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HomeMy WebLinkAbout11-13-2019 Administration Committee Meeting Agenda PacketOrange County Sanitation District ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 - 5:00 PM Board Room Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 ACCOMMODATIONS FOR THE DISABLED: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board’s office at (714) 593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. AGENDA POSTING: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District’s Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, and on the Sanitation District’s website at www.ocsd.com not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board. AGENDA DESCRIPTION: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. MEETING AUDIO: An audio recording of this meeting is available within 24 hours after adjournment of the meeting. Please contact the Clerk of the Board's office at (714) 593-7433 to request the audio file. NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, the item must be submitted in writing to the Clerk of the Board: Kelly A. Lore, MMC, (714) 593-7433 / klore@ocsd.com at least 14 days before the meeting. FOR ANY QUESTIONS ON THE AGENDA, BOARD MEMBERS MAY CONTACT STAFF AT: General Manager: Jim Herberg, jherberg@ocsd.com / (714) 593-7300 Asst. General Manager: Lorenzo Tyner, ltyner@ocsd.com / (714) 593-7550 Asst. General Manager: Rob Thompson, rthompson@ocsd.com / (714) 593-7310 Director of Human Resources: Celia Chandler, cchandler@ocsd.com / (714) 593-7202 Director of Engineering: Kathy Millea, kmillea@ocsd.com / (714) 593-7365 Director of Environmental Services: Lan Wiborg, lwiborg@ocsd.com / (714) 593-7450 ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 CALL TO ORDER PLEDGE OF ALLEGIANCE DECLARATION OF QUORUM: PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a Speaker’s Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you wish to speak. Speakers will be recognized by the Chairperson and are requested to limit comments to three minutes. REPORTS: The Committee Chairperson and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors. CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1.2019-640APPROVAL OF MINUTES RECOMMENDATION: Approve Minutes of the Regular Meeting of the Administration Committee held September 11, 2019. Originator:Kelly Lore Agenda Report 09-11-2019 Administration Committee Minutes Attachments: 2.2019-6662019 CONFLICT OF INTEREST CODE RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 19-XX entitled, “A Resolution of the Board of Directors of Orange County Sanitation District adopting a Conflict of Interest Code which supersedes all prior Conflict of Interest Codes and amendments previously adopted”. Originator:Kelly Lore Agenda Report OCSD Resolution 2019 Conflict of Interest Code 2019 DRAFT Conflict of Interest Code Attachments: Page 1 of 5 ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 3.2019-699UPDATE TO THE ESTABLISHED RULES OF PROCEDURE FOR THE CONDUCT OF BUSINESS OF THE ORANGE COUNTY SANITATION DISTRICT RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 19-XX entitled, “A Resolution of the Board of Directors of Orange County Sanitation District establishing Rules of Procedure for the Conduct of Business of the Orange County Sanitation District; and repealing Resolution No. OCSD 18-12”. Originator:Kelly Lore Agenda Report Rules of Procedure Resolution - Redline Attachments: 4.2019-709GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST RECOMMENDATION: Recommend to the Board of Directors to:..body A. Receive and file Orange County Sanitation District purchases made under the General Manager’s authority for the period of July 1, 2019 to September 30, 2019; and B. Approve the following additions to the pre-approved OEM Sole Source List for the period of July 1, 2019 to September 30, 2019: ·ALLEN-BRADLEY - Medium Voltage Variable Frequency Drive ·CLEAVER-BROOKS - Burner Elements ·EATON - Self-Cleaning Strainers ·SONETICS - Wireless headsets and system ·TRM/Maximo - Rules Manager SE and Lock out Tag Out (LOTO) Software ·VAUGHAN - Mixing Nozzles..body Originator:Lorenzo Tyner Agenda ReportAttachments: 5.2019-707CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2019 RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2019. Originator:Lorenzo Tyner Page 2 of 5 ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 Agenda Report Consolidated Financial Report for the First Quarter Ended September 30, 2019 Attachments: 6.2019-702LEASE AGREEMENT WITH MEGDAL GREEN, LLC PROVIDING ORANGE COUNTY SANITATION DISTRICT PARCEL FOR PARKING AND/OR RELATED ACTIVITIES RECOMMENDATION: Recommend to the Board of Directors to: Approve a five-year lease agreement with Megdal Green, LLC, a California limited liability company, to allow paving, striping, parking, and related improvements over a 4-foot wide portion of the Orange County Sanitation District’s 50-foot wide utility corridor which abuts 21532 South Brookhurst Street in Huntington Beach owned by Megdal Green, LLC, at an annual cost of $250, for a term of five-years. Originator:Lorenzo Tyner Agenda Report Lease Agreement with Megdal Green, LLC Attachments: NON-CONSENT: 7.2019-705ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2019 RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District’s Comprehensive Annual Financial Report for the year ended June 30, 2019, prepared by staff and audited by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, along with the following reports prepared by MGO: 1. Report to the Board of Directors; and 2. Independent Accountants’ Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. Originator:Lorenzo Tyner Agenda Report Report to the Board of Directors Independent Accountant's Report on Applying Agreed-Upon Procedures Related to Appropriations Limit Calculation Comprehensive Annual Financial Report for the Year Ended June 30, 2019 (separately bound document) Single Audit Reports Attachments: Page 3 of 5 ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 8.2019-708PROFESSIONAL RISK MANAGEMENT CONSULTANT AGREEMENT RECOMMENDATION: Approve a sole source Professional Consultant Services Agreement with John J. Preston, Specification No. SSJ 2174, to perform professional risk management consulting services for the Orange County Sanitation District, which includes overseeing property and general liability loss control and setting loss control requirements on public bids and contracts, risk transfer, loss prevention, and risk reduction in an amount not to exceed $150,000 per year, for a term of one year beginning December 1, 2019 - November 30, 2020; with a one-year renewal option. Originator:Lorenzo Tyner Agenda Report Professional Consultant Services Agreement Attachments: 9.2019-711POSITION CHANGES FOR FISCAL YEAR 2019-20 RECOMMENDATION: Recommend to the Board of Directors to: Approve a position exchange and corresponding salary upgrade from a vacant Senior Mechanic (Salary Grade LOC67) position to Maintenance Specialist (Salary Grade PRO80). Originator:Celia Chandler Agenda Report Preventative Maintenance Optimization Position Exchanges Attachments: INFORMATION ITEMS: 10.2019-713CLIMATE RESILIENCY STUDY, PROJECT NO. SP-152 RECOMMENDATION: Information Item. Originator:Kathy Millea Agenda Report SP-152 OCSD Climate Resiliency Executive Summary Attachments: OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: BOARD OF DIRECTORS INITIATED ITEMS FOR A FUTURE MEETING: At this time Board members may request staff to place an item on a future agenda. Page 4 of 5 ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, November 13, 2019 ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, December 11, 2019 at 5:00 p.m. Page 5 of 5 Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-640 Agenda Date:11/13/2019 Agenda Item No:1. FROM:James D. Herberg, General Manager Originator: Kelly A. Lore, Clerk of the Board SUBJECT: APPROVAL OF MINUTES GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Approve Minutes of the Regular Meeting of the Administration Committee held September 11, 2019. BACKGROUND In accordance