HomeMy WebLinkAbout10-26-2011 Board Agenda Packet
10/26/11 OCSD Board of Directors’ Agenda Page 1 of 6
Orange County Sanitation District Regular Meeting of the
Board of Directors
Wednesday, October 26, 2011 6:30 P.M. Board Room
10844 Ellis Avenue Fountain Valley, CA 92708
(714) 593-7130
AGENDA
INVOCATION AND PLEDGE OF ALLEGIANCE: (Joy L. Neugebauer –
Midway City Sanitary District)
DECLARATION OF QUORUM
PUBLIC COMMENTS: If you wish to speak, please complete a Speaker’s Form (located at the table
outside of the Board Room) and give it to the Clerk of the Board. Speakers are requested to limit
comments to three minutes.
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.
CLAIMS:
1. Ratify payment of claims of the District, by roll call vote, as follows:
Claims Paid for the Period Ending: 09/15/11 9/30/11
Totals
$7,367,981.12
$9,597,080.99
DIRECTORS: Pursuant to Government Code Section 84308, you are required to disclose any campaign contribution greater than $250 received in the past twelve months from any party to a contract involving
OCSD. This requires that you identify the contributor by name. Further, you may not participate in the decision making process to award a contract to such party. For reference, you are directed to the Register
of Warrants as to all current contractors/vendors with OCSD. For the specifics of Government Code Section 84308, please see your Director’s Handbook or call the office of General Counsel.
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 Any items withdrawn from the Consent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. Approve minutes of the Regular Board Meeting held on September 28, 2011.
10/26/11 OCSD Board of Directors’ Agenda Page 2 of 6
3. A. Award a construction contract to J.R. Filanc Construction Company, Inc.
for P1 Trickling Filter Pump Replacement, Contract No. FR10-017, for a total amount not to exceed $481,218.; and,
B. Approve a contingency of $96,244 (20%).
STEERING COMMITTEE:
4. Approve minutes of the September 28, 2011, Steering Committee meeting.
OPERATIONS COMMITTEE:
5. Approve Minutes of October 5, 2011, Operations Committee meeting. 6. A. Approve a Sole Source Service Agreement with Jamison Engineering for
the Outfall Beach Junction Box Repair Services, Project No. FR11-003, for
an amount not to exceed $250,000; and,
B. Approve a contingency of $75,000 (30%).
7. Approve a contingency increase of $803,198 (3%) to the Professional Services
Agreement with Carollo Engineers for Headworks Improvements at Plant No. 2,
Job No. P2-66, for a total contingency of $1,337,000 (5%).
ADMINISTRATION COMMITTEE:
8. Approve Minutes of October 12, 2011, Administration Committee meeting.
9. Receive and file report reimbursement to Board Members and Staff per
Government Code 53065.5 for the period of July 1, 2010 through June 30, 2011.
10. A. Establish the Charon-VAX product as Orange County Sanitation District’s
(OCSD) standard for VAX emulators; and,
B. Award a contract to Quayle Consulting, Inc. for the purchase of Charon-VAX/XL Permanent Licenses and Maintenance Specification No. S-2011-
504, for a period of one year, in an amount not to exceed $292,217.
10/26/11 OCSD Board of Directors’ Agenda Page 3 of 6
11. A. Approve a purchase contract with Total Resource Management, Inc.
(TRM, Inc.) for Phase 1 of the Implementation of IBM-Maximo Enterprise
Asset Management System, Specification No. CS-2011-499BD, for an
amount not to exceed of $327,638;
B. Approve a contingency in the amount of $32,763 (10%); and,
C. Authorize the General Manager to select from proposers TRM Inc., EMA
or Starboard to negotiate and obtain the best value for the
implementation of subsequent phases of Specification No. CS-2011-499BD to meet work requirements as identified by the I.T. Division.
12. A. Adopt Resolution No. OCSD 11-16, Authorizing the Execution and
Delivery by the Orange County Sanitation District (Sanitation District) of an Installment Purchase Agreement, a Trust Agreement, and a Continuing Disclosure Agreement in connection with the execution and
delivery of the Sanitation District Revenue Refunding Certificate
Anticipation Notes, Series 2011B, such Notes Evidencing Principal in an
Aggregate Amount of Not to Exceed $155,000,000, Approving a Notice of Intention to Sell, Authorizing the Distribution of a 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; and,
B. Recommend to the Orange County Sanitation District Financing Corporation to approve the documents supporting and authorizing the
Revenue Refunding Certificate Anticipation Notes, Series 2011B in an
amount not to exceed $155,000,000.
13. Approve the renewal of the financial advisory service contract with Public Resources Advisory Group (PRAG) for an additional three-year period beginning
with November 1, 2011.
GWRS STEERING COMMITTEE
14. Receive and file minutes of the Groundwater Replenishment System Steering
Committee meeting held on August 8, 2011.
Recess by Board of Directors, Orange County Sanitation District
* * * * * * * * * * * * * * * * * * * * *
10/26/11 OCSD Board of Directors’ Agenda Page 4 of 6
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
PUBLIC COMMENTS: If you wish to speak, please complete a Speaker’s Form (located at the table
outside of the Board Room) and give it to the Clerk of the Board. Speakers are requested to limit
comments to three minutes.
APPROVAL OF MINUTES:
15. If no corrections or amendments are made, the minutes for the meeting held on
August 24, 2011, will be deemed approved and be so ordered by the Chair.
ACTION ITEMS:
16. A. Adopt Resolution No. FC-16, Authorizing the Execution and Delivery by
the Corporation of an Installment Purchase Agreement and a Trust Agreement in Connection with the Execution and Delivery of Orange
County Sanitation District Revenue Refunding Anticipation Notes, Series
2011B, Authorizing the Execution and Delivery of Such Notes Evidencing
Principal in an Aggregate Amount of not to Exceed $155,000,000 and
Authorizing the Execution of Other Necessary Documents and Related Actions; and, (See Agenda Item No. 12)
B. Approve the documents supporting and authorizing the Revenue
Refunding Certificate Anticipation Notes, Series 2011B in an amount not
to exceed $155,000,000.
Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation.
* * * * * * * * * * * * * * * * * *
Reconvene, Board of Directors, Orange County Sanitation District
10/26/11 OCSD Board of Directors’ Agenda Page 5 of 6
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, if necessary
(1) CONFERENCE WITH LEGAL COUNSEL RE. INITIATION OF LITIGATION
(Government Code Section 54956.9(c))
Number of Potential Cases: 1
Potential litigation against the Santa Ana Watershed Project Authority to collect unpaid invoice amounts.
Reconvene in regular session.
Consideration of action, if any, on matters considered in closed session.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA
ITEMS, IF ANY:
ADJOURNMENT:
Adjourn the Board meeting until the next regular Meeting on November 16, 2011, at 6:30 p.m.
10/26/11 OCSD Board of Directors’ Agenda Page 6 of 6
Accommodations for the Disabled: The Board of Directors Meeting Room is 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) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested.
Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District’s Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, 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. NOTICE TO DIRECTORS: To place items on the agenda for the Regular Meeting of the Board of Directors, items must be submitted to the Clerk of the Board 14 days before the meeting.
Maria E. Ayala Clerk of the Board
(714) 593-7130 mayala@ocsd.com
Page 1 of 1
BOARD OF DIRECTORS Meeting Date To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number Item Number 1
Orange County Sanitation District FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: PAYMENT OF CLAIMS OF THE ORANGE COUNTY SANITATION
DISTRICT
GENERAL MANAGER'S RECOMMENDATION
Ratify Payment of Claims of the District by Roll Call Vote.
CONFLICT OF INTEREST NOTIFICATION
Pursuant to Government Code Section 84308, you are required to disclose any
campaign contribution greater than $250 received in the past twelve months from any
party to a contract involving the Orange County Sanitation District. Further, you may not participate in the decision making process to award a contract to such party.
For reference, you are directed to the Register of Warrants as to all current
contractors/vendors with the District.
In general, you must disclose the basis of the conflict by identifying the name of the firm or individual who was the contributor.
For the specifics of Government Code Section 84308, please see your Director’s
Handbook or call the office of General Counsel. PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
See attached listing.
ATTACHMENTS 1. Copies of Claims Paid reports from 09/01/11 – 09/15/11 and 09/16/11 – 09/30/11
fin/210/mm Page 1 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Accounts Payable Warrants
A-Check America, Inc.42359 358.75$ Human Resources Services
ADS LLC 42360 1,980.00 Professional Services/Engineering Design Services
AECOM Technical Services, Inc.42342 33,036.38 Professional Services/Engineering Design Services
AECOM USA, Inc.42343 26,574.92 Professional Services/Engineering Design ServicesAerotek423617,581.30 Professional Services/Temporary ServicesAir Products & Chemicals, Inc.42210 27,411.76 Chemicals, Water/Wastewater Treatment
Air Products & Chemicals, Inc.42344 27,411.76 Chemicals, Water/Wastewater Treatment
Air Toxics LTD 42362 864.00 Laboratory Services & SuppliesAirgas Safety, Inc.42215 1,104.31 Safety, Security, Health Equipment, Supplies, and ServicesAirgas Safety, Inc.42363 2,023.15 Safety, Security, Health Equipment, Supplies, and Services
Airgas West 42216 544.18 Repair & Maintenance Services and/or Supplies
Airgas West 42364 299.76 Repair & Maintenance Services and/or SuppliesAKM Consulting Engineers 42365 5,829.00 Professional Services/Dig Alert Associate EngineerAllied Packing & Rubber, Inc.42366 151.73 Repair & Maintenance Services and/or Supplies
American Air Filter, Inc.42367 1,959.09 Air Filters
American Express 42345 59,303.74 Purchasing Card Program for Miscellaneous Parts and SuppliesAmerican Red Cross 42368 750.00 Professional Organizations Meeting/Training/MembershipAmetek Drexelbrook 42217 483.54 Electrical/Electronic Equipment, Parts & Repairs
Angel Baseball, LP 42341 36,657.31 Sewer User Refund
Applied Industrial Technology 42369 52.34 Repair & Maintenance Services and/or Supplies
ATM AA, Inc.42370 1,143.00 Lab ServicesBank of New York Mellon Trust 42371 21,656.79 Professional Services - Financial
Barth, Leonard Michael 42218 1,069.20 Sewer User Refund
BC Wire Rope & Rigging 42372 2,811.33 Tools & Supplies
Bee Man Pest Control, Inc.42373 442.50 Pest Control ServicesBernell Hydraulics, Inc.42220 180.31 Repair & Maintenance Services and/or Supplies
Black & Veatch Corporation 42347 97,054.76 Professional Services/Engineering Design Services
Boys Hamburgers No 6 LLC 42219 803.60 Sewer User Refund
Brown & Caldwell 42374 17,343.86 Professional Services/Engineering Design ServicesBurlington Safety Laboratory of CA, Inc.42375 586.25 Safety, Security, Health Equipment, Supplies, and ServicesBush & Associates, Inc.42376 8,436.00 Professional Services/Surveying Services
Business Publishers Inc 42377 227.00 Subscription
California Dept. of Child Support 42327 2,021.51 Judgments PayableCalifornia Relocation Services, Inc.42379 202.50 Miscellaneous Services - Moving/RelocationCambridge Isotope Labs 42222 833.86 Laboratory Services & Supplies
Carbon Activated Corporation 42223 14,835.00 Repair & Maintenance Services and/or Supplies
Carol Wafer 42328 542.77 Judgments PayableCarollo Engineers 42211 143,428.42 Professional Services/Engineering Design ServicesCASA42224425.00 Professional Organizations Meeting/Training/Membership
Cavanaugh Machine Works 42380 9,788.31 Repair & Maintenance Services and/or Supplies
CCG Systems, Inc.42409 1,200.00 Computer Applications & ServicesCDW Government, Inc.42225 7,042.54 Computers, Software/HardwareCDW Government, Inc.42381 8,314.11 Computers, Software/Hardware
Cefalia, Stella James Josheph 42221 1,958.06 Sewer User Refund
Charette, George A.42378 48.98 Refund overpayment on medical billing
Charles P. Crowley Co.42382 1,482.34 Repair & Maintenance Services and/or SuppliesChildren's Education Foundation of OC 42383 5,000.00 Donation - CEFOC Gift of History Project
Christina M. Thomas 42326 181.34 Meeting/Training Expense Reimbursement
Claims Paid From 09/01/11 to 09/15/11
fin/210/mm Page 2 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
City of Fountain Valley 42348 45,737.50 Water UseCity of Huntington Beach 42430 23.96 Water Use
City of Westminster 42384 28.17 Water Use
CMAA 42385 330.00 Professional Organizations Meeting/Training/Membership
CMAA 42524 110.00 Professional Organizations Meeting/Training/MembershipCompliance Services, Inc.42386 832.19 Professional ServicesConnell Chevrolet\GEO 42387 194.32 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Consumers Pipe & Supply Co.42226 1,424.32 Repair & Maintenance Services and/or Supplies
Corner Bakery Cafe (CBC) 42388 59.81 Catering ServicesCornerstone Ondemand, Inc. 42227 7,197.75 Professional Services/I.T. Corporate Image Maintenance, Inc.42349 36,542.00 Janitor & Household Service & Supplies
Coss, Ronald J. 42520 724.00 Meeting/Training Expense Reimbursement
County of Orange Auditor Controller 42228 855.00 Governmental Agency Fees & ChargesCounty of Orange Auditor Controller 42389 202.00 Governmental Agency Fees & ChargesCounty of Orange Auditor Controller 42390 735.00 Governmental Agency Fees & Charges
Court Order 42333 2,179.38 Judgments Payable
Court Order 42334 150.00 Judgments PayableCourt Order 42339 108.00 Judgments PayableCourt Order 42340 912.50 Judgments Payable
CR&R, Inc.42391 1,297.80 Waste Disposal
CS-AMSCO 42392 1,289.77 Repair & Maintenance Services and/or Supplies
Culligan of Orange County 42393 55.85 Repair & Maintenance Services and/or SuppliesCWEA Membership 42394 396.00 Professional Organizations Meeting/Training/Membership
DAC (Digital Assurance Certification)42395 1,500.00 Professional Services/Financial Document Repository
David Wheeler Pest Control, Inc.42229 350.00 Pest Control Services
David's Tree Service 42396 2,800.00 GroundskeepingDept. of Fish and Game 42397 517.04 Governmental Agency Fees & Charges
Desert Pumps & Parts, Inc.42398 2,402.39 Repair & Maintenance Services and/or Supplies
Detection Instruments Corporation 42399 3,900.51 Electrical/Electronic Equipment, Parts & Repairs
DLT&V Systems Engineering, Inc.42230 141.00 Computer Applications & ServicesDunn-Edwards Corporation 42400 155.29 Facilities, Maintenance, Services & SuppliesDwyer Instruments, Inc.42401 153.32 Electrical/Electronic Equipment, Parts & Repairs
Electrabond 42231 1,777.88 Repair & Maintenance Services and/or Supplies
Elite Equipment Inc.42232 169.11 Repair & Maintenance Services and/or SuppliesEmployee Benefits Specialists, Inc.42212 831,488.99 Reimbursed Prepaid Employee Medical & Dependent CareEmployee Benefits Specialists, Inc.42329 13,214.21 Reimbursed Prepaid Employee Medical & Dependent Care
Enchanter, Inc.42233 5,320.00 Vessel Services - Monitoring Vessel Nerissa
Enchanter, Inc.42402 2,660.00 Vessel Services - Monitoring Vessel NerissaEndustra Filter Manufacturers 42403 1,301.26 Repair & Maintenance Services and/or SuppliesEnertech Environmental 42350 196,939.09 Biosolids Management
English, Roy C. 42322 379.00 Meeting/Training Expense Reimbursement
ENS Resources, Inc.42234 7,500.00 Professional Services - Federal AdvocacyEntech Instruments, Inc.42235 310.50 Laboratory Services & SuppliesEntech Instruments, Inc.42404 800.00 Laboratory Services & Supplies
Environ Strategy Consultants, Inc.42236 3,350.00 Professional Services-Qrtly Sample Grndwater Monitoring Wells Auto Shop area
Environmental Resource Associates 42405 1,053.07 Laboratory Services & Supplies
Environmental Sampling Supply 42406 36.00 Laboratory Services & SuppliesEric S. Hsieh 42323 250.43 Meeting/Training Expense Reimbursement
Ewing Irrigation 42407 2,539.66 Irrigation Repair & Maintenance Services and/or Supplies
fin/210/mm Page 3 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
Express Lens Lab 42408 360.00 Safety, Security, Health Equipment, Supplies, and ServicesFedex Corporation 42410 30.66 Freight Services
First Evangelical Free Church of Fullert 42237 809.59 Sewer User Refund
Fisher Scientific 42240 655.48 Laboratory Services & Supplies
Fisher Scientific 42411 1,063.82 Laboratory Services & SuppliesFluid Components Int. c/o Ponton Industries 42412 1,539.13 Repair & Maintenance Services and/or SuppliesFountain Valley AAA Auto Spa 42413 891.13 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Fountain Valley Paints, Inc.42414 504.86 Facilities, Maintenance, Services & Supplies
Franchise Tax Board 42330 50.00 Judgments PayableFranchise Tax Board 42415 3,488.00 Judgments PayableFranklin Covey 42241 130.73 Office Supplies
Fullerton Lodge Inc 42238 853.81 Sewer User Refund
GA Industries LLC 42242 1,610.69 Repair & Maintenance Services and/or SuppliesGarratt Callahan Company 42416 4,175.32 Chemicals, Water/Wastewater TreatmentGeary Pacific Supply 42243 2,177.00 Repair & Maintenance Services and/or Supplies
General Petroleum 42244 713.71 Fuel and Lubricants
Gierlich-Mitchell, Inc.42245 9,517.80 Repair & Maintenance Services and/or SuppliesGlobal Industrial Equipment 42418 370.80 Laboratory Services & SuppliesGolden State Overnight Delivery Service 42246 93.94 Courier Services
Golden State Overnight Delivery Service 42419 57.85 Courier Services
Golden State Water Company 42247 188.28 Water Use
Golden West Machine, Inc.42420 7,836.75 Repair & Maintenance Services and/or SuppliesGolden West Window Service 42248 5,535.00 Facilities, Maintenance, Services & Supplies
Golden West Window Service 42421 6,947.00 Facilities, Maintenance, Services & Supplies
Government Finance Officers Association 42417 670.00 Professional Organizations Meeting/Training/Membership
Grainger, Inc.42249 4,244.98 Repair & Maintenance Services and/or SuppliesGraybar Electric Company 42250 2,093.09 Electrical/Electronic Equipment, Parts & Repairs
Great Western Sanitary Supplies 42251 142.48 Janitor & Household Service & Supplies
GTE.NET, L.L.C. (Verizon Online)42507 99.99 Telecommunications
Hach Company 42422 223.67 Laboratory Services & SuppliesHarrington Industrial Plastics, Inc.42254 651.15 Repair & Maintenance Services and/or SuppliesHarrington Industrial Plastics, Inc.42423 2,531.50 Repair & Maintenance Services and/or Supplies
Healthpointe Medical Group, Inc.42424 55.00 Professional Services
Hewlett Packard Company 42255 5,696.47 Computers, Software/HardwareHewlett Packard Company 42425 1,507.15 Computers, Software/HardwareHill Brothers 482 21,925.97 Chemicals, Water/Wastewater Treatment
Hill Brothers 484 50,520.32 Chemicals, Water/Wastewater Treatment
Hills Boat Service, Inc.42426 986.63 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesHilti, Inc.42427 1,003.17 Repair & Maintenance Services and/or SuppliesHome Depot 42428 1,044.94 Miscellaneous Parts and Supplies
Hope INternational University 42252 379.83 Sewer User Refund
Hopkins Technical Products, Inc.42256 914.05 Repair & Maintenance Services and/or SuppliesHub Auto Supply 42257 148.33 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesHub Auto Supply 42429 197.29 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Hunsaker, Richard C. 42253 2,675.07 Sewer User Refund
Hyatt Legal Plans 42431 1,805.00 Professional Services - Legal
Indiana Child Support Bureau 42331 290.00 Judgments PayableIndustrial Fabrics Corp.42258 9,091.11 Repair & Maintenance Services and/or Supplies
Industrial Threaded Products, Inc.42432 413.37 Repair & Maintenance Services and/or Supplies
fin/210/mm Page 4 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
Inplant Sales, L.L.C.42259 1,396.26 Repair & Maintenance Services and/or SuppliesInsight Public Sector, Inc.42433 12,141.47 Computers, Software/Hardware
Intercare Holdings Insurance Svcs., Inc.42434 2,916.67 Workers' Compensation Service
Intl. Union of Oper. Eng. AFL CIO Local 501 42332 5,025.93 Dues Deductions
Invensys Systems, Inc.42435 2,591.74 Electrical/Electronic Equipment, Parts & RepairsIrvine Pipe & Supply 42436 58.12 Repair & Maintenance Services and/or SuppliesIT Mentors 42260 5,000.00 Professional Organizations Meeting/Training/Membership
J. F. Shea Construction, Inc.42214 210,949.44 Construction
Jamison Engineering Contractors, Inc.42261 4,880.00 Professional Services/Construction Support ServicesJCI Jones Chemicals, Inc.481 56,511.43 Chemicals, Water/Wastewater TreatmentJCI Jones Chemicals, Inc.485 55,333.79 Chemicals, Water/Wastewater Treatment
JHC Investments Inc 42262 1,843.32 Sewer User Refund
Johnstone Supply 42263 114.15 Repair & Maintenance Services and/or SuppliesKahn, Ruth M. 42264 962.96 Sewer User RefundKemira Water Solutions 486 100,704.74 Chemicals, Water/Wastewater Treatment
Kiewit Infrastructure West Co.42357 201,832.25 Construction
Kim, Kwang E. 42265 1,632.14 Sewer User RefundKoff & Associates, Inc.42437 1,325.00 Professional Services/Comp & Class StudyL. Johnson Painting 42438 4,420.00 Facilities, Maintenance, Services & Supplies
Lab Safety Supply, Inc.42267 633.57 Laboratory Services & Supplies
Landsbury 42266 848.86 Sewer User Refund
Laura A. Terriquez 42325 262.21 Meeting/Training Expense ReimbursementLee & Ro, Inc.42268 2,606.33 Professional Services/Engineering Design Services
Lewis Brisbois Bisgaard & Smith 42351 68,724.90 Professional Services - Legal
Lisa A. Rothbart 42324 887.59 Meeting/Training Expense Reimbursement
Lisa K. Haney 42521 150.00 Meeting/Training Expense ReimbursementMagnolia Properties 42269 1,620.21 Sewer User Refund
Malcolm Pirnie, Inc.42213 33,251.43 Professional Services/Engineering Design Services
Marvac Electronics 42270 246.19 Electrical/Electronic Equipment, Parts & Repairs
Marvac Electronics 42439 53.08 Electrical/Electronic Equipment, Parts & RepairsMcMaster-Carr Supply Co.42440 1,736.71 Repair & Maintenance Services and/or SuppliesMedlin Controls Co.42271 592.99 Electrical/Electronic Equipment, Parts & Repairs
Mesa Laboratories, Inc.42441 61.46 Lab Instruments & Supplies
Mine Safety Appliance 42442 2,227.41 Electrical/Electronic Equipment, Parts & RepairsMTM Recognition Corporation 42443 368.08 Service AwardsNASSCO/PACP 42444 285.00 Professional Organizations Meeting/Training/Membership
NEAC Compressor Services USA Inc.42445 24.28 Repair & Maintenance Services and/or Supplies
Neal Supply Co.42273 1,020.44 Repair & Maintenance Services and/or SuppliesNeal Supply Co.42446 387.90 Repair & Maintenance Services and/or SuppliesNeutron Products, Inc.42274 12,017.14 Chemicals, Water/Wastewater Treatment
Neutron Products, Inc.42447 5,813.33 Chemicals, Water/Wastewater Treatment
New York Life Investment 42272 620.48 Sewer User RefundNRG Engine Services, L.L.C.42448 650.77 Repair & Maintenance Services and/or SuppliesNth Generation Computing, Inc.42275 21,369.00 Computer Applications & Services
NWRI National Water Research Institute 42352 50,000.00 Annual Research Membership
OCEA 42335 702.00 Dues Deductible
Office Depot 42276 248.95 Office SuppliesOffice Depot 42449 362.00 Office Supplies
Officemax Incorporated 42450 2,821.01 Furniture/Fixtures
fin/210/mm Page 5 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
Olin Corporation 42451 4,162.39 Chemicals, Water/Wastewater TreatmentOneSource Distributors, Inc.42452 1,846.63 Electrical/Electronic Equipment, Parts & Repairs
Orange County Auto Parts 42277 323.94 Truck Supplies
Orange County Auto Parts 42453 1,940.47 Truck Supplies
Orange County Pump Co.42454 176.02 Pump SuppliesOrange County Sheriff 42336 596.85 Judgments PayableOrange County United Way 42337 40.00 Employee Contributions
OSTS Inc.42455 810.00 Professional Organizations Meeting/Training/Membership
Oxygen Service Company 42456 676.87 Laboratory Services & SuppliesPAC424572,262.00 Laboratory Services & SuppliesPacific Mechanical Supply 42282 3,192.03 Repair & Maintenance Services and/or Supplies
Pacific Mechanical Supply 42458 2,882.28 Repair & Maintenance Services and/or Supplies
Parker Supply Company 42283 76.03 Miscellaneous Parts and SuppliesParker Supply Company 42459 172.49 Miscellaneous Parts and SuppliesParkhouse Tire, Inc.42460 508.77 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Patel, Navnit & Kanubhai 42278 853.81 Sewer User Refund
PBS & J 42346 48,349.03 Professional Services/Engineering Design ServicesPCS Express, Inc.42461 156.22 Courier ServicesPeace Officers Council of CA 42338 2,242.50 Dues Deductions, Supervisors & Professionals
Peak Scientific Inc 42284 1,885.00 Laboratory Services & Supplies
Pep Boys Auto 42279 5,592.69 Sewer User Refund
Peppertree on Lincoln LLC 42280 2,194.24 Sewer User RefundPerkinelmer Labs 42462 740.16 Laboratory Services & Supplies
PL Hawn Company, Inc.42285 1,334.19 Repair & Maintenance Services and/or Supplies
PL Hawn Company, Inc.42463 856.27 Repair & Maintenance Services and/or Supplies
Polydyne, Inc.483 3,620.58 Chemicals, Water/Wastewater TreatmentPolydyne, Inc.487 41,054.69 Chemicals, Water/Wastewater Treatment
Praxair Distribution, Inc.42286 96.46 Laboratory Services & Supplies
Precon Products 42464 1,400.75 Repair & Maintenance Services and/or Supplies
Primary and Mulit-Specialty Clinics of A 42281 7,363.61 Sewer User RefundPrimrose Ice Co., Inc.42465 315.00 Water & Ice ServicesPrudential Overall Supply 42466 1,340.61 Uniforms
Pump Action 42467 1,612.08 Oil Filters
Quickstart Intelligence 42287 4,292.50 Professional Organizations Meeting/Training/MembershipR.C. Colyear, Trustee 42288 3,135.73 Sewer User RefundRainbow Disposal Co.42468 4,493.70 Waste Disposal
Ralphs Grochery Co. 42289 7,152.89 Sewer User Refund
RBF Consulting 42469 15,109.04 Professional Services/Engineering Design ServicesRed Lion Hotels Corporation 42290 22,374.15 Sewer User RefundRed Wing Shoes 42470 978.72 Safety, Security, Health Equipment, Supplies, and Services
Reliastar 42471 3,937.13 Voluntary Employee Life & Cancer Insurance
RM Automation c/o RM Controls 42472 167.72 Paper & Office SuppliesRoto Rooter NOC#11 42473 27.64 Repair & Maintenance Services and/or SuppliesRoyale Cleaners 42291 78.10 Miscellaneous Services
Royale Cleaners 42474 170.40 Miscellaneous Services
RS Hughes Co., Inc.42292 96.84 Repair & Maintenance Services and/or Supplies
Rutan & Tucker, L.L.P.42293 300.00 Legal Services Safety Environmental Consulting 42475 315.00 Safety, Security, Health Equipment, Supplies, and Services
San Diego/Orange Fluid System Technologies, Inc.42476 771.48 Repair & Maintenance Services and/or Supplies
fin/210/mm Page 6 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
Santa Ana River Flood Protection Agency 42477 1,100.00 Professional OrganizationSARBS42523125.00 Professional Organizations Meeting/Training/Membership
SARBS-CWEA 42295 25.00 Professional Organizations Meeting/Training/Membership
Science Applications Intl. Corp.42479 9,947.50 Professional Services/Engineering Design Services
Sciotto, Dennis R 42294 849.44 Sewer User RefundSejal Patel 42522 125.00 Meeting/Training Expense ReimbursementSewer Equipment Company of America 42296 594.56 Repair & Maintenance Services and/or Supplies
Shamrock Supply Co., Inc.42297 293.35 Repair & Maintenance Services and/or Supplies
Shureluck Sales & Engineering 42480 344.58 Repair & Maintenance Services and/or SuppliesSigma-Aldrich, Inc.42481 4,365.41 Laboratory Services & SuppliesSKC West, Inc.42298 753.14 Laboratory Services & Supplies
SKC West, Inc.42482 441.90 Laboratory Services & Supplies
Smith Paint and Supply 42299 95.16 Painting Services and SuppliesSo. Cal Gas Company 42300 3,153.34 UtilitiesSouthern California Edison 42483 2,230.44 Utilities
Sparklett-Dallas 42484 829.48 Miscellaneous Services
Square D Co. dba Schneider Electric 42478 9,223.00 Electrical/Electronic Equipment, Parts & RepairsStantec Consulting Services, Inc.42485 2,428.00 Professional Services/SurveyingStaples42486212.78 Office Supplies
Summit Steel 42487 1,850.29 Repair & Maintenance Services and/or Supplies
Sunset Industrial Parts 42488 867.53 Repair & Maintenance Services and/or Supplies
SW & CM Investment LLC 42301 1,882.28 Sewer User RefundTEG Staffing, Inc. 42489 6,600.00 Temporary Employment Services
TekSystems 42490 2,916.00 Professional Services/Temporary Services
Teledyne/ISCO 42302 446.50 Laboratory Services & Supplies
TestAmerica Ontario 42303 675.00 Laboratory Services & SuppliesTestAmerica Ontario 42491 399.00 Laboratory Services & Supplies
The Fire X-Tinguisher Service Co.42239 710.83 Safety, Security, Health Equipment, Supplies, and Services
The Trane Company 42307 3,809.56 Repair & Maintenance Services and/or Supplies
The Unisource Corporation 42502 872.78 Paper & Office SuppliesThermo Electron North America, L.L.C.42304 1,056.28 Laboratory Services & SuppliesThermo Electron North America, L.L.C.42492 12.56 Laboratory Services & Supplies
Thompson Industrial Supply, Inc.42305 6,526.81 Repair & Maintenance Services and/or Supplies
Thompson Industrial Supply, Inc.42493 7,544.66 Repair & Maintenance Services and/or SuppliesTiano Construction 42306 13,340.00 Facilities, Maintenance, Services & SuppliesT-Mobile 42494 110.07 Telecommunications
Tony's Lock & Safe Service & Sales 42495 772.75 Repair & Maintenance Services and/or Supplies
Townsend Public Affairs 42496 7,500.00 Professional Services - State Legislative AdvocacyTranscat42308849.75 Repair & Maintenance Services and/or SuppliesTruck & Auto Supply, Inc.42309 73.50 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Truck & Auto Supply, Inc.42497 169.59 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
TSG Enterprises, Inc.42498 2,261.00 Professional Services/Construction Support ServicesTule Ranch/Magan Farms 42353 247,186.41 Biosolids ManagementTW Telecom Holdings, Inc.42499 4,011.19 Telecommunications
U Line 42500 792.51 Miscellaneous Parts and Supplies
Underground Service Alert of So. Calif 42501 1,465.50 Professional Services - Dig Alert Notification Service
Union Bank of California 42321 11,102.61 Construction, RetentionUnion Bank of California Escrow 42358 63,054.53 Construction, Retention
United Parcel Service 42310 39.65 Freight Services
fin/210/mm Page 7 of 7 EXHIBIT A
9/21/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/01/11 to 09/15/11
United Parcel Service 42503 60.15 Freight ServicesUPS Ground Freight, Inc.42504 69.80 Freight Services
US Peroxide, L.L.C.42354 197,303.66 Chemicals, Water/Wastewater Treatment
Valin Corporation 42505 3,852.78 Repair & Maintenance Services and/or Supplies
Valley Splicing Co.42311 2,415.50 Repair & Maintenance Services and/or SuppliesVapex Products, Inc.42312 2,460.81 Electrical/Electronic Equipment, Parts & RepairsVerizon California 42506 1,698.03 Telecommunications
Verne's Plumbing 42508 6,394.42 Plumbing Services & Supplies
Village Nurseries 42313 141.42 Repair & Maintenance Services and/or SuppliesVillage Nurseries 42509 141.42 Repair & Maintenance Services and/or SuppliesVision Financial Corporation 42510 921.56 Employee Voluntary Benefits
Vision Internet Providers, Inc 42511 11,172.00 Professional Services/Web Design Services
VMA Mariners Mile 42314 371.45 Sewer User RefundVortex Corp.42512 1,664.60 Repair & Maintenance Services and/or SuppliesVWR Scientific Products 42315 323.01 Laboratory Services & Supplies
VWR Scientific Products 42513 1,030.76 Laboratory Services & Supplies
Waxie Sanitary Supply 42514 677.29 Janitor & Household Service & SuppliesWeather and Wind Instrument Co.42515 896.51 Miscellaneous Parts and SuppliesWeck Laboratories, Inc.42316 1,650.00 Laboratory Services & Supplies
Wells Fargo Bank 42519 10,622.75 Construction, Retention
Western Blue/Insight/Hewlett Packard 42355 32,654.72 Computers, Software/Hardware
Westin Engineering, Inc.42317 925.00 Professional Services/Software Program ConsultingXerox Corporation 42516 312.04 Computers, Software/Hardware & Managed Services
Xerox Corporation 42516 19,956.09 Computers, Software/Hardware & Managed Services
Xpedx, An International Paper Company 42318 101.10 Miscellaneous Supplies
Yale/Chase Materials Handling, Inc.42319 51.60 Electrical/Electronic Equipment, & Electric Cart Parts & RepairsYale/Chase Materials Handling, Inc.42517 14,138.01 Electrical/Electronic Equipment, & Electric Cart Parts & Repairs
1-800-Conference(R)42518 615.13 Telecommunications
24 Hour Fire Protection, Inc.42320 2,450.00 Repair & Maintenance Services and/or Supplies
Total Accounts Payable - Warrants $ 3,750,158.60
Payroll Disbursements
Employee Paychecks 47585 - 47609 4,185.50$ Interim Payroll - ARBA (09/01/11)
Employee Paychecks 47610 - 47668 99,259.53 Biweekly Payroll (09/07/11)
Employee Paychecks 47669 669.50 Interim Payroll - IDEA Payment (09/06/11)
Employee Paychecks 47670 50.00 Interim Payroll - Replace Direct Deposit Void (09/06/11)Employee Paychecks 47671 47,500.00 Interim Payroll - Employee Settlement (09/12/11)
Direct Deposit Statements 208972 - 209108 32,754.24 Interim Payroll - ARBA (09/01/11)
Direct Deposit Statements 209109 - 209679 1,380,869.56 Biweekly Payroll (09/07/11)
Total Payroll Disbursements $ 1,565,288.33 Wire Transfer PaymentsOCSD Payroll Taxes & Contributions 806,263.11$ Biweekly Payroll (09/07/11)Intercare Insurance Services 30,235.11 Workers' Compensation Services (09/07/11)
Isle Utilities 18,000.00 Membership in iTAG international R&D Utilities group (9/15/11)
J F Shea Construction, Inc.1,198,035.97 Construction P2-66 (09/15/11)
Total Wire Transfer Payments $ 2,052,534.19
Total Claims Paid 09/01/11 - 09/15/11 7,367,981.12$
fin/210/mm Page 1 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Accounts Payable Warrants
Abel Scale, Inc.42745 4,764.20$ Repair & Maintenance Services and/or SuppliesAbsolute Standards, Inc.42543 1,070.00 Laboratory Services & Supplies
Aerotek 42544 4,857.90 Professional Services/Temporary Services
Agilent Technologies, Inc.42545 580.33 Laboratory Services & Supplies
Ago IndustriesDBA So-Cal Sweeping 42546 1,960.00 Street Sweeping ServicesAir Liquide America Corp.42746 1,071.81 Laboratory Services & Supplies
Air Liquide America Specialty Gases LLC 42547 1,728.12 Laboratory Services & Supplies
Air Toxics, LTD 42548 92.00 Laboratory Services & Supplies
Airgas Safety, Inc.42549 7,811.57 Safety, Security, Health Equipment, Supplies, and ServicesAirgas Safety, Inc.42747 1,269.02 Safety, Security, Health Equipment, Supplies, and ServicesAlan's Lawn & Garden Center, Inc.42748 429.97 Repair & Maintenance Services and/or Supplies
Alhambra Foundry Co., Ltd.42550 14,303.81 Repair & Maintenance Services and/or Supplies
American Chemical Society 42749 1,395.00 Professional Organizations Meeting/Training/MembershipAmerican Express TVL Related Svcs Co., Inc.42750 2,077.00 Purchasing Card Program for Miscellaneous Travel ExpensesAmerican Payroll Association 42751 930.00 Professional Organizations Meeting/Training/Membership
Amtech Elevator Services 42551 1,035.00 Miscellaneous Services
Andy DaSilva 42715 125.00 Meeting/Training Expense ReimbursementAnn Crafton 42714 201.18 Meeting/Training Expense ReimbursementApplied Industrial Technology 42552 164.79 Repair & Maintenance Services and/or Supplies
Applied Industrial Technology 42752 13.34 Repair & Maintenance Services and/or Supplies
ARB/PERP - Air Resources Board 42874 1,150.00 Governmental Agency Fees & ChargesARB/PERP - Air Resources Board 42875 45.00 Governmental Agency Fees & ChargesAT & T Universal Biller 42553 118.09 Telecommunications
Awards & Trophies Company 42554 282.65 Awards and Framing Services
AWWA 42555 231.00 Professional Organizations Meeting/Training/Membership
Battery Specialties 42556 174.81 Batteries, VariousBell Pipe & Supply Co.42557 186.36 Repair & Maintenance Services and/or Supplies
BHI Management Consulting 42558 4,505.33 Professional Services/Strategic Planning
Black & Veatch Corporation 42525 120,064.18 Professional Services/Engineering Design Services
BNI Building News 42559 1,373.87 Books & PublicationsBrea Imperial Inc. 42560 2,500.00 Miscellaneous Services
Brown & Caldwell 42526 109,848.37 Professional Services/Engineering Design Services
Brown & Caldwell 42719 200.00 Professional Services/Engineering Design Services
Brown & Caldwell 42724 58,893.35 Professional Services/Engineering Design ServicesBruker Daltonics Inc 42527 85,386.30 Laboratory Equipment - Gas ChromatographBurlington Safety Laboratory of CA, Inc.42753 834.78 Safety, Security, Health Equipment, Supplies, and Services
California Dept. of Child Support 42561 2,021.51 Judgments Payable
California Relocation Services, Inc.42756 337.50 Miscellaneous Services - Moving/RelocationCambridge Isotope Labs 42562 2,912.99 Laboratory Services & SuppliesCAPPO, Inc.42757 530.00 Professional Organizations Meeting/Training/Membership
Carol Wafer 42563 542.77 Judgments Payable
Carollo Engineers 42528 109,480.35 Professional Services/Engineering Design ServicesCCP Industries.42564 752.05 Janitor & Household Service & SuppliesCDW Government, Inc.42565 193.46 Computers, Software/Hardware
Century National Properties 42754 6,203.86 Sewer User Refund
Charles F. Winsor 42718 125.00 Meeting/Training Expense ReimbursementCHMIA4256650.00 Training Registration - CA. Hazardous Materials Investigators Assoc.Chris A. Stacklin 42873 125.00 Meeting/Training Expense Reimbursement
Claims Paid From 09/16/11 to 09/30/11
fin/210/mm Page 2 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Cincinnati Incorporated 42567 990.00 Mechanical Parts & Supplies
City of Garden Grove 42758 292.58 Water UseCity of Huntington Beach 42624 308.92 Water Use
City of LaHabra 42755 837.71 Sewer User Refund
City of Seal Beach 42825 197.06 Water Use
Coastal Traffic Systems, Inc.42759 210.00 Safety, Security, Health Equipment, Supplies, and ServicesConnell Chevrolet\GEO 42568 148.06 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Consumers Pipe & Supply Co.42569 177.35 Repair & Maintenance Services and/or Supplies
Consumers Pipe & Supply Co.42760 10.62 Repair & Maintenance Services and/or Supplies
Controlled Motion Solutions 42570 531.27 Repair & Maintenance Services and/or SuppliesConverse Consultants 42571 176.00 Professional Services/Materials & Geotechnical TestingConveyor & Storage Solutions Inc.42761 19,033.41 Safety, Security, Health Equipment, Supplies, and Services
Corner Bakery Cafe (CBC) 42572 384.75 Catering Services
CORRPRO Companies, Inc.42529 68,001.00 Professional Services/Temporary ServicesCortech Engineering 42573 4,689.16 Repair & Maintenance Services and/or SuppliesCotton Point Design, Inc. dba Power Design 42574 6,835.57 Electrical/Electronic Equipment, Parts & Repairs
County of Orange 42762 22.00 Governmental Agency Fees & Charges
County of Orange - Health Care Agency 42725 25,157.75 Governmental Agency Fees & ChargesCounty of Orange Auditor Controller 42575 338.00 Governmental Agency Fees & ChargesCounty of Orange Auditor Controller 42763 16.50 Governmental Agency Fees & Charges
County of Orange Auditor Controller 42764 1,020.00 Governmental Agency Fees & Charges
County Wholesale Electric Co.42576 2,033.30 Electrical/Electronic Equipment, Parts & RepairsCourt Order 42638 2,179.38 Judgments PayableCourt Order 42640 150.00 Judgments Payable
Court Order 42669 108.00 Judgments Payable
Court Order 42713 912.50 Judgments Payable
CPS Human Resource Services 42577 422.05 Professional Organizations Meeting/Training/MembershipCrawford Industries LLC 42765 291.71 Office Supplies
CSI Services, Inc.42578 8,164.00 Professional Services
Curley Wholesale Electric, Inc.42579 1,998.77 Electrical/Electronic Equipment, Parts & Repairs
Cutting Edge Systems, Inc.42766 451.62 Computers, Software/HardwareCWEA Membership 42580 660.00 Professional Organizations Meeting/Training/Membership
CWEA Membership 42767 264.00 Professional Organizations Meeting/Training/Membership
David N. Phillips 42717 775.00 Meeting/Training Expense Reimbursement
David Wheeler Pest Control, Inc.42581 1,872.00 Pest Control ServicesDavid Wheeler Pest Control, Inc.42768 4,490.00 Pest Control ServicesDavid's Tree Service 42582 4,700.00 Groundskeeping
Desert Pumps & Parts, Inc.42583 24,987.83 Repair & Maintenance Services and/or Supplies
Dionex Corporation 42769 760.21 Laboratory Services & SuppliesDunn-Edwards Corporation 42584 16.30 Facilities, Maintenance, Services & SuppliesEagle Protection of California 42770 275.00 Safety, Security, Health Equipment, Supplies, and Services
Electrabond 42585 2,559.06 Repair & Maintenance Services and/or Supplies
EMEDCO dba TRICOR 42771 262.33 Repair & Maintenance Services and/or Supplies
Emerson Process Management, L.L.P.42586 1,442.66 Repair & Maintenance Services and/or SuppliesEmerson Process Management, L.L.P.42726 52,872.31 Repair & Maintenance Services and/or Supplies
Employee Benefits Specialists, Inc.42587 13,124.21 Reimbursed Prepaid Employee Medical & Dependent Care
Employment Development Dept.42588 9,024.59 Unemployment InsuranceEnecon USA, Inc.42589 1,147.78 Repair & Maintenance Services and/or SuppliesEnertech Environmental 42530 303,674.34 Biosolids Management
fin/210/mm Page 3 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Ennis, Darrell S. 42722 2,500.00 Medical Reimbursement
ENS Resources, Inc.42590 7,500.00 Professional Services - Federal AdvocacyEntech Instruments, Inc.42772 134.91 Laboratory Services & Supplies
Environmental & Occupational Risk Mgmt.42773 540.00 Safety, Security, Health Equipment, Supplies, and Services
Environmental Resource Associates 42591 694.32 Laboratory Services & Supplies
Ewing Irrigation 42592 2,017.08 Irrigation Repair & Maintenance Services and/or SuppliesEwing Irrigation 42774 30.91 Irrigation Repair & Maintenance Services and/or Supplies
Expotech USA Inc.42593 2,635.00 Laboratory Services & Supplies
Fastenal Company 42775 202.02 Janitor & Household Service & Supplies
Fedex Corporation 42776 220.07 Freight ServicesFerguson Waterworks 42777 918.22 Repair & Maintenance Services and/or SuppliesFirst American Corelogic 42594 599.67 Software Maintenance Agreement
Fisher Scientific 42595 17,997.33 Laboratory Services & Supplies
Fisher Scientific 42778 5,155.15 Laboratory Services & SuppliesFishing Boats Unlimited 42596 1,705.64 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesFlomax Products, Inc.42597 4,327.57 Electrical/Electronic Equipment, Parts & Repairs
Fluid Power Training Associates, LLC 42779 120.00 Professional Organizations Meeting/Training/Membership
FOPCO Incorporated 42780 5,504.00 Repair & Maintenance Services and/or SuppliesForensic Analytical 42598 16.00 Outside Laboratory ServicesFountain Valley Paints, Inc.42599 116.63 Facilities, Maintenance, Services & Supplies
Franchise Tax Board 42600 50.00 Judgments Payable
Frank I. Benest 42601 6,002.10 Professional Organizations Meeting/Training/MembershipFranklin Covey 42602 145.27 Office SuppliesFranklin Covey 42781 34.44 Office Supplies
Galco Industrial Electronics 42603 726.25 Electrical/Electronic Equipment, Parts & Repairs
Ganahl Lumber Company 42604 2,093.63 Facilities, Maintenance, Services & Supplies
Garratt Callahan Company 42605 3,512.28 Chemicals, Water/Wastewater TreatmentGBC (General Binding Corp)42606 67.05 Office Supplies
General Petroleum 42607 1,202.74 Fuel and Lubricants
General Petroleum 42782 11,438.77 Fuel and Lubricants
Genesis Technology Solutions Inc.42608 12,963.00 Professional Services/CMMS ConsultantGierlich-Mitchell, Inc.42610 1,663.51 Repair & Maintenance Services and/or Supplies
Glen Mills Inc.42783 800.00 Laboratory Services & Supplies
Global Industrial Equipment 42611 858.55 Laboratory Services & Supplies
GoExpo 42612 20,195.00 Printing and Publications - BrochuresGold Coast Awards, Inc.42613 11.85 BadgesGold Coast Awards, Inc.42784 50.91 Badges
Golden Bell Products 42785 7,004.00 Miscellaneous Parts and Supplies
Golden State Overnight Delivery Service 42614 373.91 Courier ServicesGolden State Overnight Delivery Service 42786 16.71 Courier ServicesGolden West Window Service 42615 415.00 Facilities, Maintenance, Services & Supplies
Golden West Window Service 42787 930.00 Facilities, Maintenance, Services & Supplies
Government Finance Officers Association 42609 153.00 Professional Organizations Meeting/Training/MembershipGrainger, Inc.42616 4,147.23 Repair & Maintenance Services and/or SuppliesGrainger, Inc.42788 2,866.06 Repair & Maintenance Services and/or Supplies
Graybar Electric Company 42617 1,207.05 Electrical/Electronic Equipment, Parts & Repairs
Graybar Electric Company 42789 4,487.58 Electrical/Electronic Equipment, Parts & RepairsGreat Western Sanitary Supplies 42618 305.66 Janitor & Household Service & SuppliesGTE.NET, L.L.C. (Verizon Online)42705 99.99 Telecommunications
fin/210/mm Page 4 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Guarantee Records Management 42619 1,042.96 Professional Services - Document Storage & Shredding
Hach Company 42790 2,470.72 Laboratory Services & SuppliesHandy Hose Services 42620 154.99 Repair & Maintenance Services and/or Supplies
Harrington Industrial Plastics, Inc.42621 900.12 Repair & Maintenance Services and/or Supplies
Harrington Industrial Plastics, Inc.42791 2,075.01 Repair & Maintenance Services and/or Supplies
Hill Brothers 492 89,317.01 Chemicals, Water/Wastewater TreatmentHilti, Inc.42622 980.96 Repair & Maintenance Services and/or Supplies
Huan Hoang Nguyen 42872 605.50 Meeting/Training Expense Reimbursement
Humantech, Inc.42623 4,175.00 Professional Organizations Meeting/Training/Membership
I.D. Industries, Inc.42625 588.22 Repair & Maintenance Services and/or SuppliesIDEXX Distribution, Inc.42626 10.78 Laboratory Services & SuppliesIndiana Child Support Bureau 42627 290.00 Judgments Payable
Industrial Distribution Group 42628 1,875.57 Repair & Maintenance Services and/or Supplies
Industrial Fabrics Corp.42792 7,214.91 Repair & Maintenance Services and/or SuppliesIndustrial Solution Services, Inc.42793 2,677.21 Chemicals, Water/Wastewater TreatmentIndustrial Threaded Products, Inc.42794 895.68 Repair & Maintenance Services and/or Supplies
Inorganic Ventures, Inc.42795 348.23 Laboratory Services & Supplies
Insight Public Sector, Inc.42629 1,020.40 Computers, Software/HardwareInstrument Meter Specialist 42630 259.39 Repair & Maintenance Services and/or SuppliesIntegrated Access Solutions 42631 149.00 Repair & Maintenance Services and/or Supplies
Intl. Union of Oper. Eng. AFL CIO Local 501 42632 5,031.45 Dues Deductions
Invensys Systems, Inc.42633 323.45 Electrical/Electronic Equipment, Parts & RepairsIPMC c/o Parsons 42531 715,389.00 Professional Services/Temporary ServicesIrvine Ranch Water District 42634 57.61 Water Use
Irvine Ranch Water District 42634 9.97 Water Use
J F Shea Construction, Inc.42727 84,664.00 Construction
J R Filanc Construction 42540 419,128.27 Construction J. F. Shea Construction, Inc.42737 26,724.22 Construction
James D. Herberg 42870 684.03 Meeting/Training Expense Reimbursement
Jamison Engineering Contractors, Inc.42635 2,763.00 Professional Services/Construction Support Services
Jays Catering 42636 333.39 Catering ServicesJays Catering 42796 1,381.89 Catering Services
JCI Jones Chemicals, Inc.489 20,523.79 Chemicals, Water/Wastewater Treatment
JCI Jones Chemicals, Inc.494 21,954.43 Chemicals, Water/Wastewater Treatment
Johnstone Supply 42637 978.07 Repair & Maintenance Services and/or SuppliesKemira Water Solutions 493 111,549.07 Chemicals, Water/Wastewater TreatmentL. Johnson Painting 42639 1,785.00 Facilities, Maintenance, Services & Supplies
Lab Safety Supply, Inc.42798 139.94 Laboratory Services & Supplies
Lakes Environmental Software, Inc.42799 530.00 Computer Applications & ServicesLash Group Limited 42797 1,557.12 Sewer User RefundLee & Ro, Inc.42728 2,251.51 Professional Services/Engineering Design Services
