HomeMy WebLinkAbout12-14-2016 Board Meeting Agenda Packet Orange County Sanitation District Wednesday, December 14, 2016
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 (John Withers, Irvine Ranch Water
District)
ROLL CALL (Clerk of the Board)
1. RECEIVE AND FILE MINUTE EXCERPTS OF MEMBER AGENCIES RELATING
TO APPOINTMENTS TO THE ORANGE COUNTY SANITATION DISTRICT
BOARD OF DIRECTORS (Clerk of the Board)
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:
• Employee Service Awards
• Peak Shaving Optimization Strategy Presentation — Director of Operations and
Maintenance, Ed Torres
REPORTS: The Chair and the General Manager may present verbal reports on miscellaneous matters
of general interest to the Directors. These reports are for information only and require no action by the
Directors.
General Counsel Report
12/14/2016 OCSD Board of Directors Agenda Page 1 of 12
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 Any items withdrawn from the Consent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.
2. APPROVAL OF MINUTES (Clerk of the Board)
RECOMMENDATION: Approve the minutes of the Regular Board of Directors
Meeting held on November 16, 2016.
3. NOMINATION & ELECTION OF VICE CHAIRPERSON OF THE BOARD OF
DIRECTORS (Clerk of the Board)
RECOMMENDATION: Consider nominations and conduct an election for the
position of Vice Chairperson of the Board of Directors in accordance with
Resolution No. OCSD 15-27.
4. PAYMENT AGREEMENT FOR CAPITAL FACILITIES CAPACITY CHARGES
FOR BAR BAKERSM (Lorenzo Tyner)
RECOMMENDATION: Approve the payment agreement negotiated by the
General Manager for the collection of all charges and fees owed for capital facility
capacity charges plus interest of 5.5% per annum and administrative fees with
Bar Bakers, LLC in a form approved by General Counsel.
RECEIVE AND FILE: These items require no action;and without objection, will be so ordered by the
Board Chair.
5. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF
NOVEMBER 2016 (Lorenzo Tyner)
RECOMMENDATION: Receive and file the report of the Investment Transactions
for the month of November 2016.
6. COMMITTEE MINUTES (Clerk of the Board)
RECOMMENDATION: Receive and file the approved minutes of the following
standing committees:
A. Operations Committee Meeting of November 2, 2016
B. Legislative and Public Affairs Committee Meeting of November 8, 2016
121142016 OCSD Board of Directors'Agenda Page 2 of 12
OPERATIONS COMMITTEE:
7. POWER PRODUCTION CONSULTING SERVICES, SPECIFICATION NO.
CS-2016-777BD (Ed Torres)
RECOMMENDATION:
A. Approve a Professional Consultant Services Agreement with AECOM for
Power Production Consulting Services, Specification No. CS 2016-77713D,
for an amount not to exceed $191,691; and
B. Approve a contingency of$19,169 (10%).
8. CBS ARCSAFE REMOTE CIRCUIT BREAKER RACKING UNIT (Ed Torres)
RECOMMENDATION:
A. Approve a sole source purchase with CBS Aresafe Inc. for the purchase of
four CBS Aresafe remote circuit breaker racking units (two per plant), for a
total amount not to exceed $139,920 delivered, plus tax; and
B. Approve a contingency of$6,996 (5%).
9. COOPERATIVE PROCUREMENT WITH STATE OF CALIFORNIA UNDER
WSCA-NASPO FOR FUEL CARD PROGRAM (Ed Torres)
RECOMMENDATION:
A. Authorize the use of the State of California Department of General Services
(DGS) Participating Addendum No. 7-16-99-27 with U.S. Bank National
Association dba Voyager Fleet Systems under the State of Washington
WSCA-NASPO Commercial Card Solutions Contract Number 00612-
Category 2 for the period beginning February 1, 2017 through
December 31, 2018 for a total not to exceed $250,000, with four one-year
renewal options.
B. Approve a $50,000 (20%) Contingency per year.
10. DOIG DRIVE BUILDING IMPROVEMENTS, PROJECT NO. 3-65
(Rob Thompson)
RECOMMENDATION: Establish a project for Doig Drive Building Improvements,
Project No. 3-65, with a budget of$2,436,000.
12/14/2016 OCSD Board of Directors Agenda Page 3 of 12
11. RETURN ACTIVATED SLUDGE PIPING REPLACEMENT AT ACTIVATED
SLUDGE PLANT 1, PROJECT NO. P1-129 (Rob Thompson)
RECOMMENDATION: Establish a project for Return Activated Sludge Piping
Replacement at Activated Sludge Plant 1, Project No. P1-129, with a budget of
$3,300,000.
12. UPDATE PRE-APPROVAL LIST FOR FREQUENTLY PROCURED SOLE
SOURCE MATERIALS AND SERVICES (Ed Torres)
RECOMMENDATION:
A. Update authorization and set administrative controls for sole source
procurement required to maintain, service, or replace equipment currently
in operation at Orange County Sanitation District facilities where the parts
and/or service can only be provided by the Original Equipment
Manufacturer (OEM) or their designated representative, for purchases
under$100,000, per purchase; and
B. Authorize the General Manager to ratify additions or deletions to the OEM
list on the General Managers quarterly approved purchases agenda report.
The following equipment, parts, and services from the listed OEMs are pre-
approved as sole source items. The information below includes a general
category for the part/service, not the specific, existing sole source
part/service.
• AANDERAA DATA INSTRUMENTS— Current meters
• ABB —Variable frequency drives, process controls
• ACME — Plant water strainers
• AGILENT TECHNOLOGIES— Liquid Chromatography Mass Spectrometer
• ALFA-LAVAL— Heat exchangers for digesters, centrifuges
• ALLEN BRADLEY— Process controls
• AMERON — Manhole Toppers
• AM-LINER® PVC— Sewer lining
• ARIZONA INSTRUMENT— Odor sensing equipment
• ASHBROOK (BELLMER/WINKLER)— Sludge belt filter presses
• BASLER— Electrical protective relays and regulators
• BEC— Building Electronics control system
• BENTLEY NEVADA— Gas compressor, Cen-Gen vibration monitoring
• BIO-MERIEUX— Bacterial identification system
• BOERGER— Process Pumps
• CHESTERTON — Mechanical seals for process equipment
• CSI/EMERSON — MSP vibrations
• DEZURIK WATER CONTROLS — Process valves
• EATON —Variable frequency drives for process pumps
• EMERSON/ROSEMOUNT— Process equipment
12/14/2016 OCSD Boats of Directors Agenda Page 4 of 12
• FOXBORO — Process equipment
• GOULD/ITT/YEOMANS — Process pumps
• HACH/AMERICAN SIGMA— Liquid samplers
• IPT— Limitorqueservices
• HIDROSTAL— Process pump motors
• LECO — GC Time of Flight mass spectrometer
• LIMITORQUE— Process valves
• MARLOW— Process pumps
• Modicon — PLC parts & service
• MOTOROLA, INC — Radios
• MOYNO — Process pumps
• MSA— Safety gas detection systems
• MUFFIN MONSTER—Sludge grinders
• PARKSON —Washer compactor
• PERKIN ELMER— ICP Mass Spectrometer
• PUTZMEISTER—Sludgetransferpumps
• ROBICON —Variable frequency drives for pumps
• ROTORK—Valve actuators
• SANCON 100 EPDXY/URETHANE — Coating system
• SCHWING — Sludge transfer pumps
• SEABIRD— Ocean Monitoring instrumentation
• SEEPEX— Process pumps
• SIEMENS—Variable frequency drives, process controls
• SIEMENS DEMAG DELAVAL TURBOMACHINERY, INC. (SDDTI)—
Aeration blowers service
• SKALAR— BOD robotics
• SPARLING INSTRUMENTS — Process flowmeters
• TELEDYNE — RD instrumentation
• THERMO ELECTRON — ICP Atomic Emission Spectrometer and GC Mass
spectrometer
• TITUS — Composite Manhole Covers
• VAREC — Process safety equipment
• VAUGHAN — Process Pumps
• WATERS CORPORATION — Liquid chromatograph mass spectrometer
• WESTFALIA— Centrifuge parts
• WEMCO— Process pumps
• XYLEM — Process pumps and ancillary parts
The following additional proprietary service providers are pre-approved:
• ARC WIRELESS — Paging services
• AUTODESK—AutoCAD drawing program
• CALIFORNIA RECREATION COMPANY—Vessel Nerissa slip fees
• CORNERSTONE— On Demand Talent Management System
• EMPLOYEE BENEFITS SPECIALIST, INC— Benefits Enrollment System
• ENFOTECH — Pre-treatment Software
12/14/2016 OCSD Board of Directors Agenda Page 5 of 12
• ESRI —GIS software
• FIRST AMERICAN REAL ESTATE— Online Geographic-Realquest Report
• GUIDANCE SOFTWARE, INC— E-Discovery Software
• GOLDEN BELL— Insect Control
• IBM MAXIMO— Enterprise Asset Management Software
• INNOVYZE, INC— Hydraulic Monitoring and CCTV Data
• L - 3 COMMUNICATIONS HOLDINGS, INC— Internet and Telecom
Provider
• LABWARE — Laboratory Information Management System
• MICROSOFT CORPORATION — Premier Support
• MOTOROLA, INC — Radios
• NEOGOV— Online Job Application System
• ORACLE — Oracle Database
• ORACLE / JD EDWARDS — Enterprise One Materials, Equipment &
Services
• PLANETBIDS, INC—Online vendor and bid Management
• RAND MCNALLY—Thomas Bros. Maps
• RBMWARE—Software and 2310 vibration analyzers
• STANDARD AUTOMATION dba WONDERWARE WEST— Historian for
SCADA system
• VISION INTERNET SOLUTIONS, INC — Internet Website
• WORKFORCE —Time Entry
13. PROJECT MANAGEMENT INFORMATION SYSTEM, PROJECT NO. J-128
(Rob Thompson)
RECOMMENDATION: Establish a project for Project Management Information
System, Project No. J-128, with a budget of$4,000,000.
14. OVERHAUL OF CENTRAL GENERATION ENGINES AT PLANT NOS. 1 AND 2,
SPECIFICATION NO. S-2016-764BD (Ed Torres)
RECOMMENDATION:
A. Approve a Service Contract to NRG Energy Services, LLC for the overhaul
of Central Generation Engines, Specification No. S-2016-76413D, for the
period of February 1, 2017 through January 31, 2018, for total amount not
to exceed $2,633,119 with four (4) one-year renewal options and;
B. Approve an annual contingency of$ 526,624 (20%)
12/14/2016 OCSD Board of Directors Agenda Page 6 of 12
LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE:
15. AB 2022 BOTTLING OF GROUNDWATER REPLENISHMENT SYSTEM
(GWRS) WATER
RECOMMENDATION:
A. Authorize $15,000 for the initial testing and bottling of GWRS water, with
the cost of the bottling and testing to be shared equally between the Orange
County Sanitation District and Orange County Water District; and
B. Authorize the General Manager to approve the label for the first-run of
GWRS water bottles.
16. APPROVAL OF 2017 LEGISLATIVE AND REGULATORY PLAN (Bob Ghirelli)
RECOMMENDATION: Approve the Orange County Sanitation District 2017
Legislative and Regulatory Plan.
NON-CONSENT CALENDAR:
17. OPTIONS FOR DISTRIBUTION OF CLOSED SESSION MATERIALS
(Jim Herberg)
RECOMMENDATION: Select an option for the distribution of documents
presented in closed session.
18. RATIFICATION TO AMEND SYNAGRO CONTRACT (Bob Ghirelli)
RECOMMENDATION: Ratify use of General Manager's emergency purchasing
authority in accordance with Ordinance No. OCSD47 Section 1.07 (B), identified
as a critical time-sensitive procurement, authorizing Amendment No. 10 to the
Synagro West, Inc. contract to include their Nursery Products, LLC facility located
at 14479 Cougar Rd., Helendale, California, to haul and compost Orange County
Sanitation District's biosolids, at a unit cost of $51.00 per wet ton for the period
December 1, 2016 through December 27, 2016.
19. DOIG DRIVE BUILDING IMPROVEMENTS, PROJECT NO. 3-65
(Rob Thompson)
RECOMMENDATION:
A. Approve a Professional Design Services Agreement with IDS Group to
provide engineering services for Doig Drive Building Improvements, Project
No. 3-65 (FE15-13), for an amount not to exceed $260,100; and
12/14/2016 OCSD Board of Directors Agenda Page 7 of 12
B. Approve a contingency of$26,010 (10%).
20. WASTEWATER REFUNDING REVENUE OBLIGATIONS SERIES 2017A
(Lorenzo Tyner)
RECOMMENDATION:
A. Adopt Resolution No. OCSD 16-32 entitled: "A Resolution of the Board of
Directors of the Orange County Sanitation District authorizing the execution
and delivery by the District of an Installment Purchase Agreement, a Trust
Agreement 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"; and
B. That the Orange County Sanitation District Financing Corporation approve
the documents supporting and authorizing the Revenue Obligations in an
aggregate amount not to exceed $91,620,000.
Recess OCSD Board of Directors Meeting.
12/14/2016 OCSD Board of Directors Agenda Page 8 of 12
ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION
The members of the Orange County Sanitation District Board of Directors are each being compensated
$212.50 for the Board Meeting;there is no additional compensation for the Financing Corporation Meeting.
CALL TO ORDER:
Board of Directors, Orange County Sanitation District Financing Corporation.
ROLL CALL: (Clerk of the Board)
APPROVAL OF MINUTES:
FC-1. If no corrections or amendments are made, the minutes for the meeting held on
September 28, 2016, will be deemed approved and be so ordered by the Chair.
ACTION ITEM:
FC-2. RECOMMENDATION: Adopt Resolution No. FC-26 entitled: "A Resolution of the
Board of Directors of the Orange County Sanitation District Financing Corporation
Authorizing the Execution and Delivery by the Corporation of an Installment
Purchase Agreement and a Trust Agreement in Connection with the 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 of not to exceed $91,620,000 and
Authorizing the execution of necessary documents and related actions."
Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation.
12/14/2016 OCSD Board of Directors Agenda Page 9 of 12
Reconvene, Board of Directors, Orange County Sanitation District.
AB 1234 REPORTS:
INFORMATION ITEMS:
None.
CLOSED SESSION:
During the course of conducting the business set forth on this agenda as a regular meeting of the Board,
the Chair may convene the Board in closed session to consider matters of pending real estate
negotiations,pending or potential litigation,or personnel matters,pursuant to Government Code Sections
54956.8, 54956.9, 54957 or 54957.6, as noted.
Reports relating to (a)purchase and sale of real property; (b) matters of pending or potential litigation;
(c)employment actions or negotiations with employee representatives;or which are exempt from public
disclosure under the California Public Records Act, may be reviewed by the Board during a permitted
closed session and are not available for public inspection. At such time as the Board takes final action
on any of these subjects, the minutes will reflect all required disclosures of information.
CONVENE IN CLOSED SESSION.
(1) CONFERENCE WITH REAL PROPERTY NEGOTIATORS
(Government Code Section 54956.8)
Property: 300 East Coast Highway, Newport Beach, CA -APN No.440-132-60
Agency negotiators: General Manager, Jim Herberg; Assistant General Manager,
Bob Ghirelli; Director of Finance, Lorenzo Tyner; Director of Engineering,
Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; and CIP
Project Manager, Adam Nazaroff.
Negotiating parties: Bayside Village Marina LLC
Under negotiation: Instruction to negotiator will concern price and terms of
payment.
(2) CONFERENCE WITH REAL PROPERTY NEGOTIATORS
(Government Code Section 54956.8)
Property: 10950 Virginia Cir. Fountain Valley, CA- APN No.156-165-05;
10870 Spencer Ave. Fountain Valley, CA -APN No.156-163-07;
18480 Pacific St. Fountain Valley, CA -APN No.156-165-04;
18430 Pacific St. Fountain Valley, CA -APN No.156-165-06;
18370 Pacific St. Fountain Valley, CA -APN No.156-165-08;
18429 Pacific St. Fountain Valley, CA -APN No.156-163-09;
12/14/2016 OCSD Board of Directors Agenda Page 10 of 12
18410 Bandilier Cir. Fountain Valley, CA -APN No.156-163-10;
18368 Bandilier Cir. Fountain Valley, CA -APN No.156-163-11;
10700 Spencer St. Fountain Valley, CA-APN No.156-163-16;
10700 Spencer Ave. Fountain Valley, CA -APN No.156-154-07;
18350 Mt. Langley St. Fountain Valley, CA-APN No.156-154-08;
18386 Mt. Langley St. Fountain Valley, CA-APN No.156-154-06;
18385 Bandilier Cir. Fountain Valley, CA -APN No.156-163-12;
18401 Bandilier Cir. Fountain Valley, CA -APN No.156-163-13;
18424 Mt. Langley St. Fountain Valley, CA-APN No.156-154-05;
18435 Bandilier Cir. Fountain Valley, CA -APN No.156-163-14;
18475 Bandilier Cir. Fountain Valley, CA -APN No.156-163-15;
10725 Ellis Ave. Fountain Valley, CA -APN No.156-154-04; and
10540 Talbert Ave. Fountain Valley, CA -APN No.156-151-03
Agency negotiators: General Manager, Jim Herberg; Assistant General Manager,
Bob Ghirelli; Director of Finance, Lorenzo Tyner; Director of Engineering, Rob
Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; CIP Project
Manager, Wendy Sevenandt; Kevin Turner and John Gallivan, Cushman and
Wakefield.
Negotiating parties:
Valley, Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07;
DK-USA LLC, APN No.156-165-04;
Fountain Valley Industrial Parcel 13, APN No.156-165-08;
Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11;
The Ins Trust Shabtai, Nevon, APN No. 156-163-16;
The Ins Trust, APN No. 156-154-07;
K & A Investments LP, APN No. 156-154-08;
Fountain Valley Star LLC, APN No. 156-154-06;
TN Sheet Metal Inc., APN No. 156-163-12;
18401 Bandilier LLC, APN No. 156-163-13;
Phone Lilly Lin-Lin TR, APN No. 156-154-05;
JDK Partners, APN No. 156-163-14;
Chandler Real Properties, APN No. 156-163-15;
Ellis Avenue LLC, APN No. 156-154-04; and
SFII Fountain Valley LLC, APN No. 156-151-03
Under negotiation: Instruction to negotiator will concern price and terms of
payment.
RECONVENE IN REGULAR SESSION.
CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED
SESSION:
12142016 OCSD Board of Directors'Agenda Page 11 of 12
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
ADJOURNMENT:
Adjourn the Board meeting until the Regular Board of Directors Meeting on
January 25, 2017 at 6:00 p.m.
Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability
related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at(714)
593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and
the type of accommodation requested.
Aaenda Postina: In accordance with the requirements of California Government Code Section 54954.2,this agenda
has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis
Avenue, Fountain Valley, California, and on the Sanitation District's website at www.ocsd.com, not less than 72
hours prior to the meeting date and time above. All public records relating to each agenda 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.
Aaenda Description: The agenda provides a brief general description of each item of business to be considered or
discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take
any action which is deemed appropriate.
NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, items must be
submitted to the Clerk of the Board 14 days before the meeting.
Kelly A.Lore
Clerk of the Board
(714)593-7433
klore(doosd.com
For any questions on the agenda, Committee members may contact staff at:
General Manager Jim Herberg (714)593-7300 iherbem0ocsd.com
Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(docsd.com
Director of Engineering Rob Thompson (714)593-7310 rthomuson(docsd.com
Director of Environmental Services Jim Colston (714)593-7450 IColston(7ppsd.com
Director of Finance and Lorenzo Tyner (714)593-7550 INner(dOCSd.com
Administrative Services
Director of Human Resources Celia Chandler (714)593-7202 cchandler(docsd.com
Director of operations&Maintenance Ed Torres 714 593-7080 etorres ocsd.com
12/14/2016 OCSD Board of Directors Agenda Page 12 of 12
ITEM NO. 2
Orange County Sanitation District
MINUTES
BOARD MEETING
November 16, 2016
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Administration Building
10844 Ellis Avenue
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11/16/2016 Minutes of Board Meeting Page 1 of 17
ROLL CALL
A regular meeting of the Board of Directors of the Orange County Sanitation District was
called to order by Chair John Nielsen on November 16, 2016, at 6:05 p.m., in the
Administration Building. Director Joy Neugebauer 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 John Nielsen, Chair Allan Bernstein
X Gregory Seboum, Vice Chair Doug Chaffee
X Tom Beamish Tim Shaw
A Steven Choi Lynn Schott
X Keith Curry Scott Peotter
A Ellery Deaton Sandra Massa-Lavitt
X Joy Neugebauer Al Krippner
X James M. Ferryman Bob Doted
A Steven Jones Kris Beard
X Jim Katapodis Erik Peterson
X Robert Kiley Michael Beverage
X Peter Kim Michele Steggell
X Lucille Kring Jordan Brandman
X Greg Mills Diana Fascenelli
X Richard Murphy Shelley Hasselbrink
X Steve Nagel Cheryl Brothers
X Glenn Parker Cecilia Hupp
X David Shawver Carol Warren
X Fred Smith Virginia Vaughn
Teresa Smith X Mark Murphy
X Michelle Steel Shawn Nelson
A Sal Tinajero David Benavides
X Chad Wanks Constance Underhill
X John Withers Douglas Reinhart
X Mariellen Yarc Stacy Berry
STAFF MEMBERS PRESENT: Jim Herberg, General Manager, Bob Ghirelli, Assistant
General Manager, Rob Thompson, Director of Engineering; Jim Colston, Director of
Environmental Services; Lorenzo Tyner, Director of Finance & Administrative Services;
Celia Chandler, Director of Human Resources; Ed Torres, Director of Operations and
Maintenance; Emilio Ariston; Deirdre Bingman; Greg Blakeley; Kim Christensen; Ron
Coss; Chad Crow; Mike Dorman; Marc Dubois; Anne Marie Feery; Lisa Frigo; Al Garcia;
Mark Kawamoto; Laurie Klinger; Gerry Matthews; Tom Meregillano; Kathy Millea; Andrew
Nau; Richard Spencer; Chris Stacklin; and Brent Wride.
11/16/2016 Minutes of Board Meeting Page 2 of 17
OTHERS PRESENT: Brad Hogin (General Counsel); Alternate Director Bob Ooten,
CMSD; Alternate Director Mike Beverage, YLWD; and Art Perry, CMSD.
PUBLIC COMMENTS:
None.
SPECIAL PRESENTATIONS:
• OCSD Safety Poster Contest Winners:
Richard Spencer, Human Resources and Risk Manager, recognized and presented
certificates to: Julia Ariston; Samantha Ariston; Emily Ayala; Emmi Crow; Stephanie
Diaz; Meghan Palk; and Norah Palk, the participants and Grand Prize Winners of this
year's Safety Poster Contest.
• Employee Commendation Chris Stacklin:
General Manager Jim Herberg acknowledged Engineer Chris Stacklin who was
recently recognized by the President of the Water Environment Federation for his
contribution to two White House initiatives.
• Employee Service Awards:
Director of Environmental Services Jim Colston presented an Employee Service
Award to Kim Christensen, Senior Scientist— Division 630 (35 years).
• Board Member Appreciation:
Board Chair John Nielsen presented Certificates of Appreciation to departing
Directors Bob Kiley (YLWD); Jim Katapodis (City of Huntington Beach); Greg Mills
(City of Villa Park); Steven Choi (City of Irvine); and Keith Curry (City of Newport
Beach), and thanked each of them for their years of support and dedication to
protecting public health and the environment throughout Orange County.
REPORTS:
Chair Nielsen reported on the recent Legislative and Public Affairs Committee meeting
where Heather Stratman, CEO of the Association of California Cities (ACC-OC),
presented the agency's recent efforts and the legislative focus for 2017. He also stated
that the 2017 OCSD Legislative Plan will be presented at the December Board Meeting.
Chair Nielsen also acknowledged Yorba Linda Water District for recently receiving their
Certificate of Transparency from CSDA.
General Manager Jim Herberg reminded everyone that the OCSD Administrative offices
will be closed November 24 & 25 for the Thanksgiving Holiday; that there will be no
11/16/2016 Minutes of Board Meeting Page 3 of 17
Administration Committee meeting held in December; and that the December Steering
and Board Meetings will be held on December 14th.
Mr. Herberg requested that the Board Meeting be adjourned in memory of two members
of the OCSD family: Barbara Collins, who retired a year ago after 28 years of service,
passed away on November 2ad; and Doug Kanis, Senior Engineer, who passed away this
past weekend. Doug had been with the District for 11 years.
CONSENT CALENDAR:
1. APPROVAL OF MINUTES (Clerk of the Board)
MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the
regular Board of Directors Meeting held on October 26, 2016.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Sebourn;
Shawver, F. Smith; Steel; Wanke; Withers and Yarc
NOES: None
ABSTENTIONS: M. Murphy (Alternate)
ABSENT: Choi; Deaton; Jones and Tinajero
2. RESOLUTION NO. OCSD 16-24 COMMENDING BOARD CHAIRMAN
JOHN NIELSEN (Bob Ghirelli)
MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD
16-24, entitled: "A Resolution of the Board of Directors of the Orange County
Sanitation District commending John Nielsen for his outstanding contributions and
dedication to public service as Chairman of the Orange County Sanitation District
Board of Directors."
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
4. COOPERATIVE PROCUREMENT WITH DOWNTOWN FORD SALES
(Ed Torres)
MOVED, SECONDED, AND DULY CARRIED TO: Ratify and approve a purchase
order agreement using the State of California's cooperative Contract Number
1-14-23-20A with Downtown Ford Sales for the purchase of six (6) budget
approved vehicles for a total cost of $187,444.62 in accordance with Ordinance
No. OCSD47, Section 2.03(B) Cooperative Purchases.
11/16/2016 Minutes of Board Meeting Page 4 of 17
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Sebourn;
Shawver; F. Smith; Steel; Wanks; Withers and Yarc
NOES: None
ABSTENTIONS: M. Murphy (Alternate)
ABSENT: Choi; Deaton; Jones and Tinajero
5. COOPERATIVE PROCUREMENT WITH XYLEM DEWATERING SOLUTIONS
INC. dba GODWIN PUMPS OF AMERICA, INC. (Ed Torres)
MOVED, SECONDED, AND DULY CARRIED TO: Ratify and approve a purchase
order agreement using the U.S. General Services Administration's (GSA)
Schedule 84 Contract Number GS-07F-9491 G with Xylem Dewatering Solutions,
Inc. dba Godwin Pumps of America, Inc. for the purchase of three (3) budget
approved diesel pumps for a total cost of$362,849.40 plus sales tax in accordance
with Ordinance No. OCSD-47, Section 2.03(B) Cooperative Purchases.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
6. CONTRACT SECURITY SERVICES (Celia Chandler)
MOVED, SECONDED, AND DULY CARRIED TO: Approve an increase of
$139,347 to Purchase Order 105775 OA, a bridge purchase contract issued to
Securitas Security Services, U.S.A., for a total amount not to exceed $300,070,
with no additional increase to the annual budget.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
7. REQUEST FOR FUNDING — WASTEWATER FLOW & LOADING STUDY
(Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO: Approve the Orange County
Sanitation District's participation in the California Association of Sanitation
Agencies (CASA)wastewater flow and loading study and the Participating Agency
Contribution Pledge of$82,500.
11/16/2016 Minutes of Board Meeting Page 5 of 17
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Krng; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
Item pulled and heard separately.
3. PROPOSED BOARD OF DIRECTORS & COMMITTEE MEETING DATES FOR
CALENDAR YEAR 2017 (Clerk of the Board)
Director Wanke requested the item pulled for consideration of changing the
meeting times of the Legislative and Public Affairs Committee. Discussion ensued
and the consensus was to bring this consideration back to a later meeting of the
Board of Directors.
MOVED, SECONDED, AND DULY CARRIED TO: Approve the calendar of
meeting dates for the 2017 calendar year for meetings of the Board of Directors
and the following Committees: Administration, Legislative and Public Affairs,
Operations, and Steering.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Krng; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
SPECIAL PRESENTATION:
Presentation to Board Chair John Nielsen:
Vice-Chair Greg Sebourn introduced Orange County Supervisor Michelle Steel
and Norma Kurtz from Assembly Member Tom Daly's office, who each recognized
and presented a Certificate of Appreciation to Board Chair Nielsen.
Vice-Chair Sebourn also presented certificates that were provided by: Assembly
Member Matt Harper;Assembly Member Young Kim; State Senator Janet Nguyen;
State Senator John Moorlach; Assembly Member Donald Wagner and the Orange
County Water District.
A C-Span clip of Congresswoman Mimi Walters was presented, where, while on
the floor of the U.S. House of Representatives, she recognized and congratulated
John Nielsen for his successful service as the Board Chairman of the Orange
County Sanitation District.
11/16/2016 Minutes of Board Meeting Page 6 of 17
Vice-Chair Sebourn thanked Chair Nielsen for his professionalism, leadership, and
dedicated service. Chair Nielsen thanked everyone for their support. He
acknowledged staff members, and stated that he feels that OCSD is the most
professional organization in government today.
RECEIVE AND FILE: These items require no action;and without objection, will be so ordered
by the Board Chair.
8. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF
OCTOBER 2016 (Lorenzo Tyner)
Received and filed the report of the Investment Transactions for the month of
October 2016.
9. COMMITTEE MINUTES (Clerk of the Board)
Received and filed the approved minutes of the following standing committees:
A. Operations Committee meeting of October 5, 2016
B. Legislative and Public Affairs Committee meeting of October 10, 2016
C. Administration Committee meeting of October 12, 2016
D. Steering Committee meeting of October 26, 2016
OPERATIONS COMMITTEE:
10. DOIG DRIVE PROPERTY LEASE EXTENSION (Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO: Approve the Second
Amendment to the Doig Property Lease, to enter into an eight (8) month lease
extension of the Orange County Sanitation District's real property at 7311 Doig
Drive, Garden Grove, in a form approved by General Counsel.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanks;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
11. OCEAN OUTFALL SYSTEM REHABILITATION, PROJECT NO. J-117
(Rob Thompson)
MOVED, SECONDED, AND DULY CARRIED TO:
A. Approve a budget increase of $28,517,000 for Ocean Outfall System
Rehabilitation, Project No. J-117, for a total budget amount of$91,000,000;
and
11/16/2016 Minutes of Board Meeting Page 7 of 17
B. Approve a contingency increase of $2,372,305 (35%) to the Professional
Design Services Agreement with Brown and Caldwell for Ocean Outfall
System Rehabilitation, Project No. J-117, for a total contingency of
$3,050,106 (45%).
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
ADMINISTRATION COMMITTEE:
12. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO: Receive and file District
purchases made under the General Manager's authority for the period of July 1,
2016 — September 30, 2016.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
13. IBM MAXIMO EMERGENCY AND LEVEL 3 SUPPORT (Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO:
A. Authorize a sole source purchase order agreement with Total Resource
Management (TRM) for Maximo Emergency and Level 3 Support for one
year commencing January 1, 2017 through December 31, 2017 for a total
amount not to exceed $160,000.
B. Authorize an option for three annual renewals at $160,000 per year for a
total amount of$480,000.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanks;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
11/16/2016 Minutes of Board Meeting Page 8 of 17
14. CONSOLIDATED FINANCIAL REPORT FOR FIRST QUARTER ENDED
SEPTEMBER 30, 2016 (Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO: Receive and file Orange
County Sanitation District First Quarter Financial Report for the period ended
September 30, 2016.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
15. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL
FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2016
(Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO:
Receive and file the Orange County Sanitation District's Comprehensive Annual
Financial Report for the year ended June 30, 2016, prepared by staff and audited
by Macias Gini & O'Connell LLP (MGO), Certified Public Accountants, along with
the following reports prepared by MGO:
A. Report to the Board of Directors; and
B. Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
STEERING COMMITTEE:
16. SALARY RANGE ADJUSTMENTS FOR NON-EXEMPT CONFIDENTIAL
EMPLOYEES (Jim Herberg)
Mr. Herberg presented a brief overview of Item Nos. 16 and 17 and stated that the
resolutions are the result of prior discussions and direction from the Board of
Directors involving the 15 Unrepresented Confidential Employees.
11/16/2016 Minutes of Board Meeting Page 9 of 17
A roll call vote was taken for Item 16 & 17 together.
MOVED. SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD
16-25, entitled, "A Resolution of the Board of Directors of the Orange County
Sanitation District Approving Salary and Benefit Adjustments for Unrepresented
Non-Exempt Confidential Employees for Fiscal Years 2016/2017, 2017/2018 &
2018/2019."
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
17. SALARY RANGE ADJUSTMENTS FOR EXEMPT LEVEL CONFIDENTIAL
EMPLOYEES (Jim Herberg)
MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD
16-26, entitled, "A Resolution of the Board of Directors of the Orange County
Sanitation District Approving Salary and Benefit Adjustments for Unrepresented
Exempt Confidential Employees for Fiscal Years 2016/2017, 2017/2018 &
2018/2019."
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
18. EXECUTIVE MANAGEMENT TEAM COMPENSATION AND BENEFITS AND
MANAGER GROUP COMPENSATION (Jim Herberg)
Mr. Herberg presented Item No. 18 and stated that these resolutions are the result
of prior discussions and direction from the Board of Directors. He further discussed
the current market position; structural adjustments; possible merit based increases
and benefit changes for the two unrepresented groups.
A roll call vote was taken for Item No.18.
MOVED, SECONDED, AND DULY CARRIED TO:
A. Adopt Resolution No. OCSD 16-27 entitled, "A Resolution of the Board of
Directors of the Orange County Sanitation District approving changes to the
salary schedule, salary increases, performance-based increases, and the
11/16/2016 Minutes of Board Meeting Page 10 of 17
distribution of any remaining funds based on changes to scope, duties or
responsibilities for At-Will Executive Management Team employees for
Fiscal Years 2016-2017, 2017-2018, and 2018-2019," authorizing the
General Managerto implement a salary structure adjustment for Fiscal Year
2016 to bring Executive Management Team salary ranges in alignment with
the market, 2.5% salary increases and range adjustments in Fiscal Years
2017 and 2018, and increases to benefits.
B. Adopt Resolution No. OCSD 16-28 entitled, "A Resolution of the Board of
Directors of the Orange County Sanitation District approving changes to the
salary schedule, salary increases, performance-based increases, and the
distribution of any remaining funds based on changes to scope, duties or
responsibilities for unrepresented management employees for Fiscal Years
2016-2017, 2017-2018, 2018-2019," authorizing the General Manager to
implement a salary structure adjustment for Fiscal Year 2016 to bring the
Manager Group salary ranges in alignment with the market, 2.5% salary
increases and range adjustments in Fiscal Years 2017 and 2018, and minor
increases to benefits.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Krng; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
19. GENERAL MANAGER COMPENSATION AND BENEFITS (Celia Chandler)
Director of Human Resources Celia Chandler provided an overview of the item and
stated that the resolution is the result of prior discussions and direction from the
Board of Directors. Chair Nielsen added that he had met with the General Manager
to discuss his position and compensation.
Mr. Herberg left the room during discussion and vote. A roll call vote was taken for
Item No.19.
MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD
16-29 entitled, "A Resolution of the Board of Directors of the Orange County
Sanitation District approving salary increase, salary range adjustment, and
changes to the benefits for the General Manager for Fiscal Years 2016 to 2017
and 2017 to 2018,"authorizing the Board Chair to implement a base building salary
increase of 8% and a salary range adjustment commencing in the first pay period
of July 2016 for fiscal year 2016 to 2017 and a base building salary increase of 8%
and a salary range adjustment in the first pay period of July 2017 for fiscal year
2017 to 2018 for a total salary cost of $39,429 and an added benefits cost of
$24,000 for both fiscal years. Compensation and benefits costs including impact
to existing benefits of an amount not to exceed $76,448.
11/16/2016 Minutes of Board Meeting Page 11 of 17
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
NON-CONSENT CALENDAR:
20. DISTRIBUTION OF CLOSED SESSION MATERIALS (Jim Herberg)
Chair Nielsen stated that he placed this item on the agenda at the request of
Director Steel. General Counsel Brad Hogin provided background and history of
the District policy regarding the distribution of Closed Session materials. He
described alternative methods for advanced distribution, but indicated that he
believes the current policy would best protect the confidentiality of the materials.
Chair Nielsen stated the apparent risks of inadvertent disclosure of Closed Session
materials. He suggested hearing Closed Session in Committee meetings with the
final decision being made at the Board meeting. He also suggested a secure
website.
Director Steel expressed her concern that the time allowed during Closed Session
is not enough to read the materials, listen to the discussion and make a decision.
She shared the County process, where she receives Closed Session materials at
least three days in advance, the documents are clearly marked Confidential and
her staff does not open. She stated that every Director is responsible and will not
release confidential material.
A motion was made by Director Steel and seconded by Director Kim to change the
Closed Session policy to provide the Closed Session Material to each Board
member at the time of agenda posting unless the information is unavailable at that
time.
After lengthy discussion, the general agreement was that additional time to
thoroughly read Closed Session documents was needed. Several suggestions
were offered including: additional time allowance during Closed Session for
reading all materials; memo provided to the Board with a basic conceptual
idea/overview of any case/item; availability of General Counsel for review of
additional documents as requested; secure website with personalized login;
Committee review of Closed Session information prior to Board approval; mail
delivery to residences only and allowing General Counsel and/or staff discretion
as to the advanced release of Closed Session documents.
Director Withers suggested a survey be completed as to options that are available
and what are the best management practices of other agencies.
11/16/2016 Minutes of Board Meeting Page 12 of 17
Director Curry supports Director Steel's request for additional time, but also stated
that due to past experiences, he is concerned with mailing paper documents. He
suggested the use of a secure website which allows read only access to
confidential documents.
A SUBSTITUTE MOTION WAS MADE BY DIRECTOR CURRY SECONDED BY
VICE-CHAIR SEBOURN, AND DULY CARRIED TO: Direct General Counsel and
staff to bring back to the Board of Directors a recommendation of how to effectively
provide closed session documents in advance of the meeting.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Seboum; Shawver, F. Smith; Wanks;Withers
and Yarc
NOES: Steel
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
21. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2017A
(Lorenzo Tyner)
Director of Finance & Administrative Services Lorenzo Tyner provided a brief
description of the item and explained the cost of refunding to be approximately
$100,000.
MOVED. SECONDED, AND DULY CARRIED TO: Authorize the General
Manager to issue new fixed rate Certificates of Participation (COP), to be referred
to as Wastewater Refunding Revenue Obligations, Series 2017A, in an amount
sufficient to refund up to $91,620,000 of COP Series 2007A.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
22. TRUCK LOADING BAY ODOR CONTROL AT PLANT NO. 2, CONTRACT
NO. P2-92A (Rob Thompson)
Director of Engineering Rob Thompson provided a brief overview of the item,
responded to a question regarding the difference between the engineer's estimate
and the bid price and assured the Board that this was a responsible bid.
11/16/2016 Minutes of Board Meeting Page 13 of 17
MOVED. SECONDED, AND DULY CARRIED TO:
A. Receive and file bid tabulation and recommendation;
B. Award a Construction Contract to Kiewit Infrastructure West Co. for Truck
Loading Bay Odor Control at Plant No. 2, Contract No. P2-92A, for a total
amount not to exceed $3,304,000; and
C. Approve a contingency of$330,400 (10%).
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
23. OCSD/OCWD JOINT AGREEMENT FOR GWRS FINAL EXPANSION
(Rob Thompson)
Director of Engineering Rob Thompson provided a brief overview of the item.
MOVED. SECONDED, AND DULY CARRIED TO:
A. Adopt Resolution No. OCSD 16-30 entitled: "A Resolution of the Orange
County Board of Directors adopting findings with respect to the California
Environmental Quality Act in consideration of the Groundwater
Replenishment System Final Program EIR/EIS (FEIR) as augmented by
Addendum No. 6 to the FEIR and related actions";
B. Adopt Resolution No. OCSD 16-31 entitled: "A Resolution of the Orange
County Board of Directors adopting findings with respect to the California
Environmental Quality Act in consideration of the Orange County Water
District Water Projection Enhancement Project Initial Study/Mitigated
Negative Declaration and related actions'; and
C. Approve the Second Amended Joint Exercise of Powers Agreement for the
Development, Operation, and Maintenance of the Groundwater
Replenishment System and Green Acres Project.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
11/16/2016 Minutes of Board Meeting Page 14 of 17
24. PROPERTY ACQUISITION FOR 18475 PACIFIC AND 18484 BANDILIER
CIRCLE, FOUNTAIN VALLEY, CA(Rob Thompson)
Director of Engineering, Rob Thompson provided a brief overview of the item.
MOVED. SECONDED, AND DULY CARRIED TO: Approve 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.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Neugebauer; Nielsen;
Parker; Sebourn; Shawver; F. Smith; Steel; Wanks; Withers
and Yarc
NOES: None
ABSTENTIONS: Nagel
ABSENT: Choi; Deaton; Jones and Tinajero
25. BIOSOLIDS HAULING AND COMPOSTING SERVICE CONTRACTS —
RECOMMENDATION TO AWARD CONTRACTS TO NURSERY PRODUCTS,
LLC. AND LIBERTY COMPOSTING, INC. (Bob Ghirelli)
Assistant General Manager Bob Ghirelli provided an overview of the item and
responded to questions regarding: differential between the bid prices and
additional cost for fuel surcharges. Mr. Hogin and Purchasing Manager Marc
Dubois responded to questions regarding: the timing of the official protest; bidder
qualifications; performance bonds; and remedies in place for possible non-
performance.
11/16/2016 Minutes of Board Meeting Page 15 of 17
MOVED. SECONDED, AND DULY CARRIED TO:
A. Receive and file Bid Tabulation and Recommendation;
B. Receive and file Solicitation Phase Protest from Synagro West, LLC. dated
August 26, 2016 for Specification No. S-2016-789BD NIB (Step 2 of 2);
C. Receive and file Orange County Sanitation District's determination letter
dated September 1, 2016;
D. Receive and file Orange County Sanitation District's Notice of Intent to
Award dated September 14, 2016;
E. Receive and file Award Protest Statement from Synagro West, LLC. dated
September 20, 2016;
F. Receive and file response letter from Nursery Products, LLC. to Award
Protest Statement dated September 27, 2016;
G. Receive and file Orange County Sanitation District's determination letter
dated October 13, 2016;
H. Receive and file Appeal of Award Protest Determination from Synagro
West, LLC. dated October 20, 2016;
I. Receive and file Orange County Sanitation District's Appeal Decision dated
November 2, 2016;
J. Deny Appeal of Award Protest filed by Synagro West, LLC;
K. Award a service contract for an estimated annual amount not to exceed
$3,828,400 per year to Nursery Products, LLC. as the Primary Contractor
to haul and compost a non-guarantee minimum of 150 wet tons per day
(WTPD) of biosolids from Orange County Sanitation District's (OCSD)
Reclamation Plant No. 1 and/or Treatment Plant No. 2 for a period of one
(1), five-year tens, with five (5), one-year optional renewals, for a unit price
of $51.00 per wet ton of biosolids coupled with a monthly fuel surcharge
cost and an annual Consumer Price Index (CPI) adjustment. Should
hauling to alternative sites be necessary, unit prices are listed in the bid
price form provided in Attachment;
L. Award a service contract for an estimated annual amount not to exceed
$1,716,261 per year to Liberty Composting Inc. as the Secondary
Contractor to haul and compost a non-guarantee minimum of 75 WTPD of
biosolids from OCSD's Reclamation Plant No. 1 and/or Treatment Plant No.
2 for a period of one (1), five-year term with five (5), one-year optional
renewals, for a unit price of $57.92 per wet ton of biosolids coupled with a
monthly fuel surcharge cost and an annual Consumer Price Index (CPI)
adjustment. Should hauling to alternative sites be necessary, unit prices
are listed in the bid price form provided in Attachment; and
M. Approve an aggregate annual unit price contingency of 5% for each
contract.
AYES: Beamish; Curry; Ferryman; Katapodis; Kiley; Kim; Kring; Mills;
M. Murphy (Alternate); R. Murphy; Nagel; Neugebauer;
Nielsen; Parker; Sebourn; Shawver; F. Smith; Steel; Wanke;
Withers and Yarc
NOES: None
11/16/2016 Minutes of Board Meeting Page 16 of 17
ABSTENTIONS: None
ABSENT: Choi; Deaton; Jones and Tinajero
INFORMATION ITEMS:
None.
AB 1234 REPORTS:
Director Ferryman provided an update on the recent OCCOG meeting and reported on
status of the recruitment for the NWRI General Manager and the successful outcome of
the NWRI audit review.
CLOSED SESSION:
General Counsel, Brad Hogin stated there would be no closed session.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
Director Kring wished everyone a Happy Thanksgiving.
Chair Nielsen provided final remarks; thanked the Directors, staff, past Board Chairs and
Vice-Chair Seboum for the support and wished everyone well.
Vice-Chair Sebourn announced that in accordance with Resolution No. OCSD 15-17, the
Board will consider nominations and conduct an election for the position of Vice
Chairperson of the Board of Directors at the December 14, 2016 meeting.
ADJOURNMENT:
At 7:55 p.m. Chair Nielsen adjourned the meeting until the Regular Board Meeting on
December 14, 2016 at 6:00 p.m. The meeting was adjourned in the memory of former
OCSD employees Barbara Collins and Doug Kanis.
Submitted by:
Kelly Lore
Clerk of the Board
11/16/2016 Minutes of Board Meeting Page 17 of 17
BOARD OF DIRECTORS Meeting Data I To BA.o Dlr.
12/19/16
AGENDA REPORT ItemNumber Item Number
s
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Kelly A. Lore, Clerk of the Board
SUBJECT: NOMINATION & ELECTION OF VICE CHAIRPERSON OF THE BOARD
OF DIRECTORS
GENERAL MANAGER'S RECOMMENDATION
Consider nominations and conduct an election for the position of Vice Chairperson of the
Board of Directors in accordance with Resolution No. OCSD 15-27.
SUMMARY
Former Chairperson John Nielsen's term expired as a City Council Member in the City of
Tustin. Vice Chairperson Greg Sebourn automatically succeeded former Chairperson
Nielsen as provided in Resolution No. OCSD 15-27. Said Resolution also requires the
Board to consider nominations for a new Vice Chairperson; and conduct an election at
the next meeting of the Board. Resolution No. OCSD 15-27 provides in relevant part as
follows:
"Section 1.G. Chairperson and Vice Chairperson of the Board.
°In the event the office of Chairperson becomes vacant due to resignation or
retirement of the incumbent prior to the expiration of the regular term, the Vice
Chairperson shall automatically succeed to the office of the Chairperson and shall
continue to serve through the remainder of the regular term unless sooner removed
by action of a majority of the Directors."
"In the event the office of Vice Chairperson becomes vacant prior to the expiration of
the regular term, nominations and the election of a Director to serve in that capacity
shall be conducted at the next regular Board meeting. The person so elected shall
serve the balance of the regularly-scheduled term unless sooner removed as a result
of action by a majority of the Directors."
General Counsel will preside over this election.
ATTACHMENTS
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the
complete agenda package:
• Resolution No. OCSD 15-27
Page 1 of 1
RESOLUTION NO. OCSD 15-27
A RESOLUTION OF THE BOARD OF DIRECTORS OF
ORANGE COUNTY SANITATION DISTRICT FIXING AND
ESTABLISHING RULES OF PROCEDURE FOR THE
CONDUCT OF BUSINESS OF THE DISTRICT, AND
REPEALING RESOLUTION NO. OCSD 15-01
WHEREAS it is necessary to establish rules of procedure to facilitate the orderly
handling of business to come before the Orange County Sanitation District Board of
Directors and Standing, Steering, Special and Ad Hoc Committees.
NOW THEREFORE, the Board of Directors of the Orange County Sanitation
District, DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1: Rules of Procedure. That the following rules of procedure be
adopted for the conduct of business of the District:
A. Regular Meetings. There shall be a regular monthly meeting of the Board
of Directors of the District on the fourth Wednesday of every month at 6:00 p.m., in the
Administrative Offices of the District, located at 10844 Ellis Avenue, Fountain Valley,
California; provided, however, if the fourth Wednesday of the month falls upon a legal
holiday, said monthly meeting shall be held on the next day thereafter, at the same time
and place, unless the Board adjourns to a different date and time.
The Board of Directors may adjourn any regular, special or adjourned special
meeting to a time and place certain, as specified in the order of adjournment.
B. Special Meetings. A special meeting of the Board of Directors may be
called in either one of the following ways:
(1) By the Chairperson of the Board of Directors; or
(2) By the written request of a majority of the Steering Committee
delivered to the Clerk of the Board.
The call or notice for special meeting shall be in writing and delivered personally
or by mail at least twenty-four(24) hours before the time of such meeting, as specked in
the notice. Any notice deposited in the regular mail addressed to a Director at the address
he or she has on file with the Clerk of the Board postage prepaid, sixty (60) hours in
advance of any such meeting as specked in the notice, shall be presumed to have been
delivered.
The call or notice shall specify the time and place of the special meeting, a
description of the business to be transacted, and copies of all pertinent written materials.
OCSD 15-27-1
Such written notice maybe dispensed with as to any Director or Alternate Director
who, at or prior to the time the meeting convenes, files with the Clerk of the Board a
written waiver of notice. Such waiver may be given by facsimile or electronic mail. Such
written notice may also be dispensed with as to any member who is actually present at
the meeting at the time it convenes. The Clerk of the Board shall diligently attempt to
notify each Director personally of the time, place and purpose of said meeting, not less
than twenty-four(24) hours before the time of said meeting.
The call or notice shall be posted in the administrative offices' public lobby at least
twenty-four (24) hours prior to the special meeting.
C. Meetings Adjourned by Clerk of the Board. If at any regular, adjourned
regular, special, or adjourned special meeting, there is not a quorum of Directors present,
the Clerk of the Board may declare the meeting adjourned to a stated time and place and
shall cause written notice of the adjournment to be given in the same manner as for a
special meeting, unless such notice is waived as provided for in special meetings. Within
twenty-four (24) hours after the time of the adjournment, a copy of the order or notice of
adjournment shall be conspicuously posted on or near the door of the place where the
meeting was held.
D. Notices to News Media. When any local newspaper of general circulation,
radio or television station requests, in writing, notices of meetings of the Board of
Directors, the Clerk of the Board shall thereafter, until receipt of a notice terminating said
request, deliver notices of regular, regular adjourned, and special adjourned meetings to
such newspapers, radio or television stations. Delivery shall be made in the same manner
as delivery is made to the Directors.
E. Conduct of Meetings.
(1) Procedural Rules. The procedural rules for debate and action shall
be as set forth in Table 1, attached hereto and adopted herein by reference. Robert's
Rules of Order shall not be applicable or govern the procedures for the conduct of
Sanitation District business.
(2) Legal Officer. In any case of ambiguity or uncertainty in the
interpretation or application of these Rules to any procedure, the presiding officer may
direct such question for a ruling to the Board's General Counsel, who shall be the
parliamentarian of the Board.
(3) Obtaining the Floor and Making Motions. Any member of the Board
wishing to speak, or any member of the public wishing to address the Board, must first
be recognized by the Chairperson. The Chairperson must recognize any member of the
Board who seeks the floor when appropriately entitled to address the Board.
Any member of the Board, including the Chairperson, may bring a
matter of business properly before the Board by making a motion. Any member, including
OCSD 15-27-2
the Chairperson, except the member making the motion, may second the motion. Once
a motion is seconded, it may be opened for discussion and debate, in accordance with
the procedures in Subsection (4) below.
(4) Rules for Discussion. Debate. and Deliberation by the Board. The
procedures for consideration and action on all matters to come before the Board shall be
in compliance with the terms of this Section, as follows:
(a) Each item on the Agenda will be introduced in a form of a
report by either Staff or Counsel.
(b) Upon completion of the report, the Chairperson will allow for
direct questions regarding the item, by Directors, each in turn, and in the order as selected
by the Chairperson.
(c) Upon completion of the question period, the Chairperson will
entertain a motion and second for consideration by the Board.
(d) Discussion among the Directors will follow. Each Director will
be recognized to address the Board in the order selected by the Chairperson, with a five
(5) minute time limit for each Member wishing to speak on the Agenda item, unless the
time limit is waived by the Chairperson. There will be no interruptions of the Director who
has been recognized. Attempted interruptions will be declared out-of-order, and the
Board Member attempting to interrupt will be asked to remain silent until recognized.
(a) As an additional courtesy to everyone, repetition of comments
will be discouraged in the interest of time, and at the discretion of the Chairperson, can
be declared out-of-order.
(f) After each Member who wishes to speak has been recognized
and completed his/her remarks, a single three (3) minute period of rebuttal will be allowed
any Director, unless the time limit is waived by the Chairperson.
(g) If it appears to the Chairperson that any Director is pursuing a
line of questioning or commentary due to lack of preparation or prior review with the
District's Staff, the Director's time will be declared to have been used up, and no further
inquiry will be allowed.
(h) Upon adoption of a motion on an Agenda item, there will be
no further discussion of that item.
(5) Decorum in Debate. All Members shall address their remarks to the
Chairperson and confine them to the business then pending and subject to discussion
before the Board, avoiding personalities and reflections upon anyone's motives.
OCSD 15-27-3
(6) Closing or Limiting Debate. At all times the Board shall endeavor to
allow free and open debate among Members of the Board. However, in the discretion of
the Chairperson, it may become necessary to close or limit debate, so that action can be
taken by the Board. An order by the Chairperson closing or limiting the debate can only
be set aside by a majority vote of the Board.
F. Quorum. A majority of the Directors shall constitute a quorum of the Board.
G. Chairperson and Vice Chairperson of the Board. A Chairperson and Vice
Chairperson of the Board shall be elected by a majority vote of Directors at the regular
meeting in June of each year, and will assume office July 1st. The nominations for
Chairperson and Vice Chairperson shall be made at the regular Board meeting in May of
each year. Any person nominated for Chairperson shall be deemed to be nominated for
Vice Chairperson in the event the person is not elected as Chairperson. Thereafter, the
nominees shall prepare a statement setting forth their qualifications for the office sought.
The statements shall be mailed to members of the Board of Directors with the Agenda
and other meeting material for the June regular meeting. If only one individual is
nominated for Chairperson at the regular Board meeting in May, that individual shall be
deemed elected as Chairperson, no election shall be held in June, and the individual shall
assume office July tat. If only one individual is nominated for Vice Chairperson at the
regular Board meeting in May, that individual shall be deemed elected as Vice
Chairperson, no election shall be held in June, and the individual shall assume office July
1 St.
The Chairperson and Vice Chairperson shall serve at the pleasure of a majority of
the Directors. In the event the office of Chairperson becomes vacant due to resignation
or retirement of the incumbent prior to the expiration of the regular term, the Vice
Chairperson shall automatically succeed to the office of the Chairperson and shall
continue to serve through the remainder of the regular term unless sooner removed by
action of a majority of the Directors. In the event the office of Vice Chairperson becomes
vacant prior to the expiration of the regular term, nominations and the election of a
Director to serve in that capacity shall be conducted at the next regular Board meeting.
The person so elected shall serve the balance of the regularly-scheduled term unless
sooner removed as a result of action by a majority of the Directors.
The Chairperson shall not serve more than two consecutive one-year terms for
which he/she has been elected to the office of Chairperson. The Vice Chairperson shall
not serve more than two consecutive one-year terms for which he/she has been elected
to the office of Vice Chairperson.
H. Presiding Officer. The Chairperson of the Board shall preside during
meetings of the Directors. In the absence of the Chairperson, the Vice Chairperson shall
preside.
OCSD 15-27-4
I. Clerk of the Board and Minutes. The Board of Directors shall have a person
designated to serve as Clerk of the Board. The Clerk of the Board will be appointed to
the position by the General Manager and shall report to the General Manager or a
Department Head as designated by the General Manager. The Clerk of the Board will be
a regular full time employee, subject to all the rules and policies applicable to all regular
full time employees. The Clerk of the Board shall attend all meetings of the Board of
Directors, unless excused by the Chairperson, and shall prepare an accurate record of
each meeting for submission to the Directors and subsequent approval at the following
meeting; provided, however, that when an adjourned, special or special adjourned
meeting of the Board of Directors immediately precedes a regular meeting, Minutes of
said meeting shall be submitted for approval at the next meeting of the Board following
said regular meeting.
In the preparation of Official Minutes of a meeting of the Board of Directors, the
Clerk of the Board will not record the name of the Director who moves or who seconds
the adoption of a motion or Resolution, except the vote of any individual Director shall be
recorded upon that Director's request. The Minutes will reflect the votes by name of
Director when required by provisions of state law.
In the absence of the Clerk of the Board, a Deputy Clerk of the Board shall be
appointed to exercise the duties of the Clerk of the Board.
J. Regular Business to Come Before the Board of Directors. Insofar as
practicable, all items of business to be taken up at a regular meeting of the Board shall
be submitted to the Clerk of the Board, who shall include on the Agenda all such items
submitted by Directors, the General Manager and General Counsel, and all formal
communications.
The Clerk of the Board shall mail to each Director a notice of such regular
meetings, together with a proposed Agenda, not later than the Friday immediately
preceding such regular meetings. Said Agenda, insofar as possible, shall include copies
of Resolutions, except as hereafter provided, and a description of all matters to be
considered, together with any pertinent written materials.
Agendas shall be posted in a location freely accessible to the public not less than
seventy-two (72) hours in advance of the meeting.
Resolutions designated as "standard" and adopted by the Board of Directors from
time to time, and approved as to form and content, need not be included with said Agenda;
provided, however, that the information completing said standard Resolutions shall be set
forth on the Agenda listing, and copies of said standard Resolutions shall be on file with
the Clerk of the Board at the meeting time and place.
Items of business not known at the time the regular Agenda is mailed as herein
provided, may be considered as supplemental Agenda items; provided that all
OCSD 15-27-5
requirements of the Ralph M. Brown Act(California Government Code Sections 54950 et
seq.)are satisfied.
No business, except with consent of two-thirds of the Directors present (a majority
of Directors present for emergency actions), and only if permitted by the Ralph M. Brown
Act, not appearing on the regular or supplemental Agendas may be brought before the
Board of Directors.
The meeting Agenda shall provide for an opportunity for members of the public to
address the Board on items on the Agenda and non-Agenda items of public interest. As
determined by the Chairperson, speakers may be deferred until the speck Agenda item
is taken for discussion, and remarks may be limited to three (3) minutes. Speakers on
non-Agenda items may address only items that are within the subject matter jurisdiction
of the Board of Directors. Time allotted for such presentations is limited to three (3)
minutes or less. Total time allotted for all public input on each non-Agenda item is limited
to thirty (30) minutes to one (1) hour, taking into consideration the number of persons
filing a request to address the Board. However, time allotments may be waived by a
majority vote of the Board.
K. Handling of Business and Voting. During the course of a Board meeting,
routine matters listed on the Agenda for consideration will be referred to by Agenda Item
Number only.
Voting on all Resolutions shall be by roll call, except if waived by unanimous voice
vote, in which event, the Chairperson may order a unanimous ballot cast in favor of the
motion or Resolution under discussion. The name of each Director shall be called only
once.
On matters of considerable interest or on which there appears to be a controversy,
the motion or Resolution shall be read by title or repeated by the Chairperson. The
Chairperson shall thereafter call for discussion of the motion or Resolution, at which time
any member may discuss the pending matter. Any person other than a Director present
at the meeting may speak on the motion if recognized by the Chairperson. Sole discretion
as to the extent of discussion outside of the membership of the Board shall rest with the
Chairperson. At the close of discussion, the Chairperson may, at the Chairperson's
discretion, repeat the motion or Resolution pending, and thereafter, call for a vote.
The Clerk of the Board shall determine and state whether or not a motion or
Resolution is adopted by roll call vote. On all other matters, the Chairperson shall
determine the outcome of the voting.
L. Committees.
(1) Standing Committees.
OCSD 15-276
(a) Steering Committee: There shall be a permanent Committee
designated as the Steering Committee, comprised of the Chairperson of the Board, the
Vice Chairperson of the Board,the Chairperson of each of the Standing Committees, and
three at-large members selected by the Chairperson of the Board. The Vice Chairperson
of each of the two Standing Committees shall serve as the designated Alternate, in the
absence or inability to serve by any Chairperson.
The Committee shall also conduct an annual performance
evaluation of the General Manager and submit recommendations on his/her
compensation to the Board of Directors. The Committee shall also review the General
Manager's evaluation and compensation of the executive management employees,
based on established criteria, and executive management's goals and objectives for the
following year.
The Committee shall also conduct an annual performance
evaluation of General Counsel and submit recommendations to the Board of Directors as
provided by Resolution OCSD 12-03.
The Committee shall receive written requests for a hearing,
set hearings or deny the request for a hearing on appeals concerning permit suspension,
revocation, or denial as provided by Ordinance OCSD-37.
The Committee shall make recommendations to the Board of
Directors on labor negotiations and other related activities as may be needed or
appropriate.
The Committee shall also be authorized to assign new
subjects of significant importance to the appropriate Standing Committee for study,
evaluation and recommendation.
The Steering Committee shall meet on the fourth Wednesday
of each month at 5:00 p.m. preceding the Board's meeting, or at the call of the
Chairperson of the Board of Directors.
(b) Administration Committee: There shall be a permanent
Administration Committee (Finance, Human Resources and Information Technology) to
advise the Staff and make recommendations on matters related to the financial,
budgeting, administrative and personnel policies and programs of the District.
The Committee shall review with the Staff the procedures for
development, preparation and format of the annual budget and recommend appropriate
change, and counsel the Staff during the budget process to assure the proper
interpretation and implementation of the Board's policies and that the desired procedures
have been followed.
The responsibility for consideration and adoption of the
District budget rests with the Board of Directors.
OCSD 15-27-7
The Committee shall periodically interview and recommend
the selection of outside auditors. The Committee shall review the result of the annual
audit of the District's accounts with representatives of the outside audit fine, including any
comments received recommending improvements. The Committee shall review
management's response to these comments and make appropriate recommendations for
implementation.
Periodically, the Committee shall recommend employment of
an outside firm to audit internal control procedures to safeguard the assets of the District.
The Committee shall interview and make recommendations
on the employment of investment-banking firms, bond counsel, and if necessary or
desired,financial advisors, to be used in connection with the District's financing programs.
The Committee shall periodically coordinate
recommendations on personnel audits of the District's operations or segments of the
operations on an as-needed basis.
The Committee shall make recommendations on personnel
policies and procedures, insurers and coverage, procurement procedures, and such other
related activities as may be needed or appropriate.
The Chairperson of the Board of Directors shall appoint a
Committee Chairperson and a Committee Vice Chairperson for the Administration
Committee. The Committee Chairperson and Committee Vice Chairperson shall serve at
the pleasure of the Chairperson of the Board of Directors.
The Administration Committee shall consist of thirteen
members, as follows:
(1) The Chairperson of the Board of Directors;
(2) The Vice Chairperson of the Board of Directors;
(3) The Committee Chair of the Administration Committee;
(4) The Committee Vice Chair of the Administration Committee; and
(5) Nine additional Board members appointed by the Chairperson of the Board of
Directors.
Other than the Board Chairperson and the Board Vice
Chairperson, no Director who serves on the Operations Committee shall be eligible to
serve on the Administration Committee.
OCSD 15-27-8
The Administration Committee shall meet on the second
Wednesday of each month at 5:00 p.m., or at the call of its Chairperson.
(c) Operations Committee. There shall be a permanent
Committee designated the Operations Committee (Engineering, Operations &
Maintenance and Technical Services). With the goal of compliance with all public health
and environmental laws and regulations, the Operations Committee shall review and
submit appropriate recommendations on the matters pertaining to the operation of the
District Treatment Works, including such matters as current and projected service/flow
needs, level and quality of treatment, conservation, recycling and reuse activities, and air
quality issues.
The Committee shall also review issues pertaining to the
District's NPDES Ocean Outfall Discharge Permit, including annual review of the
contractor(s) performing the ocean monitoring and research programs required as a
condition of said permit, and related issues regarding protection of the marine waters off
metropolitan Orange County's coastline from impacts resulting from the District's
operations and discharge of treated wastewater.
The Committee shall also review matters pertaining to
contractual arrangements by the District to provide sewerage services to areas outside
the District's boundaries or approved spheres of influence.
The Committee shall review plans for the future needs of the
District, explore alternatives and make recommendations to the Board of Directors.
The Operations Committee shall also review and submit
appropriate recommendations on matters pertaining to capital projects which address
operational needs, including the selection of professional consulting services to assist in
studying, planning and designing needed District Treatment Works and support facilities,
including computerized systems, in accordance with the Board's established policies and
procedures for procuring such services; the Committee shall further review construction
projects for said facilities in accordance with applicable public works laws and Board
policies. Said oversight shall include the contracts for professional services and public
works construction projects and addenda or change orders thereto. In carrying out its
responsibilities, the Committee shall receive advance notice and regular status reports
on the projects from Staff, and monitor, visit and observe the District Treatment Works'
operational functions and major capital construction projects.
The Chairperson of the Board of Directors shall appoint a
Committee Chairperson and a Committee Vice Chairperson of the Operations
Committee. The Committee Chairperson and Committee Vice Chairperson shall serve
at the pleasure of the Chairperson of the Board of Directors.
OCSD 15-27-9
The Operations Committee shall consist of fourteen
members, as follows:
(1) The Chairperson of the Board of Directors;
(2) The Vice Chairperson of the Board of Directors;
(3) The Committee Chair of the Operations Committee;
(4) The Committee Vice Chair of the Operations Committee; and
(5) Ten (10) additional Board members appointed by the Chairperson of the Board
of Directors.
Other than the Board Chairperson and the Board Vice
Chairperson, no Director who serves on Administration Committee shall be eligible to
serve on the Operations Committee. The Operations Committee shall meet on the first
Wednesday of each month at 5:00 p.m., or at the call of its Chairperson.
(d) Legislative and Public Affairs Committee: There shall be a
permanent Committee designated as the Legislative and Public Affairs Committee,
comprised of the Chairperson of the Board, the Vice Chairperson of the Board, and five
at-large members selected by the Chairperson of the Board.
The Committee shall advise the Staff and make recommendations
on matters related to the legislative and public affairs programs of the District.
The Legislative and Public Affairs Committee shall meet on the
second Monday of each month at 8:00 a.m. or at the call of the Board Chairperson.
(2) Special and Ad Hoc Committees. In addition to the Standing
Committees, the Chairperson of the Board of Directors, or the Chairperson of a Standing
Committee, or a majority of the Directors, may appoint from time to time, Special or Ad
Hoc Committees to study and report on specific matters. Such Committees shall be
temporary in nature, and their assignments shall pertain to a current, specific issue. Upon
completion of the assigned task, the Ad Hoc or Special Committee will be dissolved.
The Chairperson and Vice Chairperson of Special and Ad Hoc
Committees shall be appointed by the Chairperson of the appointing authority.
Each Special and Ad Hoc Committee shall meet at the call of its
Chairperson.
M. Motion to Refer to a Standing Committee. Any Director at a Board meeting
may move to have a policy or any other activity affecting the Sanitation District, or any
OCSD 15-27-10
one of the member Agencies, referred to a Standing Committee for study and report. This
motion shall be a privileged motion, and when duly seconded, discussion thereof shall be
limited to Directors only. Said motion shall receive an affirmative vote of a majority of the
Directors for adoption.
Section 2: Procedure for Consideration of Demands for Corrective Action.
A. Requirement of Written Demand. Prior to any person commencing a
judicial action for injunction or mandamus to declare any action taken by the Board void
because of failure to observe Brown Act requirements, such person must first serve
upon the Clerk of the Board a written demand describing the alleged violation and
demanding corrective action. Such demand must be served upon the Clerk of the Board
within thirty (30) days of the complained of action. Failure to serve any such demand
within this thirty (30) day period shall result in the loss of any right to challenge any action
to have been taken in violation of Sections 54953, 54954.2, or 54956 of the California
Government Code.
B. Consideration of Corrective Action. Upon receipt of such a demand,
consideration of the demand shall immediately be placed on the Agenda for the next
meeting of the Board of Directors. If the demand is received less than seventy-two (72)
hours prior to the time set for the next meeting, the Board may determine that the notice
constitutes the initiation of litigation, and that the need to take action on the threatened
litigation arose subsequent to the posting of the Agenda, and may consider it at that
meeting pursuant to Section 1(J) above. A description of any item so placed on the
Agenda shall include both consideration of the demand, and the possibility of corrective
action by the Board.
In considering such demands, the Board shall first determine, by motion,
whether corrective action should be taken. If no motion to take corrective action is carried,
the Clerk of the Board shall inform the demanding party in writing of the Board's decision
not to cure or correct the challenged action.
C. Implementing Corrective Action. If a motion to take corrective action
passes, the Chairperson may entertain a motion implementing corrective action. Any
motion implementing corrective action shall address the concerns raised in the
consideration of corrective action. The motion implementing corrective action may
include a motion to rescind prior action taken, as appropriate. Passage of a motion to
rescind invalidates prior action only as of the time of the passage of the motion, and not
from the date of the initial action. A motion implementing corrective action resulting from
a written demand is out-of-order if the action complained of(a) was in connection with the
sale or issuance of notes, bonds, or other evidences of indebtedness, or any contract,
agreement, or incident thereto; or (b) gave rise to a contractual obligation upon which a
party has, in good faith, detrimentally relied. In any event, the Board shall notify the party
making the demand in writing of its decision to take corrective action, and shall describe
any corrective action taken. This notice shall be given to the demanding party as soon
OCSD 15-27-11
as possible after the meeting, but in no event more than thirty (30) days after receipt of
the demand.
Section 3: Resolution No. OCSD 15-01 is hereby repealed.
Section 4: This Resolution shall become effective immediately.
PASSED AND ADOPTED at a regular meeting of the Board of Directors held
December 16, 2015.
John elseri
Board 19hair
J
TVeBoard
OCSD 15-27-12
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District,
do hereby certify that the foregoing Resolution No. OCSD 15-27 was passed and adopted
at a regular meeting of said Board on the 161h day of December, 2015, by the following
vote, to wit:
AYES: Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim;
Kring; Mills; M. Murphy (Alternate); R. Murphy; Nagel;
Neugebauer; Nielsen; Parker; Peterson (Alternate);Shawver;
F. Smith;
Tinajero; Underhill (Alternate), Withers and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Bartlett and Sebourn
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
Orange County Sanitation District this 16th day of December, 2015.