with the Board of Directors Rules of Procedure,an accurate record of each meeting will be provided to the Directors for subsequent approval at the following meeting. RELEVANT STANDARDS ·Resolution No. OCSD 18-12 ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Minutes of the Administration Committee meeting held September 11, 2019 Orange County Sanitation District Printed on 11/6/2019Page 1 of 1 powered by Legistar™ Orange County Sanitation District Minutes of the ADMINISTRATION COMMITTEE Wednesday, September 11, 2019 5:00 PM Board Room Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 CALL TO ORDER A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chairman Chad Wanke on September 11, 2019 at 5:01 p.m. in the Administration Building of the Orange County Sanitation District. Director Erik Peterson led the Flag Salute and a moment of silence was observed for the occurrences of September 11, 2001. A quorum was declared present as follows: DECLARATION OF QUORUM: Present:Chad Wanke, Richard Murphy, James Ferryman, Peter Kim, Mark Murphy, Steve Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver, John Withers and David Penaloza (Alternate) Absent:None STAFF PRESENT: Jim Herberg, General Manager; Rob Thompson, Assistant General Manager; Lorenzo Tyner, Assistant General Manager; Celia Chandler, Director of Human Resources; Kathy Millea, Director of Engineering; Lan Wiborg, Director of Environmental Services; Tina Knapp, Assistant Clerk of the Board; Jennifer Cabral; Rod Collins; Rhea de Guzman; Al Garcia; Derek Harp; Laura Maravilla; Tyler Ramirez; and Paula Zeller. OTHERS PRESENT: Brad Hogin, General Counsel; Steve Delaney, Orange County Employees Retirement System (OCERS); Molly Murphy, OCERS; and Brenda Shott, OCERS. PUBLIC COMMENTS: None. REPORTS: Chair Wanke did not provide a report. General Manager Jim Herberg invited the Committee to the recognition for recent excellent beach report cards event being held on September 18 from 3:15 - 4:45 p.m., prior to the Page 1 of 5 ADMINISTRATION COMMITTEE Minutes September 11, 2019 Special Board Meeting, at both Plant Nos. 1 and 2. Assistant General Manager Lorenzo Tyner indicated that the termination of the necessary leases on the properties across the street have been obtained and he will provide more information at the Board Meeting on September 25. CONSENT CALENDAR: Chair Wanke indicated that the Information Item, Item No. 5, would immediately follow the Consent Calendar, Item Nos. 1-3. 1.APPROVAL OF MINUTES 2019-517 Originator:Kelly Lore MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the Special Meeting of the Administration Committee held July 17, 2019. Ayes:Chad Wanke, Richard Murphy, James Ferryman, Peter Kim, Mark Murphy, Steve Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver and David Penaloza (Alternate) Noes:None Absent:John Withers Abstentions:None 2.SCRIPPS INSTITUTION OF OCEANOGRAPHY BEST PRACTICE DEVELOPMENT AND SEAWATER ANALYSIS FOR PH 2019-538 Originator:Lan Wiborg MOVED, SECONDED, AND DULY CARRIED TO: Approve and authorize the Purchasing and Contracts Manager to enter into a one (1) year Sole Source Service Contract with The Regents of the University of California on behalf of its San Diego campus’ Scripps Institution of Oceanography, for a total amount not to exceed $40,000, with two (2) optional one (1) year renewals at $40,000 per renewal, for a total amount not to exceed $120,000 for the three-year period, to develop best practices and analyze seawater for pH in compliance with permit mandated data quality requirements and regional comparability as recommended by the Bight’13 Nutrients Study. Ayes:Chad Wanke, Richard Murphy, James Ferryman, Peter Kim, Mark Murphy, Steve Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver and David Penaloza (Alternate) Noes:None Absent:John Withers Page 2 of 5 ADMINISTRATION COMMITTEE Minutes September 11, 2019 Abstentions:None 3.REIMBURSEMENTS TO BOARD MEMBERS AND STAFF 2019-563 Originator:Lorenzo Tyner MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period July 1, 2018 through June 30, 2019. Ayes:Chad Wanke, Richard Murphy, James Ferryman, Peter Kim, Mark Murphy, Steve Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver and David Penaloza (Alternate) Noes:None Absent:John Withers Abstentions:None Board Vice-Chair Withers arrived at 5:20 p.m., during the OCERS presentation. INFORMATION ITEMS: 5.ORANGE COUNTY EMPLOYEE RETIREMENT SYSTEM (OCERS) INFORMATION UPDATE 2019-565 Originator:Lorenzo Tyner Mr. Tyner introduced Steve Delaney, Molly Murphy, and Brend Shott from OCERS. The OCERS representatives provided the Committee with a PowerPoint presentation that included information on OCERS investment policies, 2018 investment results, and impacts on the Sanitation District. Staff and the OCERS representatives responded to questions from the Committee. INFORMATIONAL ITEM HEARD ON: OCERS will present information regarding its investment policies, 2018 investment results, and impacts on the Orange County Sanitation District. NON-CONSENT: 4.2019 ORANGE COUNTY REGIONAL WATER AND WASTEWATER HAZARD MITIGATION PLAN 2019-547 Originator:Celia Chandler Page 3 of 5 ADMINISTRATION COMMITTEE Minutes September 11, 2019 MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 19-XX entitled, “A Resolution of the Board of Directors of the Orange County Sanitation District Approving and Adopting the 2019 Orange County Regional Water and Wastewater Hazard Mitigation Plan,” in accordance with the Disaster Mitigation Act (DMA) of 2000. Ayes:Chad Wanke, Richard Murphy, James Ferryman, Peter Kim, Mark Murphy, Steve Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, David Shawver, John Withers and David Penaloza (Alternate) Noes:None Absent:Christina Shea Abstentions:None Director Shea stepped out of the room during Item No. 4 and was not present for the vote. DEPARTMENT HEAD REPORTS: None. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Board Chair Shawver reported that he attended the staff volunteer recognition event on September 10 and that it was a great event recognizing the outstanding efforts of staff that volunteer at various Sanitation District events throughout the year. Committee Chair Wanke requested that staff look into the possibility of issuing identification cards to the Directors and providing the Directors with a Board contact list. BOARD OF DIRECTORS INITIATED ITEMS FOR A FUTURE MEETING: None. ADJOURNMENT: Chair Wanke declared the meeting adjourned at 6:11 p.m. to the Regular meeting to be held on Wednesday, October 9, 2019 at 5:00 p.m. Page 4 of 5 ADMINISTRATION COMMITTEE Minutes September 11, 2019 Submitted by: _____________________ Tina Knapp, MMC Assistant Clerk of the Board Page 5 of 5 Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-666 Agenda Date:11/13/2019 Agenda Item No:2. FROM:James D. Herberg, General Manager Originator: Kelly A. Lore, Clerk of the Board SUBJECT: 2019 CONFLICT OF INTEREST CODE GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 19-XX entitled, “A Resolution of the Board of Directors of Orange County Sanitation District adopting a Conflict of Interest Code which supersedes all prior Conflict of Interest Codes and amendments previously adopted”. BACKGROUND The last biennial review,and formal amendment,to the Orange County Sanitation District’s Conflict of Interest Code was completed in April 2018.Although the Political Reform Act requires that every local agency review its Conflict of Interest Code biennially (which would bring forth the next amendment in 2020),staff is proposing this new amendment in order to reflect the current positions of those designated employees that are required to file statements of economic interests. RELEVANT STANDARDS ·Political Reform Act,Government Code Sections 81000,et seq. ·California Government Code Sections 87300-87306 ·Fair Political Practices Commission (2 Cal. Code of Regs. Section 18100, et seq.) PROBLEM During the last budget cycle and due to reorganization of the agency,several positions have been added,reclassified,or eliminated.These positions are required to file statements of economic interests and the updated