Lee & Ro, Inc.42728 49,347.46 Professional Services/Engineering Design Services
Liebert Cassidy 42800 59.26 Professional Services/Employee RelationsLorman Education Services 42641 339.00 Professional Organizations Meeting/Training/MembershipLos Angeles County 42642 2,177.50 Governmental Agency Fees & Charges
Malcolm Pirnie, Inc.42801 12,908.45 Professional Services/Engineering Design Services
Management Action Programs, Inc.42643 3,100.00 Training RegistrationMandic Motors 42644 95.00 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesMark H. Kawamoto 42716 125.00 Meeting/Training Expense Reimbursement
fin/210/mm Page 5 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Mass Electric Construction CO 42541 189,831.60 Construction
McMaster-Carr Supply Co.42645 3,871.32 Repair & Maintenance Services and/or SuppliesMcMaster-Carr Supply Co.42802 604.24 Repair & Maintenance Services and/or Supplies
Mesa Consolidated Water District 42646 33.25 Water Use
Michael I. Gold 42869 232.66 Meeting/Training Expense Reimbursement
Midway Mfg. & Machining Co.42648 745.00 Repair & Maintenance Services and/or SuppliesMid-West Associates, Inc.42647 141.33 Repair & Maintenance Services and/or Supplies
Mission Abrasive & Janitorial Supplies 42803 182.99 Janitorial & Household Services & Supplies
Morgan Company (WRM, Inc)42804 390.00 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
MSC Industrial Supply Co.42805 926.76 Repair & Maintenance Services and/or SuppliesMTM Recognition Corporation 42649 125.22 Service AwardsMunicipal Mgmt Assoc Of So California 42650 130.00 Professional Organizations Meeting/Training/Membership
MWH Americas, Inc.42532 185,361.34 Professional Services/Engineering Design Services
Natasha Dubrovski and Apple Store 42876 1,602.53 Computer LoanNational Assoc. of Clean Water Agencies 42729 39,550.00 Professional Organization & Meeting/Training RegistrationNational Safety Council 42651 1,230.00 Professional Organizations Meeting/Training/Membership
NEAC Compressor Services USA Inc.42652 60.30 Repair & Maintenance Services and/or Supplies
Newark Electronics 42806 26.31 Electrical/Electronic Equipment, Parts & RepairsNRG Engine Services, L.L.C.42730 42,961.18 Repair & Maintenance Services and/or SuppliesNSF International 42807 640.00 Laboratory Services & Supplies
OCEA 42653 692.25 Dues Deductible
Office Depot 42808 1,057.70 Office SuppliesOneSource Distributors, Inc.42654 2,578.96 Electrical/Electronic Equipment, Parts & RepairsOneSource Distributors, Inc.42809 1,230.32 Electrical/Electronic Equipment, Parts & Repairs
Orange County Sanitation District 42723 1,140.18 Petty Cash Expense
Orange County Sheriff 42655 596.85 Judgments Payable
Orange County United Way 42656 40.00 Employee ContributionsOrange County Vector Control District 42811 145.38 Pest Control
ORE Offshore 42657 3,027.25 Laboratory Services & Supplies
Oxygen Service Company 42658 1,052.19 Laboratory Services & Supplies
Oxygen Service Company 42812 1,026.36 Laboratory Services & SuppliesPacific Mechanical Supply 42659 622.80 Repair & Maintenance Services and/or Supplies
Pacific Mechanical Supply 42813 32.64 Repair & Maintenance Services and/or Supplies
Parkhouse Tire, Inc.42814 3,887.26 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Peace Officers Council of CA 42660 2,242.50 Dues Deductions, Supervisors & ProfessionalsPeach New Media, Inc.42661 125.00 Professional Organization & Meeting/Training RegistrationPerformance Pipeline Technologies 42731 36,524.12 Professional Services/CCTV Inspection/Sewerline Cleaning
Phipps & Bird 42662 86.24 Electrical Parts & Supplies
PL Hawn Company, Inc.42663 1,769.30 Repair & Maintenance Services and/or SuppliesPlumbers Depot, Inc.42664 2,369.42 Repair & Maintenance Services and/or SuppliesPolydyne, Inc.488 26,069.39 Chemicals, Water/Wastewater Treatment
Polydyne, Inc.495 23,598.89 Chemicals, Water/Wastewater Treatment
Ponton Industries, Inc.42665 474.24 Laboratory Services & SuppliesPort Supply 42666 42.60 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesPower Bros. Machine, Inc.42667 1,865.75 Repair & Maintenance Services and/or Supplies
Precon Products 42815 549.53 Repair & Maintenance Services and/or Supplies
Primrose Ice Co., Inc.42816 210.00 Water & Ice ServicesProjectline Technical Services, Inc.42817 2,108.50 Professional Services/Engineering Design ServicesPropipe Professional Pipe Services 490 24,300.67 Professional Services/CCTV Sewerline Inspections
fin/210/mm Page 6 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Prudential Insurance Company of America 42533 42,245.76 Benefits
Prudential Overall Supply 42668 2,724.02 UniformsPrudential Overall Supply 42818 2,626.92 Uniforms
PSRS ITF JHLIC Tax Payment Trust Account 42732 37,345.15 Sewer User Refund
Quickstart Intelligence 42819 1,625.00 Professional Organizations Meeting/Training/Membership
Radwell International Inc.42670 1,071.00 Repair & Maintenance Services and/or SuppliesRainbow Disposal Co.42671 60.99 Waste Disposal
Rainbow Disposal Co.42820 448.00 Waste Disposal
RBF Consulting 42821 5,055.58 Professional Services/Engineering Design Services
Restek Corp.42822 995.30 Laboratory Services & SuppliesRMS Engineering & Design, Inc.42672 2,285.00 Professional Services/Engineering Design ServicesRoberto's Auto Trim Shop 42673 112.72 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
Royale Cleaners 42823 134.90 Miscellaneous Services
Sachs Electric Company 42741 610,372.82 Professional Services/Central Generation AutomationSafety Max 42674 2,799.91 Safety, Security, Health Equipment, Supplies, and ServicesSan Diego/Orange Fluid System Technologies, Inc.42675 8,465.86 Repair & Maintenance Services and/or Supplies
Sancon Engineering, Inc.42534 49,529.50 Repair & Maintenance Services and/or Supplies
Sancon Engineering, Inc.42733 62,142.00 Repair & Maintenance Services and/or SuppliesSchwing Bioset 496 656.25 Repair & Maintenance Services and/or SuppliesSelwyn D. Mansell II, 42871 170.00 Meeting/Training Expense Reimbursement
Shamrock Supply Co., Inc.42676 7,880.10 Repair & Maintenance Services and/or Supplies
Shamrock Supply Co., Inc.42826 107.60 Repair & Maintenance Services and/or SuppliesShureluck Sales & Engineering 42677 1,824.10 Repair & Maintenance Services and/or SuppliesSo. Cal Gas Company 42678 21,401.61 Utilities
Society for HR Management 42679 180.00 Professional Organizations Meeting/Training/Membership
Southern California Edison 42535 492,019.82 Utilities
SPEX Certiprep, Inc.42680 849.06 Laboratory Services & SuppliesSPEX Certiprep, Inc.42827 90.69 Laboratory Services & Supplies
St. Croix Sensory, Inc.42828 1,143.50 Outside Laboratory Services
Stanley Steamer International, Inc.42829 1,426.00 Janitor & Household Service & Supplies
Stantec Consulting Services, Inc.42681 3,985.00 Professional Services/SurveyingStaples42682677.01 Office Supplies
Staples 42830 1,512.81 Office Supplies
State Water Resources Control Board 42720 190.00 Governmental Agency Fees & Charges
Summit Steel 42683 1,028.71 Repair & Maintenance Services and/or SuppliesSummit Steel 42831 238.81 Repair & Maintenance Services and/or SuppliesSunset Industrial Parts 42684 175.19 Repair & Maintenance Services and/or Supplies
Sunset Industrial Parts 42832 1,221.16 Repair & Maintenance Services and/or Supplies
Super Chem Corporation 42833 833.99 Repair & Maintenance Services and/or SuppliesSydney Plaza 42824 1,739.38 Sewer User RefundSystea Scientific, L.L.C.42685 324.29 Laboratory Services & Supplies
TEG Staffing, INC. 42686 1,732.50 Temporary Employment Services
TekSystems 42687 2,843.10 Professional Services/Temporary ServicesTerra Renewal, L.L.C.42734 52,295.93 Grit & Screenings DisposalTestAmerica Ontario 42688 770.00 Laboratory Services & Supplies
The Automotive Training Authority 42689 567.00 Professional Organizations Meeting/Training/Membership
The Cei Group, Inc.42690 4,327.54 Repair & Maintenance Services and/or SuppliesThe Integration Works, L.L.C.42691 1,602.00 Repair & Maintenance Services and/or SuppliesThe Orange County Register 42810 2,800.00 Notices & Ads
fin/210/mm Page 7 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
The Trane Company 42695 1,079.65 Repair & Maintenance Services and/or Supplies
The Trane Company 42841 2,855.01 Repair & Maintenance Services and/or SuppliesThermo Electron North America, L.L.C.42692 687.15 Laboratory Services & Supplies
Thermo Electron North America, L.L.C.42834 644.65 Laboratory Services & Supplies
Thermo Labsystems Inc.42835 2,066.25 Laboratory Services & Supplies
Thompson Industrial Supply, Inc.42693 13,392.75 Repair & Maintenance Services and/or SuppliesThompson Industrial Supply, Inc.42836 5,941.57 Repair & Maintenance Services and/or Supplies
Tiano Construction 42837 3,600.00 Facilities, Maintenance, Services & Supplies
Time Warner Communications 42838 59.20 Telecommunications
Tony's Lock & Safe Service & Sales 42839 474.13 Repair & Maintenance Services and/or SuppliesTortuga Pool Service 42694 310.00 Repair & Maintenance Services and/or SuppliesTraffic Control Service, Inc.42840 2,865.97 Safety, Security, Health Equipment, Supplies, and Services
Transcat 42696 1,617.90 Repair & Maintenance Services and/or Supplies
Tri-State Seminar On-the-River 42842 95.00 Professional Organizations Meeting/Training/MembershipTropical Plaza Nursery, Inc.42536 32,130.76 Landscape Maintenance ServicesTropical Plaza Nursery, Inc.42843 12,497.50 Landscape Maintenance Services
Troy Group, Inc.42697 653.81 Office Supplies
Truck & Auto Supply, Inc.42698 269.16 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesTSG Enterprises, Inc.42844 2,261.00 Professional Services/Construction Support ServicesTule Ranch/Magan Farms 42735 156,060.22 Biosolids Management
Two Wheels One Planet 42845 766.79 Autos, Trucks & Marine Equipment, Parts, Accessories & Services
UCI Foundation 42537 35,000.00 Professional Organization (Demographics)Ultra Scientific 42699 42.00 Laboratory Services & SuppliesUltra Scientific 42846 412.77 Laboratory Services & Supplies
Union Bank of California 42700 933.60 Banking Services
Union Bank of California 42868 1,406.53 Construction, Retention
United Parcel Service 42701 15.61 Freight ServicesUnited Parcel Service 42847 655.68 Freight Services
United Parcel Service 42847 1,197.67 Freight Services
United Power Service, Inc.42848 1,299.27 Electrical/Electronic Equipment, Parts & Repairs
Univar USA Inc 491 17,007.84 Chemicals, Water/Wastewater TreatmentUnivar USA Inc 497 14,056.42 Chemicals, Water/Wastewater Treatment
Universal Flooring Systems, Inc.42849 932.00 Facilities, Maintenance, Services & Supplies
US Airconditioning Distributors, Inc.42702 1,227.63 Electrical Parts & Supplies
US Peroxide, L.L.C.42538 139,361.08 Chemicals, Water/Wastewater TreatmentUS Peroxide, L.L.C.42736 198,722.01 Chemicals, Water/Wastewater TreatmentUS Plastic Corp.42850 193.22 Repair & Maintenance Services and/or Supplies
USA Bluebook 42851 389.84 Laboratory Services & Supplies
USA Mobility Wireless, Inc.42852 534.73 TelecommunicationsValley Splicing Co.42853 2,769.38 Repair & Maintenance Services and/or SuppliesVapex Products, Inc.42703 993.53 Electrical/Electronic Equipment, Parts & Repairs
Vapex Products, Inc.42854 7,726.42 Electrical/Electronic Equipment, Parts & Repairs
Verizon California 42704 49.17 TelecommunicationsVerizon Wireless 42855 1,102.35 TelecommunicationsVerne's Plumbing 42856 12,536.55 Plumbing Services & Supplies
Vortex Corp.42857 5,067.14 Repair & Maintenance Services and/or Supplies
Voyager Fleet Systems, Inc.42539 26,922.81 Autos, Trucks & Marine Equipment, Parts, Accessories & ServicesVWR Scientific Products 42706 3,492.73 Laboratory Services & SuppliesVWR Scientific Products 42858 451.59 Laboratory Services & Supplies
fin/210/mm Page 8 of 8 EXHIBIT B
10/12/2011
Vendor Warrant No.Amount Description
Claims Paid From 09/16/11 to 09/30/11
Water Environment Federation 42707 399.00 Professional Organizations Meeting/Training/Membership
Water Environment Federation 42721 220.00 Professional Organizations Meeting/Training/MembershipWater Environment Federation 42859 220.00 Professional Organizations Meeting/Training/Membership
Waters Corporation 42860 1,091.81 Laboratory Services & Supplies
Weather and Wind Instrument Co.42708 984.83 Miscellaneous Parts and Supplies
Weck Laboratories, Inc.42709 720.00 Laboratory Services & SuppliesWells Fargo Bank Esc 80556300 Kiewit 42739 38,400.10 Construction, Retention
Wells Fargo Bank Escrow 23518600 42742 25,158.45 Construction, Retention
Wells Fargo Bank Escrow 23861100 Kiewit 42744 35,053.00 Construction, Retention
Weltec Welding Alloys 42861 642.17 Repair & Maintenance Services and/or SuppliesWest Coast Safety Supply Co.42710 1,001.44 Safety, Security, Health Equipment, Supplies, and ServicesWest Coast Safety Supply Co.42862 4,375.74 Safety, Security, Health Equipment, Supplies, and Services
West Lite Supply Company, Inc.42711 51.75 Electrical/Electronic Equipment, Parts & Repairs
West Lite Supply Company, Inc.42863 348.35 Electrical/Electronic Equipment, Parts & RepairsWestin Engineering, Inc.42864 8,296.00 Professional Services/Software Program ConsultingXpedx, An International Paper Company 42865 1,594.05 Miscellaneous Supplies
Yale/Chase Materials Handling, Inc.42712 161.73 Electrical/Electronic Equipment, & Electric Cart Parts & Repairs
Yale/Chase Materials Handling, Inc.42866 351.05 Electrical/Electronic Equipment, & Electric Cart Parts & Repairs24 Hour Fire Protection, Inc.42867 1,108.07 Repair & Maintenance Services and/or Supplies4-Con Engineering, Inc.42542 180,616.95 Construction
Total Accounts Payable - Warrants $ 5,924,052.31
Payroll Disbursements
Employee Paychecks 47672 - 47712 89,168.98$ Biweekly Payroll (09/21/11)Employee Paychecks 47713 2,820.56 Interim Payroll - Reissue Payroll check (09/21/11)
Employee Paychecks 47714 50.00 Interim Payroll - Replace Direct Deposit Void (09/22/11)
Employee Paychecks 47715 - 47739 4,110.00 Interim Payroll - ARBA (09/30/11)Direct Deposit Statements 209680 - 210243 1,394,087.33 Biweekly Payroll (09/21/11)Direct Deposit Statements 210244 - 210382 33,204.24 Interim Payroll - ARBA (09/30/11)
Total Payroll Disbursements $ 1,523,441.11
Wire Transfer Payments
OCSD Payroll Taxes & Contributions 785,700.30$ Biweekly Payroll (09/21/11)Bank of America/Lloyds 235,320.04 Series 2000A&B COPs Standby Purchase Agreement Commitment Fee
Kiewit Infrastructure West Co.724,601.90 Construction 3-58 (09/29/11)
Kiewit/Mass, A Joint Venture 226,426.05 Construction 5-49 (09/29/11)
Kiewit/Mass, A Joint Venture 177,539.28 Construction 5-50 (09/29/11)
Total Wire Transfer Payments $ 2,149,587.57
Total Claims Paid 09/16/11 - 09/30/11 9,597,080.99$
DW-102 Board AR, Rev 10/04/10 Page 1 of 2
BOARD OF DIRECTORS Meeting Date To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number Item Number 3
Orange County Sanitation District FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, P.E., Director of Facilities Support Services Engineering Manager: Mark Esquer, P.E., FSSD
SUBJECT: P1 TRICKLING FILTER PUMP REPLACEMENT, FR10-017
GENERAL MANAGER'S RECOMMENDATION
A. Award a construction contract to J.R. Filanc Construction Company, Inc. for P1
Trickling Filter Pump Replacement, Contract No. FR10-017, for a total amount
not to exceed $481,218.; and,
B. Approve a contingency of $96,244 (20%).
SUMMARY
This project involves the replacement and installation of two large trickling filter pumps
at Plant No. 1. The existing pumps have exhibited excessive wear and corrosion. The
cost of the project includes purchasing two new pumps constructed of materials that are
more corrosion and abrasion resistant. The project includes repairs to the existing pump anchor bolts and additional modifications to minimize vibration.
The plans and specifications for P1 Trickling Filter Pump Replacement, Project No.
FR10-017 were prepared by Black & Veatch. Four bids for the construction and
installation of the pumps were received on September 13, 2011. Summary information on the bid opening for Project No. FR10-017 is as follows:
J.R. Filanc Construction $481,218
J.F. Shea Construction $653,000
Abhe & Svoboda Inc. $807,485 Houalla Enterprises, Ltd. $992,500
Engineer’s Estimate $980,000
Staff recommends an award to J.R. Filanc Construction Company, Inc. the lowest
responsive and responsible bidder.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
DW-102 Board AR, Rev 10/04/10 Page 2 of 2
ADDITIONAL INFORMATION
The Trickling Filter pumps were originally installed under the Trickling Filter
Rehabilitation and New Clarifiers Plant No. 1, Job No. P1-76 and placed into service in
February, 2006. Issues with excessive wear include abrasion caused by trickling filter
snail shells, corrosion, and vibration. CEQA
N/A
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE This request complies with authority levels of OCSD’s Delegation of Authority 07-04.
This item has been budgeted. (FY2011-12 Budget Line item: SP-34, Section 8, Page
113).
Date of Approval Contract Amount Contingency 10/26/11 $481,218 $96,244 (20%)
NJA:ME:SP:IH:pe
Page 1 of 4
OPERATIONS COMMITTEE Meeting Date
10/05/11
To Bd. of Dir.
10/26/11
AGENDA REPORT Item Number
4
Item Number
6
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, P.E, Director of Facilities Support Services
Engineering Manager: Mark Esquer, P.E., FSSD
SUBJECT: OCEAN OUTFALL BEACH JUNCTION BOX REPAIR SERVICES,
PROJECT NO. FR11-003
GENERAL MANAGER'S RECOMMENDATION
A. Approve a Sole Source Service Agreement with Jamison Engineering for the Outfall
Beach Junction Box Repair Services, Project No. FR11-003, for an amount not to
exceed $250,000; and,
B. Approve a contingency of $75,000 (30%).
SUMMARY
The Ocean Outfall Beach Junction Box structure is located on the beach between the Santa Ana River and the Least Tern Sanctuary. This junction box has been in service
since 1966 and the steel access covers have never been replaced.
Repairs are needed on the Ocean Outfall Beach Junction Box that houses the 120-inch
diameter and 78-inch diameter outfall pipelines. The proposed service agreement
includes replacing an existing steel access frame and cover on the 78-inch pipeline compartment and installing a concrete barrier wall between the 78-inch and 120-inch
pipelines.
The purpose of this work is to make the needed repairs and reduce the potential risk for
non-permitted effluent spills until a major public works construction project (Project
No. J-112) can make permanent repairs in 2012.
In addition, three frames and covers for the 120-inch compartment and two steel
bulkheads are being fabricated as a contingency for future short-term repairs should a
leak develop. These covers are planned to be installed under Project No. J-112 if no
failures occur before this project is completed. OCSD is currently not permitted to use
the 78-inch outfall system in order to perform this proposed work in a planned and scheduled manner with lower risks.
There are a number of high risks associated with preforming the necessary repairs. They
include working adjacent to the operational 120-inch outfall pipe and working in an
ecologically sensitive area that requires that the project be completed by March 2012
and not interfere with the Least Tern Nesting Season (annually March-September). Therefore, staff recommends the services of a contractor who is very familiar with similar
repair activities, has current knowledge of the OCSD’s facilities and this work zone, has
a thorough understanding of the complexity of the risks involved, and a proven history of
completing work in restricted time schedules.
Page 2 of 4
The proposed contractor has performed work in the Ocean Outfall Beach Junction Box in
the past and is fully equipped to manage the complexity, urgency, and sensitivity of this
work. In addition, the proposed contractor has the necessary knowledge to prepare for possible contingencies during this proposed work.
Staff worked with the Contracts/Purchasing division and negotiated the terms and rates
with this contractor based on standard rates on file and used in previous work for OCSD
to secure the best cost to meet the proposed scope and schedule.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
Background
In March 2007, Carollo Engineers (design consultant) conducted a condition assessment
on the 120-inch outfall pipeline at Plant 2. This assessment identified the potential for a leak or corrosion failure. The highest risk is associated with the structural integrity of the
Outfall Beach Junction Box and the Box Covers.
Based on this assessment, and given the sensitivity and time constraints, in 2008 OCSD
staff recommended and approved sole source agreements with Carollo Engineers and Jamison Engineering (contractor) to conduct repairs.
Jamison Engineering performed corrosion investigations using ultrasonic thickness
testing. The testing revealed that 25% to 50% of the thickness of the steel covers on the
78-inch and 120-inch pipeline compartments has been eroded due to corrosion from salt and water. They made short-term repairs that included sandblasting and applying a
protective coating on the four steel access covers located inside the 78-inch pipeline
compartment.
The Final Report summarizing the work conducted during the winter of 2008 was issued in August 2009 and presented the findings and recommendations of Carollo Engineers.
Unfortunately, due to time limitations and inability to use the 78-inch outfall, it was
determined that all the repair work recommended could not be completed. Three of the
frames and covers located within the in service 120-inch pipeline compartment were not
repaired. These repairs are scheduled to be addressed by Project No. J-112 in 2012.
Staff recommends installing a concrete barrier wall between the 78-inch and
120-inch pipelines and replacing one frame and cover on the 78-inch compartment. This
should provide adequate protection and eliminate the need to replace three of the four
frames and covers on the 78-inch outfall compartment.
OCSD is not allowed to use the 78-inch outfall to conduct maintenance repair work on
the 120-inch outfall system. We have requested the ability to use the 78-inch outfall for
brief durations in order to conduct maintenance repairs to the outfall system. In our ocean discharge permit application in April 2009, the Regional Water Quality Control
Board (RWQCB) was scheduled to renew our ocean discharge permit in the Fall of 2009.
To date, OCSD has not received the renewed ocean discharge permit or permission to
Page 3 of 4
use the 78-inch outfall in order to conduct routine maintenance work including this
proposed type of work. Also, in January 2010, at the Quarterly Management Meeting
with the RWQCB, management asked permission to use the 78-inch outfall in order to conduct the Outfall Beach Junction Box repair work. The request was denied by the
RWQCB.
Staff recommended approach and schedule:
The following is a chronology of events that describe tasks completed thus far, as well as
tasks anticipated to complete to conduct the Ocean Outfall Beach Junction Box Repair
work under the staff recommended approach. This approach also helps minimize
potential change orders to the future CIP J-112 Project.
Task Completion Date Anticipated Completion Date
Planning Phase
Facility Repair Project request submitted by
Asset Management
February 2011
Project Approved by Clearinghouse March 2011
Design Phase
Scope of Work for Design Services May 2011
Notice to Proceed – Design Services May 2011
75% Design Complete August 2011
100% Design Complete September 2011
Award Phase
Ops Committee/Board Approval of this Agenda Report October 2011
Notice to Proceed to Proposed Contractor November 2011
Construction Phase
Begin Construction November 2011
End Construction January 2012
Close-out* February 2012
*Note: This approach completes the work before the Annual Least Tern Nesting Season (March-
September)
Justification to hire Jamison Engineering:
This proposed contractor is uniquely qualified because they have previously completed inspection and maintenance tasks on the Ocean Outfall Beach Junction Box in this exact
work zone and have demonstrated their ability to successfully complete work in this
environmentally sensitive and restricted work zone in a short period of time.
Working on the Ocean Outfall Beach Junction Box is complex. Before work can begin, the contractor must hire a biologist to determine what precautions must be taken to
minimize impacts to this environmentally sensitive area. Precautions include but are not
limited to installing sound barriers and working in small lay down and set up areas in the
restricted work zone.
The Ocean Outfall Beach Junction Box is located on the beach and is secured by a
chain link fence. The steel covers are located inside a concrete vault. In order to work
on the steel covers the contractor must remove two concrete covers to access the vault.
The two concrete covers weigh more than 10,000 lbs. each. Removing the concrete
Page 4 of 4
covers requires a heavy-lifting crane to be set on soft sand and unstable ground which
adds additional risk.
Project Cost Estimates
Description Cost
Beach Junction Box $250,000
Contingency (30%) $75,000
Total $325,000
CEQA
Not applicable. This project is maintenance work required to keep the district facilities
functional.
BUDGET/DELEGATION OF AUTHORITY COMPLIANCE
This request complies with authority levels of the Sanitation District’s Delegation of
Authority. This item has been budgeted. (Line item: Section 8, Page 6).
Date of Approval Contract Amount Contingency
10/26/11 $250,000 $75,000 (30%)
Page 1 of 3
OPERATIONS COMMITTEE Meeting Date 10/05/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number 5 Item Number 7
Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Jim Herberg, Assistant General Manager CIP Project Manager: Pamela Koester
SUBJECT: HEADWORKS IMPROVEMENTS AT PLANT NO. 2, JOB NO. P2-66
GENERAL MANAGER'S RECOMMENDATION
Approve a contingency increase of $803,198 (3%) to the Professional Services
Agreement with Carollo Engineers for Headworks Improvements at Plant No. 2, Job No. P2-66, for a total contingency of $1,337,000 (5%).
SUMMARY
This project includes the design and construction of a new Headworks and demolition of the existing Headworks at Plant No. 2. The total project budget is $257,733,000 and construction has been ongoing since Fall 2005.
There have been significant construction issues and resulting delays incurred on this
project, including modifications to the electrical gear, 84-inch bypass design, generator
controls, site dewatering, and unknown utility conditions. In addition, significant delays were incurred relative to the manufacturing issues with the influent bar screens and a large effort has been put into optimizing the construction sequencing of the project as
the new facilities are constructed and incorporated into the operating facility.
The project is 95% complete and in order to provide continued support for the project to
review contractor construction documentation, prepare final project record documentation, and support potential future design changes due to unexpected field conditions, staff has determined that the contingency budget of 2% is inadequate and
requests an additional contingency of $803,198 (3%), for a total project contingency of
$1,337,000 (5%).
This additional contingency is currently included in the project budget and no increase to the project budget is required.
PRIOR COMMITTEE/BOARD ACTIONS
April 2007 – Approved a contingency of $533,802 (2%) to the Professional Services Agreement with Carollo Engineers for Headworks Improvements at Plant No. 2, Job
No. P2-66.
Page 2 of 3
July 2005 - Approved Amendment No. 7 to the Professional Services Agreement with Carollo Engineers for Headworks Replacement at Plant No. 2, Job No. P2-66, providing
for additional engineering services during construction for an additional amount of
$10,457,710, increasing the total amount not to exceed $26,740,004;
June 2004 - Approved Amendment No. 6 to the Professional Services Agreement with Carollo Engineers for Headworks Improvements at Plant No.2, Job No. P2-66, providing
for additional engineering services for an additional amount of $634,501, increasing the
total amount not to exceed $16,282,294.
December 2002 - Authorized the General Manager to negotiate and award Addendum No. 5 to the Professional Services Agreement with Carollo Engineers for design of
Headworks Improvements at Plant No. 2, Job No. P2-66, providing for additional
engineering services for an additional amount not to exceed $2,600,000, increasing the
total amount not to exceed $15,877,372. August 2001 - Approved Addendum No. 4 to the Professional Services Agreement with
Carollo Engineers for design of Headworks Improvements at Plant No. 2, Job
No. P2-66, for an additional amount of $12,628,299, increasing the total amount not to
exceed $13,277,372. November 2000 - Approved Addendum No. 3 to the Professional Services Agreement
with Carollo Engineers for Headworks Improvements at Plant No. 2, Job No. P2-66,
providing for additional services for an additional amount of $224,153, increasing the
total not to exceed contract amount to $649,073. September 2000 - General Manager Approved Addendum No. 2 to the Professional
Services Agreement with Carollo Engineers for Headworks Improvements at Plant
No. 2, Job No. P2-66, providing for additional services for an additional amount of
$24,980, increasing the total not to exceed contract amount to $424,920. September 2000 - General Manager Approved Addendum No. 1 to the Professional
Services Agreement with Carollo Engineers for Headworks Improvements at Plant
No. 2, Job No. P2-66, providing for additional services for an additional amount of
$24,940, increasing the total not to exceed contract amount to $399,940. February 2000 - Approved Professional Services Agreement with Carollo Engineers for
professional engineering services, including a preliminary engineering report for a new
Headworks at Plant No. 2, Job No. P2-66, for an amount not to exceed $375,000.
ADDITIONAL INFORMATION
The requested additional contingency is for Carollo Engineers to provide engineering and construction support services for a period of 15 months between November 2011 and January 2013. The estimated breakdown of work effort is listed below.
Page 3 of 3
Shop Drawing Review – This item is to review 30 shop drawing submittal packages from the contractor and/or manufacturers to ensure that it meets the contract
requirements. The estimated cost for this work is $43,000.
Changes and Request for Information – This item is to clarify contract requirements to the contractor and assist staff during influent trunk tie-in, existing facility demolition or startup and testing of new facilities. Staff estimates 70 change issues and RFIs prior to
project completion. The estimated cost for this work is $211,000.
Meetings – Staff estimates 30 field meetings to verify/clarify major pipe connections, electrical circuits, resolve construction and coordination issues, prepare meeting minutes, and modify drawings and specifications. The estimated cost for this work is
$62,000.
Record Drawings – Prepare/design changes to contract drawings based on field conditions and necessary change orders. Estimated work effort is for 1,500 drawings at the rate of 1.5 hours per drawing. The estimated cost for this work is $393,000.
Operations Manuals – Prepare detailed instructions to operate and maintain 15 new
facilities that are being constructed. The estimated cost for this work is $87,000.
CEQA
This project was included in the Final Subsequent Environmental Impact Report for the Treatment Plant No. 2 Headworks Replacement Project, dated April 2004, prepared by
Environmental Science Associates (ESA), certified on April 28, 2004. A Notice of
Determination was filed on April 30, 2004.
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
This request complies with authority levels of the Sanitation District’s Delegation of
Authority. This item has been budgeted (FY2011-12 Update, Page A-9, Line Item 40) and the budget is sufficient for the recommended action.
Date of Approval Contract Amount Contingency
04/25/07 10/26/11 $26,740,004 $ 533,802 (2%) $ 803,198 (3%)
$1,337,000 (5%)
JH:DF:el:gc:tlc
Page 1 of 1
ADMINISTRATION COMMITTEE Meeting Date 10/12/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number 3 Item Number 9
Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services
GENERAL MANAGER'S RECOMMENDATION
Receive and file report of reimbursements to Board Members and Staff per Government Code 53065.5 for the period July 1, 2010 through June 30, 2011.
SUMMARY Government Code Section 53065.5 requires all Special Districts to disclose any
reimbursements paid by the Sanitation District within the immediately preceding fiscal
year of at least one hundred dollars ($100) or more for each individual charge for
services or product received. The individual charge includes, but is not limited to, tuition reimbursement, certificate or license reimbursement, or meals, lodging, and transportation, or registration fee reimbursed to any employee or member of the
governing body of the Sanitation District. The disclosure requirement shall be fulfilled
by including the reimbursement information in a document published or printed at least
annually by a date determined by that district and shall be made available for public inspection.
Attached is the report of these reimbursements for the fiscal year ended June 30, 2011.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ATTACHMENTS
1. Report of reimbursements per Government Code 53065.5 for the period
July 1, 2010 through June 30, 2011.
JDR:LT:MW
Employee Title Amount Invoice Comments Site Location Duration
Adams, Matt Senior Plant Operator 170.00 Certification Reimbursement
Alter, Marian M. Principal Accountant 503.31 CSMFO Conference Burlingame, CA From 2/23 - 2/25/11
Amaro, Robert A. Maintenance Worker 170.31 TRAINING Commerce, CA From 4/11 - 4/15/11
Amaro, Robert A. Maintenance Worker 139.50 TRAINING Commerce, CA From 4/5 - 4/8/11
Arhontes, Nicholas J. Dir of Facilities Support Svcs 172.00 Certification Reimbursement
Arhontes, Nicholas J. Dir of Facilities Support Svcs 168.00 Certification Reimbursement
Arhontes, Nicholas J. Dir of Facilities Support Svcs 125.00 Certification Reimbursement
Ariston, Emilio Lead Mechanic 155.05 CWEA Conference Ontario, CA From 4/13 - 4/15/11
Armstrong, Jeffrey L. Senior Scientist 892.91 REIMB FOR TRAINING Portland, OR From 11/7 - 11/10/10
Baez, Jesus Mechanic 145.00 Certification Reimbursement
Baker, Charles Eddie Senior Plant Operator 170.00 Certification Reimbursement
Bauer II, Wesley G. Safety & Health Supervisor 593.43 REIMB FOR TRAINING Sacramento, CA From 2/1 - 2/3/11
Bauer II, Wesley G. Safety & Health Supervisor 705.00 Certification Reimbursement
Bauer II, Wesley G. Safety & Health Supervisor 105.00 Certification Reimbursement
Bauer II, Wesley G. Safety & Health Supervisor 150.00 Certification Reimbursement
Bauer II, Wesley G. Safety & Health Supervisor 246.00 Membership Reimbursement
Bewley, Benjamin W. Maintenance Worker 116.27 REIMB FOR TRAINING Commerce, CA From 4/11 - 4/15/11
Bingman, Brian Senior Engineer 125.00 Certification Reimbursement
Bingman, Deirdre E. Pr Environmental Specialist 219.63 REIMB. FOR STAFF MEETING
Bingman, Deirdre E. Pr Environmental Specialist 231.00 REIMB. FOR MEETING
Bradley Jr., Jon O.Senior Plant Operator 1,018.13 Tuition Reimbursement
Bradley Jr., Jon O.Senior Plant Operator 1,409.64 Tuition Reimbursement
Bradley Jr., Jon O.Senior Plant Operator 1,305.00 Tuition Reimbursement
Bradley Jr., Jon O.Senior Plant Operator 1,403.42 Tuition Reimbursement
Bradley Jr., Jon O.Senior Plant Operator 1,327.29 Tuition Reimbursement
Bradley Jr., Jon O.Senior Plant Operator 1,489.88 Tuition Reimbursement
Brooks, Judes Senior Plant Operator 170.00 Certification Reimbursement
Brown, Jeffrey Senior Engineer 125.00 Certification Reimbursement
Brown, Marc A.Principal Staff Analyst 1,399.88 Tuition Reimbursement
Brown, Marc A.Principal Staff Analyst 1,369.26 Tuition Reimbursement
Brown, Marc A.Principal Staff Analyst 1,333.90 Tuition Reimbursement
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Brown, Marc A.Principal Staff Analyst 1,146.96 Tuition Reimbursement
Brown, Marc A. Principal Staff Analyst 154.00 Membership Reimbursement
Burror, James L. Engineering Supervisor 1,279.88 REIMB. FOR MEETING New Orleans, LA From 10/3 - 10/6/10
Cady, Pongsakdi Principal Info Tech Analyst 453.48 IBM PULSE Las Vegas, NV From 2/27 - 3/02/11
Canen, Darrin L. Environmental Technician 538.39 CWEA P3S CONF 2011 Santa Clara, CA From 2/27 - 3/02/12
Cassidy, William D. Engineering Supervisor 118.45 CWEA ANNUAL Conference Ontario, CA From 4/12 - 4/14/11
Castillon, Richard A. IT Syst & Operations Manager 750.68 BENCHMARK WK KINGS COUNTY Seattle, WA From 2/21 - 2/24/11
Castillon, Richard A. IT Syst & Operations Manager 979.88 WASTEWTR CIO FORUM Chicago, IL From 4/25 - 5/01/11
Castro, Ernesto Lead Plant Operator 321.90 Tuition Reimbursement
Castro, Ernesto Lead Plant Operator 250.00 Certification Reimbursement
Castro, Ernesto Lead Plant Operator 250.00 Certification Reimbursement
Castro, Ernesto Lead Plant Operator 190.00 Certification Reimbursement
Chafe, David M. Reliability Maint Technician 823.24 RELIABILITY OIL TRAINING Knoxville, TN From 5/22 - 5/27/11
Chappell, Richard D. Senior Construction Inspector 248.76 REIMB. FOR MEETING Enoch, UT From 10/6 - 10/8/10
Chaudhry, Corina M. Principal Staff Analyst 119.70 REIMB. FOR SUBSCRIPTION
Chavez, Frank Operations Supervisor 159.90 CWEA ANNL CONF 2012 Ontario, CA From 4/13 - 4/15/11
Chavez, Frank Operations Supervisor 190.00 Certification Reimbursement
Cheffs, Peter Lead Mechanic 157.00 Certification Reimbursement
Chong, Tatiana Staff Analyst 1,590.00 Tuition Reimbursement
Chong, Tatiana Staff Analyst 1,590.00 Tuition Reimbursement
Cleveland, Donald R. Lead Mechanic 158.93 Staff Luncheon
Coss, Ronald J. Environmental Lab & OM Manager 490.00 REIMB. FOR MEMBERSHIP
Coss, Ronald J. Environmental Lab & OM Manager 322.12 ELOM QRTY MTG
Coss, Ronald J. Environmental Lab & OM Manager 344.80 INCIDNT COMND TRNG Riverside, CA From 1/11 - 1/14/11
Coss, Ronald J. Environmental Lab & OM Manager 198.00 Membership Reimbursement
Coss, Ronald J. Environmental Lab & OM Manager 490.00 Membership Reimbursement
Covarrubias, Daisy G. Public Information Specialist 127.90 REIMB. FOR TRAINING Irvine, CA From 7/12 - 7/16/10
Crandall, Larry R. Board of Directors 371.00 REIMB. 4 WEFTEC CONF. New Orleans, LA From 10/3 - 10/6/10
Crandall, Larry R. Board of Directors 986.97 REIMB CASA CONF Palm Desert, CA From 1/11 - 1/14/11
Crandall, Larry R. Board of Directors 1,127.83 REIMB CASA Monterey, CA From 8/17 - 8/21/10
Criscuolo, Keith W. Senior Plant Operator 250.00 Certification Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Criscuolo, Keith W. Senior Plant Operator 190.00 Certification Reimbursement
Dalgoff, Jacob Associate Engineer II 160.00 Membership Reimbursement
Dalgoff, Jacob Associate Engineer II 111.00 Membership Reimbursement
DeVries, Patrick Thys Human Resources Analyst 1,645.12 Tuition Reimbursement
Diaz, Arturo Senior Laboratory Analyst 132.00 CWEA Membership Fees
Dillon, Carla D. Engineering Supervisor 1,347.22 REIMB. FOR MEETING New Orleans, LA From 10/1 - 10/7/10
Dillon, Carla D. Engineering Supervisor 175.00 Certification Reimbursement
DoDderer, Thomas D. Lead Plant Operator 170.00 Certification Reimbursement
DoDderer, Thomas D. Lead Plant Operator 250.00 Certification Reimbursement
DoDderer, Thomas D. Lead Plant Operator 190.00 Certification Reimbursement
Donahue, Molly B. Maintenance Worker 129.00 REIMB FOR TRAINING Commerce, CA From 4/11 - 4/15/11
Donahue, Molly B. Maintenance Worker 106.69 REIMB FOR TRAINING Commerce, CA From 4/5 - 4/8/11
Dorman, Michael T. Engineering Supervisor 125.00 Certification Reimbursement
Dubois, Marcus Contract & Purchasing Manager 186.40 CAPPO CONF. REIMBURSEMNT San Jose, CA From 1/24 - 1/27/11
Dubois, Marcus Contract & Purchasing Manager 195.00 CAPPO CONF. REIMBURSEMNT San Jose, CA From 1/24 - 1/27/12
Dubois, Marcus Contract & Purchasing Manager 493.66 CAPPO CONF. REIMBURSEMNT San Jose, CA From 1/24 - 1/27/13
Dysart, Doug M. Plant Operator 130.00 Certification Reimbursement
Erickson, Kimberly A. Sr Human Resources Analyst 120.16 REIMB. FOR TRAINING Carlsbad, CA From 6/23 - 6/25/10
Escobar, Santiago A. Associate Engineer III 812.02 MACHINERY DIAGNOSE Minden, NV From 4/10 - 4/16/11
Escobar, Santiago A. Associate Engineer III 583.00 MACHINE DIAGNOSE Minden, NV From 4/10 - 4/16/11
Escobar, Santiago A. Associate Engineer III 827.46 REIMB. FOR TRAINING San Diego, CA From 7/19 - 7/23/10
Esquer, Mark A. Engineering Manager 125.00 Certification Reimbursement
Evangelista, Jerry F. Engineering Supervisor 175.00 WATERUSE WORKSHOP Fountain Valley, CA 2/1/11
Evangelista, Jerry F. Engineering Supervisor 764.54 CWEA P3S Conference San Jose, CA From 2/26 - 3/02/11
Evangelista, Jerry F. Engineering Supervisor 855.97 NACWA CONF St. Louis, MO From 5/17 - 5/20/11
Evangelista, Jerry F. Engineering Supervisor 575.00 NACWA CONF St. Louis, MO From 5/17 - 5/20/11
Evangelista, Jerry F. Engineering Supervisor 125.00 Certification Reimbursement
Evangelista, Jerry F. Engineering Supervisor 209.00 Membership Reimbursement
Evans, Theresa Contract/Purchasing Assistant 1,740.00 Tuition Reimbursement
Evans, Theresa Contract/Purchasing Assistant 1,740.00 Tuition Reimbursement
Evans, Theresa Contract/Purchasing Assistant 1,740.00 Tuition Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Falkenstein, John B. Engineer 348.44 CONCRETE CONF Las Vegas, NV From 1/19 - 1/21/11
Falkenstein, John B. Engineer 475.00 CONCRETE CONF Las Vegas, NV From 1/19 - 1/21/11
Farmer, Michele Pr Environmental Specialist 1,441.00 Tuition Reimbursement
Farmer, Michele Pr Environmental Specialist 1,951.94 Tuition Reimbursement
Farmer, Michele Pr Environmental Specialist 2,002.00 Tuition Reimbursement
Farmer, Michele Pr Environmental Specialist 1,545.05 REIMB FOR TRAINING New Orleans, LA From 10/2 - 10/7/10
Farmer, Michele Pr Environmental Specialist 150.00 Certification Reimbursement
Ferguson, Victor M. Instrumentation Tech II 144.00 CWEA Membership Fees
Ferry, Cynthia L. Administrative Assistant 182.10 OMAP LUNCH MEETING
Fields, Jeanie M. Executive Assistant 329.69 REIMB. FOR FOOD
Fisher, Dean M. Engineering Manager 125.00 Certification Reimbursement
Fisher, Dean M. Engineering Manager 1,191.44 REIMB. FOR MEETING San Diego, CA From 10/3 - 10/5/10
Flores, John M.Senior Construction Inspector 407.63 Tuition Reimbursement
Flores, John M. Senior Construction Inspector 440.05 REIMB. FOR MEETING Witcha Falls, TX From 7/20 - 7/23/10
Forman, Chuck M. Facilities Manager 477.83 REIMB. FOR MEETING San Deigo, CA From 10/17 - 10/19/10
Forman, Chuck M. Facilities Manager 477.47 FLEET EXPO San Deigo, CA From 6/06 - 6/09/11
Forman, Chuck M. Facilities Manager 1,492.20 REIMB. FOR MEETING Boston, MA From 8/14 - 8/19/10
Francis, David P. Source Control Inspector II 551.19 CHMIA CONF Shell Beach, CA From 4/12 - 4/15/11
Francis, Victoria L. Senior Engineer 1,602.05 REIMB FOR MEETING New Orleans, LA From 10/1 - 10/06/10
Gabriel, Lawrence C Plant Operator 195.00 Certification Reimbursement
Gabriel, Lawrence C Plant Operator 170.00 Certification Reimbursement
Gadzinski, Joscelynn M.Plant Operator 133.93 Tuition Reimbursement
Gadzinski, Joscelynn M.Plant Operator 501.22 Tuition Reimbursement
Gadzinski, Joscelynn M.Plant Operator 1,477.00 Tuition Reimbursement
Gadzinski, Joscelynn M.Plant Operator 111.00 Tuition Reimbursement
Gadzinski, Joscelynn M.Plant Operator 452.02 Tuition Reimbursement
Gallegos, Richard Plant Operator 170.00 Certification Reimbursement
Gamber, Robert M.Sr Environmental Specialist 2,271.09 Tuition Reimbursement
Gamber, Robert M. Sr Environmental Specialist 1,197.68 REIMB. FOR MEETING Portland, OR From 11/5 - 11/13/10
Ghirelli, Robert P. Assistant General Manager 648.87 CASA Conference Palm Desert, CA From 1/12 - 1/14/11
Givan, Tyrone C. Plant Operator 130.00 Certification Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Gold, Michael I. Public Affairs Manager 396.78 CASA STATE LEG COMMITEE Sacramento, CA 3/4/2011
Gold, Michael I. Public Affairs Manager 339.24 REIMB. FOR CAMERA
Gold, Michael I. Public Affairs Manager 139.00 REIMB. FOR VIEDO CAMERA
Gold, Michael I. Public Affairs Manager 695.30 CASA CONF Palm Desert, CA From 1/12 - 1/14/11
Gold, Michael I. Public Affairs Manager 1,859.13 CASA CONF Washington, DC From 3/12 - 3/17/11
Gold, Michael I. Public Affairs Manager 627.04 CASA CONF Sacramento, CA From 4/25 - 4/29/11
Gold, Michael I. Public Affairs Manager 1,431.46 LEGIS ADVOCACY Washington, DC From 6/14 -6/16/11
Gold, Michael I. Public Affairs Manager 1,643.63 REIMB. FOR MEETING Monterey, CA From 8/17 - 8/21/10
Gomez, Ruben Senior Construction Inspector 1,392.72 INDUSTRIAL HYGIENE San Diego, CA From 1/30 - 2/3/11
Gonzalez, John G. Maintenance Supervisor 814.04 PUMPER CLEANR EXPO Louisville, KY From 3/1 - 3/5/11
Hale, Angela A.Accounting Assistant II 109.00 Tuition Reimbursement
Hale, Angela A.Accounting Assistant II 241.02 Tuition Reimbursement
Hale, Angela A.Accounting Assistant II 419.97 Tuition Reimbursement
Halverson, David D. Engineering Manager 125.00 Certification Reimbursement
Haney, Lisa K. Sr Environmental Specialist 542.57 REIMB FOR MEETING Rancho Mirage, CA From 11/1 - 11/3/10
Haney, Lisa K. Sr Environmental Specialist 153.00 STATE OF CA MTG Sacramento, CA 3/9/11
Haney, Lisa K. Sr Environmental Specialist 160.00 REIMB. CASQA HANDBOOK
Harris, James R. Construction Insp Supervisor 841.25 REIMB. FOR MEETING Witcha Falls, TX From 7/20 - 7/23/10
Harting, Michael H. Engineer 968.71 Factory Demo Columbus, OH From 4/24 - 4/29/11
Hawkins, Warren S. Operations Supervisor 190.00 Certification Reimbursement
Haynes, Tod E. Engineering Manager 111.40 REIMB FOR TRAINING San Diego, CA 10/5/10
Heinz, David R.Operations Manager 850.00 Tuition Reimbursement
Heinz, David R. Operations Manager 190.00 Certification Reimbursement
Hellebrand, Ingrid G. Senior Public Info Specialist 296.27 REIMB. FOR FOOD - CHAT RM
Henderson, Dale O. Senior Construction Inspector 852.88 FACTOR DEMO TEST 050111 Sacramento, CA From 5/1 - 5/4/11
Hendy, Thomas S. Senior Plant Operator 195.00 Certification Reimbursement
Hendy, Thomas S. Senior Plant Operator 170.00 Certification Reimbursement
Herberg, James D. Assistant General Manager 663.44 CASA CONFERENCE Palm Desert, CA From 1/11 - 1/14/11
Herberg, James D. Assistant General Manager 175.00 Certification Reimbursement
Herberg, James D. Assistant General Manager 217.00 Membership Reimbursement
Herrera, Fernando Facilities Worker/Builder 325.00 Certification Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Herrera, Mike J. Principal Info Tech Analyst 465.99 SCADA TRAINING Las Vegas, NV From 1/2 - 1/7/11
Herrigstad, Carl A. Lead Instrumentation Tech 282.90 REIMB. FOR SUPPLIES
Hetherington, Michelle R. Engineer 1,576.55 REIMB FOR MEETING New Orleans, LA From 10/1 - 10/6/10
Hetherington, Michelle R. Engineer 916.90 RESIDUALS/BIOSOLIDS Sacramento, CA From 5/21 - 5/25/11
Hetherington, Michelle R. Engineer 125.00 Certification Reimbursement
Holdman, Robert Construction Inspector 365.37 5-50 MCC FACTORY DEMO Seneca, SC From 11/29 - 12/1/10
Holdman, Robert Construction Inspector 776.48 VFD FACTORING TESTING Pittsburgh, PA From 2/22 - 2/25/11
Hopkins, Tim H. Senior Mechanic 141.72 Meal for P2 Staff meeting
Hsiao, Lina Accounting Supervisor 200.00 CPA LICENSE REIMB 052311
Hunt, Thomas A. Lead Plant Operator 250.00 Certification Reimbursement
Hunt, Thomas A. Lead Plant Operator 190.00 Certification Reimbursement
Jimenez, Margil Associate Engineer II 795.00 REIMB. FOR TRAINING Pomona, CA From 9/10 - 10/21/10