Ke ly A, re
CI rk o t e Board of Directors
Orange ounty Sanitation District
OCSD 15-27-13
TABLE 1
BOARD PROCEDURES AND ORGANIZATION
SUMMARY OF MOTIONS
A. PRIVILEGED MOTIONS
Kind of Second Vote
Motion Required Debatable Amendable Required Purpose
Adjourn Yes No No Majority To end the
meeting
To Take a Yes No No Majority To interrupt a
Recess meeting for a short
time or to provide
an intermission
Raise a No No No None To obtain action
Question of immediately in an
Privilege emergency
B. MAIN MOTION AND RELATED
SUBSIDIARY MOTIONS
Kind of Second Vote
Motion Required Debatable Amendable Required Purpose
Main Yes Yes Yes Majority To introduce new
Motion business
Amend Yes Yes Yes Majority To modify or alter
Main a motion
Motion
Substitute Yes Yes Yes Majority To replace the
Motion main motion
entirely
OCSD 15-27-14
Previous Yes No No Majority To close debate
Question on the main or
amended motion
immediately
Continue to Yes Yes Yes Majority To defer action
a Certain
Time
To Table Yes No No Majority To discontinue
consideration until
brought back by
vote of the Board
Take a Yes No No Majority To bring before
Motion the group a
from the motion previously
Table tabled
Limit or Yes No Yes Majority To limit or extend
Extend limits of debate
Limits of
Debate
Refer to a Yes Yes Yes Majority To place business
Committee in hands of a
Committee
Withdraw a No No No None To withdraw a
Motion motion before it is
voted on
Reconsider Yes Yes No Majority To secure a new
must be by a vote on a motion
Director who previously voted
voted for the upon
prevailing
side on the
original
motion
OCSD 15-27-15
C. INCIDENTAL RULES
NON-RANKING
Kind of Second Vote
Motion Required Debatable Amendable Required Purpose
Request to Yes No No Two-Thirds To facilitate
Suspend business
the Rules ordinarily contrary
to the rules of the
organization
Override Yes No No Majority To have Board
Order of majority rule on
the Chair the order
Point of No No No None To enforce the
Order rules of the
organization
OCSD 15-27-16
BOARD OF DIRECTORS Meeting Date TOBG.of Dir.
-- 12/141
AGENDA REPORT em Number Item Number
4
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Administrative Services
SUBJECT: PAYMENT AGREEMENT FOR CAPITAL FACILITIES CAPACITY
CHARGES FOR BAR BAKERSTM
GENERAL MANAGER'S RECOMMENDATION
Approve the payment agreement negotiated by the General Manager for the collection of
all charges and fees owed for capital facility capacity charges plus interest of 5.5% per
annum and administrative fees with Bar Bakers, LLC in a form approved by General
Counsel.
BACKGROUND
The Orange County Sanitation District (Sanitation District) Capital Facility Capacity
Charge (CFCC) is a one-time, non-discriminatory charge imposed at the time a building
or structure is newly connected to the Sanitation District's system, directly or indirectly, or
an existing structure or category of use is expanded or increased. Payment of CFCC's
are required when the building permit is issued.
Bar Bakersna is currently converting 40,960 square feet of warehouse in Los Alamitos to
a food processing facility and the CFCC amount owed is $174,612.48. The owner has
requested a payment plan. Per Ordinance No. OCSD-40, the Board of Directors may,
pursuant to Health & Safety Code Section 5474, approve an agreement with the property
owner for the payment of the applicable connection charge in installment payments over
a period not to exceed five (5) years, bearing an interest rate on the unpaid balance of
not to exceed ten percent (10%) per annum and that the charges and interest shall
constitute alien on the property. Resolution No. OCSD 11-04 specifies the interest rate.
RELEVANT STANDARDS
• Cost effective method to ensure collection of monies owed by customer
Exceptional Customer Service by resolving payment issue with customer
PROBLEM
The customer is currently unable to pay the full amount of the CFCC.
PROPOSED SOLUTION
Approve the payment agreement negotiated by the General Manager for the collection of
all charges and fees owed for capital facility capacity charges plus interest of 5.5% per
annum and administrative fees with Bar Bakers, LLC in a form approved by General
Counsel.
Page 1 of 2
TIMING CONCERNS
The deferred payment agreement should be executed as soon as possible to allow the
owner to continue construction and for immediate remittance of payments.
RAMIFICATIONS OF NOT TAKING ACTION
The customer would be required to pay the entire amount in full in order to proceed with
obtaining his building permit for construction of the facilities.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
N/A
CEQA
N/A
FINANCIAL CONSIDERATIONS
The payment agreement complies with Ordinance No. OCSD-40 and Resolution No.
OCSD 11-04.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.corn with the
complete agenda package:
• Payment Agreement— Bar Bakers, LLC
• Amortization Schedule —Appendix A
Page 2 of 2
DEFERRED PAYMENT AGREEMENT
THIS AGREEMENT, is entered into, to be effective December 14, 2016, by and
between Orange County Sanitation District ("District"), a county sanitation district duly
organized and existing pursuant to Section 4700 at. seq. of the Health & Safety Code of
the State of California and Bar Bakers, LLC.
RECITALS
A. District is a wastewater treatment agency, which owns and operates
wastewater treatment facilities which receive, treat and discharge, through an ocean
outfall, wastewater received from dischargers within its jurisdictional boundaries.
Pursuant to Ordinance OCSD-40, the District is to impose Capital Facilities Capacity
Charges when properties, either newly-connect to the District's system, or expand the
use of the property previously connected to the District. Revenues derived under the
provisions of this Ordinance will be used for the acquisition, construction, and
reconstruction of the wastewater collection, treatment and disposal facilities of the
District; to repay principal and interest on debt instruments; or to repay federal or state
loans for the construction and reconstruction of said sewerage facilities, together with
costs of administration and provisions for necessary reserves.
B. Bar Bakers, LLC, is currently requesting a building permit for 40,960
square feet of 10681 Calle Lee in Los Alamitos for a change in use from a warehouse to
a food processing facility. The Capital Facilities Capacity Charges due are $174,612.48.
C. Pursuant to Ordinance OCSD-40, upon application of any property owner
seeking to connect to the District's system, the Board of Directors of the District, in its
sole and absolute discretion and upon a finding of compelling need, may, pursuant to
1
the authority of California Health & Safety Code Section 5474, approve of an agreement
with the property owner for the payment of the applicable connection charge and/or
annexation fees in installment payments over a period of not to exceed five (5) years,
bearing an interest rate on the unpaid balance of not to exceed ten (10%) percent per
annum and that the charges and interest shall constitute a lien on the property.
G. The District and Bar Bakers, LLC, intend to provide additional time Bar
Bakers, LLC to pay to District the CFCC amount presently due to the District. The first
installment will be due on January 1, 2017 with the remaining installments paid monthly
on the 1s'of each month through December 1, 2021.
NOW, THEREFORE, in consideration of the facts recited above and the
conditions, covenants and promises set forth below, the District and Bar Bakers, LLC as
follows:
AGREEMENT
1. Customer shall make payments, including principal and interest at 5.5%
per Resolution No. OCSD 11-04, to the District, according to the payment schedule
located in appendix A.
2. If any payment described in Paragraph 1 herein is not received by the
District on or before the due date specified the entire balance then owing shall become
immediately due and payable and interest at the rate of ten percent (10%) per annum
shall accrue on any such unpaid balance from the date of acceleration until the date that
the balance due is fully paid to the District.
3. Bar Bakers, LLC acknowledges that the failure to pay any installment in
accordance with the schedule set forth in Paragraph 1 herein, may be deemed a breach
of this Agreement, thereby giving rise to all legal remedies available to District.
2
4. Should any litigation be commenced between the District and
Bar Bakers, LLC regarding enforcement of this Agreement, or the rights and any duties
of the parties in relation thereto, the prevailing party in such litigation shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for its
attorney fees and costs in the litigation which shall be determined by the court in such
litigation or in a separate action brought for that purpose.
5. Nothing in this Agreement shall affect Bar Bakers, LLC obligation to pay
current and/or future charges for use of District's sewerage system or Bar Bakers, LLC
obligation to comply with all other conditions and requirements of District Ordinances.
6. Nothing herein shall affect the District's right to enforce all requirements
and conditions of the District's Ordinance.
7. This Agreement is made only for the benefit of the parties hereto. It is not
intended that any right under this Agreement shall accrue to any third person.
3
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
Orange County Sanitation District
BY:
Gregory C. Sebourn, PLS
Board Chair
ATTEST:
Kelly A. Lore
Clerk of the Board
APPROVED AS TO FORM:
Bradley R. Hogin
General Counsel
Bar Bakers, LLC
By:
Harold Rothman, Owner
4
APPENDIX A
Due Administrative
Date Prinici al Interest Charge Total
1/1/2017 2,534.99 800.31 25.00 3,360.30
2/1/2017 2,546.61 788.69 25.00 3,360.30
3/1/2017 2,558.28 777.02 25.00 3,360.30
4/1/2017 2,570.01 765.29 25.00 3,360.30
5/1/2017 2,581.79 753.51 25.00 3,360.30
6/1/2017 2,593.62 741.68 25.00 3,360.30
7/1/2017 2,605.51 729.79 25.00 3,360.30
8/1/2017 2,617.45 717.85 25.00 3,360.30
9/1/2017 2,629.45 705.85 25.00 3,360.30
10/1/2017 2,641.50 693.80 25.00 3,360.30
11/1/2017 2,653.61 681.69 25.00 3,360.30
12/1/2017 2,665.77 669.53 25.00 3,360.30
1/1/2018 2,677.99 657.31 25.00 3,360.30
2/1/2018 2,690.26 645.04 25.00 3,360.30
3/1/2018 2,702.59 632.71 25.00 3,360.30
4/1/2018 2,714.98 620.32 25.00 3,360.30
5/1/2018 2,727.42 607.88 25.00 3,360.30
6/1/2018 2,739.92 595.38 25.00 3,360.30
7/1/2018 2,752.48 582.82 25.00 3,360.30
8/1/2018 2,765.10 570.20 25.00 3,360.30
9/1/2018 2,777.77 557.53 25.00 3,360.30
10/1/2018 2,790.50 544.80 25.00 3,360.30
11/1/2018 2,803.29 532.01 25.00 3,360.30
12/1/2018 2,816.14 519.16 25.00 3,360.30
1/1/2019 2,829.05 506.25 25.00 3,360.30
2/1/2019 2,842.01 493.29 25.00 3,360.30
3/1/2019 2,855.04 480.26 25.00 3,360.30
4/1/2019 2,868.13 467.18 25.00 3,360.30
5/1/2019 2,881.27 454.03 25.00 3,360.30
6/1/2019 2,894.48 440.82 25.00 3,360.30
7/1/2019 2,907.74 427.56 25.00 3,360.30
8/1/2019 2,921.07 414.23 25.00 3,360.30
9/1/2019 2,934.46 400.84 25.00 3,360.30
10/1/2019 2,947.91 387.39 25.00 3,360.30
11/1/2019 2,961.42 373.88 25.00 3,360.30
12/1/2019 2,974.99 360.31 25.00 3,360.30
1/1/2020 2,988.63 346.67 25.00 3,360.30
2/1/2020 3,002.33 332.98 25.00 3,360.30
3/1/2020 3,016.09 319.22 25.00 3,360.30
4/1/2020 3,029.91 305.39 25.00 3,360.30
5/1/2020 3,043.80 291.50 25.00 3,360.30
6/1/2020 3,057.75 277.55 25.00 3,360.30
7/1/2020 3,071.76 263.54 25.00 3,360.30
8/1/2020 3,085.84 249.46 25.00 3,360.30
9/1/2020 3,099.98 235.32 25.00 3,360.30
10/1/2020 3,114.19 221.11 25.00 3,360.30
11/1/2020 3,128.47 206.83 25.00 3,360.30
12/1/2020 3,142.81 192.50 25.00 3,360.30
1/1/2021 3,157.21 178.09 25.00 3,360.30
2/1/2021 3,171.68 163.62 25.00 3,360.30
3/1/2021 3,186.22 149.08 25.00 3,360.30
APPENDIX A
Continued
Due Administrative
Date Prinici al Interest Charge Total
4/1/2021 3,200.82 134.48 25.00 3,360.30
5/1/2021 3,215.49 119.81 25.00 3,360.30
6/1/2021 3,230.23 105.07 25.00 3,360.30
7/1/2021 3,245.03 90.27 25.00 3,360.30
8/1/2021 3,259.91 75.39 25.00 3,360.30
9/1/2021 3,274.85 60.45 25.00 3,360.30
10/1/2021 3,289.86 45.44 25.00 3,360.30
11/1/2021 3,304.94 30.36 25.00 3,360.30
12/1/2021 3,320.08 1522 2500 3,360.30
Total 174 612 48 25 505 60 1,590_.OQ 201,618.08
BOARD OF DIRECTORS Meeting Date TO12/1Bd.Of4/16 Dir.
--
AGENDA REPORT ItemNumber IemNumber
s
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF
NOVEMBER 2016
GENERAL MANAGER'S RECOMMENDATION
Receive and file the report of the Investment Transactions for the month of
November 2016.
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 November 30, 2016.
RELEVANT STANDARDS
• CA Government Code Section 53607
PRIOR COMMITTEE/BOARD ACTIONS
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:
• Report of the Investment Transactions for the month ended November 30, 2016
Page 1 of 1
Orange County Sanitation District Consolidated Transaction Ledger
Account 410283 10/31/16 Thing 11/30/16
Thansaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss
ACQUISITIONS
Purchase 11/01/2016 261908107 25,883,801.44 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 25,883,801.44 0.00 25,883,801.44 0.00
Purchase 11/01/2016 261908107 28,525.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 28,525.00 0.00 28,525.00 0.00
Purchase 11/022016 261908107 608.92 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 608.92 0.00 608.92 0.00
Purchase 11/022016 261908107 1,107.64 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 1,107.64 0.00 1,107.64 0.00
Purchase 11/04/2016 261908107 10,122.61 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 10,122.61 0.00 10,122.61 0.00
Purchase 11/06/2016 261908107 5,250.00 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 5,250.00 0.00 5,250.00 0.00
Purchase 11/07/2016 261908107 1,000,000.00 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 1,000,000.00 0.00 1,000,000.00 0.00
Purchase 11/082016 261908107 1,851.65 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 1,851.65 0.00 1,851.65 0.00
Purchase 11/082016 261908107 10,500.00 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 10,500.00 0.00 10,500.00 0.00
Purchase 11/10/2016 261908107 65,567.36 Dreyfus Trsy/Agcy,Cash Management 521 1.000 0.21 % 65,567.36 0.00 65,567.36 0.00
Purchase 11/10/2016 45950KCJ7 2,500,000.00 International Finance Corp Note 97.664 1.64% 2,441,600.00 8,593.75 2,450,193.75 0.00
I A 25%Due 7/202021
Purchase 11/15/2016 261908107 31,945.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 31,945.00 0.00 31,945.00 0.00
Purchase 11/15/2016 261908107 37,816.88 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 37,816.88 0.00 37,816.88 0.00
Purchase 11/15/2016 261908107 7,137,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 7,137,000.00 0.00 7,137,000.00 0.00
Purchase 11/15/2016 261908107 3,657.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,657.00 0.00 3,657.00 0.00
Purchase 11/15/2016 261908107 2,706.83 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,706.83 0.00 2,706.83 0.00
Purchase 11/15/2016 261908107 1,859.13 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,859.13 0.00 1,859.13 0.00
Purchase 11/15/2016 261908107 2,742.67 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,742.67 0.00 2,742.67 0.00
Purchase 11/15/2016 261908107 2,096.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,096.58 0.00 2,096.58 0.00
Purchase 11/15/2016 261908107 2,198.03 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,198.03 0.00 2,198.03 0.00
Purchase 11/15/2016 261908107 23.76 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 23.76 0.00 23.76 0.00
Purchase 11/15/2016 261908107 288,105.04 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 288,105.04 0.00 288,105.04 0.00
Purchase 11/15/2016 261908107 200,959.08 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 200,959.08 0.00 200,959.08 0.00
Purchase 11/15/2016 261908107 172,863.74 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 172,863.74 0.00 172,863.74 0.00
Purchase 11/15/2016 261908107 254,270.73 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 254,270.73 0.00 254,270.73 0.00
Purchase 11/16/2016 261908107 126,067.04 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 126,067.04 0.00 126,067.04 0.00
Purchase 11/16/2016 261908107 26,250.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 26,250.00 0.00 26,250.00 0.00
Purchase 11/16/2016 261908107 1,060.82 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,060.82 0.00 1,060.82 0.00
Purchase 11/16/2016 912828TU 3,000,000.00 US Treasury Note 97.368 1.69% 2,921,025.68 4,357.83 2,925,383.51 0.00
1.125%Due 9/302021
Chandler Asset Management-CONFIDENTIAL Execution Time:12/52016 3:13:37 PM
Orange County Sanitation District Consolidated Transaction Ledger
1V/ Account#10283 10/31/16 Thlu 11/30/16
Thareaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss
ACQUISITIONS
Purchase 11/18/2016 261908107 5,000,000.00 Dreyfus Trey/Agcy Cash Management 521 1.000 0.21 % 5,OODp00.00 0.00 5,000,000.00 0.00
Purchase 11/18/2016 261908107 99,906.29 Dreyfus Trey/Agcy Cash Management 521 1.000 0.21 % 99,906.29 0.00 99,906.29 0.00
Purchase 11/18Q016 261908107 256,184.70 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 256,184.70 0.00 256,184.70 0.00
Purchase 11/20/2016 261908107 56,250.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 56,250.00 0.00 56,250.00 0.00
Purchase 11/21Q016 261908107 247.65 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 247.65 0.00 247.65 0.00
Purchase 11/21Q016 261908107 296.61 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 296.61 0.00 296.61 0.00
Purchase 11/21Q016 261908107 589.92 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 589.92 0.00 589.92 0.00
Purchase 11/21Q016 261908107 76.64 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 76.64 0.00 76.64 0.00
Purchase 11/21Q016 261908107 1,057.50 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,057.50 0.00 1,057.50 0.00
Purchase 11/21Q016 261908107 243,856.25 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 243,856.25 0.00 243,856.25 0.00
Purchase 11/25Q016 261908107 3.188.25 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,188.25 0.00 3,188.25 0.00
Purchase 11/25Q016 261908107 169.76 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 169.76 0.00 169.76 0.00
Purchase 11/25Q016 261908107 314.32 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 314.32 0.00 314.32 0.00
Purchase 11/25Q016 261908107 4,215.46 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,215.46 0.00 4,215.46 0.00
Purchase 11/25/2016 261908107 1,661.85 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,661.85 0.00 1,661.85 0.00
Purchase 11/25Q016 261908107 604.68 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 604.68 0.00 604.68 0.00
Purchase 11/25Q016 261908107 18,830.64 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 18,830.64 0.00 18,830.64 0.00
Purchase 11/25Q016 261908107 8,984.26 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 8,984.26 0.00 8,984.26 0.00
Purchase 11/25Q016 261908107 3,905.80 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,905.80 0.00 3,905.80 0.00
Purchase 11/25Q016 261908107 269.87 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 269.87 0.00 269.87 0.00
Purchase 11/25Q016 261908107 11,510.31 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 11,510.31 0.00 11,510.31 0.00
Purchase 11/25Q016 261908107 955.06 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 955.06 0.00 955.06 0.00
Purchase 11/25Q016 261908107 1,279.84 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,279.84 0.00 1,279.84 0.00
Purchase 11/25Q016 261908107 10,404.35 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 10,404.35 0.00 10,404.35 0.00
Purchase 11/25Q016 261908107 866.40 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 866.40 0.00 866.40 0.00
Purchase 11/29/2016 261908107 7,036.64 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 7,036.64 0.00 7,036.64 0.00
Purchase 11/30/2016 261908107 112,500.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 112,500.00 0.00 112,500.00 0.00
Purchase 11/30/2016 313589BAD 3,000,000.00 FNMA Discount Note 99.937 0.41 % 2,998,110.00 0.00 2,998,110.00 0.00
0.41%Due 1/25/2017
Chandler Asset Management-CONFIDENTIAL Execution Time:12/52016 3:13:37 PM
C." Orange County Sanitation District Consolidated Transaction Ledger
Account#10283 10/31/16 Thru 11/30/16
Transaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss
ACQUISITIONS
Purchase 11/30/2016 912796KE8 2,000,000.00 US Treasury Bill 99.944 0.36% 1,998,880.58 0.00 1,998,880.58 0.00
0,35%Due 1/26/2017
Subtotal 51,644,120.00 51,503,736.26 12,951.58 51,516,687.84 0.00
TOTAL ACQUISITIONS 51,644,120.00 51,503,736.26 12,951.58 51,516,687.84 0.00
DISPOSITIONS
Sale 11/01/2016 313379FW4 2,500,000.00 FHLB Note 100.258 0.57% 2,506,450.00 9,861.11 2,516,311.11 2,743,96
1%Due 6/9/2017
Sale 11/01/2016 3135GOZG1 5,000,000.00 FNMA Note 101.964 1.05% 5,098,200.00 11,909.72 5,110,109.72 85,220.51
1.75%Due 9/12/2019
Sale 11/01Q016 912828G20 5,000,000.00 US Treasury Note 100.152 0.73% 5,007,600.44 20,210.60 5,027,811.04 16,718.13
0.875%Due 11/15/2017
Sale 11/01/2016 912828G46 3,000,000.00 US Treasury Note 100.019 0.26% 3,000,575.89 6,311.48 3,006,887.37 852.92
0.5%Due 11/30/2016
Sale 11/01/2016 91282BW85 5,000,000.00 US Treasury Note 101.730 0.97% 5,086,506.69 27,377.72 5,113,884.41 90,735.70
1.625%Due 6/30/2019
Sale 11/01Q016 912828M6 5,000,000.00 US Treasury Note 101.765 0.97% 5,088,264.50 20,533.29 5,108,797.79 81,411.34
1.625%Due 7/31/2019
Sale 11/10/2016 313379FW4 2,500,000.00 FHLB Note 100.211 0.64% 2,505,275.00 10,486.11 2,515,761.11 1,720.57
1%Due 6/9/2017
Sale 11/16/2016 91282BW85 3,000,000.00 US Treasury Note 101.101 1.20% 3,033,036.83 18,413.72 3,051,450.55 35,535.04
1.625%Due 6130/2019
Sale 11/30/2016 261908107 4,996,990.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,996,990.58 0.00 4,996,990.58 0.00
Subtotal 35,996,990.58 36,322,899.93 125,103.75 36,448,003.68 314,938.17
Paydmn 11/04/2016 62888UAA8 9,827.60 NCUA Guaranteed Note CM02010-R2Due 100.000 9,827.60 295.01 10,122.61 0.00
11/6/2017
Paydmn 11/15/2016 161571HH0 0.00 Chase CHAIT Pool#2016-A7 100.000 0.00 3,657.00 3,657.00 0.00
1.06%Due 9/16/2019
Paydmn 11/15/2016 3133TCE95 2,078.00 FHLMC FSPC E3A 100.000 2,078.00 120.03 2,198.03 0.00
2.892%Due 8/15/2032
Paydmn 11/15/2016 31348SWZ3 18.66 FHLMC FH 786064 100.000 18.66 5.10 23.76 0.00
2.262%Due 1/1/2028
Paydmn 11/15/2016 438140AC2 0.00 Honda Auto Receivables 2016-2 A3 100.000 0.00 2,096.58 2,096.58 0.00
1.39%Due 4/15/2020
Chandler Asset Management-CONFIDENTIAL Execution Tme:12/52016 3:13:37 PM
C." Orange County Sanitation District Consolidated Transaction Ledger
Account#10283 10/31/16 Third 11/30/16
Transaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss
DISPOSITIONS
Paydown 11/15/2016 477877AD6 285,65402 John Deere Owner Trust 2014-B A3 100.000 285,654.02 2,451.02 288,105.04 000
1 07%Due 11/15/2018
Paydown 11/15/2016 4778BMAC4 0.00 John Deere Owner Trust 201&A A3 100.000 0.00 2,742.67 2,742.67 0.00
1.36%Due 4/15/2020
Paydown 11/152016 47788NAB4 0.00 John Deere Owner Trust 2016-13 A2 100.000 0.00 2,706.83 2,706.83 0.00
1.09%Due 2/15/2019
Paydown 11/152016 65478WAB1 0.00 Nissan Auto Receivables Owner 2016-C 100.000 0.00 1,859.13 1,859.13 0.00
A2A
1.07%Due 5/15/2019
Paydown 111IM016 89231 MAC9 200,482.31 Toyota Auto Receivables Owner 2014-A 100.000 200,482.31 476.77 200,959.08 0.00
0.67%Due 1 211 5/2 01 7
Paydown 1111SQ016 89231TAB6 172,176A7 Toyota Auto Receivables Owner 2015-C 100.000 172,176.47 687.27 172,863.74 0.00
0.92%Due 2/1512018
Paydown 11/15/2016 89236WAC2 251,116S9 Toyota Auto Receivables Owner 2015-A 100.000 251,116.69 3,154.04 254,270.73 0.00
1.12%Due 2/15/2019
Paydown 11/16/2016 3837H4NX9 1.031.38 GNMA P.I#2000-9 100.000 1,031.38 29.44 1,060.82 0.00
9.5%Due 2/16/2030
Paydown 11/18/2016 43814GAC4 99,438S3 Honda Auto Receivables 20142 A3 100.000 99,438.63 467.66 99,906.29 0.00
0.77%Due 3/1912018
Paydown 11/18/2016 43814NAB1 254,062.87 Honda Auto Receivables 2016-1 A2 100.000 254,062.87 2,121.83 256,1 B4.70 0.00
1.01%Due 6/18/2018
Paydown 11/21/2016 36225CAZ9 204.45 GNMA P.I#G280023 100.000 204.45 43.20 247.65 0.00
2.816%Due 1220/2026
Paydown 11/212016 36225CC20 243.15 GNMA P.I#G280088 100.000 243.15 53.46 296.61 0.00
2.817%Due 6/20/2027
Paydown 11/212016 36225CN28 440.74 GNMA Pool#G280408 100.000 440.74 149.18 589.92 0.00
2.691%Due 5/20/2030
Paydown 11/212016 36225CNM4 57.49 GNMA P.I#G280395 100.000 57.49 19.15 76.64 0.00
2.877%Due 4/202030
Paydown 11/212016 36225DCB8 898.71 GNMA P.I#G280965 100.000 898.71 158.79 1,057.50 0.00
2.31%Due 7/2012034
Paydown 11/212016 43813JAC9 243,441.59 Honda Auto Receivables 20141 A3 100.000 243,441.59 414.66 243,856.25 0.00
0.67%Due 11/21/2017
Paydown 11/252016 03215PFN4 0.00 AMRESCO Residential Securities 1999-1 100.000 0.00 169.76 169.76 0.00
ADue 6/25/2029
Paydown 11/252016 31371NUC7 217.43 FNMA FN 257179 100.000 217.43 96.89 314.32 0.00
4.5%Due 4/1/2028
Paydown 11/252016 31376KT22 3,451.32 FNMA FN 357969 100.000 3,451.32 764.14 4,215.46 0.00
5%Due 9/1/2035
Chandler Asset Management-CONFIDENTIAL Execution Tme:12/52016 3:13:37 PM
C." Orange County Sanitation District Consolidated Transaction Ledger
Account#10283 10/31/16 Thor 11/30/16
Transaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gainfl-oss
DISPOSITIONS
Paytlown 11/25/2016 31381 PDA3 60474 FNMA FN 466397 100.000 604.74 1,057.11 1,661.85 0.00
3 4%Due 11/1/2020
Paytlown 11/25/2016 3138EG6F6 529.88 FNMA FN AL0869 100.000 529.88 74.80 604.68 0.00
4.5%Due 6/l/2029
Paytlown 11/25Q016 313MJY35 13,360.74 FHLMC FSPC T-582A 100.000 13,360.74 5,469.90 18,830.64 0.00
6.5%Due 9/25/2043
Paytlown 11/25Q016 31397QRED 8,625.94 FNMA FNR 2011-3 FA 100.000 8,625.94 358.32 8,984.26 0.00
0.832%Due 2/25/2041
Paytlown 11/25/2016 31398VJ98 0.00 FHLMC FHMS K006 A2 100.000 0.00 3,188.25 3,188.25 0.00
4.251%Due 1125=20
Paytlown 11/25Q016 31403DJZ3 3,160.87 FNMA POD1#745580 100.000 3,160.87 744.93 3,905.80 0.00
5%Due 6/1/2036
Paytlown 11/25Q016 31403GXF4 247.01 FNMA PODI#FN 748678 100.000 247.01 22.86 269.87 0.00
5%Due 10/1/2033
Paytlown 11/25/2016 31406PQYB 10,251.77 FNMA P.I#FN 815971 100.000 10,251.77 1,258.54 11,510.31 0.00
5%Due 3/1/2035
Paytlown 11/25Q016 31406XW75 594.80 FNMA PODI#FN 823358 100.000 594.80 360.26 955.06 0.00
2.875%Due 21112035
Paytlown 11/25Q016 31407BXH7 1,142.84 FNMA PODI#FN 826080 100.000 1,142.84 137.00 1,279.84 0.00
5%Due 7/1/2035
Paytlown 11/25/2016 3141OF4V4 8,920.78 FNMA Pool#FN 888336 100.000 8,920.78 1,483.57 10,404.35 0.00
5%Due 7/l/2036
Paytlown 11/25/2016 31417YAY3 751.50 FNMA PODI#FN MA0022 100.000 751.50 114.90 866.40 0.00
4.5%Due 4/1/2029
Paytlown 11/29/2016 31396X3Q5 7,014.87 FNMA FNR 2007-114 A6Due 10/27/2037 100.000 7,014.87 21.77 7,036.64 0.00
Subtotal 1,580,047.25 1,580,047.25 39,031.82 1,619,079.07 0.00
Maturity 11/07/2016 30229AL72 1,000,000.00 Exxon Mobil Discount CP 99.988 1,000,000.00 0.00 1,000,000.00 0.00
0.4%Due 119/2016
Maturity, 11/15/2016 3135GOES8 4,137,000.00 FNMA Note 100.000 4,137,000.00 0.00 4,137,000.00 0.00
1.375%Due 11/15/2016
Maturity, 11/15/2016 912828WF3 3,000,000.00 US Treasury Note 100.000 3,000,000.00 0.00 3,000,000.00 0.00
0.625%Due 11/15/2016
Maturty, 11/18Y2016 89233GLJ3 5,000,000.00 Toyota Motor Credit Discount CP 99.565 5,000,000.00 0.00 5,000,000.00 0.00
0.86%Due 11/18/2016
Subtotal 13,137,000.00 13 137,000 00 0.00 13,137,000.00 0.00
Security 11/01/2016 261908107 31,000,000.00 Dreyfus Tray/Agey Cash Management 521 1.000 31,000,000.00 0.00 31,000,000.00 0.00
Withdrawal
Chandler Asset Management-CONFIDENTIAL Execution Tme:lV52016 3:13:37 PM
C/" Orange County Sanitation District Consolidated Transaction Ledger
Account#10283 10/31/16 Thru 11/30/16
Transaction Settlement Acq/Disp Interest
Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss
DISPOSITIONS
Security 11/30/2016 261908107 493.32 Dreyfus Tmy/Agcy Cash Management 521 1.000 493.32 0.00 493.32 0.00
Withdrawal
Subtotal 31,000,493.32 31,000,493.32 0.00 31,000,493.32 0.00
TOTAL DISPOSITIONS 81,714,531.15 82,040,440.50 164,135.57 82,204,576.07 314,938.17
OTHER TRANSACTIONS
Interest 11/01/2016 64971M5E8 1,400,000.00 New York NV TE-REV 0.000 28,525.00 0.00 28,525.00 000
4.075%Due 11/1/2020
Interest 11/06/2016 037833AM2 1,000,000.00 Apple Inc Note 0.000 5,250.00 0.00 5,250.00 0.00
1.05%Due 5/5/2017
Interest 11/08/2016 06050TLX8 600,000.00 Bank of America Note 0.000 1,851.65 0.00 1,851.65 0.00
1.302%Due 518/2017
Interest 11/08/2016 94974BFD7 1,000,000.00 Wells Fargo Cary Note 0.000 10,500.00 0.00 10,500.00 0.00
2.1%Due 5/8/2017
Interest 11/15/2016 3135GOESB 4,137,000.00 FNMA Note 0.000 28,441.88 0.00 28,441.88 0.00
1.375%Due 11/15/2016
Interest 11/15/2016 912828G20 5,000,000.00 US Treasury Note 0.000 21,875.00 0.00 21,875.00 0.00
0.875%Due 11/15/2017
Interest 11/15/2016 912828WF3 3,000,000.00 US Treasury Note 0.000 9,375.00 0.00 9,375.00 0.00
0.625%Due 11/15/2016
Interest 11/15/2016 913366EJ5 400,000.00 Univ of California Rgts Mad TE-REV 0.000 10,070.00 0.00 10,070.00 0.00
5.035%Due 5/15/2021
Interest 11/16/2016 166764BG4 2,500,000.00 Chevron Cory Callable Note Cont 4/15/2021 0.000 26,250.00 0.00 26,250.00 0.00
2.1%Due 5/16/2021
Interest 11/20/2016 747525AD5 5,000,000.00 Oualcomm Inc Note 0.000 56,250.00 0.00 56,250.00 0.00
2.25%Due 5/20/2020
Interest 11/30/2016 3135GOF73 7,500,000.00 FNMA Note 0.000 56,250.00 0.00 56,250.00 0.00
1.5%Due 11/30/2020
Interest 11/30/2016 912828G61 7,500,000.00 US Treasury Note 0.000 56,250.00 0.00 56,250.00 0.00
1.5%Due 11/30/2019
Subtotal 39,037,000.00 310,888.53 0.00 310,888.53 0.00
Dividend 11/0212016 261908107 609,162.37 Dreyfus Trsy/Agcy Cash Management 521 0.000 608.92 0.00 608.92 0.00
Chmdler Ae &Management-CONFIDENTIAL Execution Time a V52016 3:13:37 PM
�/" Orange County Sanitation District Consolidated Transaction Ledger
Account#10283 10/31/16 Thor 11/30/16
Transaction Settlement Acq/Disp Interest
Type Date CUSIP Gmantity Security Description Price Yield Amount PurlSold Total Amount Gaind-oss
OTHER TRANSACTIONS
Dividend 11/02/2016 261908107 230,517.75 Dreyfus Tmy/Agcy Cash Management 521 0.000 1,107.64 0.00 1,107.64 0.00
Subtotal 839,680.12 1,716.56 0.00 1,716.56 0.00
TOTAL OTHER TRANSACTIONS 39,876,680.12 312,605.09 0.00 312,605.09 0.00
Chords,Asset Management-CONFIDENTIAL Execution Trne:1V52016 3:13:37 GM
ITEM NO. 6
MINUTES OF THE
OPERATIONS COMMITTEE
Orange County Sanitation District
Wednesday, November 2, 2016, 5:00 p.m.
A regular meeting of the Operations Committee was called to order by Committee
Chair Withers on Wednesday, November 2, 2016 at 5:00 p.m. in the Administration
Building.
Director Murphy led the Flag Salute.
A quorum was declared present, as follows:
COMMITTEE MEMBERS PRESENT: STAFF PRESENT:
John Withers, Chair Jim Herberg, General Manager
David Shawver, Vice-Chair Bob Ghirelli, Assistant General Manager
Tom Beamish Celia Chandler, Director of Human Resources
Ellery Deaton Rob Thompson, Director of Engineering
Steve Jones Ed Torres, Director of Operations and Maintenance
Robert Kiley Lorenzo Tyner, Director of Finance &
Richard Murphy Administrative Services
Steve Nagel Tina Knapp, Deputy Clerk of the Board
Fred Smith Eddie Baker
Michelle Steel Mike Dorman
Chad Wanke Mark Esquer
Mariellen Yarc Dean Fisher
Greg Sebourn, Board Vice-Chair Alfredo Garcia
John Nielsen, Board Chair Rebecca Long
Mark Manzo
COMMITTEE MEMBERS ABSENT: Kathy Millea
None. Jeff Mohr
Victoria Pilko
Paula Zeller
OTHERS PRESENT:
Brad Hogin, General Counsel
Michael Beverage, Alternate Director YLWD
Dan Bunce, Brown and Caldwell
Bob Ooten, Alternate Director CMSD
PUBLIC COMMENTS:
None.
REPORT OF COMMITTEE CHAIR:
Committee Chair Withers did not provide a report.
11/0212016 Operations Committee Minutes Page 1 of 4
REPORT OF GENERAL MANAGER:
General Manager Jim Herberg did not provide a report.
CONSENT CALENDAR:
1. APPROVAL OF MINUTES (Clerk of the Board)
MOVED SECONDED and DULY CARRIED TO: Approve Minutes of the
October 5, 2016 Operations Committee Meeting.
AYES: Beamish, Kiley, Murphy, Nielsen, F. Smith, Sebourn,
Shawver, Wanke , Withers, and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Deaton, Jones, Nagel, and Steel
2. QUARTERLY ODOR COMPLAINT REPORT (Ed Torres)
MOVED SECONDED and DULY CARRIED TO: Receive and file the Fiscal Year
2016/17 First Quarter Odor Complaint Summary.
AYES: Beamish, Kiley, Murphy, Nielsen, F. Smith, Sebourn,
Shawver, Wanks , Withers, and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Deaton, Jones, Nagel, and Steel
3. CENGEN HOT WATER PIPE BRACING AT PLANT 1, PROJECT NO. FE15-09
(Rob Thompson)
MOVED SECONDED and DULY CARRIED TO:
A. Approve a Task Order with Dudek, FE15-00-01-02, to provide engineering
design services for the CenGen Hot Water Pipe Bracing at Plant 1, Project
No. FE15-09, for an amount not to exceed $146,516; and
B. Approve a contingency in the amount of$29,303 (20%).
AYES: Beamish, Kiley, Murphy, Nielsen, F. Smith, Sebourn,
Shawver, Wanke , Withers, and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Deaton, Jones, Nagel, and Steel
11/02/2016 Operations Commluee Minutes Page 2 of 4
4. DOIG DRIVE PROPERTY LEASE EXTENSION (Lorenzo Tyner)
MOVED SECONDED. and DULY CARRIED TO: Recommend to the Board of
Directors to: Approve the Second Amendment to the Doig Property Lease,to enter
into an eight (8) month lease extension of the Orange County Sanitation District's
real property at 7311 Doig Drive, Garden Grove, in a form approved by General
Counsel.
AYES: Beamish, Kiley, Murphy, Nielsen, F. Smith, Sebourn,
Shawver, Wanke , Withers, and Yarc
NOES: None
ABSTENTIONS: None
ABSENT: Deaton, Jones, Nagel, and Steel
Director Nagel arrived at 5:05 p.m.; Director Deaton arrived at 5:07 p.m.; Director Jones
arrived at 5:10 p.m.
NON-CONSENT CALENDAR:
5. OCEAN OUTFALL SYSTEM REHABILITATION, PROJECT NO. J-117
(Rob Thompson)
Director of Engineering Rob Thompson introduced Engineering Manager Mike
Dorman who provided an informative PowerPoint presentation containing an
overview of the project and outlining the advantages of doing this work as two
projects as opposed to three, which will allow for ease of sequencing and more
room for construction, and the positive modifications being made to the electrical
system. Staff responded to questions from the Committee clarifying costs,
indicating that the costs identified in this project for the Plant Water Pump Station
($15,200,000) are costs previously approved by the Board of Directors for Project
No. P2-122, which are being moved to this project, and will be reimbursed by the
Orange County Water District.
MOVED SECONDED and DULY CARRIED TO: Recommend to the Board of
Directors to:
A. Approve a budget increase of $28,517,000 for Ocean Outfall System
Rehabilitation, Project No. J-117, for a total budget amount of$91,000,000;
and
B. Approve a contingency increase of $2,372,305 (35%) to the Professional
Design Services Agreement with Brown and Caldwell for Ocean Outfall
System Rehabilitation, Project No. J-117, for a total contingency of
$3,050,106 (45%).
AYES: Beamish, Deaton, Jones, Kiley, Murphy, Nagel, Nielsen,
F. Smith, Sebourn, Shawver, Wanks , Withers, and Yarc
NOES: None
11/02/2016 Operations Committee Minutes Page 3 of 4
ABSTENTIONS: None
ABSENT: Steel
Director Steel arrived at 5:15 p.m.
INFORMATION ITEMS:
6. ORANGE COUNTY SANITATION DISTRICT TREATMENT PLANT OVERVIEW
(Ed Torres)
Director of Operations and Maintenance Ed Torres introduced Operations
Supervisor Eddie Baker who provided an informative PowerPoint presentation on
the Sanitation District's treatment plant operations, including an overview of the
2015-16 treatment plant operating expenses, future flows for the Groundwater
Replenishment System, and maintenance efforts.
7 NPOES PERMIT RENEWAL UPDATE E (JiFR !` I
This item was pulled from the agenda and will be rescheduled to a future date to
be determined.
DEPARTMENT HEAD REPORTS:
None.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS
IF ANY:
None,
ADJOURNMENT
Committee Chair Withers declared the meeting adjourned at 5:28 p.m. to the next
scheduled meeting of Wednesday, December 7, 2016 at 5:00 p.m.
Submitted by,
Tina Knapp
Knapp
Deputy Clerk of the Board
11/0212016 Operations Committee Minutes Page 4 of 4
MINUTES OF THE
LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE
Orange County Sanitation District
Tuesday, November 8, 2016 at 8:00 a.m.
A regular meeting of the Legislative and Public Affairs Committee was called to order
by Chair Nielsen on Tuesday, November 8, 2016 at 8:05 a.m. in the Administration
Building of the Orange County Sanitation District.
Vice-Chair Sebourn led the pledge of allegiance.
A quorum was declared present, as follows:
COMMITTEE MEMBERS PRESENT: STAFF PRESENT:
John Nielsen, Board Chair Jim Herberg, General Manager
Greg Sebourn, Board Vice-Chair Bob Ghirelli, Assistant General Manager
Robert Kiley, Director Jim Colston, Director of Environmental
Peter Kim, Director Services
Lucille Kring, Director Rob Thompson, Director of Engineering
John Withers, Director Lorenzo Tyner, Director of Finance &
Administrative Services
COMMITTEE MEMBERS ABSENT: Tina Knapp, Deputy Clerk of the Board
Tom Beamish, Director Jennifer Cabral
Daisy Covarrubias
Alfredo Garcia
Rebecca Long
Mark Manzo
OTHERS PRESENT:
Brad Hogin, General Counsel
Diana Coronado, Association of California
Cities - Orange County
Eric O'Donnell, Townsend Public Affairs
Eric Sapirstein, ENS Resources (via
Teleconference)
Heather Stratman, Association of California
Cities - Orange County
Cori Williams, Townsend Public Affairs
PUBLIC COMMENTS:
None.
11/0a/2016 Legislative and Public Affairs Committee Minutes Page 1 of4
REPORTS: The Committee Chair and the General Manager may present verbal reports on
miscellaneous matters of general interest to the Committee Members. These reports are for information
only and require no action by the Committee.
General Manager Jim Herberg reported on an emergency incident to which the fire
department responded yesterday, indicating that no one was injured and repairs are
underway.
CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted,
by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar
for separate discussion will be considered in the regular order of business.
1. APPROVAL OF MINUTES (Clerk of the Board)
MOVED. SECONDED and DULY CARRIED TO: Approve minutes for the
regular Legislative and Public Affairs Committee meeting held on
October 10, 2016.
AYES: Kiley, Kim, Kring, Nielsen, Sebourn, and Withers
NOES: None
ABSTENTIONS: None
ABSENT: Beamish
NON-CONSENT CALENDAR:
None.
INFORMATION ITEMS:
2. ASSOCIATION OF CALIFORNIA CITIES -ORANGE COUNTY (ACC-OC)
PRESENTATION (Rebecca Long)
Senior Public Affairs Specialist Rebecca Long introduced Heather Stratman from
the Association of California Cities - Orange County (ACC-OC). Ms. Stratman
provided a PowerPoint presentation, which reviewed the mission statement of
ACC-OC, governance and membership of the organization, significant issues
addressed by the organization in 2016, the organization's agenda and priorities
for 2017, ACC-OC's commitment to collaboration with its stakeholder groups,
and strengthening the partnership between ACC-OC and the Orange County
Sanitation District.
3. LEGISLATIVE AFFAIRS UPDATE (Rebecca Long)
Cori Williams, Townsend Public Affairs (TPA), provided an update on the end of
session legislative activities in Sacramento, especially the Governor's veto rate;
11/0a/2016 Legislative and Public Affairs Committee Minutes Page 2 of 4
election contests that will possibly affect the structure of the legislature; and an
update on the status of the legislative calendar, contingent upon Proposition 54,
which is anticipated to be released this week. Eric O'Donnell, TPA, provided an
update on the Little Hoover Commission's recent meeting regarding climate
change and how special districts are adapting to it, how special districts are
funding these changes, what is needed from the State, and what special districts
foresee as future issues.
Eric Sapirstein, ENS Resources, provided a general update on federal legislative
activity including the appropriations process; Water Resources Development Act
(WRDA) legislation; and the Energy Policy Modernization Act (S. 2012),
including drought and WaterSense provisions.
Senior Public Affairs Specialist Rebecca Long reported that staff is in the process
on developing a public relations and marketing plan for the bottling of recycled
water (AB 2022) and determining what might be used as the container for the
bottled water. Ms. Long also reported that response to the Sanitation District's
AquaCritox grant application is still pending. Ms. Long responded to a question
from the Committee regarding what types of containers are being considered for
bottling the recycled water. Director Kiley provided the name of a contact at
Yorba Linda Water District who has been coordinating the bottling of water for
that agency.
Principal Public Affairs Specialist Jennifer Cabral indicated that contracts with
TPA and ENS will be renewed for the coming year, pursuant to the current
contract, and a Request for Proposal will be released next year as the current
contract will be expiring at that time.
Ms. Cabral indicated that the presentation by ACC-OC today, much like the
presentation from the California Association of Sanitation Agencies last month
and additional prior discussions and presentations, is in preparation for the
Committee review of the Legislative Plan in December.
Mr. Herberg reported that an educational leadership symposium for Orange
County elected officials is in the early stages of development and he will bring
more details to the Board in the near future.
Director Kiley indicated that this might be his last meeting subject to the results
of the recall vote in his jurisdiction and thanked the Committee for the opportunity
to serve. Chair Nielsen indicated that this meeting is his last Legislative
Committee meeting and offered his appreciation for the work of the Committee.
4. PUBLIC AFFAIRS UPDATE (Jennifer Cabral)
Ms. Cabral did not provide a report.
11/0a/2016 Legislative and Public Attains Committee Minutes Page 3 of 4
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA
ITEMS, IF ANY:
None.
ADJOURNMENT:
Chair Nielsen declared the meeting adjourned at 8:45 a.m. to the next Legislative and
Public Affairs Committee Meeting, Wednesday, December 14, 2016 at 4:30 p.m.
Submitted by:
Tina Knapp
Deputy Clerk of the Board
11/Oa/2016 Legislative and Public Affairs Committee Minutes Page 4 af4
OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir.
12/07/16 12/14/16
AGENDA REPORT ItemNumber Item Number
z 7
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Ed Torres, Director of Operations and Maintenance
SUBJECT: POWER PRODUCTION CONSULTING SERVICES, SPECIFICATION
NO. CS-2016-777BD
GENERAL MANAGER'S RECOMMENDATION
A. Approve a Professional Consultant Services Agreement with AECOM for Power
Production Consulting Services, Specification No. CS 2016-777BD, for an amount
not to exceed $191,691; and
B. Approve a contingency of$19,169 (10%).
BACKGROUND
Orange County Sanitation District's (Sanitation District) Central Power Generation
System (CenGen) provides important services to the Sanitation District's mission for
resource recovery by utilizing digester gas for power production, heat, and steam
generation. CenGen contributes to our mission of protecting the environment by reducing
vented or flared digester gas and providing additional power reliability to our critical
processes.
In February 2015, organizational changes were made in the Operations and Maintenance
Department to increase effectiveness by incorporating the Power Plant Operators (PPO)
team into the treatment operations team. This reorganization aligned PPO work
schedules to match the 24/7 operator schedules, aligned business practices, enhanced
supervision, and increased collaborative team work.
RELEVANT STANDARDS
• Maintain a culture of improving efficiency
• Protection of Orange County Sanitation District assets
• Highly qualified, well trained, motivated, and diverse workforce
PROBLEM
Reorganizing the PPO's from the Maintenance Division into the Operations Division has
provided several advantages, such as providing 24/7 supervisor availability for PPO staff,
standardization of work practices between Operators and PPO's, and increased access
Page 1 of 4
to training for PPO's. There were also some new and existing challenges, however,which
staff would like to address, including:
1. Need for thorough training for Operations Supervisors in certain areas of CenGen;
2. Deficiencies in the maintenance database that identify CenGen assets, and clarity
in the separation of operations and maintenance tasks; and
3. Staffing issues including succession planning for future Operations Supervisors
that will assume responsibility for CenGen, limited integration of CenGen
operations with the wastewater treatment operations, and limited flexibility in
scheduling PPO time off.
PROPOSED SOLUTION
The scope of work in the proposed Professional Consultant Services Agreement (PCSA)
includes tasks that will address the challenges identified in the reorganization. Based on
the scope of work in the PCSA, the consultant shall:
1. Review existing Standard Operating Procedures and provide technical and safety
training to the Operations Supervisors in the management of CenGen.
2. Review existing maintenance database, identify deficiencies, clarify operations
and maintenance tasks, and provide solutions to gaps identified in the preventive
maintenance of CenGen assets.
3. Conduct a feasibility study to evaluate the advantages and disadvantages of
incorporating CenGen into a process area to be jointly operated by Operators and
PPOs, which may address the challenges addressed above in item #3 of the
problem statement.
TIMING CONCERNS
The ramifications below will present greater risk the longer they are not addressed.
RAMIFICATIONS OF NOT TAKING ACTION
Effectiveness of the reorganization will be incomplete. The issue regarding lack of
training to supervisors will remain, the CenGen maintenance database will take longer to
be reviewed for completeness, and the succession planning and scheduling challenges
will remain.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
A Request for Proposal (RFP), which describes the Consultant's Scope of Work, was
prepared by staff and reviewed by representatives from bargaining groups. The RFP was
advertised on May 2, 2016. Proposals were received on June 21, 2016 from two firms:
Page 2 of 4
AECOM and Jensen Hughes. A staff Evaluation Committee consisting of five
representatives from the Operations and Maintenance Department reviewed and ranked
each of the proposals in accordance with the evaluation process set forth in Sanitation
District Ordinance No. OCSD47. The proposals were evaluated according to: (1)firm's
qualifications and experience, (2)staffing and project organization, (3)work plan, (4)cost,
and (5) interview and presentation.
The Evaluation Committee reviewed the proposals and met with the highest ranked firm
to clarify comments from bargaining groups and further evaluate the firm's qualifications.
Pursuant to the results of the interview, the Evaluation Committee selected AECOM as
the top-ranked firm as shown in Table 1.
TABLE 1
PROPOSAL EVALUATION
Consultant Evaluator AECOM Jensen
Hughes
Reviewer A 1 2
Reviewer B 1 2
Reviewer C 1 2
Reviewer D 1 2
Reviewer E 1 2
Overall Ranking 1 2
Proposal Fee $196,922 -
Negotiated Fee Proposal $191,691 -
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
PCSA to AECOM.
CEQA
N/A
FINANCIAL CONSIDERATIONS
This complies with the authority levels in the Sanitation District's Purchasing Ordinance
No. OCSD47. Budget for Power Production Consulting Services is included in the Fiscal
Year 2016-17 budget(Line item: Professional and Contractual Services, Section 6, Pages
84 and 88).
Date of Approval Contract Amount Continaencv
12/14/2016 $191,691.00 $19,169.00 (10%)
Page 3 of 4
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
Professional Consultant Services Agreement
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PROFESSIONAL CONSULTANT SERVICES AGREEMENT
Power Production Consulting Services
Specification No. CS-2016.777BD
THIS AGREEMENTis made and entered into as of the date fully executed below,by and between
Orange County Sanitation District, with a principal place of business at 10844 Ellis Avenue,
Fountain Valley, CA 92708-7018 (hereinafter referred to as"OCSD")and AECOM with a principal
place of business at 999 W. Town R Country Road, Orange, CA 92868(hereinafter referred to as
"Consultant") collectively referred to as the "Parties".
WITNESSETH
WHEREAS, based on Consultant's expertise and experience, OCSD wishes to temporarily
engage Consultant to provide training to OCSD staff and supervision to operate the Can Gen at
Plant 1 and 2 and integrate power plant operators (PPO) and plant operators into one job family
("Services") as described in Exhibit"A"; and
WHEREAS, Consultant submitted its proposal, dated June 21, 2016; and
WHEREAS, on December 14, 2016,the Board of Directors of OCSD, by minute order, authorized
execution of this Agreement between OCSD and Consultant; and
WHEREAS, OCSD has chosen Consultant to conduct Services in accordance with Ordinance
No. OCSD-47; and
NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged
between the Parties, the Parties mutually agree as follows:
1. Introduction
1.1 This Agreement and all exhibits hereto (called the "Agreement") is made by OCSD and
Consultant. The Terms and Conditions herein exclusively govern the purchase of Services as
described in the Exhibit"A".
1.2 Exhibits to this Agreement are incorporated by reference and made a part of this
Agreement as though fully set forth at length herein. Exhibits to this Agreement are as follows in
order of precedence:
Exhibit"A" Scope of Work
Exhibit"B" Cost Proposal Form
Exhibit "C" Acknowledgement of Insurance Requirements (conformed 10.20.16)
Exhibit U' OCSD Safety Standards
1.3 In the event of any conflict or inconsistency between the provisions of this Agreement and
any of the provisions of the exhibits hereto, the provisions of this Agreement shall in all respects
govern and control.
1.4 This Agreement may not be modified, changed or supplemented, nor may any obligations
hereunder be waived or extensions of time for performance granted, except by written instrument
signed by both Parties.
1.5 The various headings in this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any Paragraph or provision hereof.
Orange County Sanitation District 1 of 10 Specification No. CS-2016-777BD
1.6 The term "days", when used in the Agreement, shall mean calendar days, unless
otherwise noted as workdays.
1.7 The term "workday". Workdays are defined as all days that are not Saturday, Sunday, or
legally observed holidays. Meetings with OCSD staff shall be scheduled from Monday through
Thursday between the hours of 8AM and 4PM (exception is operations staff who maintain plant
operations 24/7 and work a rotated 12-hour shift) and shall conform to OCSD work schedules.
OCSD review periods shall not include legally observed holidays.
1.8 OCSD holidays (non-working days) are as follows: New Year's Day, Lincoln's Birthday,
Presidents' Day Monday, Memorial Day Monday, Independence Day, Labor Day Monday,
Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve, and Christmas Day.
1.9 Work Hours: The work required under this Agreement may include normal Business
hours, evenings, and weekends. OCSD will not pay travel time.
1.10 Work Hours: Refer to Exhibit"A".
1.11 Consultant shall provide OCSD with all required premiums and/or overtime work at no
charge beyond the price provided below or in Exhibit"B".
1.12 Except as expressly provided otherwise, OCSD accepts no liability for any expenses,
losses,or action incurred or undertaken by Consultant as a result of work performed in anticipation
of purchases of said services by OCSD.
2. Scope of Work Subject to the terms of this Agreement, Consultant shall perform the
Services identified in Exhibit "A". Consultant warrants that all of its Services shall be performed
in a competent, professional and satisfactory manner.
3. Modifications to 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. A review of the time required for the modification will be made by OCSD
and Consultant and the Agreement period adjusted accordingly.
4. Compensation Compensation to be paid by OCSD to Consultant for the Services
provided under this Agreement shall be a total amount not to exceed One Hundred Ninety One
Thousand Six Hundred Ninety and 69/100 Dollars ($191,690.69).
5. California Department of Industrial Relations (DIR) Registration and Record of
Wages
5.1 To the extent Consultant's employees and/or Subconsultants who will perform work 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.
5.2 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 1771.4(a)(3). Penalties for non-compliance with
the requirements of Section 1776 may be deducted from progress payments per Section 1776.
Orange County Sanitation District 2 of 10 Specification No. CS-2016-777BD
5.3 Pursuant to Labor Code Section 1776, the Consultant and Subconsultants shall furnish a
copy of all certified payroll records to OCSD and/or general public upon request, provided the
public request is made through OCSD, the Division of Apprenticeship Standards or the Division
of Labor Enforcement of the Department of Industrial Relations.
5.4 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. Payment and invoicing
6.1 Consultant shall be paid monthly by OCSD upon approval of invoices by OCSD Project
Manager, or designee, for Services rendered as outlined in Exhibit "A". OCSD, at its sole
discretion, shall be the determining party as to whether the Services have been satisfactorily
completed.
6.2 Invoices shall be emailed by Consultant to OCSD Accounts Payable at
APStaffCrDOCSD.com and"INVOICE"and the Purchase Order number and"Specification No. CS-
2016-777BD" shall be referenced in the subject line.
7. Audit Rights Consultant agrees that, during the term of this Agreement and for a period
of three (3)years after its termination, OCSD shall have access to and the right to examine any
directly pertinent books, documents, and records of Consultant relating to the invoices submitted
by Consultant pursuant to this Agreement.
8. Commencement and Term The Services to be provided by Consultant under this
Agreement shall commence on the effective date of the Notice to Proceed (Effective Date), and
be completed within three hundred sixty five (365)calendar days.
9. Renewals— Not Used
10. Extensions The Term of this Agreement may be extended only by written instrument
signed by both Parties.
11. Performance Time is of the essence in the performance of the provisions hereof.
12. Termination
12.1 OCSD reserves the right to terminate this Agreement for its convenience, with or without
cause, in whole or in part, at any time, by written notice from OCSD. Upon receipt of a termination
notice, Consultant shall immediately discontinue all work under this Agreement(unless the notice
directs otherwise). OCSD shall thereafter, within thirty (30) days, pay Consultant for work
performed (cost and fee) to the date of termination. Consultant expressly waives any claim to
receive anticipated profits to be earned during the uncompleted portion of this Agreement. Such
notice of termination shall terminate this Agreement and release OCSD from any further fee, cost
or claim hereunder by Consultant other than for work performed to the date of termination.
12.2 OCSD reserves the right to terminate this Agreement immediately upon OCSD's
determination that Consultant is not meeting specification requirements, if the level of service is
inadequate, or any other default of this Agreement.
12.3 OCSD may also immediately cancel for default of this Agreement in whole or in part by
written notice to Consultant:
Orange County Sanitation District 3 of 10 Specification No. CS-2016-777BD
• if Consultant becomes insolvent or files a petition under the Bankruptcy Act; or
• if Consultant sells its business; or
• if Consultant breaches any of the terms of this Agreement; or
• if total amount of compensation exceeds the amount authorized under this Agreement.
12.4 All OCSD property in the possession or control of Consultant shall be returned by
Consultant to OCSD on demand, or at the termination of this Agreement, whichever occurs first.
13. Indemnification and Hold Harmless Provision Consultant shall assume all
responsibility for damages to property and/or injuries to persons,including accidental death,which
may arise out of or be caused by Consultant's services under this Agreement, or by its
subcontractor or by anyone directly or indirectly employed by Consultant, and whether such
damage or injury shall accrue or be discovered before or after the termination of the Agreement.
Except as to the sole active negligence of or willful misconduct of OCSD, Consultant shall
indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers,
agents and employees, from and against any and all claims, liabilities, damages or expenses of
any nature, including attorneys'fees: (a)for injury to or death of any person or damage to property
or interference with the use of property, arising out of or in connection with Consultant's
performance under the Agreement, and/or (b) on account of use of any copyrighted or
uncopyrighted material, composition, or process, or any patented or unpatented invention, article
or appliance, furnished or used under the Agreement, and/or (c) on account of any goods and
services provided under this Agreement. This indemnification provision shall apply to any acts or
omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of
Consultant of or anyone employed by or working under Consultant. To the maximum extent
permitted by law, Consultant's duty to defend shall apply whether or not such claims, allegations,
lawsuits, or proceedings have merit or are mantissa, or which involve claims or allegations that
any of the parties to be defended were actively, passively, or concurrently negligent, or which
otherwise assert that the parties to be defended are responsible, in whole or in part,for any loss,
damage, or injury. Consultant agrees to provide this defense immediately upon written notice
from OCSD, and with well qualified, adequately insured, and experienced legal counsel
acceptable to OCSD. This section shall survive the expiration or early termination of the
Agreement.
14. Insurance Consultant and all subcontractors shall purchase and maintain,throughout the
life of this Agreement and any periods of warranty or extensions, insurance in amounts equal to
the requirements set forth in the signed Acknowledgement of Insurance Requirements, Exhibit
"C". Consultant shall not commence work under this Agreement until all required insurance is
obtained in a form acceptable to OCSD, nor shall Consultant allow any subcontractor to
commence service pursuant to a subcontract until all insurance required of the subcontractor has
been obtained. Failure to maintain required insurance coverage shall result in termination of this
Agreement.
15. Key Personnel Personnel, as provided in Exhibit"B", are considered "key" to the work
under this Agreement and will be available for the term of the Agreement. No person designated
as key under this Agreement shall be removed or replaced without prior written consent of OCSD.
If OCSD asks Consultant to remove a person designated as key under this Agreement,
Consultant agrees to do so immediately regardless of the reason, or the lack of reason, for
OCSD's request. Consultant shall assign only competent personnel to perform services pursuant
to this Agreement.
Orange County Sanitation District 4 of 10 Specification No. CS-2016-777BD
16. Confidentiality and Non-Disclosure
16.1 Consultant acknowledges that in performing the Services hereunder, OCSD may have to
disclose to Consultant orally and in writing certain confidential information that OCSD considers
proprietary and has developed at great expense and effort.
16.2 Consultant agrees to maintain in confidence and not disclose to any person, firm, or
corporation, without OCSD's prior written consent, any trade secret or confidential information,
knowledge or data relating to the products, process, or operation of OCSD.
16.3 Consultant further agrees to maintain in confidence and not to disclose to any person,
firm, or corporation any data, information, technology, or material developed or obtained by
Consultant during the term of this Agreement.
16.4 Consultant agrees as follows:
• To use the Confidential Information only for the purposes described herein; to not
reproduce the Confidential Information; to hold in confidence and protect the Confidential
Information from dissemination to and use by anyone not a party to this Agreement; and
to not use the Confidential Information to benefit itself or others.
• To restrict access to the Confidential Information to its Consultant or personnel of
Consultant who (1) have a need to have such access and (2) have been advised of and
have agreed in writing to treat such information in accordance with the terms of this
Agreement.
• To return all Confidential Information in Consultant's possession upon termination of this
Agreement or upon OCSD's request, whichever occurs first.
• To hold in confidence information and materials, if any, developed pursuant to the
Services hereunder.
16.5 The provisions of this section shall survive termination or expiration of this Agreement and
shall continue for so long as the material remains confidential.
17. Ownership of Documents All drawings, specifications, reports, records, documents,
memoranda, correspondence, computations, and other materials prepared by Service Provider,
its employees, subcontractors, and agents in the performance of this Agreement shall be the
property of OCSD and shall be promptly delivered to OCSD upon request of the Project Manager
or upon the termination of this Agreement, and Service Provider shall have no claim for further
employment or additional compensation as a result of the exercise by OCSD of its full rights of
ownership of the documents and materials hereunder. Any use of such completed documents
for other projects and/or use of incomplete documents without specific written authorization by
the Service Provider will be at OCSD's sole risk and without liability to Service Provider. Service
Provider shall ensure that all its subcontractors shall provide for assignment to OCSD of any
documents or materials prepared by them.
18. Ownership of Intellectual Property
18.1 Consultant agrees that all designs, plans, reports, specifications, drawings, schematics,
prototypes, models, inventions,and all other information and items made during the course of this
Agreement and arising from the Services (hereinafter referred to as "New Developments") shall
be and are assigned to OCSD as its sole and exclusive property.
Orange County Sanitation District 5 of 10 Specification No. CS-2016-777BD
18.2 Consultant agrees to promptly disclose to OCSD all such New Developments. Upon
OCSD's request, Consultant agrees to assist OCSD, at OCSD's expense, to obtain patents or
copyrights for such New Developments, including the disclosure of all pertinent information and
data with respect thereto, the execution of all applications, specifications, assignments, and all
other instruments and papers which OCSD shall deem necessary to apply for and to assign or
convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in
such New Developments. Consultant agrees to obtain or has obtained written assurances from
its employees and contract personnel of their agreement to the terms hereof with regard to New
Developments and Confidential Information.
18.3 Consultant warrants that Consultant has good title to any New Developments, and the
right to assign New Developments to OCSD free of any proprietary rights of any other party or
any other encumbrance whatever.
18.4 The originals of all computations, drawings, designs, graphics, studies, reports, manuals,
photographs, videotapes, data, computer files, and other documents prepared or caused to be
prepared by Consultant or its subcontractors in connection with these Services shall be delivered
to and shall become the exclusive property of OCSD. OCSD may utilize these documents for
OCSD applications on other projects or extensions of this project, at its own risk.
19. No Solicitation of Employees Or Subcontractors
19.1 Consultant agrees that it shall not, during the term of this Agreement and for a period of
one (1) year immediately following termination of this Agreement, or any extension hereof, call
on, solicit, or take away any of the employees or subcontractors about whom Consultant became
aware as a result of Consultant's Services to OCSD.
19.2 Consultant acknowledges that OCSD's employees are critical to its business. Consultant
agrees not to employ or otherwise engage OCSD's employees or subcontractors during the term
of this Agreement and for a period of one(1)year following termination of this Agreement. Should
Consultant violate this provision, Consultant will pay OCSD fifty percent (50%) of the former
employee's annual salary which payment is in addition to OCSD's rights and remedies.
20. Independent Contractor Capaeity
20.1 The relationship of Consultant to OCSD is that of an independent contractor and nothing
herein shall be construed as creating an employment or agency relationship.
20.2 Consultant shall act independently and not as an officer or employee of OCSD. OCSD
assumes no liability for Consultant's action and performance, nor assumes responsibility for
taxes, funds, payments or other commitments, implied or expressed, by or for Consultant.
20.3 Consultant shall not be considered an agent of OCSD for any purpose whatsoever, nor
shall Consultant have the right to, and shall not, commit OCSD to any agreement, contract or
undertaking. Consultant shall not use OCSD's name in its promotional material or for any
advertising or publicity purposes without expressed written consent.
20.4 Consultant shall not be entitled to any benefits accorded to those individuals listed on
OCSD's payroll as regular employees including, without limitation, worker's compensation,
disability insurance, vacation, holiday or sick pay. Consultant shall be responsible for providing,
at Consultant's expense, disability,worker's compensation or other insurance as well as licenses
and permits usual or necessary for conducting the Services hereunder.
Orange County Sanitation District 6 of 10 Specification No. CS-2016-777BD
20.5 Consultant shall be obligated to pay any and all applicable local, state and federal payroll
and other taxes incurred as a result of fees hereunder. Consultant hereby indemnifies OCSD for
any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of
Consultant's breach of this provision.
20.6 Consultant shall not be eligible to join or participate in any benefit plans offered to those
individuals listed on OCSD's payroll as regular employees. Consultant shall remain ineligible for
such benefits or participation in such benefit plans even if a court later decides that OCSD
misclassified Consultant for tax purposes.
21. Licenses, Permits Consultant represents and warrants to OCSD that it has obtained all
licenses, permits, qualification and approvals of whatever nature that are legally required to
engage in this work. Any and all fees required by State, County, City and/or municipal laws,
codes and/or tariffs that pertain to work performed under the terms of this Agreement will be paid
by Consultant.
22. Consultant's Representations In the performance of duties under this Agreement,
Consultant shall adhere to the highest fiduciary standards, ethical practices and standards of care
and competence for their trade/profession. Consultant agrees to comply with all applicable
Federal, State and local laws and regulations.
23. Familiarity with Work By executing this Agreement, Consultant warrants that: 1) it has
investigated the work to be performed; 2) it has investigated the site of the work and is aware of
all conditions there; and 3) it understands the facilities, difficulties and restrictions of the work
under this Agreement. Should Consultant discover any latent or unknown conditions materially
differing from those inherent in the work or as represented by OCSD, it shall immediately inform
OCSD of this and shall not proceed, except at Consultant's risk, until written instructions are
received from OCSD.
24. Riaht to Review Services. Facilities. and Records
24.1 OCSD reserves the right to review any portion of the Services performed by Consultant
under this Agreement, and Consultant agrees to cooperate to the fullest extent possible.
24.2 Consultant shall furnish to OCSD such reports, statistical data, and other information
pertaining to Consultant's Services as shall be reasonably required by OCSD to carry out its rights
and responsibilities under its agreements with its bondholders or noteholders and any other
agreement relating to the development of the project(s) and in connection with the issuance of its
official statements and other prospectuses with respect to the offering, sale, and issuance of its
bonds and other obligations.
24.3 The right of OCSD to review or approve drawings, specifications, procedures, instructions,
reports,test results, calculations, schedules, or other data that are developed by Consultant shall
not relieve Consultant of any obligation set forth herein.
25. Force Majeure Neither party shall be liable for delays caused by accident, flood, acts of
God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said
party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force
Majeure condition may be rescheduled by mutual consent or may be eliminated from the
Agreement.
26. Severability If any section, subsection, or provision of this Agreement, or any agreement
or instrument contemplated hereby, or the application of such section, subsection, or provision is
Orange County Sanitation District 7 of 10 Specification No. CS-2016-777BD
held invalid, the remainder of this Agreement or instrument in the application of such section,
subsection or provision to persons or circumstances other than those to which it is held invalid,
shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate
the expectations of the Parties.
27. Waiver The waiver of either party of any breach or violation of, or default under, any
provision of this Agreement, shall not be deemed a continuing waiver by such party of any other
provision or of any subsequent breach or violation of this Agreement or default thereunder. Any
breach by Consultant to which OCSD does not object shall not operate as a waiver of OCSD's
rights to seek remedies available to it for any subsequent breach.
28. Remedies In addition to other remedies available in law or equity, if the Consultant fails
to make delivery of the goods or Services or repudiates its obligations under this Agreement, or
if OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD
may (1)cancel the Agreement; (2) recover whatever amount of the purchase price OCSD has
paid, and/or (3) "cover' by purchasing, or contracting to purchase, substitute goods or Services
for those due from Consultant. In the event OCSD elects to "cover' as described in (3), OCSD
shall be entitled to recover from Consultant as damages the difference between the cost of the
substitute goods or Services and the contract price, together with any incidental or consequential
damages.