Conflict of Interest Code must be adopted. PROPOSED SOLUTION Staff recommends that the Board of Directors adopt the updated 2019 Conflict of Interest Code to reflect the following changes: ·Addition of the following new positions:Administration Manager,Administration Supervisor,Orange County Sanitation District Printed on 11/6/2019Page 1 of 2 powered by Legistar™ File #:2019-666 Agenda Date:11/13/2019 Agenda Item No:2. ·Addition of the following new positions:Administration Manager,Administration Supervisor, Cost Estimator,Lead Source Control Inspector,Principal Buyer,and Principal Public Affairs Specialist ·Addition of Assistant Clerk of the Board (deletion of Deputy Clerk of the Board) ·Addition of Environmental Supervisor (deletion of Laboratory Supervisor) ·Addition of Purchasing and Contracts Manager (deletion of Contracts and Purchasing Manager) ·Deletion of the following eliminated positions:Facilities Manager,Information Technology Manager, and Senior Construction Inspection Supervisor If approved by the Board,the newly approved code will be forwarded to the County of Orange for amendment approval. TIMING CONCERNS The changes in position control have taken place and therefore cannot wait until a future meeting. RAMIFICATIONS OF NOT TAKING ACTION Non-compliance with state law. PRIOR COMMITTEE/BOARD ACTIONS April 2018 -Board of Directors amended the Conflict of Interest Code and approved Resolution No. OCSD 18-04. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Resolution No. OCSD 19-XX ·2019 DRAFT Conflict of Interest Code Orange County Sanitation District Printed on 11/6/2019Page 2 of 2 powered by Legistar™ 1427827.1 OCSD 19-XX-1 RESOLUTION NO. OCSD 19-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING A CONFLICT OF INTEREST CODE WHICH SUPERSEDES ALL PRIOR CONFLICT OF INTEREST CODES AND AMENDMENTS PREVIOUSLY ADOPTED WHEREAS, the Political Reform Act of 1974, Government Code Section 81000 et seq. (“the Act”), requires a local government agency to adopt a Conflict of Interest Code pursuant to the Act; and WHEREAS, the Orange County Sanitation District has previously adopted a Conflict of Interest Code and that Code now requires updating; and WHEREAS, amendments to the Act have in the past and foreseeably will in the future require conforming amendments to be made to the Conflict of Interest Code; and WHEREAS, the Fair Political Practices Commission has adopted a regulation, 2 California Code of Regulations, Section 18730, which contains terms for a standard model Conflict of Interest Code, which, together with amendments thereto, may be adopted by public agencies and incorporated by reference to save public agencies time and money by minimizing the actions required of such agencies to keep their codes in conformity with the Political Reform Act; and WHEREAS, the reorganization of the Orange County Sanitation District workforce resulted in the reclassification of a position; and WHEREAS, the Orange County Sanitation District’s existing Conflict of Interest Code must be amended in order to reflect the current positions of those designated employees that are required to file statements of economic interests. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE, AND ORDER: 1427827.1 OCSD 19-XX-2 Section 1.The terms of 2 California Code of Regulations, Section 18730, any amendments to it duly adopted by the Fair Political Practices Commission, and all additional guidance by the Fair Political Practices Commission, are hereby incorporated by reference and, together with the 2018 Conflict of Interest Code for the Orange County Sanitation District, including Exhibits A and B in which members and employees are designated and disclosure categories are set forth, constitute the Conflict of Interest Code of the Orange County Sanitation District. Section 2.The provisions of all Conflict of Interest Codes and Amendments thereto previously adopted by the Orange County Sanitation District are hereby superseded. Section 3. The Filing Officer is hereby authorized to forward a copy of this Resolution to the Clerk of the Orange County Board of Supervisors for review and approval by the Orange County Board of Supervisors as required by California Government Code Section 87303. PASSED AND ADOPTED at a regular meeting of the Board of Directors held November 20, 2019. ________________________________ David John Shawver Board Chairman ATTEST: ______________________________ Kelly A. Lore, MMC Clerk of the Board 1427827.1 OCSD 19-XX-3 STATE OF CALIFORNIA ) )ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 19-XX was passed and adopted at a regular meeting of said Board on the 20th day of November 2019, 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 20th day of November 2019. Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District 1427807.1 OCSD 19-XX-1 2019 CONFLICT OF INTEREST CODE FOR THE ORANGE COUNTY SANITATION DISTRICT The Political Reform Act, Government Code Sections 81000, et seq., requires state and local government agencies to adopt and promulgate Conflict of Interest Codes. The Fair Political Practices Commission has adopted a regulation (2 Cal. Code of Regs. Section 18730) which contains the terms of a standard Conflict of Interest Code, which may be incorporated by reference in an agency’s code. After public notice and hearing, it may be amended by the Fair Political Practices Commission to conform to amendments in the Political Reform Act. Therefore, the terms of 2 California Code of Regulations Section 18730, any amendments to it duly adopted by the Fair Political Practices Commission, and all additional guidance by the Fair Political Practices Commission, are hereby incorporated by reference. This regulation and the attached Appendix designating officials and employees and establishing disclosure categories, shall constitute the Conflict of Interest Code of the Orange County Sanitation District (Sanitation District). The following designated employees shall file statements of economic interests electronically with the Clerk of the Orange County Board of Supervisors: Orange County Sanitation District Board of Directors, Orange County Sanitation District Financing Corporation, General Manager, General Counsel, Assistant General Manager, Director of Finance and Administrative Services, Director of Engineering, Director of Operations & Maintenance, Director of Environmental Services, Director of Human Resources, and the Clerk of the Board. The Sanitation District’s Filing Officer (Clerk of the Orange County Sanitation District Board of Directors) will thereafter verify the completion of the filing statements. If the Sanitation District’s Filing Officer receives any statements of economic interests by other means, the Filing Officer shall make and retain a copy and forward the original of these statements to the Clerk of the Orange County Board of Supervisors. 1427807.1 OCSD 19-XX-2 Statements for all other designated employees will be retained by the Sanitation District’s Filing Officer. 