Kanis, Douglas Senior Engineer 191.99 Tuition Reimbursement
Kanis, Douglas Senior Engineer 1,097.74 Tuition Reimbursement
Kavoklis, John Chief Plant Operator 190.00 Certification Reimbursement
Kawamoto, Mark H. Engineer 110.00 LUNCH PILOT PRGRM
Kenerson, Roger A. Senior Plant Operator 170.00 Certification Reimbursement
Khublall, Hardat S. CIP Project Manager 432.00 CWEA CONFERENCE Ontario, CA 4/15/11
Kim, Igor Plant Operator 190.00 Certification Reimbursement
Kim, Jin H. Engineer 125.00 Certification Reimbursement
Kim, Jin H. Engineer 125.00 Certification Reimbursement
Kim, Jin H. Engineer 125.00 Certification Reimbursement
Kim, Jin H. Engineer 217.00 Membership Reimbursement
Kirchner, Linda L. Principal Laboratory Analyst 112.63 C MCGEE RETIREMENT ITEMS
Kleinman, Randall Principal Financial Analyst 295.00 REIMB FOR REGISTRATION Anaheim, CA From 2/6 - 2/9/11
Klinger, Laurie J. Sr Human Resources Analyst 475.00 Certification Reimbursement
Koester, Pamela A. CIP Project Manager 1,155.01 WEFTEC CONF New Orleans From 10/2 - 10/6/10
Koester, Pamela A. CIP Project Manager 119.00 Membership Reimbursement
Koester, Pamela A. CIP Project Manager 450.00 CWEA CONFERENCE Ontario, CA From 4/13 - 4/15/11
Koester, Pamela A. CIP Project Manager 220.00 Membership Reimbursement
Kogan, Vladimir A. Senior Scientist 541.79 CASA CONFERENCE Palm Desert, CA From 1/12 - 1/14/11
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Kogan, Vladimir A. Senior Scientist 290.74 CA AIR BOARD MTG Sacramento, CA From 12/16 -12/17/10
Kogan, Vladimir A. Senior Scientist 438.55 REIMB. FOR MEETING San Francisco, CA From 8/30 - 8/31/10
Kovac, Lilia Assoc Clerk of the Board II 1,545.00 Tuition Reimbursement
Kovac, Lilia Assoc Clerk of the Board II 615.00 Tuition Reimbursement
Kovac, Lilia Assoc Clerk of the Board II 592.92 SEC/CLERK CONFERENCE Monterey, CA From 3/2 - 3/4/11
Krie, Terry W. Senior Construction Insp Supv 1,298.18 REIMB. FOR MEETING Dallas, TX From 9/13 - 9/17/10
Lapus, Ludwig Contracts Administrator 1,650.00 Tuition Reimbursement
Larkin, Michael D. Engineering Supervisor 130.00 Certification Reimbursement
Le, Dustin Source Control Inspector II 132.00 Membership Reimbursement
Lester, Edwin M. Senior Plant Operator 170.00 Certification Reimbursement
Lin, John H. Senior Engineer 125.00 Certification Reimbursement
Lindel, Deborah L. Scientist 189.99 REIMB. FOR SUPPLIES
Linder, John D. Engineering Manager 125.00 Certification Reimbursement
Lopez, John M. Plant Operator 130.00 Certification Reimbursement
Losurdo, Linda Administrative Assistant 144.64 BACKSIDE NIGHT LNCH 50511
Losurdo, Linda Administrative Assistant 155.84 LUNCH 840 FRONTSIDE DAY
Losurdo, Linda Administrative Assistant 162.02 LUNCH 840 BACKSIDE DAY
Losurdo, Linda Administrative Assistant 110.47 REIMB. FOR SUPPLIES
Luna, Lourdes Human Resources Assistant 231.02 Tuition Reimbursement
Luna, Lourdes Human Resources Assistant 466.41 Tuition Reimbursement
Luna, Lourdes Human Resources Assistant 202.53 Tuition Reimbursement
Luna, Lourdes Human Resources Assistant 313.39 Tuition Reimbursement
Manning, David Planner/Scheduler 565.00 Certification Reimbursement
Mansell II, Selwyn D. Plant Operator 265.00 Certification Reimbursement
Mansell, Selwyn D. Operations Supervisor 190.00 Certification Reimbursement
Maravilla, Laura Sr Human Resources Analyst 174.90 Tuition Reimbursement
Marchegiano, Debbie F. Administrative Assistant 122.77 REIMB FOR SUPPLIES
Marsella, Rose M. Executive Assistant 156.50 REIMB FOR FLOWERS
Marsella, Rose M. Executive Assistant 135.49 REIMB FOR SUPPLIES
Marsella, Rose M. Executive Assistant 231.26 REIMB. FOR SUPPLIES
Martinez, Denise M.Sr Human Resources Analyst 1,405.00 Tuition Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Martinez, Denise M.Sr Human Resources Analyst 1,320.00 Tuition Reimbursement
Martinez, Denise M.Sr Human Resources Analyst 2,640.00 Tuition Reimbursement
Martinez, Denise M.Sr Human Resources Analyst 1,411.99 Tuition Reimbursement
Martinez, Denise M.Sr Human Resources Analyst 1,433.37 Tuition Reimbursement
Martinez, Denise M. Sr Human Resources Analyst 275.00 Certification Reimbursement
Masterson, Michael D. Source Control Inspector II 477.87 REIMB FOR TRAINING 041211 Shell Beach, CA From 4/12 - 4/15/11
May, Todd A.Maintenance Specialist 2,350.00 Tuition Reimbursement
McCusker, Michael J. Senior Engineering Associate 132.00 Membership Reimbursement
McGrath, Peter Operations Supervisor 190.00 Certification Reimbursement
Mendez, Thomas J. Senior Plant Operator 170.00 Certification Reimbursement
Menocal, Jorge Senior Mechanic 533.04 REIMB FOR TRAINING Minneapolis, MN From 5/6 - 5/13/11
Menocal, Jorge Senior Mechanic 268.11 REIMB FOR TRAINING Primm, NV From 9/27 - 9/30/10
Meregillano, Tom B. Regulatory Specialist 675.42 REIMB FOR MEETING Tempe, AZ From 12/8 - 12/10/10
Meregillano, Tom B. Regulatory Specialist 322.40 REIMB FOR MEETING Oakland, CA 2/10/11
Meregillano, Tom B. Regulatory Specialist 402.55 REIMB FOR MEETING Sacramento, CA 3/10/11
Meregillano, Tom B. Regulatory Specialist 501.40 REIMB FOR MEETING Sacramento, CA 4/18/11
Meregillano, Tom B. Regulatory Specialist 368.40 REIMB FOR MEETING Oakland, CA 4/7/11
Meregillano, Tom B. Regulatory Specialist 641.27 REIMB FOR MEETING Sacramento, CA From 5/22 - 5/25/11
Meregillano, Tom B. Regulatory Specialist 685.00 REIMB FOR MEETING Sacramento, CA From 5/22 - 5/25/11
Meregillano, Tom B. Regulatory Specialist 349.40 REIMB FOR MEETING San Francisco, CA From 6/22 - 6/24/11
Meregillano, Tom B. Regulatory Specialist 189.20 REIMB FOR MEETING Sacramento, CA From 6/6 - 6/8/11
Meregillano, Tom B. Regulatory Specialist 313.40 REIMB FOR MEETING Oakland, CA 7/8/10
Meregillano, Tom B. Regulatory Specialist 795.60 REIMB FOR MEETING Cincinnati, OH From 8/2 - 8/4/10
Meregillano, Tom B. Regulatory Specialist 239.40 REIMB FOR MEETING Oakland, CA 9/16/10
Meregillano, Tom B. Regulatory Specialist 397.40 REIMB FOR MEETING Sacramento, CA 9/22/10
Meregillano, Tom B. Regulatory Specialist 165.00 REIMB. 2011 Biosolid Wrkshp Whittier, CA 1/18/11
Michaels, Robert Principal Info Tech Analyst 433.44 REIMB. FOR TRAINING San Diego, CA From 7/14 - 7/15/10
Miller, Andre Associate Engineer III 1,583.85 REIMB FOR MEETING New Orleans, LA From 10/1 - 10/6/10
Miranda, Daniel R. Reliability Maint Technician 766.28 REIMB FOR TRAINING Knoxville, TN From 5/22 - 5/27/11
Moline, William M. Operations Supervisor 250.00 Certification Reimbursement
Moline, William M. Operations Supervisor 190.00 Certification Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Morey, Michael N. Senior Plant Operator 170.00 Certification Reimbursement
Mullins, James C. Senior Engineer 884.55 REIMB. FOR MEETING Pittsburgh, PA From 7/13 - 7/16/10
Murthy, Umesh N. CIP Project Manager 125.00 Certification Reimbursement
Nau, Andrew H.Sr Human Resources Analyst 2,559.12 Tuition Reimbursement
Nau, Andrew H.Sr Human Resources Analyst 2,559.12 Tuition Reimbursement
Nazaroff, Adam A. Associate Engineer III 597.00 REIMB. FOR SEMINAR Los Angeles, CA 11/30/10
Nguyen, Canh Q. Scientist 1,035.51 REIMB. FOR TRAINING S. Bend, IN From 8/22 - 8/26/10
Nguyen, Huan-Hoang Engineer 125.00 Certification Reimbursement
Nguyen, Quynh D. Engineering Associate 689.00 REIMB. FOR TRAINING Redlands, CA From 7/18 - 7/23/10
Nguyen, Washington Q. Engineer 125.00 Certification Reimbursement
Niswonger, James D. Construction Insp Supervisor 737.59 REIMB. FOR MEETING Pittsburgh, PA From 7/13 - 7/16/10
Oswald, Nicholas Electrical Tech II 225.00 Tuition Reimbursement
Oswald, Nicholas Electrical Tech II 1,740.00 Tuition Reimbursement
Oswald, Nicholas Electrical Tech II 1,740.00 Tuition Reimbursement
Oswald, Nicholas Electrical Tech II 1,740.00 Tuition Reimbursement
Oswald, Nicholas Electrical Tech II 324.62 REIMB TEAM MTG BBQ
Pantoja, Enrique Senior Plant Operator 170.00 Certification Reimbursement
Park Jr., Joseph W. Maintenance Supervisor 974.12 REIMB FOR TRAINING Milwaukee, WI From 10/17 - 10/21/10
Patel, Madankumar B. Senior Engineer 125.00 Certification Reimbursement
Patel, Madankumar B. Senior Engineer 125.00 Certification Reimbursement
Patel, Samir Information Tech Analyst I 1,110.00 Tuition Reimbursement
Patel, Samir Information Tech Analyst I 2,165.00 Tuition Reimbursement
Patel, Samir Information Tech Analyst I 2,165.00 Tuition Reimbursement
Perez, Leyla D. Sr Environmental Specialist 231.00 REIMB FOR WRKSHP Whittier, CA 1/18/11
Pham, Duc M.Information Tech Analyst III 2,165.00 Tuition Reimbursement
Pham, Duc M.Information Tech Analyst III 2,165.00 Tuition Reimbursement
Pham, Duc M. Information Tech Analyst III 227.65 REIMB FOR TRAINING San Diego, CA From 3/28 - 3/30/11
Phongmekhin, Yai Contract/Purchasing Assistant 672.51 Tuition Reimbursement
Phongmekhin, Yai Contract/Purchasing Assistant 800.00 Tuition Reimbursement
Phongmekhin, Yai Contract/Purchasing Assistant 753.45 Tuition Reimbursement
Phonsiri, Vanh Principal Laboratory Analyst 146.10 REIMB FOR TRAINING Anaheim, CA From 3/26 - 3/28/11
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Phonsiri, Vanh Principal Laboratory Analyst 861.55 REIMB. FOR TRAINING W. Palm Beach, FL From 7/11 - 7/15/10
Pierce, William F. Operations Supervisor 142.00 Certification Reimbursement
Pierce, William F. Operations Supervisor 190.00 Certification Reimbursement
Pilko, Victoria CIP Project Manager 4,782.74 Tuition Reimbursement
Puccio, Michael Engineering Supervisor 125.00 Certification Reimbursement
Rampley, Alexander J.CMMS Technician II 1,675.00 Tuition Reimbursement
Rampley, Alexander J.CMMS Technician II 1,590.00 Tuition Reimbursement
Rampley, Alexander J.CMMS Technician II 1,131.25 Tuition Reimbursement
Rampley, Alexander J.CMMS Technician II 853.75 Tuition Reimbursement
Rampley, Alexander J.CMMS Technician II 1,740.00 Tuition Reimbursement
Rampley, Alexander J.CMMS Technician II 1,740.00 Tuition Reimbursement
Rampley, Alexander J. CMMS Technician II 453.48 REIMB FOR TRAINING Las Vegas, NV From 2/27 - 3/2/11
Rao, Balachandra P. Senior Info Tech Analyst 125.25 REIMB. TRAINING 061410 Costa Mesa, CA From 6/14 - 6/18/10
Rao, Balachandra P. Senior Info Tech Analyst 108.70 REIMB. TRAINING 061411 Irvine, CA From 8/16 - 8/20/10
Ray, Lucinda Ellen Safety & Health Representative 390.00 Certification Reimbursement
Redinger, Sarah Human Resources Assistant 966.23 REIMB FOR TRAINING Oakland, CA From 11/4 - 11/6/10
Reed, Brian K. Sr Environmental Specialist 132.00 Membership Reimbursement
Reed, Jeffrey T. Director of Human Resources 989.05 REIMB FOR TRAINING San Diego, CA From 3/19 - 3/22/11
Reynolds, Roy J.Maintenance Supervisor 2,350.00 Tuition Reimbursement
Reynolds, Roy J.Maintenance Supervisor 1,175.00 Tuition Reimbursement
Reynolds, Roy J.Maintenance Supervisor 1,175.00 Tuition Reimbursement
Reynolds, Roy J. Maintenance Supervisor 105.99 REIMB FOR FOOD
Rivera, George Security/Emerg Plng Specialist 901.93 REIMB FOR TRAINING San Diego, CA From 12/12 - 12/15/10
Roberts, Janet K.Administrative Assistant 264.00 Tuition Reimbursement
Roberts, Janet K.Administrative Assistant 541.06 Tuition Reimbursement
Roberts, Mark S. Operations Supervisor 147.00 Certification Reimbursement
Roberts, Mark S. Operations Supervisor 143.00 Certification Reimbursement
Roberts, Mark S. Operations Supervisor 190.00 Certification Reimbursement
Robertson, George L. Senior Scientist 200.00 REIMB FOR CONF.San Deigo, CA From 12/6 - 12/8/10
Robertson, George L. Senior Scientist 157.85 REIMB. FOR PARTS
Robertson, George L. Senior Scientist 304.00 Membership Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Robertson, George L. Senior Scientist 150.26 REIMB. FOR PARTS
Robertson, George L. Senior Scientist 245.29 REIMB. FOR NERISSA PARTS
Robertson, George L. Senior Scientist 106.52 REIMB FOR SUPPLIES
Rocha, Johnny J.Senior Plant Operator 211.50 Tuition Reimbursement
Rocha, Johnny J. Senior Plant Operator 250.00 Certification Reimbursement
Rocha, Johnny J. Senior Plant Operator 170.00 Certification Reimbursement
Rocha, Milton Plant Operator 195.00 Certification Reimbursement
Rocha, Milton Plant Operator 170.00 Certification Reimbursement
Rodriguez, David Engineer 125.00 Certification Reimbursement
Rothbart, Lisa A. Environmental Supervisor 283.73 REIMB FOR TRAINING
Rothbart, Lisa A. Environmental Supervisor 1,090.84 REIMB. FOR CASA CONF. Palm Desert, CA From 1/12 - 1/14/11
Rothbart, Lisa A. Environmental Supervisor 220.00 REIMB FOR CASA CONF. Sacramento, CA From 4/27 - 4/29/11
Rothbart, Lisa A. Environmental Supervisor 1,247.12 REIMB. FOR MEETING Monterey, CA From 8/18 - 8/20/10
Ruckman, Ernest S. Senior Laboratory Analyst 549.93 REIMB FOR TRAINING Atlanta, GA From 3/12 - 3/17/11
Rulison, Doug Senior Info Tech Analyst 2,313.12 REIMB FOR TRAINING Las Vegas, NV From 11/29 - 12/3/10
Rulison, Doug Senior Info Tech Analyst 554.76 REIMB. FOR TRAINING San Diego, CA From 7/13 - 7/15/10
Ruth, James D. General Manager 672.77 REIMB. FOR MEETING Palm Desert, CA From 1/12 - 1/14/11
Sakamoto, Ken A. Sr Environmental Specialist 257.15 REIMB. FOR FOOD
Scott, Gregg A. Plant Operator 250.00 Certification Reimbursement
Scott, Gregg A. Plant Operator 190.00 Certification Reimbursement
Scott, Gregg A. Plant Operator 190.00 Certification Reimbursement
Shaaban, Alexander Senior Laboratory Analyst 2,077.75 PITTCON CONF Atlanta, GA From 3/12 - 3/17/11
Shelp, Curt V. Lead Plant Operator 190.00 Certification Reimbursement
Shelp, Curt V. Lead Plant Operator 250.00 Certification Reimbursement
Shubik, Jeffrey Y. Senior Engineer 125.00 Certification Reimbursement
Sigua, Cesario Information Tech Analyst II 156.86 REIMB FOR TRAINING.Los Angeles, CA From 11/18 - 11/19/10
Sohanaki, Roya Engineering Supervisor 125.00 Certification Reimbursement
Sohanaki, Roya Engineering Supervisor 589.74 CWEA P2S San Jose, CA From 2/28 - 3/2/11
Speakman, Steven R. Engineer 405.00 Certification Reimbursement
Speakman, Steven R. Engineer 124.96 ICS 300 CLASS Riverside, CA From 3/21 - 3/23/11
Spears, James Operations Supervisor 945.16 Tuition Reimbursement
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Spears, James Operations Supervisor 973.97 Tuition Reimbursement
Spears, James Operations Supervisor 1,305.00 Tuition Reimbursement
Spears, James Operations Supervisor 1,305.00 Tuition Reimbursement
Spears, James Operations Supervisor 530.87 Tuition Reimbursement
Spears, James Operations Supervisor 1,305.00 Tuition Reimbursement
Spears, James Operations Supervisor 1,305.00 Tuition Reimbursement
Spears, James Operations Supervisor 1,305.00 Tuition Reimbursement
Spears, James Operations Supervisor 190.00 Certification Reimbursement
Stacklin, Christopher A. Engineer 175.00 CEC Specialty Conference
Stacklin, Christopher A. Engineer 846.79 CWEA P2S MTG San Jose, CA From 2/26 - 3/2/11
Stacklin, Christopher A. Engineer 149.00 WateReuse Webcast Reimb. Fountain Valley, CA 2/1/11
Steiger, Frank R. Engineer 163.09 PARTS FOR CRISP SYSTEM
Steiger, Frank R. Engineer 125.00 Certification Reimbursement
Sternin, Warren L.Information Tech Supervisor 2,165.00 Tuition Reimbursement
Sternin, Warren L.Information Tech Supervisor 2,165.00 Tuition Reimbursement
Sternin, Warren L.Information Tech Supervisor 920.00 Tuition Reimbursement
Sternin, Warren L. Information Tech Supervisor 183.87 REIMB FOR TRAINING Los Angeles, CA From 11/15 - 11/17/10
Stokes, Don F.Instrumentation Tech II 1,350.00 Tuition Reimbursement
Stokes, Don F.Instrumentation Tech II 1,350.00 Tuition Reimbursement
Stokes, Don F.Instrumentation Tech II 1,350.00 Tuition Reimbursement
Stokes, Don F.Instrumentation Tech II 1,350.00 Tuition Reimbursement
Stokes, Don F.Instrumentation Tech II 1,350.00 Tuition Reimbursement
Stratmoen, Erik D. Lead Mechanic 160.00 Certification Reimbursement
Subash, Mysore S. Information Tech Analyst III 120.80 REIMB FOR TRAINING 120610 Irvine, CA From 12/6 - 12/10/10
Sullivan, Phillip J. Construction Inspector 548.79 SIEMENS P1-100 032111 Chicago, IL From 3/21 - 3/24/11
Talebi, Mahin Source Control Manager 767.20 NACWA PSS CONF 051711 St. Louis, MO From 5/17 - 5/20/11
Tang, Luc H. Senior Mechanic 132.00 Membership Reimbursement
Taylor, Mandrick S. Engineer 908.49 Factory Witness Testing Salt Lake City, UT 11/15/10
Terriquez, Laura A. Sr Environmental Specialist 139.86 FOOD TRAWLS
Terriquez, Laura A. Sr Environmental Specialist 976.48 REIMB. FOR MEETING Seattle, WA From 9/20 - 9/23/10
Terriquez, Laura A. Sr Environmental Specialist 370.68 REIMB. FOR OCEAN TRAWLS
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Thiede, Robert J. Pr Project Controls Analyst 154.00 Membership Reimbursement
Thomas, Christina M. Sr Environmental Specialist 162.91 REIMB. FOOD PURCHASED
Thompson, Mary Sue Sr Environmental Specialist 350.17 CWEA P3S CONF 2011 Santa Clara, CA From 2/27 - 3/2/11
Thompson, Robert C. Engineering Manager 125.00 Certification Reimbursement
Tintle, James G. Maintenance Supervisor 475.47 FLEET EXPO San Diego, CA From 6/6 - 6/9/11
Torres, Edward M. Director of Operations & Maint 378.45 CASA CONF Palm Desert, CA 1/12/11
Torres, Edward M. Director of Operations & Maint 1,272.42 REIMB. FOR MEETING San Francisco, CA From 7/19 - 7/22/10
Torres, Edward M. Director of Operations & Maint 468.33 REIMB. FOR MEETING San Francisco, CA From 9/8 - 9/9/10
Tran, Jane H. Engineer 758.61 CWEA P3S CONF 2011 Santa Clara, CA From 2/27 - 3/2/11
Tran, Jane H. Engineer 125.00 Certification Reimbursement
Tsai, Yu-Li Senior Scientist 1,454.68 ASFM 2011 New Orleans, LA From 5/21 - 5/25/11
Tuiasosopo-Kemper, Gary Lead Plant Operator 190.00 Certification Reimbursement
Van Exel, Rachel J. Sr Environmental Specialist 245.00 REIMB. FOR WEBINAR
Van Exel, Rachel J. Sr Environmental Specialist 231.00 REIMB 2011 BioSolids Wrkshp Whittier, CA 1/18/11
Velasco, MarcoPolo S.Associate Engineer III 725.00 Tuition Reimbursement
Velasco, MarcoPolo S.Associate Engineer III 1,498.00 Tuition Reimbursement
Velasco, MarcoPolo S.Associate Engineer III 885.97 Tuition Reimbursement
Vellucci, Hai-Thao H. Safety & Health Representative 110.45 SUPPLIES FOR ASBESTOS
Vellucci, Hai-Thao H. Safety & Health Representative 119.38 REIMB FOR TRAINING Burbank, CA From 12/14 - 12/15/10
Vellucci, Hai-Thao H. Safety & Health Representative 839.76 REIMB. FOR TRAINING San Diego, CA From 8/15 - 8/19/10
Villalobos, Ginetto Equipment Operator 605.00 Certification Reimbursement
Voss, Betty J.Buyer 1,488.30 Tuition Reimbursement
Vuong, Michael Operations Supervisor 190.00 Certification Reimbursement
Wade, Ronald L. Chief Plant Operator 176.30 REIMB FOR MEETING 041311 Ontario, CA From 4/13 - 4/15/11
Wade, Ronald L. Chief Plant Operator 190.00 Certification Reimbursement
Ward, Joanne Plant Operator 170.00 Certification Reimbursement
Ward, Paul Plant Operator 190.00 Certification Reimbursement
Ward, Paul Plant Operator 250.00 Certification Reimbursement
Watson, Simon L. Maintenance Manager 488.26 REIMB FOR MEETING San Diego, CA From 1/27 - 1/29/11
Watson, Simon L. Maintenance Manager 1,105.40 REIMB FOR MEETING New Orleans, LA From 10/2 - 10/6/10
Watson, Simon L. Maintenance Manager 323.26 REIMB FOR MEETING
Employee Title Amount Invoice Comments Site Location Duration
Orange County Sanitation District
Government Code 53065.5, Public Disclosure Reports - Reimbursements
July 1, 2010 Through June 30, 2011
Watson, Simon L. Maintenance Manager 207.00 REIMB FOR TRAINING Ft. Myers, FL From 6/13 - 6/16/11
Watson, Simon L. Maintenance Manager 183.88 REIMB. FOR MEETING Morro Bay, CA From 7/16 - 7/17/10
Watson, Simon L. Maintenance Manager 146.08 REIMB. FOR MEETING Modesto, CA From 9/14 - 9/15/10
Watson, Simon L. Maintenance Manager 100.12 REIMB. FOR MEETING Primm, NV From 9/29 - 9/30/10
Watson, Simon L. Maintenance Manager 158.00 Certification Reimbursement
Watson, Simon L. Maintenance Manager 162.00 Certification Reimbursement
White, Allen J. Plant Operator 195.00 Certification Reimbursement
White, Allen J. Plant Operator 130.00 Certification Reimbursement
White, Michael D. Controller 200.00 Certification Reimbursement
Wilcox, Robyn A. Engineer 125.00 Certification Reimbursement
Wilcox, Robyn A. Engineer 164.00 Membership Reimbursement
Wong, Pierre Engineer 776.48 REIMB FOR MEETING Pittsburgh, PA From 2/22 - 2/25/11
Wong, Pierre Engineer 125.00 Certification Reimbursement
Woodward, Jeff W. Lead Plant Operator 250.00 Certification Reimbursement
Woodward, Jeff W. Lead Plant Operator 190.00 Certification Reimbursement
Yin, Shuang Engineer 167.61 CWEA ANNL CONF 2012 Ontario, CA From 4/13 - 4/15/11
Ying, Morris C. Engineer 125.00 Certification Reimbursement
Zedek, Michael I. Engineer 420.08 REIMB. FOR TRAINING San Diego, CA From 7/13 - 7/15/10
Zeller, Paula A. Senior Plant Operator 190.00 Certification Reimbursement
Page 1 of 2
ADMINISTRATION COMMITTEE Meeting Date 10/12/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number 4 Item Number 10
Orange County Sanitation District FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director, Finance and Administrative Services
SUBJECT: VAX EMULATOR FOR PROCESS CONTROL SYSTEM,
MODERNIZATION & SECURITY IMPROVEMENTS PROJECT
GENERAL MANAGER'S RECOMMENDATION
A. Establish the Charon-VAX product as Orange County Sanitation District’s standard
for VAX emulators and;
B. Award a contract to Quayle Consulting, Inc. for the purchase of Charon-VAX/XL
Permanent Licenses and Maintenance, Specification No. S-2011-504, for a period of
one year in an amount not to exceed $292,217.
SUMMARY
The Operations and Maintenance Department utilizes the Supervisory Control and Data
Acquisition (SCADA) System to provide plant monitoring, automation, and control. The
SCADA is a mission critical system used by Operations to monitor and control the day-to-day operations of the plant.
The software that OCSD utilizes for its SCADA System runs on specialized computer
hardware. The computers and replacement parts are no longer produced and OCSD
has relied on used and refurbished parts to maintain the computer hardware. Such equipment is now very scarce and difficult and costly to procure.
The CHARON-VAX emulator software enables OCSD to use the existing SCADA
applications and process control software on modern computer equipment.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
OCSD has invested millions of dollars in developing our current process control software. In order to preserve this investment, a solution is needed to replace the
obsolete computer hardware. In February 2010, Operations and Maintenance
Page 2 of 2
commissioned a study to recommend a software solution that will resolve this predicament. The “VAX Emulation Product Study” was performed by DLT&V Systems
Engineering and recommended the Charon-VAX product. Based on this study, two sole
source procurements for software licenses were awarded through the CIP process in
the amount of $83,475 to Quayle Consulting. The software was tested in the new Plant No. 2 Headworks Replacement Project subsystem (Job No. P2-66). The test was considered a success and two additional licenses were bid and awarded to Quayle
Consulting through the CIP process in the amount of $30,400 and used in the Plant
No.1 Activated Sludge Facility 2 subsystem (Job No. P1-102).
Additional licenses have now been bid through Information Technology under Specification No. S-2011-504 as part of the Process Control System, Modernization &
Security Improvements project. These licenses will complete the installation of this
software for the entire process control system. By eliminating the current obsolete
hardware, staff will be able to extend the life of our high-value software configuration, thereby delaying the complete replacement of the current SCADA system by several years. An entire SCADA system replacement typically cost $40-50 million.
Below is the tabulated bid result. Quayle Consulting, Inc. was the lowest responsive and responsible bidder.
Purchase of Charon-VAX/XL Plus
Bid Date – 09/20/2011 @ 2:00 P.M.
S-2011-504
Bidder Amount of Bid Quayle Consulting $292,217
Stromasys, Inc. $302,500
Salem Automation, Inc. $302,500
CEQA
N/A
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
This request complies with authority levels of the Sanitation District’s Delegation of
Authority. This item has been budgeted. (Line item: Section A, Page 18, FY 2011-12 Budget Update).
JDR:LT:RC:peb/jmf
Page 1 of 3
ADMINISTRATION COMMITTEE Meeting Date 10/12/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number 5 Item Number 11
Orange County Sanitation District FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: IMPLEMENTATION OF IBM-MAXIMO ENTERPRISE ASSET
MANAGEMENT SYSTEM GENERAL MANAGER'S RECOMMENDATION
A. Approve a purchase contract with Total Resource Management, Inc. (TRM, Inc.) for
Phase 1 of the Implementation of IBM-Maximo Enterprise Asset Management System, Specification No. CS-2011-499BD, for an amount not to exceed of
$327,638;
B. Approve a contingency in the amount of $32,763 (10%); and,
C. Authorize the General Manager to select from proposers TRM Inc., EMA or
Starboard to negotiate and obtain the best value for the implementation of
subsequent phases of Specification No. CS-2011-499BD to meet work requirements
as identified by the I.T. Division.
SUMMARY
The current Computerized Maintenance Management System (CMMS) software is used
by Operations & Maintenance staff to manage plant and sewer assets, plan/schedule
and perform work order management activities, and track/monitor maintenance related regulatory issues. The software is obsolete and no longer supported.
The Orange County Sanitation District (OCSD) currently owns the IBM-Maximo
Enterprise Asset Management (Maximo) software that will replace the current CMMS
software. A Request for Proposal (RFP) was advertised for the initial phase of implementing Maximo. Based on the overall qualifications and expertise, staff
recommends awarding a purchase contract to TRM, Inc. for a total amount not to
exceed $327,638. The subsequent phases of the implementation project will be
identified in the planning and review process contained in Phase 1. The top scoring
firms identified during the RFP process will be qualified to propose on subsequent phases.
Page 2 of 3
PRIOR COMMITTEE/BOARD ACTIONS
July 2008 – Awarded a purchase contract to TCS America, a division of TATA America
International Corporation, for installation & Implementation of IBM-Maximo Computerized Maintenance Management System.
ADDITIONAL INFORMATION
TCS America started their implementation effort in August, 2008. Although they were
able to perform a number of technical tasks, they were unable to complete the project
due to inadequate staffing and leadership on their part. As a result of these issues, the
initial implementation effort failed and the contract expired in July 2010.
Under the Beyond 2012 initiative, the project’s scope has extended beyond the
replacement of CMMS and now includes OCSD’s entire asset management
program. Maximo will become an integral component throughout all the OCSD
business units and will be implemented and configured to improve efficiency throughout
the enterprise. In order to minimize the project risks, the project has been divided into multiple phases. The initial phase will engage the vendor solely for the planning and
review process. The subsequent phases will be identified by OCSD following the
completion of this initial phase. OCSD will have the option of using the qualified firms to
propose on such subsequent phases.
On June, 16, 2011, OCSD issued a Request for Proposal (RFP) and on July 27, 2011,
eleven proposals were received from the following vendors:
· Total Resource Management, Inc. (TRM, Inc.)
· EMA Group
· Starboard
· Interloc
· Aquitas Solutions
· Genesis
· IBM
· Raintek/Gems
· Rentflow
· Synoptek Technology Assoc.
A panel consisting of seven OCSD staff reviewed and ranked each of the proposals in accordance with Resolution No. OCSD 07-04, Section 5.07.
After preliminary assessment and following the technical proposal evaluations, the
selection was narrowed down to four prospective vendors; interviews were conducted
on September 7, 2011. The proposal review panel ranked TRM, Inc. as the most qualified firm.
Page 3 of 3
All proposals were accompanied by a sealed fee proposal. The fee proposals were not opened until the proposal evaluation process was complete, interviews conducted and
the results compiled. Staff met with the top ranked firm and reviewed the Fee Proposal.
A negotiated amount was achieved.
Staff recommends awarding the professional agreement to TRM, Inc. in a not-to-exceed amount of $327,638.
PROPOSAL EVALUATION TABLE
EVALUATORS PROPOSERS & SCORE
TRM, Inc. Starboard EMA Interloc
Reviewer A 662 580 547.5 477
Reviewer B 592 485 52 567
Reviewer C 556 655 557 437
Reviewer D 557 560 507 542
Reviewer E 597 480 668 417
Reviewer F 727 470 487 527
Reviewer G 446 590 583 472
Overall Score 4137 3820 3878 3439
Ranking 1 3 2 4
Proposal Fee $441,643 $272,575 $311,510 $436,450
Negotiated Fee $327,638
CEQA
N/A
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
This request complies with authority levels of the Orange County Sanitation District’s
Delegation of Authority. This item has been budgeted under SP-100, Asset Management/CMMS System Replacement.
JDR:LT:RC:peb/jmf
Page 1 of 4
ADMINISTRATION COMMITTEE Meeting Date 10/12/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number
6
Item Number
12
Orange County Sanitation District
FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services
GENERAL MANAGER’S RECOMMENDATION
A. Adopt Resolution No. OCSD 11-16, Authorizing the Execution and Delivery by the
Orange County Sanitation District (Sanitation District) of an Installment Purchase
Agreement, a Trust Agreement, and a Continuing Disclosure Agreement in
connection with the execution and delivery of the Sanitation District Revenue
Refunding Certificate Anticipation Notes, Series 2011B, such Notes Evidencing Principal in an Aggregate Amount of Not to Exceed $155,000,000, Approving a
Notice of Intention to Sell, Authorizing the Distribution of a 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; and, B. Recommend to the Orange County Sanitation District Financing Corporation
approve the documents supporting and authorizing the Revenue Refunding
Certificate Anticipation Notes, Series 2011B in an amount not to exceed
$155,000,000.
SUMMARY
In September 2011, the Administration Committee and the Board of Directors authorized the execution and delivery of up to $155 million of Refunding Certificates of Participation.
The Board of Directors and the Financing Corporation will each be required to adopt
separate Resolutions to complete this refinancing. Drafts of these two Resolutions are attached for review. A Financing Corporation is required by the structure of the COPs and was formed in April 2000, 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 Orange County Sanitation Board.
The Sanitation District Resolution authorizes the execution and delivery of certain legal documents and the execution and delivery of Revenue Refunding Certificate
Anticipation Notes, Series 2011B, evidencing principal in an aggregate amount of not to
exceed $155,000,000.
Page 2 of 4
PRIOR COMMITTEE/BOARD ACTIONS
September 28, 2011 – Directed staff to pursue up to $155 million in one-year fixed-rate
Certificates of Participation (COP) notes to replace the one-year $157.4 million outstanding certificates of participation notes maturing in November 2011.
ADDITIONAL INFORMATION
The global financial crisis in 2008 had negatively impacted the financial strength and ratings of many financial institutions that provide bank liquidity facilities securing
variable rate bonds issued by municipal entities. Variable rate issues secured by banks
with the least favorable investor perception had experienced higher than expected
interest rate resets as investors were less willing to hold bonds secured by these weakening banks. In many cases, investors had tendered the bonds to the banks (Bank Bonds) to preempt any possibility of the liquidity bank not being able to provide
funds in the future.
In addressing the global financial crisis and uncertainty in the market place, the Sanitation District eliminated its exposure to higher reset rates and Bank Bonds associated with its outstanding Certificates of Participation (COP), Series 2006 variable
rate debt by refunding it with the one-year Certificate Anticipation Notes (CANs) Series
2008C. As this CANs issue matured, they have been replaced with one-year CANs
annually thereafter. Following is a summary of the results of each CAN issue:
· In November 2010, the Sanitation District replaced the maturing one-year 2009B
CANs with $157.4 million of Revenue Refunding Certificate Anticipation Notes,
Series 2010B (the 2010B CANs). The yield on the 2010B CANs is 0.36% for the one-year period ending November 23, 2011 and the all-in cost was 0.53%
· In December 2009, the Sanitation District replaced the maturing one-year 2008C
CANs with $165.865 million of Revenue Refunding Certificate Anticipation Notes, Series 2009B (the 2009B CANs). The yield on the 2009B CANs was 0.37% for the one-year period ending December 1, 2010 and the all-in cost was 0.56%.
· In December 2008, the Sanitation District proactively refunded the 2006 COPs with $176.115 million of Refunding COP Series 2008C Certificate Anticipation Notes (the 2008C CANs) to reduce its exposure to higher variable rate costs.
The yield on the 2008C CANs was 0.98% for a one-year period. The issuance of
the 2008C CANs allowed the Sanitation District to redeem the 2006 COPs at an
all-in cost of less than 1.25% and avoid paying a bank rate of 4.75% which would have been effective starting in January 2009.
Staff has again recommended refunding the 2010B CANs with a new one-year CAN
that will again enable the Sanitation District to lock-in a low rate for approximately one
year without encumbering its cash reserves. Given the size and structure, these CANs can be sold on a competitive basis in order to obtain the lowest interest rate possible.
Page 3 of 4
The Board of Directors and the Financing Corporation will each be required to adopt
separate Resolutions to complete this refinancing. Drafts of these two Resolutions are
attached for review. A Financing Corporation is required by the structure of the COPs
and was formed in April 2000, to satisfy this need. The Board of Directors of the Corporation is the same as the Board of Directors of the Sanitation District and the Corporation meets after an adjournment of the Sanitation District Board.
The Sanitation District Resolution authorizes the execution and delivery of certain legal
documents and the execution and delivery of Revenue Refunding Certificate Anticipation Notes, Series 2011B, evidencing principal in an aggregate amount of not to exceed $155,000,000 all as spelled out in the title as follows:
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE SANITATION DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT, AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION
WITH THE EXECUTION AND DELIVERY OF THE SANITATION DISTRICT REVENUE
REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2011B, SUCH NOTES
EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $155,000,000, APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF A NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT
IN CONNECTION WITH THE OFFERING AND SALE OF SUCH NOTES, AND
AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND
RELATED ACTIONS.” The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three
actions that are similarly enumerated in the title as follows:
“A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT
PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH
THE EXECUTION AND DELIVERY OF THE SANITATION DISTRICT REVENUE
REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2011B; AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT-TO-EXCEED $155,000,000 AND;
AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND NOTES AND
RELATED ACTIONS.”
Following is a chart listing the remaining steps to be completed for the issuance of the Revenue Refunding Certificate Anticipation Notes Series 2011B debt issuance:
October
Ø Board approval of legal and disclosure documents
Ø Financing Corporation approval of legal and disclosure documents
Ø Receive Ratings from Bond Rating Agencies
November Ø Receive Competitive Bids
Ø Closing
Ø Payment on 2010B CANs
Page 4 of 4
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
N/A
ATTACHMENTS
Bond documents may be viewed on OCSD’s webpage: http://www.ocsd.com/about/boardofdirectors/agendanminutes.asp. Following are the
bond documents included on the OCSD webpage:
1. Orange County Sanitation District Resolution, 11-16 2. Corporation Resolution, FC-16 3. Draft Trust Agreement (Orange County Sanitation District only)
4. Draft Installment Purchase Agreement
5. Draft Preliminary Official Statement and Appendix B
(Orange County Sanitation District only) 6. Draft Continuing Disclosure Agreement (Orange County Sanitation District only) 7. Draft Official Notice Inviting Bids (Orange County Sanitation District only)
8. Draft Notice of Intention to Sell (Orange County Sanitation District only)
* (Orange County Sanitation District only) means that the document is not approved by the Corporation
95196408.4
DRAFT OF
09/29/11
RESOLUTION NO. OCSD 11- 16
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 EXECUTION AND DELIVERY OF ORANGE COUNTY
SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE
ANTICIPATION NOTES, SERIES 2011B, SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $155,000,000, APPROVING A NOTICE OF INTENTION TO SELL,
AUTHORIZING THE DISTRIBUTION OF A NOTICE INVITING BIDS
AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE
OFFERING AND SALE OF SUCH NOTES AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS
WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the “Prior Project”) the District caused the execution and delivery of $154,665,000 in aggregate principal amount of Orange County Sanitation
District Revenue Refunding Certificate Anticipation Notes, Series 2010B, of which
$154,665,000 in principal amount is currently outstanding (the “Prior Certificates”); WHEREAS, the District desires to pay at maturity all of the Prior Certificates by paying all of the remaining principal components of the installment payment relating to the Prior
Certificates (the “Prior Installment Payment”), and the interest components thereof to the date of
maturity; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be
so paid, the District and the Orange County Sanitation District Financing Corporation (the “Corporation”) desire that the Corporation purchase the Prior Project from the District and the
District sell the Prior Project to the Corporation, and that the District then purchase the Prior
Project from the Corporation and the Corporation sell the Prior Project to the District, for the
installment payment (the “Installment Payment”) to be made by the District, pursuant to a new
installment purchase agreement (the “Installment Purchase Agreement”), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of up
to $155,000,000 in aggregate principal amount of Orange County Sanitation District Revenue
Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”) to be repaid from the sale
proceeds of future certificates of participation, other notes or obligations or lawfully available
funds of the District; WHEREAS, the Corporation intends to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to Union Bank, N.A., 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 at this meeting, with such changes,
2 95196408.4
insertions and omissions as are made pursuant to this Resolution, being referred to herein as the
“Trust Agreement”); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing
direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the District desires to provide for the public sale of the Notes in one or
more discrete sale transactions; WHEREAS, a form of the Notice of Intention to Sell to be published in connection with the public offering and sale of the Notes has been prepared (such Notice of Intention to Sell, in
the form presented to this meeting, with such changes, insertions and omissions as are made
pursuant to this Resolution, being referred to herein as the “Notice of Intention to Sell”); WHEREAS, a form of the Official Notice Inviting Bids to be distributed in connection with the public offering and sale of the Notes has been prepared (such Official Notice Inviting Bids, in the form presented to this meeting, with such changes, insertions and omissions as are
made pursuant to this Resolution, being referred to herein as the “Notice Inviting Bids”); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection
with the public offering of the Notes has been prepared (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Preliminary Official Statement”); WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), requires that the
underwriter thereof must have reasonably determined that the District has undertaken in a written agreement or contract for the benefit of the holders of the Notes to provide disclosure of certain
material events; WHEREAS, to cause such requirement to be satisfied, the District desires to enter into a
Continuing Disclosure Agreement with a dissemination agent to be named therein and the
Trustee (such Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to
herein as the “Continuing Disclosure Agreement”); WHEREAS, there have been prepared and submitted to this meeting forms of:
(1) the Installment Purchase Agreement;
(2) the Trust Agreement; (3) the Notice of Intention to Sell;
(4) the Notice Inviting Bids;
(5) the Preliminary Official Statement; and
3 95196408.4
(6) the Continuing Disclosure Agreement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened
and have been performed in regular and due time, form and manner as required by law, and the
District is now duly authorized and empowered, pursuant to each and every requirement of law,
to consummate such financing for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE DISTRICT DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of
Directors of the District (the “Board”) so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The Chair of the Board, and such other member of the Board as the Chair may
designate, the General Manager of the District, the Director of Finance and Administrative
Services of the District, and such other officers of the District as the Director of Finance and Administrative Services may designate (the “Authorized Officers”) are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the
Installment Purchase Agreement in the form submitted to this meeting, with such changes,
insertions and omissions as the Authorized Officer executing the same may require or approve,
such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes,
insertions and omissions shall not result in an aggregate principal amount of the Installment
Payment in excess of $155,000,000, shall not result in a true interest cost for the Installment
Payment in excess of 2.0% per annum and shall not result in an Installment Payment later than
November 23, 2012. 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 Notes evidencing principal in an aggregate
amount not to exceed $155,000,000, payable in the year and in the amounts, and evidencing
principal of and interest on the Installment Payment as specified in the Trust Agreement as finally executed, are hereby authorized and approved.
4 95196408.4
Section 5. The payment of the remaining principal components of the Prior
Installment Payment at maturity, and the interest components thereof, and the Prior Certificates evidencing interests therein, is hereby authorized and approved. Section 6. The form of Notice of Intention to Sell, in substantially the form submitted
to this meeting and made a part hereof as though set forth in full herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, is hereby
approved, and the use of the applicable Notice of Intention to Sell in connection with the offering and sale of a series of the Notes is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to cause one or more
Notices of Intention to Sell to be published in The Bond Buyer (or in such other financial
publication generally circulated throughout the State of California or reasonably expected to be
disseminated among prospective bidders for the Notes as an Authorized Officer shall approve as being in the best interests of the District) at least five days prior to the date set for the opening of bids under the applicable 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 the publishing of such Notice of Intention to Sell. Section 7. The Notice Inviting Bids, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby
approved, and the use of one or more Notices Inviting Bids in connection with the offering and
sale of the Notes is hereby authorized and approved. The terms and conditions of the offering
and sale of the Notes shall be as specified in the applicable Notice Inviting Bids. Bids for the purchase of the Notes shall be received at the time and place set forth in the applicable Notice
Inviting Bids. The Authorized Officers are each hereby authorized and directed, for and in the
name and on behalf of the District, to accept the bid for the Notes with the lowest true interest
cost, or to reject all bids therefor, in accordance with the terms of the applicable Notice Inviting
Bids. Section 8. The Preliminary Official Statement, in substantially the form presented to
this meeting and made a part hereof as though set forth in full herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, is hereby
approved, and the use of the Preliminary Official Statement in connection with the offering and
sale of the Notes is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the District that the Preliminary Official Statement is deemed
final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain
information permitted by Rule 15c2-12 to be omitted). The Authorized Officers are each hereby
authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Notes
a reasonable number of copies of the Preliminary Official Statement. Section 9. The preparation and delivery of a final Official Statement (the “Official
Statement”), and its use in connection with the offering and sale of the Notes, be and the same is
hereby authorized and approved. The Official Statement shall be in substantially the form of the
Preliminary Official Statement, with such changes, insertions and omissions as may be approved
by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and
5 95196408.4
directed to execute the final Official Statement and any amendment or supplement thereto, for
and in the name of the District. Section 10. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the District, to execute and deliver the Continuing Disclosure Agreement in
the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such
Authorized Officer. Section 11. The Authorized Officers are, and each of them hereby is, authorized and
directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Notes and the transactions contemplated by the notices, agreements and documents
referenced in this Resolution. The Authorized Officers are further authorized and directed to
execute and deliver such additional notes as may be necessary or desirable to pay the Notes at
maturity; provided, however, that the documents executed and delivered in connection with any such notes shall be in the form approved pursuant to this Resolution in connection with the Notes. Section 12. All actions heretofore taken by the officers and employees of the District
with respect to the execution, delivery and sale of the Notes, or in connection with or related to
any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 13. This Resolution shall take effect immediately upon its adoption.