29. Governina Law This Agreement shall be governed by and interpreted under the laws of
the State of California and the Parties submit to jurisdiction in Orange County, in the event any
action is brought in connection with this Agreement or the performance thereof.
30. Attornev's Fees If any action at law or inequity or if any proceeding in the form of an
Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be entitled.
31. Dispute Resolution
31.1 In the event of a dispute as to the construction or interpretation of this Agreement, or any
rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute
by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the
dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in
accordance with the Commercial Mediation Rules of the American Arbitration Agreement,through
the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of
Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute
resolution process.
31.2 In the event the Parties are unable to timely resolve the dispute through mediation, the
issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure,
Part 3, Title 9, Sections 1280 at seq. For such purpose, an agreed arbitrator shall be selected,
or in the absence of agreement, each party shall select an arbitrator, and those two arbitrators
shall select a third. Discovery may be conducted in connection with the arbitration proceeding
pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, orthree 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.
Orange County Sanitation District 8 of 10 Specification No. CS-2016-777BD
32. Damage to OCSD's Property Any OCSD property damaged by Consultant will be
subject to repair or replacement by Consultant at no cost to OCSD.
33. OCSD Safety and Human Resources Policies OCSD requires all contractors and
Consultants to follow and ensure their employees and all subcontractors follow all State and
Federal regulations as well as OCSD requirements while working at OCSD locations. If during
the course of a contract it is discovered that OCSD policies, safety manuals, or contracts do not
comply with State or Federal regulations then the Consultant is required to follow the most
stringent regulatory requirement at no cost to OCSD. Consultant and all their employees and
subcontractors, shall adhere to all applicable OCSD Safety and Human Resources Policies found
at: OCSD.com, "Doc Central" (bottom of page), under "Safety". OCSD's Safety Standards and
Human Resource Policies are hereby incorporated by reference as though fully set forth herein
in Exhibit"D".
In addition to the requirements stated above, Contractor shall adhere to the following OCSD
Safety requirements: SOP-102 PPE.
34. Freioht(F.O.B. Destination) Consultant assumes full responsibility for all transportation,
transportation scheduling, packing, handling, insurance, and other services associated with
delivery of all products deemed necessary under this Agreement.
35. Assignments Consultant shall not delegate any duties nor assign any rights under this
Agreement without the prior written consent of OCSD. Any such attempted delegation or
assignment shall be void.
36. Conflict of Interest and Reporting
36.1 Consultant shall at all times avoid conflict of interest or appearance of conflict of interest
in performance of this Agreement.
36.2 Consultant affirms that to the best of its knowledge there exists no actual or potential
conflict between Consultant's families, business or financial interest or its Services under this
Agreement, and in the event of change in either its private interests or Services under this
Agreement, it will raise with OCSD any question regarding possible conflict of interest which may
arise as a result of such change.
37. Third Party Rights Nothing in this Agreement shall be construed to give any rights or
benefits to anyone other than OCSD and Consultant.
38. Non-Liability of OCSD Officers and Emplovees No officer or employee of OCSD shall
be personally liable to Service Provider, or any successor-in-interest, in the event of any default
or breach by OCSD or for any amount which may become due to Service Provider or to its
successor, or for breach of any obligation of the terms of this Agreement.
39. Authority to Execute The persons executing this Agreement on behalf of the Parties
warrant that they are duly authorized to execute this Agreement and that by executing this
Agreement, the Parties are formally bound.
40. Read and Understood By signing this Agreement, Consultant represents that he has
read and understood the terms and conditions of the Agreement.
41. Entire Agreement This Agreement constitutes the entire agreement of the Parties and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings,
and negotiations between the Parties with respect to the subject matter hereof.
Orange County Sanitation District 9 of 10 Specification No. CS-2016-777BD
42. Notices All notices under this Agreement must be in writing. Written notice shall be
delivered by personal service or sent by registered or certified mail, postage prepaid, return
receipt requested, or by any other overnight delivery service which delivers to the noticed
destination and provides proof of delivery to the sender. Any facsimile notice must be followed
within three(3)days by written notice. Rejection or other refusal to accept or the inability to deliver
because of changed address for which no notice was given as provided hereunder shall be
deemed to be receipt of the notice, demand or request sent. All notices shall be effective when
first received at the following addresses:
OCSD: Michelle Hadaway
Senior Contracts Administrator
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, CA 92708-7018
Consultant: Jeffrey S. Berk, PE
AECOM
999 W. Town & County Rd.
Orange, CA 92868
Each party shall provide the other party written notice of any change in address as soon as
practicable.
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this
Contract to be signed by the duly authorized representatives.
ORANGE COUNTY SANITATION DISTRICT
Dated: By:
Chair, Board of Directors
Dated: By:
Clerk of the Board
Dated: By:
Contracts/Purchasing Manager
AECOM
Dated: By:
Print Name and Title of Officer
IRS Employer's I.D. Number
Orange County Sanitation District 10 of 10 Specification No. CS-2016-777BD
OPERATIONS COMMITTEE Meeting Date TOBd.of Dir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
3 8
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Ed Torres, Director of Operations and Maintenance
SUBJECT: CBS ARCSAFE REMOTE CIRCUIT BREAKER RACKING UNIT
GENERAL MANAGER'S RECOMMENDATION
A. Approve a sole source purchase with CBS Aresafe Inc. for the purchase of four
CBS Aresafe remote circuit breaker racking units (two per plant),for a total amount
not to exceed $139,920 delivered, plus tax; and
B. Approve a contingency of$6,996 (5%).
BACKGROUND
The electrical distribution system is the backbone of the electrical service to both Orange
County Sanitation District (Sanitation District) Plant Nos. 1 and 2 and is critical for their
operation. One of the greatest risks to the electrical service worker during the
maintenance of the system is the exposure to incident energy, namely an arc flash. This
potential risk of exposure is greatest when the worker is"racking in" or"racking out"circuit
breakers on energized equipment. New technologies remove the worker from the arc
flash hazard, which increases safety. One such technology is the remote circuit breaker
racking unit. The unit allows a circuit breaker to be `racked in" or "racked out" remotely
while the worker stands up to 50 feet away and clear of the arc flash hazard.
RELEVANT STANDARDS
• Protection of Orange County Sanitation District assets
• 24/7/365 treatment plant reliability
• Provide a safe and collegial workplace
PROBLEM
A potential risk of exposure to an arc flash exists for the electrical service worker while
inserting or removing circuit breakers from energized equipment.
PROPOSED SOLUTION
Reduce the risk of exposure by removing the electrical service worker from the arc flash
potential.
Page 1 of 2
TIMING CONCERNS
N/A
RAMIFICATIONS OF NOT TAKING ACTION
Increased risk of arc flash exposure for the electrical service worker.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
CBS Aresafe Inc. is the only manufacturer that provides optional cameras to view the
circuit breaker racking process from an operator, safe remote location and provides every
adaptor required for all circuit breakers currently in service at Sanitation District facilities.
These are critical features that make them uniquely qualified.
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 FY15/16 Budget Update — Capital
Equipment Budget Detail appendix (Line items: 870 — Plant 1 Maintenance, Two Circuit
Breaker Remote Racking Units - $81,500; and 880 — Plant 2 Maintenance, Two Circuit
Breaker Remote Racking Units - $81,500; on Page A-21). A 5% contingency has been
added to this purchase for unanticipated costs such as warranties, manuals, and other
such items/services.
Date of Aooroval Contract Amount Contingencv
12/14/2016 $ 139,920 $6,996 (5%)
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the
complete agenda package:
N/A
Page 2 of 2
OPERATIONS COMMITTEE MeetingDae TOBd.OfDir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
4 9
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Ed Torres, Director of Operations & Maintenance
SUBJECT: COOPERATIVE PROCUREMENT WITH STATE OF CALIFORNIA
UNDER WSCA-NASPO FOR FUEL CARD PROGRAM
GENERAL MANAGER'S RECOMMENDATION
A. Authorize the use of the State of California Department of General Services (DGS)
Participating Addendum No. 7-16-99-27 with U.S. Bank National Association dba
Voyager Fleet Systems under the State of Washington WSCA-NASPO
Commercial Card Solutions Contract Number 00612-Category 2 for the period
beginning February 1, 2017 through December 31, 2018 for a total not to exceed
$250,000, with four one-year renewal options.
B. Approve a $50,000 (20%) Contingency per year.
BACKGROUND
Approval of this action will provide for the Orange County Sanitation District (Sanitation
District)to continue participating in the State of California (State) fuel purchase program.
Under the State program, the Sanitation District purchases fuel from fueling stations at a
discounted rate. The Sanitation District has purchased its fuel for vehicles and the
Nerissa through the State program, which allows for decreased unit fuel cost resulting
from large fuel bids associated with the cooperative procurement. The State contract was
recently renewed.
This contract with Voyager Fleet Systems Inc. (a U.S. Bank subsidiary) provides for the
Sanitation District's fuel card program. The fuel card program issues every Sanitation
District vehicle a charge card to purchase unleaded gasoline or diesel fuel from local
fueling stations.
RELEVANT STANDARDS
• Ensure the public's money is wisely spent
• Efficiency efforts reduce the cost to provide the current service level or standard
PROBLEM
The State recently renewed its contract with Voyager Fleet Systems, so the Sanitation
District must renew its purchase order to continue participating in the fuel card program.
Page 1 of 3
PROPOSED SOLUTION
Approve participation in the State cooperative procurement.
TIMING CONCERNS
The Sanitation District is currently operating under a temporary purchase order to
continue utilizing the Voyager Program while awaiting Board action.
RAMIFICATIONS OF NOT TAKING ACTION
The Sanitation District would purchase fuel at increased prices and be required to find
other alternatives to fit this need.
PRIOR COMMITTEE/BOARD ACTIONS
February 2013 - Board approved a change order for an additional $80,000 to the existing
Purchase Order for a total amount not to exceed $355,440.
September 2009 - Board approved an initial purchase order with Voyager for a total
amount not to exceed $250,400.
ADDITIONAL INFORMATION
The contract was a multi-state WSCA/NASPO competitive procurement led by
Washington State on behalf of and in collaboration with Washington stakeholders and
several other participating states, including California. This partnership brings additional
savings to the participating states by combining purchasing power. Currently
Washington, California, Oregon, Nevada, Utah, Arizona, and Minnesota utilize this
contract and participated in the rebid process.
Voyager was the lowest bidder and an incumbent vendor for WSCA-NASPO and other
states, including California. This provided no interruption of services as current accounts
and cards will be automatically covered under the new contract.
A 20% contingency has been requested to allow for variances in fuel prices.
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has been budgeted in the FY16/17 operating budget. (Line item:
Supplies. Section 6, Pages 48 and 80).
Date of Aooroval Contract Amount Contlnaencv
12/14/2016 $250,000 $50,000 (20%)
Page 2 of 3
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
N/A
Page 3 of 3
OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
5 10
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Rob Thompson, Director of Engineering
SUBJECT: DOIG DRIVE BUILDING IMPROVEMENTS, PROJECT NO. 3-65
GENERAL MANAGER'S RECOMMENDATION
Establish a project for Doig Drive Building Improvements, Project No. 3-65, with a budget
of$2,436,000.
BACKGROUND
In 2005, the Orange County Sanitation District (Sanitation District) purchased the building
located at 7311 Doig Drive in Garden Grove to be used as a Collections Department field
office. However, as a result of local sewer transfers in the Cities of Costa Mesa, Newport
Beach, Orange, Tustin, and unincorporated areas of Orange County, it was later
determined that the new facility was no longer necessary and the building was declared
surplus property. A decision was made to lease the building out. The building is currently
under a lease with a manufacturing firm that guarantees extensions until 2022.
The building was constructed in 1978 per seismic codes less stringent than currently
required. A Seismic Risk Assessment was performed and structural reinforcements were
recommended to meet current seismic standards.
RELEVANT STANDARDS
• Protection of Sanitation District assets
PROBLEM
The building does not meet current seismic standards. In the event of an earthquake, the
building could be severely damaged.
PROPOSED SOLUTION
Establish a project with a budget in the amount of $2,436,000 for the design and
construction of seismic improvements for the Doig Drive Building.
TIMING CONCERNS
The building is at risk for structural damage due to an earthquake until the seismic
improvements are completed.
Page 1 of 3
RAMIFICATIONS OF NOT TAKING ACTION
The building may be subject to significant damage and subsequent repair costs during an
earthquake if seismic strengthening is not performed.
PRIOR COMMITTEE/BOARD ACTIONS
November 2016 -Approved the Second Amendment to the Doig Property Lease, to enter
into an eight (8) month lease extension of the Sanitation District's real property at 7311
Doig Drive, Garden Grove, in a form approved by General Counsel.
July 2016 - Board of Directors approved First Amendment to extend the lease by three
months.
December 2011 - Board of Directors authorized the lease at 7311 Doig Drive.
November 2010 - Board of Directors declared the property at 7311 Doig Drive as surplus
property.
ADDITIONAL INFORMATION
The project was initially created as Doig Drive Building Improvement, Project
No. FE15-13, under the Master Facilities Engineering Collections Budget with the
expectation that the engineering work could be completed under the $200,000 task order
limitation for the Master Contracts. During the project development phase, it was
determined that the design and construction services fees would exceed the $200,000
task order limitation. Therefore, Project No. FE15-13 will be cancelled and the work will
need to be completed under a Capital Improvement Project, Doig Drive Building
Improvements, Project No. 3-65.
The selection of a Consultant has been completed and negotiations are currently in
process. The Professional Design Services Agreement for Doig Drive Building
Improvements, Project No. 3-65, is planned to be included in the agenda for the
December Board Meeting.
CEQA
A Notice of Exemption will be filed after Board award of the Professional Design Services
Agreement.
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has not been budgeted. The funds will be allocated from the
Replacement, Rehabilitation and Refurbishment, in the cash flow projections, FY 2016-
17 and 2017-18, Section 4, Page 16, Item 14.
Page 2 of 3
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
N/A
DK:dm:gc
Page 3 of 3
OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
6 11
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Rob Thompson, Director of Engineering
SUBJECT: RETURN ACTIVATED SLUDGE PIPING REPLACEMENT AT
ACTIVATED SLUDGE PLANT 1, PROJECT NO. P1-129
GENERAL MANAGER'S RECOMMENDATION
Establish a project for Return Activated Sludge Piping Replacement at Activated Sludge
Plant 1, Project No. P1-129, with a budget of$3,300,000.
BACKGROUND
Activated Sludge, Plant 1, constructed in 1974, is one of the three biological treatment
processes at the Orange County Sanitation District (Sanitation District), Plant No. 1. The
facility includes 220 feet of 30-inch return activated sludge header piping required to
maintain full capacity and supply effluent to the Orange County Water District.
RELEVANT STANDARDS
Protection of Orange County Sanitation District assets
Provide a safe and collegial workplace
PROBLEM
The return activated sludge header piping system has had numerous corrosion-related
leaks resulting in process interruptions. Future leaks could be a safety issue and could
reduce the water supply to the Groundwater Replenishment System (GWRS).
PROPOSED SOLUTION
Replace the piping, which requires the establishment of a project with a budget in the
amount of $3,300,000 for the design and construction of the return activated sludge
header piping.
TIMING CONCERNS
The pipeline is in a tunnel system under pressure. A sudden pipeline rupture could
present a safety issue for Operations staff. The repairs could also lead to a short-term
loss of water availability to the GWRS.
Page 1 of 2
RAMIFICATIONS OF NOT TAKING ACTION
The pipeline failures have been isolated to the pump room; however, there are sections
of the header piping that are buried. Leaks that occur in the buried sections may be
undetected for longer durations and contaminate soil. Leak repairs could interrupt water
supply to the GWRS.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The project was initially created under the Master Facilities Engineering Collections
Budget with the expectation that the engineering work could be completed under the
$200,000 task order limitation for the Master Contracts. During the project development
phase, it was determined that the design and construction services fees would exceed
the $200,000 task order limitation; therefore, the Facilities Engineering Project will be
cancelled and the work is recommended to be completed under a Capital Improvement
Project, Return Activated Sludge Piping Replacement at Activated Sludge Plant No. 1,
Project No. P1-129.
CEQA
A Notice of Exemption will be filed after Board award of the project.
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has not been budgeted. The funds will be allocated from the
Replacement, Rehabilitation and Refurbishment in the cash flow projections, FY 2016-17
and 2017-18, Section 4, Page 16, Item 14.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
N/A
DK:dm:gc
Page 2 of 2
OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
7 12
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Ed Torres, Director of Operations and Maintenance
Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: UPDATE PRE-APPROVAL LIST FOR FREQUENTLY PROCURED SOLE
SOURCE MATERIALS AND SERVICES
GENERAL MANAGER'S RECOMMENDATION
A. Update authorization and set administrative controls for sole source procurement
required to maintain, service, or replace equipment currently in operation at
Orange County Sanitation District facilities where the parts and/or service can only
be provided by the Original Equipment Manufacturer (OEM) or their designated
representative, for purchases under$100,000, per purchase; and
B. Authorize the General Manager to ratify additions or deletions to the OEM list on
the General Manager's quarterly approved purchases agenda report.
The following equipment, parts, and services from the listed OEMs are pre-
approved as sole source items. The information below includes a general category
for the part/service, not the specific, existing sole source part/service.
• AANDERAA DATA INSTRUMENTS — Current meters
• ABB—Variable frequency drives, process controls
• ACME— Plant water strainers
• AGILENT TECHNOLOGIES — Liquid Chromatography Mass Spectrometer
• ALFA-LAVAL— Heat exchangers for digesters, centrifuges
• ALLEN BRADLEY— Process controls
• AMERON — Manhole Toppers
• AM-LINER® PVC— Sewer lining
• ARIZONA INSTRUMENT— Odor sensing equipment
• ASHBROOK (BELLMER/WINKLER)—Sludge belt filter presses
• BASLER— Electrical protective relays and regulators
• BEC — Building Electronics control system
• BENTLEY NEVADA— Gas compressor, Cen-Gen vibration monitoring
• BIO-MERIEUX— Bacterial identification system
• BOERGER— Process Pumps
• CHESTERTON — Mechanical seals for process equipment
• CSI/EMERSON — MSP vibrations
• DEZURIK WATER CONTROLS— Process valves
• EATON —Variable frequency drives for process pumps
Page 1 of 5
• EMERSON/ROSEMOUNT— Processequipment
• FOXBORO— Process equipment
• GOULD/ITT/YEOMANS — Process pumps
• HACH/AMERICAN SIGMA— Liquid samplers
• IPT— Limitorque services
• HIDROSTAL— Process pump motors
• LECO— GC Time of Flight mass spectrometer
• LIMITORQUE — Process valves
• MARLOW— Process pumps
• Modicon — PLC parts & service
• MOTOROLA, INC— Radios
• MOYNO— Process pumps
• MSA— Safety gas detection systems
• MUFFIN MONSTER— Sludge grinders
• PARKSON —Washer compactor
• PERKIN ELMER— ICP Mass Spectrometer
• PUTZMEISTER— Sludge transfer pumps
• ROBICON —Variable frequency drives for pumps
• ROTORK—Valve actuators
• SANCON 100 EPDXY/URETHANE— Coating system
• SCHWING —Sludgetransferpumps
• SEABIRD— Ocean Monitoring instrumentation
• SEEPEX— Process pumps
• SIEMENS —Variable frequency drives, process controls
• SIEMENS DEMAG DELAVALTURBOMACHINERY, INC. (SDDTI)—
Aeration blowers service
• SKALAR— BOD robotics
• SPARLINGINSTRUMENTS— Processflowmeters
• TELEDYNE — RD instrumentation
• THERMO ELECTRON — ICP Atomic Emission Spectrometer and GC
Mass spectrometer
• TITUS— Composite Manhole Covers
• VAREC— Process safety equipment
• VAUGHAN — Process Pumps
• WATERS CORPORATION — Liquid chromatograph mass spectrometer
• WESTFALIA— Centrifuge parts
• WEMCO — Process pumps
• XYLEM — Process pumps and ancillary parts
The following additional proprietary service providers are pre-approved:
• ARC WIRELESS— Paging services
• AUTODESK—AutoCAD drawing program
• CALIFORNIA RECREATION COMPANY—Vessel Nerissa slip fees
• CORNERSTONE — On Demand Talent Management System
Page 2 of 5
• EMPLOYEE BENEFITS SPECIALIST, INC— Benefits Enrollment System
• ENFOTECH — Pre-treatment Software
• ESRI — GIS software
• FIRST AMERICAN REAL ESTATE — Online Geographic-Realquest
Report
• GUIDANCE SOFTWARE, INC — E-Discovery Software
• GOLDEN BELL— Insect Control
• IBM MAXIMO — Enterprise Asset Management Software
• INNOVYZE, INC — Hydraulic Monitoring and CCTV Data
• L - 3 COMMUNICATIONS HOLDINGS, INC — Internet and Telecom
Provider
• LABWARE— Laboratory Information Management System
• MICROSOFT CORPORATION — Premier Support
• MOTOROLA, INC— Radios
• NEOGOV— Online Job Application System
• ORACLE —Oracle Database
• ORACLE /JD EDWARDS — Enterprise One Materials, Equipment&
Services
• PLANETBIDS, INC — Online vendor and bid Management
• RAND MCNALLY— Thomas Bros. Maps
• RBMWARE — Software and 2310 vibration analyzers
• STANDARD AUTOMATION dba WONDERWARE WEST— Historian for
SCADA system
• VISION INTERNET SOLUTIONS, INC— Internet Website
• WORKFORCE —Time Entry
BACKGROUND
Minute Order— Item 11(p) of 5/23/2007 approved a list of frequently procured materials
and services, and associated vendors, which qualified as sole source procurements to
serve as standing approval for future procurements of those items. This authorization
was only for purchases related to existing equipment and did not apply to purchase of
new equipment installed through a Capital Improvement Project. It was determined that
having a pre-approved list of these specific items and vendors would increase efficiency,
enhance transparency, and reduce repetitive creation and review of like requests. After
nearly ten years, the existing list has become outdated.
RELEVANT STANDARDS
• Maintain a culture of improving efficiency
• Efficiency efforts reduce the cost to provide the current service level or standard
PROBLEM
A subset of procurements meeting the sole source requirements of Ordinance No.
OCSD47 are frequently purchased to maintain assets and wastewater process
Page 3 of 5
equipment. Approving each individual procurement requires considerable staff time and
may delay procurement of necessary materials and services.
PROPOSED SOLUTION
Approve a list of materials and services and associated vendors which clearly meet sole
source criteria for procurements under $100,000 and a quarterly process to update the
list.
TIMING CONCERNS
The current list of pre-approved sole source items from 2007 is outdated. All
procurements not provided for on the existing list require separate sole source
procurement review and approval by staff.
RAMIFICATIONS OF NOT TAKING ACTION
Staff will continue to approve numerous and repetitive individual sole source requests,
which may delay procurements necessary for the maintenance of assets and operation
of processes.
PRIOR COMMITTEE/BOARD ACTIONS
May 2007 - Minute Order 11(p) approved a list of frequently procured materials and
services meeting the qualifications for sole source purchase.
ADDITIONAL INFORMATION
If approved, this request will streamline the sole source procurement process and reduce
staff hours spent on the process. The items listed for pre-approval meet the requirements
of sole source procurements as outlined in Section 1.07A of Ordinance No. OCSD-47.
This authority does not affect staffs ongoing obligations under Article 7 (Delegation of
Authority)of Ordinance No. OCSD-47, which requires reporting and/or approval of certain
agreements regardless of whether they are sole source agreements. Also, this authority
does not provide staff with authority to sole source new equipment delivered through a
Capital Improvement Project.
Items that are not included on the list will be submitted by staff via the existing sole source
approval process. For items qualifying as OEM equipment or services and otherwise
meeting sole source criteria, additions to the pre-approved list will be included on the
Administrative Committee quarterly report for General Manager approved purchases.
The Purchasing Division will review all orders exercised under this authority and ensure
only those within the approved aggregate threshold of $100,000, including all costs (tax,
freight, etc.), are processed. Additionally, the Purchasing Division will ensure an attempt
to competitively bid all approved OEM items/services takes place whenever possible.
Page 4 of 5
CEQA
N/A
BUDGET ) PURCHASING ORDINANCE COMPLIANCE
This request complies with authority levels of the Orange County Sanitation District's
Purchasing Ordinance.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.corn with the
complete agenda package:
N/A
Page 5 of 5
OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
8 13
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Rob Thompson, Director of Engineering
SUBJECT: PROJECT MANAGEMENT INFORMATION SYSTEM,
PROJECT NO. J-128
GENERAL MANAGER'S RECOMMENDATION
Establish a project for Project Management Information System, Project No. J-128, with
a budget of$4,000,000.
BACKGROUND
The Orange County Sanitation District (Sanitation District) has an approved capital
improvement program budget of$2.1 billion over the next ten years. Each of the projects
included in this program requires management of a wide range of data, records,
correspondence, and communication with consultants, contractors, stakeholders, and
regulatory agencies. Staff currently uses a variety of tools and applications residing on a
number of computer platforms to ensure that all work is done consistently with Sanitation
District policies and procedures, contractual obligations, and legal requirements are being
met.
Primavera Contract Manager is an application currently used to manage construction
contracts including change order management, contractor submittals, inspection reports,
requests for information, meeting minutes, and punch lists. This application, first
implemented in 1999, is no longer supported by the vendor, and thus can no longer be
updated to meet new requirements and procedures. This system also predates internet-
based applications that allow construction documents to be submitted, reviewed, and
processed electronically among Sanitation District staff, consultants, contractors,
subcontractors, and suppliers. Electronic processing allows quicker resolution of issues
and reduces the potential for delays and claims related to lost documentation.
In addition to construction contract management, software tools are now available in the
industry for design, permitting, and rights-of-way procedures.
RELEVANT STANDARDS
• Sound engineering and accounting practices, complying with local, state, and federal
laws
• Maintain a culture of improving efficiency
Page 1 of 3
PROBLEM
The Primavera Contract Manager software application currently used to manage
construction contracts is no longer supported and cannot continue to meet requirements.
In addition, a number of business processes involved in managing the capital
improvement program could be more efficiently and consistently performed using a
commercial off the shelf software system.
PROPOSED SOLUTION
Implement a new Project Management Information System to replace Primavera Contract
Manager and to serve additional business processes related to management of the
capital improvement program.
TIMING CONCERNS
Primavera Contract Manager is no longer supported by the vendor. With upgrades of
existing operating systems, hardware, and internet browsers, this software may cease to
function, which could severely impact staff's ability to manage and track construction
projects.
RAMIFICATIONS OF NOT TAKING ACTION
Failure of Primavera Contract Manager could severely impact staff's ability to manage
and track construction projects. In addition, an opportunity to improve performance of
other capital improvement program business processes would be lost.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
Staff is in the process of selecting a vendor for a Project Management Information
System, and anticipates requesting award of a contract in early 2017. Project costs will
include software licensing, application hosting, configuration, training, and staff time to
define and revise business processes, testing, rollout, and training.
CEQA
N/A
Page 2 of 3
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has not been budgeted. The funds will be allocated from the
Replacement, Rehabilitation and Refurbishment, in the cash Flow projections, FY 2016-
17 and 2017-18, Section 4, Page 16, Item 14.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
Presentation from 12/7/2016 Operations Committee Meeting
JM:dm:gc
Page 3 of 3
� � � •ram. 'a��>. _��
mi164
l"_ �� /i ' �. • r ..
Project Management Information System
Project J - 128
IN Dean Fisher
Operations Committee
December 7, 2016 -
l �
ty Project Information
;, ; • Engineering Projects generate
y 1,000 s of documents and
correspondence .
• Proper management of these
documents is vital .
• Effective communication across
entire team saves money and
t reduces liability.
• • Support
• MID CIP projects have totaled
over billion past 10 years
forecasted for $2 .4 billion in the
l I • The current CIP Budget is
I`-
i. next1 years
w ..
„.r
/� t
Problem
• OCSD has utilized Primavera Contract Manager
software application for 17 years
• Software is no longer supported by the vendor and
is at risk of ceasing to function .
Opportunity
• Web-based Project Management software solutions
have significantly improved over the last decade.
• OCSD can consolidate the variety of software tools
used for documents, reporting, and communication .
Resident Con3.
Resident
Engineer
tksign woiecc
t nginee operations/ Design PmjeR
Tradition ject Collaborative Web-Based Project
Maintenance Fneineer
.�111�i I��etnr Web- Based Collaboration
;',",-. ConwM1ants Inpettor
``-..' Can[mis Contractor Pmpc[
ConVals
Gulley u , Colenlons
Proposed Solution
Project Management Information System
• Effective and modern project management tools
• Web based, hosted by 3rd party
• Collaborative (Allows Staff, Consultants and
Contractors to have secured access)
• Competitive proposal including software,
configuration and training
Recommendation
Establish a project for the Project Management
Information System, Project J-128, with a budget of
$4,000,000.
Proposed project includes software licenses, hosting
services, implementation costs, and staff labor for
support and training.
Questions ?
e
r'
r -q
OPERATIONS COMMITTEE MeetingDae TOBd.OfDir.
12/07/16 12/14/16
AGENDA REPORT Item Item Number
9 14
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Ed Torres, Director of Operations and Maintenance
SUBJECT: OVERHAUL OF CENTRAL GENERATION ENGINES AT PLANT NOS. 1
AND 2, SPECIFICATION NO. S-2016-764BD
GENERAL MANAGER'S RECOMMENDATION
A. Approve a Service Contract to NRG Energy Services, LLC for the overhaul of
Central Generation Engines, Specification No. S-2016-76413D, for the period of
February 1, 2017 through January 31, 2018, for total amount not to exceed
$2,633,119 with four (4) one-year renewal options and;
B. Approve an annual contingency of$ 526,624 (20%)
BACKGROUND
Orange County Sanitation District (Sanitation District) operates eight Central Generation
engines, between both treatment plants, that meet approximately two-thirds of ourelectric
demand and the majority of our heating demand. Routine maintenance of the engines is
conducted by Sanitation District staff; however, overhauls, which are conducted at40,000
hour intervals with major overhauls conducted at 125,000 hours, are contracted due to
specialized service and equipment requirements.
RELEVANT STANDARDS
• Protection of Orange County Sanitation District assets
• Consider life-cycle costs in all decisions
• Use all practical and effective means for recovering energy
• 24/7/365 treatment plant reliability
PROBLEM
Central Generation engines have reached or exceeded 125,000 hours of service and
require major overhaul to bring the engines back to Original Equipment Manufacturer
specifications.
PROPOSED SOLUTION
Contract with NRG Energy Systems, LLC to perform 125,000-hour service major overall
of two Central Generation engines per year.
Page 1 of 2
TIMING CONCERNS
Timely major overhaul of the Central Generation engines is required to reduce the risk of
failure.
RAMIFICATIONS OF NOT TAKING ACTION
Increased use of the engines without conducting these majoroverhauls will lead to engine
failure resulting in costly repairs and increased purchased power costs, especially during
the summer peak power season.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
This Contract was competitively bid with three prospective bidders attending the
mandatory job walk with one bid being received by the Sanitation District. The information
on the one bidder is listed below. Staff recommends that NRG Energy Services, LLC be
awarded the Overhaul of Central Generation Engines Contract as the only responsive
and responsible bidder.
Bidder Total Cost
NRG ENERGY Services LLC $2,633,118.85
A 20% contingency is requested for this effort for two reasons. First, repairs will be
completed year-to-year on two different engine sizes (12-cylinder or 16-cylinder), which
vary slightly in cost; and second, due to the likelihood of potentially unforeseen repair
requirements that may be discovered during the overhaul(s).
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has been budgeted in the FY16-17 Operating Budget. (Line item:
Repairs and Maintenance, Section 6, Pages 92 and 96).
Date of Aooroval Contract Amount Contincencv
12/14/2016 $2,633,119 $526,624 (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 2 of 2
SERVICE CONTRACT
125K Hour Overhaul of Central Generation Engines
Specification No. 5-2016-764BD
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 92708-7018 (hereinafter referred to as "OCSD") and NRG Energy Services,
LLC with a principal place of business at 990 Peiffers Lane, Harrisburg, PA 17109-5907
(hereinafter referred to as"Contractor") collectively referred to as the "Parties".
WITNESSETH
WHEREAS, OCSD desires to retain the services of Contractor for the overhaul of the 125K Hour
Central Generation engines "Services";
WHEREAS, OCSD has chosen Contractor to conduct Services in accordance with Ordinance No.
OCSD-47; and
WHEREAS, Contractor submitted its Bid, dated, August 23, 2016; and
WHEREAS, on December 14,2016, 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 education and expertise
to accomplish such Services,
NOW THEREFORE, in consideration of the promises and mutual benefits exchanged between
the Parties, it is mutually agreed as follows:
1. Introduction
1.1 This Contract and all exhibits hereto (called the "Contract") is made by OCSD and
Contractor. The terms and conditions herein exclusively govern the purchase of Services as
described in Exhibit"A".
1.2 Exhibits to this Contract are incorporated by reference and made a part of this Contract
as though fully set forth at length herein. Exhibits to this Contract are as follows in order of
precedence:
Exhibit"A" Scope of Work(Including all Appendices) and Addendum No. 2
Exhibit"B" Bid Price Form— Per Addendum No. 2
Exhibit"C" Acknowledgement of Insurance Requirements
Exhibit"D" OCSD Safety Standards
Exhibit"K" Performance Bond
Exhibit"L" Payment Bond (Labor and Materials)
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.
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1.4 The provisions of this Contract may be amended or waived only by a writing executed by
authorized representatives of both Parties hereto.
1.5 The various headings in this Contract are inserted for convenience only and shall not affect
the meaning or interpretation of this Contract or any Paragraph or provision hereof.
1.6 The term "days', when used in the Contract, shall mean working days as specified in
Exhibit"A", 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 in Exhibit"B".
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 forthis project for the initial one year term shall not exceed
the total amount of Two Million Six Hundred Thirty Three Thousand One Hundred Eighteen and
85/00 Dollars ($2,633,118.85).
3. California Department of Industrial Relations (D/R)Reoistration and Record of
Wages
3.1 To the extent Contractor's employees and/or its Subcontractors who will perform Work
under this 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 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).
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4. Payments Payments shall be made upon approval by OCSD Project Manager or
designee, of invoices submitted for the milestones completed as follows:
• Payment per Engine: An initial total of forty percent (40%) of the compensation for each
engine individually shall be paid by OCSD to Contractor after the successful completion
of the following Scope of Work (Items 1-12) as described in Exhibit "A" and sign-off by
OCSD Project Manager, or designee:
1. Full engine disassembly
2. Cylinder heads rebuilt and machined as necessary
3. Camshafts complete
4. Intercoolers complete
5. Piston refurb complete with ring sets and new bushings
6. Master rods and articulating rods completely refurbished
7. All main bearing installed
8. All liners provided with the height rings installed and lower liner seals shipped to site
9. All new head stubs installed
10. All new waterjumpers shipped to site
11. Center frame gasket replaced and v-blocks installed
12. All major equipment cleaned
• Payment per Engine: An additional total of forty percent (40%) of the compensation for
each engine individually shall be paid by OCSD to Contractor after the successful
completion of the remaining Scope of Work as described in Exhibit "A" and sign-off by
OCSD Project Manager, or designee (Inclusive) of the 96-hour straight running test. If
deficiencies occur the project manager shall review the deficiency and determine the
severity, and decide if the 96-hour clock should start over, at no extra cost to OCSD.
• Final Payment: The final twenty percent (20%) of the compensation for each engine
individually shall be paid by OCSD to Contractor after the successful completion as
described in Exhibit "A" Section 15 Warranties, and sign-off by OCSD Project Manager,
or designee. This provision does not apply to new parts referenced in Exhibit"A", Section
15.
5. Invoices
5.1 OCSD shall pay within 30 days of completion and receipt and approval by OCSD Project
Manager or designee of an itemized invoice, in a form acceptable to OCSD to enable audit of the
charges thereon. Contractor shall not pay less than the prevailing wage, if applicable. Invoices
shall include the Purchase Order Number.
5.2 Invoices shall be emailed by Contractor to OCSD Accounts Payable at
APStaffCrDOCSD.com and reference the following in the subject line: "INVOICE", the Purchase
Order number, the Project Manager and Specification Number.
6. Audit Rights Contractor agrees that, during the term of this Contract and for a period of
three (3) years after its termination, OCSD shall have access to and the right to examine any
directly pertinent books, documents, and records of Contractor relating to the invoices submitted
by Contractor pursuant to this Contract.
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7. Scone of Work Subject to the terms of this Contract, Contractor shall perform the
Services identified in Exhibit "A". Contractor shall perform said Services in accordance with
generally accepted industry and professional standards.
& 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.
9. Contract Term The Services provided under this Contract shall commence on the
effective date of the Notice to Proceed and continue for one year.
10. Renewals
10.1 OCSD may exercise the option to renew the Contract for up to four (4) one-year periods
based upon the criteria set forth in Exhibit "A" Scope of Work, if mutually acceptable contract
terms can be negotiated. OCSD shall make no obligation to renew nor give reason if it elects not
to renew.
10.2 Renewals may be made through the OCSD Purchase Order Process.
11. Termination
11.1 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.
11.2 OCSD reserves the right to terminate this Contract immediately upon OCSD's
determination that Contractor is not meeting specification requirements, if the level of service is
inadequate, or any other default of this Contract.
11.3 OCSD may also immediately cancel for default of this Contract in whole or in part by
written notice to Contractor:
• if Contractor becomes insolvent or files a petition under the Bankruptcy Act; or
• if Contractor sells its business; or
• if Contractor breaches any of the terms of this Contract; or
• if total amount of compensation exceeds the amount authorized under this Contract.
11.4 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.
12. 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
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requirements set forth in the signed Acknowledgement of Insurance Requirements (attached
hereto and incorporated herein as Exhibit"C"). Contractor and all Subcontractors 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.
13. Indemnification and Hold Harmless Provision Contractor shall assume all
responsibility for damages to property and/or injuries to persons, including accidental death,which
may arise out of or be caused by Contractor's services under this Contract,or by its Subcontractor
or by anyone directly or indirectly employed by Contractor, and whether such damage or injury
shall accrue or be discovered before or after the termination of the Contract. Except as to the
sole active negligence of or willful misconduct of OCSD, Contractor shall indemnify, protect,
defend and hold harmless OCSD, its elected and appointed officials, officers, agents and
employees, from and against any and all claims, liabilities, damages or expenses of any nature,
including attorneys' fees: (a) for injury to or death of any person or damage to property or
interference with the use of property,arising out of or in connection with Contractor's performance
under the Contract, and/or (b) on account of use of any copyrighted or uncopyrighted material,
composition, or process, or any patented or unpatented invention, article or appliance, furnished
or used under the Contract, and/or(c)on account of any goods and services provided under this
Contract. This indemnification provision shall apply to any acts or omissions, willful misconduct,
or negligent misconduct, whether active or passive, on the part of Contractor of or anyone
employed by or working under Contractor. To the maximum extent permitted by law, Contractor's
duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have
merit or are meritless,or which involve claims or allegations that any of the parties to be defended
were actively, passively, or concurrently negligent, or which otherwise assert that the parties to
be defended are responsible, in whole or in part, for any loss, damage, or injury. Contractor
agrees to provide this defense immediately upon written notice from OCSD, and with well
qualified, adequately insured, and experienced legal counsel acceptable to OCSD.
14. Safety Standards and Human Resources MR) Policies OCSD requires all contractors
and service providers to follow and ensure their employees and all subcontractors follow all State
and Federal regulations as well as OCSD requirements while working at OCSD locations. If
during the course of a contract it is discovered that OCSD policies, safety manuals, or contracts
do not comply with State or Federal regulations then the Contractor is required to follow the most
stringent regulatory requirement at no additional cost to OCSD. Contractor and all their
employees and Subcontractors, shall adhere to all applicable OCSD Safety Standards and
Human Resources Policies found at: OCSD.com, "Doc Central" (bottom of page), under"Safety".
OCSD's Safety Standards and Human Resource Policies are hereby incorporated by reference
as though fully set forth herein. In addition to the requirements stated above, Contractor shall
adhere to the following OCSD Safety requirements: SOP-102 PPE, SOP-105 LOTO, SOP-113
Bloodbome Pathogen, and SOP-118 Hot Work.
15. Warranties In addition to the Warranties stated in Exhibit "A", the following shall apply:
15.1 Manufacturer's standard warranty shall apply. All manufacturer warranties will begin at
the date of acceptance after of the 96 hour run.
16. Performance Time is of the essence in the performance of this Contract and the
provisions hereof.
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17. Force Maieure Neither party shall be liable for delays caused by accident, flood, acts of
God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said
party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force
Majeure condition may be rescheduled by mutual consent or may be eliminated from the Contract.
18. 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.
19. 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.
20. 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.
21. Licenses, Permits. Ordinances and Regulations Contractor represents and warrants
to OCSD that it has obtained all licenses, permits, qualification and approvals of whatever nature
that are legally required to engage in this work. Any and all fees required by State, County, City
and/or municipal laws, codes and/or tariffs that pertain to work performed under the terms of this
Contract will be paid by Contractor.
22. 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.
23. Contractor's Employees Compensation
23.1 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 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.
23.2 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.
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23.3 Apprentices — Sections 1777.5, 1777.6, 1777.7 of the Labor Code of the State of
California, regarding the employment of apprentices are applicable to this Contract and the
Contractor shall comply therewith if the prime contract involves thirty thousand dollars
($30,000.00)or more or twenty (20)working days or more; or if contracts of specialty contractors
not bidding for work through the general or prime Contractor are two thousand dollars($2,000.00)
or more or five (5)working days or more.
23.4 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 23.1 above.
Contractor shall conform to Article 3, Chapter 1, Part 7 (Section 1810 at seq.) of the Labor Code
of the State of California and shall forfeit to OCSD as a penalty, the sum of twenty-five dollars
($25.00) for each worker employed in the execution of this Contract by Contractor or any
subcontractor for each calendar day during which any worker is 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.
23.5 Record of Wages; Inspection - Contractor agrees to maintain accurate payroll records
showing the name, address, social security number, work classification, straight-time and
overtime hours worked each day and week, and the actual per diem wages paid to each
journeyman, apprentice, worker or other employee employed by it in connection with the project
and agrees to require that each of its subcontractors do the same. All payroll records shall be
certified as accurate by the applicable Contractor or subcontractor or its agent having authority
over such matters. Contractor further agrees that its payroll records and those of its
subcontractors shall be available to the employee or employee's representative, the Division of
Labor Standards Enforcement, and the Division of Apprenticeship Standards and shall comply
with all of the provisions of Labor Code Section 1776, in general. Penalties for non-compliance
with the requirements of Section 1776 may be deducted from project payments per the
requirements of Section 1776.
24. South Coast Air Quality Management District's (SCAQMD) Requirements It is
Contractor's responsibility that all equipment furnished and installed be in accordance with the
latest rules and regulations of the South Coast Air Quality Management District (SCAQMD). All
contract work practices, which may have associated emissions such as sandblasting, open field
spray painting or demolition of asbestos containing components or structures, shall comply with
the appropriate rules and regulations of the SCAQMD.
25. 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 Orange County, in the event any action
is brought in connection with this Contract or the performance thereof.
26. Breach The waiver of either party of any breach or violation of, or default under, any
provision of this Contract, shall not be deemed a continuing waiver by such party of any other
provision or of any subsequent breach or violation of this Contract or default thereunder. Any
breach by Contractor to which OCSD does not object shall not operate as a waiver of OCSD's
rights to seek remedies available to it for any subsequent breach.
27. Remedies In addition to other remedies available in law or equity, if the Contractor fails
to make delivery of the goods or Services or repudiates its obligations under this Contract, or if
OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD may
(1) cancel the Contract; (2) recover whatever amount of the purchase price OCSD has paid,
Orange County Sanitation District 7 of 10 Specification No. S-2016-764BD
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.
28. Dispute Resolution
28.1 In the event of a dispute as to the construction or interpretation of this Contract, or any
rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute
by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the
dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in
accordance with the Commercial Mediation Rules of the American Arbitration Agreement,through
the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of
Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute
resolution process.
28.2 In the event the Parties are unable to timely resolve the dispute through mediation, the
issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure,
Part 3, Title 9, Sections 1280 et seq. For such purpose, an agreed arbitrator shall be selected,
or in the absence of agreement, each party shall select an arbitrator, and those two arbitrators
shall select a third. Discovery may be conducted in connection with the arbitration proceeding
pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, or three arbitrators
acting as a board, shall take such evidence and make such investigation as deemed appropriate
and shall render a written decision on the matter in question. The arbitrator shall decide each
and every dispute in accordance with the laws of the State of California. The arbitrator's decision
and award shall be subject to review for errors of fact or law in the Superior Court for the County
of Orange, with a right of appeal from any judgment issued therein.
29. Attorney's Fees If any action at law or in equity or if any proceeding in the form of an
Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this
Contract, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
30. Survival The provisions of this Contract dealing with Payment, Warranty, Indemnity, and
Forum for Enforcement, shall survive termination or expiration of this Contract.
31. Severability If any section, subsection, or provision of this Contract, or any agreement
or instrument contemplated hereby, or the application of such section, subsection, or provision is
held invalid, the remainder of this Contract or instrument in the application of such section,
subsection or provision to persons or circumstances other than those to which it is held invalid,
shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate
the expectations of the Parties.
32. Damage to OCSD's Property Any of OCSD's property damaged by Contractor, any
subcontractors or by the personnel of either will be subject to repair or replacement by Contractor
at no cost to OCSD.
33. Disclosure Contractor agrees not to disclose, to any third party, data or information
generated from this project without the prior written consent from OCSD.
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34. Independent Contractor The legal relationship between the parties hereto is that of an
independent contractor, and nothing herein shall be deemed to make Contractor an OCSD
employee. During the performance of this Contract, Contractor and its officers, employees, and
agents shall act in an independent capacity and shall not act as OCSD's officers, employees, or
agents. Contractor and its officers, employees, and agents shall obtain no rights to any benefits
which accrue to OCSD's employees.
35. Limitations upon 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.
35.1 In the event the Contractor obtains written approval from the Project Manager to delegate
duties, assign rights,substitute an approved Subcontractor and/or introduce a new Subcontractor,
the Contractor shall be as fully responsible to OCSD for the acts, errors and omissions of the
Subcontractor(s) and Suppliers and of the person(s) either directly or indirectly employed by the
Subcontractor(s) and Suppliers as the Contractor is for the acts, errors and omissions of persons
directly employed by the Contractor. Nothing contained in the Contract shall create any
contractual relationship between any Subcontractor/Supplier and OCSD.
35.2 Each Subcontract and Supplier agreement shall be approved in writing by OCSD and
preserve and protect the rights of OCSD, its directors, officers, agents, and employees under the
Contract with respect to the work to be performed by the Subcontractor so that subcontracting
thereof will not prejudice such rights, and shall allow to the Subcontractor or Supplier, unless
specifically provided otherwise in the subcontract agreement, the benefits of all rights, remedies
and redress against the Contractor that the Contractor, by the Contract documents, has against
OCSD. The Contractor shall make available to each proposed Subcontractor or Supplier, prior
to the execution of the subcontract, copies of the Contract documents.
35.3 This section does not and shall not operate to relieve the Contractor of any duty or liability
under the Contract, nor does it create any duty or liability on the part of OCSD. The Contractor
shall have sole responsibility for promptly settling any disputes between its Subcontractors.
36. Third Party Rights Nothing in this Contract shall be construed to give any rights or
benefits to anyone other than OCSD and Contractor.
37. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall
be personally liable to Contractor, or any successor-in-interest, in the event of any default or
breach by OCSD or for any amount which may become due to Contractor or to its successor, or
for breach of any obligation for the terms of this Contract.
38. Read and Understood By signing this Contract, Contractor represents that he has read
and understood the terms and conditions of the Contract.
39. Authority to Execute The persons executing this Contract on behalf of the Parties
warrant that they are duly authorized to execute this Contract and that by executing this Contract,
the Parties are formally bound.
40. Entire Contract This Contract constitutes the entire agreement of the Parties and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings,
and negotiations between the Parties with respect to the subject matter hereof.
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41. Notices All notices under this Contract must be in writing. Written notice shall be
delivered by personal service or sent by registered or certified mail, postage prepaid, return
receipt requested, or by any other overnight delivery service which delivers to the noticed
destination and provides proof of delivery to the sender. Rejection or other refusal to accept or
the inability to deliver because of changed address for which no notice was given as provided
hereunder shall be deemed to be receipt of the notice, demand or request sent. All notices shall
be effective when first received at the following addresses:
OCSD: Michelle Hadaway
Senior Contracts Administrator
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, CA 92708-7018
Contractor: NRG Energy Services, LLC
990 Peiffers Lane
Harrisburg, PA 17109-5907
Each party shall provide the other party written notice of any change in address as soon as
practicable.
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this
Contract to be signed by the duly authorized representatives.
ORANGE COUNTY SANITATION DISTRICT
Dated: By:
Chair, Board of Directors
Dated: By:
Clerk of the Board
Dated: By:
Contracts, Purchasing and Materials
Management Division Manager
COMPANY
Dated: By:
Print Name and Title of Officer
IRS Employer's I.D. Number
Orange County Sanitation District 10 of 10 Specification No. S-2016-764BD
LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Mel
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AGENDA REPORT IternNumber Iemiumber
z is
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Bob Ghirelli, Assistant General Manager
SUBJECT: AB 2022 BOTTLING OF GROUNDWATER REPLENISHMENT SYSTEM
WATER
GENERAL MANAGER'S RECOMMENDATION
A. Authorize up to $15,000 for the initial testing and bottling of Groundwater
Replenishment System (GWRS) water, with the cost of the bottling and testing to
be equally shared between the Orange County Sanitation District and Orange
County Water District; and
B. Authorize the General Manager to approve the label for the first-run of GWRS
water bottles.
BACKGROUND
The Orange County Sanitation District (Sanitation District), Orange County Water District
(OCWD), and WateReuse co-sponsored Assembly Bill (AB) 2022 (Gordon) to allow for
the bottling of advanced purified water for educational purposes, which was signed into
law in 2016. AB 2022 takes effect in January 2017 and the Sanitation District and OCWD
would like to be positioned to be the first entity in the western hemisphere to bottle
advanced purified water.
RELEVANT STANDARDS
• Unified legislative advocacy and public outreach program
• Build brand, trust, and support with policy makers and community leaders
• Use all practical and effective means for recovering wastewater for reuse
• Maintain collaborative and cooperative relationships with neighboring agencies
PROBLEM
The provisions of AB 2022 specify that to bottle advanced purified water the proposed
label for the bottle must be submitted to the Department of Public Health at least 30 days
before bottling and results of samples of the water must be submitted at least seven days
before bottling.
To ensure that the Sanitation District and OCWD can bottle water in January 2017, labels
need to be submitted to the Department of Public Health in December.
Page 1 of 3
Also, to ensure that label designs are finalized before January, staff requests that the
General Managers for of the Sanitation District and OCWD be given authorization to
review and approve the label for the first-run Groundwater Replenishment System
(GWRS) water bottles. Subsequent labels will be brought before the GWRS Steering
Committee for review and approval.
The GWRS Steering Committee will review and approve any future marketing plans,
including budgets, for the bottled water, in addition to plans for commemorating the
GWRS loth Anniversary. Staff will present a marketing plan and budgets for both efforts
to the GWRS Steering Committee in early 2017.
PROPOSED SOLUTION
Ensure that the Sanitation District and OCWD are leaders in the industry by once again
being the first. This time, positioning our agencies to be the first entity in the western
hemisphere to bottle advanced purified water.
Both of these requested actions are within the General Manager's Delegation of Authority,
however, staff brings this request to the Board of Directors (Board)due to the uniqueness
of this effort, in addition to the active participation of the Sanitation District in co-
sponsoring AB 2022.
TIMING CONCERNS
To ensure that the Sanitation District and OCWD can bottle water in January 2017, labels
need to be submitted to the Department of Public Health in December.
Also, to ensure that label designs are finalized before January, staff requests that the
General Managers of the Sanitation District and OCWD be given authorization to review
and approve the label for the first-run GWRS water bottles. Subsequent labels will be
brought before the GWRS Steering Committee for review and approval.
RAMIFICATIONS OF NOT TAKING ACTION
The bottling of GWRS water would not occur or would be delayed.
PRIOR COMMITTEE/BOARD ACTIONS
2016 - Various actions and informational updates to the Board and Committee regarding
the status of AB 2022 and lobbying efforts.
ADDITIONAL INFORMATION
The OCWD laboratory regularly samples and analyzes GWRS water, which will be
coordinated with the requirements in AB 2022 that sample results meet or exceed all state
and federal drinking water standards. In addition, Riviera Beverages, located in Garden
Grove, is a fully certified drinking water bottler and will ensure that bottling meets all state
Page 2 of 3
and federal requirements, such as ozonation and sanitation requirements. To further
ensure the water quality, OCW D staff will collect a sample of the GW RS water as it is off-
loaded from the transportation truck, before it is bottled, to ensure there was no
contamination in the transportation process.
AB 2022 only allows for bottles to be up to eight ounces and only 1,000 gallons can be
bottled per year. Riviera Beverages can bottle in small batches and in bottles that are
eight ounces or less, which meets the provisions of AB 2022. Of the seven bottlers
contacted, no other bottler could meet the small eight-ounce size or small batch amount
unless custom bottles were designed at a significantly higher cost than Riviera's amount.
This budget request includes the cost for the initial test run, transporting, bottling, labeling
and delivery. These expenses are expected to be less than $15,000. In addition,
Riviera's bottles are made 100 percent of recycled plastics and can be recycled.
CEQA
N/A
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item will be funded in the approved FY 16/17 operating budget. (Line
item: Other, Section 6, Page 12.)
ATTACHMENTS
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
N/A
Page 3 of 3
LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Mel
J14116ce To12/14/l6r
AGENDA REPORT emNumber Iem1umber
3 16
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Bob Ghirelli, Assistant General Manager
SUBJECT: APPROVAL OF 2017 LEGISLATIVE AND REGULATORY PLAN
GENERAL MANAGER'S RECOMMENDATION
Approve the Orange County Sanitation District 2017 Legislative and Regulatory Plan.
BACKGROUND
The Orange County Sanitation District (Sanitation District) annually approves a
Legislative Plan (Plan)which provides a list of key issues for the Sanitation District's staff,
management, Board of Directors and legislative advocates to follow during the legislative
year. This year, we have added a regulatory component as legislation and regulations
work hand-in-hand. Additionally, the Plan provides direction to the staff and management
on how to coordinate advocacy efforts with wastewater associations and state and federal
legislative bodies.
RELEVANT STANDARDS
• Unified legislative advocacy and public outreach program
• Build brand, trust, and support with policy makers and community leaders
PROBLEM
Without a strong advocacy program, elected officials may not be aware that the Sanitation
District is more than a wastewater treatment plant — treating and sending water to the
ocean.
The Sanitation District is an environmentally engaged organization which recycles more
than 50 percent of the wastewater. Additionally, to help meet the goal of 100 percent
recycling, the Sanitation District uses the byproducts from the wastewater treatment
process to produce biosolids and energy used to help run the two plants in Fountain
Valley and Huntington Beach.
PROPOSED SOLUTION
Approve the 2017 Legislative and Regulatory Plan. Advise staff to work with Local, State
and Federal officials to advocate the Sanitation District's legislative interests and help to
create/monitor legislation and grants that would benefit the Sanitation District, the
Page 1 of 2
wastewater industry and the community as a whole. To assist in our relationship building
activities, we will continue to reach out to our elected officials providing facility tours, one-
on-one meetings and trips to D.C. and Sacramento.
RAMIFICATIONS OF NOT TAKING ACTION
If we do not work with the Local, State and Federal elected officials, legislation could be
passed that negatively affects the Sanitation District and the wastewater industry as a
whole.
Additionally, this could affect our chances of receiving grant funding.
ATTACHMENT
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:
• OCSD 2017 Legislative & Regulatory Plan
Page 2 of 2
ORANGE COUNTY SANITATION DISTRICT
2017 Legislative and
Regulatory Plan
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Orange County Sanitation District
2017 Legislative&Regulatory Plan
Legislative & Regulatory Affairs Team
OCSD Staff
Rebecca Long (714)593-7444 rlong@ocsd.com
Senior Public Affairs Specialist
Jennifer Cabral (714)593-7581 jcabral@ocsd.com
Principal Public Affairs Specialist
Robert Ghirelli (714)593-7400 rghirelli@ocsd.com
Assistant General Manager
Jim Herberg (714)593-7110 jherberg@ocsd.com
General Manager
Federal Lobbying Team
Eric Sapirstein (202)466-3755 esap@ensresources.com
ENS Resources
State Lobbying Team
Cori Williams (949)399-9050 cwilliams@TownsendPA.com
Townsend Public Affairs
Eric O'Donnell (949)399-9050 eodonnell@TownsendPA.com
Townsend Public Affairs
Christopher Townsend (949)399-9050 ctownsend@TownsendPA.com
Townsend Public Affairs
Regulatory Advocacy Team
James E. Colston, Director of Environmental (714)593-7450 jcolston@ocsd.com
Service
Tom Meregillano,Senior Regulatory Specialist (714)593-7457 tmeregillano@ocsd.com
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
Introduction
The Orange County Sanitation District(OCSD) recognizes the need for an active state and federal legislative and
regulatory advocacy program to ensure that the interests of the ratepayers and the Board of Directors are
protected and supported.Towards that end,the legislative and regulatory team actively engages, pursues and
monitors activities in California and Washington, D.C. and takes appropriate action in support or opposition of
legislative and regulatory initiatives.
Each year,the Board of Directors adopts a legislative plan,which is a summary of OCSD's goals, key issues,and
policy positions.This year,we have added a regulatory component as legislation and regulations work hand in
hand.The following legislative and regulatory policies have been developed taking into consideration OCSD,the
wastewater industry,OCSD's member agencies and policy needs.These Board-approved policies serve as OCSD's
official positions of support or opposition on issues of importance to the agency.The legislative and regulatory
plan is a dynamic document,adopted annually and changing to meet the needs of the Board as well as the
federal,state,and local policymaking agendas.
The legislative and regulatory team, in conjunction with the Board, may take appropriate action consistent with
the legislative and regulatory plan, including,but not limited to, drafting letters, lobbying legislators,regulators,
and staff,and crafting bills and proposed regulations.
Procedure for Taking Positions on Bills and Proposed Regulations
1. Staff will track bills and proposed regulations of greatest interest to OCSD, particularly those that fall
within the goals and objectives identified by the Board of Directors and included in this plan.Staff will
monitor bills and proposed regulations being watched by similar agencies in Orange County(Irvine Ranch
Water District,South Orange County Water Authority,Orange County Water District, Municipal Water
District of Orange County,etc.)as well as state,federal and national associations such as California
Association of Sanitation Agencies(CASA),Southern California Association of POTWs(SCA),the California
Special Districts Association (CSDA)and the Association of California Water Agencies(ACWA)and National
Association of California Water Agencies(NACWA),the Association of California Cities Orange County
(ACC-OC),and the League of California Cities(LOCO).
2. For those bills and proposed regulations that are being tracked,where there is clear policy direction
stated in the Board-adopted legislative and regulatory plan or adopted goals,staff can send letters to
legislators and regulators and give direction to the lobbyists to advocate that position.
3. Where a particular issue is not urgent,all legislative letters will be hand-signed by the Board Chair or Vice-
Chair. If a matter is urgent,staff may use the electronic signature,so long as a clear policy direction exists
and the General Manager or Designee approves the letter.
4. When a bill does not fall within the scope of the legislative and regulatory plan or is a controversial issue,
staff will seek direction from the Legislative and Public Affairs Committee.
5. If a bill does not fall within the scope of the legislative plan, but the Association of California Cities—
Orange County(ACCOC),California Association of Sanitation Agencies(CASA),the California Special
Districts Association (CSDA)or the National Association of Clean Water Agencies(NACWA) has an adopted
position,staff may follow this position but must inform the Legislative and Public Affairs Committee of
such action at the next regularly scheduled meeting.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
Guiding Priorities
• Funding assistance for OCSD projects through grants,appropriations,or other means;
• Maintaining local control over governance of special districts and other local entities;
• Oppose additional, redundant regulatory requirements.
Federal Priorities
• Advocate for full funding of the Water Resources Development Act(WRDA)water infrastructure
provisions and expedited compliance of provisions contained in enacted bill IS.2848/H.R. 5303).
• Focus upon Sanitary Sewer Overflow grants assistance,Water Infrastructure Finance and Innovation Act
(WIFIA)assistance,green infrastructure and water recycling.
• If the Energy Policy Modernization Act IS.2012) is enacted,work with U.S. Department of Energy to
secure funding assistance for OCSD energy water nexus project demonstrations.
• Work with Congress and United States Environmental Protection Agency to advance implementation of
the WaterSense Program to increase the use of energy efficient technologies at the Sanitation District.
• Monitor federal agency grants for funding of alternative renewable energy, bioenergy,water recycling,
biosolids beneficial use, and beach protection.
• Work with the United States Environmental Protection Agency and the U.S.Army Corps of Engineers to
help develop"programmatic permits"which will make it possible to have a single permit to support
multiple projects that can offer the potential to reduce costs to ratepayers.
• Work with the congressional delegation to advance drought relief legislation (5.2533)that promotes the
funding of the Sanitation District water recycling and other conservation projects. Seek to secure
adequate funding of programs authorized in drought relief legislation to facilitate funding of Sanitation
District project priorities.
• Work with the congressional delegation to promote explicit Sanitation District needs as part of any new
infrastructure policy developed by the next Congress and administration. Support legislation and
regulations that provides below market bonding rate assistance to construct treatment facilities such as
infrastructure banks. Focus should be on energy recovery technologies,core infrastructure assistance
related wastewater treatment,funding of final stage of water recycling needs,and related demonstration
of evolving technologies to address brine line needs.
• During the fiscal year 2018 appropriations, identify opportunities to secure federal support of Sanitation
District project needs as part of any budget decision making process for the coming fiscal year.Oppose
restrictions on tax-exempt financing for public infrastructure.
• Support at least$2 billion in annual federal appropriations to Clean Water Act State Revolving Fund(SRF).
Work with Congress and the United States Environmental Protection Agency to streamline the Clean
Water Act permitting processes. Provide assurances that Clean Water Act State Revolving Fund
appropriations are not transferred to Safe Drinking Water SRF needs.Additionally,support legislation to
revise the SRF allocation formula to allow for appropriate and fair share of funding to California consistent
with USEPA study(20%increase in share).
• Support efforts to remove state volume caps on water and wastewater private activity bonds to allow for
innovative financing options such as public private partnerships.
• Work with the U.S. Environmental Protection Agency on emerging regulatory issues of concern including
integrated plans and monitoring effluent limitations and guidelines including but not limited to the dental
amalgam program.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
• OCSD will continue to advocate for federal policies that minimize regulatory burdens imposed upon
communities and public agencies that seek to adopt programs for the giveback of pharmaceuticals that
will result in the reduction of disposal of pharmaceuticals through wastewater treatment facilities.
Additionally,OCSD will advocate for federal funding of programs currently authorized that support the
development of pharmaceutical management programs, including education.
State Priorities
• Secure funding through grants and legislation for the final expansion of the Groundwater Replenishment
System and infrastructure and collection improvements at the Fountain Valley, Plant
No. 1 and Huntington Beach, Plant No. 2.
• Oppose legislation or any regulations that would mandate volumetric pricing of wastewater.
• Continue to monitor the state budget and actively protect local property taxes.
• OCSD will work with legislators who introduce legislation such as SB 163(Hertzberg,2015)in order to
ensure that no unrealistic regulations are placed on wastewater treatment facilities,including OCSD.
• Oppose state mandates,regulations,or legislation such as AB 1217(Daly,2015)that set,alter,or
otherwise modified the governance structure of special districts,joint powers authorities,or other local
government entities.
• Support efforts to competitively seek funding for projects that meet the state's goals of expanded water
supply and energy reduction.
• Where appropriate, pursue state funding for critical aging infrastructure,through funding sources made
available through any agency including but not limited to the State Water Resources Control Board and
the Department of Water Resources.
• Support Integrated Regional Water Management planning efforts in the Santa Ana River watershed.
• Oppose additional and redundant regulatory requirements for biosolids.
• Support legislation or regulations that would prevent the disposing of drugs down the drain and would
provide for alternative safe disposal of unwanted/unused medications.
• Monitor pension reform legislation for clean-up bills and relevant proposed regulations.
• Support the state's efforts to increase the effectiveness and efficiencies of Local Agency Formation
Commissions.
• Support efforts to reform the California Environmental Quality Act(CEQA)to streamline current
procedures and regulations that streamline current procedures and regulations for projects to refurbish
or replace existing infrastructure facilities.
• Actively monitor the Little Hoover Commission hearings related to climate change adaptation as it relates
to OCSD reserves, property taxes and fee revenues to ensure that the interests of OCSD are protected.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
Appendices
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
r- r
Federal Tactics
Initiative Action
1. Identify and advise on federal • Schedule meetings with federal agency stakeholders and senior
funding opportunities for OCSD officials in Washington D.C.and district offices to build support for
infrastructure projects OCSD priority projects
• Develop white papers etc.to justify requested assistance
2. Seek funding assistance to • Meet with U.S. Department of Energy staff to discuss funding
advance recovery of energy and opportunities and options related energy water nexus
other resources from biosolids
Work with U.S. Environmental Protection Agency and other
agencies to advance energy and water efficient technologies
related to WaterSense
3. Seek funding for water • Develop priorities and disseminate to OCSD congressional
infrastructure enhancement delegation
• Advocate before congressional infrastructure committees and
applicable Executive Branch officials on proposals to provide
enhanced alternative water infrastructure financing
• Work with Washington-based stakeholders to support policies
• Work with Congress and U.S. Bureau of Reclamation on proposals
to provide enhanced alternative water infrastructure financing
4. Support unrestricted public • Work with NACWA and CASA in support of continued use of tax-
financing of water quality and exempt financing and feasible innovative financing approaches
supply needs such as infrastructure banks to supplement traditional funding
approaches
• Submit testimony on tax-exempt financing and where possible
present testimony
5. Support drought relief • Work with delegation and regulators to ensure incorporation of
legislation and regulation that new programs for water recycling assistance
supports water recycling • Work with NACWA,CASA,and ACWA to advance priority
assistance
6. Work with federal agencies on • Work with U.S. Department of Energy on alternative energy
permitting issues permitting issues
• Work with U.S. Fish and Wildlife Service on environmental site
assessment issues
• Advocate NPDES permits from 5-years to at least 10-years
• Seek introduction of amendment to Clean Water Act to address
conflict language to allow qualified candidates to serve on
California Water Boards
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
State Tactics
Initiative Action
1. Develop a proactive legislative • As legislation is introduced between January and February,and as
and regulatory advocacy bills are amended, identify legislation that has potential to benefit
agenda or impact OCSD
• Identify proposed federal,state,and local regulations that are
introduced that have potential to benefit or impact OCSD
• Recommend positions on identified legislation and proposed
regulation in alignment with OCSD's legislative and regulatory
agenda
• Create and continually update a legislative and regulatory matrix to
track identified pieces of priority legislation and proposed
regulations
• Schedule advocacy days in Sacramento with legislators and
committee staff and regulators
• Continue an active letter writing campaign in support or opposition
of priority legislation and proposed regulations
• Schedule meetings with legislators, regulators,stakeholders and
senior officials in Sacramento and district offices to build support for
OCSD priority projects
• Participate in CASA's legislative committees and Regulatory
Workgroup
2. Compile a comprehensive list • Meet with EMT to discuss future capital projects and priorities
of Capital Improvement • Match capital improvements with funding opportunities based on
projects
project eligibility
3. Monitor and advise on possible • Proactively engage on the drafting of grant funding guidelines,and
funding opportunities, provide input to drafting agency or committee to ensure eligibility
including but not limited to and competitiveness of OCSD projects and priorities
funding through Proposition 1. 0 Proactively engage on proposed legislation and regulations that
would have an impact on the implementation of funding programs
• Identify funding opportunities and provide recommendations for
eligible projects. Create an advocacy and outreach schedule on the
planning and execution of efforts to seek funds
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
4. Monitor and advise on funding • Monitor future solicitations and track guideline changes to the
available through Cap and Water-Energy grant: a $19 million opportunity
Trade • Identify eligible and competitive projects and programs
e Create a schedule on planning and execution of efforts to seek
funds,including outreach and advocacy strategy
S. Monitor and advise on energy a Track energy related grant opportunities
or other resource recovery
• Identify potential projects for funding, including, but not limited to:
related funding opportunities
alternative energy, biosolids to energy conversion,organic waste
(high strength food waste and fats,oils, and grease)to energy
conversion,and greenhouse gas reduction projects
e Ensure wastewater interests are protected as significant decisions
are made related to renewable energy production financing,
mandates, climate change goals, programs and continued efforts to
extend the state's emissions reduction target
• Schedule meetings with local delegation as well as key members to
discuss project benefits and funding opportunity
6. Schedule and attend advocacy • Educate current administration, key staff,and agencies on priority
and outreach meetings to projects and advocate for funding allocations that align with OCSD
provide OCSD project updates priorities
• Schedule stakeholder meetings to build support for projects
• Hold advocacy meetings in coordination with funding opportunities
and project timelines
• Work with relevant budget committees, budget sub-committees,
policy committees,and their staff to advocate for funding
allocations that align with OCSD priorities
• Provide full briefings and updates to Orange County legislative
delegation and relevant members on OCSD priority projects
7. Regulatory relief to allow for • Outreach with U.S. EPA, Department of Toxic Substances,State
water recycling and expansion Water Resources Control Board, Regional Water Quality Control
of GWRS for all water flowing Board,the governor's office, legislative leadership and other
into Plant appropriate stakeholders
No. 2
8. Development and advocacy for a Create and update a legislative matrix to track identified pieces of
design-build legislation legislation focused on design build legislation
targeted at OCSD projects
Schedule briefings and updates with Orange County legislative
delegation to discuss upcoming design build legislation
9. Development and a Work in conjunction with CASA and SOAP to outreach,educate and
implementation of a statewide develop an advocacy strategy for regulatory framework that will
biosolids land application support statewide objectives to manage biosolids land application
management policy
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
Legislative and Regulatory Policies
1. Air Quality:OCSD is committed to complying with federal,state, and local air quality laws, rules,
regulations,and policies.
a. Support air quality legislations, regulations,rules,and policies that emphasize the use of
advanced technologies and promote greater flexibility and financial incentives to reduce air
emission.
b. Support measures that maintain and enhance local decision-making authority,where appropriate,
in the development and implementation of air quality attainment strategies.
c. Support legislation and regulations to ensure greater consistency between the California and
Federal Clean Air Acts.
d. Support strategies that clearly demonstrate and provide for the most cost-effective means for
meeting air quality goals.
e. Continue to commit to adhere to OCSD's odor policy to assure that OCSD is a good neighbor to
the surrounding communities.