1427807.1 OCSD 19-XX-3 EXHIBIT A ORANGE COUNTY SANITATION DISTRICT LIST OF DESIGNATED POSITIONS CONFLICT OF INTEREST CODE Designated Positions Disclosure Categories Accounting Supervisor OC-05 *Administration Manager (addition)OC-05 *Administration Supervisor (addition)OC-05 *Assistant Clerk of the Board (addition)OC-05 Assistant General Manager OC-01 Buyer OC-05 Capital Improvement Program Project Manager OC-41 Chief Plant Operator OC-05 Clerk of the Board OC-05 Construction Inspection Supervisor OC-05 Construction Inspector OC-10 Consultant OC-30 *Contracts & Purchasing Manager (deletion) Reclassified as Purchasing & Contracts Manager OC-05 Contracts Administrator OC-05 Contracts Supervisor OC-05 Controller OC-05 *Cost Estimator (addition)OC-41 *Deputy Clerk of the Board (deletion) Reclassified as Assistant Clerk of the Board OC-05 Director of Engineering OC-41 Director of Environmental Services OC-41 Director of Finance & Administrative Services OC-41; OC-12 Director of Human Resources OC-41, OC-11 Director of Operations & Maintenance OC-41 Engineer OC-29, OC-41 Engineering Manager OC-41 Engineering Supervisor OC-41 Environmental Laboratory & Ocean Monitoring Manager OC-05 Environmental Supervisor OC-29 *Facilities Manager (deletion) Position eliminated OC-05 General Counsel OC-01 General Manager OC-01 Human Resources & Risk Manager OC-11; OC-12 Human Resources Supervisor OC-11 *Information Technology Manager (deletion) Position eliminated OC-08 1427807.1 OCSD 19-XX-4 Information Technology Supervisor OC-08 Information Technology Systems & Operations Manager OC-08 *Laboratory Supervisor (deletion) Previously reclassified as Environmental Supervisor OC-21 *Lead Source Control Inspector (addition)OC-05; OC-29 Maintenance Manager OC-05 Maintenance Superintendent OC-05 Maintenance Supervisor OC-05 Materials Control Supervisor OC-05 Operations Manager OC-05 Operations Supervisor OC-05 Orange County Sanitation District Financing Corporation Board of Directors OC-01 Principal Accountant OC-41 Principal Contracts Administrator OC-05 *Principal Buyer (addition)OC-05 Principal Human Resources Analyst OC-11 *Principal Public Affairs Specialist (addition)OC-05 Principal Staff Analyst OC-05; OC-12 *Purchasing and Contracts Manager (addition)OC-05 Public Affairs Supervisor OC-05 Purchasing Supervisor OC-05 Safety & Health Supervisor OC-05 Secretary of the Orange County Financing Corporation OC-05 Senior Buyer OC-05 *Senior Construction Inspection Supervisor (deletion) Position eliminated OC-05 Senior Construction Inspector OC-10 Senior Contracts Administrator OC-05 Senior Engineer OC-05 Senior Scientist OC-21 Source Control Supervisor OC-29 Treasurer of the Orange County Financing Corporation OC-41 *The following amendments are made: ADDITIONS: Administration Manager - OC-05 Administration Supervisor - OC-05 Assistant Clerk of the Board - OC-05 Cost Estimator - OC-41 Principal Buyer - OC-05 Principal Public Affairs Specialist - OC-05 Purchasing and Contracts Manager - OC-05 1427807.1 OCSD 19-XX-5 DELETIONS: Contracts & Purchasing Manager - Reclassified as Purchasing & Contracts Manager Deputy Clerk of the Board -reclassified as Assistant Clerk of the Board Facilities Manager -Position eliminated Information Technology Manager -Position eliminated Laboratory Supervisor -Reclassified as Environmental Supervisor Senior Construction Inspection Supervisor -Position eliminated 1427807.1 OCSD 19-XX-6 EXHIBIT B ORANGE COUNTY SANITATION DISTRICT DISCLOSURE CATEGORIES CONFLICT OF INTEREST CODE Disclosure Category Disclosure Description OC-01 All interests in real property in Orange County or located entirely or partly within the Sanitation District’s boundaries, as well as investments, business positions and sources of income (including gifts, loans and travel payments). OC-05 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, equipment (including training and consulting services) used by the Sanitation District. OC-08 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that develop or provide computer hardware/software, voice data communications, or data processing goods, supplies, equipment, or services (including training and consulting services) used by the Sanitation District. OC-10 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that are engaged in any real estate activity including, but not limited to real estate appraisal, development, construction, planning/architectural design, engineering, sales, brokerage, leasing, lending, insurance, rights of way, and/or studies; and/or property or facilities management/maintenance/custodial and utility services used by the Sanitation District or provides capital for the purchase of property used or sold by the Sanitation District. OC-11 All interests in real property in Orange County or located entirely or partly within the Sanitation District’s boundaries, as well as investments in, business positions with and income (including gifts, loans and travel payments) from sources that are engaged in the supply of equipment related to (i) recruitment, employment search & marketing, classification, training, or negotiation with personnel; (ii) employee benefits; and (iii) health and welfare benefits. OC-12 All interests in real property in Orange County or located entirely or partly within the Sanitation District’s boundaries, as well as investments in, business positions with and income (including gifts, loans and travel payments) from sources that invest funds or engage in the business of insurance including, but not limited to insurance companies, carriers, holding companies, underwriters, brokers, solicitors, agents, adjusters, claims managers and actuaries; from financial institutions including but not limited to, banks, savings & loan associations and credit unions or sources that have filed a claim, or have a claim pending, against the Sanitation District. 1427807.1 OCSD 19-XX-7 EXHIBIT B ORANGE COUNTY SANITATION DISTRICT DISCLOSURE CATEGORIES CONFLICT OF INTEREST CODE Disclosure Category Disclosure Description OC-21 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide laboratory or chemical – related goods, supplies, equipment, or services (including training and consulting services). OC-29 All investments in, business positions with and income (including gifts, loans and travel payments) from sources that are subject to inspection or regulation by the Sanitation District. OC-30 Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest category in the code subject to the following limitation: The Department Head/Director/General Manager may determine that a particular consultant, although a “designated position,” is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements in this section. Such written determination shall include a description of the consultant’s duties and, based upon that description, a statement of the extent of disclosure required. The determination of disclosure is a public record and shall be filed with the Form 700 and retained by the Filing Officer for public inspection. OC-41 All interests in real property in Orange County, as well as investments in, business positions with and income (including gifts, loans and travel payments) from sources that provide services, supplies, materials, machinery, vehicles, or equipment (including training and consulting services) used by the Sanitation District. Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-699 Agenda Date:11/13/2019 Agenda Item No:3. FROM:James D. Herberg, General Manager Originator: Kelly A. Lore, Clerk of the Board SUBJECT: UPDATE TO THE ESTABLISHED RULES OF PROCEDURE FOR THE CONDUCT OF BUSINESS OF THE ORANGE COUNTY SANITATION DISTRICT GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 19-XX entitled, “A Resolution of the Board of Directors of Orange County Sanitation District establishing Rules of Procedure for the Conduct of Business of the Orange County Sanitation District; and repealing Resolution No. OCSD 18-12”. BACKGROUND At this time,the procedures are being updated to include changes to the Legislative and Public Affairs Committee dates,adding the order of business,updating decorum language,and minor clerical revisions. RELEVANT STANDARDS ·California Government Code Section 54950 et seq. ·Comply with transparency and communication requirements, including the Brown Act PRIOR COMMITTEE/BOARD ACTIONS July 2018 -Adopted Resolution No.OCSD 18-12 entitled,“A Resolution of the Board of Directors of Orange County Sanitation District establishing Rules of Procedure for the Conduct of Business of the District;and repealing Resolution No.OCSD 17-18”,which will amend the rules of procedure to provide for the appointment of a Chairperson and Vice Chairperson of the Legislative and Public Affairs Committee by the Chairperson of the Board of Directors. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Draft Resolution No. OCSD 19-XX (Redline) Orange County Sanitation District Printed on 11/6/2019Page 1 of 1 powered by Legistar™ OCSD 18-1219-XX-1 RESOLUTION NO. OCSD 18-1219-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING RULES OF PROCEDURE FOR THE CONDUCT OF BUSINESS OF THE ORANGE COUNTY SANITATION DISTRICT, AND REPEALING RESOLUTION NO. OCSD 17-1818-12 WHEREAS it is necessary to establish rules of procedure to facilitate the orderly handling of business to come before the Orange County Sanitation District Board of Directors and Standing, Steering, Special and Ad Hoc Committees. NOW THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: Rules of Procedure. That the following rules of procedure be adopted for the conduct of business of the Orange County Sanitation District (Sanitation District): A. Regular Meetings. There shall be a regular monthly meeting of the Board of Directors of the Sanitation District on the fourth Wednesday of every month at 6:00 p.m., in the Administrative Offices of the Sanitation District, located at 10844 Ellis Avenue, Fountain Valley, California; provided, however, if the fourth Wednesday of the month falls upon a legal holiday, said monthly meeting shall be held on the next day thereafter, at the same time and place, unless the Board adjourns to a different date and time. The Board of Directors may adjourn any regular, special or adjourned special meeting to a time and place certain, as specified in the order of adjournment. B. Special Meetings. A special meeting of the Board of Directors may be called in either one of the following ways: (1) By the Chairperson of the Board of Directors; or (2) By the written request of a majority of the Steering Committee delivered to the Clerk of the Board. The call or notice for special meeting shall be in writing and delivered personally or by mail at least twenty-four (24) hours before the time of such meeting, as specified in the notice. Any notice deposited in the regular mail addressed to a Director at the address he or she has on file with the Clerk of the Board postage prepaid, sixty (60) hours in advance of any such meeting as specified in the notice, shall be presumed to have been delivered. OCSD 18-1219-XX-2 The call or notice shall specify the time and place of the special meeting, a description of the business to be transacted and copies of all pertinent written materials. Such written notice may be dispensed with as to any Director or Alternate Director who, at or prior to the time the meeting convenes, files with the Clerk of the Board a written waiver of notice. Such waiver may be given by facsimile or electronic mail. Such written notice may also be dispensed with as to any member who is actually present at the meeting at the time it convenes. The Clerk of the Board shall diligently attempt to notify each Director personally of the time, place and purpose of said meeting, not less than twenty-four (24) hours before the time of said meeting. The call or notice shall be posted in the administrative offices’ public lobby and in a location freely accessible to the public at least twenty-four (24) hours prior to the special meeting. C. Meetings Adjourned by Clerk of the Board. If at any regular, adjourned regular, special or adjourned special meeting there is not a quorum of Directors present, the Clerk of the Board may declare the meeting adjourned to a stated time and place and shall cause written notice of the adjournment to be given in the same manner as for a special meeting, unless such notice is waived as provided for in special meetings. Within twenty-four (24) hours after the time of the adjournment, a copy of the order or notice of adjournment shall be conspicuously posted on or near the door of the place where the meeting was held and, in a location, freely accessible to the public. D. Notices to News Media. When any local newspaper of general circulation, radio or television station requests, in writing, notices of meetings of the Board of Directors, the Clerk of the Board shall thereafter, until receipt of a notice terminating said request, deliver notices of regular, regular adjourned and special adjourned meetings to such newspapers, radio or television stations. Delivery shall be made in the same manner as delivery is made to the Directors. E. Conduct of Meetings. (1) Procedural Rules. The procedural rules for debate and action shall be as set forth in Table 1, attached hereto and adopted herein by reference. Robert’s Rules of Order shall not be applicable or govern the procedures for the conduct of Sanitation District business. (2) Legal Officer. In any case of ambiguity or uncertainty in the interpretation or application of these Rules to any procedure, the presiding officer may direct such question for a ruling to the Board’s General Counsel, who shall be the parliamentarian of the Board. (3) Obtaining the Floor and Making Motions. Any member of the Board wishing to speak, or any member of the public wishing to address the Board, must first OCSD 18-1219-XX-3 be recognized by the Chairperson. The Chairperson must recognize any member of the Board who seeks the floor when appropriately entitled to address the Board. Any member of the Board, including the Chairperson, may bring a matter of business properly before the Board by making a motion. Any member, including the Chairperson, except the member making the motion, may second the motion. Once a motion is seconded, it may be opened for discussion and debate, in accordance with the procedures in Subsection (4) below. (4) Rules for Discussion, Debate and Deliberation by the Board. The procedures for consideration and action on all matters to come before the Board shall be in compliance with the terms of this Section, as follows: (a) Each item on the Agenda will be introduced in a form of a report by either the General Manager, a member of the Executive Management Team, or General Counsel, Special Counsel, or Clerk of the Board. (b) Upon completion of the report, the Chairperson will allow for direct questions regarding the item, by Directors, each in turn, and in the order as selected by the Chairperson. (c) Upon completion of the question period, the Chairperson will entertain a motion and second for consideration by the Board. (d) Discussion among the Directors will follow. Each Director will be recognized to address the Board in the order selected by the Chairperson, with a five (5) minute time limit for each Member wishing to speak on the Agenda item, unless the time limit is waived by the Chairperson. Directors should limit comment to the subject matter, item, or motion currently being considered. There will be no interruptions of the Director who has been recognized. Attempted interruptions will be declared out-of-order, and the Board Member attempting to interrupt will be asked to remain silent until recognized. (e) As an additional courtesy to everyone, repetition of comments will be discouraged in the interest of time and, at the discretion of the Chairperson, can be declared out-of-order. (f) After each Member who wishes to speak has been recognized and completed his/her remarks, a single three (3) minute period of rebuttal will be allowed any Director, unless the time limit is waived by the Chairperson. (g) If it appears to the Chairperson that any Director is pursuing a line of questioning or commentary due to lack of preparation or prior review with the Sanitation District’s Staff, the Director’s time will be declared to have been used up, and no further inquiry will be allowed. OCSD 18-1219-XX-4 (h) Upon adoption of a motion on an Agenda item, there will be no further discussion of that item. (5) Decorum in Debate. All Members shall address their remarks to the Chairperson and confine them to the business then pending and subject to discussion before the Board, avoiding personalities and reflections upon anyone’s motives. (6) Closing or Limiting Debate. At all times, the Board shall endeavor to allow free and open debate among Members of the Board. However, in the discretion of the Chairperson, it may become necessary to close or limit debate, so that action can be taken by the Board. An order by the Chairperson closing or limiting the debate can only be set aside by a majority vote of the Board. F. Quorum. A majority of the Directors shall constitute a quorum of the Board. G. Chairperson and Vice Chairperson of the Board. A Chairperson and Vice Chairperson of the Board shall be elected by a majority vote of Directors at the regular meeting in