6 95196408.4
PASSED AND ADOPTED at a regular meeting held on October 26, 2011. Chair
ATTEST:
Clerk of the Board APPROVED AS TO FORM:
General Counsel, Orange County
Sanitation District
95196408.4
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE ) I, Maria E . Ayala, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OCSD 11-16 was passed and adopted at a regular meeting of said Board on the 26th day of October, 2011, by the following vote, to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
Orange County Sanitation District this 26th day of October, 2011. Clerk of the Board of Directors
Orange County Sanitation District
95196415.4
DRAFT OF
09/29/11
RESOLUTION NO. FC-16
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION
AUTHORIZING THE EXECUTION AND DELIVERY BY THE
CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT
AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION
NOTES, SERIES 2011B, AUTHORIZING THE EXECUTION AND
DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN
AGGREGATE AMOUNT OF NOT TO EXCEED $155,000,000 AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS
WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the “Prior Project”) the Orange County Sanitation District (the “District”) caused the execution and delivery of $154,665,000 in aggregate principal
amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes,
Series 2010B, of which $154,665,000 in principal amount is currently outstanding (the “Prior
Certificates”); WHEREAS, the District desires to pay at maturity all of the Prior Certificates by paying
all of the remaining principal components of the installment payment relating to the Prior
Certificates (the “Prior Installment Payment”), and the interest components thereof to the
maturity date; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be so paid, the District and the Orange County Sanitation District Financing Corporation (the
“Corporation”) desire that the Corporation purchase the Prior Project from the District and the
District sell the Prior Project to the Corporation, and that the District then purchase the Prior
Project from the Corporation and the Corporation sell the Prior Project to the District, for the
installment payments (the “Installment Payment”) to be made by the District, pursuant to a new installment purchase agreement (the “Installment Purchase Agreement”), and the Corporation
and the District have agreed to finance such payment by causing the execution and delivery of up
to $155,000,000 in aggregate principal amount of Orange County Sanitation District Revenue
Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”) to be repaid from future
certificates of participation, other notes or obligations or lawfully available funds of the District; WHEREAS, the Corporation intends to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to Union Bank, N.A., 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 at this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Trust Agreement”);
2 95196415.4
WHEREAS, in consideration of such assignment and the execution and delivery of the
Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the Corporation desires to assist the District to provide for the public sale of
the Notes; WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Installment Purchase Agreement;
(b) the Trust Agreement; and (c) the Preliminary Official Statement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the
State of California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the actions authorized hereby do exist, have happened and
have been performed in regular and due time, form and manner as required by law, and the Corporation is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such actions for the purpose, in the manner and upon the terms herein
provided. NOW, THEREFORE, the Board of Directors of the Corporation DOES HEREBY
RESOLVE, DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the Corporation 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 $155,000,000, shall not result in a true interest cost for the Installment
Payments in excess of 2.0% per annum and shall not result in a final Installment Payment later than November 23, 2012. 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
3 95196415.4
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 Preliminary Official Statement, in substantially the form presented to
this meeting and made a part hereof as though set forth in full herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, is hereby
approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Notes is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the Corporation that the Preliminary Official Statement is
deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of
certain information permitted by Rule 15c2-12 to be omitted). The Authorized Officers are each
hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Notes a reasonable number of copies of the Preliminary Official Statement. Section 5. The execution and delivery of Notes evidencing principal in an aggregate
amount not to exceed $155,000,000, payable in the year and in the amounts, and evidencing
direct, undivided fractional interests in the Installment Payment, and the interest thereon, as
specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 6. The Authorized Officers of the Corporation are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to
do and cause to be done any and all acts and things necessary or proper for carrying out the
execution and delivery of the Notes and the transactions contemplated by the agreements or
documents referenced in this Resolution. The Authorized Officers are further authorized and directed to assist the District in delivering such additional notes as may be necessary or desirable
to pay the Notes at maturity; provided, however, that the documents executed and delivered in
connection with any such notes shall be in the form approved pursuant to this Resolution in
connection with the Notes. Section 7. All actions heretofore taken by the officers and agents of the Corporation with respect to the execution, delivery and sale of the Notes, or in connection with or related to
any of the agreements or documents referenced in this Resolution, are hereby approved,
confirmed and ratified. Section 8. This Resolution shall take effect immediately upon its adoption.
4 95196415.4
PASSED AND ADOPTED at a meeting held on October 26, 2011. President, Orange County Sanitation
District Financing Corporation
ATTEST:
Secretary, Orange County Sanitation District Financing Corporation APPROVED AS TO FORM: General Counsel, Orange County
Sanitation District Financing
Corporation
95196415.4
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE ) I, Maria E . Ayala, Secretary of the Orange County Sanitation District Financing
Corporation, do hereby certify that the foregoing Resolution No. FC-16 was passed and adopted at
a regular meeting of said Board on the 26th day of October, 2011, 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 26th day of October, 2011. Secretary of the
Orange County Sanitation District Financing Corporation
DRAFT OF
09/29/11
TRUST AGREEMENT
by and among
UNION BANK, N.A., as Trustee,
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
and
ORANGE COUNTY SANITATION DISTRICT Dated as of November 1, 2011
Relating to
$
Orange County Sanitation District
Revenue Refunding Certificate Anticipation Notes, Series 2011B
95196426.5
i 95196426.5
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL
SECURITY
Section 1.01. Definitions........................................................................................................ 2 Section 1.02. Definitions in Installment Purchase Agreement .............................................. 8
Section 1.03. Equal Security .................................................................................................. 8
ARTICLE II
TERMS AND CONDITIONS OF NOTES
Section 2.01. Preparation and Delivery of Notes................................................................... 9 Section 2.02. Denomination, Medium and Dating of Notes .................................................. 9
Section 2.03. Payment Date of Notes; Interest Computation ................................................ 9
Section 2.04. Form of Notes .................................................................................................. 9
Section 2.05. Execution of Notes and Replacement Notes.................................................... 9 Section 2.06. Transfer and Payment of Notes; Exchange of Notes ....................................... 9 Section 2.07. Note Registration Books ................................................................................ 10
Section 2.08. Reserved......................................................................................................... 10
Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen................................................... 10
Section 2.10. Book-Entry System ........................................................................................ 11
ARTICLE III PROCEEDS OF NOTES
Section 3.01. Delivery of Notes ........................................................................................... 13
Section 3.02. Deposit and Transfer of Proceeds of Notes ................................................... 13
Section 3.03. Costs of Issuance Fund .................................................................................. 13
ARTICLE IV NO PREPAYMENT OF NOTES
Section 4.01. No Prepayment............................................................................................... 13
ARTICLE V
ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS
Section 5.01. Assignment and Pledge .................................................................................. 13 Section 5.02. Installment Payment Fund ............................................................................. 14
Section 5.03. Reserved......................................................................................................... 14
Section 5.04. Reserved......................................................................................................... 14
Section 5.05. Investment of Moneys.................................................................................... 14 Section 5.06. Brokerage Confirmations............................................................................... 15
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement ................................................................ 15
Section 6.02. Compliance with Installment Purchase Agreement ....................................... 15 Section 6.03. Compliance with Master Agreement ............................................................. 16
ii 95196426.5
TABLE OF CONTENTS
(continued)
Page
Section 6.04. Observance of Laws and Regulations ............................................................ 16
Section 6.05. Other Liens..................................................................................................... 16
Section 6.06. Prosecution and Defense of Suits .................................................................. 16 Section 6.07. Accounting Records and Statements ............................................................. 16 Section 6.08. Tax Covenants ............................................................................................... 17
Section 6.09. Continuing Disclosure ................................................................................... 20
Section 6.10. Further Assurances......................................................................................... 20
ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default ........................................................................ 20
Section 7.02. Other Remedies of the Trustee ...................................................................... 21
Section 7.03. Non-Waiver.................................................................................................... 21 Section 7.04. Remedies Not Exclusive ................................................................................ 21 Section 7.05. Application of Amounts After Default .......................................................... 22
Section 7.06. Trustee May Enforce Claims Without Possession of Notes .......................... 22
Section 7.07. Limitation on Suits......................................................................................... 22
Section 7.08. No Liability by the Corporation to the Owner ............................................... 23 Section 7.09. No Liability by the District to the Owners..................................................... 23 Section 7.10. No Liability of the Trustee to the Owners ..................................................... 23
ARTICLE VIII
THE TRUSTEE
Section 8.01. Employment of the Trustee; Duties ............................................................... 23 Section 8.02. Removal and Resignation of the Trustee ....................................................... 24 Section 8.03. Compensation and Indemnification of the Trustee ........................................ 25
Section 8.04. Protection of the Trustee ................................................................................ 25
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement ........................................................................... 27 Section 9.02. Disqualified Notes ......................................................................................... 28
Section 9.03. Endorsement or Replacement of Notes After Amendment or
Supplement .................................................................................................... 28
Section 9.04. Amendment by Mutual Consent .................................................................... 28
ARTICLE X DEFEASANCE
Section 10.01. Discharge of Notes and Trust Agreement...................................................... 28
Section 10.02. Unclaimed Moneys ........................................................................................ 29
ARTICLE XI MISCELLANEOUS
Section 11.01. Benefits of Trust Agreement.......................................................................... 30
iii 95196426.5
TABLE OF CONTENTS
(continued)
Page
Section 11.02. Successor Deemed Included in all References to Predecessor ...................... 30
Section 11.03. Execution of Documents by Owners ............................................................. 30
Section 11.04. Waiver of Personal Liability .......................................................................... 31 Section 11.05. Reserved......................................................................................................... 31 Section 11.06. Content of Notes ............................................................................................ 31
Section 11.07. Funds and Accounts ....................................................................................... 31
Section 11.08. Article and Section Headings, Gender and References ................................. 32
Section 11.09. Partial Invalidity............................................................................................. 32 Section 11.10. California Law ............................................................................................... 32 Section 11.11. Notices ........................................................................................................... 32
Section 11.12. Effective Date ................................................................................................ 33
Section 11.13. Execution in Counterparts.............................................................................. 33
EXHIBIT A – FORM OF NOTE
95196426.5
TRUST AGREEMENT
THIS TRUST AGREEMENT (this “Trust Agreement”), is dated as of November 1, 2011, by and among UNION BANK, N.A., 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”).
W I T N E S S ETH : WHEREAS, to refinance the acquisition, construction and installation of certain
improvements to its wastewater system (the “Prior Project”) the District caused the execution
and delivery of $154,665,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2010B, of which
$154,665,000 in principal amount is currently outstanding (the “Prior Notes”); WHEREAS, the District desires to pay at maturity all of the Prior Notes by paying all of
the principal component of the installment payment relating to the Prior Notes (the “Prior
Installment Payment”), and the interest component thereof, thereby causing all of the Prior Notes to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment, the
District and the Corporation desire that the Corporation purchase the Prior Project from the
District and the District sell the Prior Project to the Corporation, and that the District then
purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the “Installment Payment”) to be made by the District,
pursuant to a new installment purchase agreement (the “Installment Purchase Agreement”), and
the Corporation and the District have agreed to finance such payment by causing the execution
and delivery of $ in aggregate principal amount of Orange County Sanitation
District Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”) evidencing direct, fractional undivided interests in the Installment Payment and the interest
thereon, to be made by the District pursuant to the Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation, the District has established and
declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and
secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to the Trustee; and 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,
2 95196426.5
form and manner as required by law, and the parties hereto are now duly authorized to execute
and deliver this Trust Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the
context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Notes and of any certificate, opinion,
request or other document mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the
terms defined herein: “Authorized Corporation Representative” means the President, the Vice President, the Treasurer and the Secretary of the Corporation, and any other Person authorized by the President
of the Corporation to act on behalf of the Corporation under or with respect to this Trust
Agreement. “Authorized Denominations” means $5,000 and integral multiples thereof. “Authorized District Representative” means the General Manager of the District, the 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 Notes. “Book-Entry Notes” means the Notes registered in the name of the nominee of DTC, or
any successor securities depository for the Notes, as the Owner thereof pursuant to the terms and
provisions of Section 2.10 hereof. “Business Day” means a day other than (a) Saturday or Sunday, (b) a day on which
banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or
obligated by law or executive order to be closed. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of
DTC with respect to the Notes. “Closing Date” means November 10, 2011. “Code” means the Internal Revenue Code of 1986.
3 95196426.5
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement,
dated as of the date hereof, by and between the District and Digital Assurance Certification LLC, as dissemination agent thereunder, as originally executed and as it may from time to time be amended in accordance with the 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 Notes, including, but not limited to, all printing and document preparation expenses in connection with this Trust Agreement, the Installment Purchase Agreement, the Notes and any preliminary official
statement and final official statement pertaining to the Notes, rating agency fees, market study
fees, legal fees and expenses of counsel with respect to the execution and delivery of the Notes,
the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the execution and delivery of the Notes, to the extent such fees and expenses are approved by the District. “Costs of Issuance Fund” means the fund by that name established in accordance with
Section 3.03 hereof. “Depository” means the securities depository acting as Depository pursuant to Section 2.10 hereof. “District” means the Orange County Sanitation District, a county sanitation district
organized and existing under the laws of the State, and any successor thereto. “DTC” means The Depository Trust Company, New York, New York and its successors. “Event of Default” shall have the meaning set forth in Section 6.01 of the Installment Purchase Agreement. “Government Obligations” means any of the following which are noncallable by the
issuer thereof except to the extent not permitted by the laws of the State as an investment for the
moneys to be invested therein at the time of investment:
(i) (a) direct general obligations of the United States of America, (b) obligations the payment of the principal of and interest on which are unconditionally
guaranteed as to the full and timely payment by the United States of America or (c) any
fund or other pooling arrangement whose assets consist exclusively of the obligations
listed in clause (a) or (b) of this clause (i) and which is rated at least “P-1” by Moody’s;
provided that, such obligations shall not include unit investment trusts or mutual 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);
4 95196426.5
(iii) bonds, debentures or notes issued by any of the following federal
agencies: Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation or Federal National Mortgage Association; provided, that such bonds, debentures or notes shall be the senior obligations of such agencies (including participation certificates) and
have the same ratings by Moody’s and S&P as the obligations specified in clause (i); and (iv) bonds, debentures or notes issued by any Federal agency hereafter created
by an act of Congress, the payment of the principal of and interest on which are unconditionally guaranteed by the United States of America as to the full and timely payment; provided, that, such obligations shall not include unit investment trusts or
mutual fund obligations. “Installment Payment Fund” means the fund by that name established in accordance
with Section 5.02 hereof. “Installment Payment” means the Installment Payment required to be made by the District pursuant to Section 3.02 of the Installment Purchase Agreement. “Installment Purchase Agreement” means the Installment Purchase Agreement, dated
as of the date hereof, by and between the District and the Corporation, as originally executed and
as it may from time to time be amended in accordance with the provisions thereof. “Interest Account” means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. “Letter of Representations” means the letter of the District delivered to and accepted by
the Depository on or prior to the delivery of the Notes as Book-Entry Notes setting forth the
basis on which the Depository serves as depository for such Book-Entry Notes, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute
Depository. “Master Agreement” means the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation, as originally executed and as it
may from time to time be amended or supplemented in accordance with the terms thereof. “Maturity Date” means November 9, 2012. “Moody’s” means Moody’s Investors Service, a corporation organized and existing
under the laws of the State of Delaware, its successors and assigns, except that if such
corporation shall no longer perform the function of a securities rating agency for any reason, the
term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. “Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.10 hereof. “Notes” means the Orange County Sanitation District Revenue Refunding Certificates of
Participation (Certificate Anticipation Notes), Series 2011B, also known as the Orange County
5 95196426.5
Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B, executed
and delivered by the Trustee pursuant hereto. “Opinion of Counsel” means a written opinion of Fulbright & Jaworski L.L.P. or any other counsel of recognized national standing in the field of law relating to municipal bonds,
appointed and paid by the District. “Outstanding,” when used as of any particular time with reference to Notes, means
(subject to the provisions of Section 9.02 hereof) all Notes except (a) Notes previously canceled by the Trustee or delivered to the Trustee for cancellation, (b) Notes paid or deemed to have been paid within the meaning of Section 10.01 hereof, and (c) Notes in lieu of or in substitution for
which other Notes shall have been executed and delivered by the Trustee pursuant to
Section 2.09 hereof. “Owner” means any Person who shall be the registered owner of any Outstanding Note as indicated in the registration books of the Trustee required to be maintained pursuant to Section 2.07 hereof. “Participants” means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Book-Entry Notes as securities depository. “Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Agreement. “Permitted Investments” means any of the following, except to the extent not permitted
by the laws of the State as an investment for the moneys to be invested therein at the time of
investment:
(1) Government Obligations; (2) Bonds, debentures, notes, participation certificates or other evidences of
indebtedness issued, or the principal of and interest on which are unconditionally
guaranteed, by the Federal Intermediate Credit Bank, the Federal Home Loan Bank
System, the Government National Mortgage Association or any other agency or
instrumentality of or corporation wholly owned by the United States of America when such obligations are backed by the full faith and credit of the United States for the full
and timely payment of principal and interest; (3) Obligations of any state of the United States or any political subdivision
thereof, which at the time of investment are rated “Aa3” or higher by Moody’s and
“AA-” or higher by S&P; or which are rated by Moody’s “VMIG1” or better and by S&P “A-1+” or better with respect to commercial paper, or “VMIG1” and “SP-1”,
respectively, with respect to municipal notes; (4) Bank time deposits evidenced by certificates of deposit, deposit accounts,
and bankers’ acceptances, issued by any bank, trust company or national banking
association insured by the Federal Deposit Insurance Corporation (including the Trustee); provided that (a) such bank, trust company or national banking association be rated
6 95196426.5
“Aa3” or better by Moody’s and “AA-” or better by S&P; and (b) the aggregate of such
bank time deposits and bankers’ acceptances issued by any bank, trust company or banking association does not exceed at any one time 10% of the aggregate of the capital stock, surplus and undivided profits of such bank, trust company or banking association
and that such capital stock, surplus and undivided profits shall not be less than
$15,000,000; (5) Repurchase agreements with any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation (including the Trustee), with subsidiaries (of a parent company), provided the obligations of the subsidiary under
the agreement are unconditionally guaranteed by the parent, or with any government
bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York,
which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph (1) or (2) of this definition, provided that either such bank, trust company or national banking association which (or
senior debt or claims paying ability of the financial entity’s guarantor) is rated, at the time
of investment, “Aa3” or better by Moody’s and “AA-” or better by S&P; (6) Repurchase agreements with maturities of not more than one year entered into with financial institutions such as banks or trust companies organized under state law or national banks or banking associations (including the Trustee), insurance companies or
government bond dealers reporting to, trading with, and recognized as a primary dealer
by, the Federal Reserve Bank of New York and a member of the Securities Investor
Protection Corporation or with a dealer or parent holding company that is rated, at the time of investment, or whose long-term debt obligations (or senior debt or claims paying
ability of the financial entity’s guarantor) are rated, at the time of investment, “Aa3” or
better by Moody’s and “AA-” or better by S&P, provided such repurchase agreements are
in writing, secured by obligations described in paragraphs (1) and (2) of this definition
having a fair market value, exclusive of accrued interest, at least equal to the amount invested in the repurchase agreements and in which the Trustee has a perfected first lien
in, and retains possession of, such obligations free from all third party claims; (7) Investment agreements, forward purchase agreements and reserve fund put
agreements with any corporation, including banking or financial institutions, or
agreements entered into with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, the
corporate debt of which (or senior debt or claims paying ability of the financial entity’s
guarantor) is rated, at the time of investment, “Aa3” or better by Moody’s and “AA-” or
better by S&P;
(8) Guaranteed investment contracts or similar funding agreements issued by insurance companies, provided that either the long term corporate debt of such insurance
company, at the time of investment, is rated, at the time of investment, “Aa3” or better by
Moody’s and “AA-” or better by S&P or which agreements are fully and continuously
secured by a valid and perfected first priority security interest in obligations described in
paragraph (1) or (2) of this definition, or that the following conditions are met: (a) the market value of the collateral is maintained at levels acceptable to Moody’s and S&P,
7 95196426.5
(b) the Trustee or a third party acting solely as agent for the Trustee has possession of the
collateral, (c) the Trustee has a perfected first priority security interest in the collateral, (d) the collateral is free and clear of third-party liens, and (e) failure to maintain the requisite collateral level will require the Trustee to liquidate collateral; (9) Corporate commercial paper rated “P-1” or better by Moody’s and “A-1+”
or better by S&P at the time of investment; (10) Taxable government money market portfolios which are rated “AAAm” or “AAAm-G” by S&P and “P-1” by Moody’s (including funds for which the Trustee or an affiliate provides investment advice or similar services); (11) Deposits with the Local Agency Investment Fund of the State, as may
otherwise be permitted by law; and (12) Shares in the Franklin Adjustable U.S. Government Securities Fund or any other similar fund having at least $1,000,000,000 in assets and invested solely in securities directly guaranteed by the U.S. government or its agencies and rated “AAAf”
by S&P or a comparable rating by Moody’s. “Person” means an individual, corporation, limited liability company, firm, association,
partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Account” means the account by that name within the Installment Payment
Fund established in accordance with Section 5.02 hereof. “Principal Office” means the Trustee’s principal corporate trust office in Los Angeles,
California. “Prior Notes” has the meaning ascribed thereto in the recitals hereto. “Prior Notes Trustee” means Union Bank, N.A., as trustee for the Prior Notes. “Record Date” means, with respect to the interest payable on the Maturity Date or any
other date fixed for payment, the 15th day of the calendar month immediately preceding such
date, whether or not such day is a Business Day.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., a corporation organized and existing under the laws of the State of New York,
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. “Tax Certificate” means the Tax Certificate executed by the District at the time of
execution and delivery of the Notes relating to the requirements of section 148 of the Code, as
8 95196426.5
originally executed and as it may from time to time be amended in accordance with the
provisions thereof. “Trust Agreement” means this Trust Agreement, dated as of November 1, 2011, 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 Union Bank, N.A., a national banking association duly organized and
existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in Section 10.02 hereof. “Written Certificate” and “Written Request” mean (a) with respect to the Corporation,
a written certificate or written request, respectively, signed in the name of the Corporation by an
Authorized Corporation Representative, and (b) with respect to the District, a written certificate
or written request, respectively, signed in the name of the District by an Authorized District Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument. Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise
herein defined and unless the context otherwise requires, the terms defined in the Installment Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein,
such definitions to be equally applicable to both the singular and plural forms of any of the terms
defined therein. With respect to any defined term which is given a different meaning under this
Trust Agreement than under the Installment Purchase Agreement, as used herein it shall have the meaning given herein. Section 1.03. Equal Security. In consideration of the acceptance of the Notes by the
Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the
Trustee and the Owners to secure the full and final payment of the interest and principal
evidenced by the Notes which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and 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 Notes over any other
Notes by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein.
9 95196426.5
ARTICLE II
TERMS AND CONDITIONS OF NOTES Section 2.01. Preparation and Delivery of Notes. The Trustee is hereby authorized,
upon the Written Request of the District, to execute and deliver the Notes in the aggregate
principal amount of $ , evidencing the aggregate principal amount of the Installment
Payment and each evidencing a direct, fractional undivided interest in the Installment Payment, and the interest thereon. The Installment Payment evidenced by each Note shall constitute the
principal evidenced thereby and the interest on such Installment Payment shall constitute the
interest evidenced thereby. The Notes shall be numbered, with or without prefixes, as directed
by the Trustee. Section 2.02. Denomination, Medium and Dating of Notes. The Notes shall be designated as the “Orange County Sanitation District Revenue Refunding Certificate
Anticipation Notes, Series 2011B” and shall be prepared in the form of fully registered Notes,
without coupons, in Authorized Denominations and shall be payable in lawful money of the
United States of America. The Notes shall be dated the Closing Date and shall evidence interest
accruing from the Closing Date until the Maturity Date. Section 2.03. Payment Date of Notes; Interest Computation. Except as otherwise
provided in the Letter of Representations, interest and principal evidenced by the Notes shall
become due and payable on the Maturity Date. Interest evidenced by the Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months. Except as
otherwise provided in the Letter of Representations, payment of interest evidenced by the Notes shall be made to the Owners thereof (as determined at the close of business on the Record Date
next preceding the Maturity Date or any other date fixed for payment) by check or draft of the
Trustee mailed to the address of each such Owner as it appears on the registration books
maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may be
furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the Letter of Representations, payment of principal evidenced by the Notes, on the Maturity Date,
shall be made only upon presentation and surrender of the Notes at the Principal Office. Section 2.04. Form of Notes. The Notes shall be in substantially the form of Exhibit A
hereto, with necessary or appropriate insertions, omissions and variations as permitted or
required hereby. Section 2.05. Execution of Notes and Replacement Notes. The Notes shall be
executed by the Trustee by the manual signature of an authorized signatory of the Trustee. The
Trustee shall deliver replacement Notes in the manner and as contemplated by this Article. Such
replacement Notes, shall be executed as herein provided and shall be in Authorized
Denominations. Section 2.06. Transfer and Payment of Notes; Exchange of Notes. Each Note is
transferable by the Owner thereof, in person or by his attorney duly authorized in writing, at the
Principal Office, on the registration books maintained by the Trustee pursuant to the provisions
of Section 2.07 hereof, upon surrender of such Note for cancellation accompanied by delivery of
10 95196426.5
a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee
may treat the Owner of any Note as the absolute owner of such Note for all purposes, whether or not the principal or interest evidenced by such Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal
evidenced by such Note shall be made only to such Owner, which payments shall be valid and
effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or
sums so paid. Whenever any Note shall be surrendered for transfer, the Trustee shall execute and deliver a new Note or Notes evidencing principal in the same aggregate amount. The Trustee
shall require the payment by any Owner requesting such transfer of any tax or other
governmental charge required to be paid with respect to such transfer. Each Note may be exchanged at the Principal Office for Notes evidencing principal in a like aggregate principal amount in such Authorized Denominations as the Owner thereof may request. The Trustee shall require the payment by the Owner requesting such exchange of any
tax or other governmental charge required to be paid with respect to such exchange. Section 2.07. Note Registration Books. The Trustee shall keep at its Principal Office
sufficient books for the registration and transfer of the Notes, which books shall be available for inspection and copying by the District at reasonable hours and under reasonable conditions; and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may
prescribe, register or transfer the Notes on such books as hereinabove provided. Section 2.08. Reserved.
Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become mutilated, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note
evidencing a like principal amount and number in exchange and substitution for the Note so
mutilated, but only upon surrender to the Trustee of the Note so mutilated. Every mutilated Note
so surrendered to the Trustee shall be canceled by it. If any Note shall be lost, destroyed or
stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given,
the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note
evidencing a like principal amount, numbered as the Trustee shall determine, in lieu of and in
substitution for the Note so lost, destroyed or stolen. The Trustee may require payment of a sum
not exceeding the actual cost of preparing each new Note executed and delivered by it under this Section and of the expenses which may be incurred by it under this Section. Any Note executed
and delivered under the provisions of this Section in lieu of any Note alleged to be lost,
destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all
other Notes executed and delivered hereunder, and the Trustee shall not be required to treat both
the original Note and any replacement Note as being Outstanding for the purpose of determining the amount of Notes which may be executed and delivered hereunder or for the purpose of
determining any percentage of Notes Outstanding hereunder, but both the original and
replacement Note shall be treated as one and the same. Notwithstanding any other provision of
this Section, in lieu of executing and delivering a new Note for a Note which has been lost,
11 95196426.5
destroyed or stolen and which evidences principal that is then payable, the Trustee may make
payment of such Note to the Owner thereof if so instructed by the District. Whenever in this Trust Agreement provision is made for the cancellation by the Trustee of any Notes, the Trustee shall destroy such Notes and deliver a certificate of such destruction to
the District. Section 2.10. Book-Entry System. (a) The Notes shall be initially executed and
delivered as Book-Entry Notes, and the Notes shall be in the form of a separate single fully registered Note. Upon initial execution and delivery of the Notes, the ownership of each Note shall be registered in the registration books maintained by the Trustee in the name of the
Nominee, as nominee of the Depository. Payment of principal or interest evidenced by any
Book-Entry Note registered in the name of the Nominee shall be made on the Maturity Date by
wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address which is, on the Record Date, shown for the Nominee in the registration books
maintained by the Trustee. (b) With respect to Book-Entry Notes, the District, the Corporation and the Trustee
shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Notes. Without limiting the immediately preceding sentence, the District, the Corporation and the Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any
Participant with respect to any ownership interest in Book-Entry Notes, (ii) the delivery to any
Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any notice with respect to Book-Entry Notes, (iii) the selection by
the Depository and its Participants of the beneficial interests in Book-Entry Notes to be prepaid
in the event Notes are prepaid in part, (iv) the payment to any Participant or any other Person,
other than an Owner as shown in the registration books maintained by the Trustee, of any
amount with respect to principal or interest evidenced by Book-Entry Notes, or (v) any consent given or other action taken by the Depository as Owner. (c) The District, the Corporation and the Trustee may treat and consider the Person in
whose name each Book-Entry Note is registered in the registration books maintained by the
Trustee as the absolute Owner of such Book-Entry Note for the purpose of payment of principal
and interest evidenced by such Note, for the purpose of selecting any Notes, or portions thereof, to be prepaid, for the purpose of giving notices of matters with respect to such Note, for the
purpose of registering transfers with respect to such Note, for the purpose of obtaining any
consent or other action to be taken by Owners and for all other purposes whatsoever, and the
District, the Corporation and the Trustee shall not be affected by any notice to the contrary.
(d) Reserved. (e) The Trustee shall pay all principal and interest evidenced by the Notes to the
respective Owner, as shown in the registration books maintained by the Trustee, or his respective
attorney duly authorized in writing, and all such payments shall be valid and effective to fully
satisfy and discharge the obligations with respect to payment of principal and interest evidenced
12 95196426.5
by the Notes to the extent of the sum or sums so paid. No Person other than an Owner, as shown
in the registration books maintained by the Trustee, shall receive a Note evidencing principal and interest evidenced by the Notes. Upon delivery by the Depository to the Owners, the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new
nominee in place of the Nominee, and subject to the provisions herein with respect to Record
Date, the word Nominee in this Trust Agreement shall refer to such nominee of the Depository. (f) To qualify the Book-Entry Notes for the Depository’s book-entry system, the District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Corporation,
the District or the Trustee any obligation whatsoever with respect to Persons having, interests in
such Book-Entry Notes other than the Owners, as shown on the registration books maintained by
the Trustee. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the District, the District, the Corporation and the Trustee shall take such
other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify
Book-Entry Notes for the Depository’s book-entry program. (g) If the District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Notes and that such Notes should therefore be made available and notifies the Depository and the Trustee of such determination, the Depository will
notify the Participants of the availability through the Depository of certificated Notes. In such
event, the Trustee shall transfer and exchange certificated Notes as requested by the Depository
and any other Owners in appropriate amounts. If (i) the Depository determines not to continue to act as securities depository for Book-Entry Notes, or (ii) the Depository shall no longer so act
and gives notice to the Trustee of such determination, then the District shall discontinue the
Book-Entry system with the Depository. If the District determines to replace the Depository
with another qualified securities depository, the District shall prepare or direct the preparation of
a new single, separate, fully registered Note for such Book-Entry Notes, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails
to identify another qualified securities depository to replace the Depository, then the Notes shall
no longer be restricted to being registered in the registration books maintained by the Trustee in
the name of the Nominee, but shall be registered in whatever name or names the Owners
transferring or exchanging such Notes shall designate, in accordance with the provisions of Sections 2.06 and 2.09 hereof. Whenever the Depository requests the District to do so, the
District will cooperate with the Depository in taking appropriate action after reasonable notice
(i) to make available one or more separate certificates evidencing the Book-Entry Notes to any
Participant having Book-Entry Notes credited to its account with the Depository, and (ii) to
arrange for another securities depository to maintain custody of certificates evidencing the Book- Entry Notes. (h) Notwithstanding any other provision of this Trust Agreement to the contrary, if
DTC is the sole Owner of the Notes, so long as any Book-Entry Note is registered in the name of
the Nominee, all payments of principal and interest evidenced by such Note and all notices with
respect to such Note shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository.
13 95196426.5
(i) In connection with any notice or other communication to be provided to Owners
pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to any consent or other action to be taken by Owners, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15
calendar days in advance of such record date to the extent possible. Notice to the Depository
shall be given only when DTC is the sole Owner of the Notes. ARTICLE III
PROCEEDS OF NOTES
Section 3.01. Delivery of Notes. The Trustee is hereby authorized to execute the Notes and deliver them to the original purchaser thereof upon receipt of a Written Request of the
District and on receipt of the proceeds of sale of the Notes. Section 3.02. Deposit and Transfer of Proceeds of Notes. The net proceeds received
or acknowledged by the Trustee from the sale of the Notes in the amount of $
be deposited by the Trustee or transferred as follows:
shall
(a) the Trustee shall deposit in the Costs of Issuance Fund the amount of $ ; and (b) the Trustee shall cause to be transferred to the Prior Notes Trustee for deposit in
the Installment Payment Fund relating to the Prior Notes the amount of $ . Section 3.03. Costs of Issuance Fund. The Trustee shall establish and maintain a separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall
be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be
deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the
Costs of Issuance Fund on such dates and in such amounts as are necessary to pay Costs of
Issuance, in each case upon the Written Request of the District stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred
and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is
six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the
Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of
Issuance Fund shall be closed.
ARTICLE IV NO PREPAYMENT OF NOTES
Section 4.01. No Prepayment. The Notes are not subject to prepayment prior to the
Maturity Date.
14 95196426.5
ARTICLE V
ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge. The Corporation hereby transfers, conveys and
assigns to the Trustee, for the benefit of the Owners, all of the Corporation’s rights, title and
interest in and to the Installment Purchase Agreement (excepting its rights to indemnification
thereunder), including the right to receive the Installment Payment, and the interest thereon, from the District and the right to exercise any remedies provided therein in the event of a default by
the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment,
solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this
Trust Agreement. All of the Installment Payment, and the interest thereon, shall be paid directly
by the District to the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee immediately upon the receipt thereof. To secure the respective rights of the Owners to the payments required to be made thereto
as provided herein, the Corporation and the District hereby irrevocably pledge to the Trustee, for
the benefit of the Owners, all of their right, title and interest, if any, in and to all amounts on
deposit from time to time in the funds and accounts established hereunder. This pledge shall constitute a first lien on the amounts on deposit in such funds and accounts. Section 5.02. Installment Payment Fund. (a) The Trustee shall establish and maintain
the Installment Payment Fund until the required Installment Payment and the interest thereon, is
paid in full pursuant to the Installment Purchase Agreement and until the first date upon which
the Notes are no longer Outstanding. The Trustee shall deposit in the Installment Payment Fund the Installment Payment, 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 until the required Installment Payment, and the interest thereon, is paid in full pursuant
to the Installment Purchase Agreement and until the first date upon which the Notes are no
longer Outstanding. The moneys in each of such accounts shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses
herein authorized. (i) Interest Account. The Trustee, on the Maturity Date, shall deposit in the
Interest Account that amount of moneys representing the interest on the Installment
Payment coming due on such date. Moneys in the Interest Account shall be used by the Trustee for the purpose of paying the interest evidenced by the Notes when due and
payable. (ii) Principal Account. The Trustee, on the Maturity Date, shall deposit in the
Principal Account that amount of moneys representing the Installment Payment coming
15 95196426.5
due on such date. Moneys in the Principal Account shall be used by the Trustee for the
purpose of paying the principal evidenced by the Notes when due and payable. Section 5.03. Reserved.
Section 5.04. Reserved.
Section 5.05. Investment of Moneys. Except as otherwise provided herein, all moneys
in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by
the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written Request of the District at least two (2) Business Days prior to the making of such investment. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments
maturing not later than the date on which it is estimated that such moneys will be required for the
purposes specified in this Trust Agreement. Absent timely written direction from the District,
the Trustee shall invest any funds held by it in Permitted Investments described in clause (10) of the definition thereof. Permitted Investments that are registerable securities shall be registered in the name of the Trustee. All interest, profits and other income received from the investment of
moneys in any fund or account established pursuant to this Trust Agreement shall be retained
therein. Permitted Investments acquired as an investment of moneys in any fund or account established under this Trust Agreement shall be credited to such fund or account. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund
shall be valued by the Trustee at the market value thereof. The Trustee or an affiliate may act as principal or agent in the making or disposing of any
investment. The Trustee shall sell or present for redemption any Permitted Investment whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund or account to which such Permitted Investment is credited, and the
Trustee shall not be liable or responsible for any loss resulting from any investment made or sold
pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any
of the funds and accounts established hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by
this Section, to deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person
or dealing as principal for its own account. Section 5.06. Brokerage Confirmations. The District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the
District the right to receive brokerage confirmations of securities transactions under this Trust
Agreement, the District specifically waives receipt of such confirmations to the extent permitted
by law. The Trustee is required hereunder to furnish the District with periodic cash transaction
statements which include detail for all securities transactions made by the Trustee on behalf of the District hereunder.
16 95196426.5
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Notes in any manner other than in accordance with the provisions hereof, and the
Corporation and the District will not suffer or permit any default by them to occur hereunder, but
will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants
and terms hereof required to be complied with, kept, observed and performed by them. Section 6.02. Compliance with Installment Purchase Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terms contained in the Installment Purchase Agreement required to be
complied with, kept, observed and performed by them and, together with the Trustee, will
enforce the Installment Purchase Agreement against the other party thereto in accordance with its
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 Payment, or the
interest thereon, or involving the rights of the Trustee or any Owner hereunder; provided, however, that the Trustee or any Owner at its or his election may appear in and defend any such action, suit or other proceeding. Section 6.07. Accounting Records and Statements. The Trustee will keep proper
accounting records in which complete and correct entries shall be made of all transactions made
by the Trustee relating to the receipt, deposit and disbursement of the Installment Payment, and the interest thereon, and such accounting records shall be available for inspection by the
17 95196426.5
Corporation and the District at reasonable hours and under reasonable conditions. The Trustee
shall not be obligated to provide an accounting for any fund or account that (a) has a balance of $0.00 and (b) has not had any activity since the last reporting date. The Trustee will, upon written request, make copies of the foregoing available to any Owner (at the expense of such
Owner). Section 6.08. Tax Covenants. (a) Special Definitions. When used in this Section, the following terms shall have the following meanings: “Bond Counsel” means Fulbright & Jaworski L.L.P. or any other counsel of recognized
national standing in the field of law relating to municipal bonds, appointed and paid by the
District and reasonably satisfactory to and approved by the Trustee. “Computation Date” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Computation Period” means, initially, that period commencing on the date of the
execution and delivery of the Notes and concluding on the initial Computation Date and,
thereafter, each period commencing on the day next following a Computation Date and
concluding on the immediately succeeding Computation Date. “Gross Proceeds” of any issue of governmental obligations means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and
transferred proceeds) of that issue, and any replacement proceeds as defined in
section 1.148-1(c) of the Tax Regulations, of that issue.
“Investment” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Nonpurpose Investment” means any investment property, as defined in section 148(b) of
the Code, in which Gross Proceeds of an issue are invested and that is not acquired to carry out
the governmental purposes of that issue. “Opinion of Bond Counsel” means a written opinion of Fulbright & Jaworski L.L.P. or
any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District and reasonably satisfactory to and approved by the Trustee. “Prior Issue” shall refer to the Prior Notes (but in the case of any of the foregoing
executed and delivered for multiple purposes, only to the portion thereof allocable pursuant to
section 1.148-9(h)(4) of the Tax Regulations to other than refunding purposes).
“Proceeds,” with respect to an issue of governmental obligations, has the meaning set forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales,
investment and transferred proceeds, but not replacement proceeds). “Tax Regulations” means the United States Treasury Regulations promulgated pursuant
to sections 103 and 141 through 150 of the Code.
18 95196426.5
“Yield” of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations and (ii) in respect of the Notes has the meaning set forth in section 1.148-4 of the Tax Regulations. (b) Exclusion of Interest from Gross Income. The District will take all actions
necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of
interest on the Notes from the gross income of the owners thereof for federal income tax
purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the Notes or any other amounts (or any property the acquisition, construction or improvement of which is to be refinanced directly or indirectly with Gross Proceeds) in a manner that if made or omitted,
respectively, would cause the interest on any Note to fail to be excluded pursuant to section
103(a) of the Code from the gross income of the owners thereof for federal income tax purposes.
Without limiting the generality of the foregoing, unless and until the Trustee receives a written Opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exclusion pursuant to section 103(a) of the Code of interest on any Note
from the gross income of the owner thereof, the District shall comply with this covenant and
each of the specific covenants in this Section. (c) No Private Use or Private Payments. Except as would not cause any Note to become a “private activity bond” within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall at all times prior to the payment and
cancellation of the last of the Notes to be retired: (i) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Notes and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
applicable to the general public) or any property acquired, constructed or improved with
such Gross Proceeds or the Gross Proceeds of any Prior Issue in any activity carried on
by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely
as a member of the general public; and (ii) does not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the Notes or
of any Prior Issue, or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than
taxes of general application within the jurisdiction of the District or interest earned on
investments acquired with such Gross Proceeds pending application for their intended
purposes.
(d) No Private Loan. Except as would not cause any Note to become a “private activity bond” within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the District shall not use of Gross Proceeds of the Notes to make or finance
loans to any person or entity other than a state or local government. For purposes of the
foregoing covenant, such Gross Proceeds are considered to be “loaned” to a person or entity if:
(i) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such
19 95196426.5
person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity
in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such
Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a
loan. For purposes of this covenant, the District will treat any transaction constituting a loan of
Gross Proceeds of any of the Prior Issues as resulting in a loan of Gross Proceeds of the Notes. (e) Not to Invest at Higher Yield. Except as would not cause any Note to become an “arbitrage bond” within the meaning of section 148 of the Code and the Tax Regulations and
rulings thereunder, the District will not, at any time prior to the final cancellation of the last Note
to be retired, directly or indirectly invest Gross Proceeds of the Notes in any Investment, if as a
result of that investment the yield of any Investment acquired with Gross Proceeds of the Notes, whether then held or previously disposed of, would materially exceed the yield of the Notes within the meaning of said section 148. (f) Not Federally Guaranteed. Except to the extent such action or failure to act
would not, pursuant to section 149(b) of the Code and the Tax Regulations and rulings
thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the Notes from the gross income of the owners thereof for federal income tax purposes, the District will not take or omit to take any action that would cause any Note to be “federally guaranteed” within the
meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder. (g) Information Report. The District will timely file any information necessary to the
exclusion pursuant to section 103(a) of the Code of interest on the Notes required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in
such place as the Secretary of the Treasury may prescribe. (h) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, the District will not at any time prior
to the final cancellation of the last of the Notes to be 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 Notes not been relevant to
either party.
(i) Notes Satisfy Section 149(g). The District represents that none of the Prior Issue or the Notes are or will become “hedge bonds” within the meaning of section 149(g) of the Code.
Without limitation of the foregoing, with respect to the Prior Issue, (i)(A) on the date of issuance
of that issue the District reasonably expected (based upon its own knowledge and upon
representations made by other governmental persons upon the issuance of those obligations) that
within the three-year period commencing on such date no less than 85% of the spendable proceeds of that issue would be expended for the governmental purposes thereof and (B) the
District believes and represents that at no time has more than 50% of the proceeds of that issue
been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of
four years or more, and with respect to the application of Proceeds of the Notes other than for
refunding purposes, (ii)(A) the District will not deliver the Notes unless on the date of the
20 95196426.5
issuance of the Notes it reasonably expects that within the three-year period commencing on
such date of issuance at least 85% of such spendable proceeds of the Notes will be expended for the governmental purpose of the Notes and (B) at no time will more than 50% of such spendable proceeds of the Notes be invested in Nonpurpose Investments having a substantially guaranteed
yield for a period of four years or more. (j) Elections. The District hereby directs and authorizes any Authorized
Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Notes, in the Tax Certificate relating to
the Notes or similar or other appropriate certificate, form or document. (k) Tax Certificate. The District agrees to execute and deliver in connection with the
execution and delivery of the Notes a Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest with respect to
the Notes from the gross income of the owners thereof for federal income tax purposes (the “Tax
Certificate”), which representations and covenants are incorporated as though expressly set forth
herein. Section 6.09. Continuing Disclosure. The District will comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any
other provision of this Trust Agreement, failure of the District to comply with the Continuing
Disclosure Agreement shall not be considered an Event of Default; provided, however, the
Trustee, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Notes and upon being indemnified to its reasonable satisfaction,
shall, or any Owner or Beneficial Owner of Notes may take such actions as may be necessary
and appropriate to compel performance, including seeking mandate or specific performance by
court order. Section 6.10. Further Assurances. The District will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or
instruments and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to carry out the purposes and intentions of this Trust
Agreement and for preserving and protecting the rights and interests of the Owners. ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default. An Event of Default under the Installment
Purchase Agreement shall constitute an Event of Default hereunder and an Event of Default
under the Master Agreement shall constitute an Event of Default hereunder. The Trustee may give notice, as assignee of the Corporation, of an Event of Default under the Installment
Purchase Agreement to the District, and shall do so if directed to do so by the Owners of not less
than 5% of the aggregate principal evidenced by Notes then Outstanding. In each and every case
during the continuance of an Event of Default, the Trustee may and, at the direction of the
21 95196426.5
Owners of not less than a majority of the aggregate principal evidenced by Notes then
Outstanding, shall, upon notice in writing to the District and the Corporation (a) exercise any of the remedies granted to the Corporation under the Installment Purchase Agreement, (b) exercise any of the remedies granted to the Trustee under the Master Agreement, and (c) take whatever
action at law or in equity may appear necessary or desirable to enforce its rights pursuant to this
Trust Agreement, the Installment Purchase Agreement or the Master Agreement or to protect and
enforce any of the rights vested in the Trustee or the Owners by this Trust Agreement, the Notes, the Installment Purchase Agreement or the Master Agreement, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or
for the enforcement of any other legal or equitable right, including any one or more of the
remedies set forth in Section 7.02 hereof. Section 7.02. Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the Corporation or the District or any member, director, officer or employee
thereof, and to compel the Corporation or the District or any such member, director, officer or
employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee; or (c) by suit in equity upon the happening of any Event of Default hereunder to require
the Corporation and the District to account as the trustee of an express trust. Section 7.03. Non-Waiver. A waiver of any default or breach of duty or contract by the
Trustee or the Owners shall not affect any subsequent default or breach of duty or contract or
impair any rights or remedies on any such subsequent default or breach of duty or contract. No
delay or omission by the Trustee or the Owners to exercise any right or remedy accruing upon
any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence
therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this
Article may be enforced and exercised from time to time and as often as the Trustee shall deem
expedient.
If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse
determination, the Trustee, such Owner, the Corporation and the District shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought
or taken. 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
22 95196426.5
otherwise and may be exercised without exhausting and without regard to any other remedy
conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy. Section 7.05. Application of Amounts After Default. All damages or other payments
received by the Trustee for the enforcement of any rights and powers of the Trustee under this
Article shall be deposited into the Installment Payment Fund and as soon as practicable thereafter applied: (a) to the payment of all amounts due the Trustee under Section 8.03 hereof; (b) unless the unpaid Installment Payment, and the interest thereon, shall have
become, and shall remain, immediately due and payable pursuant to the Master Agreement: (i) to the payment of all amounts then due for interest evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the
payment of which is held by the Trustee), ratably without preference or priority of any
kind, according to the amounts of interest evidenced by such Notes due and payable; and (ii) to the payment of all amounts then due for principal evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the
payment of which is held by the Trustee), ratably without preference or priority of any
kind, according to the amounts of principal evidenced by such Notes due and payable.