2. Biosolids:OCSD strives to beneficially use biosolids through multiple management options performed at
reasonable costs that are protective of public health and the environment and offer cost-effective
alternatives to land application.
a. Support legislation, regulations,and policies that support the beneficial use of biosolids on
agricultural lands,California Healthy Soils Initiatives, mine reclamation,fire ravaged lands,
superfund sites, brownfields, overgrazed lands,carbon sequestration,and wetland restoration.
b. Support policies that encourage biosolids product use by horticulture,commercial, and residential
markets.
c. Oppose legislation and regulations that imposes new mandates, bans,or restrict the use of
biosolids for land application in any region,county,or state.
d. Support alternative energy legislation, regulation,and policy that encourage use of biosolids as a
renewable energy resource.
3. Grant Funding:OCSD is committed to advancing the state of knowledge in the treatment and
management of wastewater through the application of innovative and alternative technologies. To this
end,OCSD supports grants assistance to offset its research,special projects,and capital improvement
projects.
a. Support appropriations legislation, bonds, programs,and projects that provide funding for
infrastructure construction and rehabilitation,special studies and research or projects relating to
security, environmental education,water quality,wastewater processing, urban runoff,water
recycling, resource recovery,and alternative energy.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
b. Support projects that provide for public benefit over projects that are primarily intended for
private benefit or gain.
c. Oppose proposals placing further requirements on grant recipients that return low value for high
administrative costs.
4. Labor Relations:OCSD is committed to the exercise of and provision of orderly procedures for the
administration of employer-employee relations, including, but not limited to, meeting and conferring in
good faith with recognized employee organizations regarding the wages, hours of work,and other terms
and conditions of employment. As Congress considers reforming the federal tax code, many of the
provisions subject to reform may impact labor relations.
a. Support measures to reform current workers compensation formulas to rely on higher thresholds
for compensation or a proportionate exposure formula.
b. Support health insurance reform that does not create additional financial burdens on special
districts.
c. Support measures to ease applicability of the Fair Labor Standards Act(FLSA)on public agencies.
d. Oppose any measure imposing compulsory and binding arbitration with respect to public
employees.
e. Oppose any measure that imposes upon local government mandated employee benefits that are
more properly decided at the local bargaining table.
f. Oppose efforts reducing local control over public employee disputes and imposing regulations on
an outside agency.
g. Oppose any measure granting public employees the right to strike.
h. Oppose a new mandatory Social Security tax for public employers and public employees.
S. Planning:OCSD ensures the long-range planning of capital improvement programs in order to deliver the
highest quality facilities.
a. Support reform of existing state, regional,and local planning processes only if directly linked to
reforms in the current revenue and tax structure of state and local governments.
b. Support measures that provide new revenues for growth management and the public facilities
necessary to support expected growth.
c. Support proposals encouraging regional, sub-regional or countywide cooperation in planning
urban development strategies,especially those that provide funding for effective implementation
of agreed upon goals.
d. Oppose legislation consolidating special districts that fail to address the concerns of cities affected
by the proposed consolidation.
e. Oppose measures that prevent or restrict the ability of cities or special districts to participate in
the Southern California Association of Governments' (SCAG)sub-regional process.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
6. Public Health: Protection of public health is OCSD's core mission. OCSD will work cooperatively with
county and state health officers to assure local health protection.
a. Support hazard mitigation,emergency response, planning, and recovery through direct
legislation, policy directives,and funding toward floodplain security within the Santa Ana River
watershed.
b. Support(generally)measures that provide for improved public health through regulation.
c. Support the protection of public health through the construction and implementation of
advanced wastewater treatment technology.
7. Public Works:OCSD is committed to the achievement of effective and efficient projects that provide
wastewater treatment services that benefit its ratepayers.
a. Support measures that provide funding and support to publicly owned treatment works and
sewage collection systems.
b. Support legislation and regulation that allow public agencies to procure goods and services in
manners similar to private industry,thereby reducing overall costs of delivery.
c. Support legislation and regulation that improve the Utility Underground Service Alert Program in
order to improve coordination,identification, minimize damage,minimize environmental risks,
and minimize cost exposure to publicly owned facilities when contractors are performing sub-
surface work.
d. Support a comprehensive response to the state's electricity and natural gas shortages that
provide a stable energy supply, respects the ability of municipalities to provide power, recognizes
that infrastructure (i.e. emergency and standby generators)exists that could be employed
temporarily during periods with minimal air quality impact and protects ratepayers(including
cities and special districts)against dramatic rate increases and statewide power outages.
e. Support legislation and regulation that allow OCSD to utilize the Best Value Design/Build option
for the construction of public works projects.
f. Oppose Buy American mandates legislation that would increase project costs or prevent the use
of the most innovative technologies.
S. Revenue and Taxation:Track pending legislation to ensure OCSD remains in compliance with the
government code as it pertains to wastewater system user fees and property tax revenues and the
investment of public funds.
a. Support measures leading to a greater financial independence from the state and would result in
greater stability and predictability in local government budgeting.
b. Oppose measures that impose mandated costs for which there is no guarantee of local
reimbursement or offsetting benefits.
c. Oppose legislation that shifts tax revenues away from local governments without the adequate
provision of a constitutionally guaranteed backfill to offset the lost revenues of those local
governments.
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January 2017
Orange County Sanitation District
2017 Legislative&Regulatory Plan
d. Oppose measures that allow state retention of existing local revenue sources, including the
special district share of property tax,sales tax,vehicle license fees,and rate payer fees.
e. Oppose the use of revenues traditionally used to fund the delivery of municipal services to fund
programs for which the state is responsible, particularly the courts, health,and welfare programs.
9. Special Districts:OCSD supports the maintenance of special districts to provide specific services, in
response to citizen's demands, in a cost effective manner.
a. Support outreach to local, regional,and state elected officials to foster a greater understanding
regarding the critical relationship between adequate reserves and the successful short-and-long-
term operation of water and wastewater agencies.
b. Support the work of the Association of California Water Agencies(ACWA), California Association
of Sanitation Agencies(CASA), and California Special Districts Association (CSDA) in any future
discussions or negotiations pertaining to the legislative and budget issues relative to preserving
control of members' reserves.
c. Oppose further state regulations that adversely impact special district financing and operations.
d. Oppose measures that create or grant powers to sub-regional or regional bodies that would result
in an infringement on clearly local concerns.
e. Oppose any administrative or legislative efforts to access or transfer any reserve funds held by
water and wastewater districts.
f. Oppose the imposition of unfunded, mandated programs on local governments.
g. Oppose efforts that diminish OCSD's ability to govern efficiently and effectively, including
expanding the size of the Board of Directors.
10. Water quality and Supply:OCSD is committed to participating collaboratively in the protection of
regional water resources for the benefit of the people we serve.
a. Support(generally)measures to increase water supply and improve water quality in the region,
including drought relief legislation.
b. Support measures that would increase funding for water reuse technologies,including support for
the Groundwater Replenishment System project by the Orange County Water District and OCSD
to create new water supplies through recycling.
c. Support measures that promote and provide for the use of reclaimed water.
d. Support policy development,funding, and research for addressing urban runoff,stormwater,and
beach closures, including funding for studies that identify the sources of bacterial,viral and other
contaminants and human pathogens.
e. Support measures to evaluate water quality standards,as needed,to ensure the objectives are
appropriately protecting the designated use.
f. Support legislation and regulation that would direct U.S. EPA levied fines to remain in the region.
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Orange County Sanitation District
2017 Legislative&Regulatory Plan
g. Support legislation and regulation that clarifies the use of Clean Water Act citizen suits that are
frivolous and/or abusive of congressional intent.
h. Support measures addressing non-point source pollution in order to protect our ocean water
quality and provide funding to mitigate its effects, including integrated permitting approaches
that can reduce costs and achieve water quality improvements while allowing permits to be
tailored to the needs of Orange County and its watershed.
i. Support national aspirational goal through legislation that promotes improved water use
efficiency in construction of water efficient buildings and communities.
j. Support legislation and regulation that promote improved water use efficiency through state and
federal assistance in evaluating and implementing new programs and technologies and increasing
public awareness of water use efficiency.
k. Support legislation and regulation that provide for the development of the watershed approach,
including watershed management plans and watershed-based permitting.
I. Support legislation and regulation that necessitate the responsible use of water in residential,
commercial,and industrial areas.
m. Support environmental guidelines on government agencies that would safeguard the region while
providing increased protections.
n. Oppose the imposition of statewide/nationwide fees for environmental cleanup that is privately
caused or regional in nature(e.g.,when the nexus between those responsible for environmental
abuse and those required to pay for cleanup or mitigation is absent(.
o. Support measures to provide federal,state,and local assistance to support urban runoff studies
and urban runoff reduction.
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January 2017
BOARD OF DIRECTORS Meeting Date TO12/1Bd.Of4/16 Dir.
--
AGENDA REPORT ItemNumber Iem1umber
v
Orange County Sanitation District
FROM: James D. Herberg, General Manager
SUBJECT: OPTIONS FOR DISTRIBUTION OF CLOSED SESSION MATERIALS
GENERAL MANAGER'S RECOMMENDATION
Select an option for the distribution of documents presented in closed session.
BACKGROUND
Under state law, the Orange County Sanitation District (Sanitation District) Board of
Directors (Board) may meet in closed session to discuss a variety of specified topics
including, among others, pending litigation, labor negotiations, and real property
negotiations. Our practice has been to distribute any written materials during each closed
session, and then collect the materials after closed session to comply with Government
Code § 54963(a).
This issue was discussed at the November 2016 regular board meeting, and Staff was
directed to research and present options to the Board for distribution of closed session
documents. Staff conducted an informal survey of our member cities/agencies and other
agencies across the State. Roughly half of the agencies responded that they do not
distribute closed session materials in advance of the meeting. Of the other half-- those
that do distribute closed session materials in advance--about two thirds distribute a paper
copy, while the remaining third provide electronic access to closed session documents in
advance of meetings.
One agency, the City of Newport Beach, uses a company called CaplinkedM to post
closed session materials on a secure website. Each councilmember is listed as an
"authenticated user" for the site. The councilmembers can log on to the site and view
closed session materials, but they are not able to print or download the materials. In
addition, when viewed, the materials contain a watermark that identifies the
councilmember who is accessing the system at that time.
RELEVANT STANDARDS
• Government Code Section 54963(a)
Page 1 of 3
PROBLEM
It can be difficult for Board Members to read and analyze closed session materials that
are distributed at the meeting while listening to the discussion at the same time. If closed
session materials are distributed in advance of a meeting, there is a risk that the
documents could be disclosed, thereby causing significant harm to the Sanitation District
by compromising its strategy and negotiating position in adversarial matters. This risk is
exacerbated for very large boards such as the Sanitation District's Board, which has 25
Board Members and 25 alternates.
PROPOSED SOLUTION
Staff and General Counsel have reviewed three potential options:
1. CONTINUE CURRENT PROCEDURE OF DISTRIBUTING MATERIALS
AT THE BEGINNING OF THE CLOSED SESSION.
Under this option, the Sanitation District would continue to distribute written
materials at the beginning of closed session, and collect the materials at the
end of closed session. The materials would not be provided in advance.
2. PROVIDE ELECTRONIC ACCESS VIA A SECURE COLLABORATION
WEBSITE SUCH AS CAPLINKEDw
The secure website could be accessed by each Board Member, and the
documents could not be printed, downloaded, or shared electronically. This
method would allow Board Members to review closed session materials in
advance of the meeting, and would eliminate of some of the disclosure risk
associated with hard copies. A Board Member determined to unlawfully
disclose written materials could still do so by taking a photo of the computer
screen. This method would allow General Counsel and the Clerk of the
Board to post information for Board Members in advance of the meeting
after the distribution of agenda packages, but prior to the meeting if the
materials are not ready at the time the packages are printed out.
3. PROVIDE HARD COPY CONFIDENTIAL WRITTEN MATERIALS
Documents would be provided in a sealed envelope marked 'confidential"
with the Board agenda package in advance of the Board meeting, when
possible. This option would provide Board Members with time to review the
materials in advance of the meeting. Board Members would be instructed
not to share the documents with anyone, and to return the confidential
materials to the Clerk of the Board after closed session.
As some Member's agenda packages are dropped at their residence or
delivered to their City Hall, there is a risk of confidential materials being
Page 2 of 3
opened and read by someone other than the Board Member. Also, paper
copies can be easily reproduced or shared, increasing the risk of
inappropriate disclosure.
It should be noted that, under this option, for various reasons, written
materials might not always be available in advance of meetings. The goal,
however, would be to provide the materials in advance, if possible.
TIMING CONCERNS
No specific timing concern.
RAMIFICATIONS OF NOT TAKING ACTION
The existing policy will continue. Written closed session materials will be distributed and
collected during closed session rather than provided to the Board Members in advance.
PRIOR COMMITTEE/BOARD ACTIONS
November 2016 - Discussion regarding distribution of closed session materials, direction
to Staff to provide effective alternatives to the current policy.
ADDITIONAL INFORMATION
N/A
CEQA
N/A
FINANCIAL CONSIDERATIONS
The CaplinkedTm annual subscription is $2000 for 1GB; and $1000 for each additional
1 GB.
ATTACHMENT
The following affachment(s)is included in hard copy and may also be viewed on-line at the OCSD website
(www.ocsd.coml with the complete agenda package:
N/A
Page 3 of 3
BOARD OF DIRECTORS Meeting Date I To Bd.of Dir.
— 12/14/16
AGENDA REPORT Number
Item Item
— Nu
18
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Robert Ghirelli, Assistant General Manager
SUBJECT: RATIFICATION TO AMEND SYNAGRO CONTRACT
GENERAL MANAGER'S RECOMMENDATION
Ratify use of General Manager's emergency purchasing authority in accordance with
Ordinance No. OCSD-47 Section 1.07 (B), identified as a critical time-sensitive
procurement, authorizing Amendment No. 10 to the Synagro West, Inc. contract to
include their Nursery Products, LLC facility located at 14479 Cougar Rd., Helendale,
California, to haul and compost Orange County Sanitation District's biosolids, at a unit
cost of $51.00 per wet ton for the period December 1, 2016 through December 27,
2016.
BACKGROUND
On November 28, 2016, Synagro West Inc., (Synagro) informed staff that they
experienced a piping failure on November 22, 2016 at their South Kern Compost
Manufacturing Facility (SKCM) in Kern County, which currently receives a guaranteed
250 wet tons of the Orange County Sanitation District's (Sanitation District) biosolids for
composting. In accordance with Section 3(e) of Amendment No. 5 of the contract,
Synagro had exercised the Force Majeure provision.
The pipe failure caused Synagro to curtail their inbound materials in order to create
enough composting capacity to handle incoming loads. Sanitation District staff
confirmed the piping failure by inspecting the SKCM facility on November 30, 2016. To
address this emergency event, Syngaro offered two biosolids management options to
divert the Sanitation District's biosolids to the following locations:
1. Nursery Products, LLC (Nursery Products) at $51.00 per ton; or
2. Arizona Soils at$82.71 per ton.
Currently, the contract includes the Arizona Soils facility location; however, managing
the Sanitation District's biosolids at this facility would cost $82.71 per wet ton, which is
over the 15% increase in cost contemplated under the Force Majeure section of the
contract. Under this circumstance, the Sanitation District may suspend performance for
the duration of the Force Majeure. Rather than suspending performance under option
two, staff recommends Synagro's first option of diverting the Sanitation District's
biosolids to their Nursery Products facility located at 14479 Cougar Rd., Helendale,
California at a unit price of $51.00 per ton. The cost savings under this option is
estimated at $160,688.
Page 1 of 4
In order to make this materialize, the Synagro contract needs to be amended to include
this new location and unit price. The term is from December 1, 2016 through December
27, 2016, when the Synagro contract is set to expire. On December 27, 2016, the
Nursery Products facility will then be used as a full-time option because they were one
of the two winning biosolids composting service contracts.
RELEVANT STANDARDS
• Ordinance No. OCSD47 - Requirements and Procedures for the Purchase of
Goods, Services, and Public Works Projects
• Ocean Discharge Permit, NPDES CA0110604 §VI.C.4.b Sludge (Biosolids)
Requirements
• Resolution No. OCSD 13-03 - Biosolids Recycling Policy
• Support Biosolids Management Program
PROBLEM
Through December 26, 2016, the Sanitation District has a guaranteed contract with
Synagro's SKCM in Kern County, California to compost at least 250 tons per day of
biosolids at a cost of $76.71. The Sanitation District currently accounts for 40-50% of
Synagro's inbound biosolids. On November 22, 2016, Synagro discovered a
malfunctioning pipe at this facility that put one of their 20 compost zones out of service.
The facility is currently running at capacity, and Synagro needs space to re-process the
biosolids impacted by the pipe failure, which involves displacing about 3,000 cubic
yards of inbound biosolids. As a result, Synagro has requested to divert the Sanitation
District loads to their Nursery Products facility to free up compost process capacity at
SKCM and allow Synagro to correct the issue.
PROPOSED SOLUTION
Ratify use of General Manager's emergency purchasing authority authorizing the
amendment of the Synagro contract to include their Nursery Products facility to haul and
compost the Sanitation District's Class B biosolids at a unit cost of $51.00 per wet ton
for a term from December 1, 2016 to December 27, 2016.
Synagro Facilities Description Tons Per Cost Per Total Cost
Day Ton (w/fuel)
South Kern Damaged Facility 250 $76.71 $479,438
Nursery Products Option 1 250 $51.00 $318,750
Arizona Soils Option 2 250 $82.71 $516,938
Page 2 d4
TIMING CONCERNS
Synagro's SKMC facility is currently running at capacity, and Synagro needs additional
space to re-process the biosolids that were impacted by the pipe failure immediately.
RAMIFICATIONS OF NOT TAKING ACTION
If the Sanitation District does not amend the contract, the Sanitation District will divert
an additional 250 WTPD of biosolids to land application at Tule Ranch and an additional
50 WTPD to Inland Empire Regional Composting Facility, which would take some time
to prepare administratively and operationally. The Sanitation District will be at risk with
our ability to manage the current production of biosolids of 785 tons per day. While the
Sanitation District maintains back-up capacity for emergencies, it does take time for
contractors to provide the necessary trucks and drivers to move the material.
PRIOR COMMITTEE/BOARD ACTIONS
• February 2013:
- Authorized staff to re-establish a Biosolids Account Pool utilizing a Blanket
Purchase Order for the efficient management of all biosolids contracts (Tule
Ranch, Synagro West, Inc., and Orange County Waste and Recycling) in one
account to provide flexibility for unanticipated circumstances that may impact
biosolids management, which may include events such as truck/driver shortages,
poor weather conditions, regulatory constraints, unacceptable contractor
performance, or contractor facility limitations;
- Approved Blanket Purchase Order No. 104696-OB for an annual amount not to
exceed $19,000,000 for biosolids management with Orange County Waste and
Recycling, Tule Ranch, and Synagro West, Inc., which will replace Blanket
Purchase Order No. 100760-OB; and
- Authorized staff to move funds within the Biosolids Account Pool from one
contract to another, as deemed necessary, due to unanticipated circumstances.
• November 2012 - Authorized Amendment No. 9 to Synagro West, Inc., Purchase
Order No. 100760-OB, increasing the annual amount from $6,580,000 to an amount
not to exceed (NTE) $8,600,000 for the period of January 1, 2012 through
December 31, 2012 for the Sanitation District's biosolids management contract.
Thereafter, the NTE will be $6,850,000.
• April 2006 - Approved Amendment No. 8, amended cost of sludge removal and
included a not to exceed limit of 6,580,000.
• April 2004 - Approved Amendment No. 7, amended to include South Kern Industrial
Center and a not to exceed limit of$5,800,000 and amended term of contract.
• May 2002 - Approved Amendment No. 6, amended substituting Synagro West, Inc.
for Pima Gro Systems, Inc, cost of sludge removal, term of contract, and required an
Environmental Management System.
Page 3 d 4
• August 1999 - Approved Amendment No. 5, amended cost of sludge removal, terms
of contract, and incorporated force majeure clause.
• November 1996 - Approved Amendment No. 4, amended agricultural use sites and
cost of sludge removal.
• March 1995 - Approved Amendment No. 3, amended agricultural use sites, term of
contract, incremental weather conditions, and cost of sludge removal.
• May 1991 - Approved Amendment No. 2, amended agricultural use sites, term of
contract, early termination, and cost of sludge removal.
• October 1990 - Approved Amendment No. 1, amended agricultural use sites and
cost of sludge removal.
• May 1988 - Authorized General Manager to enter into an agreement with Prima Gro
Systems, Inc. (Currently known as Synagro West, Inc.) for removal and
disposal/reuse of Districts' residual solids from Plants 1 and 2.
ADDITIONAL INFORMATION
See Attachment 1 for pictures of pipe failure incident at the SKCM facility.
CEQA
The Sanitation District filed a Notice of Exemption for the current Nursery Product
location on November 18, 2016. This Amendment does not result in any changes.
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. This item has been budgeted. (Line item: Section 5 Page 6). Project
contingency funds will not be used for these contracts.
Date of ADDroval Contract Amount Contingency
1 2/1 412 01 6 $0
ATTACHMENT
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:
• Attachment 1 South Kem Compost Pipe Failure — Emergency Excavation in
Zone 18
• Amendment No. 10
Page 4 of 4
Attachment-1 South Kern Compost Manufacturing Pipe Failure— Emergency Excavation in
Zone 18
�e5
Picture 1: South Kern Compost Manufacturing Site's Numbered Zones for composting with affected
piping and zone marked.
s
»`r
-a
a..
w,
Picture 2(above): Piping connections in a normal � ='�
zone.
Picture 3(right): Failed piping excavated from Zone 18.
Picture 4&5(below): Piping excavation to assess and
i'�
AMENDMENT NO. 10 TO AGREEMENT
FOR THE AGRICULTURAL USE OF SEWAGE SOLIDS
THIS AMENDMENT NO.10 TO AGREEMENT FOR THE AGRICULTURAL USE OF
SEWAGE SOLIDS,is made and entered into this 1st day of December,2016,to be effective
immediately,by and between the Orange County Sanitation District("District'),and Synagro West,Inc.,
of Baltimore,Maryland or an assigned Synagro West,Inc.Affiliate("Contractor"),collectively known as
"the Parties."
WITNESSETH:
WHEREAS,District and Contractor previously executed an Agreement dated June 1, 1988, for
professional services entitled"Agreement for the Agricultural Use of Sewage Solids"("Agreement")for
removal and disposal/reuse of District's Residual Solids(biosolids); and
WHEREAS,District and Contractor previously executed Amendment No.S to Agreement on
September 1, 1999 to establish fees for removal and disposal/reuse of biosolids and define force majeure
activity; and
WHEREAS,District and Contractor previously executed Amendment No.7 to Agreement on July
1,2004 to establish fees for removal and disposal/muse of biosolids;and
WHEREAS,the Agreement with District and Contractor will terminate on December 27,2016;
and,
WHEREAS,Contractor notified the District on November 29,2016,that Contractor is
experiencing a force majeure related piping failure at its SKIC facility that currently accepts and
composts District's biosolids which will require Contractor to significantly slow its inbound biosolids
materials to repair the failure;and
WHEREAS,Contractor proposed to send the District's biosolids to its subsidiary,Nursery
Products,LLC in Helendale,California,through the termination of this Agreement on December 27,
2016, at a rate of$51.00 per wet ton. The Parties anticipate this will result in a price savings for the
District and a net decrease to the annual compensation for 2016 approved by the Agreement;and
WHEREAS,the District's Board previously approved Nursery Products,LLC as a local
alternative composting facility for the District's biosolids,the District is amenable to the proposed
solution, and the District's Board of Directors will review the determination and District staff will
recommend the Board ratify this Amendment at the next Board meeting.
NOW,THEREFORE,in consideration of the promises and mutual benefits which will result to
the parties in carrying out the tents of this Amendment No.10, it is mutually agreed as follows:
1. District agrees Contractor may send the District's biosolids to Nursery Products,LLC in
Helendale, California through the termination of this Agreement on December 27,2016,
pursuant to this Amendment No. 10 at the rate of$51.00 per wet ton effective December
1,2016,and continuing through the term of this Agreement.
12W03.1
1 This Amendment No.10 is supplemental to the Agreement dated June 1, 1988,as
modified by Amendments Nos. 1 through 9,and is by reference made a part of said
Agreement.All of the terns,conditions and provisions thereof shall continue in full force
and effect unless specifically addressed by this Amendment.
3. In the event of any conflict or inconsistency between the provisions of this Amendment
No. 10 and any of the provisions of the Agreement,Amendment Nos. 1 through 9,the
provisions of this Amendment No.10 shall in all respects govern and control.
4. The persons executing this Amendment No. 10 on behalf of the Parties hereto warrant
that(i)such party is duly organized and existing, (ii)they are duly authorized to execute
and deliver this Amendment No.10 on behalf of said Parry, (iii)by so executing this
Amendment No. 10,such party is formally bound to the provisions of this Amendment
No. 10,and(iv)the entering into this Amendment No. 10 does not violate any provisions
of any other agreement to which said Party is bound.
IN WITNESS WHEREOF,this Amendment No. 10 to the Agreement has been executed in the name of
the District by its duly authorized officers and by Contractor,as of the day and year first above written.
ORANGE COUNTY SANITATION DISTRICT
By APPROVED AS TO FORM:
Chairman,Board of Directors
By
General Counsel
By
Clerk of the Board
CONTRACTOR
By
By
Print Name and Title of Officer
12W03.1
BOARD OF DIRECTORS Meethg Dare To12/1ed.of4/16 Dir.
--
AGENDA REPORT Item Number Item Number
19
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Rob Thompson, Director of Engineering
SUBJECT: DOIG DRIVE BUILDING IMPROVEMENTS, PROJECT NO. 3-65
GENERAL MANAGER'S RECOMMENDATION
A. Approve a Professional Design Services Agreement with IDS Group, Inc. to
provide engineering services for Doig Drive Building Improvements, Project
No. 3-65 (FE15-13), for an amount not to exceed $260,100; and
B. Approve a contingency of$26,010 (10%).
BACKGROUND
In 2005, the Orange County Sanitation District (Sanitation District) purchased the building
located at 7311 Doig Drive in the city of Garden Grove to be used as a Collections
Department Feld office. However, as a result of local sewer transfers in the cities of Costa
Mesa, Newport Beach, Orange, Tustin, and unincorporated areas of Orange County, it
was later determined that the new facility was no longer necessary and the building was
declared surplus property. The building is currently under a lease with a manufacturing
firm that guarantees extensions until 2022.
The building was constructed in 1978 per seismic codes less stringent than currently
required. A Seismic Risk Assessment was performed on the building and structural
reinforcements were recommended to meet current seismic standards.
On December 7, 2016, the Sanitation District staff requested Operations Committee
approval for Doig Drive Building Improvements, Project No. 3-65, in the amount of
$2,436,000 for the design and construction of seismic improvements for the Doig Drive
Building. That item is also being presented at the December 14, 2016 Board meeting for
final approval.
RELEVANT STANDARDS
Protection of Orange Countyu Sanitation District assets
PROBLEM
The building does not meet current seismic standards. In the event of an earthquake, the
building could be severely damaged. The design of the structural improvements is not
within the capabilities of the Sanitation District's staff.
Page 1 of 4
PROPOSED SOLUTION
Approve a Professional Design Services Agreement with IDS Group, Inc. to provide
professional engineering services for Doig Drive Building Improvements, Project
No. 3-65, for an amount not to exceed $260,100, and approve a contingency of
$26,010 (10%).
TIMING CONCERNS
The building is at risk for structural damage due to an earthquake until the seismic
improvements are completed.
RAMIFICATIONS OF NOT TAKING ACTION
The building may be subject to significant damage and subsequent repair costs during an
earthquake if seismic strengthening is not performed.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The project was initially created as Doig Drive Building Improvement, Project
No. FE15-13, under the Master Facilities Engineering Collections Budget with the
expectation that the engineering work could be completed under the $200,000 task order
limitation for the Master Contracts. During the project development phase, it was
determined that the design and construction services fees would exceed the $200,000
task order limitation. Therefore, Project No. FE15-13 will be cancelled and the work will
need to be completed under a Capital Improvement Project, Doig Drive Building
Improvements, Project No. 3-65.
Consultant Selection:
The Sanitation District requested and advertised for proposals for Doig Drive Building
Improvements, Project No. FE15-13 (now 3-65), on September 29, 2016. The following
evaluation criteria were described in the Request for Proposals (RFP) and used to
determine the most qualified Consultant.
CRITERION WEIGHT
Project Understanding and Approach 40%
Related Project Experience 30%
Project Team and Staff Qualifications 30%
Page 2 of 4
Three proposals were received on October 31, 2016 and evaluated in accordance with the
evaluation process set forth in the Sanitation District Ordinance No. OCSD-47 (Purchasing
Ordinance), by a pre-selected Evaluation Team consisting of the following Sanitation
District's staff.
Doug Kanis Senior Engineer
John Falkenstein Project Engineer
Don Cutler CIP Project Manager
The Evaluation Team also included one non-voting representative from the Contracts
Administration Division.
Each member of the Evaluation Team ranked the proposals using the evaluation criteria
and weighting described above. Based on the ranking shown below, IDS Group, Inc.was
selected as the most qualified Consultant.
IDS Group, Inc. Miyamoto RMS Engineering
and Design, Inc.
Evaluator 1 1.' 3ftl 2ntl
Evaluator 1a' 2n° 3r°
Evaluator 3 1" 2nd V
Combined Ranking 1" 2nd 31d
IDS Group, Inc. has significant experience with projects that mirror the scope of this
project with compliance of American Society of Civil Engineers and California Building
Code requirements. Their proposal identified innovative ideas and included many
relevant references. IDS Group, Inc. also demonstrated a team of many qualified
individuals that will be beneficial for meeting the compressed project schedule.
Review of Fee Proposal and Negotiations:
Proposals were accompanied by sealed fee proposals. In accordance with the
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 IDS Group, Inc. to clarify the requirements of the Scope
of Work, the assumptions used for the estimated level of effort, and the proposed
approach to meet the goals and objectives for the project. A negotiation meeting was
held on November 29, 2016, during which staff confirmed that the geotechnical
exploration will investigate utilities prior to digging and will return the site to pre-
exploration conditions. The level of effort was also increased slightly to address quality
control expectations.
Page 3 of 4
Original Fee
Proposal Negotiated Fee
Total Hours 1,129 1,136
Total Fee $258,600 $260,100
The Consultant's fringe and overhead costs, which factor into the billing rate, have been
substantiated. The contract profit is 10%, which is an established formula based on 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 IDS Group, Inc.
CEQA
A Notice of Exemption will be filed after Board award of the Professional Design Services
Agreement.
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing
Ordinance. Budget for this item is included in the project. The budget request was
submitted to the December 7, 2016 Operations Committee Meeting and for approval at
the same Board Meeting as this item.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the
complete agenda package:
Professional Design Services Agreement
JM:RL:dm
Page 4 of 4
PROFESSIONAL DESIGN SERVICES AGREEMENT
THIS AGREEMENT, is made and entered into to be effective the 14'h day of December, 2016
by and between the ORANGE COUNTY SANITATION DISTRICT, hereinafter referred to as
"SANITATION DISTRICT", and IDS GROUP, INC., for purposes of this Agreement hereinafter
referred to as "CONSULTANT'.
WITNESSETH:
WHEREAS, the SANITATION DISTRICT desires to engage a CONSULTANT for
Doig Drive Building Improvements, Project No. 3-65 (FE15-13); and to provide Design
services for developing a complete set of construction drawings and specifications for public
bidding for seismic and Americans with Disabilities Act (ADA) upgrades.
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 December 14, 2016 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).
PDSA PROJECT NO.3-65(FE15-13)
Revised 062316 DOG DRIVE BUILDING IMPROVEMENTS
Page 1 of 19
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
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 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.3-55(FE15-13)
Revised 052315 DOG DRIVE BUILDING IMPROVEMENTS
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 Two Hundred Sixty
Thousand One Hundred Dollars ($260,100). 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 houdy-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.
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E. Subconsultants
For any Subconsultant whose fees for services are greater than or equal to
$100,000 (excluding out-of-pocket costs), CONSULTANT shall pay to
Subconsultant total compensation in accordance with the Subconsultant amount
specified in Attachment"E"- Fee Proposal.
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
htti)://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
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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
meals reimbursements. Per diem rates shall be applied to meals that are
appropriate for travel times. Receipts are not required for the approved meals.
Additional details related to the reimbursement of the allowable direct costs are
provided in the Attachment"D"-Allowable Direct Costs of this Agreement.
I. Limitation of Costs
If, at any time, CONSULTANT estimates the cost of performing the services
described in CONSULTANT's Proposal will exceed seventy-five percent (75%) of
the not-to-exceed amount of the Agreement, including approved additional
compensation, CONSULTANT shall notify the SANITATION DISTRICT
immediately, and in writing. This written notice shall indicate the additional
amount necessary to complete the services. Any cost incurred in excess of the
approved not-to-exceed amount, without the express written consent of the
SANITATION DISTRICT's authorized representative shall be at CONSULTANT's
own risk. This written notice shall be provided separately from, and in addition to
any notification requirements contained in the CONSULTANT's invoice and
monthly progress report. Failure to notify the SANITATION DISTRICT that the
services cannot be completed within the authorized not-to-exceed amount is a
material breach of this Agreement.
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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.
The SANITATION DISTRICT, 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
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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.
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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 Regulations 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
A.M. Best's Guide Rating. However, the SANITATION DISTRICT will accept
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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. 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.
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E. Worker's Compensation Insurance
The CONSULTANT shall provide such Workers' Compensation Insurance as
required by the Labor Code of the State of California in the amount of the
statutory limit, including Employer's Liability Insurance with a minimum limit of
One Million Dollars ($1,000,000) per occurrence. Such Worker's Compensation
Insurance shall be endorsed to provide for a waiver of subrogation in favor of the
SANITATION DISTRICT. A statement on an insurance certificate will not be
accepted in lieu of the actual endorsements unless the insurance carrier is State
of California Insurance Fund and the identifier"SCIF" and endorsement numbers
2570 and 2065 are referenced on the certificate of insurance. If an exposure to
Jones Act liability may exist, the insurance required herein shall include coverage
for Jones Act claims.
F. Errors and Omissions/Professional Liability
CONSULTANT shall maintain in full force and effect, throughout the term of this
Agreement, standard industry form professional negligence errors and omissions
insurance coverage in an amount of not less than Five Million Dollars
($5,000,000)with limits in accordance with the provisions of this Paragraph. If
the policy of insurance is written on a "claims made" basis, said policy shall be
continued in full force and effect at all times during the term of this Agreement,
and for a period of five (5) years from the date of the completion of the services
hereunder.
In the event of termination of said policy during this period, CONSULTANT shall
obtain continuing insurance coverage for the prior acts or omissions of
CONSULTANT during the course of performing services under the term of this
Agreement. Said coverage shall be evidenced by either a new policy evidencing
no gap in coverage or by separate extended "tail" coverage with the present or
new carrier.
In the event the present policy of insurance is written on an "occurrence" basis,
said policy shall be continued in full force and effect during the term of this
Agreement or until completion of the services provided for in this Agreement,
whichever is later. In the event of termination of said policy during this period,
new coverage shall be obtained for the required period to insure for the prior acts
of CONSULTANT during the course of performing services under the term of this
Agreement.
CONSULTANT shall provide to the SANITATION DISTRICT a certificate of
insurance in a form acceptable to the SANITATION DISTRICT indicating the
deductible or self-retention amounts and the expiration date of said policy, and
shall provide renewal certificates not less than ten (10)days prior to the
expiration of each policy term.
G. Proof of Coverage
The CONSULTANT shall furnish the SANITATION DISTRICT with original
certificates and amendatory endorsements effecting coverage. Said policies and
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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.
H. Cancellation Notice
Each insurance policy required herein shall be endorsed to stale 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,
Div. 260, and shall be received by the SANITATION DISTRICT not less than
thirty (30)days prior to the effective date of the change(s) if the change would
reduce coverage or increase deductibles or SIR amounts or otherwise reduce or
limit the scope of insurance coverage provided to the SANITATION DISTRICT.
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I. Primary Insurance
All liability policies shall contain a Primary and Non Contributory Clause. Any
other insurance maintained by the SANITATION DISTRICT shall be excess and
not contributing with the insurance provided by CONSULTANT.
J. Separation of Insured
All liability policies shall contain a "Separation of Insureds" clause.
K. Non-Limiting (if applicable)
Nothing in this document shall be construed as limiting in any way, nor shall it
limit the indemnification provision contained in this Agreement, or the extent to
which CONSULTANT may be held responsible for payment of damages to
persons or property.
L. Deductibles and Self-Insured Retentions
Any deductible and/or self-insured retention must be declared to the
SANITATION DISTRICT on the Certificate of Insurance. All deductibles and/or
self-insured retentions require approval by the SANITATION DISTRICT. At the
option of the SANITATION DISTRICT, either: the insurer shall reduce or
eliminate such deductible or self-insured retention as respects the SANITATION
DISTRICT; or the CONSULTANT shall provide a financial guarantee satisfactory
to the SANITATION DISTRICT guaranteeing payment of losses and related
investigations, claim administration and defense expenses.
M. 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.
N. Subconsultants
The CONSULTANT shall be responsible to establish insurance requirements for
any Subconsultant hired by the CONSULTANT. The insurance shall be in
amounts and types reasonably sufficient to deal with the risk of loss involving the
Subconsultant's operations and work.
O. Limits Are Minimums
If the CONSULTANT maintains higher limits than any minimums shown above,
then SANITATION DISTRICT requires and shall be entitled to coverage for the
higher limits maintained by CONSULTANT.
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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.
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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: Natasha Dubrovski, Principal Contracts Administrator
Copy: Richard Leon, Project Manager
Notices shall be mailed to CONSULTANT at:
IDS GROUP, INC.
1 Peters Canyon Road, Suite 130
Irvine, CA 92606
Attention: Said Hilary, PhD, SE
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.
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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 parry.
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.
PDSA PROJECT NO.3-65(FE15-13)
Revised 062316 DOIG DRIVE BUILDING IMPROVEMENTS
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.3-65(FE15-13)
Revised 062316 DOIG DRIVE BUILDING IMPROVEMENTS
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 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.3-65(FE15-13)
Revised 062316 DOG DRIVE BUILDING IMPROVEMENTS
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.3-55(FE15-13)
Revised 062316 DOG DRIVE BUILDING IMPROVEMENTS
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.
CONSULTANT: IDS GROUP, INC.
By
Date
Printed Name &Title
ORANGE COUNTY SANITATION DISTRICT
By
Chair, Board of Directors Date
By
Kelly A. Lore
Clerk of the Board Date
By
Marc Dubois Date
Contracts, Purchasing and Materials
Management Division 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 Attached
Attachment"G"— Not Attached
Attachment"H"— Not Attached
Attachment"I" —Cost Matrix and Summary
Attachment"J" — Not Attached
Attachment"K" — Hourly Rate Schedule for Minor Subconsultant
Attachment"L" —OCSD Safety Standards
NKD:CMM:yp
PDSA PROJECT NO.3-55(FE15-13)
Revised 062316 DOG DRIVE BUILDING IMPROVEMENTS
Page 19 of 19
BOARD OF DIRECTORS Meeting Date TO12/1Bd.Of4/16 Dir.
--
AGENDA REPORT ItemNumber Iem2umber
zo
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: WASTEWATER REFUNDING REVENUE OBLIGATIONS SERIES 2017A
GENERAL MANAGER'S RECOMMENDATION
A. Adopt Resolution No. OCSD 16-32 entitled: "A Resolution of the Board of Directors
of the Orange County Sanitation District authorizing the execution and delivery by
the District of an Installment Purchase Agreement, a Trust Agreement 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"; and
B. That the Orange County Sanitation District Financing Corporation approve the
documents supporting and authorizing the Revenue Obligations in an aggregate
amount not to exceed $91,620,000.
BACKGROUND
On May 22, 2007, the Orange County Sanitation District (Sanitation District) issued
$95,180,000 of fixed rate Refunding Certificates of Participation (COP), Series 2007A
(2007A COPs) to advance refund a portion of the COP, Series 2003. With current tax-
exempt interest rates lower than the coupons on the 2007A COPS, a refunding could
provide attractive savings to the Sanitation District. The current outstanding amount of
the 2007A COPs is $91,885,000, of which $91,620,000 maturing on and after 2018 are
callable on February 1, 2017.
On November 16, 2016, the Board authorized the General Manager to pursue a fixed rate
refunding of the callable 2007A COPS. Approval of the recommended actions and the
associated documents will enable the staff to complete the refunding process.
RELEVANT STANDARDS
• OCSD Debt Policy- Financial Management Policy and Procedure No. 201-3-1; net
present value savings are at least three (3) percent of the par amount of the
refunded bonds.
• Easy access to low cost credit.
Page 1 of 4
PROBLEM
The interest rates payable on the 2007A COPS are higher than current market yields.
PROPOSED SOLUTION
The issuance of up to $91,620,000 of Wastewater Refunding Revenue Obligations,
Series 2017A (2017A Wastewater Obligations), through a competitive sale, could
generate debt service savings. In the current market, net present value savings are
estimated to be approximately $12.6 million, or 13.8% of refunded par, with a matching
refunding amortization schedule.
TIMING CONCERNS
The 2007A COPS are callable starting on February 1, 2017. The proposed 2017A
Wastewater Obligations issuance is scheduled on February 1, 2017 to simultaneously(a)
close and (b) call the 2007A COPS in order to avoiding paying above market rates on the
2007A COPS.
RAMIFICATIONS OF NOT TAKING ACTION
Not taking action would cause the Sanitation District to forego the opportunity to benefit
from the savings resulting from the reduction of interest costs.
PRIOR COMMITTEE/BOARD ACTIONS
November 2016 - The Board authorized the General Manager to issue new fixed rate
Certificates of Participation (COP) to be referred to as Wastewater Refunding Revenue
Obligations, Series 2017A, in an amount sufficient to refund up to $91,620,000 of COP
Series 2007A.
September 2016 - The Board adopted Resolution No. OCSD 16-16, 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 execution and
delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation
Notes, Series 2016B, such Notes, evidencing principal in an aggregate amount of not to
exceed $120,000,000, approving a Notice of Intention to Sell, authorizing the distribution
of an Official Notice Inviting Bids and an Official Statement in connection with the offering
and sale of such Notes and authorizing the execution of other necessary documents and
related actions.
ADDITIONAL INFORMATION
The Sanitation District currently has twelve series of debt issuances outstanding in the
par amount of $1.08 billion. The following table lists each issuance, the outstanding
amount, and final maturity.
Page 2 of 4
Outstanding Final Maturity
Par Amount(1)
eries 2016B CANS 109,875,000 December 15, 2018
eries 2016A Refunding 145,880,000 February 1,2039
eries 2015A Refunding 127,510,000 February 1,2037
eries 2014A Refunding 85,090,000 February 1,2027
eries 2012B Refunding 66,395,000 February 1, 2026
eries 2012A Refunding 100,645,000 February 1, 2033
eries 2011A Refunding 96,330,000 February 1, 2026
eries 2010C 157,000,000 February 1, 2044
eries 2010A 80,000,000 February 1,2040
eries 2009A Refunding 13,405,000 February 1, 2019
eries 2007E 7,110,000 February 1, 2017
eries 2007A Refunding 91,885,000 February 1, 2030
Total: $1,081,125,000
(1) Asof December1,2016
Legal Authorization and Approvals
The Board of Directors and the Financing Corporation will each be required to adopt
separate Resolutions to complete this refunding. A Financing Corporation is required by
the structure of the COPS and was formed in April 2000 solely to satisfy this need. The
Board of Directors of the Corporation is the same as the Board of Directors of the
Sanitation District and the Corporation meets after an adjournment of the OCSD Board.
The OCSD Resolution authorizes the execution and delivery of certain legal documents
and the execution and delivery of Wastewater Refunding Revenue Obligations, Series
2017A, evidencing principal in an aggregate amount of not to exceed $91,620,000 all as
spelled out in the title as follows:
"A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE
DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT
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 OF 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."
The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three
actions that are similarly enumerated in the title as follows:
Page 3 of 4
"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
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 OF NOT TO EXCEED $91,620,000 AND AUTHORIZING THE EXECUTION
OF NECESSARY DOCUMENTS AND RELATED ACTIONS."
Following is a table listing the remaining steps to be completed for the issuance of the
Wastewater Refunding Revenue Obligations, Series 2017A debt issuance:
➢ Board considers legal and disclosure documents
December ➢ Financing Corporation considers legal and disclosure documents
➢ Rating Agency discussions
January ➢ Receive ratings from Bond Rating Agencies
➢ Receive competitive bids
February ➢ Closing
➢ Begin debt administration
CEQA
N/A
BUDGET/PURCHASING ORDINANCE COMPLIANCE
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:
• Sanitation District Resolution No. OCSD 16-32
• Corporation Resolution No. FC-25
• Draft Trust Agreement
• Draft Installment Purchase Agreement
• Draft Continuing Disclosure Agreement
• Draft Preliminary Official Statement
• Draft Official Notice Inviting Bids
• Draft Notice of Intention to Sell
Page 4 of 4
RESOLUTION NO. OCSD 16-32
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND
DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE
AGREEMENT, A TRUST AGREEMENT 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 OF 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
WHEREAS, to refinance the acquisition, construction and installation of certain
improvements to its wastewater system (the "Prior Project"), the Orange County
Sanitation District (the "District") has heretofore purchased the Prior Project from the
Orange County Sanitation District Financing Corporation (the "Corporation"), and the
Corporation has heretofore sold the Prior Project to the District, for the installment
payments (the "Prior Installment Payments") made by the District pursuant to the
Installment Purchase Agreement, dated as of May 1, 2007 (the "Prior Installment
Purchase Agreement"), by and between the District and the Corporation;
WHEREAS, to provide the funds necessary to finance the Prior Project, the District
caused the execution and delivery of the Orange County Sanitation District Refunding
Certificates of Participation, Series 2007A (the "Prior Certificates"), evidencing direct,
undivided fractional interests in the Prior Installment Payments;
WHEREAS, the District desires to refinance all or a portion of the Prior Project by
paying and prepaying all or a portion of the remaining Prior Installment Payments, and
the interest thereon to the date of prepayment, thereby causing all or a portion of the
remaining Prior Certificates to be prepaid;
WHEREAS, to provide the funds necessary to pay and prepay a portion of the
remaining Prior Installment Payments, the District and the Corporation desire that the
Corporation purchase the Prior Project from the District and the District sell the Prior
Project to the Corporation, and that the District then purchase the Prior Project from the
Corporation and the Corporation sell the Prior Project to the District, for the installment
payments (the "Installment Payments") to be made by the District pursuant to an
Installment Purchase Agreement by and between the District and the Corporation (such
Installment Purchase Agreement, in the form presented to this meeting, with such
27678322.4 11612667
(District Resolution—OCSD 2017A)
OCSD 16-32-1
changes, insertions and omissions as are made pursuant to this Resolution, being
referred to herein as the "Installment Purchase Agreement");
WHEREAS, the Corporation intends to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to U.S. Bank National
Association, as trustee (the "Trustee"), pursuant to a Trust Agreement by and among the
Trustee, the Corporation and the District (such Trust Agreement, in the form presented to
this meeting, with such changes, insertions and omissions as are made pursuant to this
Resolution, being referred to herein as the `Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and delivery
of the Trust Agreement, the Trustee intends to execute and deliver the Orange County
Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A (the
"Revenue Obligations"), evidencing direct, undivided fractional interests in the Installment
Payments, and the interest thereon;
WHEREAS, the District desires to provide for the public sale of the Revenue
Obligations;
WHEREAS, a form of the Notice of Intention to Sell to be published in connection
with the public offering and sale of the Revenue Obligations has been prepared (such
Notice of Intention to Sell, in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to herein
as the "Notice of Intention to Sell");
WHEREAS, a form of the Official Notice Inviting Bids to be distributed in
connection with the public offering and sale of the Revenue Obligations has been
prepared (such Official Notice Inviting Bids, in the form presented to this meeting, with
such changes, insertions and omissions as are made pursuant to this Resolution, being
referred to herein as the "Notice Inviting Bids");
WHEREAS, a form of the Preliminary Official Statement to be distributed in
connection with the public offering of the Revenue Obligations has been prepared (such
Preliminary Official Statement in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to herein
as the "Preliminary Official Statement");
WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"),
requires that the underwriter thereof must have reasonably determined that the District
has undertaken in a written agreement or contract for the benefit of the holders of the
Revenue Obligations to provide disclosure of certain financial information and certain
material events on an ongoing basis;
WHEREAS, to cause such requirement to be satisfied, the District desires to enter
into a Continuing Disclosure Agreement with Digital Assurance Certification L.L.C. (such
Continuing Disclosure Agreement in the form presented to this meeting, with such
27678322A OCSD 16-32-2
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:
(a) the Installment Purchase Agreement;
(b) the Trust Agreement;
(c) the Notice of Intention to Sell;
(d) the Notice Inviting Bids;
(e) the Preliminary Official Statement; and
(f) 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 District DOES HEREBY
RESOLVE, DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the Board
of Directors of the District (the "Board") so finds.
Section 2. The Installment Purchase Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth herein, be and the
same is hereby approved. The Chair of the Board, and such other member of the Board
as the Chair may designate, the General Manager of the District, the Director of Finance
and Administrative Services of the District, and such other officers of the District as the
Directorof Finance and Administrative Services may designate (the"Authorized Officers")
are, and each of them is, hereby authorized and directed, for and in the name of the
District, to execute and deliver the Installment Purchase Agreement in the form submitted
to this meeting, with such changes, insertions and omissions as the Authorized Officer
executing the same may require or approve, such requirement or approval to be
conclusively evidenced by the execution of the Installment Purchase Agreement by such
Authorized Officer; provided, however, that such changes, insertions and omissions shall
not result in an aggregate principal amount of Installment Payments in excess of
$91,620,000, shall not result in a true interest cost for the Installment Payments in excess
of 4.5% and shall not result in a final Installment Payment later than February 1, 2030.
27678322A OCSD 16-32-3
Section 3. The Trust Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is
hereby approved. The Authorized Officers are, and each of them is, hereby authorized
and directed, for and in the name of the District, to execute and deliver the Trust
Agreement in the form presented to this meeting, with such changes, insertions and
omissions as the Authorized Officer executing the same may require or approve, such
requirement or approval to be conclusively evidenced by the execution of the Trust
Agreement by such Authorized Officer.
Section 4. The execution and delivery of Revenue Obligations evidencing
principal in an aggregate amount not to exceed $91,620,000, payable in the years and in
the amounts, and evidencing principal of and interest on the Installment Payments as
specified in the Trust Agreement as finally executed, are hereby authorized and
approved.
Section 5. The prepayment of all or a portion of the remaining principal
components of the Prior Installment Payments, and the interest components thereof to
the dates of prepayment, and the Prior Certificates evidencing interests therein, as
determined by any Authorized Officer, is hereby authorized and approved.
Section 6. The form of Notice of Intention to Sell, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, with
such changes, insertions and omissions therein as may be approved by an Authorized
Officer, is hereby approved, and the use of the Notice of Intention to Sell in connection
with the offering and sale of the Revenue Obligations is hereby approved. The Authorized
Officers are each hereby authorized and directed, for and in the name and on behalf of
the District, to cause the Notice of Intention to Sell to be published once in The Bond
Buyer(or in such other financial publication generally circulated throughout the State of
California or reasonably expected to be disseminated among prospective bidders for the
Revenue Obligations as an Authorized Officer shall approve as being in the best interests
of the District) at least five days prior to the date set for the opening of bids in the Notice
Inviting Bids, with such changes, insertions and omissions therein as an Authorized
Officer may require or approve, such requirement or approval to be conclusively
evidenced by such publishing of the Notice of Intention to Sell.
Section 7. The Notice Inviting Bids, in substantially the form submitted to this
meeting and made a part hereof as though set forth herein, with such changes, insertions
and omissions therein as may be approved by an Authorized Officer, be and the same is
hereby approved, and the use of the Notice Inviting Bids in connection with the offering
and sale of the Revenue Obligations is hereby authorized and approved. The terms and
conditions of the offering and sale of the Revenue Obligations shall be as specified in the
Notice Inviting Bids. Bids for the purchase of the Revenue Obligations shall be received
at the time and place set forth in the Notice Inviting Bids. The Authorized Officers are
each hereby authorized and directed, for and in the name and on behalf of the District, to
accept the bid for the Revenue Obligations with the lowest true interest cost, or to reject
all bids therefor, in accordance with the terms of the Notice Inviting Bids.
27678322A OCSD 16-32-4
Section 8. The Preliminary Official Statement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, with
such changes, insertions and omissions therein as may be approved by an Authorized
Officer, is hereby approved, and the use of the Preliminary Official Statement in
connection with the offering and sale of the Revenue Obligations is hereby authorized
and approved. The Authorized Officers are each hereby authorized to certify on behalf of
the District that the Preliminary Official Statement is deemed final as of its date, within the
meaning of Rule 15c2-12 (except for the omission of certain information permitted by Rule
15c2-12 to be omitted). The Authorized Officers are each hereby authorized and directed
to furnish, or cause to be furnished, to prospective bidders for the Revenue Obligations a
reasonable number of copies of the Preliminary Official Statement.
Section 9. The preparation and delivery of a final Official Statement(the"Official
Statement"), and its use in connection with the offering and sale of the Revenue
Obligations, be and the same is hereby authorized and approved. The Official Statement
shall be in substantially the form of the Preliminary Official Statement, with such changes,
insertions and omissions as may be approved by an Authorized Officer, such approval to
be conclusively evidenced by the execution and delivery thereof. The Authorized Officers
are, and each of them is, hereby authorized and directed to execute the final Official
Statement and any amendment or supplement thereto, for and in the name of the District.
Section 10. The Continuing Disclosure Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth herein, be and the
same is hereby approved. The Authorized Officers are, and each of them is, hereby
authorized and directed, for and in the name of the District, to execute and deliver the
Continuing Disclosure Agreement in the form submitted to this meeting, with such
changes, insertions and omissions as the Authorized Officer executing the same may
require or approve, such requirement or approval to be conclusively evidenced by the
execution of the Continuing Disclosure Agreement by such Authorized Officer.
Section 11. The 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 Revenue Obligations and the transactions contemplated by
the notices, agreements and documents referenced in this Resolution.
Section 12. All actions heretofore taken by the officers and employees of the
District with respect to the execution, delivery and sale of the Revenue Obligations, or in
connection with or related to any of the agreements or documents referenced in this
Resolution, are hereby approved, confirmed and ratified.
Section 13. This Resolution shall take effect immediately upon its adoption.
27678322A OCSD 16-32-5
PASSED AND ADOPTED at a regular meeting of the Board of Directors held on
December 14, 2016.
Gregory C. Sebourn, PLS
Board Chairman
ATTEST:
Kelly A. Lore
Clerk of the Board
APPROVED:
Bradley R. Hogin
General Counsel
Orange County Sanitation District
27678322A OCSD 16-32-6
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
I, Kelly Lore, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OCSD 16-32 was passed and
adopted at a regular meeting of said Board on the 14th day of December, 2016, by the
following vote, to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal
of Orange County Sanitation District this 14th day of December, 2016.
Kelly A. Lore
Clerk of the Board of Directors
Orange County Sanitation District
2]698322A
RESOLUTION NO. FC-25
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 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 OF NOT TO
EXCEED $91,620,000 AND AUTHORIZING THE EXECUTION OF
NECESSARY DOCUMENTS AND RELATED ACTIONS.
WHEREAS, to refinance the acquisition, construction and installation of certain
improvements to its wastewater system (the "Prior Project"), the Orange County
Sanitation District (the "District") has heretofore purchased the Prior Project from the
Orange County Sanitation District Financing Corporation (the "Corporation"), and the
Corporation has heretofore sold the Prior Project to the District, for the installment
payments (the "Prior Installment Payments") made by the District pursuant to the
Installment Purchase Agreement, dated as of May 1, 2007 (the "Prior Installment
Purchase Agreement"), by and between the District and the Corporation;
WHEREAS, to provide the funds necessary to refinance the Prior Project, the
District caused the execution and delivery of the Orange County Sanitation District
Refunding Certificates of Participation, Series 2007A(the "Prior Certificates"), evidencing
direct, undivided fractional interests in the related Prior Installment Payments;
WHEREAS, the District desires to refinance all or a portion of the Prior Project by
paying and prepaying all or a portion of the remaining Prior Installment Payments, and
the interest thereon to the date of prepayment, thereby causing all or a portion of the
remaining Prior Certificates to be prepaid;
WHEREAS, to provide the funds necessary to pay and prepay a portion of the
remaining Prior Installment Payments, the District and the Corporation desire that the
Corporation purchase the Prior Project from the District and the District sell the Prior
Project to the Corporation, and that the District then purchase the Prior Project from the
Corporation and the Corporation sell the Prior Project to the District, for the installment
payments (the "Installment Payments") to be made by the District pursuant to an
Installment Purchase Agreement by and between the District and the Corporation (such
Installment Purchase Agreement, in the form presented to this meeting, with such
changes, insertions and omissions as are made pursuant to this Resolution, being
referred to herein as the "Installment Purchase Agreement");
27678327A 1161266'
(Copp fim Rmlufi.)
WHEREAS, the Corporation intends to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to U.S. Bank National
Association, as trustee (the "Trustee"), pursuant to a Trust Agreement by and among the
Trustee, the Corporation, and the District (such Trust Agreement, in the form presented
to this meeting, with such changes, insertions and omissions as are made pursuant to
this Resolution, being referred to herein as the "Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and delivery
of the Trust Agreement, the Trustee intends to execute and deliver the Orange County
Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A (the
"Revenue Obligations"), evidencing direct, undivided fractional interests in the Installment
Payments, and the interest thereon;
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Installment Purchase Agreement; and
(b) the Trust Agreement;
WHEREAS, all acts, conditions and things required by the Constitution and laws
of the State of California to exist, to have happened and to have been performed
precedent to and in connection with the consummation of the actions authorized hereby
do exist, have happened and have been performed in regular and due time, form and
manner as required by law, and the Corporation is now duly authorized and empowered,
pursuant to each and every requirement of law, to consummate such actions for the
purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, the Board of Directors of the Corporation DOES HEREBY
RESOLVE, DETERMINE AND ORDER:
Section 1. All 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
$91,620,000, shall not result in a true interest cost for the Installment Payments in excess
of 4.5% and shall not result in a final Installment Payment later than February 1, 2030.
27678327a FC-25-2
Section 3. The Trust Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is
hereby approved. The Authorized Officers are, and each of them is, hereby authorized
and directed, for and in the name of the Corporation, to execute and deliver the Trust
Agreement in the form presented to this meeting, with such changes, insertions and
omissions as the Authorized Officer executing the same may require or approve, such
requirement or approval to be conclusively evidenced by the execution of the Trust
Agreement by such Authorized Officer.
Section 4. The execution and delivery of Revenue Obligations evidencing
principal in an aggregate amount of not to exceed $91,620,000, payable in the years and
in the amounts, and evidencing direct, undivided fractional interests in the Installment
Payments, and the interest thereon, as specified in the Trust Agreement as finally
executed, are hereby authorized and approved.
Section 5. The officers and agents of the Corporation are, and each of them
hereby is, authorized and directed to execute and deliver any and all documents and
instruments and to do and cause to be done any and all acts and things necessary or
proper for carrying out the execution and delivery of the Revenue Obligations and the
transactions contemplated by the agreements or documents referenced in this
Resolution.
Section 6. All actions heretofore taken by the officers and agents of the
Corporation with respect to the execution, delivery, and sale of the Revenue Obligations,
or in connection with or related to any of the agreements or documents referenced in this
Resolution, are hereby approved, confirmed, and ratified.
Section 7. This Resolution shall take effect immediately upon its adoption.
27678327a FC-25-3
PASSED AND ADOPTED at a regular meeting of the Orange County Sanitation
District Financing Corporation held on December 14, 2016.
Gregory C. Sebourn, PLS
President, Orange County Sanitation
District Financing Corporation
ATTEST:
Kelly A. Lore
Clerk of the Board, Orange County
Sanitation District Financing Corporation
APPROVED:
Bradley R. Hogin
General Counsel, Orange County
Sanitation District Financing Corporation
27678327a FC-25-4
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
I, Kelly Lore, Clerk of the Board of Directors of the Orange County Sanitation
District Financing Corporation, do hereby certify that the foregoing Resolution No. FC-
25 was passed and adopted at a regular meeting of said Board on the 14th day of
December, 2016, by the following vote, to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal
of Orange County Sanitation District Financing Corporation this 14th day of December,
2016.
Kelly A. Lore
Clerk of the Board of Directors
Orange County Sanitation District
Financing Corporation
2]69832]A
DRAFT OF
12/06/16
TRUST AGREEMENT
by and among
U.S. BANK NATIONAL ASSOCIATION,
as Trustee,
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
and
ORANGE COUNTY SANITATION DISTRICT
Dated as of January 1, 2017
Relating to
Orange County Sanitation District
Wastewater Refunding Revenue Obligations
Series2017A
27687551.4 11612667
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section1.01. Definitions........................................................................................................2
Section 1.02. Definitions in Installment Purchase Agreement..............................................9
Section1.03. Equal Security..................................................................................................9
ARTICLE II
TERMS AND CONDITIONS OF REVENUE OBLIGATIONS
Section 2.01. Preparation and Delivery of Revenue Obligations ..........................................9
Section 2.02. Denomination, Medium and Dating of Revenue Obligations ....................... 10
Section 2.03. Payment Dates of Revenue Obligations; Interest Computation.................... 10
Section 2.04. Form of Revenue Obligations........................................................................ 11
Section 2.05. Execution of Revenue Obligations and Replacement Revenue
Obligations..................................................................................................... 11
Section 2.06. Transfer and Payment,Exchange or Cancellation of Revenue
Obligations..................................................................................................... 11
Section 2.07. Revenue Obligation Registration Books........................................................ 12
Section 2.08. Temporary Revenue Obligations................................................................... 12
Section 2.09. Revenue Obligations Mutilated, Lost,Destroyed or Stolen.......................... 12
Section 2.10. Book-Entry System........................................................................................ 13
ARTICLE III
PROCEEDS OF REVENUE OBLIGATIONS
Section 3.01. Delivery of Revenue Obligations................................................................... 15
Section 3.02. Deposit of Proceeds of Revenue Obligations ................................................ 15
Section 3.03. Costs of Issuance Fund.................................................................................. 15
ARTICLE IV
PREPAYMENT OF REVENUE OBLIGATIONS
Section 4.01. Optional Prepayment..................................................................................... 16
Section4.02. Reserved......................................................................................................... 16
Section 4.03. Selection of Revenue Obligations for Optional Prepayment......................... 16
Section 4.04. Notice of Prepayment .................................................................................... 16
Section 4.05. Partial Prepayment of Revenue Obligations.................................................. 17
Section 4.06. Effect of Prepayment..................................................................................... 17
ARTICLE V
ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS
Section 5.01. Assignment and Pledge.................................................................................. 18
Section 5.02. Installment Payment Fund............................................................................. 18
Section5.03. Reserved......................................................................................................... 19
Section 5.04. Investment of Moneys.................................................................................... 19
Section 5.05. Brokerage Confirmations...............................................................................20
27687551.E i
TABLE OF CONTENTS
(continued)
Page
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement................................................................20
Section 6.02. Compliance with Installment Purchase Agreement.......................................20
Section 6.03. Compliance with Master Agreement.............................................................20
Section 6.04. Observance of Laws and Regulations............................................................20
Section6.05. Other Liens.....................................................................................................21
Section 6.06. Prosecution and Defense of Suits ..................................................................21
Section 6.07. Accounting Records and Statements.............................................................21
Section 6.08. Tax Covenants ...............................................................................................21
Section 6.09. Continuing Disclosure ...................................................................................24
Section 6.10. Further Assurances.........................................................................................25
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01. Action upon Event of Default........................................................................25
Section 7.02. Other Remedies of the Trustee......................................................................25
Section7.03. Non-Waiver....................................................................................................26
Section 7.04. Remedies Not Exclusive................................................................................26
Section 7.05. Application of Amounts After Default..........................................................26
Section 7.06. Trustee May Enforce Claims Without Possession of Revenue
Obligations.....................................................................................................27
Section 7.07. Limitation on Suits.........................................................................................27
Section 7.08. No Liability by the Corporation to the Owners.............................................28
Section 7.09. No Liability by the District to the Owners.....................................................28
Section 7.10. No Liability of the Trustee to the Owners.....................................................28
ARTICLE VI I
THE TRUSTEE
Section 8.01. Employment of the Trustee; Duties...............................................................28
Section 8.02. Removal and Resignation of the Trustee.......................................................28
Section 8.03. Compensation and Indemnification of the Trustee........................................30
Section 8.04. Protection of the Trustee................................................................................30
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement...........................................................................32
Section 9.02. Disqualified Revenue Obligations.................................................................33
Section 9.03. Endorsement or Replacement of Revenue Obligations After
Amendment or Supplement...........................................................................33
Section 9.04. Amendment by Mutual Consent....................................................................33
27687551.E ii
TABLE OF CONTENTS
(continued)
Page
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Revenue Obligations and Trust Agreement.............................33
Section10.02. Unclaimed Moneys........................................................................................35
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of Trust Agreement..........................................................................35
Section 11.02. Successor Deemed Included in all References to Predecessor......................35
Section 11.03. Execution of Documents by Owners.............................................................35
Section 11.04. Waiver of Personal Liability..........................................................................36
Section 11.05. Acquisition of Revenue Obligations by District............................................36
Section11.06. Content of Certificates...................................................................................36
Section 11.07. Funds and Accounts.......................................................................................37
Section 11.08. Article and Section Headings,Gender and References.................................37
Section 11.09. Partial Invalidity.............................................................................................37
Section 11.10. California Law...............................................................................................37
Section11.11. Notices...........................................................................................................38
Section 11.12. Effective Date................................................................................................38
Section 11.13. Execution in Counterparts..............................................................................38
EXHIBIT A—FORM OF REVENUE OBLIGATION
27697551.4 111
TRUST AGREEMENT
THIS TRUST AGREEMENT (this "Trust Agreement'), dated as of January 1, 2017, is
made by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, as trustee(the"Trustee"),
the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a
nonprofit public benefit corporation organized and existing under the laws of the State of
California (the "Corporation"), and the ORANGE COUNTY SANITATION DISTRICT, a
county sanitation district organized and existing under the laws of the State of California (the
"°District').
WITNESSETH:
WHEREAS, to refinance the acquisition, construction and installation of certain
improvements to its wastewater system (the "Prior Project'), the District has heretofore
purchased the Prior Project from the Corporation, and the Corporation has heretofore sold the
Prior Project to the District, for the installment payments (the "Prior Installment Payments")
made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2007
(the"Prior Installment Purchase Agreement'),by and between the District and the Corporation;
WHEREAS, to provide the funds necessary to refinance the Prior Project, the District
caused the execution and delivery of the Orange County Sanitation District Refunding
Certificates of Participation, Series 2007A (the "Prior Certificates"), evidencing direct,
undivided fractional interests in the related Prior Installment Purchase Agreement and the related
Prior Installment Payments;
WHEREAS,the District desires to refinance a portion of the Prior Project (the"Project')
by prepaying a portion of the remaining Prior Installment Payments, and the interest thereon to
the date of prepayment, thereby causing a portion of the Prior Certificates to be retired;
WHEREAS, to provide the funds necessary to pay and prepay a portion of the remaining
Prior Installment Payments,the District and the Corporation desire that the Corporation purchase
the Project from the District and the District sell the Project to the Corporation, and that the
District then purchase the Project from the Corporation and the Corporation sell the Project to
the District, for the installment payments (the"Installment Payments") to be made by the District
pursuant to the Installment Purchase Agreement, dated the date hereof(the"Installment Purchase
Agreement');
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to the Trustee;
WHEREAS, in consideration of such assignment and the execution and delivery of this
Trust Agreement, the Trustee has agreed to execute and deliver Orange County Sanitation
District Wastewater Refunding Revenue Obligations, Series 2017A (the "Revenue Obligations"),
which are certificates of participation, evidencing direct, undivided fractional interests in the
Installment Purchase Agreement and the related Installment Payments,and the interest thereon;
27687551A
WHEREAS, a portion of the proceeds of the Revenue Obligations will be used to prepay
a portion of the Prior Installment Payments; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and delivery of
this Trust Agreement do exist, have happened and have been performed in regular and due time,
form and manner as required by law, and the parties hereto are now duly authorized to execute
and deliver this Trust Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual agreements
and covenants contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the
context otherwise requires, the terms defined in this Section shall for all purposes hereof and of
any amendment hereof or supplement hereto and of the Revenue Obligations and of any
certificate, opinion, request or other document mentioned herein or therein have the meanings
defined herein, the following definitions to be equally applicable to both the singular and plural
forms of any of the terms defined herein:
"Authorized Corporation Representative"means the President,the Vice President, the
Treasurer and the Secretary of the Corporation, and any other Person authorized by the President
of the Corporation to act on behalf of the Corporation under or with respect to this Trust
Agreement.
"Authorized Denominations"means $5,000 and integral multiples thereof.
"Authorized District Representative" means the General Manager of the District, the
Director of Finance and Administrative Services of the District, the Controller of the District and
any other Person authorized by the Director of Finance and Administrative Services of the
District to act on behalf of the District under or with respect to this Trust Agreement.
"Beneficial Owners" means those individuals, partnerships, corporations or other
entities for which the Participants have caused the Depository to hold Book-Entry Certificates.
"Book-Entry Certificates" means the Revenue Obligations registered in the name of the
nominee of DTC, or any successor securities depository for the Revenue Obligations, as the
Owner thereof pursuant to the terms and provisions of Section 2.10 hereof.
"Business Day" means a day other than (a) Saturday or Sunday, (b)a day on which
banking institutions in the city in which the Principal Office is located are authorized or required
by law to be closed, and (c)a day on which the New York Stock Exchange is authorized or
obligated by law or executive order to be closed.
2]68]551A 2
"Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of
DTC with respect to the Revenue Obligations.