June of each year and will assume office July 1st. The nominations for Chairperson and Vice Chairperson shall be made at the regular Board meeting in May of each year. Any person nominated for Chairperson shall be deemed to be nominated for Vice Chairperson in the event the person is not elected as Chairperson. Thereafter, the nominees shall prepare a statement setting forth their qualifications for the office sought. The statements should be forwarded to the Clerk of the Board who will in turn mail to the members of the Board of Directors with the Agenda and other meeting material for the June regular meeting. If only one individual is nominated for Chairperson at the regular Board meeting in May, that individual shall be deemed elected as Chairperson, no election shall be held in June, and the individual shall assume office July 1st. If only one individual is nominated for Vice Chairperson at the regular Board meeting in May, that individual shall be deemed elected as Vice Chairperson, no election shall be held in June, and the individual shall assume office July 1st. The Chairperson and Vice Chairperson shall serve at the pleasure of a majority of the Directors. In the event the office of Chairperson becomes vacant due to resignation or retirement of the incumbent prior to the expiration of the regular term, the Vice Chairperson shall automatically succeed to the office of the Chairperson and shall continue to serve through the remainder of the regular term unless sooner removed by action of a majority of the Directors. In the event the office of Vice Chairperson becomes vacant prior to the expiration of the regular term, nominations and the election of a Director to serve in that capacity shall be conducted at the next regular Board meeting. The person so elected shall serve the balance of the regularly scheduled term unless sooner removed as a result of action by a majority of the Directors. The Chairperson shall not serve more than two consecutive one-year terms for which he/she has been elected to the office of Chairperson. The Vice Chairperson shall not serve more than two consecutive one-year terms for which he/she has been elected to the office of Vice Chairperson. OCSD 18-1219-XX-5 H. Presiding Officer. The Chairperson of the Board shall preside during meetings of the Directors. In the absence of the Chairperson, the Vice Chairperson shall preside. I. Clerk of the Board and Minutes. The Board of Directors shall have a person designated to serve as Clerk of the Board. The Clerk of the Board will be appointed to the position by the General Manager and shall report to the General Manager or a Department Head their designeeas designated by the General Manager. The Clerk of the Board will be a regular full-time employee, subject to all the rules and policies applicable to all regular full-time employees. The Clerk of the Board shall attend all meetings of the Board of Directors, unless excused by the Chairperson, and shall prepare an accurate record of each meeting for submission to the Directors and subsequent approval at the following meeting; provided, however, that when an adjourned, special or special adjourned meeting of the Board of Directors immediately precedes a regular meeting, Minutes of said meeting shall be submitted for approval at the next meeting of the Board following said regular meeting. In the preparation of Official Minutes of a meeting of the Board of Directors, the Clerk of the Board will not record the name of the Director who moves or who seconds the adoption of a motion or Resolution but will reflect the votes by name of each Director on each item brought before the Board. In the absence of the Clerk of the Board, an Deputy Assistant Clerk of the Board shall be appointed to exercise the duties of the Clerk of the Board. J. Regular Business to Come Before the Board of Directors. Insofar as practicable, all items of business to be taken up at a regular meeting of the Board shall be submitted to the Clerk of the Board, who shall include on the Agenda all such items submitted by Directors, the General Manager and General Counsel, and all formal communications. The Order of Business on the agenda for regular meetings of the Board of Directors shall be: Call to Order Invocation and Pledge of Allegiance Roll Call and Declaration of Quorum Public Comment Special Presentations Board Chairperson / General Manager Reports Public Hearings Elections (when necessary) Consent Calendar Receive and File Committee Items Non-Consent OCSD 18-1219-XX-6 Information Items AB 1234 Disclosure Reports Closed Session Other Business and communications or Supplemental agenda items Board of Directors initiated items for a future meeting Adjournment The Board Chairperson shall have the discretion to change the order of business. The Clerk of the Board shall mail to each Director a notice of such regular meetings, together with a proposed Agenda, not later than the Friday immediately preceding such regular meetings. Said Agenda, insofar as possible, shall include copies of Resolutions, except as hereafter provided, and a description of all matters to be considered, together with any pertinent written materials. Agendas shall be posted in a location freely accessible to the public not less than seventy-two (72) hours in advance of the meeting. Resolutions designated as “standard” and adopted by the Board of Directors from time to time, and approved as to form and content, need not be included with said Agenda; provided, however, that the information completing said standard Resolutions shall be set forth on the Agenda listing, and copies of said standard Resolutions shall be on file with the Clerk of the Board at the meeting time and place. Items of business not known at the time the regular Agenda is mailed as herein provided, may be considered as supplemental Agenda items; provided that all requirements of the Ralph M. Brown Act (California Government Code Sections 54950 et seq.) are satisfied. No business, except with consent of two-thirds of the Directors present (a majority of Directors present for emergency actions), and only if permitted by the Ralph M. Brown Act, not appearing on the regular or supplemental Agendas may be brought before the Board of Directors. The meeting Agenda shall provide for an opportunity for members of the public to address the Board on items on the Agenda and non-Agenda items of public interest. As determined by the Chairperson, speakers may be deferred until the specific Agenda item is taken for discussion, and remarks may be limited to three (3) minutes. Speakers on non-Agenda items may address only items that are within the subject matter jurisdiction of the Board of Directors. Time allotted for such presentations is limited to three (3) minutes or less. Total time allotted for all public input on each non-Agenda item is limited to thirty (30) minutes to one (1) hour, taking into consideration the number of persons filing a request to address the Board. However, time allotments may be waived by a majority vote of the Board. Formatted: Indent: First line: 0" OCSD 18-1219-XX-7 K. Handling of Business and Voting. During the course of a Board meeting, routine matters listed on the Agenda for consideration will be referred to by Agenda Item Number only. Voting on all Resolutions shall be by roll call, except if waived by unanimous voice vote, in which event, the Chairperson may order a unanimous ballot cast in favor of the motion or Resolution under discussion. The name of each Director shall be called only once. On matters of considerable interest or on which there appears to be a controversy, the motion or Resolution shall be read by title or repeated by the Chairperson. The Chairperson shall thereafter call for discussion of the motion or Resolution, at which time any member may discuss the pending matter. Any person other than a Director present at the meeting may speak on the motion if recognized by the Chairperson. Sole discretion as to the extent of discussion outside of the membership of the Board shall rest with the Chairperson. At the close of discussion, the Chairperson