(c) if the unpaid Installment Payment, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement, to the
payment of all amounts then due for principal and interest evidenced by the Notes and, if the
amount available therefor shall not be sufficient to pay in full the whole amount so due and
unpaid, then to the payment thereof ratably, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Note over any other Note, to the persons entitled thereto without any
discrimination or preference. Section 7.06. Trustee May Enforce Claims Without Possession of Notes. All rights
of action and claims under this Trust Agreement or the Notes may be prosecuted and enforced by
the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Owners of the Notes in respect of
which such judgment has been recovered. Section 7.07. Limitation on Suits. No Owner shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Trust Agreement, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have
23 95196426.5
previously given written notice to the Trustee of a continuing Event of Default hereunder, (b) the
Owners of not less than a majority of the aggregate principal evidenced by Notes then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (c) such Owner or Owners shall
have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request, (d) the Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Owners of a majority of the aggregate
principal evidenced by Notes then Outstanding; it being understood and intended that no one or
more Owners of Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other Owner of Notes, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Trust Agreement, except in the manner herein provided and for the
equal and ratable benefit of all the Owners of Notes. Section 7.08. No Liability by the Corporation to the Owner. Except as expressly
provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with respect to the performance by the District of the other agreements and covenants
required to be performed by it contained in the Installment Purchase Agreement, the Master
Agreement or herein, or with respect to the performance by the Trustee of any right or obligation
required to be performed by it contained herein. Section 7.09. No Liability by the District to the Owners. Except for the payment
when due of the Installment Payment, and the interest thereon, and the performance of the other
agreements and covenants required to be performed by it contained in the Installment Purchase
Agreement, the Master Agreement or herein, the District shall not have any obligation or liability
to the Owners with respect to this Trust Agreement or the preparation, execution, delivery or transfer of the Notes or the disbursement of the Installment Payment, and the interest thereon, by
the Trustee to the Owners, or with respect to the performance by the Trustee of any right or
obligation required to be performed by it contained herein. Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided
herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with
respect to the performance by the Corporation or the District of the other agreements and
covenants required to be performed by them, respectively contained in the Installment Purchase
Agreement or herein. 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 Payment,
and the interest thereon, to prepare, execute, deliver and transfer the Notes and to perform the
24 95196426.5
other functions contained herein, all in the manner provided herein and subject to the conditions
and terms hereof. By executing and delivering this Trust Agreement, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an
Event of Default hereunder has occurred and is continuing, the Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this Trust Agreement, and no
implied covenants or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the circumstances in the
conduct of such person’s own affairs. Section 8.02. Removal and Resignation of the Trustee. The Corporation and the District may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and
shall remove the Trustee initially a party hereto and any successor thereto if at any time
(a) requested to do so by an instrument or concurrent instruments in writing signed by the
Owners of a majority of the aggregate principal evidenced by the Notes at the time Outstanding (or their attorneys duly authorized in writing), or (b) the Trustee shall cease to be eligible in accordance with the following paragraph, and shall appoint a successor Trustee. The Trustee
shall be a bank having trust powers or a trust company in good standing in or incorporated under
the laws of the United States or any state thereof, having (or if such bank or trust company is a
member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $75,000,000, and be subject to supervision or
examination by federal or state banking authorities. If such bank or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this Section the combined capital
and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the
Corporation and the District and by giving notice, by first class mail, postage prepaid, of such
resignation to the Owners at their addresses appearing on the registration books maintained by
the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the
event the District and the Corporation do not appoint a successor Trustee within 30 days
following receipt of such notice of resignation, the resigning Trustee may, at the expense of the
District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any
resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee
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
25 95196426.5
further assurance and do such other things as may reasonably be required for more fully and
certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property
subject to the trusts and conditions herein set forth. Any corporation, association or agency into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party,
provided that such entity meets the combined capital and surplus requirements of this Section,
ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all
the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Section 8.03. Compensation and Indemnification of the Trustee. The District shall
from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include “overhead
expenses” except as such expenses are included as a component of the Trustee’s stated annual
fees or disclosed transaction fees) hereunder, including but not limited to advances to and
reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys
retained by the Trustee, employed by it in the exercise and performance of its rights and
obligations hereunder; provided, however, that the Trustee shall not have any lien for such
compensation or reimbursement against any moneys held by it in any of the funds or accounts
established hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Corporation or the District. Except as otherwise expressly provided herein, no provision of this Trust Agreement
shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of any of its rights or powers
hereunder. The District, to the extent permitted by law, agrees to indemnify and save the Trustee, its
directors, officers, employees and agents harmless against any liabilities which it may incur in
the exercise and performance of its powers and duties hereunder, including but not limited to
costs and expenses incurred in defending against any claim or liability, which are not due to its
negligence or willful misconduct. Section 8.04. Protection of the Trustee. The Trustee shall be protected and shall incur
no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent,
notice, request, requisition, resolution, statement, waiver or other paper or document which it
shall in good faith believe to be genuine and to have been adopted, executed or delivered by the
proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty
26 95196426.5
to make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the
Owners of the Notes pursuant to this Trust Agreement, unless such Owners shall have offered to
the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable
costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Corporation or the District, with regard to legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect to any action taken or suffered by it hereunder
in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Notes or the Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements made in the preliminary or final official statement relating to the Notes. The Trustee shall not be required to take notice or be deemed to have notice of any
default or Event of Default hereunder, except failure of any of the payments to be made to the
Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the Trustee shall be specifically notified in writing of such default or Event of Default by the District, the Corporation or the Owners of not less than 5% of the aggregate principal evidenced
by the Notes then Outstanding. Whenever in the administration of its rights and obligations hereunder the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a Written Certificate of
the District or a Written Certificate of the Corporation, and such certificate shall be full warrant
to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof,
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Notes and may join in any
action which any Owner may be entitled to take with like effect as if the Trustee were not a party
hereto. The Trustee, either as principal or agent, may also engage in or be interested in any
financial or other transaction with the Corporation or the District, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the
Corporation or the District as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers
hereof and perform any rights and obligations required of it hereunder by or through agents,
attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the
negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable
care; provided, however, that in the event of any negligence or misconduct of any such attorney,
agent or receiver, the Trustee shall diligently pursue all remedies of the Trustee against such
agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it
27 95196426.5
in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its
own willful misconduct, negligence or breach of an obligation hereunder. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which
the Corporation or the District is a party and which, in the opinion of the Trustee and its counsel, affects the Notes or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal evidenced by Notes then Outstanding, provided the Trustee
shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction
against all risk or liability arising from such action. ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement. (a) This Trust Agreement and the rights
and obligations of the Corporation, the District, the Owners and the Trustee hereunder may be
amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then Outstanding, exclusive of Notes disqualified as provided
in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement shall
(i) extend the stated Maturity Date of any Note or reduce the rate of interest evidenced thereby or
extend the time of payment of such interest or reduce the amount of principal evidenced thereby, (ii) reduce the percentage of Owners whose consent is required for the execution of any
amendment hereof or supplement hereto without the prior written consent of the Owners of all
Notes then Outstanding, (iii) modify any of the rights or obligations of the Trustee without the
prior written consent of the Trustee, or (iv) amend this Section without the prior written consent
of the Owners of all Notes then Outstanding. (b) This Trust Agreement and the rights and obligations of the Corporation, the
District, the Owners and the 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
28 95196426.5
to questions arising hereunder which the Corporation or the District may deem desirable
or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of
interest evidenced by the Notes; or (iv) for any other reason, provided such amendment or supplement does not
adversely affect the rights or interests of the Owners. Section 9.02. Disqualified Notes. Notes owned or held by or for the account of the District (but excluding Notes held in any pension or retirement fund of the District) shall not be
deemed Outstanding for the purpose of any consent or other action or any calculation of
Outstanding Notes provided in this Article, and shall not be entitled to consent to or take any
other action provided in this Article, and the Trustee may adopt appropriate regulations to require each Owner, before his consent provided for herein shall be deemed effective, to reveal if the Notes as to which such consent is given are disqualified as provided in this Section.
Section 9.03. Endorsement or Replacement of Notes After Amendment or Supplement. After the effective date of any action taken as hereinabove provided in this
Article, the Trustee may determine that the Notes may bear a notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the Owner of any Outstanding Note and presentation of such Note for such purpose at the Principal Office a
suitable notation as to such action shall be made on such Note. If the Trustee shall receive an
Opinion of Counsel advising that new Notes modified to conform to such action are necessary, modified Notes shall be prepared, and in that case upon demand of the Owner of any
Outstanding Notes such new Notes shall be exchanged at the Principal Office without cost to
each Owner for Notes then Outstanding upon surrender of such Outstanding Notes. Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Owner from accepting any amendment as to the particular Notes owned by such Owner, provided that due notation thereof is made on such Notes.
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Notes and Trust Agreement. (a) If the Trustee shall pay or cause to be paid or there shall otherwise be paid (i) to the Owners of all Outstanding Notes the
interest and principal evidenced thereby at the times and in the manner stipulated herein and therein, and (ii) all other amounts due hereunder and under the Installment Purchase Agreement,
then such Owners shall cease to be entitled to the pledge of and lien on the amounts on deposit in
the funds and accounts established hereunder, as provided herein, and all agreements and
covenants of the Corporation, the District, and the Trustee to such Owners hereunder shall
thereupon cease, terminate and become void and shall be discharged and satisfied. (b) Any Outstanding Note shall be deemed to have been paid within the meaning and
with the effect expressed in this Section when the whole amount of the principal and interest
29 95196426.5
evidenced by such Note shall have been paid or when 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 and interest evidenced by such Note and due and to
become due on or prior to the Maturity Date, and if the Maturity Date will not occur, and said
Note is not to be prepaid, within the next succeeding 60 days, the District shall have given the
Trustee irrevocable instructions to give notice, as soon as practicable to the Owner of such Note, stating that the deposit of moneys or Government Obligations required by this subsection has been made with the Trustee and that such Note, or portion thereof, is deemed to have been paid
in accordance with this Section and stating such Maturity Date upon which moneys are to be
available for the payment of the principal and interest evidenced by said Note, or portion thereof. Neither the moneys nor the Government Obligations deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the
payment of the principal and interest evidenced by said Note, or portions thereof. If payment of
less than all of the Notes is to be provided for in the manner and with the effect expressed in this
Section, the Trustee or the District, as applicable, shall select such Notes, or portions thereof in the principal amounts designated to the Trustee by the District. (c) After the payment of all the interest and principal evidenced by all Outstanding
Notes and all other amounts due hereunder and under the Installment Purchase Agreement as
provided in this Section, the Trustee shall execute and deliver to the Corporation and the District
all such instruments as may be necessary or desirable to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall pay over or deliver to the District all moneys or
securities held by it pursuant hereto which are not required for the payment of the interest and
principal evidenced by such Notes and all other amounts due hereunder and under the
Installment Purchase Agreement.
(d) Prior to any defeasance becoming effective under this Article, the District shall cause to be delivered (i) an executed copy of a report, addressed to the Trustee and the District,
in form and in substance acceptable to the Trustee and the District, of a nationally recognized
certified public accountant, or firm of such accountants, verifying that the Government
Obligations and cash, if any, satisfy the requirements of subsection (b) of this Section (a
“Verification”), (ii) a copy of the escrow deposit agreement entered into in connection with such defeasance, which escrow deposit agreement shall provide that no substitution of Government
Obligations shall be permitted except with other Government Obligations and upon delivery of a
new Verification and no reinvestment of Government Obligations shall be permitted except as
contemplated by the original Verification or upon delivery of a new Verification, and (iii) a copy
of an Opinion of Counsel, dated the date of such defeasance and addressed to the Trustee and the District, in form and in substance acceptable to the District, to the effect that such Notes have
been paid within the meaning and with the effect expressed in this Trust Agreement, and all
agreements and covenants of the Corporation, the District and the Trustee to the Owners of such
Notes under this Trust Agreement have ceased, terminated and become void and have been
discharged and satisfied.
30 95196426.5
Section 10.02. Unclaimed Moneys. Any moneys held by the Trustee in trust for the
payment and discharge of the interest or principal evidenced by any of the Notes which remain unclaimed for two years after the date when such interest or principal evidenced by such Notes have become payable, if such moneys were held by the Trustee at such date, or for two years
after the date of deposit of such moneys if deposited with the Trustee after the date when the
interest and principal evidenced by such Notes have become payable, shall be repaid by the
Trustee to the District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of the interest and principal evidenced by such Notes.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of Trust Agreement. Nothing contained herein, expressed or implied, is intended to give to any Person other than the Corporation, the District, the Trustee
and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the
Corporation or the District shall be for the sole and exclusive benefit of the Trustee and the
Owners. Section 11.02. Successor Deemed Included in all References to Predecessor.
Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties
and functions that are presently vested in the Corporation, the District or the Trustee, or such
officer, and all agreements, conditions, covenants and terms required hereby to be observed or
performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof,
shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03. Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or
more instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to take
acknowledgments of deeds to be recorded in the state or territory in which he purports to act that
the Person signing such declaration, request or other instrument or writing acknowledged to him
the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may
deem sufficient. The ownership of any Notes and the amount, payment date, number and date of owning
the same may be proved by the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof.
31 95196426.5
Any declaration, request or other instrument in writing of the Owner of any Note shall
bind all future Owners of such Note with respect to anything done or suffered to be done by the Corporation, the District or the Trustee in good faith and in accordance therewith. Section 11.04. Waiver of Personal Liability. Notwithstanding anything contained
herein to the contrary, no member, officer or employee of the District or the Corporation shall be
individually or personally liable for the payment of any moneys, including without limitation, the
interest or principal evidenced by the Notes, but nothing contained herein shall relieve any member, officer or employee of the District or the Corporation from the performance of any official duty provided by any applicable provisions of law, by the Installment Purchase
Agreement or hereby. Section 11.05. Reserved.
Section 11.06. Content of Written Certificates. Every Written Certificate of the District and every Written Certificate of the Corporation with respect to compliance with any agreement, condition, covenant or term contained herein shall include (a) a statement that the
Person making or giving such certificate has read such agreement, condition, covenant or term
and the definitions herein relating thereto, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such certificate are based, (c) a statement that, in the opinion of the signer, the signer has made or caused to be made such examination or investigation as is necessary to enable the signer to express an informed opinion
as to whether or not such agreement, condition, covenant or term has been complied with, and
(d) a statement as to whether, in the opinion of the signer, such agreement, condition, covenant
or term has been complied with. Any Written Certificate of the District and any Written Certificate of the Corporation
may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the
Person making or giving such certificate knows that the Opinion of Counsel with respect to the
matters upon which each Person’s certificate may be based, as aforesaid, is erroneous, or in the
exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the
possession of the District or the Corporation upon a representation by an officer or officers of the
District or the Corporation, as the case may be, unless the counsel executing such Opinion of
Counsel knows that the representation with respect to the matters upon which such counsel’s
opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 11.07. Funds and Accounts. Any fund or account required to be established
and maintained herein by the Trustee may be established and maintained in the accounting
records of the Trustee either as an account or a fund, and may, for the purposes of such
accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with sound accounting practice and with
due regard for the protection of the security of the Notes and the rights of the Owners. The
Trustee may establish such funds and accounts as it deems necessary to perform its obligations
hereunder.
32 95196426.5
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 Notes, and the Owners shall retain all the benefit, protection and security afforded to
them under any applicable provisions of law. The Corporation, the District and the Trustee
hereby declare that they would have executed this Trust Agreement, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized
the execution and delivery of the Notes pursuant hereto irrespective of the fact that any one or
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
33 95196426.5
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
34 95196426.5
If to the Trustee: Union Bank, N.A.
120 South San Pedro Street, Suite 400 Los Angeles, California 90012 Attention: Alison Braunstein
Telephone: (213) 972-5674
Facsimile: (213) 972-5694 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, 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.
35 95196426.5
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
executed by their respective officers thereunto duly authorized, all as of the day and year first written above.
ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By:
Treasurer
ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors
(S E A L)
Attest:
By: _ Clerk of the Board of Directors UNION BANK, N.A.,
as Trustee By:
Authorized Officer
A-1 95196426.5
EXHIBIT A
FORM OF NOTE
No. R–1 $
Unless this Note is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Note executed
and delivered is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner hereof, Cede &
Co., has an interest herein.
ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2011B
(CERTIFICATE ANTICIPATION NOTE) DATED DATE INTEREST RATE MATURITY DATE CUSIP
November 10, 2011 % November 9, 2012 68428Q
REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY that the Registered Owner of this Revenue Refunding Certificate of Participation, Series 2011B (Certificate Anticipation Note) (this “Note”), as identified above, is the owner of a direct, fractional undivided interest in certain installment
payments (“Installment Payment”), and the interest thereon, payable under and pursuant to the
Installment Purchase Agreement, dated as of November 1, 2011 (the “Installment Purchase
Agreement”), by and between the Orange County Sanitation District (the “District”), a county sanitation district organized and existing under the laws of the State of California, and the Orange County Sanitation District Financing Corporation (the “Corporation”), a nonprofit public
benefit corporation organized and existing under the laws of the State of California. Certain of
the rights of the Corporation under the Installment Purchase Agreement, including the right to
receive the Installment Payment, and the interest thereon, have been assigned without recourse by the Corporation to Union Bank, N.A., a national banking association duly organized and existing under the laws of the United States of America, as trustee (the “Trustee”) under the
Trust Agreement, dated as of November 1, 2011 (the “Trust Agreement”), by and among the
Trustee, the District and the Corporation. Capitalized undefined terms used herein shall have the
meanings ascribed thereto in the Trust Agreement. 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
A-2 95196426.5
Corporation, pursuant to which the District establishes and declares the conditions and terms
upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and secured. This Note is one of the duly authorized Orange County Sanitation District Revenue
Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”) evidencing principal in the
aggregate amount of $_ , executed pursuant to the terms of the Trust Agreement.
The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, payable under the Installment Purchase Agreement. The Notes are executed and delivered to refinance certain improvements to the wastewater collection, treatment and disposal
facilities of the District (the “Wastewater System”) and to pay the costs of issuance incurred in
connection therewith. The Installment Payment, and the interest thereon, are to be paid by the District pursuant to the Installment Purchase Agreement in consideration for the purchase of certain improvements to the Wastewater System and for the other agreements and obligations undertaken by the
Corporation under the Installment Purchase Agreement and the Trust Agreement. The Notes evidence direct, fractional undivided interests in the Installment Payment, and
the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided under the Installment Purchase
Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in
the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining
after payment of Maintenance and Operation Costs, all as further provided in the Master
Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall
be subject to the provisions of the Master Agreement, and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement.
The Installment Purchase Agreement is payable on a parity with the other existing Senior
Obligation. The District may at any time incur Senior Obligations in addition to existing Senior
Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in
the Master Agreement on a parity with all other Senior Obligations theretofore incurred, but only subject to the conditions and upon compliance with the procedures set forth in the Master
Agreement. The obligation of the District to pay the Installment Payment and the interest thereon, and
other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in
the Installment Purchase Agreement, and does not constitute a debt of the District or of the State,
or of any political subdivision thereof, in contravention of any constitutional or statutory debt
limitation or restriction. Neither the faith and credit nor the taxing power of the District or the
State or any political subdivision thereof, is pledged to the payment of the Installment Payment,
A-3 95196426.5
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. Reference is hereby made to the Master Agreement, the Installment Purchase Agreement
and to the Trust Agreement and any and all amendments thereof and supplements thereto for a
description of the terms under which the District’s obligation to pay the Installment Payment, and the interest thereon, is incurred, the Notes are executed and delivered, the provisions with regard to the nature and extent of the Net Revenues and other lawfully available funds of the
District, and the rights of the Owners of the Notes. All of the terms of the Master Agreement,
the Installment Purchase Agreement and the Trust Agreement are hereby incorporated herein.
The Trust Agreement constitutes a contract among the District, the Corporation and the Trustee for the benefit of the Owners of the Notes, to all the provisions of which the Owner of this Note, by acceptance hereof, agrees and consents. The Registered Owner of this Note is entitled to receive, subject to the terms of the Trust
Agreement on the Maturity Date set forth above, upon presentation and surrender of this Note at
the principal corporate trust office of the Trustee in Los Angeles, California (the “Principal Office”), the Principal Amount specified above, evidencing the Owner’s interest in the Installment Payment coming due on the Maturity Date, and to receive on the Maturity 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 such Principal Amount is paid in full, evidencing
the Registered Owner’s interest in the interest evidenced by the Installment Payment coming due on such date. Payments of interest evidenced by the Notes shall be made to the Owners thereof (as
determined at the close of business on the Record Date next preceding the Maturity Date or any
other date fixed for payment) by check or draft of the Trustee mailed to the address of each such
Owner as it appears on the registration books maintained by the Trustee pursuant to the Trust Agreement, or to such other address as may be furnished in writing to the Trustee by such
Owner. Payment of principal evidenced by the Notes, on the Maturity Date, shall be made only
upon presentation and surrender of the Notes at the Principal Office. All such amounts are
payable in lawful money of the United States of America.
The Notes are authorized to be executed and delivered in the form of fully registered notes in denominations of $5,000 or any integral multiple thereof. This Note may be transferred or exchanged by the Registered Owner hereof, in person or
by his attorney duly authorized in writing, at the Principal Office, but only in the manner, subject
to the limitations and upon payment of the charges provided in the Trust Agreement.
The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, whether or not the principal or interest evidenced by this Note shall be overdue, and
the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the
principal and interest evidenced by this Note shall be made only to such Registered Owner,
A-4 95196426.5
which payments shall be valid and effectual to satisfy and discharge the liability evidenced by
this Note to the extent of the sum or sums so paid. The Notes are not subject to prepayment prior to the Maturity Date. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust
Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then outstanding, exclusive of Notes disqualified as provided under the Trust Agreement, are filed with the
Trustee. No such supplement or amendment shall (a) extend the stated Maturity Date or reduce
the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the
amount of principal evidenced thereby, (b) reduce the percentage of Owners whose consent is required for the execution of any amendment of or supplement to the Trust Agreement without the prior written consent of the Owners of all Notes then outstanding, (c) modify any of the
rights or obligations of the Trustee without the prior written consent of the Trustee or (d) amend
the amendment provisions of the Trust Agreement without the prior written consent of the
Owners of all Notes then outstanding. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may also be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding upon execution, without the
written consents of any Owners, but only to the extent permitted by law and only (a) to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be
observed or performed under the Trust Agreement other agreements, conditions, covenants and
terms thereafter to be observed or performed by the Corporation or the District, or to surrender
any right or power reserved therein to or conferred therein on the Corporation or the District, and
which in either case shall not adversely affect the rights or interests of the Owners, (b) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or
supplementing any defective provision contained in the Trust Agreement or in regard to
questions arising thereunder which the Corporation or the District may deem desirable or
necessary and not inconsistent therewith, (c) to make such additions, deletions or modifications
as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Notes or (d) for any other reason, provided such
amendment or supplement does not adversely affect the rights or interests of the Owners. THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the
statutes of the State of California and by the Trust Agreement to exist, to have happened and to
have been performed precedent to and in connection with the execution and delivery of this Note do exist, have happened and have been performed in regular and due time, form and manner as
required by law, and that the Trustee is duly authorized to execute and deliver this Note.
A-5 95196426.5
IN WITNESS WHEREOF, this Note has been executed by the manual signature of an
authorized signatory of the Trustee as of the date set forth below. Date: November 10, 2011
UNION BANK, N.A., as Trustee
By: Authorized Officer
A-6 95196426.5
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned Note and hereby
irrevocably constitute(s) and
appoint(s) attorney, to transfer the same
on the books of the Trustee with full power of substitution in the premises.
Dated:
Note: The signature(s) on this Assignment must correspond with the name(s) as written on the
face of the within registered Note in every particular, without alteration or enlargement
or any change whatsoever.
Tax I.D. #:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible guarantor. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Note in
every particular without alteration or enlargement or any change whatsoever.
95197269.4
DRAFT OF
09/29/11
INSTALLMENT PURCHASE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION Dated as of November 1, 2011
Relating to
$
Orange County Sanitation District
Revenue Refunding Certificate Anticipation Notes, Series 2011B
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................................. 2
Section 1.01. Definitions............................................................................................ 2 Section 1.02. Definitions in Master Agreement and Trust Agreement...................... 3
ARTICLE II PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE
CORPORATION; PAYMENT........................................................................ 3
Section 2.01. Acquisition, Construction and Installation of the Project .................... 3
Section 2.02. Payment................................................................................................ 4
ARTICLE III PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE DISTRICT; INSTALLMENT PAYMENTS ................................................... 4
Section 3.01. Purchase and Sale of Project................................................................ 4
Section 3.02. Installment Payment............................................................................. 4
Section 3.03. Reserved............................................................................................... 4 Section 3.04. Obligation Absolute ............................................................................. 4 Section 3.05. Nature of Agreement............................................................................ 5
ARTICLE IV NO PREPAYMENT OF INSTALLMENT PAYMENTS;
DISCHARGE................................................................................................... 5
Section 4.01. No Prepayment of Installment Payment .............................................. 5 Section 4.02. Discharge of Obligations ..................................................................... 5
ARTICLE V COVENANTS ................................................................................................. 5
Section 5.01. Compliance with Master Agreement ................................................... 5
Section 5.02. Compliance with Installment Purchase Agreement ............................. 5
Section 5.03. Protection of Security and Rights ........................................................ 6 Section 5.04. Indemnification of Corporation ........................................................... 6 Section 5.05. Further Assurances............................................................................... 6
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE
CORPORATION ............................................................................................. 6
Section 6.01. Events of Default ................................................................................. 6 Section 6.02. Remedies on Default............................................................................ 7 Section 6.03. Non-Waiver.......................................................................................... 7
Section 6.04. Remedies Not Exclusive ...................................................................... 8
ARTICLE VII AMENDMENTS ............................................................................................. 8
Section 7.01. Amendments ........................................................................................ 8
ARTICLE VIII MISCELLANEOUS ........................................................................................ 9 Section 8.01. Liability of District Limited................................................................. 9
Section 8.02. Limitation of Rights ............................................................................. 9
Section 8.03. Assignment .......................................................................................... 9
Section 8.04. Notices ................................................................................................. 9 Section 8.05. Successor Is Deemed Included in all References to Predecessor ...... 10 Section 8.06. Waiver of Personal Liability .............................................................. 10
Section 8.07. Article and Section Headings, Gender and References ..................... 10
95197269.4 -i-
TABLE OF CONTENTS
(continued)
Page
Section 8.08. Partial Invalidity................................................................................. 10
Section 8.09. Governing Law .................................................................................. 11
Section 8.10. Execution in Counterparts.................................................................. 11
EXHIBIT A - DESCRIPTION OF PROJECT .......................................................................... A-1
95197269.4 -ii-
95197269.4
INSTALLMENT PURCHASE AGREEMENT THIS INSTALLMENT PURCHASE AGREEMENT (this “Installment Purchase Agreement”), dated as of November 1, 2011, 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”).
W I T N E S S E T H: WHEREAS, to finance the acquisition, construction and installation of certain
improvements to its wastewater system (the “Prior Project”) the District caused the execution
and delivery of $154,665,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificates Anticipation Notes, Series 2010B, of which $154,665,000 in principal amount is currently outstanding (the “Prior Notes”); WHEREAS, the District desires to pay all of the Prior Notes by paying at maturity all of
the principal component of the installment payment relating to the Prior Notes (the “Prior
Installment Payment”), and the interest thereon; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment and the interest thereon to be so paid, the District and the Corporation desire that the Corporation
purchase the Prior Project from the District and the District sell the Prior Project to the
Corporation, and that the District then purchase the Prior Project from the Corporation and the
Corporation sell the Prior Project to the District, for the installment payment (the “Installment Payment”) to be made by the District, pursuant to a new installment purchase agreement (the
“Installment Purchase Agreement”),and the Corporation and the District have agreed to finance
such prepayment by causing the execution and delivery of $ in aggregate principal
amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes,
Series 2011B (the “Notes”) evidencing direct, fractional undivided interests in the Installment Payment and the interest thereon, to be made by the District pursuant to the Installment Purchase
Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation, the District has established and
declared the conditions and terms upon which obligations such as this Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and
secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to this Installment Purchase Agreement to Union Bank, N.A., as trustee (the
“Trustee”);
2 95197269.4
WHEREAS, in consideration of such assignment and the execution and delivery of the
Trust Agreement, dated as of the date hereof, by and among the Trustee, the Corporation and the District, the Trustee has agreed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon, payable hereunder; WHEREAS, a portion of the proceeds of the Notes, together with other available funds,
will be used to prepay the Prior Installment Payment; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in
regular and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Installment Purchase Agreement; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of
any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally
applicable to both the singular and plural forms of any of the terms defined herein: “Business Day” means a day other than (a) Saturday or Sunday, (b) a day on which
banking institutions in the city in which the Principal Office is located are authorized or required
by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. “Closing Date” means November 10, 2011. “Corporation” means the Orange County Sanitation District Financing Corporation, a
nonprofit public benefit corporation organized and existing under the laws of the State, and any
successor thereto. “District” means the Orange County Sanitation District, a county sanitation district
organized and existing under and by virtue of the laws of the State, and any successor thereto. “Event of Default” means an event described in Section 6.01 hereof. “Installment Payment” means the Installment Payment required to be made by the
District pursuant to Section 3.02 hereof. “Installment Payment Date” means November 9, 2012.
3 95197269.4
“Installment Purchase Agreement” means this Installment Purchase Agreement, dated
as of November 1, 2011, 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. “Master Agreement” means the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation, as originally executed and as it
may from time to time be amended or supplemented in accordance with the terms thereof. “Notes” means the Orange County Sanitation District Revenue Refunding Certificates of Participation (Certificate Anticipation Notes), Series 2011B, also known as the Orange County
Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B, executed
and delivered by the Trustee pursuant to the Trust Agreement. “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.
hereto. “Project” means the improvements to the Wastewater System, as described in Exhibit A
“Trust Agreement” means the Trust Agreement, dated as of November 1, 2011, by and
among the Trustee, the Corporation and the District, as originally executed and as it may from
time to time be amended or supplemented in accordance with its terms. “Trustee” means Union Bank, N.A., 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.
4 95197269.4
ARTICLE II
PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE CORPORATION; PAYMENT Section 2.01. Acquisition of the Project. The District represents and warrants that it is
the sole and exclusive owner of the Project. The Corporation hereby purchases from the District,
and the District hereby sells to the Corporation, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall
immediately vest in the Corporation on the Closing Date without further action on the part of the
Corporation or the District. Section 2.02. Payment of Purchase Price. On the Closing Date, the Corporation shall
pay to the District, as the purchase price of the Project, the amount of $ amount shall be paid from the proceeds of the Notes.
ARTICLE III
, which
PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE DISTRICT;
INSTALLMENT PAYMENTS
Section 3.01. Purchase and Sale of Project. The District hereby purchases from the
Corporation, and the Corporation hereby sells to the District, the Project in accordance with the
provisions of this Installment Purchase Agreement. All right, title and interest in and to the
Project shall immediately vest in the District on the Closing Date without further action on the
part of the District or the Corporation. Section 3.02. Installment Payment. The District shall pay to the Corporation, from
Net Revenues and other lawfully available funds of the District, the purchase price of the Project
in a single Installment Payment, with interest thereon, as provided herein. The Installment
Payment shall be in the aggregate principal amount of $
Installment Payment Date.
, and shall be payable on the
The Installment Payment shall accrue interest from the Closing Date, at the rate of % per annum, payable on the Installment Payment Date. Such interest shall accrue on the basis of
a 360-day year consisting of twelve 30-day months. The Installment Payment, and the payment
of interest thereon, shall be deposited with the Trustee, as assignee of the Corporation, no later
than the Installment Payment Date, 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 Notes, such
amounts shall be credited against the Installment Payment, or payment of interest thereon, as
applicable, due on such date.
Section 3.03. Reserved.
5 95197269.4
Section 3.04. Obligation Absolute. The obligation of the District to make the
Installment Payment, and payment of interest thereon, and other payments required to be made by it under this Article, from Net Revenues and other lawfully available funds of the District, is absolute and unconditional, and until such time as the Installment Payment, payments of interest
thereon, and such other payments shall have been paid in full (or provision for the payment
thereof shall have been made pursuant to Article IV), the District shall not discontinue or
suspend any Installment Payment, or payments of interest thereon, or other payments required to be made by it hereunder when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or
terminated in whole or in part, and such Installment Payment, payments of interest thereon, and
other payments shall not be subject to reduction whether by offset or otherwise and shall not be
conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes
a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and
shall be afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement. ARTICLE IV
NO PREPAYMENT OF INSTALLMENT PAYMENTS; DISCHARGE Section 4.01. No Prepayment of Installment Payment. The Installment Payment shall
not be subject to prepayment prior to the Installment Payment Date. Section 4.02. Discharge of Obligations. If the Installment Payment, and the interest
thereon, shall be paid as and when due in accordance with the terms hereof, and if all Notes shall
be fully paid, or provision therefor made in accordance with Article X of the Trust Agreement,
and the Trust Agreement shall be discharged by its terms, then all agreements, covenants and
other obligations of the District hereunder shall thereupon cease, terminate and become void and be discharged and satisfied.
ARTICLE V
COVENANTS
Section 5.01. Compliance with Master Agreement. The District will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Master
Agreement required to be observed and performed by it and will not cause, suffer or permit any
default to occur thereunder. Section 5.02. Compliance with Installment Purchase Agreement. The District will
punctually pay the Installment Payment, and interest thereon, and other payments required to be
made by it hereunder in strict conformity with the terms hereof, and will faithfully observe and
perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, will not cause, suffer or permit any default to occur hereunder and
6 95197269.4
will not terminate this Installment Purchase Agreement for any cause including, without limiting
the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political
subdivision of either or any failure of the Corporation to observe or perform any agreement,
condition, covenant or term contained herein required to be observed and performed by it,
whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war,
rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial
disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of
governmental authorities. Section 5.03. Protection of Security and Rights. The District will preserve and protect the security hereof and the rights of the Trustee, as assignee of the Corporation, to the
Installment Payment, and interest thereon, and other payments required to be made by the
District hereunder and will warrant and defend such rights against all claims and demands of all
Persons. Section 5.04. Indemnification of Corporation. To the extent permitted by law, the District hereby agrees to indemnify and hold the Corporation and its members and officers
harmless against any and all liabilities which might arise out of or are related to the Project, this
Installment Purchase Agreement or the Notes, and the District further agrees to defend the
Corporation and its members and officers in any action arising out of or related to the Project, this Installment Purchase Agreement or the Notes. Section 5.05. Further Assurances. The District will adopt, deliver, execute and make
any and all further assurances, instruments and resolutions as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance hereof and for the better assuring
and confirming unto the Corporation, or unto the Trustee, as assignee of the Corporation, the rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the
Corporation. 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
7 95197269.4
for a period of 30 days after the District shall have been given notice in writing of such default
by the Corporation or the Trustee; provided, however, that the party or parties giving such notice may agree in writing to a reasonable extension of such period prior to the expiration of such 30 day period and, provided further, that if the District shall proceed to take curative action which,
if begun and prosecuted with due diligence, cannot be completed within such a period of 30
days, then such period shall be increased without such written extension to such extent as shall
be necessary to enable the District to diligently complete such curative action and such default shall not become an Event of Default for so long as shall be necessary to diligently complete such curative action; or (c) if the District shall file a petition or answer seeking arrangement or reorganization
under the federal bankruptcy laws or any other applicable law of the United States of America or
any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein,
or if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction shall assume custody or control of the District or of the whole or any substantial part
of its property. Section 6.02. Remedies on Default. Upon the occurrence of an Event of Default, the Trustee, as assignee of the Corporation, shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the District and to compel the District to perform and carry out its duties under
applicable law and the agreements and covenants required to be performed herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee, as assignee of the Corporation; (c) by suit in equity to require the District to account as the trustee of an express trust;
and to have a receiver or receivers appointed for the Wastewater System and of the issues,
earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof
shall affect or impair the obligation of the District, which is absolute and unconditional, to pay
the Installment Payment, and the interest thereon, to the Trustee, as assignee of the Corporation,
at the respective due dates from the Net Revenues and the other funds herein committed for such payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which
is also absolute and unconditional, to institute suit to enforce such payment by virtue of the
contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee, as assignee of the
Corporation, shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or
omission by the Trustee, as assignee of the Corporation, to exercise any right or remedy accruing
upon any default or breach of duty or contract shall impair any such right or remedy or shall be
8 95197269.4
construed to be a waiver of any such default or breach of duty or contract or an acquiescence
therein, and every right or remedy conferred upon the Trustee, as assignee of the Corporation, by applicable law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee, as assignee of the Corporation. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned
or determined adversely to the Trustee, as assignee of the Corporation, the District and the
Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 6.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy,
and each such remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law.
ARTICLE VII
AMENDMENTS
Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation,
may be amended or modified from time to time and at any time by a written amendment hereto
executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with the written consent of the Owners of a majority of the aggregate principal evidenced by Notes
then Outstanding. No such amendment shall (i) extend the payment date of any Installment
Payment or reduce the amount of any Installment Payment, or the interest rate applicable thereto,
without the prior written consent of the Owner of each affected Note, or (ii) reduce the
percentage of Owners of the Notes whose consent is required to effect any such amendment or modification, without the prior written consent of the Owners of all Notes then Outstanding. (b) This Installment Purchase Agreement and the rights and obligations of the
District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or
modified from time to time and at any time by a written amendment hereto executed by the
District, the Corporation and the Trustee, as assignee of the Corporation, without the written consents of any Owners of the Notes, but only to the extent permitted by law and only for any
one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the
District, the Corporation or the Trustee, as assignee of the Corporation, to be observed
or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the District, the Corporation or the Trustee, as assignee of the
Corporation, or to surrender any right or power reserved herein to or conferred herein
on the District, the Corporation or the Trustee, as assignee of the Corporation;
(ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in
9 95197269.4
regard to questions arising hereunder which the District, the Corporation or the Trustee,
as assignee of the Corporation, may deem desirable or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or
appropriate to assure the exclusion from gross income for federal income tax purposes
of interest on the Installment Payment; and (iv) to make such other changes herein or modifications hereto as the District, the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners of
the Notes. ARTICLE 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 Payment, and the interest thereon, and other payments required to be made by it
hereunder, or for the performance of any agreements or covenants required to be performed by it
contained herein. The District may, however, but in no event shall be obligated to, advance
moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the District for such purpose. The obligation of the District to pay the Installment Payment, and the interest thereon,
and other payments required to be made by it hereunder is a special obligation of the District
payable, in the manner provided herein, from Net Revenues and other funds provided for herein,
and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither
the faith and credit nor the taxing power of the District or the State, or any political subdivision
thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other
payments required to be made hereunder. 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
10 95197269.4
indemnification hereunder), including the right to receive Installment Payment, and the interest
thereon, from the District, pursuant to the Trust Agreement. Section 8.04. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: 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: Union Bank, N.A.
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attention: Allison Braunstein 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 Payment, or
the interest thereon, or other payments required to be made by the District hereunder, but nothing
contained herein shall relieve any official, officer or employee of the District from the
performance of any official duty provided by any applicable provisions of law or hereby.
11 95197269.4
Section 8.07. Article and Section Headings, Gender and References. The headings
or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All
references herein to “Articles,” “Sections” and other subsections or clauses are to the
corresponding articles, sections, subsections or clauses hereof; and the words “hereby,” “herein,”
“hereof,” “hereto,” “herewith” and other words of similar import refer to this Installment Purchase Agreement as a whole and not to any particular Article, Section, subdivision or clause hereof. Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the District or the
Corporation shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants and portions thereof and shall in no way affect the validity
hereof. Section 8.09. Governing Law. This Installment Purchase Agreement shall be construed
and governed and construed in accordance with the laws of the State. Section 8.10. Execution in Counterparts. This Installment Purchase Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which
shall constitute but one and the same instrument.
12 95197269.4
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 (S E A L)
Attest:
By:
Clerk of the Board of Directors
ORANGE COUNTY SANITATION
DISTRICT FINANCING CORPORATION By: Treasurer
A-1 95197269.4
EXHIBIT A
DESCRIPTION OF PROJECT
The Project includes in general the acquisition, construction and installation of certain
improvements to the wastewater collection, treatment and disposal facilities of the District and in particular including, without limitation, the financing of improvements to the Wastewater
System including particularly, but without limitation, the District's collection system, two
wastewater treatment plants, and Ocean Outfall, and further as follows: the acquisition,
construction, installation, rehabilitation, replacement, or repair of the North County Yard,
Bushard Trunk Sewer, Gisler-Redhill Trunk Sewer, Magnolia Trunk Sewer, Bay Bridget Pump Station, Bitter Point Pump Station, Ellis Avenue Pumps Station, Rocky Point Pump Station, Headworks at Plant 2, Primary Clarifiers at Plant 1, Primary Treatment System at Plant 2
Secondary Treatment System at Plant 1, Activated Sludge at Plant 1, Trickling Filters at Plant 1
and 2; Sludge Digester at Plant 1, Sludge Dewatering at Plant 1 and 2, Truck Wash and
Dewatering Beds at Plant 1, Primary sludge Feed System at Plant 2, Digester at Plant 2, Effluent Pump Station Annex, Groundwater Replenishment System, and Odor Control Facilities.
95197910.4
This
Preli
minary Of
f
i
cial Statement and the informa
ti
on co
ntained herein
are
subjec
t to
completion or am
e
nd
me
nt.
Under no
cir
cumst
ance
s shall
this
Preli
minary
Of
f
i
cial Statem
e
nt
con
st
i
t
ute
an off
er to
sell
or the
s
oli
cit
ati
on of an off
er to
buy, no
r shall
there
be
any sale
of these
s
ecuri
t
i
es
i
n
any juri
sdicti
on in which such off
er,
soli
cit
ati
on or sale
w
ou
ld be unlawf
ul.
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER , 2011
DRAFT
09/29/11
NEW ISSUE—BOOK-ENTRY-ONLY RATINGS: S&P: “ ” Fitch: “ ” (See “RATINGS” herein.)
In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Special Counsel, under existing statutes, regulations, rulings and court decisions, and, assuming compliance with the tax covenants described herein, the interest component of the Installment Payment, and the allocable portion thereof distributable in respect of any Note, is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. It is also the opinion of Special Counsel that under existing law interest on the Notes is exempt from personal income taxes of the State of California. See, however, “TAX MATTERS” herein.
[District Logo] $[PAR AMOUNT]* ORANGE COUNTY SANITATION DISTRICT REVENUE
REFUNDING CERTIFICATE ANTICIPATION NOTES SERIES 2011B
[DAC Logo]
Dated: Date of Delivery Maturity Date: November 9, 2012
Interest Rate: % Price: % Yield: % CUSIP No. 68428Q The $[PAR AMOUNT]* Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”) evidence direct, fractional undivided interests of the Owners thereof in the installment payment (the “Installment Payment”), and the interest thereon, to be made by the Orange County Sanitation District (the “District”) pursuant to the Installment Purchase Agreement, dated as of November 1, 2011 (the “Installment Purchase Agreement”), by and between the District and the Orange County Sanitation District Financing Corporation (the “Corporation”). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the “Master Agreement”), by and between the District and the Corporation, the District has established conditions and terms upon which obligations, such as the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable from (i) Net Revenues (as more fully described in the Master Agreement, the “Net Revenues”), as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the “Wastewater System”) remaining after payment of Maintenance and Operation Costs, and (ii) other lawfully available funds of the District, as further described in “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” herein.
The Notes will mature on November 9, 2012 (the “Maturity Date”). The District expects the principal of and interest on the Notes to be paid from proceeds of the sale, on the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation, notes or other obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” herein.
The proceeds of the Notes, together with other amounts, will be used to (i) pay at maturity all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2010B, currently outstanding in the aggregate principal amount of $154,665,000, and (ii) pay the costs incurred in connection with the execution and delivery of the Notes. See “PLAN OF FINANCE” herein.
Interest evidenced by the Notes will accrue from the date of their initial delivery and will be payable on the Maturity Date. See “THE NOTES” herein. The Notes initially will be delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. The Notes will be delivered in denominations of $5,000 and any integral multiple thereof. Payments of principal and interest evidenced by the Notes are payable directly to DTC by Union Bank, N.A., as trustee (the “Trustee”). Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. See APPENDIX E — “BOOK-ENTRY SYSTEM” herein.
THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENT, AND THE INTEREST THEREON, AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A SPECIAL OBLIGATION OF THE DISTRICT PAYABLE, IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE AGREEMENT, FROM NET REVENUES AND OTHER LAWFULLY AVAILABLE FUNDS OF THE DISTRICT, AS PROVIDED 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 PAYMENT, OR THE INTEREST THEREON, OR OTHER PAYMENTS REQUIRED TO BE MADE UNDER THE INSTALLMENT PURCHASE AGREEMENT. SEE “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” 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 NOTES WILL BE RECEIVED BY THE DISTRICT UNTIL 11:00 A.M. NEW YORK TIME ON NOVEMBER 2, 2011 UNLESS POSTPONED OR CANCELLED AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS.
The Notes are offered when, as and if executed and delivered and received by , as the Initial Purchaser, subject to the approval of Fulbright & Jaworski L.L.P., Los Angeles, California, Special Counsel and Disclosure Counsel to the District, and certain other
* Preliminary; subject to change.
95197910.4
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 financial advisor to the District in connection with the execution and delivery of the Notes. It is anticipated that the Notes in definitive form will be available for delivery through the book-entry facilities of DTC on or about November 10, 2011. Dated: November , 2011
[MAP]
95197910.4
95197910.4
ORANGE COUNTY SANITATION DISTRICT
Board of Directors
Larry Crandall — (Chair) — Fountain Valley Troy Edgar – (Vice Chair) – Los Alamitos
Harry Sidhu — Anaheim Jon Dumitru — Orange Roy Moore — Brea Constance Underhill — Placentia
Fred Smith — Buena Park Sal Tinajero — Santa Ana Prakash Narain — Cypress Michael Levitt — Seal Beach
Sharon Quirk-Silva — Fullerton David Shawver — Stanton
Bill Dalton — Garden Grove John Nielsen – Tustin Joe Carchio — Huntington Beach Brad Reese — Villa Park
Jeffrey Lalloway — Irvine John Anderson — Yorba Linda
Tom Beamish — La Habra James M. Ferryman — Costa Mesa Sanitary District Mark Waldman — La Palma John Withers — Irvine Ranch Water District
Steven Rosansky — Newport Beach Joy L. Neugebauer — Midway City Sanitary District
Janet Nguyen — Member of the Orange County Board of Supervisors Executive Management of the District James D. Ruth, General Manager Robert P. Ghirelli, D.Env., Assistant General Manager
James Herberg, Assistant General Manager and Director of Engineering
Lorenzo Tyner, Director of Finance and Administrative Services Ed Torres, Director of Operations and Maintenance
Nick Arhontes, Director of Facilities Support Services Special Services Special Counsel and Disclosure Counsel
Fulbright & Jaworski L.L.P. Los Angeles, California
District General Counsel
Bradley R. Hogin Woodruff, Spradlin & Smart, a Professional Corporation
Costa Mesa, California
Financial Advisor Public Resources Advisory Group
Los Angeles, California
Trustee Union Bank, N.A.
Los Angeles, California
95197910.4
No dealer, salesman or any other person has been authorized by the Orange County Sanitation District (the “District”) or the initial purchaser of the Notes listed on the cover page hereof (the “Initial Purchaser”) to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the District or the Initial Purchaser. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes by any person in 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 District and other sources that are believed by the District to be reliable. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this
Official Statement. If given or made, such other information or representations must not be relied upon as
having been authorized by the District, the Corporation or the Initial Purchaser in connection with any
reoffering.
This Official Statement is not to be construed as a contract with the purchasers of the Notes.
Statements contained in this Official Statement which involve estimates, projections, forecasts or matters of
opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Corporation since the date hereof. This Official Statement is submitted with respect to the sale of the Notes referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the District. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Preparation of this Official Statement and its distribution
have been duly authorized and approved by the District and the Corporation.
In connection with the offering of the Notes, the Initial Purchaser in connection with any reoffering
may over-allot or effect transactions which stabilize or maintain the market price of the Notes at a level above
that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued
at any time. The Initial Purchaser in connection with any reoffering may offer and sell the Notes to certain
dealers, institutional investors and others at prices lower than the public offering prices stated on the cover
page hereof and such public offering prices may be changed from time to time by the Initial Purchaser. Certain statements included or incorporated by reference in this Official Statement constitute forward- looking statements. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
CUSIP is a registered trademark of the American Bankers Association. CUSIP data on the cover
hereof and herein is provided by CUSIP Global Services, managed by Standard & Poor’s Financial Services
LLC on behalf of The American Bankers Association. This data is not intended to create a database and does
not serve in any way as a substitute for the CUSIP Services. The District, the Financial Advisor and the Initial
Purchaser are not responsible for the selection or correctness of the CUSIP numbers set forth on the cover
hereof or herein.
TABLE OF CONTENTS Page
INTRODUCTION ....................................................................................................................................... 1
General ........................................................................................................................................... 1
The District ..................................................................................................................................... 2 Security and Sources of Payment for the Notes.............................................................................. 2 Continuing Disclosure .................................................................................................................... 3
Miscellaneous ................................................................................................................................. 3 PLAN OF FINANCE................................................................................................................................... 3
ESTIMATED SOURCES AND USES OF FUNDS ................................................................................... 4
THE NOTES ................................................................................................................................................ 4 General ........................................................................................................................................... 4
No Prepayment ............................................................................................................................... 5
SECURITY AND SOURCES OF PAYMENT FOR THE NOTES............................................................ 5 Sale Proceeds of Future Obligations ............................................................................................... 5
Installment Payment........................................................................................................................ 5 Available Funds of the District ....................................................................................................... 6
Net Revenues .................................................................................................................................. 7
Rate Stabilization Account ............................................................................................................. 8 Allocation of Revenues................................................................................................................... 8 Rate Covenant ................................................................................................................................. 9 Limitations on Issuance of Additional Obligations ........................................................................ 9 Insurance ....................................................................................................................................... 11
Allocation of Installment Payment ............................................................................................... 12
THE DISTRICT ......................................................................................................................................... 13 Background ................................................................................................................................... 13
Organization and Administration.................................................................................................. 14 Services ......................................................................................................................................... 15 Service Area.................................................................................................................................. 15
Employees..................................................................................................................................... 16 Retirement Plan............................................................................................................................. 17
Other Post-Employment Benefits ................................................................................................. 19
Risk Management ......................................................................................................................... 19 Existing Facilities ......................................................................................................................... 19
Permits, Licenses and Other Regulations ..................................................................................... 21 2009 Facilities Master Plan and Capital Improvement Program .................................................. 22 Groundwater Replenishment System............................................................................................ 24
Preferred Level of Treatment ........................................................................................................ 24 Biosolids Management.................................................................................................................. 25 Urban Runoff ................................................................................................................................ 26
Integrated Emergency Response Program .................................................................................... 27 Five-Year Strategic Planning ........................................................................................................ 28
DISTRICT REVENUES............................................................................................................................ 28
Sewer Service Charges ................................................................................................................. 28 Additional Revenues ..................................................................................................................... 32
Wastewater Treatment History ..................................................................................................... 33
Customers ..................................................................................................................................... 33 Assessed Valuation ....................................................................................................................... 35
Tax Levies and Delinquencies ...................................................................................................... 36
95197910.4 i
TABLE OF CONTENTS (continued)
Page
Budgetary Process......................................................................................................................... 37 Reserves ........................................................................................................................................ 38 Summary of Operating Data ......................................................................................................... 39
Projected Operating Data .............................................................................................................. 40 Management’s Discussion and Analysis of Operating Data......................................................... 43
Investment of District Funds......................................................................................................... 44
FINANCIAL OBLIGATIONS .................................................................................................................. 44 Existing Indebtedness ................................................................................................................... 44
Variable Rate Obligations............................................................................................................. 45 Anticipated Financings ................................................................................................................. 45 Direct and Overlapping Bonded Debt........................................................................................... 46
THE CORPORATION .............................................................................................................................. 46 LIMITATIONS ON TAXES AND REVENUES...................................................................................... 46 Article XIIIA of the California Constitution................................................................................. 46
Legislation Implementing Article XIIIA ...................................................................................... 47 Article XIIIB of the California Constitution................................................................................. 47
Proposition 1A .............................................................................................................................. 48
Article XIIIC and Article XIIID of the California Constitution ................................................... 49 Other Initiative Measures.............................................................................................................. 51
LEGAL MATTERS................................................................................................................................... 51
FINANCIAL ADVISOR ........................................................................................................................... 51
ABSENCE OF LITIGATION ................................................................................................................... 51
FINANCIAL STATEMENTS ................................................................................................................... 52
TAX MATTERS........................................................................................................................................ 52
CONTINUING DISCLOSURE ................................................................................................................. 54
RATINGS .................................................................................................................................................. 55
PURCHASE AND REOFFERING ........................................................................................................... 55
MISCELLANEOUS .................................................................................................................................. 55
APPENDIX A – COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE
ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR
ENDED JUNE 30, 2010 ......................................................... ………………...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
95197910.4 ii
95197910.4
OFFICIAL STATEMENT
$[PAR AMOUNT]*
ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES SERIES 2011B
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Notes being offered and a brief description of the Official Statement. All statements contained in this introduction are
qualified in their entirety by reference to the entire 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
OF PRINCIPAL LEGAL DOCUMENTS – Definitions” herein.