"Certificate Year" means each twelve-month period beginning on February 2 in each
year and extending to the next succeeding February 1,both dates inclusive.
"Closing Date"means February 1,2017.
"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
L.L.C., as originally executed and as it may from time to time be amended in accordance with
the terms thereof.
"Corporation" means the Orange County Sanitation District Financing Corporation, a
nonprofit public benefit corporation organized and existing under the laws of the State.
"Costs of Issuance" means all the costs of executing and delivering the Revenue
Obligations, including, but not limited to, all printing and document preparation expenses in
connection with this Trust Agreement, the Installment Purchase Agreement, the Revenue
Obligations and any preliminary official statement and final official statement pertaining to the
Revenue Obligations, fees of a municipal advisor, rating agency fees, market study fees, legal
fees and expenses of counsel with respect to the execution and delivery of the Revenue
Obligations, the initial fees and expenses of the Trustee and its counsel and other fees and
expenses incurred in connection with the execution and delivery of the Revenue Obligations, to
the extent such fees and expenses are approved by the District.
"Costs of Issuance Fund" means the fund by that name established in accordance with
Section 3.03 hereof.
"Depository" means the securities depository acting as Depository pursuant to
Section 2.10 hereof.
"District" means the Orange County Sanitation District, a county sanitation district
organized and existing under the laws of the State, and any successor thereto.
"DTC"means The Depository Trust Company,New York,New York and its successors.
"Event of Default" shall have the meaning set forth in Section 6.01 of the Installment
Purchase Agreement.
"Fitch" means Fitch Ratings, its successors and assigns, except that if such corporation
shall no longer perform the function of a securities rating agency for any reason,the term "Fitch"
shall be deemed to refer to any other nationally recognized securities rating agency selected by
the District.
2]68]551A 3
"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-I" by Moody's;
provided that, such obligations shall not include unit investment trusts or mutual fund
obligations;
(ii) advance refunded tax-exempt obligations that (a) are rated by Moody's
and S&P, (b) are secured by obligations specified in clause (i), (c) 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
Fannie Mae; provided, that such bonds, debentures or notes shall be the senior
obligations of such agencies (including participation certificates) and have the same
ratings by Moody's and S&P as the obligations specified in clause(i); and
(iv) bonds, debentures or notes issued by any Federal agency hereafter created
by an act of Congress, the payment of the principal of and interest on which are
unconditionally guaranteed by the United States of America as to the full and timely
payment; provided, that, such obligations shall not include unit investment trusts or
mutual fund obligations.
"Installment Payment Fund" means the fund by that name established in accordance
with Section 5.02 hereof.
"Installment Payments" means the Installment Payments required to be made by the
District pursuant to Section 3.02 of the Installment Purchase Agreement.
"Installment Purchase Agreement" means the Installment Purchase Agreement, dated
as of the date hereof, by and between the District and the Corporation, as originally executed and
as it may from time to time be amended in accordance with the provisions thereof.
"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 I and August 1 of each year, commencing
August 1,2017.
"Letter of Representations"means the letter of the District delivered to and accepted by
the Depository on or prior to the delivery of the Revenue Obligations as Book-Entry Certificates
setting forth the basis on which the Depository serves as depository for such Book-Entry
27687551A 4
Certificates, 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 terns thereof.
"Moody's" means Moody's Investors Service, its successors and assigns, except that if
such corporation shall no longer perform the function of a securities rating agency for any
reason,the term "Moody's" shall be deemed to refer to any other nationally recognized securities
rating agency selected by the District.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.10 hereof.
"Opinion of Counsel"means a written opinion of Norton Rose Fulbright US LLP or any
other counsel of recognized national standing in the field of law relating to municipal bonds,
appointed and paid by the District.
"Outstanding," when used as of any particular time with reference to Revenue
Obligations, means (subject to the provisions of Section 9.02 hereof) all Revenue Obligations
except (a)Revenue Obligations previously canceled by the Trustee or delivered to the Trustee
for cancellation, (b) Revenue Obligations paid or deemed to have been paid within the meaning
of Section 10.01 hereof, and(c) Revenue Obligations in lieu of or in substitution for which other
Revenue Obligations shall have been executed and delivered by the Trustee pursuant to
Section 2.09 hereof.
"Owner" means any Person who shall be the registered owner of any Outstanding
Revenue Obligation as indicated in the registration books of the Trustee required to be
maintained pursuant to Section 2.07 hereof.
"Participants" means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Book-Entry Certificates as securities depository.
"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
2]68]551A 5
such obligations are backed by the full faith and credit of the United States for the full
and timely payment of principal and interest;
(3) Obligations of any state of the United States or any political subdivision
thereof, which at the time of investment are rated "Aa3" or higher by Moody's or"AA-"
or higher by S&P or Fitch; or which are rated "VMIG 1" or better by Moody's, "A-1"or
better by S&P, or "Fl" or better by Fitch with respect to commercial paper, or "VMIG
1,""SP-1,"or"F 1,"respectively,with respect to municipal notes;
(4) Unsecured certificates of deposit, time deposits and bankers' acceptance
(having maturities of not more than 365 days) of any bank the short-term obligations of
which we rated on the date of purchase "A-1+" or better by S&P, "Fl" or better by Fitch
and "P-l" by Moody's and/or certificates of deposit (including those of the Trustee, its
parent and its affiliates) secured at all times by collateral that may be used by a national
bank for purposes of satisfying its obligations to collateralize pursuant to federal law
which are issued by commercial banks, savings and loan associations or mutual savings
bank whose short-term obligations are rated on the date of purchase "A-1" or better by
S&P, "Fl"or better by Fitch or"P-l"by Moody's and investment in any interest bearing
deposits/interest bearing money market deposit account, tune deposit account, including
such accounts with the Trustee;
(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 we unconditionally guaranteed by the parent, or with any government
bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York,
which agreements are fully and continuously secured by a valid and perfected first
priority security interest in obligations described in paragraph(1) or (2) of this definition,
provided that either such bank, trust company or national banking association which (or
senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time
of investment,at least"Al" or"A+"by any two Rating Agencies;
(6) Repurchase agreements with maturities of not more than one year entered
into with financial institutions such as banks or trust companies organized under state law
or national banks or banking associations (including the Trustee), insurance companies or
government bond dealers reporting to, trading with, and recognized as a primary dealer
by, the Federal Reserve Bank of New York and a member of the Securities Investor
Protection Corporation or with a dealer or parent holding company that is rated, at the
time of investment, or whose long-term debt obligations (or senior debt or claims paying
ability of the financial entity's guarantor) me rated, at the time of investment, at least
"Al" or "A+" by any two Rating Agencies; provided, that such repurchase agreements
we 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;
2]68]551A 6
(7) Investment agreements, forward purchase agreements and reserve fund put
agreements with any corporation, including banking or financial institutions, or
agreements entered into with subsidiaries (of a parent company), provided the obligations
of the subsidiary under the agreement are unconditionally guaranteed by the parent, the
corporate debt of which (or senior debt or claims paying ability of the financial entity's
guarantor) is rated, at the time of investment, at least "Al" or "A+" by any two Rating
Agencies;
(8) Guaranteed investment contracts or similar funding agreements issued by
insurance companies, provided that either the long term corporate debt of such insurance
company, at the time of investment, is rated, at the time of investment, at least "Al" or
"A+" by any two Rating Agencies or which agreements are fully and continuously
secured by a valid and perfected first priority security interest in obligations described in
paragraph(1) or (2) of this definition, or that the following conditions are met: (a)the
market value of the collateral is maintained at levels acceptable to Moody's and S&P or
Fitch, (b)the Trustee or a third party acting solely as agent for the Trustee has possession
of the collateral, (c)the Trustee has a perfected first priority security interest in the
collateral, (d)the collateral is free and clear of third-party liens, and (e) failure to
maintain the requisite collateral level will require the Trustee to liquidate collateral;
(9) Corporate commercial paper which are rated at least"P-1," "A-1" or"Fl"
by any two Rating Agencies at the time of investment;
(10) Taxable government money market portfolios which are rated at least
"AAm" or "AAm-G" or "Aaa-mf' or "AAmmf' by any two Rating Agencies (including
funds for which the Trustee or an affiliate provides investment advice or similar
services); and
(11) Deposits with the Local Agency Investment Fund of the State, as may
otherwise be permitted by law.
"Person" means an individual, corporation, limited liability company, firm, association,
partnership, trust, or other legal entity or group of entities, including a governmental entity or
any agency or political subdivision thereof.
"Prepayment Account"means the account by that time within the Installment Payment
Fund established in accordance with Section 5.02 hereof.
"Principal Account" means the account by that time within the Installment Payment
Fund established in accordance with Section 5.02 hereof.
"Principal Office" means the Trustee's principal corporate trust office in Los Angeles,
California.
"Principal Payment Date"means a date on which an Installment Payment evidenced by
the Revenue Obligations becomes due and payable.
"Prior Certificates" means the District's Certificates of Participation, Series 2007A.
276875514 7
"Prior Trust Agreement" means the Trust Agreement, dated as of May 1, 2007, by and
among the Prior Trustee, the Corporation and the District, as amended and supplemented,
pursuant to which the Prior Certificates were executed and delivered.
"Prior Trustee" means MUFG Union Bank, N.A., as successor trustee under the Prior
Trust Agreement.
"Project" has the meaning ascribed thereto in the recitals hereto.
"Rating Agency"means Fitch, Moody's or S&P.
"Record Date"means, with respect to the interest payable on any Interest Payment Date,
the 15th day of the calendar month immediately preceding such Interest Payment Date, whether
or not such day is a Business Day.
"Revenue Obligations" means the Orange County Sanitation District Wastewater
Refunding Revenue Obligations, Series 2017A, executed and delivered by the Trustee pursuant
hereto, which are certificates of participation, evidencing direct, undivided fractional interests in
the Installment Purchase Agreement and the related Installment Payments, and the interest
thereon.
"S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial
Services LLC business, its successors and assigns, except that if such entity shall no longer
perform the functions of a securities rating agency for any reason, the term "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency selected by the
District.
"State"means the State of California.
"Trust Agreement" means this Trust Agreement, dated as of January 1, 2017, by and
among the Trustee, the Corporation and the District, as originally executed and delivered and as
it may from time to time be amended or supplemented in accordance with the provisions hereof.
"Trustee" means U.S. Bank National Association, a national banking association duly
organized and existing under the laws of the United States of America, or any other bank or trust
company which may at any time be substituted in its place as provided in Section 8.02 hereof.
"Written Certificate"and"Written Request"mean(a)with respect to the Corporation,
a written certificate or written request, respectively, signed in the name of the Corporation by an
Authorized Corporation Representative, and (b)with respect to the District, a written certificate
or written request, respectively, signed in the name of the District by an Authorized District
Representative. Any such certificate or request may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument.
Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise
herein defined and unless the context otherwise requires, the terms defined in the Installment
Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement
2]68]551A 8
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 Securiri. In consideration of the acceptance of the Revenue
Obligations by the Owners, this Trust Agreement shall be deemed to be and shall constitute a
contract between the Trustee and the Owners to secure the full and final payment of the interest
and principal evidenced by the Revenue Obligations which may be executed and delivered
hereunder, subject to each of the agreements, conditions, covenants and terms contained herein;
and all agreements, conditions, covenants and 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 Revenue Obligations over any other Revenue Obligations by reason of the
number or date thereof or the time of execution or delivery thereof or for any cause whatsoever,
except as expressly provided herein or therein.
ARTICLE II
TERMS AND CONDITIONS OF REVENUE OBLIGATIONS
Section 2.01. Preparation and Delivery of Revenue Obligations. The Trustee is
hereby authorized, upon the Written Request of the District, to execute and deliver the Revenue
Obligations in the aggregate principal amount of $ evidencing the aggregate
principal amount of the Installment Payments and each evidencing a direct, fractional undivided
interest in the Installment Payments, and the interest thereon. The Installment Payments
evidenced by each Revenue Obligation shall constitute the principal evidenced thereby and the
interest on such Installment Payments shall constitute the interest evidenced thereby. The
Revenue Obligations shall be numbered,with or without prefixes, as directed by the Trustee.
Section 2.02. Denomination. Medium and Dating of Revenue Obligations. The
Revenue Obligations shall be designated "Orange County Sanitation District Wastewater
Refunding Revenue Obligations, Series 2017A" and shall be prepared in the form of fully
registered Revenue Obligations, without coupons, in Authorized Denominations and shall be
payable in lawful money of the United States of America.
The Revenue Obligations shall be dated as of the Closing Date. Each Revenue Obligation
shall evidence interest from the Interest Payment Date next preceding its date of execution to
which interest has been paid in full, unless such date of execution shall be after a Record Date
and on or prior to the following Interest Payment Date, in which case such Revenue Obligation
shall evidence interest from such Interest Payment Date, or unless such date of execution shall be
on or prior to July 15, 2017, in which case such Revenue Obligation shall represent interest from
the Closing Date. Notwithstanding, the foregoing, if, as shown by the records of the Trustee,
interest evidenced by the Revenue Obligations shall be in default, each Revenue Obligation shall
evidence interest from the last Interest Payment Date to which such interest has been paid in full
or duly provided for.
2]68]551A 9
Section 2.03. Payment Dates of Revenue Obligations: Interest Computation.
(a)Method and Place of Payment. The principal evidenced by the Revenue Obligations shall
become due and payable, subject to prior prepayment, on February 1 of the years, in the
amounts,and shall evidence interest accruing at the rates per annum set forth below:
Principal Principal
Payment Payment
Date Principal Interest Date Principal Interest
(February 1) Component Rate (February 1) Component Rate
Except as otherwise provided in the Letter of Representations, payments of interest
evidenced by the Revenue Obligations shall be made to the Owners thereof(as determined at the
close of business on the Record Date next preceding the related Interest Payment Date) by check
or draft of the Trustee mailed to the address of each such Owner as it appears on the registration
books maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may
be famished in writing to the Trustee by each such Owner. Except as otherwise provided in the
Letter of Representations, payment of principal and prepayment premium, if any, evidenced by
the Revenue Obligations, on their stated Principal Payment Dates or on prepayment in whole or
in part prior thereto, shall be made only upon presentation and surrender of the Revenue
Obligations at the Principal Office.
(b) Computation oflnterest. The interest evidenced by the Revenue Obligations shall
be payable on each Interest Payment Date to and including their respective Principal Payment
Dates or prepayment prior thereto, and shall represent the sum of the interest on the Installment
Payments coming due on the Interest Payment Dates in each yew. The principal evidenced by
the Revenue Obligations shall be payable on their respective Principal Payment Dates in each
year and shall represent the Installment Payments coming due on the Principal Payment Dates in
each year. Interest evidenced by the Revenue Obligations shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
Section 2.04. Form of Revenue Obligations. The Revenue Obligations shall be in
substantially the form of Exhibit A hereto, with necessary or appropriate insertions, omissions
and variations as permitted or required hereby.
Section 2.05. Execution of Revenue Obligations and Replacement Revenue
Obligations. The Revenue Obligations shall be executed by the Trustee by the manual signature
29689551A 10
of an authorized signatory of the Trustee. The Trustee shall deliver replacement Revenue
Obligations in the manner and as contemplated by this Article. Such replacement Revenue
Obligations shall be executed as herein provided and shall be in Authorized Denominations.
Section 2.06. Transfer and Payment, Exchange or Cancellation of Revenue
Obligations. Each Revenue Obligation is transferable by the Owner thereof, in person or by his
attorney duly authorized in writing, at the Principal Office, on the registration books maintained
by the Trustee pursuant to the provisions of Section 2.07 hereof,upon surrender of such Revenue
Obligation for cancellation accompanied by delivery of a duly executed written instrument of
transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Revenue
Obligation as the absolute owner of such Revenue Obligation for all purposes, whether or not the
principal or interest evidenced by such Revenue Obligation shall be overdue, and the Trustee
shall not be affected by any knowledge or notice to the contrary; and payment of the interest and
principal evidenced by such Revenue Obligation shall be made only to such Owner, which
payments shall be valid and effectual to satisfy and discharge the liability evidenced by such
Revenue Obligation to the extent of the sum or sums so paid.
Whenever any Revenue Obligation shall be surrendered for transfer, the Trustee shall
execute and deliver a new Revenue Obligation or Revenue Obligations evidencing principal in
the same aggregate amount and having the same stated Principal Payment Date. The Trustee
shall require the payment by any Owner requesting such transfer of any tax or other
governmental charge required to be paid with respect to such transfer.
Each Revenue Obligation may be exchanged at the Principal Office for Revenue
Obligations evidencing principal in a like aggregate principal amount having the same stated
Principal Payment Date in such Authorized Denominations as the Owner thereof may request.
The Trustee shall require the payment by the Owner requesting such exchange of any tax or
other governmental charge required to be paid with respect to such exchange.
Whenever in this Trust Agreement provision is made for the cancellation by the Trustee
of any Bonds, the Trustee shall destroy such Bonds and deliver a certificate of such destruction
to the District.
Section 2.07. Revenue Obligation Registration Books. The Trustee shall keep at its
Principal Office sufficient books for the registration and transfer of the Revenue Obligations,
which books shall be available for inspection and copying by the District at reasonable hours and
under reasonable conditions; and upon presentation for such purpose the Trustee shall, under
such reasonable regulations as it may prescribe, register or transfer the Revenue Obligations on
such books as hereinabove provided.
Section 2.08. Temporary Revenue Obligations. The Revenue Obligations may be
initially delivered in temporary form exchangeable for definitive Revenue Obligations when
ready for delivery, which temporary Revenue Obligations shall be printed, lithographed or
typewritten, shall be of such denominations as may be determined by the Trustee, shall be in
fully registered form and shall contain such reference to any of the provisions hereof as may be
appropriate. Every temporary Revenue Obligation shall be executed and delivered by the
Trustee upon the same conditions and terms and in substantially the same manner as definitive
27687551A 11
Revenue Obligations. If the Trustee executes and delivers temporary Revenue Obligations, it
shall prepare and execute definitive Revenue Obligations without delay, and thereupon the
temporary Revenue Obligations may be surrendered at the Principal Office in exchange for such
definitive Revenue Obligations, and until so exchanged such temporary Revenue Obligations
shall be entitled to the same benefits hereunder as definitive Revenue Obligations executed and
delivered hereunder.
Section 2.09. Revenue Obligations Mutilated, Lost, Destroyed or Stolen. If any
Revenue Obligation shall become mutilated, the Trustee, at the expense of the Owner thereof,
shall execute and deliver a new Revenue Obligation evidencing a like principal amount and
having the same stated Principal Payment Date and number in exchange and substitution for the
Revenue Obligation so mutilated, but only upon surrender to the Trustee of the Revenue
Obligation so mutilated. Every mutilated Revenue Obligation so surrendered to the Trustee shall
be canceled by it. If any Revenue Obligation shall be lost, destroyed or stolen, evidence of such
loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to
the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense
of the Owner thereof, shall execute and deliver a new Revenue Obligation evidencing a like
principal amount and having the same stated Principal Payment Date, numbered as the Trustee
shall determine, in lieu of and in substitution for the Revenue Obligation so lost, destroyed or
stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing
each new Revenue Obligation executed and delivered by it under this Section and of the
expenses which may be incurred by it under this Section. Any Revenue Obligation executed and
delivered under the provisions of this Section in lieu of any Revenue Obligation alleged to be
lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with
all other Revenue Obligations executed and delivered hereunder, and the Trustee shall not be
required to treat both the original Revenue Obligation and any replacement Revenue Obligation
as being Outstanding for the purpose of determining the amount of Revenue Obligations which
may be executed and delivered hereunder or for the purpose of determining any percentage of
Revenue Obligations Outstanding bereunder, but both the original and replacement Revenue
Obligation shall be treated as one and the same. Notwithstanding any other provision of this
Section, in lieu of executing and delivering a new Revenue Obligation for a Revenue Obligation
which has been lost, destroyed or stolen and which evidences principal that is then payable, the
Trustee may make payment of such Revenue Obligation to the Owner thereof if so instructed by
the District.
Section 2.10. Book-Entry System. (a) The Revenue Obligations shall be initially
executed and delivered as Book-Entry Certificates, and the Revenue Obligations for each stated
Principal Payment Date shall be in the form of a separate single fully registered Revenue
Obligation (which may be typewritten). Upon initial execution and delivery, the ownership of
each Revenue Obligation shall be registered in the registration books maintained by the Trustee
in the name of the Nominee, as nominee of the Depository. Payment of principal or interest
evidenced by any Book-Entry Certificate registered in the name of the Nominee shall be made
on the applicable Interest Payment Date by wire transfer of New York clearing house or
equivalent next day funds or by wire transfer of same day funds to the account of the Nominee.
Such payments shall be made to the Nominee at the address which is, on the Record Date, shown
for the Nominee in the registration books maintained by the Trustee.
29689551A 12
(b) With respect to Book-Entry Certificates, the District, the Corporation and the
Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of
which such a Participant holds an interest in such Book-Entry Certificates. Without limiting the
immediately preceding sentence, the District, the Corporation and the Trustee shall have no
responsibility or obligation with respect to (i)the accuracy of the records of the Depository, the
Nominee or any Participant with respect to any ownership interest in Book-Entry Certificates,
(ii) the delivery to any Participant or any other Person, other than an Owner as shown in the
registration books maintained by the Trustee, of any notice with respect to Book-Entry
Certificates, including any notice of prepayment, (iii)the selection by the Depository and its
Participants of the beneficial interests in Book-Entry Certificates to be prepaid in the event
Revenue Obligations are prepaid in part, (iv)the payment to any Participant or any other Person,
other than an Owner as shown in the registration books maintained by the Trustee, of any
amount with respect to principal, premium, if any, or interest evidenced by Book-Entry
Certificates, or(v)any consent given or other action taken by the Depository as Owner.
(c) The District, the Corporation and the Trustee may treat and consider the Person in
whose name each Book-Entry Certificate is registered in the registration books maintained by the
Trustee as the absolute Owner of such Book-Entry Certificate for the purpose of payment of
principal, prepayment premium, if any, and interest evidenced by such Revenue Obligation, for
the purpose of selecting any Revenue Obligations, or portions thereof, to be prepaid, for the
purpose of giving notices of prepayment and other matters with respect to such Revenue
Obligation, for the purpose of registering transfers with respect to such Revenue Obligation, for
the purpose of obtaining any consent or other action to be taken by Owners and for all other
purposes whatsoever, and the District, the Corporation and the Trustee shall not be affected by
any notice to the contrary.
(d) Reserved.
(e) The Trustee shall pay all principal, premium, if any, and interest evidenced by the
Revenue Obligations to the respective Owner, as shown in the registration books maintained by
the Trustee, or his respective attorney duly authorized in writing, and all such payments shall be
valid and effective to fully satisfy and discharge the obligations with respect to payment of
principal, premium, if any, and interest evidenced by the Revenue Obligations to the extent of
the sum or sums so paid. No Person other than an Owner, as shown in the registration books
maintained by the Trustee, shall receive a Revenue Obligation evidencing principal, premium, if
any, and interest evidenced by the Revenue Obligations. Upon delivery by the Depository to the
Owners, the Trustee and the District of written notice to the effect that the Depository has
determined to substitute a new nominee in place of the Nominee, and subject to the provisions
herein with respect to Record Dates, the word Nominee in this Trust Agreement shall refer to
such nominee of the Depository.
(f) To qualify the Book-Entry Certificates for the Depository's book-entry system,
the District shall execute and deliver to the Depository a Letter of Representations. The
execution and delivery of a Letter of Representations shall not in any way impose upon the
Corporation,the District or the Trustee any obligation whatsoever with respect to Persons having
interests in such Book-Entry Certificates other than the Owners, as shown on the registration
books maintained by the Trustee. Such Letter of Representations may provide the time, form,
29689551A 13
content and manner of transmission, of notices to the Depository. In addition to the execution
and delivery of a Letter of Representations by the District, the District, the Corporation and the
Trustee shall take such other actions, not inconsistent with this Trust Agreement, as are
reasonably necessary to qualify Book-Entry Certificates for the Depository's book-entry
program.
(g) If the District determines that it is in the best interests of the Beneficial Owners
that they be able to obtain certificated Revenue Obligations and that such Revenue Obligations
should therefore be made available and notifies the Depository and the Trustee of such
determination, the Depository will notify the Participants of the availability through the
Depository of certificated Revenue Obligations. In such event, the Trustee shall transfer and
exchange certificated Revenue Obligations as requested by the Depository and any other Owners
in appropriate amounts. In the event (i)the Depository determines not to continue to act as
securities depository for Book-Entry Certificates, or(ii)the Depository shall no longer so act and
gives notice to the Trustee of such determination, then the District shall discontinue the Book-
Entry system with the Depository. If the District determines to replace the Depository with
another qualified securities depository, the District shall prepare or direct the preparation of a
new single, separate, fully registered Revenue Obligation for each stated Principal Payment Date
of such Book-Entry Certificates, registered in the name of such successor or substitute qualified
securities depository or its nominee. If the District fails to identify another qualified securities
depository to replace the Depository, then the Revenue Obligations shall no longer be restricted
to being registered in the registration books maintained by the Trustee in the name of the
Nominee, but shall be registered in whatever name or names the Owners transferring or
exchanging such Revenue Obligations shall designate, in accordance with the provisions of
Sections 2.06 and 2.09 hereof. Whenever the Depository requests the District to do so, the
District will cooperate with the Depository in taking appropriate action after reasonable notice
(i)to make available one or more separate certificates evidencing the Book-Entry Certificates to
any Participant having Book-Entry Certificates credited to its account with the Depository, and
(ii)to arrange for another securities depository to maintain custody of certificates evidencing the
Book-Entry Certificates.
(h) Notwithstanding any other provision of this Trust Agreement to the contrary, if
DTC is the sole Owner of the Revenue Obligations, so long as any Book-Entry Certificate is
registered in the time of the Nominee, all payments of principal, premium, if any, and interest
evidenced by such Revenue Obligation and all notices with respect to such Revenue Obligation
shall be made and given, respectively, as provided in the Letter of Representations or as
otherwise instructed by the Depository.
(i) In connection with any notice or other communication to be provided to Owners
pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to
any consent or other action to be taken by Owners, the Trustee shall establish a record date for
such consent or other action and give the Depository notice of such record date not less than 15
calendar days in advance of such record date to the extent possible. Notice to the Depository
shall be given only when DTC is the sole Owner of the Revenue Obligations.
29689551A 14
ARTICLE III
PROCEEDS OF REVENUE OBLIGATIONS
Section 3.01. Delivery of Revenue Obligations. The Trustee is hereby authorized to
execute the Revenue Obligations and deliver the Revenue Obligations to the original purchaser
thereof upon receipt of a Written Request of the District and upon receipt of the net proceeds of
sale thereof.
Section 3.02. Deposit of Proceeds of Revenue Obligations. The net proceeds received
by the Trustee from the sale of the Revenue Obligations in the amount of $
(which amount includes the security deposit for the Revenue Obligations in the amount of
$ on deposit with the Trustee) shall be deposited or transferred by the Trustee as
follows:
(a) the Trustee shall deposit in the Costs of Issuance Fund the amount of
$ ; and
(b) the Trustee shall transfer to the Prior Trustee the amount of$ from
the proceeds of the Revenue Obligations, to be applied, together with other available monies
released from the Prior Trust Agreement, to the payment and prepayment of all of the remaining
installment payments related to the Prior Certificates. The Trustee may establish a temporary
fund to facilitate such transfer to the Prior Trustee.
Section 3.03. Costs of Issuance Fund. The Tmstee shall establish and maintain a
separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall
be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be
deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the
Costs of Issuance Fund on such dates and in such amounts as are necessary to pay Costs of
Issuance, in each case upon the Written Request of the District stating the Person to whom
payment is to be made, the amount to be paid, the purpose for which the obligation was incurred
and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is
six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the
Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of
Issuance Fund shall be closed.
ARTICLE IV
PREPAYMENT OF REVENUE OBLIGATIONS
Section 4.01. Optional Prepayment. The Revenue Obligations maturing on or after
February 1, 2027 are subject to optional prepayment prior to their stated Principal Payment
Dates, on any date on or after February 1, 2026, in whole or in part, in Authorized
Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the
Installment Purchase Agreement or from any other source of available funds, any such
prepayment to be at a price equal to the principal evidenced by the Revenue Obligations to be
29689551A 15
prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without
premium.
Section 4.02. Reserved.
Section 4.03. Selection of Revenue Obligations for Optional Prepayment. Whenever
less than all the Outstanding Revenue Obligations are to be prepaid on any one date pursuant to
Section 4.01 hereof, with respect to optional prepayment of Revenue Obligations, the Trustee
shall select the Revenue Obligations to be prepaid among Revenue Obligations with different
Principal Payment Dates as directed in a Written Request of the District. Whenever less than all
the Outstanding Revenue Obligations with the same stated Principal Payment Date are to be
prepaid on any one date pursuant to Section 4.01 hereof, the Trustee shall select the Revenue
Obligations with such Principal Payment Date to be prepaid as directed in a Written Request of
the District, or at the discretion of the District by lot in any manner that the Trustee deems fair
and appropriate, which decision shall be Final and binding upon the District and the Owners. The
Trustee shall promptly notify the District in writing of the numbers of the Revenue Obligations
so selected for prepayment on such date. For purposes of such selection, any Revenue Obligation
may be prepaid in part in Authorized Denominations.
Section 4.04. Notice of Prepayment. When prepayment of Revenue Obligations is
authorized pursuant to Section 4.01, the Trustee shall give notice, at the expense of the District,
of the prepayment of the Revenue Obligations. The notice of prepayment shall specify (a)the
Revenue Obligations or designated portions thereof(in the case of prepayment of the Revenue
Obligations in part but not in whole) which are to be prepaid, (b) the date of prepayment, (c) the
place or places where the prepayment will be made, including the name and address of any
paying agent, (d)the prepayment price, (e) the CUSIP numbers assigned to the Revenue
Obligations to be prepaid, (f)the numbers of the Revenue Obligations to be prepaid in whole or
in part and, in the case of any Revenue Obligation to be prepaid in part only, the principal
evidenced by such Revenue Obligation to be prepaid, and (g) the interest rate and stated
Principal Payment Date of each Revenue Obligation to be prepaid in whole or in part. Such
notice of prepayment shall further state that on the specified date there shall become due and
payable upon each Revenue Obligation or portion thereof being prepaid the prepayment price
and that from and after such date interest evidenced thereby shall cease to accrue and be payable.
With respect to any notice of prepayment of Revenue Obligations pursuant to Section 4.01
hereof, unless at the time such notice is given the Revenue Obligations to be prepaid shall be
deemed to have been paid within the meaning of Section 10.01 hereof, such notice shall state that
such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such
prepayment, of moneys sufficient to pay for the prepayment price of the Revenue Obligations to
be prepaid, and that if such moneys shall not have been so received said notice shall be of no
force and effect and the District shall not be required to prepay such Revenue Obligations. If a
notice of prepayment of Revenue Obligations contains such a condition and such moneys are not
so received, the prepayment of Revenue Obligations as described in the conditional notice of
prepayment shall not be made and the Trustee shall, within a reasonable time after the date on
which such prepayment was to occur, give notice to the persons and in the manner in which the
notice of prepayment was given,that such moneys were not so received and that there shall be no
prepayment of Revenue Obligations pursuant to such notice of prepayment.
29689551A 16
The Trustee shall, at least 20 but not more than 60 days prior to any prepayment date,
give notice of prepayment to the respective Owners of Revenue Obligations designated for
prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration
books maintained by the Trustee as of the close of business on the day before such notice of
prepayment is given.
The actual receipt by the Owner of any notice of such prepayment shall not be a
condition precedent to prepayment, and neither failure to receive such notice nor any defect
therein shall affect the validity of the proceedings for the prepayment of such Revenue
Obligations or the cessation of interest evidenced thereby on the date fixed for prepayment.
A certificate by the Trustee that notice of prepayment has been given to Owners as herein
provided shall be conclusive as against all parties, and no Owner whose Revenue Obligation is
called for prepayment may object thereto or object to the cessation of interest evidenced thereby
on the Fixed prepayment date by any claim or showing that said Owner failed to actually receive
such notice of prepayment.
Section 4.05. Partial Prepayment of Revenue Obligations. Upon surrender of any
Revenue Obligation prepaid in part only, the Trustee shall execute and deliver to the Owner
thereof a new Revenue Obligation or Revenue Obligations evidencing the unprepaid principal
with respect to the Revenue Obligation surrendered.
Section 4.06. Effect of Prepayment. If notice of prepayment has been duly given as
aforesaid and moneys for the payment of the prepayment price of the Revenue Obligations to be
prepaid are held by the Trustee, then on the prepayment date designated in such notice, the
Revenue Obligations so called for prepayment shall become payable at the prepayment price
specified in such notice; and from and after the date so designated, interest evidenced by the
Revenue Obligations so called for prepayment shall cease to accrue, such Revenue Obligations
shall cease to be entitled to any benefit or security hereunder and the Owners of such Revenue
Obligations shall have no rights in respect thereof except to receive payment of the prepayment
price thereof The Trustee shall, upon surrender for payment of any of the Revenue Obligations
to be prepaid, pay such Revenue Obligations at the prepayment price thereof, and such moneys
shall be pledged to such payment. All Revenue Obligations prepaid pursuant to the provisions of
this Article shall be canceled by the Trustee and shall not be redelivered.
ARTICLE V
ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS
Section 5.01. Assignment and Pledee. The Corporation hereby transfers, conveys and
assigns to the Trustee, for the benefit of the Owners, all of the Corporation's rights, title and
interest in and to the Installment Purchase Agreement (excepting its rights to indemnification
thereunder), including the right to receive Installment Payments, and the interest thereon, from
the District and the right to exercise any remedies provided therein in the event of a default by
the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment,
solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this
Trust Agreement. All Installment Payments, and the interest thereon, shall be paid directly by
29689551A 17
the District to the Trustee, and if received by the Corporation at any time shall be deposited by
the Corporation with the Trustee immediately upon the receipt thereof.
To secure the respective rights of the Owners to the payments required to be made thereto
as provided herein, the Corporation and the District hereby irrevocably pledge to the Trustee, for
the benefit of the Owners, all of their right, title and interest, if any, in and to all amounts on
deposit from time to time in the funds and accounts established hereunder. This pledge shall
constitute a first lien on the amounts on deposit in such funds and accounts.
Section 5.02. Installment Payment Fund. (a) The Trustee shall establish and maintain
the Installment Payment Fund until all required Installment Payments, and the interest thereon,
we paid in full pursuant to the Installment Purchase Agreement and until the first date upon
which the Revenue Obligations are no longer Outstanding. The Trustee shall deposit in the
Installment Payment Fund all Installment Payments, and the interest thereon, paid by the District
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(provided the Prepayment Account need not be established in the records of the Trustee
until deposit is required to be made to the Prepayment Account) until all required Installment
Payments, and the interest thereon, are paid in full pursuant to the Installment Purchase
Agreement and until the first date upon which the Revenue Obligations are no longer
Outstanding. The moneys in each of such accounts shall be held in trust by the Trustee for the
benefit of the Owners and shall be used and disbursed only for the purposes and uses herein
authorized.
(i) Interest Account. The Trustee, on each Interest Payment Date, shall
deposit in the Interest Account that amount of moneys representing the interest on the
Installment Payments coming due on such Interest Payment Date. Moneys in the Interest
Account shall be used by the Trustee for the purpose of paying the interest evidenced by
the Revenue Obligations when due and payable.
(ii) Principal Account. The Trustee, on each Principal Payment Date, shall
deposit in the Principal Account that amount of moneys representing the Installment
Payments coming due on such Principal Payment Date. Moneys in the Principal Account
shall be used by the Trustee for the purpose of paying the principal evidenced by the
Revenue Obligations when due and payable.
(iii) Prepayment Account. The Trustee, on the prepayment date specified in
the Written Request of the District filed with the Trustee at the time that any prepaid
Installment Payment is paid to the 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
and any premium payable with respect thereto. The Trustee shall deposit in the
29689551A 18
Prepayment Account any other amounts made available by the District that the District,
pursuant to a Written Request of the District, instructs the Trustee to apply to the
prepayment of Revenue Obligations pursuant to Section 4.01 hereof. Moneys in the
Prepayment Account shall be used by the Trustee for the purpose of paying the interest,
premium, if any, and principal evidenced by the Revenue Obligations to be prepaid
pursuant to Section 4.01 hereof.
Section 5.03. Reserved.
Section 5.04. Investment of Moneys. Except as otherwise provided herein, all moneys
in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by
the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written
Request of the District at least two (2) Business Days prior to the making of such investment.
Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments
maturing not later than the date on which it is estimated that such moneys will be required for the
purposes specified in this Trust Agreement. Absent timely written direction from the District,
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, such valuation to be performed not
less frequently than semiannually on or before each January 15 and July 15. The Trustee may
use securities pricing services available to it in making such valuations, including those within
the accounting system used by the Trustee, and conclusively rely on thereon.
The Trustee or an affiliate may act as principal or agent in the making or disposing of any
investment. The Trustee shall sell or present for redemption any Permitted Investment whenever
it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund or account to which such Permitted Investment is credited, and the
Trustee shall not be liable or responsible for any loss resulting from any investment made or sold
pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any
of the funds and accounts established hereunder.
The Trustee is hereby authorized, in making or disposing of any investment permitted by
this Section, to deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person
or dealing as principal for its own account.
Section 5.05. Brokeraee Confirmations. The Trustee shall famish the District periodic
cash transaction statements which shall include detail for all investment transactions effected by
the Trustee or brokers selected by the District. Upon the District's election and request, the
Trustee shall provide the District online access to such statements. The District waives the right
29689551A 19
to receive brokerage confirmations of securities 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
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or
deliver any Revenue Obligations in any manner other than in accordance with the provisions
hereof, and the Corporation and the District will not suffer or permit any default by them to
occur hereunder, but will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terms hereof required to be complied with, kept, observed and
performed by them.
Section 6.02. Compliance with Installment Purchase Agrcement. 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
terms.
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 any of the Installment Payments, or
the interest thereon, or involving the rights of the Trustee or any Owner hereunder; provided,
2]68]551A 20
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 Payments, and
the interest thereon, and such accounting records shall be available for inspection by the
Corporation and the District at reasonable hours and under reasonable conditions. The Tmstee
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 terns 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.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Computation Period" means, initially, that period commencing on the date of the
execution and delivery of the Revenue Obligations and concluding on the initial Computation
Date and,thereafter, each period commencing on the day next following a Computation Date and
concluding on the immediately succeeding Computation Date.
"Gross Proceeds" of any issue of governmental obligations means any proceeds as
defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and
transferred proceeds) of that issue, and any replacement proceeds as defined in section 1.148-
1(c)of the Tax Regulations, of that issue.
"Investment"has the meaning set forth in section 1.148-1(b)of the Tax Regulations.
"Nonpurpose Investment"means any investment property, as defined in section 148(b) of
the Code, in which Gross Proceeds of an issue are invested and that is not acquired to carry out
the governmental purposes of that issue.
"Opinion of Bond 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 Certificates (but in the case of any of the foregoing
executed and delivered for multiple purposes, only to the portion thereof allocable pursuant to
section 1.148-9(b)(4) of the Tax Regulations to other than refunding purposes).
27687551A 21
"Proceeds," with respect to an issue of governmental obligations, has the meaning set
forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales,
investment and transferred proceeds,but not replacement proceeds).
"Rebate Amount"has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated pursuant
to sections 103 and 141 through 150 of the Code.
"Yield" of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations and (ii) in respect of the Revenue Obligations has the meaning set forth in
section 1.148-4 of the Tax Regulations.
(a) Exclusion of Interest from Gross Income. The District will take all actions
necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of
interest on the Revenue Obligations from the gross income of the owners thereof for federal
income tax purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the
Revenue Obligations or any other amounts (or any property the acquisition, construction or
improvement of which is to be refinanced directly or indirectly with Gross Proceeds) in a manner
that if made or omitted, respectively, would cause the interest on any Revenue Obligation to fail
to be excluded pursuant to section 103(a) of the Code from the gross income of the owners
thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless
and until the Trustee receives an Opinion of Bond Counsel to the effect that failure to comply
with such covenant will not adversely affect the exclusion pursuant to section 103(a) of the Code
of interest on any Revenue Obligation from the gross income of the owner thereof, the District
shall comply with this covenant and each of the specific covenants in this Section.
(b) No Private Use or Private Payments. Except as would not cause any Revenue
Obligation to become a "private activity bond" within the meaning of section 141 of the Code
and the Tax Regulations and rulings thereunder, the District shall at all times prior to the
payment and cancellation of the last of the Revenue Obligations to be retired:
(i) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Revenue Obligations and not use or permit the use
of such Gross Proceeds (including all contractual arrangements with 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 the Prior Issue in any activity carried
on by any person or entity (including the United States or any agency, department and
instrumentality thereof) other than a state or local government, unless such use is solely
as a member of the general public; and
(ii) does not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the Revenue
Obligations or of the Prior Issue, or any property the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with such
Gross Proceeds, other than taxes of general application within the jurisdiction of the
2]68]551A 22
District or interest earned on investments acquired with such Gross Proceeds pending
application for their intended purposes.
(c) No Private Loan. Except as would not cause any Revenue Obligation to become
a"private activity bond"within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the District shall not use of Gross Proceeds of the Revenue Obligations to
make or finance loans to any person or entity other than a state or local government. For
purposes of the foregoing covenant, such Gross Proceeds are considered to be `loaned" to a
person or entity if. (i) property acquired, constructed or improved with such Gross Proceeds is
sold or leased to such person or entity in a transaction that creates a debt for federal income tax
purposes; (ii) capacity in or service from such property is committed to such person or entity
under a take-or-pay, output or similar contract or 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 the Prior Issue as resulting in a loan of Gross
Proceeds of the Revenue Obligations.
(d) Not to Invest at Higher Yield. Except as would not cause any Revenue
Obligation to become an"arbitrage bond"within the meaning of section 148 of the Code and the
Tax Regulations and rulings thereunder, the District will not, at any time prior to the final
cancellation of the last Revenue Obligation to be retired, directly or indirectly invest Gross
Proceeds of the Revenue Obligations in any Investment, if as a result of that investment the yield
of any Investment acquired with Gross Proceeds of the Revenue Obligations, whether then held
or previously disposed of, would materially exceed the yield of the Revenue Obligations within
the meaning of said section 148.
(e) Not Federally Guaranteed. Except to the extent such action or failure to act
would not pursuant to section 149(b) of the Code and the Tax Regulations and rulings
thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the Revenue
Obligations from the gross income of the owners thereof for federal income tax purposes, the
District will not take or omit to take any action that would cause any Revenue Obligation to be
"federally guaranteed" within the meaning of section 149(b) of the Code and the Tax
Regulations and rulings thereunder.
(f) Information Report. The District will timely file any information necessary to the
exclusion pursuant to section 103(a) of the Code of interest on the Revenue Obligations required
by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other
form and in such place as the Secretary of the Treasury may prescribe.
(g) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, the District will not at any time prior
to the final cancellation of the last of the Revenue Obligations to be retired, enter into any
transaction that reduces the amount required to be paid to the United States pursuant to
section 148(f) of the Code because such transaction results in a smaller profit or a larger loss
than would have resulted if the transaction had been at arm's length and had the yield on the
Revenue Obligations not been relevant to either party.
2]68]551A 23
(h) Revenue Obligations Satisfy Section 149(g). The District represents that neither
the Prior Issue nor the Revenue Obligations are or will become "hedge bonds" within the
meaning of section 149(g) of the Code. Without limitation of the foregoing, with respect to the
Prior Issue, (i)(A) on the date of execution and delivery of that issue the District reasonably
expected (based upon its own knowledge and upon representations made by other governmental
persons upon the issuance of those obligations) that within the 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 Revenue Obligations other than for refunding purposes, (ii)(A) the
District will not deliver the Revenue Obligations unless on the date of the issuance of the
Revenue Obligations it reasonably expects that within the three-year period commencing on such
date of issuance at least 85% of such spendable proceeds of the Revenue Obligations will be
expended for the governmental purpose of the Revenue Obligations and (B) at no time will more
than 50% of such spendable proceeds of the Revenue Obligations be invested in Nonpurpose
Investments having a substantially guaranteed yield for a period of four years or more.
(i) Elections. The District hereby directs and authorizes any Authorized
Representative to make elections permitted or required pursuant to the provisions of the Code or
the Tax Regulations, as such Authorized Representative (after consultation with Bond Counsel)
deems necessary or appropriate in connection with the Revenue Obligations, in the Tax
Certificate(as defined below)or similar or other appropriate certificate, form or document.
0) Tax Certificate. The District agrees to execute and deliver in connection with the
execution and delivery of the Revenue Obligations a Tax Certificate as to Arbitrage and the
Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document
containing additional representations and covenants pertaining to the exclusion of interest with
respect to the Revenue Obligations from the gross income of the owners thereof for federal
income tax purposes (the "Tax Certificate"), which representations and covenants are
incorporated as though expressly set forth herein.
Section 6.09. 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 Revenue Obligations and upon being indemnified to its
reasonable satisfaction, shall, or any Owner or Beneficial Owner of Revenue Obligations may
take such actions as may be necessary and appropriate to compel performance, including seeking
mandate or specific performance by court order. The Trustee is authorized and directed to
execute the acceptance and acknowledgement of the Continuing Disclosure Agreement.
Section 6.10. Further Assurances. The District will promptly execute and deliver or
cause to be executed and delivered all such other and further assurances, documents or
instruments and promptly do or cause to be done all such other and further things as may be
2]68]551A 24
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 Revenue Obligations then Outstanding. In each
and every case during the continuance of an Event of Default, the Trustee may and, at the
direction of the Owners of not less than a majority of the aggregate principal evidenced by
Revenue Obligations then Outstanding, shall, upon notice in writing to the District and the
Corporation (a)exercise any of the remedies granted to the Corporation under the Installment
Purchase Agreement, (b) exercise any of the remedies granted to the Trustee under the Master
Agreement, and (c)take whatever action at law or in equity may appear necessary or desirable to
enforce its rights pursuant to this Trust Agreement, the Installment Purchase Agreement or the
Master Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners
by this Trust Agreement, the Revenue Obligations, the Installment Purchase Agreement or the
Master Agreement, either at law or in equity or in 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
27687551A 25
therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this
Article may be enforced and exercised from time to time and as often as the Trustee shall deem
expedient.
If any action, proceeding or suit to enforce any right or to exercise any remedy is
abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse
determination,the Trustee, such Owner,the Corporation and the District shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought
or taken.
Section 7.04. Remedies Not Exclusive. Subject to the provisions of Section 7.01
hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of
any other remedy, and each such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing in law or in equity or by statute or
otherwise and may be exercised without exhausting and without regard to any other remedy
conferred by any law. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other
appropriate right or remedy.
Section 7.05. Auolication of Amounts After Default. All damages or other payments
received by the Trustee for the enforcement of any rights and powers of the Trustee under this
Article shall be deposited into the Installment Payment Fund and as soon as practicable and
thereafter applied:
(a) to the payment of all amounts due the Trustee under Section 8.03 hereof;
(b) unless the unpaid Installment Payments, and the interest thereon, shall have
become, and shall remain, immediately due and payable pursuant to the Master Agreement:
(i) to the payment of all amounts then due for interest evidenced by the
Revenue Obligations, in respect of which, or for the benefit of which, money has been
collected (other than Revenue Obligations which have become payable prior to such
Event of Default and money for the payment of which is held by the Trustee), ratably
without preference or priority of any kind, according to the amounts of interest evidenced
by such Revenue Obligations due and payable; and
(ii) to the payment of all amounts then due for principal evidenced by the
Revenue Obligations, in respect of which, or for the benefit of which, money has been
collected (other than Revenue Obligations which have become payable prior to such
Event of Default and money for the payment of which is held by the Trustee), ratably
without preference or priority of any kind, according to the amounts of principal
evidenced by such Revenue Obligations due and payable.
(c) if the unpaid Installment Payments, and the interest thereon, shall have become,
and shall remain, immediately due and payable pursuant to the Master Agreement, to the
payment of all amounts then due for principal and interest evidenced by the Revenue Obligations
and, if the amount available therefor shall not be sufficient to pay in full the whole amount so
due and unpaid, then to the payment thereof ratably, without preference or priority of principal
27687551A 26
over interest, or of interest over principal, or of any installment of interest over any other
installment of interest, or of any Revenue Obligation over any other Revenue Obligation, to the
persons entitled thereto without any discrimination or preference.
Section 7.06. Trustee May Enforce Claims Without Possession of Revenue
Obligations. All rights of action and claims under this Trust Agreement or the Revenue
Obligations may be prosecuted and enforced by the Trustee without the possession of any of the
Revenue Obligations or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own time as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Owners of the Revenue Obligations in respect of which such
judgment has been recovered.
Section 7.07. Limitation on Suits. No Owner shall have any right to institute any
proceeding,judicial or otherwise,with respect to this Trust Agreement, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have
previously given written notice to the Trustee of a continuing Event of Default hereunder, (b)the
Owners of not less than a majority of the aggregate principal evidenced by Revenue Obligations
then Outstanding shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder, (c) such Owner or
Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities to be incurred in compliance with such request, (d)the
Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such proceedings, and (e)no direction inconsistent with such written
request shall have been given to the Trustee during such 60-day period by the Owners of a
majority of the aggregate principal evidenced by Revenue Obligations then Outstanding; it being
understood and intended that no one or more Owners of Revenue Obligations shall have any
right in any manner whatever by virtue of, or by availing of, any provision of this Trust
Agreement to affect, disturb or prejudice the rights of any other Owner of Revenue Obligations,
or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right
under this Trust Agreement, except in the manner herein provided and for the equal and ratable
benefit of all the Owners of Revenue Obligations.
Section 7.08. No Liability by the Corporation to the Owners. Except as expressly
provided herein, the Corporation shall not have any obligation or liability to the Owners with
respect to the payment when due of the Installment Payments, and the interest thereon, by the
District, or with respect to the performance by the District of the other agreements and covenants
required to be performed by it contained in the Installment Purchase Agreement, the Master
Agreement or herein, or with respect to the performance by the Trustee of any right or obligation
required to be performed by it contained herein.
Section 7.09. No Liability by the District to the Owners. Except for the payment
when due of the Installment Payments, and the interest thereon, and the performance of the other
agreements and covenants required to be performed by it contained in the Installment Purchase
Agreement, the Master Agreement or herein, the District shall not have any obligation or liability
to the Owners with respect to this Trust Agreement or the preparation, execution, delivery or
27687551A 27
transfer of the Revenue Obligations or the disbursement of the Installment Payments, and the
interest thereon, by the Trustee to the Owners, or with respect to the performance by the Trustee
of any right or obligation required to be performed by it contained herein.
Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided
herein, the Trustee shall not have any obligation or liability to the Owners with respect to the
payment when due of the Installment Payments, and the interest thereon, by the District, or with
respect to the performance by the Corporation or the District of the other agreements and
covenants required to be performed by them, respectively contained in the Installment Purchase
Agreement or herein.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Employment of the Trustee: Duties. The Corporation and the District
hereby appoint and employ the Trustee to receive, deposit and disburse the Installment
Payments, and the interest thereon, to register, execute, deliver and transfer the Revenue
Obligations 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 Resismatlun of the Trustee. The Corporation and the
District may, by an instrument in writing, remove the Trustee inifially a party hereto and any
successor thereto unless an Event of Default shall have occurred and then be continuing, and
shall remove the Trustee initially a party hereto and any successor thereto if at any time
(a)requested to do so by an instrument or concurrent instruments in writing signed by the
Owners of a majority of the aggregate principal evidenced by the Revenue Obligations at the
time Outstanding (or their attorneys duly authorized in writing), or (b)the Trustee shall cease to
be eligible in accordance with the following sentence,and shall appoint a successor Trustee. The
Trustee shall be a bank having trust powers or a trust company in good standing in or
incorporated under the laws of the United States or any state thereof, having (or if such bank or
trust company is a member of a bank holding company system, its parent bank holding company
shall have) a combined capital and surplus of at least $75,000,000, and be subject to supervision
or examination by federal or state banking authorities. If such bank or trust company publishes a
report of condifion at least annually, pursuant to law or to the requirements of any supervising or
examining authority above refered 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.
27687551A 28
The Trustee may at any time resign by giving written notice of such resignation to the
Corporation and the District and by giving notice, by first class mail, postage prepaid, of such
resignation to the Owners at their addresses appearing on the registration books maintained by
the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall
promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the
event the District and the Corporation do not appoint a successor Trustee within 30 days
following receipt of such notice of resignation, the resigning Trustee may, at the expense of the
District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any
resignation or removal of a Trustee and appointment of a successor Trustee shall become
effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee
appointed under this Trust Agreement shall signify its acceptance of such appointment by
executing and delivering to the District and the Corporation and to its predecessor Trustee a
written acceptance thereof, and thereupon such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the moneys, estates, properties, rights, powers,
trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein;but,nevertheless, at the written request of the District or of the successor Trustee,
such predecessor Trustee shall execute and deliver any and all instruments of conveyance or
further assurance and do such other things as may reasonably be required for more fully and
certainly vesting in and confirming to such successor Trustee all the right, title and interest of
such predecessor Trustee in and to any property held by it under this Trust Agreement and shall
pay over, transfer, assign and deliver to the successor Trustee any money or other property
subject to the trusts and conditions herein set forth.
Any corporation, association or agency into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or transfer its corporate
trust business and assets as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party,
provided that such entity meets the combined capital and surplus requirements of this Section,
ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all
the trusts, powers, discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.03. Compensation and Indemnification of the Trustee. The District shall
from time to time, subject to any written agreement then in effect with the Trustee, pay the
Trustee reasonable compensation for all its services rendered hereunder and reimburse the
Trustee for all its reasonable advances and expenditures (which shall not include "overhead
expenses" except as such expenses are included as a component of the Trustee's stated annual
fees or disclosed transaction fees) hereunder, including but not limited to advances to and
reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other
experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys
retained by the Trustee, employed by it in the exercise and performance of its rights and
obligations hereunder; provided, however, that the Trustee shall not have any lien for such
compensation or reimbursement against any moneys held by it in any of the funds or accounts
established hereunder. The Trustee may take whatever legal actions are lawfully available to it
directly against the Corporation or the District.
29689551A 29
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 from and against any costs, expenses, claims
and liabilities which it may incur in the exercise and performance of its powers and duties
hereunder or any other document related to this Trust Agreement, including but not limited to
costs and expenses incurred in defending against any claim or liability, which are not due to its
negligence or willful misconduct. The obligations of the District under this Section shall survive
the resignation or removal of the Trustee and the termination of this Trust Agreement.
Section 8.04. Protection of the Trustee. The Trustee shall be protected and shall incur
no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent,
notice, request, requisition, resolution, statement, waiver or other paper or document which it
shall in good faith believe to be genuine and to have been adopted, executed or delivered by the
proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty
to make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Trust Agreement at the request or direction of any of the
Owners of the Revenue Obligations pursuant to this Trust Agreement, unless such Owners shall
have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against
the reasonable costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction. The Trustee may consult with counsel, who may be counsel to the
Corporation or the District, with regard to legal questions, and the opinion of such counsel shall
be full and complete authorization and protection in respect to any action taken or suffered by it
hereunder in good faith in accordance therewith.
The Trustee shall not be responsible for the sufficiency of the Revenue Obligations or the
Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements
made in the preliminary or final official statement relating to the Revenue Obligations.
The Trustee shall not be required to take notice or be deemed to have notice of any
default or Event of Default hereunder, except failure of any of the payments to be made to the
Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the
Trustee shall be specifically notified in writing of such default or Event of Default by the
District, the Corporation or the Owners of not less than 5% of the aggregate principal evidenced
by the Revenue Obligations then Outstanding.
Whenever in the administration of its rights and obligations hereunder the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a Written Certificate of
the District or a Written Certificate of the Corporation, and such Written Certificate shall be full
warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith
2]68]551A 30
thereof,but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter
or may require such additional evidence as it deems reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Revenue Obligations and
may join in any action which any Owner may be entitled to take with like effect as if the Trustee
were not a party hereto. The Trustee, either as principal or agent, may also engage in or be
interested in any financial or other transaction with the Corporation or the District, and may act
as agent, depository or trustee for any committee or body of Owners or of owners of obligations
of the Corporation or the District as freely as if it were not the Tmstee hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers
hereof and perform any rights and obligations required of it hereunder by or through agents,
attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust
and its rights and obligations hereunder, and the Trustee shall not be answerable for the
negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable
cue; 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 Revenue Obligations or the security therefor, and shall do so if requested in writing
by the Owners of at least 5% of the aggregate principal evidenced by Revenue Obligations then
Outstanding, provided the Trustee shall have no duty to take such action unless it has been
indemnified to its reasonable satisfaction against all risk or liability arising from such action.
The Trustee will not be considered in breach of or in default in its obligations hereunder
or progress in respect thereto in the event of delay in the performance of such obligations due to
unforeseeable causes beyond its control and without its fault or negligence, including, but not
limited to,acts of God or of the public enemy or terrorists,acts of a government,acts of the other
parties, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes,
explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor,
equipment, facilities, sources of energy, material or supplies in the open market, litigation or
arbitration involving a party or others relating to zoning or other governmental action or inaction
pertaining to any project refinanced with the proceeds of the Revenue Obligations, malicious
mischief, condemnation, and unusually severe weather or any similar event and/or occurrences
beyond the control of the Trustee.
2]68]551A 31
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement. This Trust Agreement and the rights and
obligations of the Corporation, the District, the Owners and the Trustee hereunder may be
amended or supplemented at any time by an amendment hereof or supplement hereto which shall
become binding when the prior written consents of the Owners of a majority of the aggregate
principal evidenced by the Revenue Obligations then Outstanding, exclusive of Revenue
Obligations disqualified as provided in Section 9.02 hereof, are filed with the Trustee. No such
amendment or supplement shall (i) extend the stated Principal Payment Date of any Revenue
Obligation or reduce the rate of interest evidenced thereby or extend the time of payment of such
interest or reduce the amount of principal evidenced thereby or change the prepayment terms and
provisions or the provisions regarding delivery of notice of prepayment without the prior written
consent of the Owner of each Revenue Obligation so affected, (ii)reduce the percentage of
Owners whose consent is required for the execution of any amendment hereof or supplement
hereto without the prior written consent of the Owners of all Revenue Obligations then
Outstanding, (iii)modify any of the rights or obligations of the Trustee without the prior written
consent of the Trustee, or (iv)amend this Section without the prior written consent of the
Owners of all Revenue Obligations then Outstanding.
(a) This Trust Agreement and the rights and obligations of the Corporation, the
District, the Owners and the Trustee hereunder may also be amended or supplemented at any
time by an amendment hereof or supplement hereto which shall become binding upon execution,
without the written consents of any Owners, but only to the extent permitted by law and only for
any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants and terms required by the
Corporation or the District to be observed or performed herein other agreements,
conditions, covenants and terms thereafter to be observed or performed by the
Corporation or the District, or to surrender any right or power reserved herein to or
conferred herein on the Corporation or the District;
(ii) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in regard
to questions arising hereunder which the Corporation or the District may deem desirable
or necessary and not inconsistent herewith; or
(iii) for any other reason, provided such amendment or supplement does not
adversely affect the rights or interests of the Owners.
Section 9.02. Disqualified Revenue Obligations. Revenue Obligations owned or held
by or for the account of the District (but excluding Revenue Obligations held in any pension or
retirement fund of the District) shall not be deemed Outstanding for the purpose of any consent
or other action or any calculation of Outstanding Revenue Obligations provided in this Article,
and shall not be entitled to consent to or take any other action provided in this Article, and the
Trustee may adopt appropriate regulations to require each Owner, before his consent provided
2]68]551A 32
for herein shall be deemed effective, to reveal if the Revenue Obligations as to which such
consent is given are disqualified as provided in this Section.
Section 9.03. Endorsement or Replacement of Revenue Obligations After
Amendment or Supplement. After the effective date of any action taken as hereinabove
provided in this Article, the Trustee may determine that the Revenue Obligations may bear a
notation by endorsement in form approved by the Trustee as to such action, and in that case upon
demand of the Owner of any Outstanding Revenue Obligation and presentation of such Revenue
Obligation for such purpose at the Principal Office a suitable notation as to such action shall be
made on such Revenue Obligation. If the Trustee shall receive an Opinion of Counsel advising
that new Revenue Obligations modified to conform to such action are necessary, modified
Revenue Obligations shall be prepared, and in that case upon demand of the Owner of any
Outstanding Revenue Obligations such new Revenue Obligations shall be exchanged at the
Principal Office without cost to each Owner for Revenue Obligations then Outstanding upon
surrender of such Outstanding Revenue Obligations.
Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not
prevent any Owner from accepting any amendment as to the particular Revenue Obligations
owned by such Owner,provided that due notation thereof is made on such Revenue Obligations.
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Revenue Obligations and Trust Agreement. (a) If the
Trustee shall pay or cause to be paid or there shall otherwise be paid (i)to the Owners of all
Outstanding Revenue Obligations the interest and principal evidenced thereby at the times and in
the manner stipulated herein and therein, and (ii) all other amounts due hereunder and under the
Installment Purchase Agreement,then such Owners shall cease to be entitled to the pledge of and
lien on the amounts on deposit in the funds and accounts established hereunder, as provided
herein, and all agreements and covenants of the Corporation, the District, and the Trustee to such
Owners hereunder shall thereupon cease, terminate and become void and shall be discharged and
satisfied.
(b) Any Outstanding Revenue Obligation shall be deemed to have been paid within
the meaning and with the effect expressed in this Section when the whole amount of the
principal, premium, if any, and interest evidenced by such Revenue Obligation shall have been
paid or when (i) in case said Revenue Obligation or portion thereof has been selected for
prepayment in accordance with Section 4.03 hereof prior to its stated Principal Payment Date,
the District shall have given to the Trustee irrevocable instructions to give, in accordance with
the provisions of Section 4.03 hereof, notice of prepayment of such Revenue Obligation, or
portion thereof, (ii)there shall be on deposit with the Trustee, moneys, or Government
Obligations, or any combination thereof, the principal of and the interest on which when due, and
without any reinvestment thereof,will provide moneys which shall be sufficient to pay when due
the principal, premium, if any, and interest evidenced by such Revenue Obligation and due and
to become due on or prior to the prepayment date or its stated Principal Payment Date, as the
case may be, and (iii) in the event the stated Principal Payment Date of such Revenue Obligation
27687551a 33
will not occur, and said Revenue Obligation is not to be prepaid, within the next succeeding 60
days, the District shall have given the Trustee irrevocable instructions to give notice, as soon as
practicable in the same manner as a notice of prepayment given pursuant to Section 4.03 hereof,
to the Owner of such Revenue Obligation, or portion thereof, stating that the deposit of moneys
or Government Obligations required by clause (ii) of this subsection has been made with the
Trustee and that said Revenue Obligation, or portion thereof, is deemed to have been paid in
accordance with this Section and staring such Principal Payment Date or prepayment date upon
which moneys are to be available for the payment of the principal, premium, if any, and interest
evidenced by said Revenue Obligation, or portion thereof.
Neither the moneys nor the Government Obligations deposited with the Trustee pursuant
to this Section nor principal or interest payments on any such Government Obligations shall be
withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the
payment of the principal, premium, if any, and interest evidenced by said Revenue Obligation, or
portions thereof If payment of less than all of the Revenue Obligations is to be provided for in
the manner and with the effect expressed in this Section, the Trustee or the District, as
applicable, shall select such Revenue Obligations, or portions thereof, in the manner specified in
Section 4.03 hereof for selection for prepayment of less than all of the Revenue Obligations, in
the principal amounts designated to the Trustee by the District.
(c) After the payment of all the interest, prepayment premium, if any, and principal
evidenced by all Outstanding Revenue Obligations and all other amounts due hereunder and
under the Installment Purchase Agreement as provided in this Section, the Trustee shall execute
and deliver to the Corporation and the District all such instruments as may be necessary or
desirable to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall
pay over or deliver to the District all moneys or securities held by it pursuant hereto which are
not required for the payment of the interest, prepayment premium, if any, and principal
evidenced by such Revenue Obligations and all other amounts due hereunder and under the
Installment Purchase Agreement.
(d) Prior to any defeasance becoming effective under this Article, the District shall
cause to be delivered (i) an executed copy of a report, addressed to the Trustee and the District,
in form and in substance acceptable to the District, of a nationally recognized certified public
accountant, or firm of such accountants, verifying that the Government Obligations and cash, if
any, satisfy the requirements of clause (ii) of subsection(b) of this Section (a "Verification"),
(ii) a copy of the escrow deposit agreement entered into in connection with such defeasance,
which escrow deposit agreement shall provide that no substitution of Government Obligations
shall be permitted except with other Government Obligations and upon delivery of a new
Verification and no reinvestment of Government Obligations shall be permitted except as
contemplated by the original Verification or upon delivery of a new Verification, and(iii) a copy
of an Opinion of Counsel, dated the date of such defeasance and addressed to the Trustee and the
District, in form and in substance acceptable to the District, to the effect that such Revenue
Obligations have been paid within the meaning and with the effect expressed in this Trust
Agreement, and all agreements and covenants of the Corporation, the District and the Trustee to
the Owners of such Revenue Obligations under this Trust Agreement have ceased, terminated
and become void and have been discharged and satisfied.
2]68]551A 34
Section 10.02. Unclaimed Moneys. Any moneys held by the Trustee in trust for the
payment and discharge of the interest or principal evidenced by any of the Revenue Obligations
which remain unclaimed for two years after the date when such interest or principal evidenced
by such Revenue Obligations have become payable, if such moneys were held by the Trustee at
such date, or for two years after the date of deposit of such moneys if deposited with the Trustee
after the date when the interest and principal evidenced by such Revenue Obligations have
become payable, shall be repaid by the Trustee to the District as its absolute property free from
trust, and the Trustee shall thereupon be released and discharged with respect thereto and the
Owners shall look only to the District for the payment of the interest and principal evidenced by
such Revenue Obligations.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of Trust Aareement. 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 Tmstee and the
Owners.
Section 11.02. Successor Deemed Included in all References to Predecessor.
Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or
referred to herein, such reference shall be deemed to include the successor to the powers, duties
and £unctions that are presently vested in the Corporation, the District or the Trustee, or such
officer, and all agreements, conditions, covenants and terms required hereby to be observed or
performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof,
shall bind and inure to the benefit of the respective successors thereof whether so expressed or
not.
Section 11.03. Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or
more instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or his attorney of any
declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to take
acknowledgments of deeds to be recorded in the state or territory in which he purports to act that
the Person signing such declaration, request or other instrument or writing acknowledged to him
the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer, or by such other proof as the Trustee may accept which it may
deem sufficient.
The ownership of any Revenue Obligations and the amount, payment date, number and
date of owning the same may be proved by the registration books maintained by the Trustee
pursuant to the provisions of Section 2.07 hereof.
2]68]551A 35
Any declaration, request or other instrument in writing of the Owner of any Revenue
Obligation shall bind all future Owners of such Revenue Obligation with respect to anything
done or suffered to be done by the Corporation, the District or the Trustee in good faith and in
accordance therewith.
Section 11.04. Waiver of Personal Liability. Notwithstanding anything contained
herein to the contrary, no member, officer or employee of the District or the Corporation shall be
individually or personally liable for the payment of any moneys, including without limitation, the
interest or principal evidenced by the Revenue Obligations, but nothing contained herein shall
relieve any member, officer or employee of the District or the Corporation from the performance
of any official duty provided by any applicable provisions of law, by the Installment Purchase
Agreement or hereby.
Section 11.05. Acquisition of Revenue Obliaations by District. All Revenue
Obligations acquired by the District, whether by purchase or gift or otherwise, shall be
surrendered to the Trustee for cancellation.
Section 11.06. Content of Certificates. Every Written Certificate of the District and
every Written Certificate of the Corporation with respect to compliance with any agreement,
condition, covenant or term contained herein shall include (a)a statement that the Person making
or giving such certificate has read such agreement, condition, covenant or term and the
definitions herein relating thereto, (b)a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such certificate are based,
(c) a statement that, in the opinion of the signer, the signer has made or caused to be made such
examination or investigation as is necessary to enable the signer to express an informed opinion
as to whether or not such agreement, condition, covenant or term has been complied with, and
(d)a statement as to whether, in the opinion of the signer, such agreement, condition, covenant
or term has been complied with.
Any Written Certificate of the District and any Written Certificate of the Corporation
may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the
Person making or giving such certificate knows that the Opinion of Counsel with respect to the
matters upon which each Person's certificate may be based, as aforesaid, is erroneous, or in the
exercise of reasonable care should have known that the same was erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon information which is in the
possession of the District or the Corporation upon a representation by an officer or officers of the
District or the Corporation, as the case may be, unless the counsel executing such Opinion of
Counsel knows that the representation with respect to the matters upon which such counsel's
opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should
have known that the same was erroneous.
Section 11.07. Funds and Accounts. Any fund or account required to be established
and maintained herein by the Trustee may be established and maintained in the accounting
records of the Trustee either as an account or a fund, and may, for the purposes of such
accounting records, any audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund, but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with sound accounting practice and with
27687551a 36
due regard for the protection of the security of the Revenue Obligations and the rights of the
Owners. The Trustee may establish such funds and accounts as it deems necessary to perform its
obligations hereunder.
Trustee may commingle any of the moneys held by it hereunder for investment purposes
only; provided, however, that the Trustee shall account separately for the moneys in each fund or
account established pursuant to this Trust Agreement.
Section 11.08. Article and Section Headings, Gender and References. The singular
form of any word used herein, including the terms defined in Section 1.01 hereof, shall include
the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of
any gender shall include correlative words of the other genders. The headings or titles of the
several Articles and Sections hereof and the table of contents appended hereto shall be solely for
convenience of reference and shall not affect the meaning, construction or effect hereof. All
references herein to "Articles," "Sections," subsections or clauses are to the corresponding
Articles, Sections, subsections or clauses hereof, and the words "hereby," "herein," "hereof,"
"hereto," "herewith," "hereunder" and other words of similar import refer to this Trust
Agreement as a whole and not to any particular Article, Section, subsection or clause thereof.