may, at the Chairperson’s discretion, repeat the motion or Resolution pending, and thereafter, call for a vote. The Clerk of the Board shall determine and state whether or not a motion or Resolution is adopted by roll call vote. On all other matters, the Chairperson shall determine the outcome of the voting. L. Committees. (1) Standing Committees. (a) Steering Committee: There shall be a permanent Committee designated as the Steering Committee, comprised of the Chairperson of the Board, the Vice Chairperson of the Board, the Chairperson of each of the Standing Committees and two at-large members selected by the Chairperson of the Board. The Vice Chairperson of each of the three Standing Committees shall serve as the designated Alternate, in the absence or inability to serve by any Chairperson. In the absence or inability of any designated member of the Steering Committee to serve, his/her city/agency appointed Alternate Director may not serve in that member’s absence. The Committee shall conduct an annual performance evaluation of the General Manager and submit recommendations on his/her compensation to the Board of Directors. The Committee shall also review the General Manager’s evaluation and compensation of the executive management employees, based on established criteria, and executive management’s goals and objectives for the following year. The Committee shall also conduct an annual performance evaluation of General Counsel and submit recommendations to the Board of Directors as provided by Resolution No. OCSD 12-03. OCSD 18-1219-XX-8 The Committee shall make recommendations to the Board of Directors on labor negotiations and other related activities as may be needed or appropriate. The Committee shall also be authorized to assign new subjects of significant importance to the appropriate Standing Committee for study, evaluation and recommendation. The Steering Committee shall meet on the fourth Wednesday of each month at 5:00 p.m. preceding the Board’s meeting, or at the call of the Chairperson of the Board of Directors. (b) Administration Committee: There shall be a permanent Administration Committee (Finance & Administrative Services, Environmental Services, and Human Resources) to advise the Staff and make recommendations on matters related to the financial, budgeting, administrative and personnel policies and programs of the Sanitation District. The Committee shall review with the Staff the procedures for development, preparation and format of the annual budget and recommend appropriate change, and counsel the Staff during the budget process to assure the proper interpretation and implementation of the Board’s policies and that the desired procedures have been followed. The responsibility for consideration and adoption of the Sanitation District budget rests with the Board of Directors. The Committee shall periodically interview and recommend the selection of outside auditors. The Committee shall review the result of the annual audit of the Sanitation District’s accounts with representatives of the outside audit firm, including any comments received recommending improvements. The Committee shall review management’s response to these comments and make appropriate recommendations for implementation. Periodically, the Committee shall recommend employment of an outside firm to audit internal control procedures to safeguard the assets of the Sanitation District. The Committee shall interview and make recommendations on the employment of investment-banking firms, bond counsel and, if necessary or desired, financial advisors, to be used in connection with the Sanitation District’s financing programs. The Committee shall periodically coordinate recommendations on personnel audits of the Sanitation District’s operations or segments of the operations on an as- needed basis. OCSD 18-1219-XX-9 The Committee shall make recommendations on personnel policies and procedures, insurers and coverage, procurement procedures and such other related activities as may be needed or appropriate. The Chairperson of the Board of Directors shall appoint a Committee Chairperson and a Committee Vice Chairperson for the Administration Committee. The Committee Chairperson and Committee Vice Chairperson shall serve at the pleasure of the Chairperson of the Board of Directors. The Administration Committee shall consist of thirteen members, as follows: (1) The Chairperson of the Board of Directors; (2) The Vice Chairperson of the Board of Directors; (3) The Committee Chair of the Administration Committee; (4) The Committee Vice Chair of the Administration Committee; and (5) Nine additional Board members appointed by the Chairperson of the Board of Directors. Other than the Board Chairperson and the Board Vice Chairperson, no Director who serves on the Operations Committee shall be eligible to serve concurrently on the Administration Committee. In the absence of the Board Chairperson, his or her alternate Director may attend meetings of the Administration Committee. The Administration Committee shall meet on the second Wednesday of each month at 5:00 p.m., or at the call of its Chairperson. (c) Operations Committee: There shall be a permanent Committee designated the Operations Committee (Engineering, and Operations & Maintenance and Environmental Services). With the goal of compliance with all public health and environmental laws and regulations, the Operations Committee shall review and submit appropriate recommendations on the matters pertaining to the operation of the Sanitation District tTreatment Works, including such matters as current and projected service/flow needs, level and quality of treatment, conservation, recycling and reuse activities and air quality issues. The Committee shall also review issues pertaining to the Sanitation District’s National Pollutant Discharge Elimination System Ocean Outfall Discharge Permit, including annual review of the contractor(s) performing the ocean monitoring and research programs required as a condition of said permit, and related issues regarding protection of the marine waters off metropolitan Orange County’s coastline from impacts resulting from the Sanitation District’s operations and discharge of treated wastewater. OCSD 18-1219-XX-10 The Committee shall also review matters pertaining to contractual arrangements by the Sanitation District to provide sewerage services to areas outside the Sanitation District’s boundaries or approved spheres of influence. The Committee shall review plans for the future needs of the Sanitation District, explore alternatives and make recommendations to the Board of Directors. The Operations Committee shall also review and submit appropriate recommendations on matters pertaining to capital projects which address operational needs, including the selection of professional consulting services to assist in studying, planning and designing needed Sanitation District tTreatment Works and support facilities, including computerized systems, in accordance with the Board’s established policies and procedures for procuring such services; the Committee shall further review construction projects for said facilities in accordance with applicable public works laws and Board policies. Said oversight shall include the contracts for professional services and public works construction projects and addenda or change orders thereto. In carrying out its responsibilities, the Committee shall receive advance notice and regular status reports on the projects from Staff, and monitor, visit and observe the Sanitation District Treatment Works’ operational functions and major capital construction projects. The Chairperson of the Board of Directors shall appoint a Committee Chairperson and a Committee Vice Chairperson of the Operations Committee. The Committee Chairperson and Committee Vice Chairperson shall serve at the pleasure of the Chairperson of the Board of Directors. The Operations Committee shall consist of fourteen members, as follows: (1) The Chairperson of the Board of Directors; (2) The Vice Chairperson of the Board of Directors; (3) The Committee Chair of the Operations