General This Official Statement, including the cover page and all appendices hereto, provides certain
information concerning the sale and delivery of $[PAR AMOUNT]* aggregate principal amount of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B (the
“Notes”) evidencing direct, fractional undivided interests in the Installment Payment (the “Installment Payment”) and the interest thereon, to be made by the Orange County Sanitation District (the “District”)
pursuant to the Installment Purchase Agreement, dated as of November 1, 2011 (the “Installment Purchase Agreement”), by and between the District and the Orange County Sanitation District Financing Corporation (the “Corporation”). Unless the context clearly indicates to the contrary, a reference herein
to either of the Installment Purchase Agreement or the Notes is intended to refer to the corresponding interest in the Installment Purchase Agreement. Pursuant to the Master Agreement for District
Obligations, dated as of August 1, 2000 (the “Master Agreement”), by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations
such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable
from (i) Net Revenues (as defined hereinafter) as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of
the Wastewater System of the District (the “Wastewater System”) remaining after payment of Maintenance and Operation Costs, and (ii) other lawfully available funds of the District, as further described in “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” herein.
The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of November 1, 2011 (the “Trust Agreement”), by and among the District, the Corporation and Union Bank, N.A., as
trustee (the “Trustee”). Proceeds from the sale of the Notes will be used to (i) pay at maturity all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2010B,
currently outstanding in the aggregate principal amount of $154,665,000 (the “Prior Notes”), and (ii) pay
* Preliminary; subject to change.
2 95197910.4
the costs incurred in connection with the execution and delivery of the Notes. See “PLAN OF
FINANCE” herein.
The Notes will be executed and delivered in the form of fully registered certificates, dated as of
the date of initial delivery thereof and will mature on November 9, 2012 (the “Maturity Date”). Interest evidenced by the Notes will be payable on the Maturity Date. See “THE NOTES” herein. The Notes
initially will be delivered only in book-entry form and will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Notes. The Notes will be delivered in denominations of $5,000 and any integral
multiple thereof. So long as the Notes are in the DTC book-entry system, the interest and principal due with respect to the Notes will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in
turn, will make payments pursuant to its procedures as described under APPENDIX E – “BOOK–
ENTRY SYSTEM” herein.
The District The District is a public agency responsible for regional wastewater collection, treatment and
disposal. The District is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of more than 2.5 million people in the northern and central
portion of the County of Orange (the “County”), in a service area of approximately 463 square miles,
treating an average of 207 million gallons per day (“mg/d”) of wastewater in Fiscal Year 2010-11. See “THE DISTRICT,” “DISTRICT REVENUES” and “FINANCIAL OBLIGATIONS” herein. Security and Sources of Payment for the Notes
The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of
the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the
manner provided under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of
the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement. The District expects the principal of and interest on the Notes to be paid from proceeds of the
sale, on the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation, notes or other
obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES — Sale Proceeds of Future Obligations.”
The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District currently has
Outstanding Senior Obligations payable from Net Revenues on a parity with the Installment Payment under the Installment Purchase Agreement. See “FINANCIAL OBLIGATIONS – Existing
Indebtedness” and “THE DISTRICT” herein and APPENDIX C – “SUMMARY OF PRINCIPAL
LEGAL DOCUMENTS – Master Agreement” attached hereto. The District has no Subordinate Obligations currently outstanding.
3 95197910.4
Pursuant to the Master Agreement, the District will, to the extent permitted by law, fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year (a) Net Revenues equal to 125% of Debt Service on Senior
Obligations for such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and
charges and may make such classification thereof as it deems necessary, but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See “SECURITY AND
SOURCE OF PAYMENT FOR THE NOTES – Rate Covenant” herein.
The obligation of the District to pay the Installment Payment and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement,
from Net Revenues and other lawfully available funds of the District, as provided for in the Installment Purchase Agreement, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation
or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The
Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See “SECURITY AND
SOURCES OF PAYMENT FOR THE NOTES” herein. Continuing Disclosure
The District has covenanted for the benefit of holders and beneficial owners of the Notes to provide notices of the occurrence of certain enumerated events. The specific nature of the information to
be contained in the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See “CONTINUING DISCLOSURE” herein and APPENDIX D – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” Miscellaneous
The descriptions herein of the Trust Agreement, the Master Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and any other agreements relating to the Notes are qualified in their entirety by reference to such documents. Copies of the Trust Agreement, the Master Agreement and the Installment Purchase Agreement are on file and available for inspection at the
corporate trust office of Union Bank, N.A., Los Angeles, California, Attention: Corporate Trust.
PLAN OF FINANCE A portion of the net proceeds from the sale of the Notes, together with other available moneys,
will be used to pay at maturity the prior installment payment (the “Funded Installment Payment”) to be made by the District in connection with the Prior Notes. Under the terms of the Trust Agreement, dated
as of November 1, 2010 (the “Prior Trust Agreement”), pursuant to which the Prior Notes were executed
and delivered, the payment of the Prior Notes will be effected by depositing a portion of the proceeds of the Notes in the Installment Payment Fund established under the Prior Trust Agreement (the “Payment
Fund”). Such proceeds and other moneys deposited by the District will be held uninvested in cash in an amount sufficient to provide for the payment of the interest on the Funded Installment Payment through and including November 23, 2011 (the “Payment Date”) and to provide for the payment of the principal
4 95197910.4
represented by the Funded Installment Payment. In accordance with the Prior Trust Agreement, the Funded Installment Payment will be applied to the payment of interest with respect to the outstanding Prior Notes and to the payment of the principal of the outstanding Prior Notes on the maturity date
thereof.
The amounts deposited in the Payment Fund will be held in trust solely for the Prior Notes and will not be available to pay the principal and interest evidenced by the Notes or any obligations other than
the Prior Notes.
ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds and other amounts in connection with the delivery of the
Notes are presented below.
Sources Principal Amount of Notes $ Premium District Contribution
Total Sources $ Uses
Payment of Prior Notes $ Costs of Issuance(1)
Total Uses $
(1) Costs of Issuance include, among other things, fees of rating agencies, Special Counsel fees and expenses and the initial fees of the Trustee.
THE NOTES
General
The Notes will be prepared in the form of fully registered certificates in denominations of $5,000 and any integral multiple thereof. The Notes will be dated the date of initial delivery thereof and will
mature on the Maturity Date. The principal evidenced by the Notes shall be payable on the Maturity
Date. Interest evidenced by the Notes will accrue from their date of initial delivery and will be payable on the Maturity Date. Interest evidenced by the Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. See APPENDIX C — “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Trust Agreement.” The Notes initially will be delivered only in book-entry form and will be registered in the name of
Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry
form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. Payments of principal and interest evidenced by the Notes are payable
directly to DTC by Union Bank, N.A., as trustee. Upon receipt of payments of such principal and
interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are held in the DTC book-entry system, the interest and principal due with respect to the Notes will
5 95197910.4
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.
No Prepayment The Notes are not subject to prepayment prior to their maturity.
SECURITY AND SOURCES OF PAYMENT FOR THE NOTES
Sale Proceeds of Future Obligations
The District expects the principal of and interest on the Notes to be paid from proceeds of the
sale, on the Maturity Date, of a future series of certificates of participation, notes or other obligations of
the District, that will amortize over a term of approximately 25 years (the “Future Obligations”). The issuance of the Future Obligations will require future authorizations by the governing boards
of the District and the Corporation, as well as the preparation of suitable legal and disclosure documents for the issue. The District is currently unaware of any material impediment to obtaining such authorizations and documents. In addition, the issuance and sale of the Future Obligations will be
contingent on the District’s ability to access the municipal capital markets, which will depend on the District’s creditworthiness and market conditions during the weeks immediately preceding the Maturity
Date. The District is unable to predict such matters with certainty and therefore cannot guarantee that the
Future Obligations will be successfully issued and sold.
Installment Payment The Notes evidence direct, fractional undivided interests in the Installment Payment, and the
interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be
made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues
generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement. See “DISTRICT REVENUES” herein.
Pursuant to the Master Agreement, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment
and the interest thereon payable under the Installment Purchase Agreement, will be incurred and secured.
The obligation of the District to make the Installment Payment, and payments of interest thereon, and other payments required to be made by it under the Installment Purchase Agreement, from Net Revenues,
and other lawfully available funds of the District, is absolute and unconditional, and until such time as the
Installment Payment, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to the Installment Purchase
Agreement), the District has covenanted that it will not discontinue or suspend any Installment Payment when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such
Installment Payment, payments of interest thereon, and other payments shall not be subject to reduction whether offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or any cause whatsoever. The District’s obligation to make the Installment
Payment from Net Revenues is on a parity with the District’s obligation to make payments with respect to
6 95197910.4
its Outstanding Senior Obligations. See “Net Revenues” below. Pursuant to the Trust Agreement, the Corporation has assigned to the Trustee for the benefit of the Owners of the Notes substantially all of its rights, title and interest in and to the Installment Purchase Agreement, including its right to receive the
Installment Payment and the interest thereon. The District has certain Existing Senior Obligations Outstanding payable from Net Revenues on a
parity with the Installment Payment under the Installment Purchase Agreement. The term “Existing
Senior Obligations” as used in this Official Statement refers to the 2000 Installment Purchase Agreement, the 2003 Installment Purchase Agreement, the 2007A Installment Purchase Agreement, the 2007B
Installment Purchase Agreement, the 2008A Installment Purchase Agreement, the 2008B Installment Purchase Agreement, the 2009A Installment Purchase Agreement, the 2010A Installment Purchase
Agreement, the 2010B Installment Purchase Agreement, the 2010C Installment Purchase Agreement and
the 2011A Installment Purchase Agreement and the term “Senior Obligations” as used in this Official Statement refers to the Existing Senior Obligations and to any additional Senior Obligations, such as the
Installment Purchase Agreement, that may be made payable on a parity basis to the Installment Payment as provided in the Master Agreement. Senior Obligations, together with any Subordinate Obligations
payable on a subordinate basis to the Installment Payments incurred as provided in the Master Agreement,
are referred to collectively as the “Obligations.” The District has no Subordinate Obligations currently outstanding. See “FINANCIAL OBLIGATIONS — Existing Indebtedness” herein and APPENDIX C —
“SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement” attached hereto.
The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is
a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided for in the Installment Purchase Agreement, and does not constitute a debt of the District, the State or of any
political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District, the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other
payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master
Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” herein. Available Funds of the District
As Senior Obligations under the Master Agreement, the Installment Payment is payable from and secured by a pledge of Net Revenues. Should Net Revenues prove insufficient, the Installment Purchase
Agreement further provides that the Installment Payment is 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, 2011, the District’s Debt Service Required Reserves totaled $147 million, of which $90.2 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.”
District reserve funds, excluding Debt Service Required Reserves (see Table 13), are referred to herein as
“Available Reserves.” Available Reserves at June 30, 2011 were approximately $414 million. Available Reserves at June 30, 2012 and June 30, 2013 are projected to be approximately $573 million and $643
7 95197910.4
million, respectively. See “DISTRICT REVENUES — Reserves,” “— Summary of Operating Data” and
“— Projected Operating Data.”
Net Revenues The District is obligated to make the Installment Payment from, among other things, Net
Revenues as provided in the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District for maintaining and operating the Wastewater System (“Maintenance and
Operation Costs”). Revenues are defined in the Master Agreement to mean, for any period, all income
and revenue received by the District during such period from the operation or ownership of the Wastewater System, determined in accordance with generally accepted accounting principles, including
all fees and charges received during such period for the services of the Wastewater System, investment income received during such period (but only to the extent that such investment income is generally available to pay costs with respect to the Wastewater System, including Maintenance and Operation
Costs), Net Proceeds of business interruption insurance received during such period, ad valorem taxes received during such period, payments under the Agreement Acquiring Ownership Interests, Assigning
Rights and Establishing Obligations, entered into on February 13, 1986, and amendment No. 1 thereto
dated December 10, 1986 (the “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 (ii) Revenues shall include Capital Facilities Capacity
Charges collected during such period to the extent that such Capital Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible Project for which the proceeds of Senior Obligations were used or are available to be used. Any Federal Subsidy payments received by the
District will constitute Revenues as defined in the Master Agreement. See “DISTRICT REVENUES — Additional Revenues” herein. The District’s obligation to make the Installment Payment from its Net Revenues is on a parity
with the District’s obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations, as provided
in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the
Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term “Senior Obligations,” generally
means all revenue bonds or notes (including bond anticipation notes and commercial paper) of the District authorized, issued, executed and delivered under and pursuant to applicable law, the Installment Purchase Agreement, and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, including, without limitation, installment,
8 95197910.4
lease or other payments which are, in accordance with the provisions of the Master Agreement, payable
from Net Revenues on a parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations payable on a subordinate basis to the
Installment Payment as provided in the Master Agreement; provided, however, that prior to incurring such Subordinate Obligations, the District shall have determined that the incurrence thereof will not
materially adversely affect the District’s ability to comply with the requirements of the Master
Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. For a description of the District’s Outstanding Senior Obligations and Subordinate
Obligations, see “FINANCIAL OBLIGATIONS — Existing Indebtedness” herein. There are currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate Obligations
outstanding.
The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to
Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of, and lien on, Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Rate Stabilization Account To avoid fluctuations in its fees and charges of the Wastewater System, from time to time the District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the District
deems necessary or appropriate. From time to time, the District may also transfer moneys from the Rate Stabilization Account to the Revenue Account to be used by the District, first to pay all Maintenance and
Operations Costs as and when the same shall be due and payable. In addition, any such amount transferred from the Rate Stabilization Account to the Revenue Account by the District is included as Revenues for any period, but such transferred amount is excluded from determining Operating Revenues
for any period. Revenues will be decreased by the amounts, if any, transferred from the Revenue Account to the Rate Stabilization Account. There are presently no funds in the Rate Stabilization Account. Allocation of Revenues To carry out and effectuate the pledge of Net Revenues under the Master Agreement as described above, the District agrees and covenants that all Operating Revenues received by the District will be
deposited when and as received in the Revenue Account. Additionally, amounts may, from time to time
as the District deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Account, as described above under “— Rate Stabilization Account” above. The
District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the payment of which is not immediately required) as and when the same shall be due and payable.
After having paid, or having made provisions for the payment of, Maintenance and Operations Costs, the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account such amounts at such times as provided in the Master Agreement in the following order of priority:
(1) Senior Obligation Payment Account;
(2) Senior Obligation Reserve Funds (the Notes are not secured by any Reserve Fund); (3) Subordinate Obligation Payment Account;
(4) Subordinate Obligation Reserve Funds; and (5) Rate Stabilization Account.
9 95197910.4
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 $482 million as indicated in the District’s ten-year cash flow forecast for fiscal years 2011-12 through 2020-21. 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
10 95197910.4
(2) Subject to the provisions of the Master Agreement, the District will have received either
one of the following:
(i) A Written Certificate of the District certifying that, for a 12 consecutive calendar
month period during the 24 consecutive calendar month period ending in the calendar month prior to the incurrence of such Senior Obligations (which 12
consecutive calendar month period will be specified in such certificate or
certificates): (A) Net Revenues, as shown by the books of the District, will have amounted
to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations, and
(B) Net Operating Revenues, as shown by the books of the District, will have amounted to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such
Senior Obligations.
For purposes of demonstrating compliance with the foregoing, Net Revenues and
Net Operating Revenues may be adjusted for (x) any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred, but which, during all or
any part of such 12 consecutive calendar month period, were not in effect, (y) customers added to the Wastewater System subsequent to such 12 consecutive calendar month period but prior to the date such Senior Obligations
are incurred, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of
any project to be funded or any system to be acquired from the proceeds of such Senior Obligations; or (ii) A certificate or certificates from one or more Consultants which, when taken
together, project that, for each of the two Fiscal Years next succeeding the incurrence of such Senior Obligations:
(A) Net Revenues will amount to at least 125% of Maximum Annual Debt
Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations, and
(B) Net Operating Revenues will amount to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing, Net Revenues and Net Operating Revenues may be adjusted for (x) any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred or will go into effect prior to the end of such two Fiscal Year period, (y) customers expected to be added to
the Wastewater System prior to the end of such two Fiscal Year period, and (z) the estimated change in available Net Revenues and Net Operating Revenues
11 95197910.4
which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior
Obligations. For purposes of preparing the certificate or certificates described above, the Consultant may rely upon financial statements prepared by the District
that have not been subject to audit by an independent certified public accountant if audited financial statements for the period are not available. See, also “FINANCIAL OBLIGATIONS – Existing Indebtedness” herein. The District is not
required to comply with the provisions described above in paragraph (2) if the Senior Obligations being incurred are Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to
clause (H) of the definition thereof. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS – Definitions” herein. The determination of Net Revenues for use in the calculation described above is more fully
described in APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Master Agreement – Senior Obligations” attached hereto. The District is not required to comply with the provisions described in paragraph (2) above for such portion of Senior Obligations incurred for the
purpose of providing funds to refund or refinance Senior Obligations if (i) upon such refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on bonds, notes or
other obligations of an entity other than the District, the debt service on which is payable from Obligation Payments for such Obligations (the “Related Bonds”), will no longer be included in the calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such Obligations, will
have been paid in full or because such debt service is disregarded pursuant to clause (L) of the definition of Assumed Debt Service, and (ii) Assumed Debt Service in each Fiscal Year for the portion of such
Senior Obligations incurred for the purpose of providing funds to refund or refinance such Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such Obligations being
refunded or refinanced (assuming for such purposes that debt service on such refunded or refinanced
Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded pursuant to clause (L) of the definition of Assumed Debt Service). See APPENDIX C — “SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS — Master Agreement” attached hereto for additional information.
The District may at any time incur Reimbursement Obligations with respect to Senior Obligations. 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. 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.
12 95197910.4
Allocation of Installment Payment Table 1 below sets forth the estimated Installment Payment with respect to the Notes. Also set forth are the payments due on Existing Senior Obligations, excluding the Prior Notes. The District
ultimately expects the Notes to be paid with obligations that will amortize over a term of approximately 25 years, but there is no guarantee that such refinancing will occur. Table 1 Estimated Installment Payment and Outstanding Existing Senior Obligations of the District
Fiscal Year Ending Installment Payment Relating to Notes Other Senior
Obligation Payments(1)
June 30 Principal Interest Principal Interest(2) Total
2012(3) - - $ $ $
2013 $ $ 2014 - - 2015 - - 2016 - - 2017 - - 2018 - - 2019 - - 2020 - - 2021 - - 2022 - - 2023 - - 2024 - - 2025 - - 2026 - - 2027 - - 2028 - - 2029 - - 2030 - - 2031 - - 2032 - - 2033 - - 2034 - - 2035 - - 2036 - - 2037 - - 2038 - - 2039 - - 2040 - - - - -
Total $ $ $ $ $
(1) Excludes the Prior Notes. (2) Assumes a per annum interest rate of 3% for all variable rate obligations. See “FINANCIAL OBLIGATIONS – Existing Indebtedness” and APPENDIX A – “COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2010” herein. (3) Excludes interest and principal due prior to November 23, 2011.
13 95197910.4
THE DISTRICT
Background
The Orange County Sanitation District is a public agency responsible for regional wastewater
collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United
States. The District provides service to an area with a population of more than 2.5 million people in the northern and central portion of the County by treating an average of 207 mg/d of wastewater in Fiscal
Year 2010-11. The District serves approximately 81% of the County population in approximately 463
square miles, or approximately 60% of the County’s area. The service area which comprises the District was originally formed in 1954 pursuant to the
County Sanitation District Act, as amended, Section 4700 et seq. of the Health and Safety Code of the State. The District’s service area originally consisted of seven independent special districts in the County which were each responsible for matters relating to their individual districts. These special districts were
jointly responsible for the treatment and disposal facilities which they each used. The seven independent districts were successors to the Joint Outfall Sewer Organization, which was formed in 1923 among the
Cities of Anaheim, Santa Ana, Fullerton, and Orange, and the sanitary districts of Placentia, Buena Park,
La Habra, and Garden Grove. The Joint Outfall Sewer Organization constructed a treatment plant and outfall in the early 1920’s 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 District’s Board of Directors (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 the Resolution 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. See
“FINANCIAL OBLIGATIONS – Existing Indebtedness” herein. The boundaries of the nine predecessor special districts were initially used by the District to delineate separate revenue areas (the “Revenue
Areas”) for budgeting and accounting purposes and in order to facilitate the imposition of fees and
charges imposed by the District. See “DISTRICT REVENUES – Sewer Service Charges” herein. The District is managed by the Board of Directors, whose members are appointed by 25 member
cities and agencies which are serviced by the District. The District is responsible for construction and
maintenance of a major portion of the wastewater collection, treatment and disposal facilities within its boundaries. Revenue Area No. 7 is responsible for approximately 171 miles of local sewers in its service
area, whereas local sanitary districts, water districts and cities are responsible for local sewers in the
remainder of the District’s service area.
14 95197910.4
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 21 cities, unincorporated
areas of the County and three special districts, including mayors of cities, members of city councils, directors of independent special districts and one member from the County Board. 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 the majority of the Board of Directors. The District has a general manager, 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 637 under the direction of its General Manager, James D. Ruth. James D. Ruth is the District’s General Manager, and has served in that capacity since December 2005. Prior to that time, from January 2003 to October 2004, Mr. Ruth served as Chief Executive Officer for the County of Orange. Mr. Ruth had previously provided 22 years of service to the
City of Anaheim as parks and recreation director, deputy city manager, assistant city manager and chief executive officer, a post he held for 11 years. Robert P. Ghirelli, D.Env. is an Assistant General Manager of the District, and has served in that capacity since July 2006. Mr. Ghirelli previously served as Director of Technical Services for the District since his joining the District in 1998. Prior to joining the District, Mr. Ghirelli served for just over a year
as managing principal of the Los Angeles office of a national environmental consulting firm, and served 20 years in supervisory positions with the State Water Resources Control Board and Regional Water Quality Control Boards, including 13 years serving as Executive Officer of the California Regional Water
Quality Control Board, Los Angeles/Ventura Region. James Herberg, P.E. is an Assistant General Manager of the District and has served in this
capacity since February 2011. He also retains the position of Director of Engineering, and has served in that capacity since November 2006. Prior to becoming Director of Engineering, he was the District’s Director of Operations and Maintenance. Mr. Herberg has over 20 years of experience in water and
wastewater including project management, construction management, design, strategic planning, and operations & maintenance. Lorenzo Tyner is the District’s Director of Finance and Administrative Services. In
September 2005, Mr. Tyner joined the District with nearly 15 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 Northrop.
15 95197910.4
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 24
years of public and private sector experience in protecting public health and the environment.
Nick Arhontes, P.E. is the District’s Director of Facilities Support Services and has served the District since 1988. Mr. Arhontes has over 30 years of experience managing various engineered systems
in the private and public sectors regionally, nationally, and internationally.
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 463
square-mile area including 23 of the County’s 33 cities and various unincorporated areas of the County. The District serves a population of more than 2.5 million residents and owns sanitary sewerage facilities
with an estimated replacement value of approximately $7.1 billion at December 31, 2012 when full secondary treatment facilities become fully operational.
[Remainder of page intentionally left blank.]
16 95197910.4
Table 2 below sets forth the estimated populations of cities and unincorporated areas served by
the District as of January 1, 2010.
Table 2 Estimated Populations of Cities and Unincorporated Areas
Served by the Orange County Sanitation District As of January 1, 2010 City Population
Anaheim 353,640
Brea 40,380
Buena Park 84,140 Costa Mesa 117,180
Cypress 49,980
Fountain Valley 58,740 Fullerton 138,610
Garden Grove 175,620 Huntington Beach 203,480 Irvine 217,690
La Habra 63,180 La Palma 16,300
Los Alamitos 12,270
Newport Beach 86,740 Orange 142,710
Placentia 52,310
Santa Ana 357,750 Seal Beach 26,010
Stanton 39,800
Tustin 75,770 Villa Park 6,310
Westminster 94,290 Yorba Linda 69,270 Cities Subtotal 2,482,170
Unincorporated Areas (estimated) 81,000 Total 2,563,170
Sources: State of California Department of Finance, Demographic Research Unit for city population data; Orange
County Sanitation District for population of unincorporated areas. Employees
As of September 1, 2011, the District had 590 represented and non-represented employees. Most of the District’s 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 Peace Officers Counsel of California representing the Supervisor Group and the Professional Group supervisory and professional employees since 1991. Total represented employees as of September 1, 2011 numbered 548 as follows: 96 were represented by the OCEA, 210 were represented by Local 501
and 242 were represented by the Supervisor and Professional Groups. The Supervisor and Professional
17 95197910.4
Groups agreements with the District were renegotiated in 2011 and expire on June 30, 2013. The OCEA and Local 501 agreements with the District were renegotiated in 2011 and expire on June 30, 2014. The District has historically enjoyed a good working relationship with its employee organizations and has
experienced no work stoppages by represented personnel 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 District full-time employees, except the General Manager, participate in OCERS. The
amount of the retirement allowance is based upon the member’s age at retirement, the member’s “final
compensation” as defined in Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the employee’s classification as a Plan B, G or H member. Effective July 1, 2005,
employees retiring at age 55 or older receive 2.5% of their final compensation for every year of service. The District entered into a memorandum of understanding with all represented groups that (effective on October 1, 2010 for the Supervisor and Professional Group and unrepresented employees, effective on
July 1, 2011 for the Local 501 Group, and effective on August 1, 2011 for the OCEA Group) reduced the
benefit formula for new employees. Employees hired into the groups after the respective effective dates are subject to a benefit formula of 2.5% at age 55 for Plan G and H members and a benefit formula of
1.667% at age 57.5 for Plan B members. [Each group’s benefits are based on the employee’s final
compensation for every year of service.] “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 and H 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 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 is required to make periodic contributions to OCERS in amounts that are estimated to remain a
constant percentage of covered employees’ compensation such that, when combined with covered employees’ contributions, they will fully provide for all covered employees’ benefits by the time they
retire.
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18 95197910.4
A current comparison of OCERS costs for Fiscal Years 2006-07 through 2010-11 and projected
costs for Fiscal Years 2011-12 and 2012-13 is shown in the following table.
Table 3 Orange County Sanitation District
Comparison of OCERS Costs for Fiscal Years 2006-07 through 2010-11 and Projected Costs for Fiscal Years 2011-12 through 2012-13
Fiscal Year Rate(1) Cost(2)
2006-07 19.78% $ 9,848,854
2007-08 20.55 11,011,693
2008-09 21.14 12,193,601 2009-10 21.50 13,029,795
2010-11 24.20 14,176,989
2011-12(3) 25.68 16,346,155
2012-13(3) 27.47 17,485,548
(1) Required contribution as a percent of covered payroll. Includes amortization of Unfunded Actuarial Accrued
Liability. (2) Amounts represent employer contributions made or to be made by the District. (3) Projected. Source: Orange County Sanitation District.
For Fiscal Years 2006-07 through 2010-11, the District’s required contribution was equal to the contribution that the District actually made. As noted, the required contribution set forth above includes
amortization of Unfunded Actuarial Accrued Liability (“UAAL”). For the Fiscal Year ended June 30, 2011, total payroll costs of employees covered by OCERS was $58,582,598. As of the December 31,
2010 valuation, OCERS has an aggregate UAAL ratio of 69.79%, for a total UAAL of $3.75 billion. 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 after
qualifying public service of ten years. 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 $248,410 in ARBA benefits during Fiscal
Year 2010-11. Effective August 1, 2011, ARBA benefits are no longer available to new OCEA Group
employees of the District. For more information regarding OCERS and the District’s retirement plan as of June 30, 2011,
see Note 6 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for
Fiscal Year Ended June 30, 2010 set forth in Appendix A. The Comprehensive Annual Financial Reports of the Orange County Employees Retirement System are available on the OCERS website at
http://www.ocers.org. The information on such website is not incorporated herein by such reference or otherwise. The District cannot predict whether the OCERS investment portfolio will experience additional losses in the future; however, any future losses could result in material increases in the
District’s required contributions.
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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 l Agency.” According to the District’s actuary, Demsey Filliger Associates (the “Actuary”), the unfunded OPEB liability as of July 1, 2009 is
approximately $8.8 million. The ARC is $819,692 for Fiscal Year 2010-11. 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 5% per annum. The
District does not believe that its OPEB liability will have a material impact on its operational results.
Risk Management As of the date hereof, the District has in force basic all risk property and casualty insurance,
including theft, fire, flood, terrorism and boiler and machinery losses at its plants and pump stations. The District is self-insured for portions of workers’ compensation, property damage and general liability. The self-insurance portion of workers’ compensation is $750,000 per person per occurrence with outside
excess insurance coverage to the statutory limit. The self-insured portion for property damage covering fire and other disasters is $250,000 per occurrence with outside excess insurance coverage to $1 billion.
The self-insured portion for property damage covering flood is $100,000 per occurrence with outside
excess insurance coverage to $300 million. The District is self-insured for all property damage from the perils of earthquakes. See “DISTRICT REVENUES – Reserves.” 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 $250,000 per occurrence (except that employment practice liability is $500,000),
with excess general liability coverage up to $30 million.
During the past five fiscal years there have been no settlements in excess of covered amounts.
Claims against the District are processed by outside claim administrators. The District believes that there
are no unrecorded claims as of June 30, 2011 that would materially affect the financial position of the District. For more information regarding the District’s insurance coverage as of June 30, 2010, see Note 1
to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year Ended June 30, 2010 set forth in Appendix A. Existing Facilities
The District’s Wastewater System presently consists of two wastewater treatment plants, an influent metering and diversion structure, 15 off-plant pump stations, various interplant pipelines and
connections, and the ocean outfall facilities. The District’s Wastewater System includes approximately 403 miles of sewers within 11 trunk sewer systems, 176 miles of local sewers located within a portion of Revenue Area No. 7, two treatment plants, two discharge outfalls and two emergency weir outlets. The
existing treatment plants have a rated primary treatment capacity of 372 mg/d, including standby capacity.
Treatment Plant No. 1 (“Plant No. 1”) is located in the City of Fountain Valley, about four miles from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a
20 95197910.4
trickling filter plant and a conventional air activated sludge plant. Up to 105 mg/d of secondary treated
effluent is conveyed to an Orange County Water District (the “OCWD”) plant for tertiary treatment prior to reclamation and groundwater recharge.
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.
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. Substantially all of the wastewater received by the District is sent to
secondary treatment for further processing because of the recent completion of the secondary expansion at Treatment Plant No. 2. 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.
Table 4 below sets forth the treatment plants’ approximate current and future treatment capacities.
Table 4 Wastewater System Treatment Capacities (mg/d)
2010-11 Actual
Flows
Existing Primary Treatment
Capacity
Existing Secondary
Treatment Capacity(1)
Total Planned Secondary
Capacity(2)
Plant No. 1 99 204 122 182
Plant No. 2 108 168 150 150
Aggregate Treatment 207 372 272 332
(1) The existing secondary capacity is being expanded to meet secondary treatment standards by December 2012. (2) The District’s “Planned Total Capacity” is based on the 2009 Facilities Master Plan for planned capacity by
2020, which estimated the District’s requirements to meet future expected primary and secondary capacity demands. Source: Orange County Sanitation District. The District also has the capability to divert a portion of the influent flow from Plant No. 1 to
Plant No. 2 through interplant connections. A portion of the flow destined for Plant No. 2 can also be
diverted to Plant No. 1. Another interplant facility allows gas generated during solids treatment to be transported between Plant No. 1 and Plant No. 2 and allows digester gas (which is used as fuel for many
of the facilities’ engines) from one plant to be used at the other to balance the supply and demand, which
results in efficient gas utilization.
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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, Public Law 92-500 (the “Clean Water Act”), the California Environmental Quality Act of 1970, as amended (“CEQA”) and the Federal Clean Air Act. The regulatory requirements are primarily administered by the United States Environmental Protection Agency (the “EPA”), the California Air
Resources Board, the Santa Ana Regional Water Quality Control Board (“RWQCB”), and the South
Coast Air Quality Management District (“AQMD”). Regulations of these agencies deal primarily with the quality of effluent which may be discharged from the treatment plants and air quality emissions. The
Clean Water Act directs the EPA to monitor and to regulate the discharge of pollution into navigable waterways and to enforce the requirements that all wastewater treatment plants in the nation provide full secondary treatment for sewage. In 1977, Congress amended the Clean Water Act to allow waivers of
secondary treatment standards for certain ocean dischargers if they can demonstrate, to the satisfaction of the EPA that significant adverse environmental impacts would not occur. The District currently has all
applicable permits and licenses necessary to operate its facilities.
The District has discharged treated wastewater into the Pacific Ocean under a permit issued by the EPA and the RWQCB. The discharge permit included a waiver under the 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.
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. See “Preferred Level of Treatment” and “Urban Runoff” below. As a result, the District established a policy to subject all wastewater discharges into the ocean to secondary treatment standards.
To implement this policy, the District staff was directed to immediately proceed with the planning, design, and implementation of treatment methods with the expressed purposes of eliminating the need for the permit waiver received under Section 301(h).
Following the determination by the Board of Directors on 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 is separate and apart from the permit waiver received under Section 301(h), and once awarded would negate the need for a waiver. Achieving
secondary treatment standards was originally projected to take nine years to complete, with completion
expected in December 2012. Because ocean discharge permits are issued for only five years, and the EPA has no authority to waive the discharge limit requirements or grant a longer permit (except in
accordance with Section 301(h)), the District decided to voluntarily seek a consent decree concurrently
with the issuance of the new ocean discharge permit. This negotiated consent decree (the “Consent Decree”) approves the schedule and decrees that no
penalties will be imposed for discharges that exceed the secondary treatment limits during the period of construction. The Consent Decree was signed by the District, the EPA and the RWQCB and filed with the U.S. District Court on November 15, 2004. The Consent Decree contains seven construction
milestones and interim effluent limitations. The District is in compliance with the Consent Decree and has successfully completed five of the seven milestones within the specified deadlines required by the Consent Decree. The District expects to complete all seven milestones ahead of schedule, prior to
December 31, 2012.
22 95197910.4
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 (PM10), carbon monoxide, lead, nitrogen dioxide, and sulfur dioxide). Criteria air pollutants cause
adverse effects on human health and environment. AQMD is the local air pollution control agency charged with implementing the Federal Clean Air Act. In addition to criteria pollutants, AQMD also
implements numerous federal and state requirements related to the toxic air pollutants which can cause cancer or other severe localized health effects. The State’s Air Toxic Hot Spots Act, for example, requires facilities to conduct health risk assessments and notify the neighboring communities if the health
risk exceeds the regulatory thresholds. Pursuant to AQMD’s requirements, the District must obtain permits before sewage treatment
improvement projects can be constructed and operated. Such permits are project specific and may contain
conditions that govern design criteria, operating parameters, and emissions standards. Most of the District’s treatment facilities are enclosed in order to capture and treat emissions to meet regulatory
emissions standards and to minimize odor impact to the neighboring communities. The District’s treatment plants are also subject to the requirements of Title V of the Federal Clean Air Act amendments.
The Title V permit is a single air quality permit for a facility that consolidates and replaces all of the air
permits for individual pieces of equipment previously issued by the local air quality district. The permit contains all of the applicable local, state, and federal requirements, including periodic self-certification of
compliance and mandatory self-reporting of permit deviation.
All Title V permit related reporting and documents submitted to the AQMD must be signed by the highest District official – in this case the General Manager. The Title V program also demands
facilities to organize and conduct extensive training of the staff involved, including the field operation and maintenance staff. Another Title V important feature is a possibility of the public active participation and
intervention in the cases of potential emission limits and monitoring violations. The District Title V permits did not receive any negative public responses or comments during the required public review
period. The District received initial Title V permits for both treatment plants in January 2009.
The District developed the Air Toxic Emissions Reduction Strategic Plan in 2007, which evaluated the health risk impacts and risk reduction alternatives for Calendar Year 2012. This is when all
treatment plant upgrades and improvements planned for completion were in place. The District currently has all necessary AQMD permits to operate the Wastewater System. 2009 Facilities Master Plan and Capital Improvement Program The District’s 2009 Facilities Master Plan (the “Master Plan”) was completed and adopted by the
Board of Directors in December 2009. 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 District’s Board of Directors that
are included in the District’s 2009 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. A key component of the Master Plan was the updating of flow projections and the collection system hydraulic modeling. A capital improvement program was
developed to implement the required sewer capacity and rehabilitation improvements through the year
2030. The Master Plan continues to support the July 17, 2002 Board of Directors’ 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
23 95197910.4
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 agency to meet Clean Water Act secondary treatment standards. The District currently estimates that
it will complete these improvements by December 2012 at a total capital improvement cost of $623.1 million to reach secondary treatment discharge standards. In the interim, the District operates the plants
to maximize available secondary treatment and to reduce effluent biochemical oxygen demand and suspended solid discharges below currently allowed limits. The District also annually reviews and validates its current Capital Improvement Program
(“CIP”). The District expects to meet future demands on the Wastewater System through the CIP. This
program has been 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 2030, the District’s current CIP is scheduled to accomplish: • Major rehabilitation of the existing headworks, primary treatment, secondary treatment,
outfall pumping, and solids handling facilities at both treatment plants;
• Replace and rehabilitate nine of the District’s outlying pumping stations, and 26 trunk sewer improvement projects;
• Reduce fence line odor to levels that do not generate odor complaints; and
• Achieve full secondary treatment standards. The 2011 CIP validation study resulted in revisions to the CIP. The CIP currently consists of 145
individual capital projects through Fiscal Year 2030-31 with remaining outlays of $1.8 billion. Over the next five years, the CIP contemplates average annual capital expenditures of $180 million.
Implementation of full secondary treatment standards is scheduled to be completed on or before
December 31, 2012. A summary of total estimated capital costs for the CIP for Fiscal Years 2011-12 through 2030-31 is set forth in Table 5 below. Table 5
Capital Improvement Program – Estimated Capital Costs
Fiscal Years 2011-12 through 2030-31
Project Collection System Capacity
Cost $ 164,128,000
Collection System Repair, Rehabilitation, Replacement 335,590,000
Treatment Plant Capacity 227,253,000 Additional Secondary Treatment 141,163,000
Improved Treatment 156,503,000
Treatment Plant Repair, Rehabilitation, Replacement 646,871,000 Support Facilities 143,815,000
Total Validated Capital Improvement Program $1,815,323,000
Source: 2011-12 Budget Update, Orange County Sanitation District.
The CIP included budgeted expenditures of $129.2 million in Fiscal Year 2011-12. The largest
cash outlay planned for plant facilities in Fiscal Year 2011-12 was $16.6 million for the Digester Rehabilitation at Reclamation Plant No. 1 (total project cost is expected to be $55.5 million). The CIP’s
24 95197910.4
largest collection system project for Fiscal Year 2011-12 is $9.7 million for the rehabilitation of Magnolia
Trunk Sewer.
Groundwater Replenishment System The District has taken a multi-jurisdictional approach to planning for capital facilities because
many of the methods for reducing or managing flows involve other jurisdictions. One such project is the Groundwater Replenishment System (“GWRS”). In March 2001, the District entered into an agreement
with the OCWD to design and construct Phase 1 of the GWRS. The capital cost of this Phase was shared
equally (50% shares) by each agency. The GWRS is a joint effort by the two agencies to provide reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater
intrusion barrier. Phase I of the GWRS became operational in January of 2008 with an expected water production of 72,000 acre-feet per year once all secondary treatment facilities are online. In 2010, GWRS produced approximately 68,000 acre-feet. The Phase II expansion is expected to start construction in
November 2011 to add about 33,000 acre-feet per year. Phase II and all future phases will be funded solely by OCWD and could expand capacity up to a total capacity of 145,600 acre-feet per year. The
District and OCWD amended the 2001 agreement in 2009 to dedicate the water supply from the District
to OCWD for these future phases; however, no capital funding is anticipated or dedicated from the District for these future expansion phases. OCWD and the District have agreed to share equally in the cost of the Joint GWRS Microfiltration Backwash Redirection Project which will increase the quantity of water delivered during the night when the flows are low. This project will save the District operational costs in the form of
reduced primary treatment chemical usage. The total estimated budget for the District is $1,061,000.
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 reasoning behind the decision to move to full secondary standards included (1) the
possibility (no matter how remote) that bacteria from the ocean outfall may at times reach the shoreline,
(2) upgraded treatment will aid additional water reclamation with the OCWD, and (3) the clearly stated public preference for upgrading wastewater treatment at the time.
In an effort to eliminate most bacteria from being released from the ocean outfall, in 2002 the District began to use chlorine bleach to disinfect the effluent and then apply sodium bisulfate to remove remaining chlorine prior to releasing the treated wastewater to the ocean. The District continues to take
measures to limit the chlorine residual to a very low level prior to release. This mode of disinfection is expected to continue while the District studies, designs and constructs permanent facilities, and considers alternate disinfection technologies. Beginning in Fiscal Year 2006-07, the addition of disinfection
treatment required an annual outlay ranging from $5.3 million to $7.2 million for additional chemicals from the operating budget of the District. Following the determination by the Board of Directors in July 2002 to implement full secondary
standards, staff prepared the Secondary Treatment NPDES Permit Application that was required to be submitted to the regional office of EPA and the RWQCB in December 2002. An NPDES permit has been
issued to the District and the District is currently operating under the Consent Decree. See “THE DISTRICT – Permits, Licenses and Other Regulations.”
Currently, the District estimates that it will take approximately one year and require approximately $[193.1] million to complete the additional secondary treatment capacity project. In the
25 95197910.4
interim, the District will operate the plants to maximize available secondary treatment and to reduce
effluent biochemical oxygen demand and suspended solid discharges below those currently allowed limits. Biosolids Management The District produces digested and dewatered biosolids for beneficial use. By 2013, the District’s
biosolids production is anticipated to peak at approximately 766 wet tons per day (wtpd) when new secondary treatment processes are fully operational, and then is projected to decline to approximately 625
– 650 wtpd by 2016 when the IRWD’s solids processing facilities and the District’s centrifuges
commence operations. The District has a diversified biosolids management portfolio:
Contractor Location Product Contract
(tons per day and term) Synagro Kern County, CA and
La Paz County, AZ
Compost 250 tpd – 10 years with two
five-year renewals, expires
7/1/2024
EnerTech City of Rialto San Bernardino County, CA
Conversion to a renewable coal substitute
225 tpd – 25 years with a one five-year option to renew, expires 12/1/2038
Tule Ranch Dateland and Yuma
Counties, AZ
Land application 175-225 tpd – One (1) year expires 12/31/2012
The District’s contractors provide back-up biosolids management options in Arizona that include land application recycling and landfill disposal. Together, these options have the capacity to manage
seven to eight times the District’s daily biosolids production to ensure sustainable, consistent, and reliable operations. The District’s Long-Range Biosolids Management Plan (“LRBMP”) was approved by the
Board in December 2003. The goal of the LRBMP was to develop a sustainable, reliable, and economical
program for long-range biosolids management providing environmentally sound practices that meet the stringent federal, state, and local regulatory requirements.
As a result of the LRBMP recommendations, Synagro’s existing biosolids management contract was amended in April 2004, committing 250 tons per day of biosolids to be composted at Synagro’s South Kern Compost Manufacturing Facility, which started operations in late 2006. In May 2006, the District entered into a contract with EnerTech Environmental, Inc. to convert
225 tons of biosolids per day to a renewable fuel at EnerTech’s proposed facility in Rialto, California. The EnerTech solution is a new, patented heat treatment process that reduces the energy needs to dry the
biosolids in a conventional dryer, which creates the fuel pellets. The renewable fuel pellets called eFuel
are sold to cement manufacturers that use the pellets as fuel to heat their kilns, which the residual ash from the fuel combustion becomes part of the cement product, resulting in no residual waste byproducts.
EnerTech started commissioning its facility in October 2008 and anticipates completion in 2012. The cost to the District for biosolids management decreased from $20.6 million in Fiscal Year
2009-10 to $17.8 million in Fiscal Year 2010-11. The Fiscal Year 2011-12 budget is $18.5 million.
26 95197910.4
Urban Runoff The Board of Directors, recognizing that the beaches of the County were being affected by pollution carried by urban runoff, adopted Resolution No. OCSD 00-04 on April 26, 2000, agreeing to
temporarily accept dry weather urban runoff into the Wastewater System. A subsequent revision to this initial policy, OCSD 00-22 adopted September 27, 2000, added an aggregate 10 million gallons per day (“MGD”) capacity limit for the urban runoff flows. In addition, the resolution declares that the District
will initially waive fees and charges associated with authorized discharges of dry weather urban runoff to
the Wastewater System until the total volume of all runoff discharges exceeds 4 MGD calculated on a monthly average, or until the District modifies this provision of its policy. Resolution No. OCSD 01-07
was adopted March 28, 2001 to clarify the District’s indemnification liability. In June 2002, legislation was enacted to formally allow the District’s charter to include the treatment of urban runoff flows. There are a total of 19 active urban runoff diversion structures, four owned and operated by the
County, 11 owned and operated by the City of Huntington Beach, one owned and operated by the City of Newport Beach, two owned and operated by the IRWD, and one owned and operated by The Irvine
Company. From July 1, 2010 through June 30, 2011, the District received a daily average urban runoff
flow ranging between 0.334 and 3.31 MGD with a cumulative total of 555 million gallons for this period. The daily urban runoff volume remained at less than half of the 4 MGD fee threshold for ten months out
of the twelve month period. At the existing operations and maintenance cost of $1,311.79 per million
gallons (2010-2011 rate). The District’s Environmental Compliance Division administers the Dry Weather Urban Runoff
Program through the issuance of a discharge permit for each of the diversion structures. The permit functions as a control mechanism to establish discharge limits, constituent monitoring, and flow metering requirements, as well as provide requirements that specifically prohibit storm runoff and authorizes
discharge only during periods of dry weather. In addition, the District conducts quarterly sampling and analysis of the urban runoff discharges to ensure discharge limit compliance for the various regulated
constituents. The Dry Weather Urban Runoff Program’s effectiveness is measured by improvements in the quality of recreational waters of the County as manifested by a decline in beach advisories and closures. The most recent report on beach quality by Orange County Health Agency, 2009 Annual Ocean, Harbor,
& Bay Water Quality Report details the total number of Beach Mile Days that were posted due to AB 411 standards violations between April 1 and October 31. Throughout the County overall, the total number of Beach Mile Days posted in 2009 (123.5) was the lowest total on record for the 10-year period from 2000–
2009. In addition, the total number of Beach Mile Days posted has declined in the County for four consecutive years.
Since inception of the program, the areas directly benefitting from the urban runoff diversions, Huntington State Beach and Huntington City Beach, have had significant reductions in Beach Posting
Days and Beach Mile Days, with the exception of a spike at Huntington State in 2007. Though there are numerous variables impacting water quality at any given instant, the dry weather diversion appears to
have contributed positively to the overall downward trend in beach closures at these locations. As a
consequence, the Dry Weather Urban Runoff Program appears to have benefitted the beach going public as well as all the clean environment stakeholders of the County.
27 95197910.4
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 document titled Fault Rupture Hazard
Investigation – Wastewater Treatment Plant No. 2. The disaster preparedness plan included in the Master Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude (“M”) earthquake on the southern San Andreas fault
system and an M 7.0 earthquake on the Newport-Inglewood fault zone, which includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault, while on the whole more destructive than the M 7.0
Newport-Inglewood fault, may result in less damage to the District’s service area due to the distance of
the fault from most of the service area. However, the Master Plan stated that damage from such a major earthquake on the San Andreas fault would be extensive. Also, the Master Plan indicated that an M 7.0
earthquake on the Newport-Inglewood fault within five miles of the District’s sewerage facilities could
cause major destruction to those facilities. The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to upgrade all of the existing sanitary sewerage facilities to
survive an earthquake of this magnitude along the Newport-Inglewood fault. The IERP outlines the policies and employee actions to be taken before, during and after an earthquake, earthquake response guidelines and damage assessment procedures.