Section 11.09. Partial Invalidity. If any one or more of the agreements, conditions,
covenants or terms required herein to be observed or performed by or on the part of the
Corporation, the District or the Trustee shall be contrary to law, then such agreement or
agreements, such condition or conditions, such covenant or covenants or such term or terms shall
be null and void to the extent contrary to law and shall be deemed separable from the remaining
agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof
or of the Revenue Obligations, and the Owners shall retain all the benefit,protection and security
afforded to them under any applicable provisions of law. The Corporation, the District and the
Trustee hereby declare that they would have executed this Trust Agreement, and each and every
Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have
authorized the execution and delivery of the Revenue Obligations pursuant hereto irrespective of
the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or
phrases hereof or the application thereof to any Person or circumstance may be held to be
unconstitutional, unenforceable or invalid.
Section 11.10. California Law. This Trust Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 11.11. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
If to the District: Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, California 92708
Attention: Director of Finance and Administrative Services
2]68]551A 37
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, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust Services
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, e.g. facsimile or telecopier or e-mail (with a PDF attachment, if applicable),
upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or
certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72
hours after such notice is deposited with the United States mail, (d) if given by overnight courier,
with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by
any other means,upon delivery at the address specified in this Section.
Section 11.12. Effective Date. This Trust Agreement shall become effective upon its
execution and delivery.
Section 11.13. Execution in Counterparts. This Trust Agreement may be
simultaneously executed in several counterparts, each of which shall be deemed an original, and
all of which shall constitute but one and the same instrument.
[Remainder of page intentionally left blank.]
27687551a 38
IN WITNESS WHEREOF,the parties hereto have caused this Trust Agreement to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
written above.
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
By:
Treasurer
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
(SEAL)
Attest:
By:
Clerk of the Board of Directors
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
2]68]551A 39
EXHIBIT A
FORM OF REVENUE OBLIGATION
No. R— •*•$•*•
Unless this Revenue Obligation is presented by an authorized representative of The
Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and
any Revenue Obligation executed and delivered is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
Registered Owner hereof, Cede&Co.,has an interest herein.
ORANGE COUNTY SANITATION DISTRICT
WASTEWATER REFUNDING REVENUE OBLIGATION
SERIES 2017A
Such revenue obligations are certificates of participation evidencing direct,undivided fractional
interests in the Installment Purchase Agreement,dated as of January 1,2017,by and between the
Orange County Sanitation District and the Orange County Sanitation District Financing
Corporation and the related Installment Payments,and the interest thereon.
PRINCIPAL
PAYMENT DATE INTEREST RATE DATED DATE CUSIP
February 1, - 2017
REGISTERED OWNER: Cede&Co.
PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY that the Registered Owner of this Revenue Obligation (this
"Revenue Obligation"), as identified above, is the owner of a direct, fractional undivided interest
in certain installment payments ("Installment Payments"), and the interest thereon,payable under
and pursuant to the Installment Purchase Agreement, dated as of January 1,2017 (the"Installment
Purchase Agreement'), by and between the Orange County Sanitation District (the "District'), a
county sanitation district organized and existing under the laws of the State of California, and the
Orange County Sanitation District Financing Corporation (the"Corporation"), a nonprofit public
benefit corporation organized and existing under the laws of the State of California. Certain of
the rights of the Corporation under the Installment Purchase Agreement, including the right to
receive the Installment Payments, and the interest thereon, have been assigned without recourse
by the Corporation to U.S. Bank National Association, a national banking association duly
organized and existing under the laws of the United States of America, as trustee (the"Trustee")
under the Trust Agreement, dated as of January 1, 2017 (the "Trust Agreement'), by and among
the Trustee,the District and the Corporation. Capitalized undefined terns used herein shall have
the meanings ascribed thereto in the Trust Agreement.
27687551.4 A-1
The District has executed and delivered the Master Agreement for District Obligations,
dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the
Corporation, pursuant to which the District establishes and declares the conditions and terms
upon which obligations such as the Installment Purchase Agreement, and the Installment
Payments and the interest thereon, will be incurred and secured.
This Revenue Obligation is one of the duly authorized Orange County Sanitation District
Wastewater Refunding Revenue Obligations, Series 2017A (the "Revenue Obligations")
evidencing principal in the aggregate amount of$ , executed pursuant to the terms
of the Trust Agreement. The Revenue Obligations evidence direct, fractional undivided interests
in the Installment Payments, and the interest thereon, payable under the Installment Purchase
Agreement. The Revenue Obligations are executed and delivered to refinance certain
improvements to the wastewater collection, treatment and disposal facilities of the District (the
"Wastewater System") and to pay the costs of issuance incurred in connection therewith and to
pay certain other related costs.
The Installment Payments, and the interest thereon, are to be paid by the District pursuant
to the Installment Purchase Agreement in consideration for the purchase of certain improvements
to the Wastewater System and for the other agreements and obligations undertaken by the
Corporation under the Installment Purchase Agreement and the Trust Agreement.
The income and revenue received by the District from the operation of the Wastewater
System remaining after the payment of maintenance and operation or ownership costs of the
Wastewater System (as more fully described in the Installment Purchase Agreement, the "Net
Revenues") are, pursuant to the Master Agreement, pledged to the payment of the Senior
Obligations and Reimbursement Obligations with respect to Senior Obligations (as such terms
are defined in the Master Agreement).
The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall
be subject to the provisions of the Master Agreement, and shall be afforded all of the advantages,
benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement.
The Installment Purchase Agreement is payable on a parity with the other existing Senior
Obligations. The District may at any time incur Senior Obligations in addition to existing Senior
Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in
the Master Agreement on a parity with all other Senior Obligations theretofore incurred,but only
subject to the conditions and upon compliance with the procedures set forth in the Master
Agreement.
The District is not required to advance any moneys derived from any source of income
other than Net Revenues and the other funds provided in the Installment Purchase Agreement for
the payment of the Installment Payments, and the interest thereon, and other payments required
to be made by it under the Installment Purchase Agreement, or for the perfomtance of any
agreements or covenants required to be performed by it contained therein. The obligation of the
District to pay the Installment Payments, and the interest thereon, and other payments required to
be made by it under the Installment Purchase Agreement is a special obligation of the District
27687551.4 A-2
payable, in the manner provided in the Installment Purchase Agreement, solely from such Net
Revenues and other funds provided for therein, and does not constitute a debt of the District or of
the State of California, or of any political subdivision thereof, in contravention of any
constitutional or statutory debt limitation or restriction.
Reference is hereby made to the Master Agreement, the Installment Purchase Agreement
and to the Trust Agreement and any and all amendments thereof and supplements thereto for a
description of the terms under which the District's obligation to pay the Installment Payments,
and the interest thereon, is incurred, the Revenue Obligations are executed and delivered, the
provisions with regard to the nature and extent of the Net Revenues, and the rights of the Owners
of the Revenue Obligations. All of the terms of the Master Agreement, the Installment Purchase
Agreement and the Trust Agreement are hereby incorporated herein. The Trust Agreement
constitutes a contract among the District, the Corporation and the Trustee for the benefit of the
Owners of the Revenue Obligations, to all the provisions of which the Owner of this Revenue
Obligation,by acceptance hereof, agrees and consents.
The Registered Owner of this Revenue Obligation is entitled to receive, subject to the
terms of the Trust Agreement and any right of prepayment as provided herein or therein, on the
Principal Payment Date set forth above, upon presentation and surrender of this Revenue
Obligation at the principal corporate trust office of the Trustee in St. Paul, Minnesota (the
`Principal Office"),the Principal Amount specified above, evidencing the Owner's interest in the
Installment Payments coming due on the Principal Payment Date, and to receive on February I
and August 1 of each year, commencing on August 1, 2017 (each an "Interest Payment Date"),
interest accrued thereon at the Interest Rate specified above, computed on the basis of a 360-day
year consisting of twelve 30-day months, until said Principal Amount is paid in full, evidencing
the Registered Owner's interest in the interest evidenced by the Installment Payments coming
due on each of said dates.
This Revenue Obligation shall evidence interest from the Interest Payment Date next
preceding its date of execution to which interest has been paid in full, unless such date of
execution shall be after the 15th day of the month next preceding an Interest Payment Date,
whether or not such day is a business day (each such date, a "Record Date"), and on or prior to
the following Interest Payment Date, in which case this Revenue Obligation shall evidence
interest from such Interest Payment Date, or unless such date of execution shall be on or prior to
the first Record Date, in which case this Revenue Obligation shall evidence interest from the
Dated Date specified above. Notwithstanding the foregoing, if, as shown by the records of the
Trustee, interest evidenced by the Revenue Obligations shall be in default, this Revenue
Obligation shall evidence interest from the last Interest Payment Date to which interest has been
paid in full or duly provided for.
Payments of interest evidenced by the Revenue Obligations shall be made to the Owners
thereof(as determined at the close of business on the Record Date next preceding the related
Interest Payment Date) by check or draft of the Trustee mailed to the address of each such
Owner as it appears on the registration books maintained by the Trustee pursuant to the Trust
Agreement, or to such other address as may be famished in writing to the Trustee by such
Owner. Payment of principal and prepayment premium, if any, evidenced by the Revenue
Obligations, on their stated principal payment dates or on prepayment in whole or in part prior
27687551.4 A-3
thereto, shall be made only upon presentation and surrender of the Revenue Obligations at the
Principal Office. All such amounts are payable in lawful money of the United States of America.
The Revenue Obligations are authorized to be executed and delivered in the form of fully
registered certificates in denominations of$5,000 or any integral multiple thereof("Autorized
Denominations").
This Revenue Obligation may be transferred or exchanged by the Registered Owner
hereof, in person or by his attorney duly authorized in writing, at the Principal Office,but only in
the manner, subject to the limitations and upon payment of the charges provided in the Trust
Agreement.
The Trustee shall not be required to transfer or exchange any Revenue Obligation during
the period commencing on the date five days before the date of selection of Revenue Obligations
for prepayment and ending on the date of mailing of notice of such prepayment, nor shall the
Trustee be required to transfer or exchange any Revenue Obligation or portion thereof selected
for prepayment from and after the date of mailing the notice of prepayment thereof.
The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all
purposes, whether or not the principal or interest evidenced by this Revenue Obligation shall be
overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and
payment of the principal and interest evidenced by this Revenue Obligation shall be made only
to such Registered Owner, which payments shall be valid and effectual to satisfy and discharge
the liability evidenced by this Revenue Obligation to the extent of the sum or sums so paid.
The Revenue Obligations are subject to prepayment prior to their stated Principal
Payment Dates in accordance with the Trust Agreement.
To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust
Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding when the prior written consents
of the Owners of a majority of the aggregate principal evidenced by the Revenue Obligations
then outstanding, exclusive of Revenue Obligations disqualified as provided under the Trust
Agreement, are filed with the Trustee. No such supplement or amendment shall (a)extend the
stated Principal Payment Date of any Revenue Obligation or reduce the rate of interest evidenced
thereby or extend the time of payment of such interest or reduce the amount of principal
evidenced thereby or change the prepayment terms and provisions or the provisions regarding
delivery of notice of prepayment without the prior written consent of the Owner of each Revenue
Obligation so affected, (b)reduce the percentage of Owners whose consent is required for the
execution of any amendment of or supplement to the Trust Agreement without the prior written
consent of the Owners of all Revenue Obligations then outstanding, (c)modify any of the rights
or obligations of the Trustee without the prior written consent of the Trustee, or (d)amend the
amendment provisions of the Trust Agreement without the prior written consent of the Owners
of all Revenue Obligations then outstanding.
27687551.4 A-4
To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust
Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may also be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding upon execution, without the
written consents of any Owners,but only to the extent permitted by law and only(a)to add to the
agreements, conditions, covenants and terns required by the Corporation or the District to be
observed or performed under the Trust Agreement other agreements, conditions, covenants and
terns thereafter to be observed or performed by the Corporation or the District, or to surrender
any right or power reserved therein to or conferred therein on the Corporation or the District, and
which in either case shall not adversely affect the rights or interests of the Owners, (b)to make
such provisions for the purpose of curing any ambiguity or of correcting, curing or
supplementing any defective provision contained in the Trust Agreement or in regard to
questions arising thereunder which the Corporation or the District may deem desirable or
necessary and not inconsistent therewith or (c) for any other reason, provided such amendment
or supplement does not adversely affect the rights or interests of the Owners.
THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the
statutes of the State of California and by the Trust Agreement to exist, to have happened and to
have been performed precedent to and in connection with the execution and delivery of this
Revenue Obligation do exist, have happened and have been performed in regular and due time,
form and manner as required by law, and that the Trustee is duly authorized to execute and
deliver this Revenue Obligation.
IN WITNESS WHEREOF, this Revenue Obligation has been executed by the manual
signature of an authorized signatory of the Trustee as of the date set forth below.
Date: ,2017
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
27687551.4 A-5
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned Revenue Obligation
and hereby irrevocably constitute(s) and
appoint(s) attorney, to transfer the same
on the books of the Trustee with full power of substitution in the premises.
Dated:
Note: The signature(s)on this Assignment must correspond with the narne(s) as written on the
face of the within registered Revenue Obligation in every particular, without alteration
or enlargement or any change whatsoever.
Tax I.D. #:
Signature Guaranteed:
Now: Signature(s)must be guaranteed by an eligible Note: The signature(s)on this Assignment must correspond
guarantor. with the names)as written on the face of the within Revenue
Obligation in every particular without alteration or
enlargement or any change whatsoever.
27687551.4 A-6
DRAFT OF
12/06/16
INSTALLMENT PURCHASE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
Dated as of January 1, 2017
Relating to
Orange County Sanitation District
Wastewater Refunding Revenue Obligations
Series 2017A
2769 914 11612667
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.01. Definitions............................................................................................2
Section 1.02. Definitions in Master Agreement and Trust Agreement......................3
ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE
CORPORATION; PAYMENT OF PURCHASE PRICE
Section 2.01. Acquisition of the Project....................................................................4
Section 2.02. Payment of Purchase Price...................................................................4
ARTICLE IH PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE
DISTRICT; INSTALLMENT PAYMENTS
Section 3.01. Purchase and Sale of Project................................................................4
Section 3.02. Installment Payments...........................................................................4
Section3.03. Reserved...............................................................................................6
Section 3.04. Obligation Absolute.............................................................................6
Section 3.05. Nature of Agreement............................................................................6
ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENTS
Section 4.01. Prepayment of Installment Payments...................................................7
Section4.02. Notice...................................................................................................7
Section 4.03. Discharge of Obligations.....................................................................7
ARTICLE V COVENANTS
Section 5.01. Compliance with Master Agreement...................................................7
Section 5.02. Compliance with Installment Purchase Agreement.............................7
Section 5.03. Protection of Security and Rights........................................................ 8
Section 5.04. Indemnification of Corporation........................................................... 8
Section 5.05. Further Assurances............................................................................... 8
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE
CORPORATION
Section 6.01. Events of Default................................................................................. 8
Section 6.02. Remedies on Default............................................................................9
Section6.03. Non-Waiver..........................................................................................9
Section 6.04. Remedies Not Exclusive.................................................................... 10
ARTICLE VII AMENDMENTS
Section 7.01. Amendments...................................................................................... 10
ARTICLE VIII MISCELLANEOUS
Section 8.01. Liability of District Limited............................................................... 11
Section 8.02. Limitation of Rights........................................................................... 11
Section8.03. Assignment ........................................................................................ 11
Section8.04. Notices............................................................................................... 12
27690492.4 _i_
TABLE OF CONTENTS
(continued)
Page
Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 12
Section 8.06. Waiver of Personal Liability.............................................................. 12
Section 8.07. Article and Section Headings, Gender and References..................... 12
Section 8.08. Partial Invalidity................................................................................. 13
Section 8.09. Governing Law.................................................................................. 13
Section 8.10. Execution in Counterparts.................................................................. 13
EXHIBIT A DESCRIPTION OF PROJECT........................................................A-1
27690492.4 -11-
INSTALLMENT PURCHASE AGREEMENT
THIS INSTALLMENT PURCHASE AGREEMENT (this "Installment Purchase
Agreement'), dated as of January 1, 2017, is by and between the ORANGE COUNTY
SANITATION DISTRICT, a county sanitation district organized and existing under the laws of
the State of California (the "District'), and the ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing
under the laws of the State of California(the"Corporation").
WITNESSETH:
WHEREAS, to refinance the acquisition, construction and installation of certain
improvements to its wastewater system (the `Prior Project'), the District has heretofore
purchased the Prior Project from the Corporation, and the Corporation has heretofore sold the
Prior Project to the District, for the installment payments (the `Prior Installment Payments")
made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2007
(the`Prior Installment Purchase Agreement'),by and between the District and the Corporation;
WHEREAS, to provide the funds necessary to refinance the Prior Project, the District
caused the execution and delivery of the Orange County Sanitation District Refunding
Certificates of Participation, Series 2007A (the "Prior Certificates"), evidencing direct,
undivided fractional interests in the related Prior Installment Payments;
WHEREAS,the District desires to refinance a portion of the Prior Project (the"Project')
by prepaying a portion of the remaining Prior Installment Payments, and the interest thereon to
the dates of prepayment, thereby causing a portion of the remaining Prior Certificates to be
prepaid;
WHEREAS,to provide the funds necessary to pay and prepay a portion of the remaining
Prior Installment Payments,the District and the Corporation desire that the Corporation purchase
the Project from the District and the District sell the Project to the Corporation, and that the
District then purchase the Project from the Corporation and the Corporation sell the Project to
the District, for the installment payments (the`Installment Payments") to be made by the District
pursuant to this Installment Purchase Agreement;
WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of
August 1, 2000,by and between the District and the Corporation,the District has established and
declared the conditions and terms upon which obligations such as this Installment Purchase
Agreement, and the Installment Payments, and the interest thereon, are to be incurred and
secured;
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to this Installment Purchase Agreement to U.S. Bank National Association,
as trustee(the"Trustee");
2769 914
WHEREAS, in consideration of such assignment and the execution and delivery of the
Trust Agreement, dated as of the date hereof, by and among the Trustee, the Corporation and the
District, the Trustee has agreed to execute and deliver the Orange County Sanitation District
Wastewater Refunding Revenue Obligations, Series 2017A (the "Revenue Obligations"),
evidencing direct, undivided fractional interests in the Installment Payments, and the interest
thereon,payable hereunder;
WHEREAS, a portion of the proceeds of the Revenue Obligations will be used to prepay
a portion of the Prior Installment Payments; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and delivery of
this Installment Purchase Agreement do exist, have happened and have been performed in
regular and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Installment Purchase Agreement;
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged,the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the
context otherwise requires, the terms defined in this Section shall for all purposes hereof and of
any amendment hereof or supplement hereto and of any report or other document mentioned
herein or therein have the meanings defined herein, the following definitions to be equally
applicable to both the singular and plural forms of any of the terms defined herein:
"Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which
banking institutions in the city in which the Principal Office is located are authorized or required
by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or
obligated by law or executive order to be closed.
"Closing Date"means February_, 2017.
"Corporation" means the Orange County Sanitation District Financing Corporation, a
nonprofit public benefit corporation organized and existing under the laws of the State, and any
successor thereto.
"District" means the Orange County Sanitation District, a county sanitation district
organized and existing under and by virtue of the laws of the State, and any successor thereto.
"Event of Default"means an event described in Section 6.01 hereof.
"Installment Payments" means the Installment Payments required to be made by the
District pursuant to Section 3.02 hereof.
2769 914 2
"Installment Payment Dates"means each February 1, commencing February 1, [20201.
"Installment Purchase Agreement" means this Installment Purchase Agreement, dated
as of January 1, 2017, by and between the District and the Corporation, as originally executed
and as it may from time to time be amended or supplemented in accordance with the terms
hereof.
"Interest Payment Date" means February 1 and August 1 of each year, commencing
August 1,2017.
"Master Agreement" means the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation, as originally executed and as it
may from time to time be amended or supplemented in accordance with the terms thereof.
"Person" means an individual, corporation, limited liability company, firm, association,
partnership, trust, or other legal entity or group of entities, including a governmental entity or
any agency or political subdivision thereof.
"Principal Office" means the Trustee's principal corporate trust office in Los Angeles,
California.
"Project" means the improvements to the Wastewater System, as described in Exhibit A
hereto.
"Revenue Obligations" means the Orange County Sanitation District Wastewater
Refunding Revenue Obligations, Series 2017A, executed and delivered by the Trustee, which are
certificates of participation, evidencing direct, undivided fractional interests in the Installment
Payments, and the interest thereon, executed and delivered under and pursuant to the Trust
Agreement.
"Trust Agreement" means the Trust Agreement, dated as of January 1, 2017, 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 terns.
"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.
2769 914 3
ARTICLE II
PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE CORPORATION;
PAYMENT OF PURCHASE PRICE
Section 2.01. Acquisition of the Protect. The District represents and warrants that it is
the sole and exclusive owner of the Project. The Corporation hereby purchases from the District,
and the District hereby sells to the Corporation, a portion of the Project equal to $ as
described in Exhibit A hereto in accordance with the provisions of this Installment Purchase
Agreement. All right, title and interest in and to such portion of the Project shall immediately
vest in the Corporation on the Closing Date without further action on the part of the Corporation
or the District.
Section 2.02. Payment of Purchase Price. On the Closing Date, the Corporation shall
pay to the District, as the purchase price of the applicable portion of the Project specified in
Section 2.01, the amount of$ , which amount shall be paid from the proceeds of
the Revenue Obligations.
ARTICLE IU
PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT;
INSTALLMENT PAYMENTS
Section 3.01. Purchase and Sale of Protect. The District hereby purchases from the
Corporation, and the Corporation hereby sells to the District, the Project in accordance with the
provisions of this Installment Purchase Agreement. All right, title and interest in and to the
Project shall immediately vest in the District on the Closing Date without further action on the
part of the District or the Corporation.
Section 3.02. Installment Payments. The District shall, subject to any rights of
prepayment provided in Article W hereof, pay to the Corporation, solely from Net Revenues and
from no other sources, the purchase price of the Project in Installment Payments, with interest
thereon, as provided herein. The Installment Payments and the interest thereon shall be payable
on the Business Day immediately preceding each of the Installment Payment Dates in the
amounts and at the interest rates per annum set forth in the following schedule:
2769 914 4
Interest on
Payment Installment Installment Interest
Date Payment Payment Total Rate
2769 914 5
The Installment Payments shall accrue interest from the Closing Date, at the rates set
forth above, payable on the Interest Payment Dates in each year. Such interest shall accrue on
the basis of a 360-day year consisting of twelve 30-day months. Each Installment Payment, and
each payment of interest thereon, shall be deposited with the Trustee, as assignee of the
Corporation, no later than the Business Day next preceding the Installment Payment Date or
Interest Payment Date on which such Installment Payment or payment of interest is due, in
lawful money of the United States of America, in immediately available funds. If and to the
extent that, on any such date, there are amounts on deposit in the Installment Payment Fund
established under the Trust Agreement, or in any of the accounts therein, which amounts are not
being held for the payment of specific Revenue Obligations, such amounts shall be credited
against the Installment Payment, or payment of interest thereon, as applicable, due on such date.
Section 3.03. Reserved.
Section 3.04. Oblisation Absolute. The obligation of the District to make the
Installment Payments, and payments of interest thereon, and other payments required to be made
by it under this Article, solely from Net Revenues, is absolute and unconditional, and until such
time as the Installment Payments, payments of interest thereon, and such other payments shall
have been paid in full (or provision for the payment thereof shall have been made pursuant to
Article IV), the District shall not discontinue or suspend any Installment Payments, or payments
of interest thereon, or other payments required to be made by it hereunder when due, whether or
not the Project or any part thereof is operating or operable or has been completed, or its use is
suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such
Installment Payments, payments of interest thereon, and other payments shall not be subject to
reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any party of any agreement for any cause whatsoever.
Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes
a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and
shall be afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement.
ARTICLE IV
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 4.01. Prepayment of Installment Payments. (a) The Installment Payments
shall be subject to prepayment prior to their respective Installment Payment Dates as provided in
Article IV of the Trust Agreement.
(b) The District may prepay, from any source of available funds, all or any portion of
the Installment Payments by depositing with the Trustee moneys or securities as provided, and
subject to the terms and conditions set forth, in Article X of the Trust Agreement sufficient to
pay such Installment Payments, and the interest thereon, when due or to pay such Installment
Payments, and the interest thereon, through a specified date on which the District has a right to
prepay such Installment Payments pursuant to subsection(a) of this Section, and to prepay such
2769 914 6
Installment Payments on such prepayment date, at a prepayment price determined in accordance
with subsection(a)of this Section.
(c) If less than all of the Installment Payments are prepaid then, as of the date of such
prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to
subsection (b) of this Section, the schedule of Installment Payments shall be recalculated to take
such prepayment into account.
Section 4.02. Notice. The District shall give written notice to the Trustee specifying the
date on which the prepayment will be made prior to making any prepayment pursuant to this
Article, which date shall be not less than 25 nor more than 60 days from the date such notice is
given to the Trustee,unless such time period shall be waived by the Trustee.
Section 4.03. Discharge of Obligations. If all Installment Payments, and the interest
thereon, shall be paid as and when due in accordance with the terns hereof, or prepaid in
accordance with Section 4.01 hereof, and if all Revenue Obligations shall be fully paid, or
provision therefor made in accordance with Article X of the Trust Agreement, and the Trust
Agreement shall be discharged by its terns, then all agreements, covenants and other obligations
of the District hereunder shall thereupon cease, terminate and become void and be discharged
and satisfied.
ARTICLE V
COVENANTS
Section 5.01. Comoliance with Master Agreenu mt. The District will faithfully
observe and perform all the agreements, conditions, covenants and terns 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. Comoliance with Installment Purchase Agreement. The District will
punctually pay the Installment Payments, and interest thereon, and other payments required to be
made by it hereunder in strict conformity with the 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.
2769 914 7
Section 5.03. Protection of Security and Rights. The District will preserve and protect
the security hereof and the rights of the Trustee, as assignee of the Corporation, to the
Installment Payments, and interest thereon, and other payments required to be made by the
District hereunder and will warrant and defend such rights against all claims and demands of all
Persons.
Section 5.04. Indemnification of Corporation. To the extent permitted by law, the
District hereby agrees to indemnify and hold the Corporation and its members and officers
harmless against any and all liabilities which might arise out of or are related to the Project, this
Installment Purchase Agreement or the Revenue Obligations, and the District further agrees to
defend the Corporation and its members and officers in any action arising out of or related to the
Project,this Installment Purchase Agreement or the Revenue Obligations.
Section 5.05. Further Assurances. The District will adopt, deliver, execute and make
any and all further assurances, instruments and resolutions as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance hereof and for the better assuring
and confirming unto the Corporation, or unto the Trustee, as assignee of the Corporation, the
rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the
Corporation.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 6.01. Events of Default. The following shall be Events of Default under this
Installment Purchase Agreement, and "Event of Default' shall mean any one or more of the
following events:
(a) if default shall be made by the District in the due and punctual payment of or on
account of any Senior Obligation as the same shall become due and payable;
(b) if default shall be made by the District in the performance of any of the
agreements or covenants required herein, in the Trust Agreement or in the Master Agreement to
be performed by it (other than as specified in (a) above), and such default shall have continued
for a period of 30 days after the District shall have been given notice in writing of such default
by the Corporation or the Trustee; provided, however, that the party or parties giving such notice
may agree in writing to a reasonable extension of such period prior to the expiration of such 30
day period and, provided further, that if the District shall proceed to take curative action which,
if begun and prosecuted with due diligence, cannot be completed within such a period of 30
days, then such period shall be increased without such written extension to such extent as shall
be necessary to enable the District to diligently complete such curative action and such default
shall not become an Event of Default for so long as shall be necessary to diligently complete
such curative action; or
2769 914
(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 we unlawful or violate the
rights of the Trustee, as assignee of the Corporation;
(c) by suit in equity to require the District to account as the trustee of an express trust;
and to have a receiver or receivers appointed for the Wastewater System and of the issues,
earnings, income, products and profits thereof, pending such proceedings, with such powers as
the court making such appointment shall confer.
Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof
shall affect or impair the obligation of the District, which is absolute and unconditional, to pay
the Installment Payments, and the interest thereon, to the Trustee, as assignee of the Corporation,
at the respective due dates from the Net Revenues and the other funds herein committed for such
payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which
is also absolute and unconditional, to institute suit to enforce such payment by virtue of the
contract embodied herein.
A waiver of any default or breach of duty or contract by the Trustee, as assignee of the
Corporation, shall not affect any subsequent default or breach of duty or contract or impair any
rights or remedies on any such subsequent default or breach of duty or contract. No delay or
omission by the Trustee, as assignee of the Corporation,to exercise any right or remedy accruing
upon any default or breach of duty or contract shall impair any such right or remedy or shall be
construed to be a waiver of any such default or breach of duty or contract or an acquiescence
therein, and every right or remedy conferred upon the Trustee, as assignee of the Corporation,by
applicable law or by this Article may be enforced and exercised from time to time and as often as
shall be deemed expedient by the Trustee, as assignee of the Corporation.
If any action,proceeding or suit to enforce any right or exercise any remedy is abandoned
or determined adversely to the Trustee, as assignee of the Corporation, the District and the
Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and
remedies as if such action,proceeding or suit had not been brought or taken.
2769 914 9
Section 6.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy,
and each such remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be
exercised without exhausting and without regard to any other remedy conferred by law.
ARTICLE VII
AMENDMENTS
Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights
and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation,
may be amended or modified from time to time and at any time by a written amendment hereto
executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with
the written consent of the Owners of a majority of the aggregate principal evidenced by Revenue
Obligations then Outstanding. No such amendment shall (i) extend the payment date of any
Installment Payment or reduce the amount of any Installment Payment, or the interest rate
applicable thereto, without the prior written consent of the Owner of each affected Revenue
Obligation, or (ii)reduce the percentage of Owners of the Revenue Obligations whose consent is
required to effect any such amendment or modification, without the prior written consent of the
Owners of all Revenue Obligations then Outstanding.
(b) This Installment Purchase Agreement and the rights and obligations of the
District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or
modified from time to time and at any time by a written amendment hereto executed by the
District, the Corporation and the Trustee, as assignee of the Corporation, without the written
consents of any Owners of the Revenue Obligations, but only to the extent permitted by law and
only for any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants and terms required by the
District, the Corporation or the Trustee, as assignee of the Corporation, to be observed
or performed herein other agreements, conditions, covenants and terns thereafter to be
observed or performed by the District,the Corporation or the Trustee, as assignee of the
Corporation, or to surrender any right or power reserved herein to or conferred herein
on the District,the Corporation or the Trustee,as assignee of the Corporation;
(ii) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in
regard to questions arising hereunder which the District, the Corporation or the Trustee,
as assignee of the Corporation, may deem desirable or necessary and not inconsistent
herewith; and
(iii) to make such other changes herein or modifications hereto as the District,
the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or
2769 914 10
necessary, and which shall not materially adversely affect the interests of the Owners of
the Revenue Obligations.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Liability of District Limited. Notwithstanding anything contained herein
to the contrary, the District shall not be required to advance any moneys derived from any source
of income other than Net Revenues and the other funds provided herein for the payment of the
Installment Payments, and the interest thereon, and other payments required to be made by it
hereunder, or for the performance of any agreements or covenants required to be performed by it
contained herein. The District may, however, but in no event shall be obligated to, advance
moneys for any such purpose so long as such moneys are derived from a source legally available
for such purpose and may be legally used by the District for such purpose.
The obligation of the District to pay the Installment Payments, and the interest thereon,
and other payments required to be made by it hereunder is a special obligation of the District
payable, in the manner provided herein, solely from Net Revenues and other funds provided for
herein, and does not constitute a debt of the District or of the State, or of any political
subdivision thereof, in contravention of any constitutional or statutory debt limitation or
restriction. Neither the faith and credit nor the taxing power of the District or the State, or any
political subdivision thereof, is pledged to the payment of the Installment Payments, or the
interest thereon, or other payments required to be made hereunder.
Section 8.02. Limitation of Rights. Nothing in this Installment Purchase Agreement
expressed or implied is intended or shall be construed to give to any Person other than the
District, the Corporation and the Trustee, as assignee of the Corporation, any legal or equitable
right, remedy or claim under or in respect of this Installment Purchase Agreement or any
covenant, condition or provision therein or herein contained, and all such covenants, conditions
and provisions are and shall be held to be for the sole and exclusive benefit of the District, the
Corporation and the Trustee, as assignee of the Corporation.
Section 8.03. Assignment. The District and the Corporation hereby acknowledge the
transfer, conveyance and assignment by the Corporation to the Trustee of all of the Corporation's
rights, title and interest in and to this Installment Purchase Agreement (excepting its rights to
indemnification bereunder), including the right to receive Installment Payments, and the interest
thereon,from the District,pursuant to the Trust Agreement.
Section 8.04. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
If to the District: Orange County Sanitation District
10844 Ellis Avenue
2769 914 11
Fountain Valley, California 92708
Attention: Director of Finance and Administrative Services
If to the Corporation: Orange County Sanitation District Financing Corporation
c/o Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, California 92708
Attention: Treasurer
If to the Trustee: U.S. Bank Corporate Trust Services
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust Services
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, whether by facsimile or telecopier, upon the sender's receipt of an appropriate
answerback or other written acknowledgment, (c) if given by registered or certified mail, return
receipt requested, deposited with the United States mail postage prepaid, 72 hours after such
notice is deposited with the United States mail, (d) if given by overnight courier, with courier
charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other
means,upon delivery at the address specified in this Section.
Section 8.05. Successor is Deemed Included in all References to Predecessor.
Whenever the District or the Corporation is named or referred to herein, such reference shall be
deemed to include the successor to the powers, duties and functions that are presently vested in
the District or the Corporation, and all agreements and covenants required hereby to be
performed by or on behalf of the District or the Corporation shall bind and inure to the benefit of
the respective successors thereof whether so expressed or not.
Section 8.06. Waiver of Personal Liability. No official, officer or employee of the
District shall be individually or personally liable for the payment of the Installment Payments, or
the interest thereon, or other payments required to be made by the District hereunder, but nothing
contained herein shall relieve any official, officer or employee of the District from the
performance of any official duty provided by any applicable provisions of law or hereby.
Section 8.07. Article and Section Headings. Gender and References. The headings
or 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.
2769 914 12
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. Governine 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.
2769 914 13
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
2769 914 14
EXHIBIT A
DESCRIPTION OF PROJECT
Improvements to the Wastewater System including the District's two wastewater
treatment plants, and Ocean Outfall and the Back Bay Sewer, and the acquisition, construction,
installation, rehabilitation, replacement, or repair of the Orange Western Subtrunk Relief Sewer,
the Bushard Trunk Sewer, Headworks Improvements at Plant 2; Rehab Trickling Filters at Plant
1; Solids Storage and Truck Loading Facility; Effluent Pump Station Annex; Standby Power and
Reliability Modifications; Groundwater Replenishment System; Bacteria Reduction Facilities;
Rehabilitate Digesters at Plant 2; Ocean Outfall Rehabilitation; Replace Back Bay Sewer;
Chemical Facility Modifications at Plant 1; Replace Outfall Flow Meter; Odor Scrubber
Monitoring and Control; and Replace HVAC Equipment at Plants 1 and 2.
A portion of the Project in the amount of$ shall be sold and purchased as
described in Article II of this Installment Purchase Agreement.
2769 914 A-1
DRAFT OF
12/06/16
CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement'),dated as
of February , 2017, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county
sanitation district organized and existing under the laws of the State of California (the "District'), and
DIGITAL ASSURANCE CERTIFICATION L.L.C., as Dissemination Agent (the "Dissemination
Agent').
WITNESSETH:
WHEREAS, the District has caused to be executed and delivered the Orange County Sanitation
District Wastewater Refunding Revenue Obligations, Series 2017A (the "Revenue Obligations"),
evidencing principal in the aggregate amount of $ , pursuant to a Trust Agreement,
dated as of January 1, 2017 (the "Trust Agreement'), by and among U.S. Bank National Association, as
trustee (the "Trustee"),the Orange County Sanitation District Financing Corporation(the "Corporation')
and the District; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the
Dissemination Agent for the benefit of the owners and beneficial owners of the Revenue Obligations and
in order to assist the purchaser of the Revenue Obligations in complying with the Rule (as defined
herein);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein
contained,the parties hereto agree as follows:
Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings
ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of
August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized
terms shall have the following meanings:
"Annual Report" means any Annual Report provided by the District pursuant to, and as
described in, Sections 2 and 3 hereof.
"Annual Report Date" means the date in each year that is eight months after the end of the
Fiscal Year,which date,as of the date of this Disclosure Agreement,is March 1.
"Disclosure Representative" means the Director of Finance and Administrative Services of the
District, or such other officer or employee of the District as the District shall designate in writing to the
Dissemination Agent 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 intemet at
liMWemma.msrb.org by the MSRB.
"Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next
succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the District,with
notice of such selection or change in fiscal year to be provided as set forth herein.
27676492.3 11612667
(OCSD 2017-A)
1
"Listed Events" means any of the events listed in Section 4 hereof and any other event legally
required to be reported pursuant to the Rule.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to
Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by
the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC,
filings with the MSRB are to be made through EMMA.
"Official Statement" means the Official Statement, dated January _, 2017, relating to the
Revenue Obligations.
"Participating Underwriter"means any of the original purchaser(s) of the Revenue Obligations
required to comply with the Rule in connection with the offering of the Revenue Obligations.
"Repository"means,until otherwise designated by the SEC,EMMA.
"Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as
the same has been or may be amended from time to time.
"SEC" shall mean the United States Securities and Exchange Commission.
Section 2. Provision of Annual Reports.
(a) The District shall provide, or shall cause the Dissemination Agent to provide, to MSRB,
through EMMA, not later than 15 days prior to the Annual Report Date, an Annual Report which is
consistent with the requirements of Section 3 of this Disclosure Agreement. The Annual Report must be
submitted in electronic Format, accompanied by such identifying information as provided by the MSRB.
The Annual Report may be submitted as a single document or as separate documents comprising a
package, and may include by reference other information as provided in Section 3 of this Disclosure
Agreement. Not later than 15 Business Days prior to such date, the District shall provide the Annual
Report to the Dissemination Agent. If the Fiscal Year changes for the District, the District shall give
notice of such change in the manner provided under Section 4(e)hereof.
(b) If by 15 Business Days prior to the date specified in subsection(a) for providing the
Annual Report to the MSRB, through EMMA, the Dissemination Agent has not received a copy of the
Annual Report the Dissemination Agent shall contact the District to determine if the District is in
compliance with subsection(a). The District shall provide a written certification with each Annual
Report famished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual
Report required to be famished by it hereunder. The Dissemination Agent may conclusively rely upon
such certification of the District and shall have no duty or obligation to review such Annual Report.
(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided
to the MSRB by the date required in subsection(a), the Dissemination Agent shall send a notice to the
MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine the electronic filing address of, and then-current procedures For
submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual
Report; and
2767M92.3 2
(if) to the extent appropriate information is available to it, file a report with the
Authority certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement, stating the date it was provided.
Section 3. Content of Annual Reports. The District's Annual Report shall contain or
incorporate by reference the following:
(a) Audited financial statements prepared in accordance with generally accepted accounting
principles as promulgated to apply to governmental entities from time to time by the Governmental
Accounting Standards Board. If the District's audited financial statements are not available by the
Annual Report Date,the Annual Report shall contain unaudited financial statements in a format similar to
the financial statements contained in the Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
(b) The principal evidenced by the Revenue Obligations Outstanding as of the June 30 next
preceding the Annual Report Date and the principal amount of other Senior Obligations outstanding as of
the June 30 next preceding the Annual Report Date.
(c) Updated information (not to include projections), for the Fiscal Year ended the June 30
next preceding the Annual Report Date, comparable to the information contained in the Official
Statement in Table Nos. 2,4, 6 (only with respect to information on 6 under the headings Fiscal Year and
Sewer Service Charge), 8,9, 10, 11, 12, 13, 14 and 16.
(d) In addition to any of the information expressly required to be provided under subsections
(a), (b) and (c) of this Section, the District shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under which they
are made,not misleading.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues with respect to which the District is an "obligated person" (as
defined by the Rule), which we available to the public on EMMA or filed with the SEC. The District
shall clearly identify each such document to be included by reference.
Section 4. Reportine of Sienificant Events.
(a) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Revenue Obligations, in a
timely manner not more than ten(10)Business Days after the event:
(1) principal and interest payment delinquencies;
(2) defeasances;
(3) tender offers;
(4) rating changes;
(5) adverse tax opinions or the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
5701-TEB)or other material notices or determinations with respect to the tax status of the
27676492.3 3
Revenue Obligations, or other material events affecting the tax status of the Revenue
Obligations;
(6) unscheduled draws on the debt service reserves reflecting financial
difficulties;
(7) unscheduled draws on credit enhancements reflecting financial
difficulties;
(8) substitution of credit or liquidity providers or their failure to perform; or
(9) bankruptcy,insolvency,receivership or similar proceedings.
For these purposes,any event described in the immediately preceding paragraph(9)is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the
District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state
or federal law in which a court or governmental authority has assumed jurisdiction over substantially all
of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing
governing body and officials or officers in possession but subject to the supervision and orders of a court
or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or
liquidation by a court or governmental authority having supervision or jurisdiction over substantially all
of the assets or business of the District.
(b) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Revenue Obligations, if
material:
(1) the consummation of a merger, consolidation or acquisition involving the
District or the sale of all or substantially all of the assets of the District, other than in the
ordinary course of business,the entry into a definitive agreement to undertake such action
or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms;
(2) appointment of a successor or additional Trustee or the change of the
name of a Trustee;
(3) non-payment related defaults;
(4) modifications to the rights of Owners;
(5) a notices of prepayment; or
(6) release, substitution or sale of property securing repayment of the
Revenue Obligations.
(c) whenever the District obtains knowledge of the occurrence of an 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 an event described in
subsection(b) of this Section 4 would be material under applicable federal securities law, the District
27676492.3 4
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.
Section 5. Filings with the MSRB. All information, operating data, financial statements,
notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall
be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying
information as prescribed by the MSRB.
Section 6. Termination of Reporting Obligation. The District's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Revenue Obligations. If such termination occurs prior to the final maturity of the Revenue
Obligations, the District shall give notice of such termination in the same manner as for a Listed Event
under Section 4 hereof.
Section 7. Dissemination Agent. The District may, from time to time, appoint or engage
another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement,
and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination
Agent. Notwithstanding any other provision to this Disclosure Agreement to the contrary, the District
may provide any Annual Report to Beneficial Owners by means of posting such Annual Report on an
internet site that provides open access to Beneficial Owners.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the District may amend this Disclosure Agreement, provided no amendment increasing or
affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such
party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is
supported by an opinion of counsel expert in federal securities laws acceptable to the District and the
Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the
undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof
but taking into account any subsequent change in or official interpretation of the Rule.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the District from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the District chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the District or the Dissemination Agent to
comply with any provision of this Disclosure Agreement, at the written direction of any Participating
Underwriter or the holders of at least 25%of the aggregate amount of principal evidenced by Outstanding
Revenue Obligations and upon being indemnified to its reasonable satisfaction, shall, or any holder or
beneficial owner of the Revenue Obligations may,take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the District 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
27676,192.3 5
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 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. The Dissemination Agent
shall not be responsible for the form or content of any Annual Report or notice of Listed Event. The
Dissemination Agent shall receive reasonable compensation for its services provided under this
Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth
in this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may
incur arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding
liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the
District under this Section shall survive resignation or removal of the Dissemination Agent and payment
of the Revenue Obligations.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
District, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from
time to time of the Revenue Obligations,and shall create no rights in any other person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
2767M92.3 6
IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the
date first above written.
ORANGE COUNTY SANITATION DISTRICT
By:
Lorenzo Tyner
Director of Finance and Administrative Services
DIGITAL ASSURANCE CERTIFICATION L.L.C.,
as Dissemination Agent
By:
Authorized Representative
2767M92.3 7
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE
TO FILE ANNUAL REPORT
Name of Obligor: Orange County Sanitation District
Name of Issue: Orange County Sanitation District
Wastewater Refunding Revenue Obligations, Series 2017A
Date of Execution and Delivery: February2017
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District")has not
provided an Annual Report with respect to the above-captioned Revenue Obligations as required by
Section 6.09 of the Trust Agreement, dated as of January 1, 2017, by and among U.S. Bank National
Association, as Trustee, the Orange County Sanitation District Financing Corporation and the District.
[The District anticipates that the Annual Report will be filed by .]
Dated: 20_ ORANGE COUNTY SANITATION DISTRICT
By
Title:
cc: Dissemination Agent
27676492.3
DRAFT OF
12/06/16
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 2017
O'L
� NEW ISSOE—BOOK-ENTRY-ONLY RATINGS:
S
S&P: "_
� ,; Fitch:
v o Moody's
w ca (See"RATINGS"herein.)
y
c In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel, under existing
6 3 statutes, regulations, rulings and court decisions, and assuming compliance with the tax covenants described herein,
the interest component of each Installment Payment, and the allocable portion thereofdistributable in respect of any
M.00 Revenue Obligation, is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross
.= income of the owners thereoffor federal income tax purposes and is union item of tax preference for purposes of the
Rfederal alternative minimum tax. It is also the opinion of Special Counsel that under existing law the interest
component of each Installment Payment, and the allocable portion thereof distributable in respect of any Revenue
Obligation, is exempt from personal income taxes of the State of California. See, however, "TAX MATTERS"
7.5
[District Logo] $[Par Amount]* [DAC Logo]
ORANGE COUNTY SANITATION DISTRICT
WASTEWATER REFUNDING REVENUE OBLIGATIONS
SERIES 2017A
Dated: Date of Delivery Due: as shown on the inside cover
o�
E " The$[Par Amount] Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series
2017A (the "Revenue Obligations") are certificates of participation that evidence direct, fractional undivided
interests of the Owners thereof in certain installment payments (the `Installment Payments"), and the interest
8 2 thereon, to be made by the Orange County Sanitation District(the "Distrat")pursuant to the Installment Purchase
3'e Agreement, dated as of January 1, 2017 (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
c ° District and the Corporation, the District has established conditions and terms upon which obligations such as the
iInstallment Payments, and the interest thereon, will be incurred and secured. Installment Payments order the
e o Installment Purchase Agreement are payable solely from Net Revenues (as more fully described in the Master
Agreement, the "Net Revenues") as provided in the Installment Purchase Agreement, consisting primarily of all
c o income and revenue received by the District from the operation or ownership of the Wastewater System of the
8 9 District (the "Wastewater System') remaining after payment of Maintenance and Operation Costs, as further
o`o described in"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. The
c c
? Installment Purchase Agreement provides that the obligation of the District to pay the Installment Payments, and
payments of interest thereon, and certain other payments required to be made in accordance with the Installment
Purchase Agreement, solely from Net Revenues, is absolute and unconditional. See"SECURITY AND SOURCES
OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein.
a8
A `o The proceeds of the Revenue Obligations, together with other funds of the District,will be used to (i)pay
�— or prepay all of the District's $95,180,000 Refunding Certificates of Participation, Series 2007A (the "Prior
oCertificates"), currently outstanding in the aggregate principal amount of $91,885,000, and (ii)pay the costs
m C incurred in connection with the execution and delivery of the Revenue Obligations. See "REFUNDING PLAN"
herein.
oInterest evidenced by the Revenue Obligations will be payable semiannually on Febmary 1 and August 1 of
e o each year, commencing on August 1, 2017. See "THE REVENUE OBLIGATIONS" herein. The Revenue
g 'o Obligations initially will be delivered only in book-entry form and will be registered in the name of Cede&Co., as
E a. nominee of The Depository Trust Company,New York,New York("DTC"),which will act as securities depository
a E 53 for the Revenue Obligations. Individual purchases of the Revenue Obligations will be made in book-entry form
only. Purchasers of Revenue Obligations will not receive physical certificates representing their ownership interests
H� 8
Preliminary,subject to change.
27680956A
in the Revenue Obligations purchased. The Revenue Obligations will be delivered in denominations of$5,000 and
any integral multiple thereof. Payments of principal and interest evidenced by the Revenue Obligations are payable
directly to DTC by U.S. Bank National Association, as trustee(the"Trustee"). Upon receipt of payments of such
principal and interest, DTC will in man distribute such payments to the beneficial owners of the Revenue
Obligations. See APPENDIX E—"BOOK-ENTRY SYSTEM"herein.
THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENTS, AND THE
INTEREST THEREON, AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE
INSTALLMENT PURCHASE AGREEMENT IS A SPECIAL OBLIGATION OF THE DISTRICT PAYABLE,IN
THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE AGREEMENT, SOLELY FROM NET
REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INSTALLMENT PURCHASE AGREEMENT,
AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF CALIFORNIA,OR OF
ANY POLITICAL SUBDIVISION THEREOF, IN CONTRAVENTION OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE
TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS
PLEDGED TO THE PAYMENT OF THE INSTALLMENT PAYMENTS, OR THE INTEREST THEREON, OR
OTHER PAYMENTS REQUIRED TO BE MADE UNDER THE INSTALLMENT PURCHASE AGREEMENT.
SEE"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"HEREIN.
This cover page contains information intended for quick reference only. It is not a summary of this
issue.Investors must read the entire Official Statement to obtain information essential to making an informed
investment decision.
BIDS FOR THE PURCHASE OF THE REVENUE OBLIGATIONS WILL BE RECEIVED BY THE
DISTRICT UNTIL : A.M.NEW YORK TIME ON JANUARY ,2017 UNLESS POSTPONED
OR CANCELLED AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS.
The Revenue Obligations are offered when, as and if executed and delivered and received by
as the Initial Purchaser, subject to the approval of Norton Rose Fulbright US LLP,
Los Angeles, California, Special Counsel and Disclosure Counsel to the District, and certain other conditions.
Certain legal matters will be passed upon for the District and the Corporation by Woodruff; Spradlin &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 Revenue
Obligations. It is anticipated that the Revenue Obligations in definitive form will be available for delivery through
the book-entry facilities ofDTC on or about February 2017.
Dated: January ,2017
27680956A
MATURITY SCHEDULE'
Maturity Date Principal Interest CUSIPt
(February 1) Amount Rate Yield Price (Base No. )
'Preliminary,subject to change.
t CUSIP is a registered trademark of the American Bankers Association.CUSIP Global Services(CGS)is managed on behalf of
the American Bankers Association by S&P Global Market Intelligence. Copyright C 2017 CUSIP Global Services. All rights
reserved. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP
service.CUSIP numbers have been assigned by an independent company not affiliated with the District and are included solely
for the convenience of the registered owners of the Revenue Obligations. None of the District, the Initial Purchaser or the
Municipal Advisor are responsible for the selection or uses of these CUSIP numbers,and an representation is made as to their
correctness on the applicable Revenue Obligations or as included herein.The CUSIP number for a specific maturity is subject in
being changed after the issuance of the Bonds as a result of various subsequent actions including,but not limited to,a refunding
in whole or in part or as a result of the procurement of secondary market portfolio insurance and other similar enhancement by
investors that is applicable to all or a portion of certain maturities of the Revenue Obligations.
27680956A
[INSERT MAP[
2]680956A
ORANGE COUNTY SANITATION DISTRICT
Board of Directors
[TO BE UPDATED BEFORE POSTING]
John Nielsen (Chair) Twin
Greg Sebourn—(Vice Chair) Fullerton
Lucille KringAnaheim Teresa Smith—Orange
Glenn Parker—Brea Chad WankePlacentia
Fred Smith—Buena Park Sal Tinajero—Santa Ana
Mariellen Yam, Cypress Ellery Deaton—Seal Beach
Steve Nagel—Fountain Valley David Shasvver Stanton
Steve Jones—Garden Grove Greg Mills— Villa Park
Jim Kampodis Huntington Beach James M. Ferryman Costa Mesa Sanitary District
Steven Choi—Irvine John Withers—Irvine Ranch Water District
Tom Beamish—La Habra Joy Neugebauer—Midway City Sanitary District
Peter Kim La Palma Robert Kiley Yorba Linda Water District
Richard Murphy—Los Alamitos Michelle Steel—Member of the Orange County
Keith Curry—Newport Beach Board of Supervisors
Executive Mana¢ement of the District
James Herberg, General Manager
Robert P. Ghirelli,D.Env.,Assistant General Manager
Lorenzo Tyner,Director of Finance and Administrative Services
Ed Torres,Director of Operations and Maintenance
James Colston,Director of Environmental Services
Robert Thompson,Director of Engineering
Celia Chandler,Director of Human Resources
Special Services
Special Counsel and Disclosure Counsel
Norton Rose Fulbright US LLP
Los Angeles,California
District General Counsel
Bradley R.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
29680956A
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Revenue Obligations by any person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale. The information set forth herein has
been provided by the Orange County Sanitation District (the "District) and other sources that are
believed by the District to be reliable. No dealer,broker, salesperson or other person has been authorized
to give any information or to make any representations other than those contained in this Official
Statement. If given or made, such other information or representations must not be relied upon as having
been authorized by the District,the Corporation or the Initial Purchaser in connection with any reoffering.
This Official Statement is not to be construed as a contract with the purchasers of the Revenue
Obligations. Statements contained in this Official Statement which involve estimates, projections,
forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such
and are not to be construed as representations of facts.
The information and expressions of opinion herein are subject to change without notice and
neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the District or the Corporation since
the date hereof This Official Statement is submitted with respect to the sale of the Revenue Obligations
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless
authorized in writing by the District. All summaries of the documents and laws are made subject to the
provisions thereof and do not purport to be complete statements of any or all such provisions. Preparation
of this Official Statement and its distribution have been duly authorized and approved by the District and
the Corporation.
In connection with the offering of the Revenue Obligations, the Initial Purchaser in connection
with any reoffering may over-allot or effect transactions which stabilize or maintain the market price of
the Revenue Obligations at a level above that which might otherwise prevail in the open market. Such
stabilizing,if commenced,may be discontinued at any time. The Initial Purchaser in connection with any
reoffering may offer and sell the Revenue Obligations to certain dealers,institutional investors and others
at prices lower than the public offering prices stated on the inside cover page hereof and such public
offering prices may be changed from time to time by the Initial Purchaser.
Certain statements included or incorporated by reference in this Official Statement constitute
forward-looking statements. Such statements 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.
29680956A
TABLE OF CONTENTS
Page
INTRODUCTION.......................................................................................................................................I
General............................................................................................................................................I
TheDistrict.....................................................................................................................................2
Security and Sources of Payment for the Revenue Obligations.....................................................2
ContinuingDisclosure....................................................................................................................3
Miscellaneous.................................................................................................................................3
REFUNDINGPLAN...................................................................................................................................4
ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................5
THE REVENUE OBLIGATIONS..............................................................................................................5
General............................................................................................................................................5
Prepayment Provisions....................................................................................................................6
SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS..........................7
InstallmentPayments......................................................................................................................7
AvailableFunds of the District.......................................................................................................8
NetRevenues..................................................................................................................................9
Rate Stabilization Account...........................................................................................................10
Allocation of Revenues.................................................................................................................10
RateCovenant...............................................................................................................................11
Limitations on Issuance of Additional Obligations......................................................................12
Insurance.......................................................................................................................................14
Allocation of Installment Payments..............................................................................................14
THEDISTRICT.........................................................................................................................................16
Background...................................................................................................................................16
Organization and Administration..................................................................................................17
Services.........................................................................................................................................18
ServiceArea..................................................................................................................................18
Employees.....................................................................................................................................19
RetirementPlan.............................................................................................................................20
Other Post-Employment Benefits.................................................................................................22
RiskManagement.........................................................................................................................22
ExistingFacilities.........................................................................................................................23
Permits,Licenses and Other Regulations.....................................................................................24
District Planning and Capital Improvement Program...................................................................25
Groundwater Replenishment System............................................................................................26
Preferred Level of Treatment........................................................................................................27
BiosolidsManagement..................................................................................................................27
UrbanRunoff................................................................................................................................28
Integrated Emergency Response Program....................................................................................29
Five-Year Strategic Planning........................................................................................................31
27680956.4 -i-
TABLE OF CONTENTS
(continued)
Page
DISTRICT REVENUES............................................................................................................................32
SewerService Charges.................................................................................................................32
AdditionalRevenues.....................................................................................................................34
Wastewater Treatment History.....................................................................................................36
Customers.....................................................................................................................................36
AssessedValuation.......................................................................................................................38
BudgetaryProcess.........................................................................................................................40
Reserves........................................................................................................................................41
Summary of Operating Data.........................................................................................................42
Forecasted Operating Data............................................................................................................44
Management's Discussion and Analysis of Operating Data.........................................................46
Investment of District Funds.........................................................................................................47
FINANCIAL OBLIGATIONS..................................................................................................................47
ExistingIndebtedness...................................................................................................................47
AnticipatedFinancings.................................................................................................................48
Direct and Overlapping Bonded Debt...........................................................................................48
THECORPORATION..............................................................................................................................48
LIMITATIONS ON TAXES AND REVENUES......................................................................................49
Article XIIIA of the California Constitution.................................................................................49
Legislation Implementing Article XHIA......................................................................................49
Article XIIIB of the California Constitution.................................................................................50
Proposition IA and Proposition 22...............................................................................................51
Article XIBC and Article XBID of the California Constitution...................................................52
Other Initiative Measures..............................................................................................................54
LEGALMATTERS...................................................................................................................................54
MUNICIPAL ADVISOR...........................................................................................................................54
ABSENCE OF LITIGATION...................................................................................................................54
FINANCIAL STATEMENTS...................................................................................................................55
TAXMATTERS........................................................................................................................................55
TaxExemption..............................................................................................................................55
Tax Accounting Treatment of Bond Premium..............................................................................57
Other Tax Consequences..............................................................................................................57
CONTINUING DISCLOSURE.................................................................................................................58
RATINGS..................................................................................................................................................58
PURCHASE AND REOFFERING...........................................................................................................59
MISCELLANEOUS..................................................................................................................................59
27680956.4 -i-
TABLE OF CONTENTS
(continued)
Page
APPENDIX A — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE
ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED
JUNE 30,2016........................................................................................................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
27680956.4
OFFICIAL STATEMENT
$[PARAMOUNT]
ORANGE COUNTY SANITATION DISTRICT
WASTEWATER REFUNDING REVENUE OBLIGATIONS
SERIES 2017A
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Revenue
Obligations being offered and a brief description of the Official Statement. All statements contained in
this introduction are qualified in their entirety by reference to the entire Official Statement. References
to, and summaries of,provisions of the Constitution and laws of the State of California (the "State') and
any documents referred to herein do not purport to be complete and such references are qualified in their
entirety by reference to the complete provisions. All capitalized terms used in this Official Statement and
not otherwise defined herein have the meanings set forth in the Trust Agreement, the Installment
Purchase Agreement and the Master Agreement (each, as hereinafter defined). See APPENDIX C—
"SUMMARY OFPRINCIPAL LEGAL DOCUMENTS—Definitions"herein.
General
This Official Statement, including the cover page and all appendices hereto, provides certain
information concerning the sale and delivery of$[Par Amount]aggregate principal amount of the Orange
County Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A (the "Revenue
Obligations"), which are certificates of participation evidencing direct,fractional undivided interests
in certain installment payments (the `Installment Payments") and the interest thereon, to be made by
the Orange County Sanitation District (the "District") pursuant to the Installment Purchase Agreement,
dated as of January 1, 2017 (the`Installment Purchase Agreement'),by and between the District and the
Orange County Sanitation District Financing Corporation(the"Corporation"). Unless the context clearly
indicates to the contrary, a reference herein to either of the Installment Purchase Agreement or the
Revenue Obligations is intended to refer to the corresponding interest in the Installment Purchase
Agreement. Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the
"Master Agreement'), by and between the District and the Corporation, the District has established and
declared the conditions and terms upon which obligations such as the Installment Purchase Agreement,
and the Installment Payments and the interest thereon,will be incurred and secured. Installment Payments
under the Installment Purchase Agreement are payable solely from Net Revenues (as defined hereinafter)
as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue
received by the District from the operation or ownership of the Wastewater System of the District (the
"Wastewater System")remaining after payment of Maintenance and Operation Costs,as further described
in"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein.
The Revenue Obligations are to be executed and delivered pursuant to a Trust Agreement, dated
as of January 1, 2017 (the"Trust Agreement"),by and among the District,the Corporation and U.S. Bank
National Association, as trustee (the "Trustee"). Proceeds from the sale of the Revenue Obligations,
together with other funds of the District, will be used to (i)pay or prepay all of the District's$95,180,000
Refunding Certificates of Participation, Series 2007A (the`Prior Certificates"), currently outstanding in
the aggregate principal amount of $91,885,000, and (ii)pay the costs incurred in connection with the
execution and delivery of the Revenue Obligations. See"REFUNDING PLAN"herein.
27680956A
The Revenue Obligations will be executed and delivered in the form of fully registered
certificates of participation, dated as of the date of initial delivery thereof and will mature on February 1
in each such year as set forth on the inside cover page hereof Interest evidenced by the Revenue
Obligations will be payable semiannually on February 1 and August I of each year, commencing on
August 1, 2017. See"THE REVENUE OBLIGATIONS"herein. The Revenue Obligations initially will
be delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company, New York, New York("DTC'), which will act as securities depository
for the Revenue Obligations. The Revenue Obligations will be delivered in denominations of$5,000 and
any integral multiple thereof. So long as the Revenue Obligations are in the DTC book-entry system, the
interest, principal, purchase price and prepayment premiums, if any, due with respect to the Revenue
Obligations will be payable by the Trustee, or its agent,to DTC or its nominee. DTC, in tam,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 183 million gallons per day("mg/d") of wastewater in Fiscal Year 2015-16.
See"THE DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"herein.
Security and Sources of Payment for the Revenue Obligations
The Revenue Obligations, which are certificates of participation, evidence direct, fractional
undivided interests in the Installment Payments, and the interest thereon, paid by the District pursuant to
the Installment Purchase Agreement. The obligation of the District to pay the Installment Payments and
the interest thereon and other payments required to be made by it under the Installment Purchase
Agreement is a special obligation of the District payable, in the manner provided under the Installment
Purchase Agreement, solely from Net Revenues, and other funds as provided in the Installment Purchase
Agreement Net Revenues generally consist of all income and revenue received by the District from the
operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation
Costs, all as further provided in the Master Agreement. The Installment Purchase Agreement constitutes
a Senior Obligation and,as such, is subject to the provisions of the Master Agreement and is afforded all
of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master
Agreement.
The District currently has Outstanding Senior Obligations payable from Net Revenues on a parity
with the Installment Payments under the Installment Purchase Agreement. See`ESTIMATED SOURCES
AND USES OF FUNDS," "FINANCIAL OBLIGATIONS — Existing Indebtedness" and "THE
DISTRICT" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —
Master Agreement"attached hereto. The District has no Subordinate Obligations currently outstanding.
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
27680956.4 2
all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND
SOURCE OF PAYMENT FOR THE REVENUE OBLIGATIONS—Rate Covenant'herein.
The obligation of the District to pay the Installment Payments and the interest thereon, and
other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided in the Installment Purchase Agreement,
solely from Net Revenues and other funds provided for in the Installment Purchase Agreement,and
does not constitute a debt of the District or of the State, or of any political subdivision thereof, in
contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and
credit nor the taxing power of the District or the State or any political subdivision thereof, is
pledged to the payment of the Installment Payments, or the interest thereon, or other payments
required to be made under the Installment Purchase Agreement. The Installment Purchase
Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master
Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement. See"SECURITY AND SOURCES OF PAYMENT
FOR THE REVENUE OBLIGATIONS" herein.
Continuing Disclosure
The District has covenanted for the benefit of holders and beneficial owners of the Revenue
Obligations (a)to provide certain financial information and operating data(the"Annual Report)relating
to the District and the property in the District not later than eight months after the end of the District's
Fiscal Year (which currently would be March 1), commencing with the report for the 2016-17 Fiscal
Year, and (b)to provide notices of the occurrence of certain enumerated events. The specific nature of
the information to be contained in the Annual Report or the notices of enumerated events is set forth in
the Continuing Disclosure Agreement. See "CONTINUING DISCLOSURE" herein and APPENDIX D
—"FORM OF CONTINUING DISCLOSURE AGREEMENT."
Miscellaneous
The descriptions herein of the Trust Agreement, the Master Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and any other agreements relating to the Revenue
Obligations are qualified in their entirety by reference to such documents. Copies of the Trust Agreement,
the Master Agreement and the Installment Purchase Agreement are on file and available for inspection at
the corporate trust office of U.S. Bank National Association, Los Angeles, California Attention:
Corporate Trust.
27680956.4 3
REFUNDING PLAN
A portion of the net proceeds from the sale of the Revenue Obligations,together with other funds
of the District, will be used to pay or prepay on February 1, 2017 all of the installment payments to be
made by the District in connection with the Prior Certificates to be refunded; which are set forth on the
table below and are referred to herein as the "Refunded 2007A Certificates."Under the terms of the Trust
Agreement, dated as of May 1, 2007 (the "Prior Trust Agreement"), by and between the District and
MUFG Union Bank, N.A., pursuant to which the Prior Certificates were executed and delivered, the
prepayment of the installment payments related to the Refunded 2007A Certificates will be effected by
depositing a portion of the proceeds of the Revenue Obligations 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 prepayment of the principal and interest components of the installment
payments related to the Refunded 2007A Certificates in full on February 1, 2017.
The amounts deposited in the Payment Fund will be held in trust solely for the Refunded 2007A
Certificates and will not be available to pay the principal and interest evidenced by the Revenue
Obligations or any obligations other than the Refunded 2007A Certificates.
Refunded 2007A Certificates
Principal CUSIP
Maturity Date Amount Number
(February l) Outstanding (68428P)
27680956.4 4
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds in connection with the execution and delivery of the
Revenue Obligations are presented below.
Sources
Principal Amount of Revenue Obligations $
Premium/Discount
Amounts released from Prior Trust Agreement
Total Sources $
Uses
Prepayment of Refunded 2007A Certificates $
Costs of lssuancet'I
Total Uses $
(D Costs of Issuance include, among other things, the Initial Purchaser's discount, fees and expenses of rating
agencies,Special Counsel and Disclosure Counsel,and the initial fees of the Trustee.
THE REVENUE OBLIGATIONS
General
The Revenue Obligations will be prepared in the form of fully registered certificates of
participation in denominations of$5,000 and any integral multiple thereof. The Revenue Obligations will
be dated as of the date of initial delivery thereof and will mature on February 1 in such years as set forth
on the inside cover page hereof. Interest evidenced by the Revenue Obligations will be payable
semiannually on February 1 and August 1 of each year, commencing on August 1, 2017. The Revenue
Obligations initially will be delivered only in book-entry form and will be registered in the name of Cede
&Co., as nominee of The Depository Trust Company,New York,New York("DTC"),which will act as
securities depository for the Revenue Obligations. Individual purchases of the Revenue Obligations will
be made in book-entry form only. Purchasers of Revenue Obligations will not receive physical certificates
representing their ownership interests in the Revenue Obligations purchased.
The interest evidenced by the Revenue Obligations shall be payable on each Interest Payment
Date to and including their respective Principal Payment Dates or prepayment prior thereto, and shall
represent the sum of the interest on the Installment Payments coming due on the Interest Payment Dates
in each year. The principal evidenced by the Revenue Obligations shall be payable on their respective
Principal Payment Dates in each year and shall represent the Installment Payments coming due on the
Principal Payment Dates in each year. Each Revenue Obligation shall evidence interest from the Interest
Payment Date next preceding its date of execution to which interest has been paid in full,unless such date
of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which
case such Revenue Obligation shall evidence interest from such Interest Payment Date, or unless such
date of execution shall be on or prior to July 15, 2017, in which case such Revenue Obligation shall
represent interest from its date of initial delivery. Notwithstanding, the foregoing, if, as shown by the
records of the Trustee, interest evidenced by the Revenue Obligations shall be in default, each Revenue
Obligation shall evidence interest from the last Interest Payment Date to which such interest has been paid
in full or duly provided for. Interest evidenced by the Revenue Obligations shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C — "SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS Trust Agreement."
27680956.4 5
Payments of principal and interest evidenced by the Revenue Obligations are payable directly to
DTC by U.S. Bank National Association, as trustee. Upon receipt of payments of such principal and
interest, DTC will in turn distribute such payments to the beneficial owners of the Revenue Obligations.
So long as the Revenue Obligations are held in the DTC book-entry system, the interest, principal,
purchase price and prepayment premiums, if any, due with respect to the Revenue Obligations will be
payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments pursuant
to its procedures as described under APPENDIX E—"BOOK-ENTRY SYSTEM"herein.
Prepayment Provisions`
Optional Prepayment. The Revenue Obligations maturing on or after February 1, 2027 are
subject to optional prepayment prior to their stated Principal Payment Dates, on any date on or after
February 1, 2026, in whole or in part, in Authorized Denominations, from and to the extent of prepaid
Installment Payments paid pursuant to the Installment Purchase Agreement or from any other source of
available funds, any such prepayment to be at a price equal to the principal evidenced by the Revenue
Obligations to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment,
without premium.
Selection of Revenue Obligations for Prepayment. Whenever less than all the Outstanding
Revenue Obligations are to be prepaid on any one date pursuant to provisions of the Trust Agreement
with respect to optional prepayment of Revenue Obligations, the Trustee shall select the Revenue
Obligations to be prepaid among Revenue Obligations with different Principal Payment Dates as directed
in a Written Request of the District. Whenever less than all the Outstanding Revenue Obligations with
the same stated Principal Payment Date are to be prepaid on any one date in accordance with the Trust
Agreement, the Trustee shall select the Revenue Obligations with such Principal Payment Date to be
prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any
manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the
District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the
Revenue Obligations so selected for prepayment on such date. For purposes of such selection, any
Revenue Obligation may be prepaid in part in Authorized Denominations.
Notice of Prepayment When prepayment of Revenue Obligations is authorized pursuant to the
Trust Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the
Revenue Obligations. The notice of prepayment shall specify(a)the Revenue Obligations or designated
portions thereof(in the case of prepayment of the Revenue Obligations in part but not in whole)which are
to be prepaid, (b)the date of prepayment, (c)the place or places where the prepayment will be made,
including the time and address of any paying agent, (it)the prepayment price, (e)the CUSIP numbers
assigned to the Revenue Obligations to be prepaid, (f)the numbers of the Revenue Obligations to be
prepaid in whole or in part and, in the case of any Revenue Obligation to be prepaid in part only, the
principal evidenced by such Revenue Obligation to be prepaid, and (g)the interest rate and stated
Principal Payment Date of each Revenue Obligation to be prepaid in whole or in part. Such notice of
prepayment shall further state that on the specified date there shall become due and payable upon each
Revenue Obligation or portion thereof being prepaid the prepayment price and that from and after such
date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of
optional prepayment of Revenue Obligations, unless at the time such notice is given the Revenue
Obligations to be prepaid shall be deemed to have been paid within the meaning of the Trust Agreement,
such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the
date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Revenue
Obligations to be prepaid,and that if such moneys shall not have been so received said notice shall be of
Preliminary,subject to change.