The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of the District and planned a risk reduction program wherein the vulnerability of many of the District’s sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction
measures. The Master Plan also recommended that designs of existing major structures which were 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 are built to federal standards.
The disaster preparedness plan in the Strategic Plan investigates the damage potential posed by coastal flooding, tsunamis (large ocean waves generated by seismic activity) and windstorms. No
assurance can be given that any such events would not have a material adverse impact on the Wastewater System.
The Strategic Plan also 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 Strategic Plan and
the IERP can be reviewed at the District’s office.
28 95197910.4
Five-Year Strategic Planning In November 2007, the Board of Directors adopted a new comprehensive strategic plan to steer the District’s efforts and engage the organization to envision service levels and operational needs for the
next five years. The Strategic Plan has been updated annually to continue looking at a five-year horizon (each, a “Five-Year Plan”). The November 2010 update focused on internal operations for economy and efficiency. The General Manager’s Office initiated an effort, known as the Beyond 2012 Strategic
Planning Framework, to guide all future planning and more tightly integrate our priorities, strategic
planning and budget implementation. Working with the executive team the General Manager solicited input from District managers then held a workshop with the Board of Directors in October 2010. At this
workshop the Board members discussed and deliberated changes and additions to the plan. Driven by our Mission, Vision and Core Values, this 2010 Strategic Plan Update continues an aggressive effort to meet the sanitation, health, and safety needs of its more than 2.5 million customers while protecting the
environment.
Since 2007, 72% percent of the strategic goals have been completed. As a result of the discussion at the October 2010 workshop, one new goal was added to the plan:
• Full-Cost Recovery – Conduct a comprehensive review of the Sanitation District’s urban runoff diversion program and ensure a fair share recovery of costs for services.
This Strategic Plan continues to chart a focused roadmap of success for the future of the District.
It addresses critical issues and challenges and communicates clear and concise future direction to District staff. 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 increase in the number of
categories provided a more equitable fee structure and also provided for future reductions in single-family
residential Sewer Service Charges. 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.” In May 2002, the Board of Directors adopted District Ordinance No. OCSD 18 (the “2002 Ordinance”) which became effective on July 1, 2002. The 2002 Ordinance included a single family
residential (“SFR”) rate increase, the underlying basis for all sanitary sewer service charges including
29 95197910.4
sanitary sewer rates for multi-family residential units as well as most commercial and industrial properties, of $7.50 per year, or 9.4%, to $87.50 per year. In June 2003, the Board of Directors authorized a Proposition 218 notice on proposed “not to exceed” rate increases for each year over the next
five years. 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 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 NOTES – Rate Covenant” herein.
Residential and Commercial Sewer Service Charges. Pursuant to the 2002 Ordinance, 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 2002 Ordinance considered increases in the amount of the annual charges of approximately 20% per year for each of the then following five years. In May 2005, the Board of
Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential
rate, the underlying basis for all sewer service charges, by 31%, from $115.00 to $151.00 for all ratepayers, except those located in Revenue Area No. 14. 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%.
On February 27, 2008, the Board of Directors approved increases in its sanitary sewer service charges for all single family and multi-family residential units, and for all commercial properties. The
Board increased the single family residential rate, which is the basis for all of the District’s sewer service charges, by 10.4% for Fiscal Year 2008-09, 10.0% for Fiscal Year 2009-10, 10.4% for Fiscal Year 2010-
11, 9.4% for Fiscal Year 2011-12 and 10.1% for Fiscal Year 2012-13.
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Table 6 below presents a five-year comparison of the Sewer Service Charge rate for single-family
residences.
Table 6 Annual Sewer Service Charges
Single Family Residence Rate Five Year Rate Schedule Fiscal Years 2008-09 through 2012-13
Fiscal Year Sewer Service
Charge Percent
Increase
2008-09 $201.00 10.4%
2009-10 221.00 10.0
2010-11 244.00 10.4 2011-12 267.00 9.4
2012-13 294.00 10.1
Source: Orange County Sanitation District. Table 7 below sets forth total average annual Sewer Service Charges for single-family residences
(“SRF”) 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 the dates indicated. The
District’s projected SFR rate of $294 in Fiscal Year 2012-13 remains below the current average annual sewer rate of $406 according to a Fiscal Year 2007-08 survey of 726 agencies encompassing all 58 counties in California conducted by the State Water Resources Control Board.
[Remainder of page intentionally left blank.]
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Table 7 Comparison of Total Sewer Service Charges
For Single-Family Residences As of July 1, 2011 (Sacramento as of October 1, 2011) Entity
Average Dry Weather Flow (mg/d) (3)
Annual Sewer Service
Charge(1)
Treatment
Level(2) (3)
Collection
Responsibility(3)
Property Tax
Income(3)
City of San Diego 168 $608 2 Yes No
City of Los Angeles 428 360 4 Yes No
East Bay MUD 80 288 4 No Yes
Sacramento 140 312 3 No Yes Orange County 221 267 2 No Yes
Sanitation District Los Angeles County 497 143 4 No Yes
(1) 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. Pursuant to the 2002 Ordinance, rates for each component factor were revised for certain industrial users in order to be consistent with the rates charged to residential users. Total industrial Sewer
Service Charges in Fiscal Year 2010-11 were approximately $10.9 million. Industrial Sewer Service Charges are applied to both operating and capital funds. The Sewer Service Charge increases described above are necessary to meet the District’s cash
flow needs arising from the addition of disinfection treatment and other operating requirements. As discussed under the caption “THE DISTRICT – 2009 Facilities Master Plan and Capital Improvement Program,” the 2011 CIP Validation Study developed the capital improvement program to ensure
secondary treatment standards are met as quickly as possible while providing for increased flows and rehabilitation and refurbishment of existing facilities. As projected through Fiscal Year 2030-31, the cash
flow needs of the CIP total approximately $1.8 billion. Over the next five years the CIP contemplates
average annual capital expenditures of $180 million.
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Additional Revenues The District has several sources of additional revenue, including property taxes, Capital Facilities Capacity Charges, capacity rights, permit and inspection fees and interest earnings.
Property Taxes. The District receives approximately 2.5% of the one percent County ad valorem property tax levy, based on the allocation procedure under State law. Property tax revenues were $40.0 million in Fiscal Year 2005-06, $60.6 million in Fiscal Year 2006-07, $65.2 million in Fiscal Year 2007-
08, $66.4 million in Fiscal Year 2008-09 and $64.8 million in Fiscal Year 2009-10. In Fiscal Years 2003- 04 and 2004-05 the State implemented a two-year 40% secured property tax shift away from independent special districts due to the fiscal crisis occurring at that time. During the 2004-05 State Budget process, the State Legislature and the Governor enacted Senate Bill 1096 and Assembly Bill 2115, effectively shifting an additional $1.3 billion in local property tax revenues from counties, cities, special districts and
redevelopment agencies to schools and community colleges. See “LIMITATIONS ON TAXES AND REVENUES –Proposition 1A.” Total assessed valuations increased in the 2005-06 Fiscal Year by 10.3%
over the 2004-05 Fiscal Year, and the full value of these increases was received on all non-secured property tax distributions. The District received its full allotment of property tax revenues (no State property tax shift) beginning in Fiscal Year 2006-07. See Table 14 below. The District currently projects
its property tax receipts to remain approximately level through Fiscal Year 2012-13. The apportionment of the ad valorem tax is pursuant to a revenue program adopted by the District in April 1979 to comply
with EPA and RWQCB mandates, legal and contractual requirements and Board of 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. Currently, the District has Capital Facilities Capacity
Charges of $3,341 per residential unit (three-bedroom); however, under the current industrial use
ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial users who place larger than average demand on the Wastewater System. Member cities and sanitary districts collect
Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to which a new customer is connecting.
On December 15, 1999, the Board of Directors approved District Ordinance No. OCSD 99-11 (the “1999 Ordinance”) which established a comprehensive Capital Facilities Capacity Charge. The 1999 Ordinance, effective as of January 1, 2000, renamed connection fees as Capital Facilities Capacity
Charges and provided a more equitable schedule of fees among industrial, commercial and residential
users. Pursuant to the 1999 Ordinance, Capital Facilities Capacity Charges were revised for high demand industrial users in five incremental increases from 1999 through 2001. For a summary of historical and
projected revenues derived from Capital Facilities Capacity Charges, see Table 14 and Table 15 below.
Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities
Capacity Charges and, in exchange, the IRWD provides funding to the District for the construction costs
of certain wastewater collection, transmission, treatment and disposal facilities to be used by the IRWD and is obligated to make certain payments to the District for certain services arising from the Wastewater
System (including any standby or availability charges).
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Sale of Capacity. The District has entered into agreements with the Santa Ana Watershed Project
Authority (“SAWPA”) whereby wastewater from Upper Santa Ana River Basin dischargers can be transported through the District’s Santa Ana River Interceptor to the District’s wastewater treatment
facilities. This program was developed in the early 1970s. The agreements establish control mechanisms
regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has purchased and paid for 30 mg/d of maximum regulated flow capacity rights in the District’s Santa Ana
River Interceptor and 17 mg/d of monthly average flow capacity in the District’s wastewater treatment
plants. Projected revenues from SAWPA range from $6.3 million to $7.2 million over the next four years. Additional treatment plant capacity can be purchased in increments at the District’s current
replacement cost.
Federal Subsidy Payments. In connection with the District’s Revenue Obligations, Series 2010A (the “2010A Certificates”) and the District’s Revenue Obligations, Series 2010C (the “2010C
Certificates”), issued as “Build America Bonds,” the District will 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 Certificates and the 2010C Certificates will constitute
Revenues as defined in the Master Agreement. In its financial reports, the District accounts for subsidy payments received in connection with the 2010A Certificates and the 2010C Certificates as a reduction in interest expense with respect to such obligations.
Wastewater Treatment History
The wastewater flows for Fiscal Year 2006-07 through Fiscal Year 2010-11 were 229 mg/d, 221
mg/d, 211 mg/d, 196 mg/d and 207 mg/d, respectively. The highest flow rate experienced was during El Niño 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. Customers
The historical number of customers served by the District for the Fiscal Years 2006-07 through 2010-11 and the projected number of customers served by the District for the Fiscal Years 2011-12
through 2015-16, 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.” The EDUs
set forth in Table 8 equate to total Sewer Service Charge levies while the EDUs set forth in Table 9 equate to total sewer service charge collections.
34 95197910.4
Table 8 Historical and Projected Equivalent Dwelling Units
Fiscal Years 2006-07 through 2015-16
Fiscal Year Historical EDUs(1) Fiscal Year
Projected
EDUs
2006-07 907,986 2011-12 926,990(2)
2007-08 911,033 2012-13 929,401(3)
2008-09 921,782 2013-14 931,910(3)
2009-10 930,164 2014-15 934,519(3) 2010-11 924,622 2015-16 937,229(3)
(1) 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. (2) EDUs projected in current budget as of June 2011. (3) EDU growth during the projection period is estimated at approximately 2.6% to 2.9% per annum. Source: Orange County Sanitation District. Table 9 below shows the number of residential and commercial customers and industrial
customers and the approximate percentages of Sewer Service Charge revenues derived from the combined residential and commercial use and industrial use for the last five fiscal years. Table 9 Number of Accounts and Revenues by Customer Class
for the Fiscal Years 2005-06 through 2009-10 ($ 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
2005-06 872,859 $132.0 92% 557 $12.2 8% 2006-07 867,035 143.8 91 531 13.4 9 2007-08 875,739 159.4 93 520 12.1 7 2008-09 882,747 177.4 95 515 9.9 5 2009-10 875,442 193.5 95 487 10.8 5
Source: Orange County Sanitation District.
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The ten largest principal sewer service customers of the District for the Fiscal Year ended
June 30, 2010 are shown in Table 10 below.
Table 10 Largest Principal Sewer Service Customers of the District
for the Fiscal Year Ended June 30, 2010
User Sewer Service Charges
Kimberly-Clark Worldwide, Inc. $ 1,325,796
MCP Foods, Inc. 1,313,284 Alstyle Apparel-A&G Inc. 1,019,603 Stremicks Heritage Foods, LLC 629,473
House Foods America Corp. 534,052 Pepsi-Cola Bottling Group 419,539 Ameripec Inc. 410,545 Pulmuone Wildwood, Inc. 409,974 Morningstar Foods, LLC 360,198 Angelica Textile Services 321,568 Total $ 6,744,031
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 to market value only upon a change in ownership or
completion of new construction. The assessed value of property that has not incurred a change of ownership or new construction must be adjusted annually to reflect inflation at a rate not to exceed 2%
per year based on the State consumer price index. In the event of declining property value caused by
substantial damage, destruction, economic or other factors, the assessed value must be reduced temporarily to reflect market value. For the definition of full cash value and more information on
property tax limitations and adjustments, see “LIMITATIONS ON TAXES AND REVENUES” herein.
The County Assessor determines and enrolls a value for each parcel of taxable real property in the County every year. The value review may result in a reduction in value. Taxpayers in the County also
may appeal the determination of the County Assessor with respect to the assessed value of their property.
Table 11 below shows a five-year history of assessed valuations in the District since Fiscal Year 2006-07.
36 95197910.4
Table 11 Assessed Valuations of Property in the District
Fiscal Years 2006-07 through 2010-11 ($ in Billions) Fiscal Year Value % Change
2006-07 $270.7 11.93%
2007-08 292.7 8.14 2008-09 307.6 5.08
2009-10 305.2 (0.98)
2010-11 304.3 (0.27)
Source: County of Orange Auditor-Controller. Prior to 2006, the housing market in Southern California experienced significant price
appreciation. During this period, many homebuyers financed the purchase of their new homes using non- conventional loans. Such loans were made with little or no down payment and included adjustable
interest rates subject to being reset at higher rates on a specified date or upon the occurrence of specified
conditions. In addition, many of these loans allow the borrower to pay interest only for an initial period, in some cases up to ten years.
Starting in 2006, housing developers, appraisers and real estate consultants began to report
weakening of prices for single-family homes. There has been tightening of underwriting criteria for mortgage loans such that most lenders now require down payments, stricter verification, higher income to
loan ratios, higher credit ratios or some combination of such factors. These factors have contributed to a decrease in home sales as prospective purchasers are unable to qualify for loans. Declining home sales in some areas of Southern California have resulted in a decrease in home prices. As home values decline,
homebuyers may not be able to obtain replacement financing because the outstanding loan balances exceed the value of their homes. Due to the limiting effect of Proposition 13 on assessed valuations,
declines in the market value of property in the County will not necessarily result in decreased property tax
revenue in the near term. In fact, assessed valuations of property in the District for Fiscal Year 2008-09 increased by $14.9 billion, or 5.08%, over Fiscal Year 2007-08 valuations. For Fiscal Years 2009-10 and 2010-11, however, the County reduced assessed valuations by 0.98% and 0.27%, respectively, as a result
of further decreases in market value, leading to decreased property tax collections. Assessed valuations tend to lag economic activity. Given the severity of the recent recession, the sharp decline in the market
value of real estate, and the complexity of the methodology by which property is assessed, the District
cannot accurately forecast the long-term impact of the recent recession on assessed valuations and property tax receipts. Tax Levies and Delinquencies Property taxes are based on assessed valuation which is determined as described under “DISTRICT REVENUES – Assessed Valuation” herein. In accordance with the California Revenue and
Taxation Code, the County tax collector collects secured tax levies for each Fiscal Year. Property taxes on the secured roll are due in two installments, on November 1 and February 1. The District currently
participates in the County’s Teeter Plan under which the District receives annually 100% of the secured
property tax levies and Sewer Service Charges to which it otherwise is entitled, regardless of whether the County has actually collected the levies. This alternative method provides for funding each taxing entity
included in the Teeter Plan with its total secured property taxes during the year the taxes are levied, including any amount uncollected at fiscal year end. Under this plan, the District’s general fund receives
37 95197910.4
the full amount of secured 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. In recent
years, the County has experienced delinquencies of Sewer Service Charges in the District of approximately 2%.
Table 12 below presents 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 2006-07 through 2010-11 (In Thousands)
Fiscal Year
Total Tax and Sewer
Service Charge Levy
2006-07 $209,766 2007-08 228,622 2008-09 254,092 2009-10 272,050 2010-11 292,646
Source: Orange County Auditor-Controller’s Office. 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. See “DISTRICT REVENUES — 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.
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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. Reserves The District has an established reserve policy with eight separate categories for its reserve funds. Collectively, these individual reserve requirements total over $482 million for each year of the current
ten-year cash flow forecast. 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 percent. The following table sets forth actual reserves at June 30, 2008, June 30, 2009, June 30, 2010 and June 30,
2011, for each fund. Reserve levels are calculated in accordance with the District’s reserve policy.
Table 13 Cash Reserves June 30, 2008 through 2011
(In Millions)
Actual Projected
Cash Flow Requirements Reserve —
2008 (June 30) 2009 (June 30) 2010 (June 30) 2011 (June 30)
Operating Expenses $ 70 $ 73 $ 78 $ 75 Certificates of Participation Payments 65 84 92 97
Operating Contingencies Reserve 14 15 15 15 Capital Improvement Program Reserve 165 116 86 113
Catastrophe and Self Insurance 57 58 57 57 Capital Replacement and Refurbishment 54 55 56 57
Debt Service Required Reserves(1)
108 133 129 147
Overlapping Reserve Adjustment - - (40) - Total $ 533 $ 534 $ 473 $561
(1) “Debt Service Required Reserves” constitute all amounts held in Obligation Reserve Funds, together with additional amounts held by the District that may be used for the payment of debt service on District obligations
in accordance with the District’s reserve policy. As of June 30, 2011, $90.2 million of Debt Service Required Reserves were held in Obligation Reserve Funds restricted by covenant for the specific obligations for which
such Obligation Reserve Funds were established. Source: Orange County Sanitation District.
39 95197910.4
The District has the following reserves: • 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.
• 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 $6.92 billion.
The initial reserve level for this fund was established at $50 million and is augmented by interest earnings and a portion of the annual Sewer Service Charges.
• Debt Service Required Reserves include trustee-held amounts in any Obligation Reserve Fund and additional amounts held by the District for the payment of debt service in
accordance with the District’s reserve policy. The District’s current policy is to maintain
reserves (including trustee-held reserves) for debt service in the amount of 10% of the principal amount of the District’s outstanding debt obligations.
• The Rate Stabilization Reserve accumulates all available funds which exceed the targets for all other reserves. The Rate Stabilization Reserve is a separate fund from the Rate
Stabilization Account established under the Trust Agreement. There is currently no
established target for this reserve and, because the reserves of all other funds have not been exceeded, the reserve level for this reserve fund is zero for Fiscal Year 2009-10. Summary of Operating Data
Set forth in Table 14 below is a summary of historic operating results for the District for Fiscal Years 2005-06 through 2009-10 and unaudited results for Fiscal Year 2010-11. The information
presented in the summary should be read in conjunction with the financial statements and notes. See
APPENDIX A — “COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2010.”
40 95197910.4
Table 14 Summary of Historical District Revenues and Expenses
and Other Financial Information For Fiscal Years 2006-07 through 2010-11
($ in Millions) Revenues:
Residential & Commercial
Sewer Service Charges(1)
Audited Unaudited 2006-07 2007-08 2008-09 2009-10 2010-11
Regional $143.8 $159.4 $177.4 $193.5 $214.3
Local - - 5.6 5.6 5.7 Industrial Sewer Service
Charges 13.4 12.1 9.9 10.8 10.6
Revenue Area No. 14 Fees 5.2 7.1 10.3 10.2 15.5 Ad Valorem Taxes 60.6 65.2 66.4 64.8 64.3
Interest Earnings 22.2 20.2 14.8 19.2 10.1
Capital Facilities Capacity Charges(2) 50.2 35.4 17.9 (2.4) (8.8)
Other Revenues 8.3 6.9 5.8 12.5 9.5
Total Revenues $303.7 $306.3 $308.1 $314.2 321.2
Operations and Maintenance Expenses (3)
112.2
131.9
164.6(6)
138.1
137.2
Net Revenues (4)
$141.3 $139.0 $125.6 $178.5 $192.8
Debt Service $ 48.8 $ 42.8 $ 57.6 $ 77.3 $ 83.6
Coverage Ratios (4)
2.90x 3.25x 2.18x 2.31x 2.31x
CIP Outlay $287.5 $259.4 $290.1 $251.1 $135.9
Ending Reserves (5) $293.0 $425.0 $401.0 $344.0 $413.5
(1) Net of rebates, if any, to commercial users. Local sewer service fees were not established until Fiscal Year 2008-09. (2) Includes capital contributions from IRWD. (3) Excludes depreciation and amortization expenses. (4) Calculated in accordance with Master Agreement, which excludes CFCC from Net Revenues. (5) Excludes debt service reserves in accordance with the District’s Debt Service Required Reserves Policy. (6) During the fiscal year ended June 30, 2009, independent agreed-upon procedures were conducted on Revenue Area 14 to substantiate the IRWD’s owner equity interest in the District. As a result, a one-time other operating expense of $29 million was charged to the Consolidated Revenue Area for the year ended June 30, 2009. Source: Orange County Sanitation District.
41 95197910.4
Projected Operating Data Set forth in Table 15 below are projected operating results for the District for Fiscal Years 2011- 12 through 2015-16. These projections assume the number of projects and scheduled build out set forth
in the 2011 CIP Validation Study, and reflect Board-approved annual rate increases over the next two years of 9.4%, and 10.1%, respectively. The following three years thereafter are projected at 7.0% for
each year. Principal expenditure components of these projections are derived from the 2011 CIP
Validation Study, which identified 176 individual capital projects through Fiscal Year 2030-31 with remaining outlays of $1.8 billion. Much of the construction is scheduled during the next five years, with
average annual expenditures of $180 million. The District’s CIP cash flow budget for Fiscal Year 2010- 11 was $179.6 million. The District’s CIP cash flow budget for Fiscal Year 2011-12 is $129.2. This CIP budget finances joint works treatment and disposal system improvement projects, and collection system
improvement projects. The preparation of such projections was based upon certain assumptions and certain forecasts with respect to conditions that may occur in the future. While the District believes that
these assumptions and forecasts are reasonable for the purposes of the projected selected operating data, it makes no representations that they will in fact occur. To the extent that actual future conditions differ
from those assumed herein, the data will vary.
[Remainder of page intentionally left blank.]
42 95197910.4
Table 15 Summary of Projected District Revenues and Expenses
and Other Financial Information for Fiscal Years 2011-12 through 2015-16
($ in Millions)(3)
Residential & Commercial
2011-12 2012-13 2013-14 2014-15 2015-16
Sewer Service Charges $248.5 $276.9 $299.5 $321.0 $344.2 Industrial Sewer Service Charges 11.4 12.5 13.4 14.4 15.4 IRWD Assessments 13.9 14.6 15.6 15.4 16.2 SAWPA Assessments 4.4 4.5 4.6 4.7 4.9
Ad Valorem Taxes 63.4 63.4 66.5 69.9 73.4 Interest Earnings 11.7 12.0 15.2 17.1 16.1 Capital Facilities Capacity Charges (14.5) - 16.4 8.7 9.5 Other Revenues 1.3 1.7 1.7 1.7 1.8
Total Revenues $340.1 $385.6 $432.9 $452.9 $481.5 Add: Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 5.1
Operations and Maintenance Expenses (152.5) (169.5) (179.0) (189.4) (202.0) Less: Capital Facilities Capacity Charges 14.5 - (16.4) (8.7) (9.5) Net Revenues (1) $207.2 $221.2 $242.6 $259.9 $275.1
Debt Service $ 92.2 $ 96.1 $113.8 $100.6 $100.5 Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 5.1 Gross Debt Service $ 97.3 $101.2 $118.9 $105.7 $105.6
Coverage Ratios (1)
2.13x 2.19x 2.04x 2.46x 2.61x
CIP Outlays $129.2 $169.0 $212.3 $173.4 $214.3 Debt Proceeds $ - $120.0 $ - $ - $ - Ending Reserves (2) $573.4 $643.4 $585.2 $572.2 $514.8
(1) Calculated in accordance with the Master Agreement and the Installment Purchase Agreement. (2) Excludes debt service reserves in accordance with the District’s Debt Service Required Reserve Policy. (3) Assumptions: a) Annual growth in equivalent dwelling units is projected to increase 0.25% over the next five years. b) The Residential and Commercial Sewer Service Charge and the Industrial Sewer Service Charges are forecasts are based on the total projected equivalent dwelling units, and the actual board approved annual rate increases over the
next two years of 9.4%, and 10.1%, respectively. The following three years thereafter are projected at 7.0% for each year.
c) The Capital Facility Capacity Charge forecast is based on the total projected equivalent dwelling units along with a 5.0% project annual increase in the rate. d) Revenue Area No. 14 Fees are derived based on the projected contribution of sewage flows to the District from the IRWD.
e) Ad Valorem Taxes are projected to remain level through Fiscal Year 2012-13, with 5% annual increases thereafter. f) Interest earnings are projected to average 2.5% of annual cash balances.
g) Operating and Maintenance Expenses are forecasted with a base increase of 7.0% per year with adjustments for known periodic outlays that do not occur annually. h) Annual CIP Outlays are based on the cash flow projections developed from the CIP Validation Study. Source: Orange County Sanitation District.
43 95197910.4
Management’s Discussion and Analysis of Operating Data The District’s Fiscal Year 2011-12 total operating, capital improvement, debt service, and other
financing requirement budget is $405.8 million, an 11.6 percent decrease over the prior year budget of
$459.0 million. The decrease in the Fiscal Year 2011-12 budget is primarily due to the timing of the construction schedules on the implementation of the overall 20-year $1.8 billion Capital Improvement
Program. The District’s Fiscal Years 2011-12 budgets include $129.2 million in capital improvement
outlays as the District moves towards reaching secondary treatment standards by the target date of December 31, 2012, as specified by the Board of Directors’ July 2002 resolution and in keeping with the
terms and conditions of its ocean discharge permit and related Consent Decree. The Fiscal Year 2011-12 operations budget for the collection, treatment, and disposal of
wastewater is $154.7 million, a $2.2 million or 1.4 percent increase over the prior year budget of $152.5 million. Although individual expense categories will increase or decrease slightly, the overall increase to the operating budget is primarily attributable to an increase in personnel costs which will increase $2.7
million, or 2.8 percent as a result of existing employee contract agreements as staffing has been reduced by 4 full -time equivalent (“FTE”) positions in Fiscal Year 2011-12 to an authorized staffing level of 637
FTE positions. Contractual services have been budgeted at an increase of $1.5 million, or 6.4 percent, due
primarily to a $0.75 million, 4.5 percent increase in solids removal. Biosolids production is estimated to
increase at both plants by 8.3 percent in Fiscal Year 2011-12 to 287,000 wet tons due to increases in secondary treatment as new secondary treatment processes become operational. Operating materials and
supplies are being proposed to decrease $1.6 million, or 6.5 percent, over the prior year due primarily to the increases in chemical coagulants, odor control, and disinfection being less than anticipated. Utility costs were increased by $0.4 million, or 4.3 percent over the prior year, primarily due to the increased
usage of electricity as secondary treatment facilities continue to become operational. In preparation for the Fiscal Year 2010-12 budget, a strategic planning workshop was held by the
Board of Directors to review the capital program to deliver the level of services desired by the Board. These levels of services and associated capital projects are included in the District’s Five-Year Strategic Plan. In addition, District staff reviewed each ongoing CIP project to ensure that the scope of the project
remains appropriate, and that the cost estimates have been accurately updated. The Fiscal Year 2011-12
CIP cash flow budget was approved at $129.2 million. The Fiscal Year 2010-12 CIP includes three projects totaling $627 million over the life of the CIP to upgrade the District’s treatment plants to meet
secondary treatment standards. This CIP also includes the 23 recommended projects identified in the
2009 Facilities Master Plan (the “Master Plan”). The result was the addition of $169.3 million to the overall CIP through the year 2030. Over this period, the CIP will accomplish: • Rehabilitation of the existing headworks, primary treatment, secondary treatment, outfall
pumping, and solids handling facilities at both treatment plants;
• Replacement and rehabilitation of nine of the District’s outlying pumping stations, and rehabilitation and upgrade of 29 trunk sewer improvement projects; • Optimization of the production of “power” and “biosolids” at each of the treatment plants;
• Reclamation of up to 150 mg/d of the District’s effluent; and • Secondary treatment standards by December 2012.
44 95197910.4
The 2009 CIP Validation Study reaffirmed the need for further rate increases in future years.
Based on the results of the CIP Validation Study and the Five-Year Plan, the Board of Directors adopted Ordinance No. OCSD-35, increasing the sanitary sewer service charges by approximately 10 percent each
year for a five-year period beginning in Fiscal Year 2008-09. 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. This action increased the single family residence
user rate, the basis for all sewer user fee rates, from $221 to $244 in Fiscal Year 2010-11, and to $267 in
Fiscal year 2011-12. See “DISTRICT REVENUES – Sewer Service Charges.” Investment of District Funds State statutes authorize the District to invest in obligations of the United States Government, state and local governmental agencies, negotiable certificates of deposits, bankers acceptances, commercial paper, reverse repurchase agreements and a variety of other investment instruments which are allowable
under California Government Code Section 53600 et seq. All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to
the provisions of Existing Senior Obligations, are managed by an external money manager, Pacific
Investment Management Company (“PIMCO”). Mellon Trust (“Mellon Trust”) serves as the District’s independent custodian bank for its investment program. Callan Associates (“Callan”) serves as the
District’s independent advisor.
As of August 1, 2011, the District’s externally managed fund consisted of a short-term investment portfolio of $54.6 million with an average maturity of 110 days, and a long-term investment portfolio of
$281.7 million with average maturities of 2.6 years. Investments consist of United States government
securities, corporate bonds and commercial paper. The District’s portfolio contains no structured investment vehicles (“SIVs”) or reverse repurchase agreements. Deposits in banks are maintained in financial institutions which provide deposit protection on the bank balance from the Federal Deposit Insurance Corporation. The California Government Code requires
State banks and savings and loans to secure local government deposits by pledging government securities
equal to 110% of the deposits or by pledging first trust deed mortgage notes equal to 150% of the deposits.
The District’s Investment Policy requires that the District invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonable anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the
investment of public funds. The primary objectives, in order, of the District’s investment activities are safety, liquidity and return on investment. FINANCIAL OBLIGATIONS
Existing Indebtedness
Currently, the District has Senior Obligations Outstanding payable on a parity with the Installment Payment under the Installment Purchase Agreement. The table below describes the District’s
outstanding certificates of participation as of October 3, 2011. The payment obligations in connection
with each series of these certificates constitute Senior Obligations, subject to the provisions of the Master Agreement and shall be afforded all of the benefits, interests and security afforded Senior Obligations
pursuant to the Master Agreement. The District has no general obligation bonds or subordinate bonds
outstanding.
45 95197910.4
Table 16 Outstanding Senior Obligations
As of October 3, 2011
Original Principal
Amount
Issue
Date
Outstanding
Balance
Final
Maturity
2000 Certificates $218,600,000 08/31/00 $ 91,900,000 08/01/30
2003 Certificates 280,000,000 08/26/03 108,180,000 02/01/33 2007A Certificates 95,180,000 05/22/07 93,060,000 02/01/30
2007B Certificates 300,000,000 12/20/07 284,825,000 02/01/37
2008A Certificates 77,165,000 05/29/08 25,710,000 08/01/13 2008B Certificates 27,800,000 09/11/08 26,550,000 08/01/16
2009A Certificates 200,000,000 05/07/09 194,595,000 02/01/39
2010A Certificates 80,000,000 05/18/10 80,000,000 02/01/40 2010B Certificates 154,665,000 11/23/10 154,665,000(1) 11/23/11(1)
2010C Certificates 157,000,000 11/29/10 157,000,000 02/01/44
2011A Certificates 147,595,000 10/03/11 147,595,000 02/01/26 Total Senior Obligations $1,738,005,000 $1,364,080,000
(1) To be refunded with the sale proceeds of the Notes and other sources of funds. See “PLAN OF FINANCE.”
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.
Variable Rate Obligations In August 2000, the District caused the execution and delivery of the Orange County Sanitation
District Refunding Certificates of Participation, Series 2000-A (the “2000-A Certificates”) and the Orange County Sanitation District Refunding Certificates of Participation, Series 2000-B (the “2000-B
Certificates” and, together with the 2000-A Certificates, the “2000 Certificates”) in the original aggregate principal amount of $218,600,000, of which $[181,700,000] is currently outstanding. The payment of the purchase price of tendered 2000 Certificates is supported by a Standby Certificate Purchase Agreement,
dated as of August 1, 2010 (the “Standby Agreement”), by and between the District and Lloyds TSB Bank plc, acting through its New York Branch. The Standby Agreement currently expires on August 24, 2012. Anticipated Financings
From time to time the District expects to incur other obligations to finance portions of the CIP. In
fiscal year 2012-13, the District expects to incur further Additional Senior Obligations in an aggregate
principal amount of approximately $120 million for the purpose of funding the capital improvement program. The District may also refinance outstanding obligations from time to time.
46 95197910.4
Direct and Overlapping Bonded Debt The aggregate direct and overlapping bonded debt of the District as of June 30, 2010 is set forth on page 52 of Appendix B. THE CORPORATION
The Corporation was organized on June 19, 2000 as a nonprofit public benefit corporation pursuant to the Nonprofit Public Corporation law of the State. The Corporation’s purpose is to render
assistance to the District in its acquisition of equipment, real property and improvements on behalf of the
District. Under its articles of incorporation, the Corporation has all powers conferred upon nonprofit public benefit corporations by the laws of the State, provided that it will not engage in any activity other
than that which is necessary or convenient for, or incidental to the purposes for which it was formed.
The Corporation is a separate legal entity from the District. It is governed by a twenty-five
member Board of Directors. The Corporation has no employees. All staff work is performed by
employees of the District. The members of the Corporation’s Board of Directors are the Board of Directors of the District. 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.
47 95197910.4
Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except
to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency
continues as part of its allocation in future years.
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” are authorizations to spend “proceeds of taxes,” which
consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service,” but “proceeds of taxes” excludes tax refunds
and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non- tax funds.
Not included in the Article XIIIB limit are appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations
required to comply with mandates of courts or the federal government and appropriations for qualified capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency.
48 95197910.4
The appropriations limit for the District in each year is based on the District’s limit for the prior
year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of
government. The change in the cost of living is, at the District’s option, either (1) the percentage change
in State per capita personal income, or (2) the percentage change in the local assessment roll on nonresidential property. Either test is likely to be greater than the change in the cost of living index,
which was used prior to Proposition 111. Change in population is to be measured either within the
jurisdiction of the District or the County as a whole. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year
periods. Any excess of the aggregate “proceeds of taxes” received by a District over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979, the
District’s appropriations limit was based on 1978-79 authorizations to expend proceeds of taxes and was adjusted annually to reflect changes in cost of living and population (using different definitions, which
were modified by Proposition 111). Starting with Fiscal Year 1990-91, the District’s appropriations limit
was recalculated by taking the actual Fiscal Year 1986-87 limit, and applying the annual adjustments as if Proposition 111 had been in effect. The District does not anticipate that any such appropriations limitations will impair its ability to make the Installment Payment as required by the Installment Purchase
Agreement.
Proposition 1A Proposition 1A (“Proposition 1A”), 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 1A 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 1A 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 1A 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.
For Fiscal Year 2009-10, approximately $5 million of the District’s property tax revenues were diverted to the State as a result of a Proposition 1A suspension. The District participated in a Proposition
1A 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.
Proposition 1A also provides that if the State reduces the vehicle license fee (“VLF”) rate currently in effect, 0.65% of vehicle value, the State must provide local governments with equal
replacement revenues. Further, Proposition 1A requires the State to suspend State mandates affecting
49 95197910.4
cities, counties and special districts, excepting mandates relating to employee rights, schools or
community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Article XIIIC and Article XIIID of the California Constitution
Proposition 218, a State ballot initiative known as the “Right to Vote on Taxes Act,” was approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the
California Constitution, creating additional requirements for the imposition by most local governments of “general taxes,” “special taxes,” “assessments,” “fees,” and “charges.” Proposition 218 became effective,
pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general governmental purposes (i.e., “general taxes”) imposed, extended or increased on or after January 1, 1995
and prior to November 6, 1996.
Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any “fee” or “charge” subject to its provisions. A “fee” or “charge” subject to Article XIIID
includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or
charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be
imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a
majority of the property owners subject to the fee or charge, or at the option of the agency, by a two-thirds vote of the electorate residing in the affected area, is required within 45 days following the public hearing
on any such proposed new or increased fee or charge. The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Cal.4th 409 (2004) (“Richmond”), and Bighorn- Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006) (“Bighorn”) have clarified some of the
uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court
held that both the capacity charge and the fire suppression charge were not subject to Article XIIID
because a water connection fee is not a property-related fee or charge because it results from the property owner’s voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the
Court stated that a fee for ongoing water service through an existing connection is imposed “as an incident of property ownership” within the meaning of Article XIIID, rejecting, in Bighorn, the water agency’s argument that consumption-based water charges are not imposed “as an incident of property
ownership” but as a result of the voluntary decisions of customers as to how much water to use.
Article XIIID also provides that “standby charges” are considered “assessments” and must follow the procedures required for “assessments” under Article XIIID and imposes several procedural
requirements for the imposition of any assessment, which may include (1) various notice requirements, including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a
property owner ballot procedure for the traditional written protest procedure, and providing that “majority
protest” exists when ballots (weighted according to proportional financial obligation) submitted in opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity
“separate the general benefits from the special benefits conferred on a parcel” of land. Article XIIID also
precludes standby charges for services that are not immediately available to the parcel being charged.
Article XIIID provides that all existing, new or increased assessments are to comply with its provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and
50 95197910.4
“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 2/3 vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with all laws. The Ordinance increases the amount of the annual charges by approximately 15% per year for each of the
following five years, commencing with Fiscal Year 2003-04, thereby raising the single family residence user rate from the then current $87.50 to $100.00, $115.00, $132.00, $152.00, and $175.00 annually. The Ordinance discounted by 5% the annual increases which were the subject of the required protest hearings
on the fee increase as described above. After the completion of the CIP Validation Study for Fiscal Year
2005-06 that increased its ten year CIP cash flow projects to $2.2 billion, or an average of $220 million per year, the Board of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06
single family residential rate 31%, from $115 to $151 for such year. In May 2006, the Board of Directors adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07 single family residential rate 9.8%, from $151.00 to $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. 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
51 95197910.4
sufficient to meet the requirements of the Master Agreement. In the event that 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 effect the ability of the District to generate
revenues in the amounts required by the Master Agreement, and to make the Installment Payment as
provided in the Installment Purchase Agreement. No assurance may be given that Articles 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 Notes and certain other legal matters are subject to the approving opinion of
Fulbright & Jaworski L.L.P., 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 Fulbright & Jaworski L.L.P., Disclosure Counsel to the District.
FINANCIAL ADVISOR
The District has retained Public Resources Advisory Group as financial advisor (the “Financial
Advisor”) in connection with the execution and delivery of the Notes. The Financial 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 Financial Advisor has reviewed this Official Statement but makes no guaranty, warranty or other representation respecting accuracy and
completeness of the information contained in this Official Statement. ABSENCE OF LITIGATION There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, regulatory agency, public board or body, pending or, to the best knowledge of the District, threatened against the District affecting the existence of the District or the titles of its directors or officers to their offices or seeking to restrain or to enjoin the sale or delivery of the Notes, the application of the
proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the validity or enforceability of the Notes, the Trust Agreement, the Master Agreement, the Installment
Purchase Agreement or any action of the District contemplated by any of said documents, or in any way
contesting the completeness or accuracy of this Official Statement, or contesting the powers of the District or its authority with respect to the Notes or any action of the District contemplated by any of said documents, nor, to the knowledge of the District is there any basis therefor.
There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best knowledge of the District,
threatened against the District contesting or affecting the ability of the District to collect amounts from
which the Installment Payment is payable, or which would have a material adverse effect on the District’s ability to make the Installment Payment.
52 95197910.4
FINANCIAL STATEMENTS The basic financial statements of the District included in Appendix A to this Official Statement have been audited by Mayer Hoffman McCann P.C., independent certified public accountants. See
APPENDIX A – “COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2010” herein. The District has received the Government Finance Officer’s Association Certificate of Achievement for “Excellence in
Financial Reporting” for 16 consecutive years. The audited financial statements, including the footnotes
thereto, should be reviewed in their entirety. Mayer Hoffman McCann P.C. has consented to the inclusion of its report as Appendix A but has not undertaken to update its report or to take any action
intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by Mayer Hoffman McCann P.C. with respect to any event subsequent to its report dated October 20, 2010. TAX MATTERS
The Internal Revenue Code of 1986 (the “Code”) imposes certain requirements that must be met
subsequent to the execution and delivery of the Notes for the interest component of the Installment
Payment (the “Interest Component”), and the allocable portion thereof distributable in respect of each Note (the “Note Interest Distribution”), to be and remain excluded pursuant to section 103(a) of the Code
from the gross income of the owners thereof from the gross income of the owner thereof for federal
income tax purposes. Noncompliance with such requirements could cause such amounts to be included in gross income for federal income tax purposes retroactive to the date of delivery of the Installment
Purchase Agreement and the Notes. The District and the Corporation have covenanted to maintain the
exclusion pursuant to section 103(a) of the Code of the interest on the Notes from the gross income of the owners thereof for federal income tax purposes. In rendering its opinions with respect to the Notes, as
described below, Special Counsel will rely upon representations and covenants of the District and the Corporation (including such covenant noted above) made in connection with the execution and delivery of the Notes, and will assume that all such representations are true and correct and that the District and the
Corporation will comply with all such covenants.
In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Special Counsel, under
existing statutes, regulations, rulings and court decisions, the Interest Component allocable to and the
Note Interest Distributions in respect of a Note is exempt from personal income taxes of the State of California and, assuming compliance with the aforementioned covenant, the Interest Component allocable
to and the Note Interest Distributions in respect of a Note is excluded pursuant to section 103(a) of the
Code from the gross income of the owners thereof for federal income tax purposes. In the further opinion of Special Counsel, under existing statutes, regulations, rulings and court decisions, the Notes are not
“specified private activity bonds” within the meaning of section 57(a)(5) of the Code and, therefore, the
Interest Component allocable to and the Note Interest Distributions in respect of a Note will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section
55 of the Code. Receipt or accrual of the Interest Component allocable to and the Note Interest
Distributions in respect of a Note owned by a corporation may affect the computation of the alternative minimum taxable income. A corporation’s alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. To the extent that a purchaser of a Note acquires that Note at a price in excess of its “stated
redemption price at maturity” (within the meaning of section 1273(a)(2) of the Code), 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 over the remaining term of the obligation (or a shorter period in the case of certain callable
53 95197910.4
obligations); 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. Such reduction in basis will increase the amount of any gain (or decrease the amount of any
loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the
obligation. The amount of premium that is amortizable each year by a purchaser is determined by using such purchaser's yield to maturity. 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 its Note is sold or
disposed of for an amount equal to or in some circumstances even less than the original cost of the Note to the owner. Purchasers of Notes at a price that includes bond premium should consult their own tax
advisors with respect to the computation and treatment of such bond premium, including, but not limited
to, the calculation of gain or loss upon the sale, redemption or other disposition of the Note. The excess, if any, of the stated redemption price at maturity of Notes of a maturity over the
initial offering price to the public of the Note s of that maturity is “original issue discount.” Original issue discount accruing on a Note is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes and is exempt from California personal income tax to the same
extent as would be stated interest on that Note. Original issue discount on any Note purchased at such initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the Note on the basis of a constant yield method and, within each semiannual period, will accrue on a
ratable daily basis. The amount of original issue discount on such a Note accruing during each period is added to the adjusted basis of such Note to determine taxable gain upon disposition (including sale,
redemption or payment on maturity) of such Note. The Code includes certain provisions relating to the
accrual of original issue discount in the case of purchasers of Note who purchase such Note other than at the initial offering price and pursuant to the initial offering. Purchasers of Note of a maturity having
original issue discount should consult their own tax advisors with respect to the tax consequences of
ownership of Note with original issue discount. Pursuant to the Trust Agreement and in the Tax Certificate Pertaining to Arbitrage and Other
Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the
District and the Corporation in connection with the issuance of the Notes, the District and the Corporation will make representations relevant to the determination of, and will make certain covenants regarding or
affecting, the exclusion of interest on the Notes from the gross income of the owners thereof for federal income tax purposes. In reaching its opinions described above, Special Counsel will assume the accuracy of such representations and the present and future compliance by the District and the Corporation with
such covenants. Further, except as stated above, Special Counsel will express no opinion as to any federal or state tax consequences of the receipt of interest on, or the ownership or disposition of, the
Notes.
Special Counsel has not undertaken to advise in the future whether any events after the date of execution and delivery of the Installment Purchase Agreement and the Notes may affect the tax status of
the Interest Component or the Note Interest Distributions. No assurance can be given that future
legislation, if enacted into law, will not contain provisions that could directly or indirectly reduce the benefit of the exemption of such amounts from personal income taxation by the State of California or of
the exclusion of the interest on the Notes from the gross income of the owners thereof for federal income tax purposes. Furthermore, Special Counsel will express no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement, the Notes, the Interest Component
or Note Interest Distributions, if any action is taken with respect to the Installment Purchase Agreement, the Notes or the proceeds thereof, or the Trust Agreement predicated or permitted upon the advice or approval of other counsel.
54 95197910.4
Although Special Counsel is of the opinion that Interest Component and Note Interest
Distributions in respect of a Note are exempt from California personal income tax and excluded from the gross income of the owners thereof for federal income tax purposes, an owner’s federal, state or local tax
liability may be otherwise affected by the ownership or disposition of the Notes. The nature and extent of
these other tax consequences will depend upon the owner’s other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Notes should be aware that (i)
section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase
or carry the Notes and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Notes), (ii) with respect to insurance
companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the
deduction for loss reserves by 15% of the sum of certain items, including Interest Component and Note Interest Distributions in respect of the Notes, (iii) Interest Component and Note Interest Distributions
accrued in respect of Notes owned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including Interest Component and Note Interest Distributions accrued in respect of Notes, may be
subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires
recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, Interest Distributions and Note Interest Distributions accrued
in respect of Notes owned by such recipients for federal income tax purposes, and (vi) under section 32(i)
of the Code, receipt of investment income, including Interest Component and Note Interest Distributions accrued in respect of Notes, may disqualify the recipient thereof from obtaining the earned income credit.
Special Counsel has expressed no opinion regarding any such other tax consequences.
Special Counsel’s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the District and the Corporation described above. No ruling has been sought from the Internal Revenue Service (the “Service”) with respect to the matters addressed in the
opinion of Special Counsel, and Special Counsel’s opinion is not binding on the Service. The Service has
an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Notes is commenced, under current procedures the Service is likely to treat the District as the
“taxpayer,” and the owners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the Interest Component and Note Interest Distributions
accrued in respect of Notes, the District may have different or conflicting interest from the owners.
Public awareness of any future audit of the Notes could adversely affect the value and liquidity of the Notes during the pendency of the audit, regardless of its ultimate outcome. On September 12, 2011, President Obama submitted to Congress the “American Jobs Act of
2011” (the “American Jobs Act”), which, if enacted, could result in additional federal income tax being imposed on certain owners of tax-exempt obligations, including the Notes, for tax years beginning on or
after January 1, 2013. As proposed, the American Jobs Act would limit for certain individual taxpayers
the value of certain deductions and exclusions, including the exclusion for tax-exempt interest, to 28 percent irrespective of the actual marginal tax rate imposed on such taxpayers. The American Jobs Act or
other similar legislation, if enacted, could directly or indirectly reduce or eliminate the benefit of the
exclusion of interest on the Notes from gross income for federal income tax purposes. The introduction or enactment of the American Jobs Act or other similar legislation could also affect the market value and
liquidity of the Notes. Prospective purchasers of the Notes should consult with their own tax advisors with respect to the American Jobs Act or other pending or proposed tax legislation.
55 95197910.4
A copy of the form of opinion of Special Counsel to be delivered at the closing of the Notes is
included in Appendix F.
CONTINUING DISCLOSURE The District has covenanted for the benefit of holders and beneficial owners of the Notes to provide notices of the occurrence of certain enumerated events. The notices of material events, if any,
will be filed by the Dissemination Agent on behalf of the District with the Municipal Securities
Rulemaking Board. The specific nature of the information to be contained in the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See APPENDIX D – “FORM OF
CONTINUING DISCLOSURE AGREEMENT.” This covenant has been made in order to assist the Initial Purchaser in complying with S.E.C. Rule 15c2-12 (the “Rule”). During the past five years, the
District has never failed to comply in all material respects with any previous undertaking with respect to
the Rule to provide annual reports or notices of material events.
RATINGS
The Notes will be assigned short-term ratings of “ ” by Standard & Poor’s Financial Services
LLC (“S&P”), and “ ” by Fitch Ratings (“Fitch”). S&P and Fitch affirmed the long-term ratings of
“ ” and “ _,” respectively, on the District’s Existing Senior Obligations. Such ratings reflect only the
views of the rating agencies, and do not constitute a recommendation to buy, sell or hold the Notes.
Explanation of the significance of such ratings may be obtained only from the respective organizations at: Standard & Poor’s Ratings Services, 55 Water Street, New York, New York 10041 and Fitch Ratings,
One State Street Plaza, New York, New York 10004. There is no assurance that any such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by
the respective rating agencies, if in the judgment of any such rating agency circumstances so warrant.
Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Notes. PURCHASE AND REOFFERING
(the “Initial Purchaser”) has purchased the Notes from the District at a competitive sale for a purchase price of $
the Notes, plus a premium of $
(representing the aggregate principal amount of
). The public offering price may be changed from time to
time by the Initial Purchaser. The Initial Purchaser may offer and sell Notes to certain dealers and others at prices lower than the offering price shown on the cover page hereof. MISCELLANEOUS
Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and
complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the District and the
purchasers or Owners of any of the Notes.
56 95197910.4
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
A-1 95197910.4
APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2010
B-1 95197910.4
APPENDIX B
THE COUNTY OF ORANGE – ECONOMIC AND DEMOGRAPHIC INFORMATION
C-1 95197910.4
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
D-1 95197910.4
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
E-1 95197910.4
APPENDIX E BOOK-
ENTRY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Notes, payment of principal and interest evidenced by the Notes to Participants
or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Notes, and other Note-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the District and the Corporation each believes to be reliable, but the
District and the Corporation take no responsibility for the completeness or accuracy thereof. The Depository Trust Company – Book-Entry System The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Notes”). The Notes will be issued as fully-registered securities registered in the name of
Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered note will be issued for the Notes in the aggregate principal amount of such issue, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial
Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million U.S. and non-U.S.
equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants
include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which 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 Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC’s records. The ownership interest of each actual purchaser of
each Note (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners 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 Notes are to be accomplished
by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued.
E-2 95197910.4
To facilitate subsequent transfers, all Notes 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 Notes with DTC and their registration
in the name 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 Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the
Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of
their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Notes may wish to take certain
steps to augment transmission to them of notices of significant events with respect to the Notes, such as prepayments, tenders, defaults, and proposed amendments to the security documents. For example,
Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has
agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.
Prepayment notices shall be sent to DTC. If less than all of the Notes within an issue are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such
issue to be prepaid.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Prepayments with respect to the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’
accounts, upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, nor its nominee, the
Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time
to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the
District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Notes at
any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Notes are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, Notes will be printed and delivered to DTC.
E-3 95197910.4
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. Discontinuance of DTC Services
In the event (i) DTC determines not to continue to act as securities depository for the Notes, (ii) DTC shall no longer 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 Notes and
delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. If the District determines to replace DTC with another qualified securities depository, the District shall prepare
or direct the preparation of a new single, separate, fully registered Note for each of the maturities of the
Notes, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace DTC then the
Notes shall no longer be restricted to being registered in the certificate registration books in the name of Cede & Co., but shall be registered in such names as are requested in a certificate of the District, in accordance with the Trust Agreement.
All Notes may be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, on the books required to be kept by the
Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certifications for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Note as the absolute owner of such
Note for all purposes, whether or not such Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such
Note shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or sums so paid. Whenever any Notes shall be surrendered for transfer, the Trustee shall execute and deliver new
Notes representing the same principal amount in Authorized Denominations. The Trustee shall require the payment of any Owner requesting such transfer of any tax or other governmental charge required to
be paid with respect to such transfer. Notes may be presented for exchange at the Principal Office of the Trustee for a like aggregate principal amount of Notes of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental
charge required to be paid with respect to such exchange. The Trustee shall not be required to transfer or exchange any Note during the period in which the Trustee is selecting Notes for prepayment, nor shall the
Trustee be required to transfer or exchange any Note or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof.
F-1 95197910.4
APPENDIX F
FORM OF APPROVING OPINION OF SPECIAL COUNSEL Upon the execution and delivery of the Notes, Fulbright & Jaworski L.L.P., Los Angeles, California, Special Counsel to the District, will render its final approving opinion with respect to the Notes in substantially the following form:
[Date of Delivery]
Orange County Sanitation District 10844 Ellis Avenue
Fountain Valley, California 92708-7018
$[PAR AMOUNT]
Orange County Sanitation District
Revenue Refunding Certificate Anticipation Notes, Series 2011B Ladies and Gentlemen:
We have acted as Special Counsel in connection with the $ aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series
2011B (the “Notes”) which evidence direct, fractional undivided interests of the Owners thereof in the
installment payment (the “Installment Payment”), and the interest thereon, to be made by the Orange County Sanitation District (the “District”) pursuant to the Installment Purchase Agreement, dated as of
November 1, 2011 (the “Installment Purchase Agreement”), by and between the District and the Orange
County Sanitation District Financing Corporation (the “Corporation”). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the “Master Agreement”), by and between the
District and the Corporation, the District has established conditions and terms upon which obligations such as the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable from (i) Net Revenues as provided in the
Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the “Wastewater System”)
remaining after payment of Maintenance and Operation Costs, and (ii) other lawfully available funds of
the District. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Installment Purchase Agreement. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of
November 1, 2011 (the “Trust Agreement”), by and among the District, the Corporation and Union Bank, N.A., as trustee (the “Trustee”). Proceeds from the sale of the Notes will be used to (i) pay at maturity all
of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series
2010B, currently outstanding in the aggregate principal amount of $154,665,000, and (ii) pay the costs incurred in connection with the execution and delivery of the Notes.
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 Notes. We have also examined such
F-2 95197910.4
certificates of officers of the District, the Corporation and others as we have considered necessary for the
purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Master Agreement, the Installment Purchase Agreement and the Trust
Agreement each has been duly and validly authorized, executed and delivered by the District and, assuming the Master Agreement, the Installment Purchase Agreement and the Trust Agreement
each constitutes the legally valid and binding obligation of the other parties thereto, each
constitutes the legally valid and binding obligation of the District, enforceable against the District in accordance with its respective terms 2. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase
Agreement, from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and
the Notes by the Trustee, the Notes are entitled to the benefits of the Trust Agreement.
4. Under existing statutes, regulations, rulings and court decisions, and, assuming
compliance with the covenants mentioned below, the component of each payment designated as interest in the Installment Purchase Agreement (the “Interest Component”), and the allocable
portion thereof distributable in respect of any Note (the “Note 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 Notes are not “specified private activity bonds” within the meaning of section 57(a)(5) of the Code and, therefore, the
Interest Component and the Note Interest Distributions will not be treated as an item of tax
preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of the Interest Component, and the Note Interest Distribution, 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 on which the
alternative minimum tax imposed by section 55 of the Code will be computed. We are further of
the opinion that the Interest Component allocable to and the Note Interest Distributions in respect of a Note, are exempt from personal income taxes of the State of California under present state
law.
Pursuant to the Trust Agreement and in the Tax Certificate Pertaining to Arbitrage and
Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be
delivered by the District and the Corporation in connection with the execution and delivery of the Notes, the District and the Corporation will each make representations relevant to the
determination of, and will make certain covenants regarding or affecting, the exclusion of the
Interest Component and the Note Interest Distribution from the gross income of the owners thereof for federal income tax purposes. In reaching the opinions described in the immediately
preceding paragraph, we have assumed the accuracy of such representations and the present and
future compliance by the District and the Corporation with such covenants. Except as stated in the preceding two paragraphs, we express no opinion as to any federal
or state tax consequences of the ownership or disposition of the Installment Purchase Agreement
F-3 95197910.4
or the Notes. Furthermore, we express no opinion as to any federal, state or local tax law
consequences with respect to the Installment Purchase Agreement, Notes, Interest Component, or Note Interest Distributions, if any action is taken with respect to the Installment Purchase
Agreement, the Master Agreement, the Trust Agreement, the Notes, or the proceeds thereof if,
permitted or predicated on the advice or approval of counsel if such advice or approval is given by counsel other than us.
The rights of the owners of the Notes and the enforceability of the Notes, the Master Agreement,
the Trust Agreement and the Installment Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter
enacted and may also be subject to the exercise of judicial discretion in appropriate cases. The enforceability of the Notes, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement is subject to the effect of general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and
to the limitations on legal remedies against governmental entities in California.
No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Notes.
Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any
changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result; rather, such opinions represent our legal judgment based upon our review of existing
law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. Respectfully submitted,
95196468.2
DRAFT OF
09/29/11
CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”),
dated as of November 1, 2011, is by and between the ORANGE COUNTY SANITATION
DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the “District”), and DIGITAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent (the “Dissemination Agent”).
WITNESSETH: WHEREAS, the District has caused to be executed and delivered the Orange County
Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B (the
“Notes”), evidencing principal in the aggregate amount of $ , pursuant to a Trust Agreement, dated as of the date hereof (the “Trust Agreement”), by and among Union Bank,
N.A., as trustee (the “Trustee”), the Orange County Sanitation District Financing Corporation
(the “Corporation”) and the District; and WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the Dissemination Agent for the benefit of the owners and beneficial owners of the Notes and in order to assist the underwriter of the Notes in complying with the Rule (as defined
herein); NOW, THEREFORE, for and in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the
meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master
Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In
addition, the following capitalized terms shall have the following meanings: “Disclosure Representative” means the Director of Finance and Administrative Services of the District, or such other officer or employee of the District as the District shall
designate in writing to the Dissemination Agent and the Trustee from time to time. “Dissemination Agent” means an entity selected and retained by the District, or any
successor thereto selected by the District. The initial Dissemination Agent shall be Digital
Assurance Certification LLC. “EMMA” shall mean Electronic Municipal Market Access system, maintained on the
internet at http://emma.msrb.org by the MSRB. “Listed Events” means any of the events listed in subsection (a) of 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
2 95196468.2
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. “Participating Underwriter” means the original underwriter of the Notes required to comply with the Rule in connection with the offering of the Notes. “Repository” means, until otherwise designated by the Securities and Exchange
Commission, EMMA. “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “SEC” shall mean the United States Securities and Exchange Commission. Section 2. Reporting of Significant Events. (a) Pursuant to the provisions of this
Section 2, the District shall give, or cause to be given, notice of the occurrence of any of the
following events with respect to the Notes, in a timely manner not more than ten (10) Business Days after the event: (1) principal and interest payment delinquencies;
(2) defeasances;
(3) tender offers;
(4) rating changes;
(5) adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability, Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax- status of the Notes; (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
3 95196468.2
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 2, the District shall give, or cause to be
given, notice of the occurrence of any of the following events with respect to the Notes, if material: (1) mergers, consolidations, acquisitions, the sale of all or
substantially all of the assets of the obligated persons or their termination; (2) appointment of a successor or additional Trustee or the change of
the name of a Trustee; (3) nonpayment related defaults;
(4) modifications to the rights of Owners;
(5) a notices of prepayment; or
Notes. (6) release, substitution or sale of property securing repayment of the
(c) Whenever the District obtains knowledge of the occurrence of a Listed Event,
described in subsection (b) of this Section (2), the District shall as soon as possible determine if
such event would be material under applicable federal securities law. (d) If the District determines that knowledge of the occurrence of a Listed Event described in subsection (b) of this Section (2) would be material under applicable federal
securities law, the District shall promptly notify the Dissemination Agent in writing and instruct
the Dissemination Agent to report the occurrence to the Repository in a timely manner not more
than ten (10) Business Days after the event. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with
the MSRB and each Repository. Section 3. 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 4. Termination of Reporting Obligation. The District’s obligations under
this Disclosure Agreement shall terminate upon the legal defeasance or payment in full of all of
the Notes. If such termination occurs prior to the final maturity of the Notes, the District shall give notice of such termination in the same manner as for a Listed Event under Section 2 hereof.
4 95196468.2
Section 5. Dissemination Agent. The District may, from time to time, appoint or
engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated
Dissemination Agent, the Trustee shall be the Dissemination Agent; provided, it shall receive
written notice of such designation at the time of such designation. Section 6. 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 7. 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 or notice of occurrence of a Listed Event, in addition to that
which is required by this Disclosure Agreement. Section 8. Default. In the event of a failure of the District or the Dissemination
Agent to comply with any provision of this Disclosure Agreement, the Trustee, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount
of principal evidenced by Outstanding Notes and upon being indemnified to its reasonable
satisfaction, shall, or any holder or beneficial owner of the Notes may, take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the District, the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement
shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under
this Disclosure Agreement in the event of any failure of the District, the Trustee or the
Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel
performance. Section 9. Duties, Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall not be responsible for the form or content of any notice of Listed
Event. The Dissemination Agent shall receive reasonable compensation for its services provided
under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the
Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save the
Dissemination Agent, its officers, directors, employees and agents, harmless against any loss,
expense and liabilities which it may incur arising out of or in the exercise or performance of its
powers and duties hereunder, including the costs and expenses (including attorneys fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination
5 95196468.2
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 Notes. Section 10. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders
and beneficial owners from time to time of the Notes, and shall create no rights in any other
person or entity. Section 11. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
6 95196468.2
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement
as of the date first above written. ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner Director of Finance and Administrative Services
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent By: Authorized Representative Acknowledged and Accepted:
UNION BANK, N.A., as Trustee
By: _ Authorized Officer
95196459.4
DRAFT OF
09/29/11
OFFICIAL NOTICE INVITING BIDS
$ *
ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2011B
(Book-Entry-Only) NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation
District (the “District”) for the purchase of $ * original principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”). Bids
for less than all of the Notes will not be accepted. The bids will be received in the form, in the manner and up to the time specified below (unless postponed as described herein):
Date: Wednesday, November 2, 2011
11:00 a.m., New York Time
Electronic Bids: As an accommodation to bidders, electronic proposals may
be submitted to Ipreo LLC, at www.newissuehome.i-
deal.com and the Parity bid delivery 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 or Sealed Bids: No facsimile or sealed bids will be accepted.
Terms of the Notes The Preliminary Official Statement for the Notes, dated October [27], 2011, including the cover
page and all appendices thereto (the “Preliminary Official Statement”), provides certain information
concerning the sale and delivery of $ * aggregate principal amount of the Notes evidencing direct, undivided fractional interests in the Installment Payment (the “Installment Payment”), and the
interest thereon, payable by the District pursuant to the Installment Purchase Agreement, dated as of November 1, 2011 (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 Notes. This Official Notice Inviting Bids contains certain information for quick reference only, is not a summary of the issue and
governs only the terms of the sale of, bidding for and closing procedures with respect to the Notes.
Bidders must read the entire Preliminary Official Statement to obtain information essential to making an informed investment decision.
Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the “Master Agreement”), by and between the District and the Corporation, the District has established and
declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon, will be incurred and secured. The Installment
* Preliminary, subject to change.
2 95196459.4
Payment under the Installment Purchase Agreement is payable solely from Net Revenues, as provided in the Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District
(the “Wastewater System”) remaining after payment of Maintenance and Operation Costs.
The Issue The proceeds from the sale of the Notes will be used to: (i) pay on November 23, 2011, all of the
Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2010B currently outstanding in the aggregate principal amount of $154,665,000 and (ii) pay the costs incurred in
connection with the execution and delivery of the Notes. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of November 1, 2011 (the “Trust Agreement”), by and among the
District, the Corporation and Union Bank, N.A., 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 October 26, 2011, the District and the Corporation authorized the execution and delivery of
the Installment Purchase Agreement, the Trust Agreement and the Notes. Outstanding Senior Obligations The District has outstanding Senior Obligations payable on a parity with the Installment Payment under the Installment Purchase Agreement. The term “Existing Senior Obligations” as used in the Preliminary Official Statement refers to the 2000 Installment Purchase Agreement, the 2003 Installment
Purchase Agreement, the 2007A Installment Purchase Agreement, the 2007B Installment Purchase Agreement, the 2008A Installment Purchase Agreement, the 2008B Installment Purchase Agreement, the
2009A Installment Purchase Agreement, the 2010A Installment Purchase Agreement, the 2010B
Installment Purchase Agreement, the 2010C Installment Purchase Agreement and the 2011A Installment Purchase Agreement. Security and Source of Payments
The Notes evidence direct, undivided fractional interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of
the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, solely from Net Revenues and other funds
as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement.
The District’s obligation to make the Installment Payment from Net Revenues is on a parity with the District’s obligation to make payments with respect to its other outstanding obligations described as
Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations, as provided in
the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests
and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master
Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
3 95196459.4
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, executed, issued and delivered under and pursuant to applicable law, the Installment Purchase
Agreement and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, the installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a
parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations; provided, however, that prior to incurring such Subordinate Obligations, the District will have determined that the incurrence thereof will
not materially adversely affect the District’s ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate
Obligations. Currently, there are no Subordinate Obligations outstanding. For a description of the
District’s outstanding Senior Obligations, see “FINANCIAL OBLIGATIONS — Existing Indebtedness” in the Preliminary Official Statement. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net
Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of, and lien on, Net Revenues for the payment of Senior Obligations
and Reimbursement Obligations with respect to Senior Obligations. Pursuant to the Master Agreement, the District is required, to the extent permitted by law, to fix,
prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year (a) Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service
on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the
fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and
charges will at all times be sufficient to meet the requirements of the Master Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE NOTES — Rate Covenant” in the Preliminary
Official Statement.
Additional Obligations In addition to the 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 Payment
upon satisfaction of conditions provided in the Master Agreement. No Obligations payable on such a subordinate basis are currently outstanding. See “SECURITY AND SOURCES OF PAYMENT FOR
THE NOTES — Limitations on Issuance of Additional Obligations” in the Preliminary Official Statement. Book-Entry-Only The Notes will be executed and delivered in the form of fully registered certificates payable in lawful money of the United States of America. The Notes will be initially delivered only in book-entry
form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company,
New York, New York (“DTC”), which will act as securities depository for the Notes. Individual
4 95196459.4
purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive
physical certificates representing their ownership interests in the Notes purchased. The Notes will be delivered in Authorized Denominations of $5,000 and any integral multiple thereof. Payments of
principal and interest evidenced by the Notes are payable directly to DTC by the Trustee. Upon receipt of
payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are in the DTC book-entry system, the interest, principal and
prepayment premiums, if any, due with respect to the Notes will be payable by the Trustee, or its agent, to
DTC or its nominee. Principal and Interest Payments
The Notes will mature on November 9, 2012* (the “Maturity Date”). The District expects the principal of and interest on the Notes to be paid from proceeds of the sale, prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and
delivery of a future series of certificates of participation, notes or other obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See
“SECURITY AND SOURCES OF PAYMENT FOR THE NOTES” in the Preliminary Official Statement. No Prepayment The Notes are not subject to prepayment prior to their maturity.
Interest Rates, Reoffering Prices, Premium Bids, and Certificate of Initial Purchaser Bidders must bid to purchase all and not part of the Notes and must submit their bids on the Official Bid Form. Bidders must specify a rate of interest for the Notes, expressed in multiples of one-
one thousandths (1/1000) of one percent (1%); and no interest rate can exceed [3.5]% per annum. The successful bidder will, within 30 minutes after being notified of the award of the Notes,
advise the District of the initial bona fide public reoffering prices of the Notes on the date of award. The successful bidder will also be required to 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 Notes to the successful bidder, that successful bidder also may be required by the District or Special Counsel to clarify any
discrepancies between the Certificate of Initial Purchaser and publicly available information relating to
trades of the Notes that might suggest that the initial sale of a substantial portion of the Notes to the public was at a materially higher price than the price stated for that maturity in the Certificate of Initial
Purchaser.
Bidders may bid to purchase Notes from the District with a premium; however, no bid will be considered if the bid is to purchase Notes at an aggregate price less than [100]% or more than [102.5]% of
the aggregate principal amount of the Notes.
No bid will be accepted that contemplates the waiver of any interest or other concession by the
bidder as substitute for payment in 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. * Preliminary; subject to change.
5 95196459.4
Adjustment of Principal Amounts After Receipt of Bids The principal amount of the Notes set forth in the Official Bid Form reflects an estimate of the District as to the likely interest rate of the winning bid and the premium contained in the winning bid.
After selecting the winning bid, the principal amount of the Notes may be adjusted in $5,000 increments, if the District elects to do so, to reflect the actual interest rate and any premium in the winning bid to
generate a dollar amount bid of at least $ while maintaining the same “per Note”
purchaser’s discount and original issue premium, if any, provided in such bid. Any such adjustment will be communicated to the winning bidder within 24 hours after receipt of such bid by the District. Changes
in the principal amount of the Notes made as described in this paragraph will not affect the determination
of the winning bidder or give the winning bidder any right to reject the Notes. No Insurance
THE SUCCESSFUL BIDDER MAY NOT PURCHASE MUNICIPAL BOND INSURANCE
FOR ANY OF THE NOTES.
Form of Bid BIDS FOR LESS THAN ALL OF THE NOTES WILL NOT BE ACCEPTED. Each bid must be
on the Official Bid Form. All electronic proposals shall be deemed to incorporate the provisions of the Official Bid Form and must be unconditional and irrevocable. In addition, each bidder is requested to
supply an estimate of the true interest cost resulting from its bid, computed as prescribed below under the
caption “Award, Delivery and Payment,” which shall be considered as informative only and not binding on either the bidder or the District. Each bid must be in accordance with the terms and conditions set
forth in this Official Notice Inviting Bids.
The District will make its best efforts to accommodate electronic bids; however, the District, the
Financial Advisor (Public Resources Advisory Group) and Special Counsel assume no responsibility for
any error contained in any electronic bid, or for the failure of any electronic bid to be transmitted or received at the official time for receipt of such bids. The official time for receipt of bids will be determined by the District at the place of the bid opening, and the District shall not be required to accept
the time kept by Electronic Service as the official time. The District assumes no responsibility for informing any bidder prior to the deadline that its bid is incomplete, or not received. If multiple timely bids are received from a single bidder the District shall accept the best of such
bids and each bidder agrees, by submitting any bid, to be bound by its best bid.
Information Regarding Electronic Proposals Electronic proposals must be submitted through the Electronic Service. If any provision of this Official Notice Inviting Bids conflicts with information provided by the Electronic Service, this Official Notice Inviting Bids shall control. The District is not responsible for the proper operation of, and shall
have no liability for any delays or interruptions of or any damages caused by the Electronic Service. The District is using the Electronic Service as a communication mechanism and not as the District’s agent to
conduct electronic bidding for the Notes. The District is not bound by any advice of or determination by
the Electronic Service to the effect that any particular bid complies with the terms of this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection with their submission
of bids through the Electronic Service are the sole responsibility of such bidders and the District is not
responsible for any such costs or expenses. Further information about the Electronic Service, including any fee charged, may be obtained from Ipreo LLC, 1359 Broadway, Second Floor, New York, NY 10018
6 95196459.4
(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
of $ Each bidder must provide with its bid (i) a financial surety bond (“Surety Bond”) in the amount
(the “Bid Security Deposit”) issued by an insurance company rated in one of the top two
rating categories by Moody’s Investors Service, Fitch Ratings or Standard & Poor’s Ratings Services,
without regard to any modification of the rating, and licensed to issue such a bond in the State of California, naming the District as the beneficiary and identifying the bidder whose deposit is guaranteed
by the Surety Bond or (ii) a wire transfer of immediately available federal funds.
Surety Bonds. If the successful bidder has provided a Surety Bond, such bidder shall wire
transfer to the District the amount of the Bid Security Deposit in immediately available federal funds not
later than 3:00 p.m. (New York Time) on the business day next succeeding the day of acceptance of the bid, which amount shall be deposited in an escrow fund or account or a similar fund and applied to the
purchase price of the Notes at the time of delivery of the Notes. If the District has not received such
federal funds wire transfer by the time stated, the District may draw upon the Surety Bond to satisfy the successful bidder’s Bid Security Deposit requirements. Wire Transfers. Any Bid Security Deposit wire transfers must be received in federal funds prior
to the deadline for examination of the bids, and should be directed as follows: Union Bank, N.A. ABA 122000496
37130196431/TRUSDG Acct: OCSD 2011B
Acct No. [67119612] The wire transfers of unsuccessful bidders will be returned promptly on the bid date after the
examination of bids. The wire transfer of the successful bidder will be retained by the District and applied to the purchase price at the time of delivery of the Notes. The District disclaims any liability for
funds sent by wire transfer, except for any willful misconduct or reckless disregard for its duties. If after the award of the Notes, the successful bidder fails to complete the purchase on the terms
stated in its bid, unless such failure of performance shall be caused by any act or omission of the District,
the Bid Security Deposit, whether paid by federal funds wire or pursuant to the Surety Bond procedure set forth above, shall be retained by the District as stipulated liquidated damages. No interest will be paid
upon any Bid Security Deposit.
Official Statement The District has approved a Preliminary Official Statement, dated October [27], 2011, which the
District has “deemed final” for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission, as amended (the “Rule”), although subject to revision, amendment and completion in
conformity with the Rule. The District will provide the successful bidder such reasonable number of
printed copies of the final Official Statement as such bidder may reasonably request no later than seven business days after the day the Notes are awarded. Up to 50 copies of the final Official Statement will be furnished without cost to the successful bidder and further copies, if desired, will be made available at the
successful bidder’s expense. The successful bidder shall file the final Official Statement with a nationally
7 95196459.4
recognized municipal securities information repository on a timely basis. The successful bidder shall, by
accepting the award, agree at all times to comply with the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board. Award, Delivery and Payment
If satisfactory bids are received, the Notes will be awarded to the highest responsible bidder not later than two hours after the time established for the receipt of bids. The highest bidder shall be the
bidder submitting the best price for the Notes, which best price shall be that resulting in the lowest true interest cost with respect to the Notes. The true interest cost shall be computed by doubling the semi-
annual interest rate (compounded semi-annually) necessary to discount the Installment Payment from the Maturity Date to the date of the Notes and to the price bid. If two or more bidders have bid the same true interest cost, the award shall be made at the sole discretion of the District.
Delivery of the Notes is expected to occur on or about November 10, 2011. The Notes will be delivered through the facilities of DTC, New York, New York. The successful bidder shall pay for the Notes on the date of delivery in Los Angeles, California in immediately available federal funds. Any
expenses of providing federal funds shall be borne by the purchaser. Payment on the delivery date shall be made in an amount equal to the price bid for the Notes less the amount of the bid security deposit. Right to Reject Bids, Waive Irregularities The District reserves the right to reject any and all bids and to the extent permitted by law to
waive any irregularity or informality in any bid. CUSIP Numbers It is anticipated that CUSIP numbers will be printed on the Notes, but the District will assume no obligation for the assignment or printing of such numbers on the Notes or for the correctness of such
numbers, and neither the failure to print such number on any Note nor any error with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept delivery of and make payment for the Notes. The cost for the assignment of CUSIP numbers to the Notes 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 Notes. Legal Opinions The District will furnish to the successful bidder at the closing of the Notes, the legal opinion of Special Counsel to the effect that, in the opinion of Special Counsel, based upon an analysis of existing
laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the interest component of the Installment Payment and the allocable portion thereof distributable in respect of each Note is excluded from gross income for
federal income tax purposes under section 103 of the Internal Revenue Code of 1986 and is not a specific preference item for purposes of the federal alternative minimum tax and is exempt from State of
California personal income taxes. Special Counsel will express no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Notes.
8 95196459.4
Change in Tax Exempt Status At any time before the Notes are tendered for delivery, the successful bidder may disaffirm and withdraw its proposal if the interest on municipal securities of the same type and character as that
evidenced by the Notes (as determined by Special Counsel) shall be declared to be includable in gross income under federal income tax laws, either by a ruling of the Internal Revenue Service or by a final decision of any federal court, or shall be declared taxable by the terms of any federal income tax law
enacted subsequent to the date of this Official Notice Inviting Bids. Closing Documents The District will furnish to the successful bidder at the time of delivery of the Notes: (1) a
certificate certifying (i) that as of and at the time of delivery of the Notes, there is no action, suit, proceeding or investigation, pending or, to the best knowledge of the District, threatened against or affecting the District, (A) which affects or seeks to prohibit, restrain or enjoin the execution and delivery
of the Notes or the Trust Agreement, (B) in any way contesting the validity of the Notes, the Installation Purchase Agreement or the Trust Agreement or the powers of the District to enter into or perform its
obligations under such documents to which it is a party or the existence of the District, or (C) wherein an
unfavorable decision, ruling or finding would materially and adversely affect the District, or the validity or enforceability of the Notes, the Installation Purchase Agreement or the Trust Agreement or the ability
of the District to perform its obligations under such documents to which it is a party, (ii) that the
Preliminary Official Statement did not on the date of sale of the Notes and the Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in the light of the circumstances under which they
were made, not misleading, and (2) a receipt of the District showing that the purchase price of the Notes has been received by the District. Continuing Disclosure
To assist the successful bidder in complying with the Rule, the District will undertake, pursuant to the Continuing Disclosure Agreement, to provide notices of the occurrence of certain events, if
material. 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 furnished to any potential bidder upon request made to the District’s Financial Advisor at: Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, CA
90064, 310-477-8487, via e-mail at lchoi@pragla.com. Right to Modify or Amend
The District reserves the right to modify or amend this Official Notice Inviting Bids, including
but not limited to the right to adjust and change the principal amount of the Notes being offered;
provided, however, that such notifications or amendments shall be made not later than November 1, 2011, by 3:00 p.m., New York Time and communicated through Thomson Municipal Market News (available at
http://www.tm3.com) and by facsimile transmission to any qualified bidder timely requesting such notice.
Bidders are required to bid for the Notes as so modified.
9 95196459.4
Cancellation or Postponement The District reserves the right to cancel or postpone, from time to time, the date established for the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson
Municipal News. If any date fixed for the receipt of bids and the sale of the Notes is postponed, any alternative sale date will be announced via Thomson Municipal News at least 24 hours prior to such alternative sale date and will be provided by facsimile transmission to any qualified bidder timely
requesting such notice. On any such alternative sale date, any bidder may submit a sealed bid for the
purchase of the Notes in conformity in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and except for the changes announced by Thomson Municipal News at the
time the sale date and time are announced.
Dated: October [27], 2011
95196459.4
Exhibit A
Initial Issue Price Certificate November , 2011
Orange County Sanitation District
Fountain Valley, California Fulbright & Jaworski L.L.P. 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 Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “2011 Notes”).
We hereby certify that: (i) November , 2011 was the first day on which there was a binding contract in
writing for the sale or exchange of the 2011 Notes by the District to the Underwriter, and on that day (the “Sale Date”), the Underwriter undertook pursuant to such contract to make a bona fide public offering of all of the 2011 Notes. On the Sale Date all of the 2011 Notes 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, on the cover page of the Official Statement dated
November , 2011 relating to such offering (the “Official Statement”). The Initial Offering
Price represented: (i) the Underwriters’ reasonable determination of a fair market value on the Sale Date of the 2011 Notes; and (ii) the price at which the Underwriters reasonably expected to
sell all the 2011 Notes 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
the 2011 Notes was sold by the Underwriter (or by other excluded persons) to the general public was the Initial Offering Price in respect of the 2011 Notes as described above; (iii) at the time that the Underwriter agreed to purchase the 2011 Notes, based upon
then prevailing market conditions, the Underwriter had no reason to believe that the first sale of any of the 2011 Notes 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 the 2011 Notes, and treating the
Initial Offering Price as the issue price of each 2011 Note, the aggregate issue price of the 2011
Notes is $_ (the 2011 Notes having been sold with premium of $ ); and (v) we provided the yield proof attached hereto as Exhibit A to Special Counsel; we make no legal representations regarding its sufficiency.
For purposes of this Certificate, the term “excluded person” refers to: the Underwriter; any affiliate of the Underwriter; any fund or other person that the Underwriter believed would purchase such
2011 Notes with the intention of immediate resale; or any bond house, broker or similar person or
2
organization acting in the capacity of an underwriter or wholesaler. Further, 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
the gross income for federal income tax purposes of interest with respect to the 2011 Notes. [INITIAL PURCHASER], as Underwriter By:
Title:
3
Exhibit A
Yield Proof
(See attached)
OFFICIAL BID FORM
$ *
ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2011B
November , 2011
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”) Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”), more particularly described in your Official Notice Inviting Bids, dated October [27], 2011 (the
“Official Notice Inviting Bids”), which is incorporated herein by reference, and made a part thereof, at a
purchase price of $ (which purchase price is not less than [100.0]% or more than [102.5]% of the aggregate principal amount of the Notes). This offer is for Notes evidencing interest at
the rate per annum of %.
The bid is subject to acceptance not later than two hours after the expiration of the time established for the
final receipt of bids.
Our calculation of the 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
_%.
(PLEASE CHECK ONE OF THE FOLLOWING TWO PARAGRAPHS)
[ ] A surety bond has been provided to the District in the amount of $ issued by
an insurance company rated in one of the top two rating categories by Moody’s Investors Service, Fitch Ratings or Standard & Poor’s Ratings Services, without regard to any modification of the rating, and
licensed to issue such a bond in the State of California, naming the District as the beneficiary and indentifying our bidding syndicate whose deposit is guaranteed by the surety bond.
[ ] With this bid we are providing the District a wire transfer in immediately available
federal funds in the amount of $ to an account specified by the District or its representative, in accordance with the Official Notice Inviting Bids. We have noted that payment of the purchase price is to be made in immediately available Federal Funds
at the time of delivery of the Notes. If we are the successful bidder, we will (1) within 30 minutes after being notified of the verbal award of the Notes, advise the District of the initial public offering prices of
the Notes; and (2) prior to delivery of the Notes furnish a certificate, acceptable to Special Counsel,
* Preliminary; subject to change.
95196459.4
Fulbright & Jaworski L.L.P., as to the “issue price” of the Notes in the form specified in the Official
Notice Inviting Bids. We represent that we have full and complete authority to submit this bid on behalf of our bidding
syndicate and the undersigned will serve as the lead manager for the group if the Notes are awarded
pursuant to this bid. We certify (or declare) under penalty of perjury under the laws of the State of California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on
behalf of any person not herein named, and that the bidder has not directly or indirectly induced or
solicited any other bidder to 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.
2
NOTICE OF INTENTION TO SELL
DRAFT OF
09/29/11
$ *
Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes Series
2011B
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District (the “District”)
intends to receive sealed bids and electronic bids until 11:00 a.m., New York time, on
Wednesday, November 2, 2011,
t h r ou g h t h e us e of a n e l e c t r oni c b i ddi ng s e r vi c e o f f e r e d b y Ip r e o L L C ; a t
www.newissuehome.i-deal.com and the Parity bid delivery service, for the purchase of all of the
District’s Revenue Refunding Certificate Anticipation Notes, Series 2011B (the “Notes”), dated as
of the date of initial delivery, and maturing on November 9, 2012 as described in the related
Official Notice Inviting Bids (the “Notice”). No bids will be accepted by facsimile. Bids for less than all of the Notes will not be accepted. The District reserves the right to postpone the date
established for the receipt of bids as more fully described under the paragraph “Cancellation or
Postponement” in the Notice. NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the
Preliminary Official Statement issued in connection with the sale of the Notes may be obtained from the District’s financial advisor, Public Resources Advisory Group, 11500 West Olympic
Boulevard, Suite 502, Los Angeles, California 90064, (310) 477-8487, via e-mail:
lchoi@pragla.com. Orange County Sanitation District
Dated: October , 2011
* Preliminary, subject to change.
95196458.4
Page 1 of 3
ADMINISTRATION COMMITTEE Meeting Date 10/12/11 To Bd. of Dir. 10/26/11
AGENDA REPORT Item Number 7 Item Number 13
Orange County Sanitation District FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: RENEWAL OF FINANCIAL ADVISOR CONTRACT
GENERAL MANAGER'S RECOMMENDATION
Approve the renewal of the financial advisory service contract with Public Resources
Advisory Group (PRAG) for an additional three-year period beginning November 1,
2011.
SUMMARY
In November 2001, the Board of Directors appointed PRAG as the Orange County
Sanitation District’s (OCSD) Financial Advisor after staff conducted a competitive
selection process for Financial Advisor to assist with the development of a financial plan for the capital improvement program through the year 2020, including the groundwater
replenishment system and full secondary treatment facilities.
PRAG has served as OCSD’s Financial Advisor since 2001 and has assisted in the
completion of fourteen debt financing issues totaling over $2.2 billion, $1.2 billion in new money debt issuances in financing the ten-year capital improvement program and
another $0.9 billion in debt re-financings that were completed to lower OCSD’s cost of
borrowing. Based on their guidance and recommendations, staff believes they are
responsible for assisting OCSD in saving $108.4 million over this time period by
selecting the most advantageous new money and re-financing debt structures. The associated issuance fees on these fourteen debt financings totaled $1,206,500, or an
average of $134,055 per year from 2003 through 2011. Their fees as a percentage of
par amount issued in the capital markets were 0.05 percent.
PRAG’s most recent contract extension is set to expire and staff is recommending that it be renewed for an additional three-years. During this time period, there is one new
money debt issue of $120 million scheduled to be issued, the annual renewal of the
$154 million certificates of anticipation notes, the replacement of the standby
purchasing agreement associated with the Certificates of Participation, Series 2000
variable rate debt that is expiring in August 2012, and the possibility of additional re-financings of existing debt as opportunities may arise due to the stimulus efforts of the
Federal Reserve to lower long term interest rates by buying $400 billion in long-term
treasuries. PRAG is willing to renew their agreement at no increase to the existing fixed
transaction fees or hourly fees established five-years ago.
Page 2 of 3
PRIOR COMMITTEE/BOARD ACTIONS
October 2006 – The Board of Directors extended the contract of Public Resources Advisory Group (PRAG) to serve as OCSD’s Financial Advisor for an additional five years beginning with fiscal year 2006-07.
February 2004 – The Board of Directors extended the contract of Public Resources
Advisory Group (PRAG) to serve as OCSD’s Financial Advisor for an additional two years beginning with fiscal year 2004-05.
November 2001 – The Board of Directors appointed Public Resources Advisory Group
(PRAG) as OCSD’s Financial Advisor for a three-year period beginning with fiscal year
2001-02, with an option of extending the service period for an additional two years upon Board approval.
ADDITIONAL INFORMATION
In November 2001, the Board of Directors appointed PRAG as OCSD’s Financial Advisor for a three-year period beginning with fiscal year 2001-02, with an option of
extending the service period for an additional two years upon Board approval. This was
done after staff conducted a competitive selection process for Financial Advisor to
assist with the development of a financial plan for the capital improvement program through the year 2020, including groundwater replenishment, and for assistance in the issuance of the $280 million Certificates of Participation, Series 2003 fixed rate debt.
During the original competitive selection process, PRAG was deemed to be the most
competent firm to meet OCSD’s financing needs by the Evaluation Team, a team consisting of the Director of Finance, the Controller and two external professionals. This finding was based on proposal evaluations and interviews of the four finalists as to
the overall qualifications of each firm, the experience of each firm, quality of each firm's
professional personnel assigned, services and products offered by each firm,
understanding of OCSD’s needs and each firm’s proposed solutions, and the financing approach proposed by each firm.
Staff has been pleased with the results provided by PRAG on both the development of
the capital improvement program financial plans and in the assistance provided on the
fourteen COP debt issuances. PRAG’s assistance is now needed to evaluate the current market conditions and how they may impact OCSD’s eleven outstanding debt issues. For example, OCSD’s debt policy states that we should consider the refunding
of existing debt if the present value savings are at least three percent of the par amount
of the refunding bonds. In addition, staff needs to begin establishing the financing team
that will be necessary for OCSD’s next scheduled debt issuance in FY 2012-13. PRAG’s bond financing fee and hourly fees are proposed at no increase over the next
five years as those that were in effect for the last five years.
Page 3 of 3
Staff therefore requests that the Committee recommend that the Board of Directors renew the financial advisory service contract with PRAG and authorize the General
Manager to complete a negotiated agreement for a three-year period beginning
November 1, 2011.
ATTACHMENTS
1. Public Resources Advisory Group Proposal dated September 20, 2011.
2. Public Resources Advisory Group Fee Schedule dated September 5, 2006.
sPRAG
Mr.Michael White
Controller
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92708-7018
Dear Mr.White:
11845 WEST OLYMPIC BOULEVARD,SUITE 640
LOS ANGELES,CALIFORNIA 90064
TEL:(310)477-8487 | FAX:(310)477-0105
WWW.PRAGADVISORS.COM
PUBLIC RESOURCES ADVISORY GROUP
September 20,2011
Public Resources Advisory Group ("PRAG")is pleased to submit this proposal to extend our services as
financial advisor to the Orange County Sanitation District (the "District").We very much appreciate and
enjoy our opportunities to work with the District. We are proud of the accomplishments resulting from
our association,with the debt aspects of the District's capital funding program,which began with the
$280 million Series 2003 Certification of Participation issuance.We greatly value our relationship and I
assure you we will continue to provide the same high level of service and attention as we have provided
to the District in the past.
Below is a chart that briefly summarizes the transactions we have assisted the District in successfully
completing,along with some notable results:
Series Type ($000s)Results
I
2003 Fixed 280,000 •Funding Capital Improvement Program See Series 2007A and
Series 2011A below
2006 Variable 200,000 •Funding Capital Improvement Program
•Initiated Adjustable Rate Management
Program to mitigate risks of variable
rate exposure
See Series 2010B below
2007A Refunding 95,180 •Identified refunding opportunity of
Series 2003
$4,400,000 (refunding
savings)
2007B Fixed 300,000 •Funding Capital Improvement Program n/a
2008A Refunding 77,165 •Elimination of "troubled"1992 swap
financing
•Issuance of traditional debt
•Locked in deteriorating savings
$6,200,000 (locked in
savings from original
financing plan)
2008B Refunding 27,800 •Elimination of "troubled"1993 swap
financing
•Issuance of traditional debt
•Locked in deteriorating savings
$7,000,000 (locked in
savings from original
financing plan)
2008C CANs 176,115 •Elimination of "troubled"liquidity bank
(Series 2006)
•Maintain short-term (variable-like)
exposure
• All-in one-year cost of 1.25%
See Series 2010B below
C:\Ed\OCSD\FA\FeeProposal20110920v1.doc
Series
Par
Amount
Type ($000s)Results Savings
2009A Fixed 200,000 •Funding Capital Improvement Program
LI Delayed pricing date on two occasions
over a period of six months to avoid
difficult markets
$25,000,000 (savings
compared to pricing on
initially scheduled date)
2009B CANs 165,865 •Extension of Series 2008C (originally
Series 2006)
•Maintain short-term (variable-like)
exposure
• All-in one-year cost of 0.56%
See Series 2010B below
2010A BABs 80,000 •Funding Capital Improvement Program
•Borrowing at low all-in net yield of
3.70%for an average life of 26.9 years
$15,200,000 (savings
compared to issuance of
traditional tax-exempt debt)
2000AB Bank
Substitution
194,000 •Secured low-cost bank liquidity
•2-year commitment
$425,000 (savings
compared to prevailing
market levels)
2010B CANs 154,665 •Extension of Series 2009B (originally
Series 2006)
•Maintain short-term (variable-like)
exposure
• All-in one-year cost of 0.52%
$19,500,000 (savings
since Series 2006
compared to fixed rate
issuance)
201OC BABs 157,000 •Funding Capital Improvement Program
•Borrowing at low all-in net yield of
4.12%with a final maturity in February
2044
$20,000,000 (savings
compared to issuance of
traditional tax-exempt debt)
2011A Refunding 147,595 •Identified refunding opportunity of
Series 2000AB and Series 2003
•Refunding of Series 2000AB expected
to produce savings while reducing bank
and interest rate risks
$10,700,000 (refunding
savings of which $2.1
million is expected from
Series 2000AB)
Totals:$2,225,385 $108,425,000
As we reflect on the past services provided to the District,it is rewarding for us to know we took part in
guiding the District through the recent global financial crisis relatively unscathed over the past few years.
Even during these recent turbulent financial times (since 2008),the District achieved rating upgrades to
"AAA"(highest ratings available)by both Fitch Ratings ("Fitch")and Standard &Poor's Ratings
Services ("S&P").When PRAG began working with the District in 2002,the long-term ratings of the
District were "AA"by both Fitch and S&P, and since then,PRAG has provided strategic counsel and
assistance in presenting the strong financial picture of the District to the rating agencies which ultimately
resulted in the assignment of "AAA"ratings. In addition, PRAG has been a pro-active participant and
contributor to developing a well-managed,cost effective capital funding program that avoided risky
financing techniques while providing significant savings and low borrowing costs to the District.As one
recent example,PRAG alerted the District and identified the refunding opportunity associated with
outstanding COPs that will generate over $10 million in present value savings,including a unique
restructuring of variable rate debt to reduce bank and interest rate risks in addition to producing savings
(see Series 2011A in table above).
We recognize the current difficult economic environment we are all facing;therefore,PRAG proposes no
increase in our fixed transaction fees or hourly fees which were established five years ago.Although,the
Consumer Price Index has risen by 12.3%and PRAG hourly fees have increased by an average of over
15%o during the same period (as shown in the table below),we propose no adjustments to our hourly rates.
1PRAG C:\Ed\OCSD\FA\FeeProposal20110920v1.doc
Personnel District Rates Current PRAG Rates
Executive Vice President /
Senior Managing Director $300 $325
Managing Director 275 285
Vice President 250 260
Assistant Vice President 200 235
Associate 150 220
Analyst 150 200
PRAG is very appreciative ofthe opportunity to provide financial advisory services to the District and we
look forward to continuing to serve in this capacity. Please let me know if you have any questions or
comments about our proposal.Thank you.
I PRAG
Sincerely,
ft(A
Edmund Soong
Executive Vice President
C:\Ed\OCSD\FA\FeeProposal20110920v1.doc
Public Resources Advisory Group
11845West Olympic Boulevard • Suite 640 • Los Angeles, California 90064 • Phone (310)477-8487 • Fax (310)477-0105
September 5,2006
Mr.Michael White
Controller
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92708-7018
Dear Mr.White:
Public Resources Advisory Group ("PRAG")is pleased to submit a proposal to extend its service
as financial advisor to the Orange County Sanitation District (the "District").As financial
advisor,PRAG will continue to provide consulting services in conjunction with the District's
capital funding, debt, swaps, and investment programs.PRAG will provide qualified personnel
for all financial advisory services,including,but not limited to the following:
>Making available qualified personnel for consultations and conferences with
staffand officials on an as needed basis;
> Maintain and refine the Capital Financing Plan model which projects
components of the District's revenue and expenses, cash reserves, and capital
project expenditures for the collection system and joint treatment works, as well
as repayment obligations for the District's outstanding and projected debt
obligations;
>Conduct regular reviews of the District's debt structure and explore refinancing
and restructuring opportunities available in the current market, including
increasing or decreasing variable rate exposure;
>Issuance ofdebt and swaps
• Assist in the selection process of other financing team members,
including underwriters, legal counsel, swap providers, credit
enhancementproviders,paying agents, auction agents, trustees, printers,
and verification agents;
•Develop the financing structure with a focus on the benefits and risks to
the District;
• Prepare financing schedules and agendas for meetings of the financing
team;
• Review and provide comments on bond resolutions, offering statements
and other financing documents;
• Devise and implement credit ratings strategies, including arranging to
obtain ratings for debt, preparation of presentations, conducting
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>
Public Resources Advisory Group
meetings,arranging tours,responding to inquiries from rating analysts,
and maintaining regular contact with rating analysts;
•Assess the cost effectiveness of credit enhancement options for the
financing;and
•Participate in the pre-closing and closing activities,to assure that a
smooth closing is accomplished;
Perform other financial advisory services as may be required from time to time.
PRAG typically bills clients on an hourly basis for non-transactional work and fixed fees for
transactional work. Our proposed billing rates for non-transactional work is the following:
Hourly Rates
Personnel 1 Rate Per Hour
Chairman /Co-President $350
Executive Vice President /
Senior Managing Director 300
Managing Director 275
Vice President 250
Assistant Vice President 200
Associate /Analyst 150
For transactional work,we propose the following fees:
Fixed Fees00
Fixed Rate New Money Issuance
(Competitive or Negotiated)$85,000
Fixed Rate Refunding Issuance
(Competitive or Negotiated)100,000
Variable Rate New Money Issuance 100,000
Variable Rate Refunding Issuance 115,000
Swaps(b)(c)125,000
Swap Reports
Existing Swaps (1992 and 1993 COPs)
NewSwaps(during 1st year)
New Swaps (starting 2nd year)
l,000(d)
2,000(d)
l,000(d)
Bidding of an Investment(b)(e)
(a)Discounts for simultaneous or close proximity multiple issues (including
swaps and investments)will be negotiated prior to commencing work on
the transactions.
(b)Payable by the counterparty if the District prefers.
(c)Not to exceed.Actual fee to be negotiated based on the complexity of
the transaction (i.e.substantial discounting if there is an associated bond
transaction and/or existing swap documents).
(d) For each outstanding swap.
(e) For new investments,not to exceed the amount permitted by the "safe
harbor''provisions of the federal arbitrage regulations (currently
$32,000). For escrow restructurings, 5% of savings on the first million
and 2.5%of incremental savings thereafter.
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Public Resources Advisory Group
In addition,PRAG will bill the District for out-of-pocket expenses associated with providing
transactional and non-transactional financial advisory services,which are detailed below:
Out-of-Pocket Expenses
Expense j Rate
Administrative Fee 10%(a)
Computer Charges:
Databases
Munifacts
at cost
$250 per bond issue
Travel at cost(b)
Automobile:
Rental Cars
Personal Cars
at cost
$0.445/mile(c)
Other Expenses'*"at cost
(a)This fee pertains only to non-personnel expenses which are
billed through PRAG.such as The Bond Buyer,printer,and
disclosure message charges.Any such charges by PRAG will be
disclosed to the District prior to being incurred.
(b)PRAG professionals would endeavor to use the lowest cost
transportation that scheduling permits.Advance notification will
be given to the District on all travel costs outside of mileage
reimbursement.
(c) Or the current standard mileage rate as determined by the U.S.
Internal Revenue Service.
(d)Must be preapproved by the District's Project Manager.
0
PRAG thanks you for the opportunity over the past few years of providing financial advisory
services to the District.We would very much like to continue serving the District in this
capacity.Ifthe above proposal is acceptable to you,please counter sign below and return a copy
to me at the above address.
Sincerely,
Edmund Soong
Executive Vice President
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