27680956.4 6
no force and effect and the District shall not be required to prepay such Revenue Obligations. In the
event a notice of prepayment of Revenue Obligations contains such a condition and such moneys are not
so received, the prepayment of Revenue Obligations as described in the conditional notice of prepayment
shall not be made and the Trustee shall, within a reasonable time after the date on which such prepayment
was to occur, give notice to the persons and in the manner in which the notice of prepayment was given,
that such moneys were not so received and that there shall be no prepayment of Revenue Obligations
pursuant to such notice of prepayment.
The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice
of prepayment to the respective Owners of Revenue Obligations designated for prepayment by first-class
mail,postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as
of the close of business on the day before such notice of prepayment is given.
The actual receipt by the Owner of any notice of such prepayment shall not be a condition
precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the
validity of the proceedings for the prepayment of such Revenue Obligations or the cessation of interest
evidenced thereby on the date fixed for prepayment.
Effect of Prepayment If notice of prepayment has been duly given as aforesaid and moneys for
the payment of the prepayment price of the Revenue Obligations to be prepaid are held by the Trustee,
then on the prepayment date designated in such notice,the Revenue Obligations so called for prepayment
shall become payable at the prepayment price specified in such notice; and from and after the date so
designated,interest evidenced by the Revenue Obligations so called for prepayment shall cease to accrue,
such Revenue Obligations shall cease to be entitled to any benefit or security hereunder and the Owners
of such Revenue Obligations shall have no rights in respect thereof except to receive payment of the
prepayment price thereof The Trustee shall, upon surrender for payment of any of the Revenue
Obligations to be prepaid, pay such Revenue Obligations at the prepayment price thereof, and such
moneys shall be pledged to such payment.
SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS
Installment Payments
Pursuant to the Installment Purchase Agreement, the Project will be reacquired by the District
from the Corporation. The District has covenanted to, subject to any rights of prepayment under the
Installment Purchase Agreement, pay to the Corporation, solely from Net Revenues and from no other
sources, the Purchase Price in Installment Payments, with interest thereon, as provided in the Installment
Purchase Agreement. Pursuant to the Master Agreement, the District has established and declared the
conditions and terms upon which obligations such as the Installment Purchase Agreement, and the
Installment Payments and the interest thereon payable under the Installment Purchase Agreement,will be
incurred and secured. The obligation of the District to make the Installment Payments, and payments of
interest thereon,and other payments required to be made by it under the Installment Purchase Agreement,
solely from Net Revenues,is absolute and unconditional,and until such time as the Installment Payments,
payments of interest thereon, and such other payments shall have been paid in full (or provision for the
payment thereof shall have been made pursuant to the Installment Purchase Agreement), the District has
covenanted that it will not discontinue or suspend any Installment Payments when due,whether or not the
Project or any part thereof is operating or operable or has been completed, or its use is suspended,
interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments,
payments of interest thereon, and other payments shall not be subject to reduction whether offset or
otherwise and shall not be conditional upon the performance or nonperformance by any party of any
agreement or any cause whatsoever. The District's obligation to make Installment Payments from Net
27680956.4 7
Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding
Senior Obligations. See "Net Revenues" below. Pursuant to the Trust Agreement, the Corporation has
assigned to the Trustee for the benefit of the Owners of the Revenue Obligations substantially all of its
rights, title and interest in and to the Installment Purchase Agreement, including its right to receive
Installment Payments and the interest thereon.
The District has certain Existing Senior Obligations Outstanding payable from Net Revenues on a
parity with the Installment Payments under the Installment Purchase Agreement. The term "Existing
Senior Obligations" as used in this Official Statement refers to the Installment Purchase Agreements
relating to the District's currently Outstanding Senior Obligations, as set forth on Table 16 under the
caption "FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The term"Senior Obligations"
as used in this Official Statement refers to the Existing Senior Obligations and to any additional Senior
Obligations, such as the Installment Purchase Agreement, that may be made payable on a parity basis to
the Installment Payments as provided in the Master Agreement. Senior Obligations, together with any
Subordinate Obligations payable on a subordinate basis to the Installment Payments incurred as provided
in the Master Agreement, are referred to collectively as the "Obligations." The District has no
Subordinate Obligations currently outstanding. See "FINANCIAL OBLIGATIONS — Existing
Indebtedness" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —
Master Agreement"attached hereto.
The obligation of the District to pay the Installment Payments, and the interest thereon, and other
payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is
a special obligation of the District payable, in the manner provided in the Installment Purchase
Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase
Agreement, and does not constitute a debt of the District, the State or any political subdivision thereof, in
contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit
nor the taxing power of the District, the State or any political subdivision thereof, is pledged to the
payment of the Installment Payments, or the interest thereon, or other payments required to be made
under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior
Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the
advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master
Agreement. See`SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"
herein.
Available Funds of the District
As Senior Obligations under the Master Agreement, the Installment Payments are payable from
and secured by a pledge of Net Revenues. Should Net Revenues prove insufficient, the Installment
Purchase Agreement further provides that the Installment Payments are payable from any other lawfully
available funds of the District. The primary lawfully available funds of the District are its reserve funds,
other than trustee-held amounts required to be in any Obligation Reserve Fund securing certain of the
District's Senior Obligations, as described in the Master Agreement. At June 30, 2016, the District's
Debt Service Required Reserves totaled$117 million, of which$25 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, 2016 were approximately $570 million (consisting of$545
million in cash and investments and $25 million due from the Orange County Flood Control District).
See "DISTRICT REVENUES — Reserves," "— Summary of Operating Data" and "— Projected
Operating Data."
27680956.4 8
Net Revenues
The District is obligated to make Installment Payments from, among other things, Net Revenues
as provided in the Master Agreement, which consist of Revenues remaining after payment of costs paid
by the District for maintaining and operating the Wastewater System ("Maintenance and Operation
Costs"). Revenues are defined in the Master Agreement to mean, for any period, all income and revenue
received by the District during such period from the operation or ownership of the Wastewater System,
determined in accordance with generally accepted accounting principles, including all fees and charges
received during such period for the services of the Wastewater System, investment income received
during such period(but only to the extent that such investment income is generally available to pay costs
with respect to the Wastewater System, including Maintenance and Operation Costs), Net Proceeds of
business interruption insurance received during such period, ad valorem taxes received during such
period,payments under the Agreement Acquiring Ownership Interests,Assigning Rights and Establishing
Obligations, entered into on February 13, 1986, and amendment No. 1 thereto dated December 10, 1986
(the "IRWD Agreement"), by and between predecessor County Sanitation District No. 14 of Orange
County and the Irvine Ranch Water District (the "IRWD") received during such period and all other
money received during such period howsoever derived by the District from the operation or ownership of
the Wastewater System or arising from the Wastewater System (including any standby or availability
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(it)Revenues shall include Capital Facilities Capacity Charges collected during such period
to the extent that such Capital Facilities Capacity Charges could be properly expended on a Capital
Facilities Capacity Charge Eligible Project for which the proceeds of Senior Obligations were used or 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 Payments from its Net Revenues is on a parity
with the District's obligation to make payments with respect to its other outstanding obligations described
as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided
in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as
such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits,
interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the
Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be
apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations. The term"Senior Obligations"generally
means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District
authorized, issued,executed and delivered under and pursuant to applicable law, the Installment Purchase
Agreement, and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, including, without limitation, installment,
lease or other payments which are, in accordance with the provisions of the Master Agreement, payable
from Net Revenues on a parity with the payments under the Master Agreement.
27680956.4 9
The District may at any time incur Subordinate Obligations payable on a subordinate basis to the
Installment Payments as provided in the Master Agreement; provided, however, that prior to incurring
such Subordinate Obligations, the District shall have determined that the incurrence thereof will not
materially adversely affect the District's ability to comply with the requirements of the Master
Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate
Obligations. For a description of the District's Outstanding Senior Obligations and Subordinate
Obligations, see "FINANCIAL OBLIGATIONS Existing Indebtedness" herein. There 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.
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 Revenue Obligations are not secured by any
Reserve Fund);
(3) Subordinate Obligation Payment Account;
(4) Subordinate Obligation Reserve Funds;and
27680956.4 10
(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
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$475 million as
indicated in the District's ten-year cash flow forecast for fiscal years 2016-17 through 2025-26. At its
election,the District may use unrestricted reserves to help satisfy the rate covenant described above. See
"DISTRICT REVENUES Reserves"herein.
Limitations on Issuance of Additional Obligations
Senior Obligations. The District may at any time incur Senior Obligations in addition to the
Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity
with all other Senior Obligations theretofore incurred but only subject to the following conditions under
the Master Agreement:
(1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing
under the Master Agreement;and
27680956.4 11
(2) Subject to the provisions of the Master Agreement, the District will have received either
one of the following:
(1) A Written Certificate of the District certifying that, for a 12 consecutive calendar
month period during the 24 consecutive calendar month period ending in the
calendar month prior to the incurrence of such Senior Obligations (which 12
consecutive calendar month period will be specified in such certificate or
certificates):
(A) Net Revenues,as shown by the books of the District,will have amounted
to at least 125% of Maximum Annual Debt Service on all Senior
Obligations to be outstanding immediately after the incurrence of such
Senior Obligations,and
(13) Net Operating Revenues,as shown by the books of the District,will have
amounted to at least 100% of Maximum Annual Debt Service on all
Obligations to be outstanding immediately after the incurrence of such
Senior Obligations.
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x)any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred, but which, during all or
any part of such 12 consecutive calendar month period, were not in effect,
(y)customers added to the Wastewater System subsequent to such 12
consecutive calendar month period but prior to the date such Senior Obligations
are incurred, and (z) the estimated change in available Net Revenues and Net
Operating Revenues which will result from the connection of existing residences
or businesses to the Wastewater System within one year following completion of
any project to be funded or any system to be acquired from the proceeds of such
Senior Obligations;or
(ii) A certificate or certificates from one or more Consultants which, when taken
together, project that, for each of the two Fiscal Years next succeeding the
incurrence of such Senior Obligations:
(A) Net Revenues will amount to at least 125% of Maximum Annual Debt
Service on all Senior Obligations to be outstanding immediately after the
incurrence of such Senior Obligations,and
(B) Net Operating Revenues will amount to at least 100% of Maximum
Annual Debt Service on all Obligations to be outstanding immediately
after the incurrence of such Senior Obligations.
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x) any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred or will go into effect prior
to the end of such two Fiscal Year period, (y) customers expected to be added to
the Wastewater System prior to the end of such two Fiscal Year period, and (z)
the estimated change in available Net Revenues and Net Operating Revenues
27680956.4 12
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-Terre 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.
Subordinate Obligations. The District may at any time incur Subordinate Obligations upon
satisfaction of the conditions provided in the Master Agreement. See APPENDIX C—"SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS Master Agreement'herein for a description of such conditions.
There are currently no Subordinate Obligations outstanding.
Insurance
The District will procure and maintain or cause to be procured and maintained casualty insurance
on the Wastewater System with responsible insurers, or provide self- insurance (which may be provided
in the form of risk-sharing pools), in such amounts and against such risks (including accident to or
destruction of the Wastewater System) as are usually covered in connection with facilities similar to the
Wastewater System. The District will procure and maintain such other insurance which it will deem
advisable or necessary to protect its interests and the interests of the Corporation. See "THE DISTRICT
—Risk Management' and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—
Master Agreement'herein.
27680956.4 13
Allocation of Installment Payments
Set forth in Table 1 are the principal and interest payments on the Revenue Obligations. Also set
forth we the payments due on Existing Senior Obligations,including the Refunded 2007A Certificates.
Table 1
Payments Relating to the Revenue Obligations
and Existing Senior Obligations of the District
As of 2017
Fiscal Year Installment Payments Other
Ending Relating to Revenue Obligations Senior Obligations')(')
June 30 Principal Interest Principal Interest Total
2017 $ 11,625,000 $ 25,602,567 $ 37,227,567
2018 32,415,000 49,650,369 82,065,369
2019 141,815,000 47,457,619 189,272,619
2020 33,025,000 44,764,719 77,789,719
2021 34,675,000 43,116,419 77,791,419
2022 28,675,000 41,424,669 70,099,669
2023 30,085,000 40,008,079 70,093,079
2024 31,430,000 38,666,329 70,096,329
2025 32,960,000 37,129,459 70,089,459
2026 34,305,000 35,793,541 70,098,541
2027 36,330,000 34,114,691 70,444,691
2028 42,200,000 32,396,166 74,596,166
2029 44,205,000 30,388,341 74,593,341
2030 46,310,000 28,284,666 74,594,666
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 28,950,150
2041 20,805,000 2,912,640 23,717,640
2042 12,430,000 1,581,120 14,011,120
2043 9,795,000 785,600 10,580,600
2044 2,480,000 158,720 2,638,720
Total $1.0111.125,000 RfiR2_fi02.025 Sl Afi372Z025
I11 The District intends to refinance its Revenue Refunding Certificate Anticipation Notes, Series 2016B (the
"2016B Certificates") on or before their maturity on December 15, 2018. [Assumes principal of the 2016B
Certificates is amortized from 2022 through 2036 and an interest rate of 3%per annum.] See "FINANCIAL
OBLIGATIONS—Recent and Anticipated Financings'herein.
(3) Includes payments with respect to the Refunded 2007A Certificates, all of which are to be refunded with the
proceeds of the Revenue Obligations. See`REFUNDING PLAN'herein.
27680956.4 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. 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 183 mg/d of wastewater in Fiscal Year 2015-
16. 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 5001. 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 Outfall Sewer Organization constructed a treatment plant and
outfall in the early 1920s to serve its members. It was reorganized in 1947 and 1948 into seven county
sanitation districts — District Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on
engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and
District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which
provided for the joint construction,ownership,and operation of the prior districts'joint facilities.
In April 1998, at the request of the Board of Directors of the District (the "Board of Directors"),
the Board of Supervisors of the County of Orange (the "County Board") passed Resolution No. 98-140
approving the consolidation of the then existing nine special districts into a new,single sanitation district,
to be known as the Orange County Sanitation District. This action was designed to simplify governance
structures, reduce the size of the Board of Directors, ease administrative processes, streamline decision-
making and consolidate accounting and auditing processes. The consolidation was effective on July 1,
1998.
Pursuant to Resolution No. 98 140 and Government Code Section 57500, the prior districts
transferred and assigned all of their powers, rights, duties, obligations, functions and properties to the
District, and the District assumed all obligations of the prior districts which were several and not joint
including, without limitation, their obligations to repay the then outstanding certificates of participation.
The boundaries of the nine predecessor special districts were initially used by the District to delineate
separate revenue areas (the "Revenue Areas") for budgeting and accounting purposes and in order to
facilitate the imposition of fees and charges imposed by the District. See "DISTRICT REVENUES —
Sewer Service Charges"herein.
27680956.4 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 Heiberg.
James Herberg, P.E. is the General Manager of the District and has served in this capacity since
April 2013. During his 20 years with the District,he has held the positions of Assistant General Manager,
Director of Engineering, and Director of Operations and Maintenance. Mr. Herberg has more than 27
years of experience in the water and wastewater industries, including six years at the Orange County
Water District with whom the District has partnered on the Groundwater Replenishment System project.
Robert P. Ghirelli, D.Env. is the Assistant General Manager of the District,and has served in that
capacity since July 2006. Dr. Ghirelli previously served as Director of Technical Services for the District
since his joining the District in 1998. Prior to joining the District, Dr. Ghirelli served for just over a year
as managing principal of the Los Angeles office of a national environmental consulting firm, and served
20 years in supervisory positions with the State Water Resources Control Board and Regional Water
Quality Control Boards, including 13 years serving as Executive Officer of the California Regional Water
Quality Control Board,Los AngelesNentum Region.
Lorenzo Tyner is the District's Director of Finance and Administrative Services. In September
2005, Mr. Tyner joined the District with more than 20 years of public finance and budgeting experience,
most recently serving as the Los Angeles Unified School District Budget Director and Deputy Chief
Financial Officer. Mr. Tyner previously worked in large government organizations including the City of
Los Angeles and the Los Angeles County Metropolitan Transportation Authority and with private sector
companies IBM Global Services and TRW Space and Defense.
Ed Torres is the District's Director of Operations and Maintenance for the District. He has
served the District since 1991. Prior to joining the District, Mr. Torres served in a professional capacity
for the California State University System and TRW Electronics and Defense Sector. Mr. Torres has
more than 25 years of public and private sector experience in protecting public health and the
environment.
Robert Thompson,P.E. is the District's Director of Engineering. He has worked for the District
since 1995. Mr. Thompson has served as manager in several departments with OCSD, including
Information Technology, Operations and Maintenance, and Engineering. He has had a lead role in
creating and maintaining engineering,programming,tagging and asset standards for the District.
27680956.4 16
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 Murieta and the County of Riverside,
and with private sector company Stone&Webster Engineering Services Company.
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.
27680956.4 17
Set forth in Table 2 below is the estimated populations of cities and unincorporated areas served
by the District as of January 1,2016.
Table 2
Estimated Populations of Cities and Unincorporated Areas
Served by the Orange County Sanitation District
As of January 1,2016
CitV Population
Anaheim 358,136
Brea 43,710
Buena Park 83,347
Costa Mesa 114,603
Cypress 49,743
Fountain Valley 56,714
Fullerton 142,457
Garden Grove 177,303
Huntington Beach 195,212
Irvine 258,386
La Habra 62,064
La Palma 16,057
Los Alamitos 11,738
Newport Beach 84,270
Orange 141,420
Placentia 52,263
Santa Ana 342,930
Seal Beach 25,078
Stanton 39,751
Tustin 82,717
Villa Park 5,948
Westminster 94,073
Yorba Linda 67,637
Cities Subtotal(') 2,505,557
Unincorporated Areas(estimated)(') 73324
Total 2 SZ$5$L
0) Demographic Research Unit,State of California Deparmcm of Finance.
(2) Center for Demographic Research,California State University,Fullerton.
Employees
As of October 21, 2016, the District had a total of 579 employees. The majority of District
employees are represented by recognized employee organizations, which include the following: the
Orange County Employees Association("OCEA"),representing administrative/clerical,technical services
and engineering employees since 1979, the International Union of Operating Engineers — Local 501
("Local 501"), representing operations and maintenance employees since October 1985, and the
Supervisory and Professional Management Group ("SPMT"), representing employees within the
Supervisor Group and Professional Group since 1991. The total number of represented employees as of
October 21, 2016 was 546, and is broken down as follows: 104 employees represented by OCEA, 192
employees represented by Local 501, and 250 employees represented by the SPMT. All labor contracts
27680956.4 18
expired on Jame 30,2016. In October 2016,the District reached final agreement with all bargaining units
on the current set of labor contracts which will expire on June 30, 2019. Historically, the District has
experienced positive and collaborative working relationships with each organization and has not endured
any work stoppages since the early 1980s.
Retirement Plan
The District participates in the Orange County Employees Retirement System ("OCERS"), a
cost-sharing multiple-employer defined benefit pension plan, which is governed and administered by a
nine-member Board of Retirement. OCERS was established in 1945 under the provisions of the County
Employees Retirement Law of 1937,and provides members with retirement,death,disability,and cost of-
living benefits.
All full-time and part-time District employees participate in OCERS. Contributions are based on
an OCERS actuarial-determined rate structure and age at time of employment; contributions are deducted
on a pre-tax basis. Most employees do not pay into Social Security with the exception of 1.45% of gross
income, which is paid into the Medicare portion of Social Security. The amount of the retirement
allowance is based upon the member's age at retirement,the member's"final compensation"as defined in
Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the
employee's classification m a Plan B, G, H or U member. Plan U applies to all full-time and part-time
employees hired on or after January 1, 2013. Plan B applies to supervisor and professional employees
hired on or after October 1, 2010, Local 501 employees hired on or after July 1, 2011 and OCEA
employees hired on or after August 1, 2011. Plan G applies to employees hired before September 21,
1979. Plan H applies to employees hired on or after September 21, 1979 and prior to the eligibility dates
for Plan B or Plan U. Plan G and H provide 2.5% of final compensation per year of service at age 55.
Plan B provides 1.667%of final compensation per year of service at age 57.5, and Plan U provides 2%at
62. "Final compensation"is the highest consecutive 12 months of compensation for Plan G members and
the highest consecutive 36 months of compensation divided by three for Plan B, H, and U members.
Benefits fully vest under the OCERS retirement plan upon reaching five years of service. Employees
who retire at or after age 50 with ten or more years of service are eligible to receive an annual retirement
allowance, but at a reduced benefit for those employees retiring prior to age 62 for Plan U members, 57.5
for Plan B members, or prior to age 55 for Plan G and H members. OCERS also provides death and
disability benefits.
As a condition of participation under the provisions of the County Employees Retirement Law of
1937, members are required to contribute a percentage of their annual compensation to OCERS. The
District contributes a portion of the employee's contribution to OCERS for members of Plans G and H
based on a percentage of the covered employee's base salary. Members of Plans U and B do not receive
any contributions toward employee contribution to OCERS. As of the December 31, 2015 valuation,
OCERS had an aggregate Unfunded Actuarial Accrued Liability ("UAAL") of$4.8 billion, and a funded
ratio of 71.72%.
27680956.4 19
Set forth in Table 3 below is a current comparison of the District's required contributions to
OCERS for Fiscal Years 2011-12 through 2015-16 and projected required contributions for Fiscal Year
2016-17.
Table 3
Orange County Sanitation District
District Required Contributions to OCERS for Fiscal Years 2011-12 through 2015-16 and
Projected Required Contributions for Fiscal Year 2016-17
District Required
Fiscal Year Rete(l) Contributions
2011-12 26.10% $15,767,050
2012-13 27.35 16,363,917
2013-14 32.09 18,920,212
2014-15 29.33 17,201,569
2015-16 20.44 12,222,849
2016-17(') 12.50 7,290,080
m Required contribution as a percent of covered payroll. Includes amortization of Unfunded Actuarial Accrued
Liability. Combined rate for all Plans.
(2) Projected.
Source: Orange County Sanitation District.
For Fiscal Years 2011-12 through 2013-14, the District's required contribution was equal to the
contribution that the District actually made. In Fiscal Year 2014-15, the District contributed an additional
$125 million to OCERS to pay against UAAL liability totaling $194 million as of July 1, 2014. On
September 3, 2015,the District again made an additional UAAL contribution to OCERS in the amount of
$50 million. As of December 31, 2015, the date of the most recent actuarial valuation completed by
OCERS,the District's past UAAL was approximately$5.3 million. However, for the OCERS year ended
December 31, 2015, OCERS experienced a total net deferred investment loss of $680 million. The
District's share of this loss totaled $31.6 million. Therefore, the District's total UAAL as of December
31, 2015 was $36.9 million. The District made an additional contribution to OCERS in the amount of
$39 million on November 1, 2016 to pay against UAAL liability totaling $39 million as of November 1,
2016. For the Fiscal Year ended June 30, 2016, total payroll costs of District employees covered by
OCERS was $59,789,927.
The District's retirement program includes Additional Retiree Benefit Account ("ARBA")
benefits. ARBA benefits provide a monthly payment to retirees towards the premium costs of health
insurance for the retiree and eligible dependents. The retiree is not required to use this amount for health
insurance premium or to remain on the OCERS medical plan. Benefits vest upon retirement. The District
pays 100%of the cost for the ARBA plan and utilizes a pay-as-you-go method for funding the plan. The
District paid $565,380 in ARBA benefits during Fiscal Year 2015-16. As of August 1, 2011, ARBA
benefits are no longer available to new OCEA Croup employees of the District.
For more information regarding OCERS and the District's retirement plan as of Jane 30, 2016,
see Note 5 and 6 to the Comprehensive Annual Financial Report of the Orange County Sanitation District
for the Year Ended Jane 30, 2016 set forth in Appendix A. The Comprehensive Annual Financial
Reports of the Orange County Employees Retirement System are available on the OCERS website at
http://www.ocers.org. The information on such website is not incorporated herein by such reference or
otherwise. The District cannot predict whether the OCERS investment portfolio will experience
27680956.4 20
additional losses in the future; however, any fttwe losses could result in material increases in the
District's required contributions.
Other Post-Employment Benefits
In June 2004, Governmental Accounting Standards Board ("GASB") issued Statement No. 45,
which requires state and local governmental employers to fund the actuarially determined annual required
contribution ("ARC")for its post-employment benefits other than pension benefits (known as other post-
employment benefits or"OPEB") or record the entire amount of the unfunded liability of its OPEB in its
financial statements. OPEB includes healthcare and life insurance expenses and related liabilities, and an
annual required contribution to fund such liabilities. The District adopted Statement No. 45 for the fiscal
year beginning July 1, 2007, as required of a GASB "Phase 1 Agency." According to the District's
actuary, Demsey Filliger Associates (the "Actuary"),the unfunded OPEB liability as of July 1, 2015 was
approximately $9.4 million. The ARC was determined to be $755,078 for Fiscal Year 2014-15 and
$559,620 for each of Fiscal Years 2015-16 and 2016-17, the period covered by the last actuarial
valuation. Calculation of the ARC is based on the present value of benefits accruing in the current year, a
30-year amortization of the unfunded OPEB liability and an assumed rate of return on investments in the
retiree fund of 3.75%per annum. The District does not believe that its OPEB liability will have a material
impact on its operational results.
Risk Management
As of the date hereof, the District has in force basic all risk property and casualty insurance,
including theft, fire, flood,terrorism and boiler and machinery losses at its plants and pump stations. The
District is self-insured for portions of workers' compensation,property damage and general liability. The
self-insurance portion of workers' compensation is $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 S100,000 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("FENW) 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 Jane 30, 2016 that
would materially affect the financial position of the District.
For more information regarding the District's insurance coverage as of June 30, 2016, see Note 1
to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Year
Ended Jane 30,2016 set forth in Appendix A.
27680956.4 21
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.
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"Preferred
Level of Treatment" and "Biosolids Management" below. In the next phase, primary treatment,
wastewater is pumped to large settling basins. The liquids are separated from the remaining solids which
settle or float as the wastewater passes through large settling basins called clarifiers. The settled solids
are sent to solids treatment facilities. All of the wastewater received by the District is sent to secondary
treatment for further processing. During secondary treatment, the wastewater is treated with naturally
occurring bacteria to remove most of the remaining dissolved and suspended microscopic organic solids.
The treated wastewater from both plants is mixed together at Plant No.2,where it is then pumped through
the ocean outfall pipe that extends five miles offshore.
Set forth in Table 4 below are the treatment plants' approximate treatment capacities.
Table 4
Wastewater System Treatment Capacities
(mg/d)
As of June 30,2016
Primary Secondary
2015-16 Treatment Treatment
Actual Flows Ca aci Cavacity
Plant No. 1 117 208 182
Plant No. 2 66 168 150
Aggregate Treatment lu 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
27680956.4 22
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
the South Coast Air Quality Management District ("AQMD"). These agencies regulate the standards of
quality of water that can be discharged from the treatment plants and air quality emissions from treatment
processes. The Clean Water Act directs the EPA to monitor and regulate the discharge of pollutants into
the waters of the United States and to enforce the requirements that all wastewater treatment plants in the
nation provide full secondary treatment. In 1977, Congress amended the Clean Water Act to allow
waivers of secondary treatment standards for certain ocean dischargers, if they could demonstrate to the
satisfaction of the EPA that significant adverse environmental impacts would not occur. The District
currently has all applicable permits and licenses necessary to operate its facilities.
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
waiver under the Section 301(h)provisions of the Clean Water Act, allowing for less than full secondary
treatment based on an ocean discharge of sufficient depth, distance and dilution. The permit was initially
issued in 1985 and was the first modified Section 301(h) permit issued to a major wastewater treatment
facility. The permit was re-issued on May 6, 1998 and expired on June 8,2003.
On July 17, 2002, the Board of Directors adopted Resolution No. OCSD 02-14, "Establishing the
Policy for Level of Treatment of Wastewater Discharged into the Ocean." This resolution established the
District's policy to treat all wastewater discharges into the ocean to secondary treatment standards,
thereby providing for continued public safety, marine ecosystem protection, and water reclamation
opportunities. To implement this policy, District staff was directed to immediately proceed with the
planning, design, and implementation of treatment methods that will allow the District to meet Clean
Water Act secondary treatment standards with the expressed purposes of eliminating the need for the
permit waiver received under Section 301(h). The District completed these improvements 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 will 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.
District staff has begun the process of preparing a permit application in advance of the July 2017 permit
expiration date and anticipates submittal of the completed permit application package before the end of
2016.
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,
27680956.4 23
carbon monoxide, lead, nitrogen dioxide, and sulfur dioxide). Air pollutants cause adverse effects on
human health and environment. AQMD is the local air pollution control agency charged with
implementing the Federal Clean Air Act. hi addition to mandated criteria pollutants, AQMD also
implements numerous federal and State requirements related to the toxic air pollutants which can cause
cancer or other severe localized health effects. For example,the State's Air Toxic Hot Spots Act requires
facilities to conduct health risk assessments and notify the neighboring communities if the health risk
exceeds the regulatory thresholds.
Pursuant to AQMD's requirements, the District must obtain permits before sewage treatment
improvement projects can be constructed and operated. Such permits are project-specific and may contain
conditions that govern design criteria, operating parameters, and emissions standards. Most of the
District's treatment facilities are enclosed in order to capture and treat emissions to 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 of the applicable local, state,and federal requirements, including periodic self-certification of
compliance and mandatory self-reporting of permit deviation.
All Title V permit-related reporting and documents submitted to the AQMD must be signed by
the highest District official — in this case, the General Manager. The Title V program also demands
facilities to organize and conduct extensive training of the staff involved,including the field operation and
maintenance staff Another Title V important feature is a possibility of the public active participation and
intervention in the cases of potential emission limits and monitoring violations. The District Title V
permits did not receive any negative public responses or comments during the required public review
period. The District received initial Title V permits for the treatment plants in January 2009. Title V
permits are issued for a five-year period. Title V permits for both plants were issued on April 16, 2014.
They will expire on April 16,2019.
District Planning and Capital Improvement Program
In November 2007, the Board of Directors adopted a new comprehensive strategic plan to
consider the District's service levels and operational needs for the next five years. The Strategic Plan has
subsequently been updated biennially to continue looking at a five-year horizon (each, a "Five-Year
Strategic Plan"). See"THE DISTRICT—Five-Year Strategic Planning."
In December 2009, the Board of Directors adopted a Facilities Master Plan (the "Master Plan").
The Master Plan updated the planning processes set forth in the 1989 Master Plan,the 1999 Strategic Plan
and the 2002 Interim Strategic Plan Update. The Master Plan also incorporates and implements the levels
of services defined by the Board of Directors that are included in the 2007 Five-Year Strategic Plan. The
result is a plan that integrates research, facilities planning, water conservation and reclamation, sludge
reuse,other wastewater programs and financial planning into a single unified approach. Key components
of the Master Plan include updated flow projections and collection system hydraulic modeling.
The District expects to satisfy required sewer capacity and rehabilitation improvements for the
Wastewater System through its Capital Improvement Program ("CIP"). The District annually reviews
and validates its CIP. The CIP was developed to satisfy anticipated regulatory requirements, increased
population, anticipated rehabilitations and replacements, additional treatment requirements, conservation,
energy and other resource savings considerations, odor control improvements, and air quality protection
needs. Through Fiscal Year 2025-26,the current CIP is scheduled to accomplish:
27680956.4 24
• Major rehabilitation of existing headworks, primary treatment, outfall pumping, solids
handling facilities, and central generation at both treatment plants;
• Relocation of District headquarters complex, including the relocation of the front
entrance at Plant No. 1;
• 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 seven of the District's outlying pumping stations,
abandonment of one pump station, and nine trunk sewer improvement projects;
• Reduction of fence line odor to levels that minimize odor complaints; and
• Safety improvements at both treatment plants.
The 2016 CIP validation effort resulted in revisions to the CIP. The CIP currently consists of 81
individual capital projects through Fiscal Year 2025-26, with remaining outlays of approximately $2.1
billion. Over the next four years,the District contemplates average annual capital outlays of$197 million
based on the 2016 CIP validation effort, without taking into account CIP savings and deferrals. Set forth
in Table 5 below is a summary of total estimated capital costs over the next ten years.
Table 5
Capital Improvement Program—Estimated Capital Costs
Fiscal Years 2016-17 through 2025-26
Project Cost
Collection System Capacity $ 162,400,000
Collection System Repair,Rehabilitation,Replacement 408,600,000
Treatment Plant Capacity 46,300,000
Additional Secondary Treatment 40,200,000
Improved Treatment 135,500,000
Treatment Plant Repair,Rehabilitation, Replacement 1,083,900,000
Support Facilities 240,000,00
Total Validated Capital Improvement Program $2.116.900.000
Source: 2016-17 CIP Validation,Drange County Sanitation District.
Of this ten year $2.1 billion CIP program, $190.3 million of CIP outlays is budgeted in Fiscal
Year 2016-17. Also budgeted in a separate contra line item are anticipated offsetting CIP savings and
deferrals of $19.0 million, thereby reducing the net budgeted outlays to $171.3 million. There are
currently 30 projects in the construction phase with proposed capital outlay spending in Fiscal Year 2016-
17. The two most significant projects in the construction phase are the Sludge Dewatering and Odor
Control Project at Plant No. 2 and the Newhope-Placentia Trunk Replacement Project with projected
Fiscal Year 2016-17 outlays of$23.5 million and$20.9 million,respectively.
27680956.4 25
Groundwater Replenishment System
The District bas 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 April 2015, the District and the OCWD approved a $2
million joint study to explore the Final Expansion of the GWRS which would increase GWRS capacity
by an additional 30 MGD. In September 2016,the District and OCWD Boards of Directors approved the
Final Expansion project, which will design and construct additional infrastructure and treatment
facilities. The Final Expansion will be funded by the OCWD, and no capital funding is anticipated from
the District for such expansion.
Preferred Level of Treatment
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50% advanced primary and 50% secondary treated wastewater, to full secondary treatment
standards. The District completed all of the necessary expansion projects to support full secondary
treatment by December 2012. On July 20, 2012, the District received a new NPDES permit, which
reflects the full secondary treatment requirements. The new NPDES permit will expire on July 19, 2017.
See"THE DISTRICT—Permits,Licenses and Other Regulations."
Biosolids Management
Through the treatment of wastewater,the District recovers and treats nutrient-rich, organic matter
(solids) to produce biosolids. Consistent with EPA's regulations and the regulations in place at the end-
use sites, the District's biosolids are recycled through composting, fertilizing non-food farm fields (land
application), and disposed in a landfill for methane gas recovery. The District's goal is to ensure our
biosolids management strategies align with existing market conditions and continue a sustainable,reliable
and economical biosolids management program that provides environmentally-sound practices and meets
federal, State and local regulatory requirements.
The District's biosolids averaged about 785 tons per day("tpd") in Fiscal Year 2015-16,with an
annual average cost per ton of$61.78 for management at offsite locations, as described in the following
table. Costs have remained stable with in part due to diesel prices remaining low. The biosolids
management costs totaled about $17.6 million last fiscal year, which was 101% of the $17.4 million
budgeted. Costs and biosolids production in Fiscal Year 2016-17 are anticipated to remain stable with a
budget of$17.2 million. The District's biosolids tonnage will begin trending down in Fiscal Year 2017-
18 as new solids facilities complete construction.This will also reduce biosolids management costs. Plant
No. 1 thickening and dewatering centrifuge facility is currently under construction, and by early 2018 it is
anticipated to create drier solids which will reduce hauling costs. Irvine Ranch Water District is
constructing solids processing facilities, and the agency will stop sending solids to the District during
2018. Plant No.2 centrifuges will begin operating during 2019.
27680956.4 26
Biosolids Management Contracts
Current tons
Contract per day Average
(Minimum tons managed cost per tan
Contractor Location Product per day and term) (approximate) (June 2016)
Kern County,CA Compost 250 tad—Expires 250 tpd $75.25
La Paz County,AZ Compost 0 tpd—Expires 70 tpd $60.98
Tale Ranch Yuma County,AZ Land 0 tpd — 10 years plus one 350 tpd $54.50
application five-year renewal; first
renewal 1/l/18
Orange County Orange County,CA Local 0 tpd — 8 years plus one 70 tpd Facility: $41.19
Waste& Landfill 10-year renewal; first Hauling: $8.96
Recycling renewal 6/30/I8 Total:$50.15
Inland Empire Rancho Cucamonga,CA Compost 0 tpd — 1 year plus up to 35 tpd Facility: $56.00
Regional three renewals; first Hauling:$14.99
Composting renewal 7/31/17 Total:$70.99
Facility
The District's contractors provide back-up biosolids management capacity in California and
Arizona that include compost, land application, lime stabilization before land application and landfill.
Together, these options have the additional available capacity to manage more than ten times the
District's daily biosolids production to ensure sustainable,consistent and reliable operations.
[On June 16, 2016, OCSD posted a request for qualification (RFQ) for composting (including
hauling) services. OCSD expects to award two separate contracts before Synagro's current composting
contract expires on December 27, 2016. The new contractors will begin hauling December 27,
2016.1[update[
The District has started work on a Biosolids Master Plan, which includes evaluating onsite and
offsite management options in order to make recommendations for the Capital Improvement Plan and
potentially longer-term management options for the future. The final Plan is anticipated to be complete in
spring of 2017. [confirm schedule[
In 2003,the District was certified by the National Biosolids Partnership for its biosolids program.
The District's biosolids program has continued to develop under this certification over the last decade. In
late 2015, the District started transitioning its biosolids management system to an internal standard, as
outside certification is not required for the District's biosolids program. The District's internal standard is
intended to maintain sound practices while allowing the District to streamline areas to increase efficiency
and redirect staff resources.
Urban Runoff
Recognizing that County beaches were being affected by pollution carried by urban runoff, the
Board of Directors adopted a number of resolutions agreeing to accept dry weather urban runoff into the
sewer system. In June 2002, Assembly Bill 1892 amended the District's charter to formally allow the
diversion and management of dry weather urban runoff flows. Resolution No. 01-07, adopted March 28,
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
27680956.4 27
four million gallons per day ("mg/d") calculated on a monthly average. For the first 12 years of the
Urban Runoff Program, the average monthly flow averages remained less than the four mg/d threshold,
thus avoiding user fee costs being assessed to the diversion permittees. In 2012, the District received a
number of diversion proposals to deal with bacteria and selenium loading to the upper Newport Bay. The
discharge from the additional proposed diversions combined with the existing diversion flows would
eventually exceed the 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
only to protect the Comity'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 (formerly known as the Environmental Compliance Division), which issues a discharge permit
for each of the diversion structures. The permit functions as a control mechanism that specifically
prohibits storm runoff and authorizes discharge only during periods of dry weather. The permit also
establishes specific discharge limits, constituent monitoring, and flow metering requirements. The
District conducts quarterly sampling and analysis of the urban runoff discharges to ensure discharge limit
compliance with the various regulated constituents.
There are currently 20 active urban runoff diversion structures; three owned and operated by the
County of Orange, 11 owned and operated by the City of Huntington Beach,two owned and operated by
the City of Newport Beach,three owned and operated by the IRWD, and one owned and operated by PH
Finance (present owner of the Pelican Point Resort). In 2015, the Big Canyon Diversion was added to
OCSD's urban runoff program. To further remediate elevated selenium concentrations entering into the
waters of the Upper Newport Bay, the City of Newport Beach is evaluating a second diversion in the
lower Big Canyon wetlands area. Also in the proposal stage are three City of Santa Ana diversions: the
Delhi, Santa Fe, and Lane flood control channels. The Peters Canyon Diversion went on-line in
September 2016. This diversion is projected to add an additional 1.8 mg/d of flow, possibly doubling the
average monthly flow tally. The District continues to work with the Orange County Public Works
Department (OC Watersheds) 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
27680956.4 28
survive an earthquake of this magnitude along the Newport-Inglewood fault. The IERP outlines the
policies and employee actions to be taken before, during and after an earthquake, earthquake response
guidelines and damage assessment procedures.
The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of
the District and planned a risk reduction program wherein the vulnerability of many of the District's
sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction
measures. The Master Plan also recommended that designs of existing major structures which were
constructed prior to development of current seismic design standards be reviewed and the structures
strengthened,if necessary.
Since the Master Plan and the 1994 Report, the District has completed retrofitting where deemed
appropriate. Pursuant to the Master Plan, all recent and future projects have been, and will be, designed
to the same high earthquake code standards as set for other essential services, such as hospitals and fire
stations. Many of the older buildings analyzed in the Master Plan have been replaced by structures built
after 1989.
The 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 are constructed of fire-resistant materials.
The IERP describes the procedures needed to respond to a possible disaster. For more information
regarding emergency response policies, the disaster preparedness plan described in the IERP can be
reviewed at the District's office.
Five-Year Strategic Planning
The District maintains 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:
27680956.4 29
1. Odor Control—Completion of the Odor Control Master Plan.
2. Future Biosolids Management Options — Study biosolids management options including
third party contracts and onsite capital facilities.
3. Energy Efficiency— Continue to research new energy efficiency and energy conversion
technologies.
4. Disinfection of Ocean Discharge — Develop an implementation plan that includes the
technical, financial and societal factors associated with cessation of disinfection of the ocean discharge.
5. Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts
of the City of Tustin and unincorporated areas north of the City of Tustin and local sewer transfers in the
City of Santa Ana.
6. Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and
public outreach program.
7. Future Water Recycling — Determine partnerships, needs, strategies, benefits and costs
associated with recycling of Plant No. 2 effluent water.
8. Workforce Planning and Workforce Development—This initiative is ongoing and part of
a comprehensive workforce planning and development effort to ensure that the District has the right
people with the right skills and abilities, in the right place,at the right time.
The five-year Strategic Plan is updated biennially. The December 2015 Strategic Plan Update
reflected that two of the strategic goals had been completed and strides had been made towards
accomplishing the remaining six. The strategic goals completed in 2015 were:
(a) 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.
(b) Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and
public outreach program.
An additional major strategic initiative was completed during the 2016 annual update period:
(c) 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.
27680956.4 30
DISTRICT REVENUES
Sewer Service Charges
General. The District has the power to establish fees and charges for services of the Wastewater
System. Such fees and charges are established by the District's Board of Directors and are not subject to
review or approval by any other agencies.
In Fiscal Year 1997-98, a Rate Advisory Committee (the "RAC") was established comprised of
representatives from industrial, commercial and residential users. The goal of the RAC was to examine
the then current rate structure and, if needed, develop recommendations for change. The RAC analyzed
the District's rate structure to determine whether its then current sewer service user fees (now known as
"Sewer Service Charges") were equitable among residential and industrial customers. This review
resulted in a proposal to expand the number of non-residential user categories from one to 23 and to
provide for gradual rate increases in seven of the nine Revenue Areas. The Sewer Service Charges for
those categories were based on the average flow and strength of wastewater discharged for each property
type and remain currently in use.
The Board of Directors establishes the annual sanitary sewer service charges by ordinance. The
sanitary sewer service charge ordinances are adopted by a two-thirds vote of the Board of Directors as
required under law after conducting a noticed public hearing in compliance with Proposition 218. See
"LIMITATIONS ON TAXES AND REVENUES — Article XIIIC and Article XIIID of the California
Constitution."
The District collects Sewer Service Charges from property owners through the semi-annual
property tax bill distributed by the County throughout the District, except in Revenue Area No. 14.
Pursuant to the IRWD Agreement, the District receives quarterly fee payments from the IRWD which
directly collects fees from customers through a monthly billing procedure in Revenue Area No. 14.
The District currently participates in the County's Teeter Plan under which the District receives
annually 100% of the secured property tax levies to which it otherwise is entitled, regardless of whether
the County has actually collected the levies.
The District has covenanted in the Master Agreement to fix, prescribe and collect fees and
charges to satisfy certain coverage requirements as further described under "SECURITY AND
SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS—Rate Covenant'herein.
Residential and Commercial Sewer Service Charges. In December 2012,the Board of Directors
authorized a Proposition 218 notice on proposed rate increases for each year over the next five years.
Pursuant to the adoption of Ordinance No. OCSD-41 on March 27, 2013, the District established
residential Sewer Service Charges, except within Revenue Area No. 14,based on the cost of services and
facilities provided to each customer of the District The noticed public hearing held in connection with
the adoption of this ordinance considered an increase in the single family residential rate, the underlying
rate for all of the District's sewer service charges, of 4.8% for Fiscal Year 2013-14 and thereafter by an
average annual increase of 2.4%for each Fiscal Year through Fiscal Year 2017-18. These increases were
approved by the Board through the adoption of Ordinance No. OCSD-41. Following the first two years
of this rate plan,however, District staff recommended and the Board of Directors approved a reduction of
the rate increase for the last three years of the plan, lowering the average of these increases from 2.4% to
1.6%.
27680956.4 31
Set forth in Table 6 below is a comparison of the Sewer Service Charge rate for single family
residences("SFRs")for the fiscal years shown.
Table 6
Annual Sewer Service Charges
Single Family Residence Rate
Fiscal Years 2009-10 through 2017-18
Fiscal Sewer Service Percentage
Year Charge Change
2009-10 $221 -
2010-11 244 10.4%
2011-12 267 9.4
2012-13 294 10.1
2013-14 308 4.8
2014-15 316 2.6
2015-16 322 1.9
2016-17 327 1.6
2017-18 331 1.2
Source: Orange County Sanitation District.
Set forth in Table 7 below are the total average annual Sewer Service Charges for SFRs within
the District, together with comparable total average annual charges for wastewater service within the
jurisdictions of certain other cities and districts within the State as of July 1, 2016. The District's
approved SFR rate of$327 for Fiscal Year 2015-16 remains below the average annual sewer rate of$475
according to a Fiscal Year 2014-15 survey of 482 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 duly 1,2016
Average Dry Annual
Weather Sewer
Flow Service Treatment Collection Property Tax
Entity m d (a) Charge[') Level(')(3) Responsibility tat Income(3)
City of San Diego 168 $573 2 Yes No
City of Los Angeles 428 495 4 Yes No
Sacramento 140 420 3 No Yes
East Bay MUD 80 373 4 No Yes
Orange County
Sanitation District 221 327 3 No Yes
Los Angeles County 497 159 4 No Yes
27680956.4 32
f1 Source: Information obtained from respective entities listed.
(2) 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.
(3) Source: Wastewater User Charge Survey Report by the California State Water Resources Control Board.
Industrial Sewer Service Charges. The District charges industrial Sewer Service Charges to
customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to
industrial Sewer Service Charges are billed directly by the District. The fee charged to each customer is
based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen
demand. Total industrial Sewer Service Charges in Fiscal Year 2015-16 were approximately $12.6
million. Industrial Sewer Service Charges are applied to both operating and capital funds.
Summary. The Sewer Service Charge increases described above are necessary to meet the
District's cash flow needs arising from the addition of disinfection treatment and other operating
requirements. As projected through Fiscal Yew 2025-26, the cash flow needs of the CIP total
approximately $2.4 billion. This total represents the $2.1 billion for projects identified within the CIP
Validation Study, as summarized in Table 5 above, less $112 million for CIP savings and deferrals plus
$371 million for replacement, refurbishment and rehabilitation of existing infrastructure that have been
identified within the District's Asset Management Program as future capital outlays but have not yet been
developed into specific proposed projects and included within the CIP Program. Over the next four years
the District contemplates average annual net capital outlays of$186 million.
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 Tases. 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 $67.9
million in Fiscal Year 2011-12, $77.3 million in Fiscal Year 2012-13, $72.8 million in Fiscal Year 2013-
14, $77.6 million in Fiscal Year 2014-15 and$82.0 million in Fiscal Year 2015-16. The District currently
estimates that its property tax receipts will increase by approximately 5.0% each year from Fiscal Year
2016-17 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.
Capital Facilities Capacity Charges. Capital Facilities Capacity Charges (commonly referred to
as connection fees) are one-time fees with two components, paid at the time property is developed and
connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of
the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for
access to capacity in the Wastewater System. The District currently has Capital Facilities Capacity
Charges of $3,710 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.
27680956.4 33
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
regrading 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 yews.
Additional treatment plant capacity can be purchased in increments at the District's current replacement
cost.
Federal Subsidy Payments. In connection with the District's Revenue Obligations, Series 2010A
(the "2010A Revenue Obligations") and the District's Revenue Obligations, Series 2010C (the "2010C
Revenue Obligations"), issued as `Build America Bonds," the District is scheduled to receive certain
federal subsidy payments of approximately $5.1 million annually through 2031 and lesser amounts
thereafter until 2044. Subsidy payments with respect to the 2010A Revenue Obligations and the 2010C
Revenue Obligations constitute Revenues as defined in the Master Agreement. In its financial reports,the
District accounts for subsidy payments received in connection with the 2010A Revenue Obligations and
the 2010C Revenue Obligations as a reduction in interest expense with respect m 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.
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 7.4%),and$106,098 (or 6.8%) for the federal fiscal yews ended
September 30, 2013, 2014, 2015, and 2016, respectively; and federal subsidy payments for the 2010C
Revenue Obligations were reduced by $152,807 (or 8.7%; second half of the year only) by$261,616 (or
7.4%), $256,435 (or 7.3%), and $238,881 (or 6.8%) for the federal fiscal years ended September 30,
2013, 2014, 2015, and 2016,respectively. The federal government has publicized that the federal subsidy
payments for the federal fiscal year ended September 30,2017 will be 6.9%.
27680956.4 34
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 2011-12 through Fiscal Year 2015-16 were 201 mg/d, 200
mg/d, 198 mg/d, 190 mg/d and 183/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 2011-12 through
2015-16 and the projected number of customers served by the District for the Fiscal Years 2016-17
through 2020-21, identified in Equivalent Dwelling Units ("EDUs"), are set forth in Table 8 and Table 9
below. As discussed below, sewer service charges are based on the expected amount of wastewater flow
for a single family dwelling. This base amount is considered the "equivalent dwelling unit." Set forth in
Table 8 below are the EDUs that equate to total Sewer Service Charge levies,while the EDUs set forth in
Table 9 equate to total sewer service charge collections.
Table 8
Historical and Projected Equivalent Dwelling Units
Fiscal Yeare 2011-12 through 2020-21
Historical Projected
Fiscal Year EDUs(') Fiscal Year EDUs
2011-12 924,525 2016-17 922,183
2012-13 915,685 2017-18 924,950
2013-14 916,812 2018-19 927,724
2014-15 934,141 2019-20 930,508
2015-16 924,944 2020-21 933,300
With respect to such Fiscal Years,presentation in the Statistical Section of the District's Comprehensive Annual
Financial Report set forth in Appendix A includes EDUs that equate to total Sewer Service Charge collections
rather than levies.
Set forth in Table 9 below are the number of residential and commercial customers and industrial
customers and the approximate percentages of Sewer Service Charge revenues derived from the
combined residential and commercial use and industrial use for the last five fiscal years.
27680956.4 35
Table 9
Number of Accounts and Revenues by Customer Class
for the Fiscal Years 2011-12 through 2015-16
($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 Dwellings Revenue Revenues Accounts Revenue Revenues
2011-12 869,709 $232.2 96% 516 $ 9.5 4%
2012-13 879,443 258.6 96 527 10.8 4
2013-14 869,461 267.8 95 489 14.4 5
2014-15 806,585 254.9 95 467 14.2 5
2015-16 846,358 272.5 96 450 12.6 4
Source: Orange County Sanitation District.
Set forth in Table 10 below are the ten largest principal sewer service customers of the District
for the Fiscal Year ended June 30,2016.
Table 10
Largest Principal Sewer Service Customers of the District
for the Fiscal Year Ended June 30,2016
Sewer
User Service Charees
House Foods America Corp. $1,137,028.04
Kimberly-Clark Worldwide, Inc. 1,123,747.74
Stremicks Heritage Foods,LUC 735,840.30
Pulmuone Wildwood,Inc. 667,743.70
MCP Foods,Inc. 649,886.38
Jazz Semiconductor 541,379.17
Ameripec Inc. 494,286.72
Nor-Cal Beverage Co. Inc. (Main) 453,736.70
Van Law Food Products,Inc. 446,942.19
Nor-Cal Beverage Co.Inc. (NCB) 409,574.82
Source: Orange County Sanitation District.
Assessed Valuation
The assessed valuation of property in the County is established by the County Assessor, except
for public utility property which is assessed by the State Board of Equalization. Due to changes in
assessment required under State Constitution Article XIIIA, the County assessment roll no longer
purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES"
herein. Generally,property can be reappraised upward to market value only upon a change in ownership
or completion of new construction. The assessed value of property that has not incurred a change of
ownership or new construction most be adjusted annually to reflect inflation at a rate not to exceed 2%
27680956.4 36
per year based on the State consumer price index. In the event of declining property value caused by
substantial damage, destruction, economic or other factors, the assessed value must be reduced
temporarily to reflect market value. For the definition of full cash value and more information on
property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein.
The County Assessor determines and enrolls a value for each parcel of taxable real property in the
County every year. The value review may result in a reduction in value. Taxpayers in the County also
may appeal the determination of the County Assessor with respect to the assessed value of their property.
Set forth in Table 11 below is a five-year history of assessed valuations in the District for the
fiscal years shown.
Table 11
Assessed Valuations of Property in the District
Fiscal Years 2012-13 through 2016-17
($in Billions)
Fiscal Year Value Percent Chimee
2012-13 $316.4 2.49%
2013-14 329.3 4.08
2014-15 350.5 6.44
2015-16 372.2 6.19
2016-17 391.8 5.27
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 yen 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.
27680956.4 37
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 2012-13 through 2016-17
(In Thousands)
Total Property Tax and Sewer
Fiscal Year Service Charee Lew
2012-13 $340,298
2013-14 356,607
2014-15 362,978
2015-16 371,502
2016-17 377,711
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 year.
The District's annual budget preparation process begins in January of each year and concludes in
June upon its adoption. The General Manager reviews the final operating budgets and then distributes
them to the Directors and District Committees for consideration. The Board of Directors then adopts the
proposed annual budgets,with any revisions,in June of each year.
Budgetary control is exercised at the individual Department level and administrative policies
provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget
adjustment is a transfer which does not change the total appropriated amount and does not require Board
of Directors action. Approval may be granted by the General Manager or the Department Head in certain
circumstances. Department Heads have the discretion to reapportion funds between certain line items
within a division but may not exceed total appropriated amounts for each department. They may also
transfer staff across divisional lines. The General Manager and Board of Directors must approve
additional capital outlay items.
A budget amendment is an adjustment to the total appropriated amount which was not included in
the original budget. These supplemental appropriations require formal action by the Board of Directors.
Prior year reserves or fund balances may be appropriated to fund items not previously included in the
adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may
be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate
reserves in case of emergencies or unusual circumstances.
27680956.4 38
Reserves
The District has an established reserve policy with eight separate categories for its reserve funds.
Collectively, these individual reserve requirements total over $475 million for each year of the current
ten-year cash flow forecast.
Set forth in Table 13 below are the actual reserves at June 30,2013,June 30,2014,June 30,2015
and June 30,2016.
Table 13
Cash and Investment Reserves
June 30, 2013 through 2016
(In Millions)
2013 2014 2015 2016
June 30 June 30 June 30 June 30
Cash Flow Requirements Reserve:
Operating Expenses $ 76 $ 76 $ 76 $75
Certificates of Participation Payments 98 98 86 92
Operating Contingencies Reserve 15 15 15 15
Capital Improvement Program Reserve 210 275 163 151
Catastrophe and Self Insurance 57 57 57 57
Capital Replacement and Refurbishment 61 61 62 63
Debt Service Required Reserves(') 135 132 129 117
Rate Stabilization Reserve _
Total $652 14 $588 $57o
0) "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 30,2016, of the total
Debt Service Required Reserves of$117 million, $25 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 are
collected as a separate line item on the property tax bill. The level of this reserve is established as
the sum of an amount equal to six months operations and maintenance expense and the total of
certificates of participation debt service expenses due in the subsequent fiscal 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.
27680956.4 39
• The Catastrophic Loss, or Self-Insurance Reserve is established for property damage including
fire, flood and earthquake, general liability and workers' compensation. The level of reserve in
this fund is maintained at a level to fund the District's non-reimbursed costs which are estimated
to be$57 million.
• The Capital Replacement and Refurbishment Reserve was established to provide 30% of the
funding to replace or refurbish the current collection, treatment and disposal facilities. The
current replacement value of these facilities is estimated to be approximately $6.2 billion. The
initial reserve level for this fund was established at $50 million and is augmented by interest
earnings and a portion of the annual Sewer Service Charges.
• Debt Service Required Reserves include trustee-held amounts in any Obligation Reserve 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 10% of the principal amount of the District's
outstanding debt obligations.
• The Rate Stabilization Reserve accumulates all available funds which exceed the targets for all
other reserves. The Rate Stabilization Reserve is a separate fund from the Rate Stabilization
Account established under the Trust Agreement. There is currently no established target for this
reserve and,because the reserves of all other funds have not been exceeded, the reserve level for
this reserve fund has been zero for Fiscal Years 2012-13 through 2015-16.
• In Fiscal Year 2009-10, Financial Management staff and the Board of Directors concluded that
given the nature of the likely events that may cause a withdrawal from the District's reserves and
the degree of overlap among reserve categories, the total amount reserved need not equal the sum
of each separate reserve category. As a result, the District adjusted the application of its reserve
policy, leading to a reduction of $40 million of the accumulated total, or approximately 8%.
Reserve levels are calculated in accordance with the District's reserve policy.
Summary of Operating Data
Set forth in Table 14 below is a summary of historical audited operating results for the District for
Fiscal Years 2011-12 through Fiscal Year 2015-16. The information presented in the summary should be
read in conjunction with the financial statements and notes. See APPENDIX A—"COMPREHENSIVE
ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE
YEAR ENDED JUNE 30,2016."
27680956.4 40
Table 14
Summary of District Historical Revenues and Expenses
and Other Financial Information
For Fiscal Years 2011-12 through 2015-16
($in Millions)
2011-12 2012-13 2013-14 2014-15 2015-16
Revenues:
Residential.&Commercial
Sewer Service Charges(')
Regional $232.2 $259.8 $269.0 $260.5 $278.0
Local 5.7 5.8 5.7 5.5 5.7
Industrial Sewer Service Charges 9.5 10.8 14.4 14.2 12.6
IRWD Assessments 18.0 27.5 22.1 28.6 29.1
SAWPA Assessments 3.5 2.7 2.3 2.7 3.1
Ad Valorem Taxes 66.0 77.3 72.8 77.6 82.0
Interest Earnings 13.9 (3.6) 6.1 4.8 9.2
Other Revenues 2.6 3.7 3.1 3.2 4.0
Total Revenues $352.6 $383.7 $395.5 $397.1 $423.7
Operations and Maintenance Expenses(�) 172.30) $149.8 $146.4 149.2 $153.5
Net Revenues $180.3 $233 9 $249 1 %247.9 $270 2
Debt Service $655 4 $77.6 $_9_2.8 S81.5 79-7
Coverage Ratios 2.76x 3.01x 2.68x 3.04x 3.39x
UAAL Payment(4) $125.0 $_50_0
CIP Outlay $101.7 $ 97.6 $ 87.5 $182.6 $12A
Ending Reserves 608 5 L9 $713 7 $588 0 $569 5
of Net of rebates,if any,to commercial users.
(2) Excludes depreciation and amortization expenses.
(3) Includes a one-time write-down of$34.2 million for costs of feasibility studies to properly conform to generally
accepted accounting principles. These costs were previously capitalized and were being amortized over a five-
year period.
(4) As of July 1, 2014, the District had an unfunded actuarial accrued pension liability ("UAAU) in its defined
pension benefit plan administered by the Orange County Employees Retirement System of$194 million. In
Fiscal Year 2014-15 and Fiscal Year 2015-16, the District paid down $125 million and $50 million of this
liability, respectively. As of November 1, 2016,however, the actual UAAL had increased to $39 million and
the Board of Directors directed that the UAAL of$39 million be paid in full.
Source: Orange County Sanitation District.
27680956.4 41
Forecasted Operating Data
Set forth in Table 15 below are forecasted operating results for the District for Fiscal Yews
2016-17 through 2020-21. These projections assume the number of projects and scheduled build out set
forth in the 2016 CIP Validation Study, and reflects the Board-approved annual rate increases of 1.55%
and 1.22% for Fiscal Year 2016-17, and Fiscal Year 2017-18, respectively. Principal outlay components
of these projections are derived from the 2016 CIP Validation Study, which identified 81 individual
capital projects with a 10-year projected outlay of$2.1 billion. Much of the construction is scheduled
during the next five years, with average annual capital outlays of$197.0 million. The District's net CIP
cash flow budget for Fiscal Year 2016-17 is $171.3 million, which factors in savings and deferrals. This
CIP budget finances joint works treatment and disposal system improvement projects, and collection
system improvement projects. The preparation of such projections was based upon certain assumptions
and certain forecasts with respect to conditions that may occur in the future. While the District believes
that these assumptions and forecasts are reasonable for the purposes of the projected selected operating
data, it makes no representation that they will in fact occur. To the extent that actual future conditions
differ from those assumed herein,the data will vary.
[Remainder of page intentionally left blank.]
27680956.4 42
Table 15
Summary of Forecasted District Revenues and Expenses
and Other Financial Information
for Fiscal Years 2016-17 through 2020-21
($in Millions)(:)
2016-17 2017-18 2018-19 2019-20 2020-21
Revenues:
Residential&Commercial
Sewer Service Charges $ 286.6 $ 291.2 $ 297.6 $ 305.1 $ 312.6
Industrial Sewer Service Charges 11.3 11.4 11.6 11.9 12.1
IRWD Assessments 17.2 15.5 11.7 10.3 11.3
SAWPA Assessments 3.3 3.4 3.6 3.7 3.8
Ad Valorem Taxes 87.0 91.4 95.9 100.7 105.8
Interest Earnings 8.6 8.8 12.9 16.7 16.5
Other Revenues 2.1 2.3 2.4 2.4 2.5
Total Revenues 416.1 424.0 435.7 450.8 464.6
Build America Bonds Federal Subsidy 4.7 4.7 4.7 4.7 4.7
Operations and Maintenance Expenses (146.4) (149.9) 1( 55.8) (162.1) (168.6)
Net Revenues('I $ 274.4 $ 278.8 $ 284.6 $ 293.4 $ 300.7
Debt Service $ 86.7 $ 83.1 $ 81.6 $ 81.0 $ 81.0
Build America Bonds Federal Subsidy 4.7 4.7 4.7 4.7 4.7
Gross Debt Service $ 91.4 $ 87.8 $ 86.3 $ 85.7 $ 85.7
Coverage Ratios o) 3.00x 3.18x 3.30x 3.42x 3.51x
CIE Outlays $ 171.3 $ 137.7 $ 157.9 $ 204.2 $ 229.5
Replacement,Refurbishment&
Rehabilitation(3) $ $ 0.3 $ 5.2 $ 10.1 $ 17.7
Debt Proceeds $ $ $ $ $
Ending Reserves $ 558.2 $ 629.3 $ 674.0 $ 677.3 $ 655.5
0) Calculated in accordance with the Master Agreement and the Installment Purchase Agreement.
a) 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 2016-17 and 2017-18 averaging L4% per year, and
projected rate increases of approximately 2.0 percent per year over the next three years.
c) Revenue Area No. 14 Fees are derived based on the projected contribution of sewage flows to the District from the
Irvine Ranch Water District.
d) Ad Valorem Taxes are projected with annual increases of 5%.
e) Interest earnings are projected to average 2.0%of annual cash balances.
I) Operating and Maintenance Expenses are forecasted with a base increase of 4.0%per year beginning with Fiscal Years
2018-19 with adjustments for known periodic outlays that do not occur annually.
g) Annual CIP Outlays are based on the cash flow projections developed from the CIP Validation Study,with adjustments
for CIP savings and deferrals.
a) Replacement, Refinbishment & Rehabilitation are known future capital outlays that have been identified within the
District's Asset Management Program but have not yet been developed into specific proposed projects and included within
the CIP Program.
Soume: Orange County Sanitation District.
27680956.4 43
Management's Discussion and Analysis of Operating Data
The District's Fiscal Year 2016-17 total operating, capital improvement, debt service, and other
financing requirements budget is $475.2 million, a 1.2% increase over the prior fiscal year budget of
$469.7 million. Included in this overall increase for Fiscal Year 2016-17 is a $65 million planned
reduction in long-term liabilities. Of this amount, approximately $35 million in reserves for the
rehabilitation and replacement of 174 linear miles of local sewer lines located in the City of Tustin is
being transferred to the Past Orange County Water District along with the responsibility of maintaining,
repairing,and replacing these assets as the District is divesting itself of providing local sewer services and
focusing on its core mission of providing regional trunk line sewer services. The remaining $25 million
in long-term liability reductions was earmarked towards the elimination of the District's UAAL. As of
November 1, 2016, however, the actual UAAL had increased to $39 million and the Board of Directors
directed that the UAAL of$39 million be paid in full. Excluding these planned liability reductions, the
total approved cash flow budget for Fiscal Year 2016-17 totals $410 million,versus the Fiscal You 2015-
16 total of $420 million, or a 2% decrease over the prior year. This overall decrease consists of a
decrease in capital outlay of$3.7 million or 2.1%,a decrease in debt service requirements of$5.1 million
or 5.6%,and an increase in operating expenses of$0.5 million or 0.3%.
The Fiscal Year 2016-17 approved budget to operate, maintain and manage the District's sewage
collection, treatment and disposal system is $152.4 million, an increase of 0.3%. Personnel costs have
decreased by $5.5 million, or 5.8%, due primarily to the projected savings of$5.89 million, or 34.5% in
employee retirement premiums due to the pay down of the District's UAAL of$125 million in Fiscal
Year 2014-15 and another $50 million in Fiscal Year 2015-16. As a result of these pay downs, the
District's employer premium retirement contribution rate decreased 36.9% in Fiscal Year 2016-17. These
retirement savings were partially offset by increased salaries of$0.5 million attributable to provisions of
the existing bargaining unit agreements. As of June 30,2016,there were 52 vacant positions, or 8.3% of
the total budgeted staffing level of 624.0 full-time equivalent positions.
Repairs and maintenance costs were approved to increase of$1.9 million or 15.4%. This increase
is mostly attributable to increases in basic repairs and maintenance costs, including the scheduling of one
digester cleaning and one central generation engine overhaul totaling approximately$1.3 million each.
Electrical power increased $1.0 million, or 15.9% due to anticipated unit cost rate increases of
20%.
Contractual Services and professional services were budgeted to increase of $0.9 million, or
3.7%; and $0.7 million, or 19.7%respectively to support the new Civil Assets Maintenance Program for
asset assessment, industrial cleanings and coatings, as well as specialized heating, ventilation and air
conditioning("AVAC")support services.
In preparation of the Fiscal Year 2016-18 biennium budget, District staff developed a Capital
Improvement Program to deliver the levels of service included in the District's five-year rolling Strategic
Plan. These levels of service and associated capital projects are included in the Strategic Plan, last
updated in December 2015. In addition, District staff validated the active CIP projects currently being
executed to ensure that the scope of work on the active projects remains appropriate, and that the cost
estimates have been accurately updated. The Fiscal Year 2016-17 CIP cash flow budget was approved at
$190.3 million. After factoring in CIP savings and deferrals, this CIP budget was reduced by $19.0
million to $171.3 million. The 2016 validated CIP includes 81 individual capital projects with 10-year
outlays totaling approximately$2.1 billion.
27680956.4 44
The completion of the CIP Validation Study in 2013 reaffirmed the need for rate increases in
future years. Based on the results of the CIP Validation Study and the Strategic Plan, the Board of
Directors adopted Ordinance No. OCSD-41, increasing the sanitary sewer service charges by
approximately 4.8% in Fiscal Year 2013-14, and by an average of 2.4% over the following four years.
These rate increases were approved by a vote of two-thirds of the members of the Board of Directors and
are not subject to reaffirmation in any of the future fiscal years covered by this five-year period.
Following the first two years of this rate plan, however, District staff recommended and the Board of
Directors approved a reduction of the rate increase for the last three years of the plan, lowering the
average of these increases from 2.4% to 1.6%. This action resulted in the single family residence user
rate, the basis for all sewer user fee rates, increasing from $322 in Fiscal Year 2015-16 to $327 in Fiscal
Year 2016-17. See"DISTRICT REVENUES—Sewer Service Charges."
Investment of District Funds
State statutes authorize the District to invest in obligations of the United States Government,state
and local governmental agencies, negotiable certificates of deposits, 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.
All District fonds, 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. BNY Mellon Trust serves as the District's independent custodian bank for its
investment program. Callan Associates serves as the District's independent advisor.
As of September 30, 2016, the District's externally managed fund consisted of a short-term
investment portfolio of $58.0 million with an average maturity of 40 days, and a long-term investment
portfolio of $325.9 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 fast trast 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 return on investment.
FINANCIAL OBLIGATIONS
Existing Indebtedness
Currently, the District has Senior Obligations Outstanding payable on a parity with the Revenue
Obligations. The table below describes the District's outstanding parity certificates of participation. 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,
27680956.4 45
interests and security afforded Senior Obligations pursuant to the Master Agreement. The District has no
general obligation bonds or subordinate bonds outstanding.
Table 16
Outstanding Senior Obligations
As of January 1,2017
Original
Principal Issue Outstanding Final
Amount Date Balance Maturity
2007A Certificates(') $ 95,180,000 05/22/07 $ 91,885,000 02/01/30
2007B Certificates 300,000,000 12/20/07 7,110,000 02/01/17
2009A Certificates 200,000,000 05/07/09 13,405,000 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 96,330,000 02/01/26
2012A Revenue Obligations 100,645,000 03/22/12 100,645,000 02/01/33
2012B Revenue Obligations 66,395,000 08/16/12 66,395,000 02/01/26
2014A Revenue Obligations 85,090,000 08/07/14 85,090,000 02/01/27
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
Total Senior Obligations 1.615.170.000 $1.081.125.000
0) To be prepaid in full with a portion of the proceeds of the Revenue Obligations. See "REFUNDING PLAN"
herein.
In connection with the execution and delivery of the above-referenced outstanding certificates of
participation, the District entered into certain installment purchase agreements, or equivalent documents,
providing for the payment of installment payments or similar payments.
Anticipated Financings
From time to time the District may incur other obligations to finance portions of the CIP. Over
the next five years, however, the District does not expect to issue any additional debt, other than
refunding debt. The District expects to refund outstanding obligations from time to time, such as the
2016B Certificates mentioned in Table 16 above. See "SECURITY AND SOURCES OF PAYMENT
FOR THE REVENUE OBLIGATIONS—Sale Proceeds of Future Obligations."
Direct and Overlapping Bonded Debt
The aggregate direct and overlapping bonded debt of the District as of June 30, 2016 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
27680956.4 46
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.
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 property for school
facilities, approved by 55% of the voters of the district, but only if certain accountability measures are
included in the proposition. Article XIIIA defines full cash value to mean "the county assessor's
valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the
appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment." The 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 property tax except to pay debt service on indebtedness approved by the voters as described
above.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law,local agencies me no longer permitted to levy directly any property tax(except
to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County
and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in
27680956.4 47
the "taxing area" based upon their respective "silos." 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 $1 per$100 of taxable value. All taxable property value included in this Official Statement
is shown at 100% of market value (unless noted differently) and all tax rates reflect the $1 per $100 of
taxable value.
Article XIIIB of the California Constitution
An initiative to amend the State Constitution entitled"Limitation of Government Appropriations"
was approved on September 6, 1979, thereby adding Article 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" we 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 me 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
27680956.4 48
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 You 1990-91,the District's appropriations limit
was recalculated by taking the actual Fiscal Year 1986-87 limit, and applying the annual adjustments as if
Proposition 111 had been in effect. The District does not anticipate that any such appropriations
limitations will impair its ability to make Installment Payments as required by the Installment Purchase
Agreement.
Proposition 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 IA suspension.
The District participated in a Proposition IA Securitization Program (the "Program") sponsored by the
California Statewide Communities Development Authority. The Program allowed the District to
exchange its anticipated State property tax receivable for an equal amount of cash. In addition,the State's
adopted 2009-10 budget included a $1.7 billion diversion in local property tax revenues from local
redevelopment agencies. Many California Redevelopment Association members are actively engaged in
litigation to block such diversion and recoup certain payments already made under certain legislation
passed in July 2009 that is beyond the reach of Proposition 22,known as"ABX4 26."
27680956.4 49
Proposition IA also provides that if the State reduces the vehicle license fee ("VLF") rate
currently in effect, 0.65% of vehicle value, the State most provide local governments with equal
replacement revenues. Further, Proposition lA 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 (mown as the "Right to Vote on Taxes Act," was
approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the
California Constitution, creating additional requirements for the imposition by most local governments of
"general taxes,""special taxes,""assessments,""fees,"and"charges." Proposition 218 became effective,
pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was
deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general
governmental purposes (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 ay"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 CalAth 409 (2004) ("Richmond"), and Bighorn-
Desert View Water Agency v. Verjil, 39 CalAth 205 (2006) (`Bighorn") have clarified some of the
uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In
Richmond, the Shasta Community Services District charged a water connection fee, which included a
capacity charge for capital improvements to the water system and a fire suppression charge. The Court
held that both the capacity charge and the fire suppression charge were not subject to Article XIIID
because a water connection fee is not a property-related fee or charge because it results from the property
owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the
Court stated that a fee for ongoing water service through an existing connection is imposed "as an
incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water
agency's argument that consumption-based water charges are not imposed "m an incident of property
ownership"but as a result of the voluntary decisions of customers as to how much water to use.
Article XIIID also provides that"standby charges"are considered"assessments"and must follow
the procedures required for "assessments" under Article XIIID and imposes several procedural
requirements for the imposition of any assessment, which may include (1) various notice requirements,
including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a
property owner ballot procedure for the traditional written protest procedure, and providing that"majority
protest" exists when ballots (weighted according to proportional financial obligation) submitted in
opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity
"separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also
precludes standby charges for services that are not immediately available to the parcel being charged.
27680956.4 50
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
authorized initiative power is free of all limitations, stating that it was not determining whether the
electorate's initiative power is subject to the public agency's statutory obligation to set water service
charges at a level that will "pay the operating expenses of the agency, . . . provide for repairs and
depreciation of works,provide a reasonable surplus for improvements, extensions,and enlargements,pay
the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of
such debt as it may become due."
The District implemented a five-year plan beginning in Fiscal Year 2002-03 which included a
rate increase of$7.50 per year, or 9.4%, for all ratepayers to$87.50 per year. In May 2003,the Board of
Directors approved a 15%rate increase per year, for each year, over the then following five years, upon
2/3 vote of the Board of Directors after conducting a noticed public hearing in compliance with Article
XIIID. The Board of Directors considered this increase necessary to provide needed capital
improvements,to cover additional treatment and disinfection costs,and to minimize rate increases over an
extended period of time. On July 2, 2003, the Board of Directors adopted Ordinance No. OCSD-20
increasing sanitary sewer service charges for all single family and multi-family residential units as well as
most commercial and industrial properties. The Ordinance was adopted by a 213 vote of the Board of
Directors as required under law after conducting a noticed public hearing in compliance with all laws.
The Ordinance increases the amount of the annual charges by approximately 15%per year for each of the
following five years, commencing with Fiscal Year 2003-04, thereby raising the single family residence
user rate from the then current$87.50 to$100.00, $115.00,$132.00, $152.00, and$175.00 annually. The
Ordinance discounted by 5%the annual increases which were the subject of the required protest hearings
on the fee increase as described above. After the completion of the CIP Validation Study for Fiscal Year
2005-06 that increased its ten year CIP cash flow projects to $2.2 billion, or an average of$220 million
per year, the Board of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06
single family residential rate 31%,from$115 to $151 for such year. In May 2006, the Board of Directors
adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07 single family residential rate
9.8%, from$151.00 to $165.80 for such year, except those located in Revenue Area 14. These increases
represented the increase permitted under the protest hearings on the fee increase which was held in 2003.
In June 2007, the Board of Directors adopted Ordinance No. OCSD-32 increasing the Fiscal Year 2007-
08 single family residential rate by 9.8%. In February 2008, after a noticed public hearing, the Board of
Directors adopted Ordinance No. OCSD-35, which provides for annual increases in the single family
residential rate of 10.4%, 10.0%, 10.4%, 9.4%and 10.1%,respectively, for Fiscal Years 2008-09 through
2012-13. On March 27, 2013, the Board of Directors adopted Ordinance No. OCSD-41 approving
increases in its sanitary sewer service charges for all single family residences, multi-family residential
units, and all non-residential properties. The Board of Directors increased the single family residential
rate, which is the basis for all of the District's sewer service charges, by 4.8% for Fiscal Year 2013-14
and thereafter by an average of 2.4%annually for each Fiscal Year through Fiscal Year 2017-18.
27680956.4 51
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. If service charges are determined to be
subject to Article XIIID, and proposed increased service charges cannot be imposed as a result of a
majority protest, such circumstances may adversely affect the ability of the District to generate revenues
in the amounts required by the Master Agreement, and to make Installment Payments as provided in the
Installment Purchase Agreement. No assurance may be given that Articles XIIIC and XIIID will not have
a material adverse impact on Net Revenues.
Other Initiative Measures
Articles XIIIA, XIIIB, XIIIC and XIIID were adopted pursuant to California's constitutional
initiative process. From time to time other initiative measures could be adopted by California voters,
placing additional limitations on the ability of the District to increase revenues.
LEGAL MATTERS
The validity of the Revenue Obligations and certain other legal matters me subject to the
approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the
District. A complete copy of the proposed form of Special Counsel opinion is attached as Appendix F
hereto. Special Counsel, in its capacity as Special Counsel to the District,undertakes no responsibility for
the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed on
for the District and the Corporation by Woodruff, Spradlin & Smart, a Professional Corporation, Costa
Mesa, California, and for the District by Norton Rose Fulbright US LLP, Disclosure Counsel to the
District.
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
Revenue Obligations. 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.
ABSENCE OF LITIGATION
There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any
court, regulatory agency, public board or body, pending or, to the best knowledge of the District,
threatened against the District affecting the existence of the District or the titles of its directors or officers
to their offices or seeking to restrain or to enjoin the sale or delivery of the Revenue Obligations, the
application of the proceeds thereof in accordance with the Trust Agreement, or in any way contesting or
affecting the validity or enforceability of the Revenue Obligations, the Trust Agreement, the Master
Agreement, the Installment Purchase Agreement or any action of the District contemplated by any of said
27680956.4 52
documents, or in any way contesting the completeness or accuracy of this Official Statement, or
contesting the powers of the District or its authority with respect to the Revenue Obligations or any action
of the District contemplated by any of said documents, nor, to the knowledge of the District is there any
basis therefor.
There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any
court, regulatory agency, public board or body pending or, to the best knowledge of the District,
threatened against the District contesting or affecting the ability of the District to collect amounts from
which Installment Payments are payable, or which would have a material adverse effect on the District's
ability to make Installment Payments.
FINANCIAL STATEMENTS
The basic financial statements of the District included in Appendix A to this Official Statement
have been audited by 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, 2016" 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
Tax Exemption
The Internal Revenue Code of 1986 (the"Code")imposes certain requirements that must be met
subsequent to the execution and delivery of the Installment Purchase Agreement for the interest
component of each Installment Payment (the "Interest Component"), and the allocable portion thereof
distributable in respect of each Revenue Obligation(each a "Certificate Interest Distribution"), to be and
remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for
federal income tax purposes. Noncompliance with such requirements could cause such amounts to be
included in gross income for federal income tax purposes retroactive to the date of delivery of the
Installment Purchase Agreement and the Revenue Obligations. The District has covenanted to maintain
the exclusion of the Interest Components and the Certificate Interest Distributions from the gross income
of the owners thereof for federal income tax purposes.
Upon the execution and delivery of the Installment Purchase Agreement,Norton Rose Fulbright
US LLP, Los Angeles, California, Special Counsel, will deliver its opinion that under existing law, and
assuming compliance with the covenants referred to herein, each Interest Component, and each
Certificate Interest Distribution in respect thereof,is excluded pursuant to section 103(a)of the Code from
the gross income of the owner thereof for federal income tax purposes. Further, on that same day Special
Counsel will render its opinion,based solely on the foregoing, and upon existing provisions of the laws of
California, that each Interest Component, and each Certificate Interest Distribution in respect thereof, is
exempt from personal income taxes of the State of California. Special Counsel will render its further
opinion that, under existing statutes, regulations, rulings and court decisions, the Installment Purchase
Agreement will not constitute a "specified private activity bond"within the meaning of section 57(a)(5)
of the Code and, therefore, that neither any Interest Component, nor any Certificate Interest Distribution
in respect thereof, will be treated as an item of tax preference for purposes of computing the alternative
27680956.4 53
minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component allocable
to, or Certificate Interest Distribution in respect of a Revenue Obligation owned by, a corporation may
affect the computation of the alternative minimum taxable income of that corporation. A corporation's
alternative minimum taxable income is the basis upon which the alternative minimum tax imposed by
section 55 of the Code is computed.
Pursuant to the Installment Purchase Agreement and in the Tax Certificate Pertaining to
Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Cade of 1986, to
be delivered by the District in connection with the execution and delivery of the Installment Purchase
Agreement, and the issuance of the Revenue Obligations, the District will make representations relevant
to the determination of, and will make certain covenants regarding or affecting, the exclusion of the
Interest Component of the Installment Payments, and of each Certificate Interest Distribution in respect
thereof, from the gross income of the owners thereof for federal income tax purposes. In reaching its
opinions described above, Special Counsel will assume the accuracy of each such representation and the
present and future compliance by the District with each of its covenants.
Except as stated in this section above, Special Counsel will express no opinion as to any federal
or state tax consequence of the receipt or accrual of an Interest Component of an Installment Payment, or
of a Certificate Interest Distribution in respect thereof, or of the ownership or disposition of, a Revenue
Obligation. Furthermore, Special Counsel will express no opinion as to any federal, state or local tax law
consequences with respect to the Installment Purchase Agreement or the Revenue Obligations, or of the
Interest Components or Certificate Interest Distributions in respect thereof, if any action is taken with
respect to the Installment Purchase Agreement, or the use or investment of proceeds thereof, the Trust
Agreement or the Revenue Obligations predicated or permitted upon the advice or approval of other
counsel. Special Counsel has not undertaken to advise in the future whether any events after the date of
execution and delivery of the Installment Purchase Agreement may affect the tax status of Interest
Components or Certificate Interest Distributions or the tax consequences of the ownership of a Revenue
Obligation.
Special Counsel's opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the District described above. No ruling has been sought from the
Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Special
Counsel, and Special Counsel's opinion is not binding on the Service. The Service has an ongoing
program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the
Installment Purchase Agreement and Revenue Obligations is commenced, under current procedures the
Service is likely to treat the District as the "taxpayer,"and the owners of the Revenue Obligations would
have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt
status of the Interest Components and Certificate Interest Distributions, the District may have different or
conflicting interests from the owners. Public awareness of any future audit of the Installment Purchase
Agreement and Revenue Obligations could adversely affect the value and liquidity of the Revenue
Obligations during the pendency of the audit,regardless of its ultimate outcome.
Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of
interest on the Interest Components and Certificate Interest Distributions accrued in respect of Revenue
Obligations from gross income for federal income tax purposes. Any proposed legislation or
administrative action,whether or not taken, could also affect the value and marketability of the Revenue
Obligations. Prospective purchasers of the Revenue Obligations should consult with their own tax
advisors with respect to any proposed or future changes in tax law.
27680956.4 54
A copy of the proposed form of opinion of Special Counsel relating to the Revenue Obligations is
included in Appendix F.
Tax Accounting Treatment of Bond Premium and Original Issue Discount
For purposes of the following discussion, each Revenue Obligation should be treated as a debt
instrument, the scheduled payments of principal of and interest on which are the scheduled distributions
of Installment Principal and Installment Interest,respectively, to be allocated to that Revenue Obligation
in accordance with the terms of the Installment Purchase Agreement and Revenue Obligation.
To the extent that a purchaser of a debt instrument acquires that debt instrument at a price that
exceeds the aggregate amount of scheduled interest payments (other than payments of"qualified stated
interest" as defined in section 1.1273-1 of the Treasury Regulations) to be made on that debt instrument
(determined, in the case of a prepayable debt instrument, under the assumption described below) (the
"stated redemption price at maturity" of the instrument), such excess will constitute "bond premium"
under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder,provide
generally that bond premium on a tax-exempt obligation must be amortized on a constant yield,economic
accrual, basis; the amount of premium so amortized will reduce the owner's basis in such obligation for
federal income tax purposes, but such amortized premium will not be deductible for federal income tax
purposes. In the case of a purchase of a Revenue Obligation that is subject to redemption(in whole or in
part)upon a permitted optional prepayment of an Installment Payment,the determination whether there is
amortizable bond premium, and the computation of the accrual of that premium, must be made under the
assumption that the Installment Payment will be prepaid on the permitted date that would minimize the
yield on the Revenue Obligation (or that the Revenue Obligation will not be prepaid prior to the stated
maturity date in respect of that Revenue Obligation if that would minimize the purchaser's yield). The
rate and timing of the amortization of the bond premium and the corresponding basis reduction may result
in an owner realizing a taxable gain when a Revenue Obligation owned by such owner is sold or disposed
of for an amount equal to or in some circumstances even less than the original cost of the Revenue
Obligation to the owner.Any person considering purchasing a Revenue Obligation at a price that includes
bond premium should consult his or her own tax advisors with respect to the amortization and treatment
of such bond premium, including, but not limited to, the calculation of gain or loss upon the sale,
prepayment or other disposition of the Revenue Obligation.
The excess, if any, of the stated redemption price at maturity of a Revenue Obligation of a stated
maturity over the initial offering price to the public of the Revenue Obligations of that stated maturity set
forth on the inside cover page of this Official Statement is "original issue discount" Original issue
discount accruing in respect of a Revenue Obligation is treated for federal income tax and California
personal income tax purposes as additional interest in respect of that debt instrument and is excluded from
the gross income of the owner thereof for federal income tax purposes and exempt from the California
personal income tax to the same extent as would be stated interest on that debt instrument. Original issue
discount accruing in respect of any Revenue Obligation purchased at its initial offering price and pursuant
to such initial offering will accrue on a semiannual basis over the term to the stated maturity date in
respect of the Revenue Obligation on the basis of a constant yield method and, within each semiannual
period, will accme on a ratable daily basis. The amount of original issue discount in respect of such a
Revenue Obligation accruing during each period is added to the adjusted basis of such Revenue
Obligation to determine taxable gain upon disposition (including upon sale, prepayment or payment on
maturity) of such Revenue Obligation. The Code includes certain provisions relating to the accrual of
original issue discount in the case of a purchaser of a Revenue Obligation who purchases that Revenue
Obligation other than at the initial offering price and pursuant to the initial offering of that Revenue
Obligation.
27680956.4 55
Any person considering purchasing a Revenue Obligation at a price that includes bond premium
should consult his or her own tax advisors with respect to the amortization and treatment of such bond
premium, including, but not limited to, the calculation of gain or loss upon the sale, prepayment or other
disposition of the Revenue Obligation. Any person considering purchasing a Revenue Obligation of a
maturity in respect of which there is original issue discount should consult his or her own tax advisors
with respect to the tax consequences of ownership of such Revenue Obligation,including the treatment of
a purchaser who does not purchase in the original offering and at the original offering price of that
Revenue Obligation, the allowance of a deduction for any loss on a sale or other disposition, and the
treatment of accrued original issue discount in respect of such Revenue Obligation under federal
individual and corporate alternative minimum taxes.
Other Tax Consequences
Although each Interest Component, and each Certificate Interest Distribution in respect thereof,
may be excluded pursuant to section 103(a) of the Code from the gross income of the owner thereof for
federal income tax purposes, an owner's federal, state or local tax liability may be otherwise affected by
the ownership or disposition of the Revenue Obligations. The nature and extent of these other tax
consequences will depend upon the owner's other items of income or deduction. Without limiting the
generality of the foregoing, prospective purchasers of the Revenue Obligations should be aware that
(i)section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to
purchase or carry the Revenue Obligations and the Code contains additional limitations on interest
deductions applicable to financial institutions that own tax-exempt obligations (such as the Revenue
Obligations), (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 Certificate Interest Distributions in respect of the Revenue Obligations,
(iii)Interest Component and Certificate Interest Distributions accrued in respect of Revenue Obligations
owned by certain foreign corporations doing business in the United States could be subject to a branch
profits tax imposed by section 884 of the Code, (iv) passive investment income, including Interest
Component and Certificate Interest Distributions seemed in respect of Revenue Obligations, may be
subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have
Subchapter C earnings and profits at the close of the taxable year if greater than 25%of the gross receipts
of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires
recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in
determining the taxability of such benefits, Interest Distributions and Certificate Interest Distributions
accrued in respect of Revenue Obligations owned by such recipients for federal income tax purposes, and
(vi) under section 32(i) of the Code, receipt of investment income, including Interest Components and
Certificate Interest Distributions accrued in respect of Revenue Obligations, may disqualify the recipient
thereof from obtaining the earned income credit. Special Counsel has expressed no opinion regarding any
such other tax consequences.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of holders and beneficial owners of the Revenue
Obligations (a)to provide certain financial information and operating data(the`Annual Report")relating
to the District and the property in the District not later than eight months after the end of the District's
Fiscal Year (which currently would be March 1), commencing with the report for the 2016-17 Fiscal
Year, and(b)to provide notices of the occurrence of certain enumerated events. The Annual Report will
be filed by the District, or the Dissemination Agent on behalf of the District, with the Municipal
Securities Rulemaking Board. The notices of enumerated events will be filed by or on behalf of the
District with the Municipal Securities Rulemaking Board. The specific nature of the information to be
contained in the Annual Report or the notices of enumerated events is set forth in the Continuing
27680956.4 56
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 Revenue Obligations will be rated"_"by S&P Global Ratings,a business unit of Standard
& Poor's Financial Services LLC ("S&P"), -by by Moody's Investors Service, Inc. ("Moody's"), and
" " by Fitch Ratings ("Fitch"). Such ratings reflect only the views of the rating agencies, and do not
constitute a recommendation to buy,sell or hold the Revenue Obligations. Explanation of the significance
of such ratings may be obtained only from the respective organizations at: S&P Global Ratings, 55 Water
Street, New York, New York 10041, Moody's Investors Service, Inc. 7 World Trade Center, 250
Greenwich Street, New York, New York 10007, and Fitch Ratings, One State Street Plaza, New York,
New York 10004. There is no assurance that any such ratings will continue for any given period of time
or that they will not be revised downward or withdrawn entirely by the respective rating agencies,if in the
judgment of any such rating agency circumstances so warrant. Any such downward revision or
withdrawal of such ratings may have an adverse effect on the market price of the Revenue Obligations.
PURCHASE AND REOFFERING
(the "Initial Purchaser") has purchased the Revenue Obligations from the
District at a competitive sale for a purchase price of $ (representing the aggregate principal
amount of the Revenue Obligations,plus/minus a premium/discoum of$ and less an Initial
Purchaser's discount of$ ). The public offering prices may be changed from time to time by
the Initial Purchaser. The Initial Purchaser may offer and sell Revenue Obligations to certain dealers and
others at prices lower than the offering prices shown on the inside cover page hereof.
MISCELLANEOUS
Included herein are brief summaries of certain documents and reports, which summaries do not
purport to be complete or definitive, and reference is made to such documents and reports for full and
complete statements of the contents thereof Any statements in this Official Statement involving matters
of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.
This Official Statement is not to be construed as a contract or agreement between the District and the
purchasers or Owners of any of the Revenue Obligations.
The execution and delivery of this Official Statement has been duly authorized by the District.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
27680956.4 57
APPENDIX A
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2016
27680956A
[INSERT APPENDIX B]
2]680956A
[INSERT APPENDIX Cl
2]680956A
[INSERT APPENDIX DI
27680956.4 D-2
APPENDIX E
BOOK-ENTRY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial
ownership interests in the Revenue Obligations, payment of principal and interest evidenced by the
Revenue Obligations to Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in the Revenue Obligations, and other Revenue Obligation-related transactions by
and between DTC, Participants and Beneficial Owners, is based on information furnished by OTC which
the District and the Corporation each believes to be reliable, but the District and the Corporation take no
responsibility for the completeness or accuracy thereof.
The Depository Trust Company—Book-Entry System
The Depository Trust Company("DTC"),New York,NY,will act as securities depository for the
securities (the "Revenue Obligations"). The Revenue Obligations will be issued as fully-registered
securities registered in the name of Cede& Co. (DTC's partnership nominee) or such other name as may
be requested by an authorized representative of DTC. One fully-registered certificate will be issued for
the Revenue Obligations in the aggregate principal amount of such issue, and will be deposited with
DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million U.S. and non-U.S.
equity issues, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the
post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities,through electronic computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities certificates. Direct Participants
include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations,and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust
& Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and dealers,banks, trust companies,
and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly("Indirect Participants"). DTC has a Standard&Poor's rating of"AA+." The
DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com. The information on such website is not
incorporated herein by such reference or otherwise.
Purchases of Revenue Obligations under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Revenue Obligations on DTC's records. The ownership
interest of each actual purchaser of each Revenue Obligation (`Beneficial Owner') is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their holdings, from
the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Revenue Obligations are to be accomplished by entries made on
27680956.4 E-1
the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in the Revenue Obligations, except in
the event that use of the book-entry system for the Revenue Obligations is discontinued.
To facilitate subsequent transfers, all Revenue Obligations deposited by Direct Participants with
DTC are registered in the name of DTC's partnership nominee,Cede&Co. or such other name as may be
requested by an authorized representative of DTC. The deposit of Revenue Obligations with DTC and
their registration in the time of Cede&Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Revenue Obligations; DTC's
records reflect only the identity of the Direct Participants to whose accounts such Revenue Obligations
are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Revenue Obligations may wish
to take certain steps to augment transmission to them of notices of significant events with respect to the
Revenue Obligations, such as prepayments, tenders, defaults, and proposed amendments to the security
documents. For example, Beneficial Owners of Revenue Obligations may wish to ascertain that the
nominee holding the Revenue Obligations for their benefit has agreed to obtain and transmit notices to
Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses
to the registrar and request that copies of the notices be provided directly to them.
Prepayment notices shall be sent to DTC. If less than all of the Revenue Obligations within an
issue are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be prepaid.
Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to
the Revenue Obligations unless authorized by a Direct Participant in accordance with DTC's MMI
Procedures. Under its usual procedures,DTC mails an Omnibus Proxy to the District as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Revenue Obligations are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Prepayments with respect to the Revenue Obligations will be made to Cede & Co., or such other
nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the
District or the Trustee on payable date in accordance with their respective holdings shown on DTC's
records. Payments by Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its
nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of prepayment proceeds,distributions, and dividend payments to Cede
& Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be
the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
27680956.4 E-2
DTC may discontinue providing its services as securities depository with respect to the Revenue
Obligations at any time by giving reasonable notice to the District or the Trustee. Under such
circumstances, in the event that a successor securities depository is not obtained,Revenue Obligations are
required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, Revenue Obligations will be printed and
delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the District believes to be reliable, but the District takes no responsibility for the
accuracy thereof.
Discontinuance of DTC Services
In the event (i)DTC determines not to continue to act as securities depository for the Revenue
Obligations, (ii)DTC shall no longer act and give notice to the Trustee of such determination or(iii)the
District determines that it is in the best interest of the Beneficial Owners that they be able to obtain
Revenue Obligations and delivers a written certificate to the Trustee to that effect, DTC services will be
discontinued. If the District determines to replace DTC with another qualified securities depository, the
District shall prepare or direct the preparation of a new single, separate, fully registered Revenue
Obligation for each of the maturities of the Revenue Obligations,registered in the time of such successor
or substitute qualified securities depository or its nominee. If the District fails to identify another
qualified securities depository to replace DTC then the Revenue Obligations shall no longer be restricted
to being registered in the certificate registration books in the name of Cede&Co.,but shall be registered
in such names as are requested in a certificate of the District,in accordance with the Trust Agreement.
All Revenue Obligations may be presented for transfer by the Owner thereof, in person or by his
attorney duly authorized in writing,at the Principal Office of the Trustee,on the books required to be kept
by the Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certifications
for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form
acceptable to the Trustee. The Trustee may treat the Owner of any Revenue Obligation as the absolute
owner of such Revenue Obligation for all purposes, whether or not such Revenue Obligation shall be
overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of
the interest and principal evidenced by such Revenue Obligation shall be made only to such Owner,
which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such
Revenue Obligation to the extent of the sum or sums so paid.
Whenever any Revenue Obligations shall be surrendered for transfer, the Trustee shall execute
and deliver new Revenue Obligations representing the same principal amount in Authorized
Denominations. The Trustee shall require the payment of any Owner requesting such transfer of any tax
or other governmental charge required to be paid with respect to such transfer. Revenue Obligations may
be presented for exchange at the Principal Office of the Trustee for a like aggregate principal amount of
Revenue Obligations of other Authorized Denominations. The Trustee shall require the payment by the
Owner requesting such exchange of any tax or other governmental charge required to be paid with respect
to such exchange. The Trustee shall not be required to transfer or exchange any Revenue Obligation
during the period in which the Trustee is selecting Revenue Obligations for prepayment, nor shall the
Trustee be required to transfer or exchange any Revenue Obligation or portion thereof selected for
prepayment from and after the date of mailing the notice of prepayment thereof.
27680956.4 E-3
APPENDIX F
FORM OF APPROVING OPINION OF SPECIAL COUNSEL
Upon the execution and delivery of the Revenue Obligations,Norton Rose Fulbright US LLP, Los
Angeles, California, Special Counsel to the District, will render its final approving opinion with respect
to the Revenue Obligations in substantially the following form:
[Date of Delivery]
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,California 92708-7018
Orange County Sanitation District
Wastewater Refunding Revenue Obligations
Series 2017A
Ladies and Gentlemen:
We have acted as Special Counsel in connection with the $ aggregate principal
amount of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A
(the "Revenue Obligations') which are certificates of participation that evidence direct, fractional
undivided interests of the Owners thereof in the installment payments (the `Installment Payments'), and
the interest thereon, to be made by the Orange County Sanitation District(the "District') pursuant to the
Instalhnent Purchase Agreement, dated as of January 1, 2017(the`Installment Purchase Agreement'),by
and between the District and the Orange County Sanitation District Financing Corporation (the
"Corporation"). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000
(the "Master Agreement"), by and between the District and the Corporation, the District has established
conditions and terms upon which obligations such as the Installment Payments, and the interest thereon,
will be incurred and secured. Installment Payments under the Installment Purchase Agreement are
payable solely from Net Revenues as provided in the Installment Purchase Agreement, consisting
primarily of all income and revenue received by the District from the operation or ownership of the
Wastewater System of the District (the "Wastewater System") remaining after payment of Maintenance
and Operation Costs. Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Installment Purchase Agreement.
The Revenue Obligations me to be executed and delivered pursuant to a Trust Agreement, dated
as of January 1, 2017 (the"Trust Agreement"),by and among the District,the Corporation and U.S.Bank
National Association, as trustee (the `Trustee"). Proceeds from the sale of the Revenue Obligations,
together with other funds of the District,will be used to (i)pay or prepay all of the District's $95,180,000
Refunding Certificates of Participation, Series 2007A, currently outstanding in the aggregate principal
amount of$91,885,000, and (it)pay the costs incurred in connection with the execution and delivery of
the Revenue Obligations.
As Special Counsel,we have examined copies certified to us as being true and complete copies of
the Master Agreement,the Trust Agreement and the Installment Purchase Agreement and the proceedings
of the District in connection with the execution and delivery of the Revenue Obligations. We have also
examined such certificates of officers of the District, the Corporation and others as we have considered
necessary for the purposes of this opinion.
27680956.4 F-I
Based upon the foregoing,we are of the opinion that:
I. The Master Agreement, the Installment Purchase Agreement and the Trust
Agreement each has been duly and validly authorized,executed and delivered by the District and,
assuming the Master Agreement, the Installment Purchase Agreement and the Trust Agreement
each constitutes the legally valid and binding obligation of the other parties thereto, each
constitutes the legally valid and binding obligation of the District,enforceable against the District
in accordance with its respective terns.
2. The obligation of the District to pay the Installment Payments, and the interest
thereon, and other payments required to be made by it under the Installment Purchase Agreement
is a special obligation of the District payable, in the manner provided in the Installment Purchase
Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase
Agreement lawfully available therefor.
3. Assuming due authorization, execution and delivery of the Trust Agreement and
the Revenue Obligations by the Trustee, the Revenue Obligations are entitled to the benefits of
the Trust Agreement.
4. Under existing statutes, regulations, rulings and court decisions, and, assuming
compliance with the covenants mentioned below, the component of each Installment Payment
designated as "Interest on Installment Payment" in Section 3.02 of the Installment Purchase
Agreement (each, an "Interest Component"), and the allocable portion thereof distributable in
respect of any Revenue Obligation (the "Certificate Interest Distribution"), is excluded pursuant
to section 103(a)of the Internal Revenue Code of 1986(the"Code")from the gross income of the
owners thereof for federal income tax purposes. We are further of the opinion that under existing
statutes, regulations, rulings and court decisions, the Installment Purchase Agreement is not a
"specified private activity bond" within the meaning of section 57(a)(5) of the Code and,
therefore, that the Interest Components and the Certificate Interest Distributions will not be
treated as items of tax preference for purposes of computing the alternative minimum tax imposed
by section 55 of the Code. Receipt or accrual of an Interest Component allocable to, or
Certificate Interest Distribution in respect of a Revenue Obligation owned by, a corporation may
affect the computation of the alternative minimum taxable income of that corporation. A
corporation's alternative minimum taxable income is the basis upon which the alternative
minimum tax imposed by section 55 of the Code is computed. We are further of the opinion that
under existing laws of the State of California the Interest Component allocable to and the
Certificate Interest Distributions in respect of a Revenue Obligation are exempt from personal
income taxes of the State of California under present state law.
Pursuant to the Installment Purchase Agreement and in the Tax Certificate Pertaining to
Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of
1986,to be delivered by the District in connection with the execution and delivery of the Revenue
Obligations, the District has made representations relevant to the determination of, and has
undertaken certain covenants regarding or affecting,the exclusion of the Interest Component,and
the Certificate Interest Distribution, from the gross income of the owners thereof for federal
income tax purposes. In reaching the opinions described in the immediately preceding paragraph,
we have assumed the accuracy of such representations and the present and future compliance by
the District with its covenants.
27680956.4 F-2
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 Revenue Obligations. Furthermore, we express no opinion as to any federal,
state or local tax law consequence with respect to the Installment Purchase Agreement or the
Revenue Obligations,or of the Interest Components or Certificate Interest Distributions in respect
thereof, if any action is taken with respect to the Installment Purchase Agreement, or the use or
investment of the proceeds thereof, the Master Agreement, the Trust Agreement, the Revenue
Obligations permitted or predicated upon the advice or approval of other counsel.
The rights of the owners of the Revenue Obligations and the enforceability of the Revenue
Obligations,the Master Agreement,the Trust Agreement and the Installment Purchase Agreement may be
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors'
rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in
appropriate cases. The enforceability of the Revenue Obligations, the Master Agreement, the Trust
Agreement and the Installment Purchase Agreement is subject to the effect of general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the
possible unavailability of specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law, and to the limitations on legal remedies against governmental entities in
California.
No opinion is expressed herein on the accuracy, completeness or fairness of the Official
Statement or other offering material relating to the Revenue Obligations.
Our opinions are based on existing law, which is subject to change. Such opinions are further
based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our
opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any
changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a
guarantee of result; rather, such opinions represent our legal judgment based upon our review of existing
law that we deem relevant to such opinions and in reliance upon the representations and covenants
referenced above.
Respectfully submitted,
27680956.4 F-3
DRAFT OF
12/06/16
OFFICIAL NOTICE INVITING BIDS
ORANGE COUNTY SANITATION DISTRICT
WASTEWATER REFUNDING REVENUE OBLIGATIONS
SERIES 2017A
(Book-Entry-Only)
NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation
District(the "Districts for the purchase of$ ' original principal amount of Orange County
Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A, Evidencing Direct,
Fractional Undivided Interests of the Owners Thereof in Installment Payments to be Made by the Orange
County Sanitation District to the Orange County Sanitation District Financing Corporation(the"Revenue
Obligations"). Bids for less than all of the Revenue Obligations will not be accepted. The bids will be
received in the form, in the manner and up to the time specified below (unless postponed as described
herein):
Date: January.2017
10,45 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 Revenue Obligations
The Preliminary Official Statement for the Revenue Obligations, dated January . 2017,
including the cover page and all appendices thereto (the "Preliminary Official Statement'), provides
certain information concerning the sale and delivery of$ 'aggregate principal amount of
the Revenue Obligations, which are certificates of participation evidencing direct, undivided fractional
interests in the Installment Payments (the "Installment Payments"), and the interest thereon, payable by
the District pursuant to the Installment Purchase Agreement, dated as of January 1,2017(the"Installment
Purchase Agreement'), by and between the District and the Orange County Sanitation District Financing
Corporation (the"Corporation"). Each bidder must have obtained and reviewed the Preliminary Official
Statement prior to bidding for the Revenue Obligations. This Official Notice Inviting Bids, including all
exhibits and attachments, contains certain information for quick reference only, is not a summary of the
issue and governs only the terms of the sale of, bidding for and closing procedures with respect to the
Revenue Obligations. Bidders must read the entire Preliminary Official Statement to obtain information
essential to making an informed investment decision.
Preliminary,subject to change.
276"6773 11612667
Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the
"Master Agreement"), by and between the District and the Corporation, the District has established and
declared the conditions and terms upon which obligations such as the Installment Purchase Agreement,
and the Installment Payments and the interest thereon, will be incurred and secured. Installment
Payments under the Installment Purchase Agreement are payable solely from Net Revenues, as provided
in the Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and
revenue received by the District from the operation or ownership of the Wastewater System of the District
(the"Wastewater System")remaining after payment of Maintenance and Operation Costs.
The Issue
The proceeds from the sale of the Revenue Obligations, together with other funds of the District,
will be used to (i)pay or prepay all of the District's $95,180,000 Refimding Certificates of Participation,
Series 2007A (the "Prior Certificates"), currently outstanding in the aggregate principal amount of
$91,885,000, and(ii)pay the costs incurred in connection with the execution and delivery of the Revenue
Obligations. The Revenue Obligations are to be executed and delivered pursuant to a Trust Agreement,
dated as of January 1,2017(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 December 14, 2016,the District and the Corporation authorized the execution and delivery of
the Installment Purchase Agreement,the Trust Agreement and the Revenue Obligations.
Outstanding Senior Obligations
The District has outstanding Senior Obligations payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The term"Existing Senior Obligations"as used in
the Preliminary Official Statement refers to the 2007B Installment Purchase Agreement, the 2008B
Installment Purchase Agreement, the 2009A Installment Purchase Agreement, the 2010A Installment
Purchase Agreement, the 20I0C Installment Purchase Agreement, the 2011A Installment Purchase
Agreement, the 2012A Instalbnent Purchase Agreement, the 2012B Installment Purchase Agreement, the
2014A Installment Purchase Agreement, the 2015A Installment Purchase Agreement, the 2016A
Installment Purchase Agreement and the 2016B Installment Purchase Agreement.
Security and Source of Payments
The Revenue Obligations are certificates of participation which evidence direct, undivided
fractional interests in the Installment Payments, and the interest thereon, paid by the District pursuant to
the Installment Purchase Agreement. The obligation of the District to pay the Installment Payments and
the interest thereon and other payments required to be made by it under the Installment Purchase
Agreement is a special obligation of the District payable, in the manner provided under the Installment
Purchase Agreement, solely from Net Revenues and other funds as provided in the Instalbnent 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 Instalhnent Payments from Net Revenues is on a parity with the
District's obligation to make payments with respect to its other outstanding obligations described as
Senior Obligations and all Reimbursement Obligations, if any, with respect to Senior Obligations, as
276"677.3 2
provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation
and is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits,
interests and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master
Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be
apportioned such sums for such purposes as we expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally
means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District
authorized, executed,issued and delivered under and pursuant to applicable law,the Installment Purchase
Agreement and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, the installment, lease or other payments
which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a
parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations; provided, however, that prior to
incurring such Subordinate Obligations, the District will have determined that the incurrence thereof will
not materially adversely affect the District's ability to comply with the requirements of the Master
Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate
Obligations. Currently, there are no Subordinate Obligations outstanding. For a description of the
District's outstanding Senior Obligations, see"FINANCIAL OBLIGATIONS— Existing Indebtedness"
in the Preliminary Official Statement.
The District may, in connection with the incurrence of Subordinate Obligations, pledge Net
Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to
Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations
and Reimbursement Obligations with respect to Senior Obligations.
Pursuant to the Master Agreement, the District is required, to the extent permitted by law, to fix,
prescribe and collect fees and charges for the services and facilities of the Wastewater System which will
be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125% of Debt Service on
Senior Obligations for such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service
on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such
fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the
fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and
charges will at all times be sufficient to meet the requirements of the Master Agreement. See
"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS Rate
Covenant"in the Preliminary Official Statement.
Additional Obligations
In addition to the Existing Senior Obligations, the District may at any time incur Obligations
payable on a parity or on a subordinate basis to the payment by the District of the Installment Payments
upon satisfaction of conditions provided in the Master Agreement. No Obligations payable on such a
subordinate basis are currently outstanding. See "SECURITY AND SOURCES OF PAYMENT FOR
THE REVENUE OBLIGATIONS — Limitations on Issuance of Additional Obligations" in the
Preliminary Official Statement.
2]6"69].3 3
Book-Entry-Only
The Revenue Obligations will be executed and delivered in the form of fully registered
certificates payable in lawful money of the United States of America. The Revenue Obligations will be
initially delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee
of The Depository Trust Company, New York, New York ("DTC'), which will act as securities
depository for the Revenue Obligations. Individual purchases of the Revenue Obligations will be made in
book-entry form only. Purchasers of Revenue Obligations will not receive physical certificates
representing their ownership interests in the Revenue Obligations purchased. The Revenue Obligations
will be delivered in Authorized Denominations of$5,000 and any integral multiple thereof. Payments of
principal and interest evidenced by the Revenue Obligations are payable directly to DTC by the Trustee.
Upon receipt of payments of such principal and interest,DTC will in turn distribute such payments to the
beneficial owners of the Revenue Obligations. So long as the Revenue Obligations are in the DTC book-
entry system, the interest, principal and prepayment premiums, if any, due with respect to the Revenue
Obligations will be payable by the Trustee,or its agent,to DTC or its nominee.
Principal and Interest Payments
The Revenue Obligations will be dated as of the date of initial delivery and will evidence interest
from that date(computed on the basis of a 360-day year of twelve 30-day months). Interest evidenced by
the Revenue Obligations is payable semiannually on February 1 and August 1 of each yen, commencing
on August 1, 2017. Payment of principal and prepayment premium, if any, evidenced by the Revenue
Obligations will be paid in lawful money of the United States of America upon presentation and surrender
thereof at the Principal Office of the Trustee.
Principal Amortization
The Revenue Obligations will be executed and delivered in the original principal amount of
$ 'and will be subject to principal amortization on February 1 in the years_' through
2037'in the amounts set forth in the Official Bid Form.
Optional Prepayment
The Revenue Obligations with stated Principal Payment Dates on or after February 1, 2027' are
subject to optional prepayment prior to their stated Principal Payment Dates, on any date on or after
February 1, 2026% in whole or in part, in Authorized Denominations, from and to the extent of prepaid
Installment Payments paid pursuant to the Installment Purchase Agreement or from any other source of
available funds, any such prepayment to be at a price equal to the principal evidenced by the Revenue
Obligations to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment,
without premium.
Selection of Revenue Obligations for Prepayment
Whenever less than all the Outstanding Revenue Obligations are to be prepaid on any one date
pursuant to provisions of the Trust Agreement with respect to optional prepayment of Revenue
Obligations, the Trustee shall select the Revenue Obligations to be prepaid among Revenue Obligations
with different Principal Payment Dates as directed in a Written Request of the District. Whenever less
Preliminary,subject to change.
Preliminary;subject to change.
276"677.3 4
than all the Outstanding Revenue Obligations with the same stated Principal Payment Date are to be
prepaid on any one date pursuant to the Trust Agreement, the Trustee shall select the Revenue
Obligations with such Principal Payment Date to be prepaid as directed in a Written Request of the
District, or at the discretion of the District by lot in any manner that the Trustee deems fair and
appropriate,which decision shall be final and binding upon the District and the Owners. The Trustee shall
promptly notify the District in writing of the numbers of the Revenue Obligations so selected for
prepayment on such date.
Notice of Prepayment
The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice
of prepayment to the respective Owners of Revenue Obligations designated for prepayment by first-class
mail,postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as
of the close of business on the day before such notice of prepayment is given. The actual receipt by the
Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither
failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the
prepayment of such Revenue Obligations or the cessation of interest evidenced thereby on the date fixed
for prepayment.
Interest Rates,Reoffering Prices,Premium or Discount Bids and Certificate of Initial Purchaser
Bidders most bid to purchase all and not part of the Revenue Obligations and must submit their
bids on the Official Bid Form. Bidders must specify a rate of interest for each maturity of the Revenue
Obligations. The rates of interest must be expressed in multiples of either one-eighth ("s) or one-
twentieth ('/20) of one percent (1%), no interest rate on Revenue Obligations maturing between February
1, [202_] and February 1, [203], inclusive, may be less than five percent (5.0%) per annum and no
interest rate on Revenue Obligation maturing on or after February 1, [203] may be less than fora
percent (4.00/.) per arum. All Revenue Obligations of the same maturity must evidence interest at the
same rate.
The successful bidder will, within 30 minutes after being notified of the award of the Revenue
Obligations, advise the District of the initial bona fide public reoffering prices of each maturity of the
Revenue Obligations on the date of award. The successful bidder will also be required to furnish to the
District a certificate("Certificate of Initial Purchaser') in the form of the Certificate of Initial Purchaser
attached hereto(with such modifications as may be acceptable to Special Counsel). At any time before or
after delivery of the Revenue Obligations to the successful bidder, that successful bidder also may be
required by the District or Special Counsel to clarify any discrepancies between the Certificate of Initial
Purchaser and publicly available information relating to trades of the Revenue Obligations that might
suggest that the initial sale of a substantial portion of any maturity of the Revenue Obligations to the
public was at a materially higher price than the price stated for that maturity in the Certificate of Initial
Purchaser.
Bidders may bid to purchase the Revenue Obligations from the District at a discount or with a
premium; however, no bid will be considered if the bid is to purchase Revenue Obligations at an
aggregate price less than 115% or more than 125% of the aggregate principal amount of the Revenue
Obligations.
No bid will be accepted that contemplates the waiver of any interest or other concession by the
bidder as substitute for payment in full of the purchase price. Bids that do not conform to the terms of
this section may be rejected. See"Right to Reject Bids,Waive Irregularities"below.
2]6069].3 5
Adjustment of Principal Amounts After Receipt of Bids
The principal amounts of the Revenue Obligations set forth in the Official Bid Form reflect
estimates of the District as to the likely interest rates of the winning bid and the premium or discount
contained in the winning bid. After selecting the winning bid,the amortization schedule for the Revenue
Obligations will be adjusted in $5,000 increments, to reflect the actual interest rates and any discount or
premium in the winning bid to properly fund the purchase price of the Prior Certificates and to
accommodate certain other requirements or preferences of the District. Such adjustments will not change
any Revenue Obligation in any year by more than 10% of the principal amount for such year. The dollar
amount bid for the Revenue Obligations by the winning bidder will be adjusted to reflect such adjustment
in the applicable amortization schedule. Any such adjustment will change the total (but not the per
Revenue Obligation) dollar amount of purchaser's discount and original issue discount or premium, if
any, provided in such bid. Any such adjustment will be communicated to the winning bidder within 24
hours after receipt of such bid by the District Changes in the amortization schedule made as described in
this paragraph will not affect the determination of the winning bidder or give the winning bidder any right
to reject the Revenue Obligations.
No Insurance
THE SUCCESSFUL BIDDER SHALL NOT PURCHASE MUNICIPAL BOND INSURANCE
IN CONNECTION WITH THE REVENUE OBLIGATIONS.
Form of Bid
BIDS FOR LESS THAN ALL OF THE REVENUE OBLIGATIONS WILL NOT BE
ACCEPTED. Each bid must be on the Official Bid Form, submitted through the Electronic Service as
specified herein. All electronic proposals shall be deemed to incorporate the provisions of the Official
Bid Form and must be unconditional and irrevocable. In addition, each bidder is requested to supply an
estimate of the true interest cost resulting from its bid, computed as prescribed below under the caption
"Award, Delivery and Payment,"which shall be considered as informative only and not binding on either
the bidder or the District. Each bid must be in accordance with the terms and conditions set forth in this
Official Notice Inviting Bids.
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
All proposals must be submitted through the Electronic Service. If any provision of this Official
Notice Inviting Bids conflicts with information provided by the Electronic Service, this Official Notice
Inviting Bids shall control. The District is not responsible for the proper operation of, and shall have no
liability for any delays or interruptions of or any damages caused by the Electronic Service. The District
is using the Electronic Service as a communication mechanism and not as the District's agent to conduct
2]6069].3 6
electronic bidding for the Revenue Obligations. The District is not bound by any advice of or
determination by the Electronic Service to the effect that any particular bid complies with the terms of
this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection
with their submission of bids through the Electronic Service are the sole responsibility of such bidders
and the District is not responsible for any such costs or expenses. Further information about the
Electronic Service, including any fee charged, may be obtained from Ipreo, 1359 Broadway, Second
Floor,New York,NY 10018 (212-849-5023). The District assumes no responsibility or liability for bids
submitted through the Electronic Service. The District shall be entitled to assume that any bid submitted
through the Electronic Service has been made by a duly authorized agent of the bidder.
Bid Security Deposit
Each bidder most provide with its bid a wire transfer of immediately available federal funds in the
amount of$ (the"Bid Security Deposit").
Bid Security Deposit 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 Ichoifrdpraaadvisors.com,for wire instructions.
The wire transfers of unsuccessful bidders will be returned promptly on the bid date after the
examination of bids. The wire transfer of the successful bidder will be retained by the District and
applied to the purchase price at the time of delivery of the Revenue Obligations. The District disclaims
any liability for funds sent by wire transfer,except for any willful misconduct or reckless disregard for its
duties.
If after the award of the Revenue Obligations,the successful bidder fails to complete the purchase
on the terms stated in its bid,unless such failure of performance shall be caused by any act or omission of
the District, the Bid Security Deposit shall be retained by the District as stipulated liquidated damages.
No interest will be paid upon any Bid Security Deposit.
Official Statement
The District has approved a Preliminary Official Statement for the Revenue Obligations, dated
January_,2017,which the District has"deemed final"for purposes of Rule 15c2-12 promulgated by the
Securities and Exchange Commission, as amended(the"Rule"),although subject to revision, amendment
and completion in conformity with the Rule. The District will provide the successful bidder such
reasonable number of printed copies of the final Official Statement as such bidder may reasonably request
no later than seven business days after the day the Revenue Obligations are awarded. Up to 50 copies of
the final Official Statement will be famished 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 Revenue Obligations will be awarded to the highest
responsible bidder not later than two hours after the time established for the receipt of bids. The highest
bidder shall be the bidder submitting the best price for the Revenue Obligations,which best price shall be
that resulting in the lowest true interest cost with respect to the Revenue Obligations. The true interest
cost shall be computed by doubling the semi-annual interest rate (compounded semi-annually) necessary
276"677.3 7
to discount the debt service payments from their respective payment dates to the date of the Revenue
Obligations and to the price bid. If two or more bidders have bid the same true interest cost, the award
shall be made at the sole discretion of the District.
Delivery of the Revenue Obligations is expected to occur on or about February 1, 2017. The
Revenue Obligations will be delivered through the facilities of OTC, New York, New York. The
successful bidder shall pay for the Revenue Obligations on the date of delivery in Los Angeles, California
in immediately available federal funds. Any expenses of providing federal funds shall be home by the
purchaser. Payment on the delivery date shall be made in an amount equal to the price bid for the
Revenue Obligations less the amount of the bid security deposit.
Right to Reject Bids,Waive Irregularities
The District reserves the right to reject any and all bids, and to the extent permitted by law, to
waive any irregularity or informality in any bid.
CUSIP Numbers
It is anticipated that CUSIP numbers will be printed on the Revenue Obligations, but the District
will assume no obligation for the assignment or printing of such numbers on the Revenue Obligations or
for the correctness of such numbers, and neither the failure to print such numbers on any Revenue
Obligation nor any error with respect thereto shall constitute cause for a failure or refusal by the
purchasers thereof to accept delivery of and make payment for the Revenue Obligations. The cost for the
assignment of CUSIP numbers to the Revenue Obligations will be the responsibility of the successful
bidder.
California Debt and Investment Advisory Commission
The successful bidder will be required to pay all fees due to the California Debt and Investment
Advisory Commission ("CDIAC") under California law. CDIAC will invoice the successful bidder after
the delivery of the Revenue Obligations.
Legal Opinions
The District will famish to the successful bidder at the closing of the Revenue Obligations the
legal opinion of Special Counsel to the effect that, in the opinion of Special Counsel, based upon an
analysis of existing laws,regulations,ratings and court decisions,and assuming, among other matters,the
accuracy of certain representations and compliance with certain covenants,the interest component of each
Installment Payment and the allocable portion thereof distributable in respect of each Revenue Obligation
is excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue
Code of 1986 and is not a specific preference item for purposes of the federal alternative minimum tax
and is exempt from State of California personal income taxes. Special Counsel will express no opinion
regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt
of interest on,the Revenue Obligations.
Closing Documents
The District will furnish to the successful bidder at the time of delivery of the Revenue
Obligations: (1)a certificate certifying (i) that as of and at the time of delivery of the Revenue
Obligations,there is no action, suit,proceeding or investigation,pending or,to the best knowledge of the
District, threatened against or affecting the District, (A) which affects or seeks to prohibit, restrain or
276M677.3 8
enjoin the execution and delivery of the Revenue Obligations or the Trust Agreement, (B) in any way
contesting the validity of the Revenue Obligations, the Installation Purchase Agreement or the Trust
Agreement or the powers of the District to enter into or perform its obligations under such documents to
which it is a party or the existence of the District, or (C)wherein an unfavorable decision, ruling or
finding would materially and adversely affect the District, or the validity or enforceability of the Revenue
Obligations, the Installation Purchase Agreement or the Trust Agreement or the ability of the District to
perform its obligations under such documents to which it is a parry, (ii)that the Preliminary Official
Statement did not on the date of sale of the Revenue Obligations and the Official Statement does not on
the date of delivery contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in the light of the circumstances under which they
were made, not misleading, and (2) a receipt of the District showing that the purchase price of the
Revenue Obligations has been received by the District.
Continuing Disclosure
To assist the successful bidder in complying with the Rule, the District will undertake, pursuant
to the Continuing Disclosure Agreement, to provide certain annual financial information, and notices of
the occurrence of certain enumerated events. A description of the Continuing Disclosure Agreement is
set forth in the Preliminary Official Statement and will be set forth in the final Official Statement.
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
at: Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, CA
90064,310-477-8487,via e-mail at Ichoi@pmgadvisors.com.
Right to Modify or Amend
The District reserves the right to modify or amend this Official Notice Inviting Bids, including
but not limited to the right to adjust and change the principal amount of the Revenue Obligations being
offered; provided, however, that such notifications or amendments shall be made not later than the
business day prior to the date fixed for the receipt of bids, by 4:00 p.m., New York Time and
communicated through Thomson Municipal News (available at http://u .tm3.com) and by facsimile
transmission to any qualified bidder timely requesting such notice. Bidders are required to bid for the
Revenue Obligations as so modified.
Cancellation or Postponement
The District reserves the right to cancel or postpone, from time to time, the date established for
the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson
Municipal News. If any date fixed for the receipt of bids and the sale of the Revenue Obligations is
postponed, any alternative sale date will be announced via Thomson Municipal News at least 24 hours
prior to such alternative sale date and will be provided by facsimile transmission to any qualified bidder
timely requesting such notice. On any such alternative sale date, any bidder may submit a sealed bid for
the purchase of the Revenue Obligations in conformity in all respects with the provisions of this Official
276"677.3 9
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: January_2017
zr6owr3 10
EXHIBIT A
FORM OF CERTIFICATE OF INITIAL PURCHASER
February 2017
Orange County Sanitation District
Fountain Valley,California
Norton Rose Fulbright US LLP
Los Angeles,California
Ladies and Gentlemen:
We have served as the Underwriter in connection with the execution and delivery on behalf of the
Orange County Sanitation District (the "District') of $ Orange County Sanitation District
Wastewater Refunding Revenue Obligations, Series 2017A(the"Revenue Obligations").
We hereby certify that:
(i) January_, 2017 was the first day on which there was a binding contract in writing for
the sale or exchange of the Revenue Obligations by the District to the Underwriter, and
on that day (the "Sale Date"), we undertook pursuant to such contract to make a bona
fide public offering of all of the Revenue Obligations. On the Sale Date all of each
maturity of the Revenue Obligations was offered in a bona fide initial offering to the
general public at the initial offering price or initial offering yield (the "Initial Offering
Price") shown, for such maturity on the inside cover page of the Official Statement,
dated March_ 2017, relating to such offering (the "Official Statement'). The Initial
Offering Price for each maturity represented: (i) our reasonable determination of a fair
market value on the Sale Date of that maturity of the Revenue Obligations; and (ii) the
price at which we reasonably expected to sell all the Revenue Obligations of that maturity
to the general public;
(ii) based upon our records and other information available to us that we believe to be
correct,the first price at which a substantial portion(but in no event less than ten percent)
of each maturity of the Revenue Obligations[, (except for the Revenue Obligations
maturing in (the "Unsold Maturity'),] was sold by the Underwriter to the
general public was the Initial Offering Price in respect of that maturity as described
above. [For[the] [each]Unsold Maturity,on the Sale Date we reasonably expected that a
substantial portion (at least ten percent) of that Unsold Maturity would be sold at the
initial offering price or yield in respect of that maturity];
(iii) at the time that we agreed to purchase the Revenue Obligations, based upon then
prevailing market conditions, we had no reason to believe that the first sale of any of the
Revenue Obligations to a member of the general public would be at an initial offering
price greater than or an initial offering yield less than the fair market value thereof;
(iv) taking into account the aggregate amount of each maturity, and treating the Initial
Offering Price as the issue price of each Revenue Obligation of that maturity, the
aggregate issue price of the Revenue Obligations is $ ;and
276"6773 11612667
(v) we provided the yield proof attached hereto as Exhibit A to Special Counsel;we make no
representations regarding its legal sufficiency for any purpose.
For purposes of this Certificate, the term"general public"does not include bond houses,brokers,
or similar persons or organizations acting in the capacity of underwriters or wholesalers.
The undersigned understands that the statements made herein will be relied upon by the District
in its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986 (the "Code"),
and will be relied upon by Special Counsel in rendering its legal opinion, concerning the exclusion from
gross income for federal income tax purposes of the interest component of each Installment Payment
under the Installment Purchase Agreement, dated as of January 1, 2017, and described in more detail in
the Official Statement,and the amount thereof distributable with respect to the Revenue Obligations.
[INITIAL PURCHASER],
as Underwriter
By:
Title:
276"677.3 2
Exhibit A
Yield Proof
(See attached)
2]6069]3 3
OFFICIAL BID FORM
ORANGE COUNTY SANITATION DISTRICT
WASTEWATER REFUNDING REVENUE OBLIGATIONS
SERIES 2017A
January ,2017
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92708-7018
Attn: Lorenzo Tyner
Ladies and Gentlemen:
We hereby offer to purchase all of the $ aggregate principal amount of the Orange County
Sanitation District (the "District") Wastewater Refunding Revenue Obligations, Series 2017A (the
"Revenue Obligations"), more particularly described in the Official Notice Inviting Bids, dated
January_, 2016 (the "Official Notice Inviting Bids"), which is incorporated herein by reference, and
made a part thereof, at a purchase price of $ . This offer is for Revenue Obligations
evidencing interest at the rates and in the form of serial maturities or term maturities with mandatory
sinking account prepayments as set forth in the table on the following page.
The bid is subject to acceptance not later than two hours after the expiration of the time established for the
final receipt of bids.
Our calculation of the true interest cost, computed in accordance with the instructions in the Official
Notice Inviting Bids, and which is considered to be informative only and not a part of the bid, is
With this bid we are providing the District a wire transfer in immediately available federal funds in the
amount of$ to an account specified by the District or its representative,in accordance with
the Official Notice Inviting Bids.
We have noted that payment of the purchase price is to be made in immediately available Federal Funds
at the time of delivery of the Revenue Obligations. If we are the successful bidder,we will (1)within 30
minutes after being notified of the verbal award of the Revenue Obligations, advise the District of the
initial public offering prices of the Revenue Obligations; and (2) prior to delivery of the Revenue
Obligations famish a certificate,acceptable to Special Counsel,Norton Rose Fulbright US LLP,as to the
"issue price"of the Revenue Obligations in the form specified in the Official Notice Inviting Bids.
Preliminary,subject to change.
276"6773 11612667
Sinking
Maturity Principal Interest Serial Account
(February I Amount* Rate Maturity Prepayment
(Check one column)
We represent that we have full and complete authority to submit this bid on behalf of our bidding
syndicate and the undersigned will serve as the lead manager for the group if the Revenue Obligations are
awarded pursuant to this bid. We certify(or declare)under penalty of perjury under the laws of the State
of California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on
behalf of any person not herein named, and that the bidder has not directly or indirectly induced or
solicited any other bidder to put in a sham bid or any other person, firm or corporation to refrain from
bidding, and that the bidder has not in any manner sought by collusion to secure for himself an advantage
over any other bidder.
Respectfully Submitted,
Account Manager:
By:
Address:
City:
State:
Telephone:
Following(or attached)is a list of the members of our account on whose behalf this bid is made.
Preliminary,subject to change.
2]6"69].3 2
DRAFT OF
12/06/16
NOTICE OF INTENTION TO SELL
S '
Orange County Sanitation District
Wastewater Refunding Revenue Obligations
Series2017A
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District")
intends to receive electronic bids until [10:451 a.m.,New York time, on
January_,2017,
through the use of an electronic bidding service offered by Ipreo, at www.newissuehome.i-
deal.com and the Parity electronic bid submission system, for the purchase of all of the Orange
County Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A (the
"Revenue Obligations"), dated as of the date of initial delivery, and maturing on such dates as
described in the related Official Notice Inviting Bids (the"Notice"). No bids will be accepted by
facsimile. Bids for less than all of the Revenue Obligations will not be accepted. The District
reserves the right to postpone the date established for the receipt of bids as more fully described
under the paragraph"Cancellation or Postponement"in the Notice.
NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the
Preliminary Official Statement issued in connection with the sale of the Revenue Obligations
may be obtained from the District's municipal advisor, Public Resources Advisory Group, 11500
West Olympic Boulevard, Suite 502, Los Angeles, California 90064, 310-477-8487, via e-mail:
lchoi@pmgadvisors.com.
Orange County Sanitation District
Dated: January_, 2017
` Preliminary, subject to change.
2769070&2 11612667
ITEM NO. FICA
Orange County Sanitation District
Financing Corporation
BOARD MEETING
MINUTES
September 28, 2016
ANITAT� 9
2 U
c '?
0 1
l�NG THE ENV�e'
Administration Building
10844 Ellis Avenue
Fountain Valley, California 92708-7018
0912812016 Minutes of Financing Corporation Meeting Page 1 of 3
ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION
CALL TO ORDER:
Chair Nielsen called the Board of Directors, Orange County Sanitation District Financing
Corporation meeting to order at 7:12 p.m.
The Deputy Secretary of the Financing Corporation declared a quorum present as follows:
ACTIVE DIRECTORS ALTERNATE DIRECTORS
X John Nielsen, Chair Allan Bernstein
X Gregory Sebourn, Vice Chair Doug Chaffee
X Tom Beamish Tim Shaw
X Steven Choi Lynn Schott
X Keith Curry Scott Peotter
X Ellery Deaton Sandra Massa-Lavitt
X Joy Neugebauer Al Krippner
X James M. Ferryman Bob Ooten
X Steven Jones Kris Beard
Jim Katapodis X Erik Peterson
X Robert Kiley Michael Beverage
X Peter Kim Michele Steggell
X Lucille Kring Jordan Brandman
X Greg Mills Diana Fascenelli
X Richard Murphy Shelley Hasselbrink
Steve Nagel X Cheryl Brothers
X Glenn Parker Cecilia Hupp
X David Shawver Carol Warren
X Fred Smith Virginia Vaughn
X Teresa Smith Mark Murphy
X Michelle Steel Shawn Nelson
X Sal Tinajero David Benavides
X Chad Wanke Constance Underhill
X John Withers Douglas Reinhart
X Mariellen Yarc Stacy Berry
Tina Knapp, Deputy 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 Meeting; there is no additional compensation for the
Financing Corporation Meeting.
09/28/2016 Minutes of Financing Corp mtiaa Meeting Page 2 of 3
APPROVAL OF MINUTES:
FC-1. Hearing no corrections or amendments made, the minutes for the meeting held on
February 24, 2016 were deemed approved as so ordered by the Chair.
ACTION ITEM:
Director of Finance &Administrative Services Lorenzo Tyner provided an overview of this
item, indicating it was related to Item 20 on the agenda for the Board of Directors meeting
of September 28, 2016, and answered a question regarding rates.
FC-2. MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. FC-25
entitled; "A Resolution of the Board of Directors of the Orange County Sanitation
District Financing Corporation Authorizing the execution and delivery by the
Corporation of an Installment Purchase Agreement and a Trust Agreement in
connection with the execution and delivery of Orange County Sanitation District
Wastewater Refunding Revenue Certificate Anticipation Notes, Series 2016B,
Authorizing the execution and delivery of such notes evidencing principal in an
aggregate amount of not to exceed $120,000,000 and Authorizing the execution
of other necessary documents and related actions."
AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton;
Ferryman; Jones; Kiley; Kring; Mills; R. Murphy; Neugebauer;
Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver;
F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc
NOES: None
ABSTENTIONS: Kim
ABSENT: None
ADJOURNMENT:
Chair Nielsen adjourned the meeting of the Board of Directors, Orange County Sanitation
District Financing Corporation at 7:15 p.m.
Tina Knapp
Deputy Secretary of the Financing Corporation
09/28/2016 Minutes of Financing Corp mtiaa Meeting Page 3 of 3
WOODRUFF SPRADLIN&SMART ITEM NO. CS-'I
• A P . . . . , . .
555 ANTON BOULEVARD, SUITE 1200
COSTA MESA, CA 92626-7670
(714)556-9000
MEMORANDUM
TO: Hon. Chair and Members of the Orange County Sanitation District Board of
Directors
FROM: Bradley R. Hogin, Esq.
General Counsel
DATE: December 6, 2016
RE: Closed Session Items
The Board of Directors will hold a closed session on December 14,2016 for the purpose
of conferring with its negotiators regarding the purchase of real property. The negotiating parties
and property are as follows: Bayside Village Marina LLC, 300 East Coast Highway, Newport
Beach, CA, APN No. 440-132-60. The District's negotiators are General Manager, Jim Herberg;
Assistant General Manager, Bob Ghirelli; Director of Finance, Lorenzo Tyner; Director of
Engineering, Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; and CIP
Project Manager, Adam Nazaroff. Said closed session will be held pursuant to authority of
California Government Code Section 54956.8.
Respectfully submitted,
By. /J 6-
Bradley 6-
Bradley R. Hogin, 46eneral Counsel
1206984.1
WOODRUFF SPRADIJN&SMART ITEM NO. CS-2
• A
555 ANTON BOULEVARD, SUITE 1200
COSTA MESA, CA 92626-7670
(714)556-7000
MEMORANDUM
TO: Hon. Chair and Members of the Orange County Sanitation District Board of
Directors
FROM: Bradley R. Hogin, Esq.
General Counsel
DATE: December 6, 2016
RE: Closed Session Items
The Board of Directors will hold a closed session on December 14,2016 for the purpose
of conferring with its negotiators regarding the purchase of real property. The negotiating parties
and properties are as follows: Valley Business Park,APN Nos. 156-165-05, 156-165-06, 156-163-
07; DK-USA LLC,APN No.156-165-04;Fountain Valley Industrial Parcel 13,APN No.156-165-
08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust
Shabtai,Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; K&A Investments
LP,APN No. 156-154-08;Fountain Valley Star LLC,APN No. 156-154-06; TN Sheet Metal Inc.,
APN No. 156-163-12; 18401 Bandilier LLC,APN No. 156-163-13;Phone Lilly Lin-Lin TR,APN
No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-
163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC,APN No. 156-
151-03. The District's negotiators are Jim Herberg; Assistant General Manager, Bob Ghirelli;
Director of Finance, Lorenzo Tyner; Director of Engineering, Rob Thompson; Engineering
Managers, Kathy Millea and Jeff Mohr; CIP Project Manager, Wendy Sevenandt; Kevin Turner
and John Gallivan, Cushman and Wakefield. Said closed session will be held pursuant to authority
of California Government Code Section 54956.8.
Respectfully submitted,
By, 4'
Bradle R. Hogin, Oeneral Counsel
1206977.1
ORANGE COUNTY SANITATION DISTRICT
Agenda
Terminology Glossary
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARB California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CIP Capital Improvement Program
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA U.S. Environmental Protection Agency
FOG Fats, Oils, and Grease
gpd Gallons per day
GWR System Groundwater Replenishment System (also called GWRS)
ICS Incident Command System
IERP Integrated Emergency Control Plan
LOS Level of Service
MGD Million gallons per day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O&M Operations and Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
COBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
PCSA Professional Consultant Services Agreement
POTW Publicly Owned Treatment Works
ppm Parts per million
PSA Professional Services Agreement
RFP Request For Proposal
Glossary of Terms and Abbreviations
RWQCB Regional Water Quality Control Board
SARFPA Santa Ana River Flood Protection Agency
SARI Santa Ana River Inceptor
SARWQCB Santa Ana Regional Water Quality Control Board
SAWPA Santa Ana Watershed Project Authority
SCADA Supervisory Control and Data Acquisition system
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SRF State Revolving Fund
SSMP Sanitary Sewer Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
WERF Water Environment Research Foundation
WIFIA Water Infrastructure Financing and Innovation Act
Activated-sludge process — A secondary biological wastewater treatment process where bacteria
reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved
nutrients in the wastewater.
Benthos—The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or
near the seabed, also known as the benthic zone.
Biochemical Oxygen Demand (BOD) —The amount of oxygen used when organic matter undergoes
decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in
water.
Blogas — 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
farm land or further processed as an earth-like product for commercial and home gardens to improve
and maintain fertile soil and stimulate plant growth.
Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets.
Also includes treatment improvements, additional capacity, and projects for the support facilities.
Coliform bacteria —A group of bacteria found in the intestines of humans and other animals, but also
occasionally found elsewhere used as indicators of sewage pollution. E. coil are the most common
bacteria in wastewater.
Glossary of Terms and Abbreviations
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 (D/T) — the dilution at which the majority of the people detect the odor
becomes the D/T for that air sample.
Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane,
nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse
effect").
Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively
responds to Southern California's current and future water needs. This joint project between the
Orange County Water District and the Orange County Sanitation District provides 70 million gallons a
day of drinking quality water to replenish the local groundwater supply.
Levels of Service(LOS)—Goals to support environmental and public expectations for performance.
NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been
found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide
with extra ultra-violet treatment.
National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water
Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S.
Environmental Protection Agency (EPA). NBP is committed to developing and advancing
environmentally sound and sustainable biosolids management practices that go beyond regulatory
compliance and promote public participation in order to enhance the credibility of local agency
biosolids programs and improved communications that lead to public acceptance.
Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility.
Publicly-owned Treatment Works(POTW)— Municipal wastewater treatment plant.
Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million
gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean
for disposal, after treatment.
Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial
wastewater. Combined sewers carry both wastewater and urban run-off.
South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that
develops plans and regulations designed to achieve public health standards by reducing emissions
from business and industry.
Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process,
where bacteria and other microorganisms consume dissolved nutrients in wastewater.
Sludge— Untreated solid material created by the treatment of wastewater.
Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater.
Glossary of Terms and Abbreviations
Trickling filter — A biological secondary treatment process in which bacteria and other
microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in
wastewater as it trickles over them.
Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm
drains, rivers, lakes, and oceans.
Wastewater—Any water that enters the sanitary sewer.
Watershed —A land area from which water drains to a particular water body. OCSD's service area is
in the Santa Ana River Watershed.