Committee; (4) The Committee Vice Chair of the Operations Committee; and (5) Ten (10) additional Board members appointed by the Chairperson of the Board of Directors. Other than the Board Chairperson and the Board Vice Chairperson, no Director who serves on the Administration Committee shall be eligible to serve concurrently on the Operations Committee. In the absence of the Board Vice-Chairperson, his or her Alternate Director may attend meetings of the Operations Committee. The Operations Committee shall meet on the first Wednesday of each month at 5:00 p.m., or at the call of its Chairperson. OCSD 18-1219-XX-11 (d) Legislative and Public Affairs Committee: There shall be a permanent Committee designated as the Legislative and Public Affairs (LaPA) Committee. The Committee shall review issues pertaining to the impact on OCSD of legislative and regulatory proposals and submit appropriate recommendations on the matters. The Committee shall also be responsible for overseeing the contractual arrangements with the Sanitation District’s legislative advocates to provide advocacy services in Sacramento and Washington, D.C. In carrying out its responsibilities, the Committee shall receive regular status reports from the advocates and staff and monitor and recommend positions on legislative and regulatory proposals. The Committee shall also review issues pertaining to the Sanitation District’s public outreach, branding, and communications activities, evaluate alternatives and make recommendations to the Board of Directors. The Chairperson of the Board of Directors shall appoint a Committee Chairperson and a Committee Vice Chairperson to the LaPA committee. The Committee Chairperson and Vice Chairperson shall serve at the pleasure of the Chairperson of the Board of Directors. The LaPA Committee shall consist of seven members, as follows: (1) The Chairperson of the Board of Directors (2) The Vice Chairperson of the Board of Directors (3) The Committee Chairperson of the LaPA Committee (3) (4) The Committee Vice Chairperson of the LaPA committee (5) Three (3) additional Board Members appointed by the Chairperson of the Board of Directors The LaPA Committee shall meet on the second Monday of each the months of February, March, May, September and December at 12:00 p.m. and the months of April and July at 3:30 p.m. or at the call of its Chairperson.” (2) Special and Ad Hoc Committees. In addition to the Standing Committees, the Chairperson of the Board of Directors, the Chairperson of a Standing Committee or a majority of the Directors, may appoint from time to time, Special or Ad Hoc Committees to study and report on specific matters. Such Committees shall be temporary in nature, and their assignments shall pertain to a current, specific issue. Upon completion of the assigned task, the Ad Hoc or Special Committee will be dissolved. Formatted: Justified Formatted: Indent: Left: 0.75", No bullets or numbering Formatted: Justified Formatted: Justified OCSD 18-1219-XX-12 The Chairperson and Vice Chairperson of Special and Ad Hoc Committees shall be appointed by the Chairperson of the appointing authority. Each Special and Ad Hoc Committee shall meet at the call of its Chairperson. M. Alternate Directors: If a regular Director cannot attend a meeting of the Operations Committee, the Administration Committee or the full Board of Directors, the Director’s alternate may attend in place of his or her regular Director. An alternate Director may not, however, attend a meeting of any other Committee in the absence of his or her regular Director. If the regular Director and the Alternate Director are both unable to attend the meeting, the regular Director may request that the meeting be teleconferenced. The request may be approved, at the Board Chairperson’s discretion, provided that all requirements of the Ralph M. Brown Act (California Government Code Sections 54950 et seq.) are able to be satisfied. N. Motion to Refer to a Standing Committee. Any Director at a Board meeting may move to have a policy or any other activity affecting the Sanitation District, or any one of the member Agencies, referred to a Standing Committee for study and report. This motion shall be a privileged motion, and when duly seconded, discussion thereof shall be limited to Directors only. Said motion shall receive an affirmative vote of a majority of the Directors for adoption. Section 2: Procedure for Consideration of Demands for Corrective Action. A. Requirement of Written Demand. Prior to any person commencing a judicial action for injunction or mandamus to declare any action taken by the Board void because of failure to observe Brown Act requirements, such person must first serve upon the Clerk of the Board a written demand describing the alleged violation and demanding corrective action. Such demand must be served upon the Clerk of the Board within thirty (30) days of the complained of action. Failure to serve any such demand within this thirty (30) day period shall result in the loss of any right to challenge any action to have been taken in violation of Sections 54953, 54954.2 or 54956 of the California Government Code. B. Consideration of Corrective Action. Upon receipt of such a demand, consideration of the demand shall immediately be placed on the Agenda for the next meeting of the Board of Directors. If the demand is received less than seventy-two (72) hours prior to the time set for the next meeting, the Board may determine that the notice constitutes the initiation of litigation, and that the need to take action on the threatened litigation arose subsequent to the posting of the Agenda and may consider it at that meeting pursuant to Section 1(J) above. A description of any item so placed on the Agenda shall include both consideration of the demand, and the possibility of corrective action, by the Board. In considering such demands, the Board shall first determine, by motion, whether corrective action should be taken. If no motion to take corrective action is carried, OCSD 18-1219-XX-13 the Clerk of the Board shall inform the demanding party in writing of the Board’s decision not to cure or correct the challenged action. C. Implementing Corrective Action. If a motion to take corrective action passes, the Chairperson may entertain a motion implementing corrective action. Any motion implementing corrective action shall address the concerns raised in the consideration of corrective action. The motion implementing corrective action may include a motion to rescind prior action taken, as appropriate. Passage of a motion to rescind invalidates prior action only as of the time of the passage of the motion, and not from the date of the initial action. A motion implementing corrective action resulting from a written demand is out-of-order if the action complained of (a) was in connection with the sale or issuance of notes, bonds or other evidences of indebtedness, or any contract, agreement or incident thereto; or (b) gave rise to a contractual obligation upon which a party has, in good faith, detrimentally relied. In any event, the Board shall notify the party making the demand in writing of its decision to take corrective action and shall describe any corrective action taken. This notice shall be given to the demanding party as soon as possible after the meeting, but in no event more than thirty (30) days after receipt of the demand. Section 3: Resolution No. OCSD 17-1818-12 is hereby repealed. Section 4: This Resolution shall become effective immediately. PASSED AND ADOPTED at a regular meeting of the Board of Directors held July 25, 2018November 20, 2019. _______________________________ Gregory C. Sebourn, PLS David John Shawver Board Chairman ATTEST: __________________________ Kelly A. Lore, MMC Clerk of the Board APPROVED AS TO FORM: ___________________________ Bradley R. Hogin General Counsel OCSD 18-1219-XX-14 STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 18-12 19-XX was passed and adopted at a regular meeting of said Board on the 25th day of July 201820th day of November 2019, 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 25th day of July 201820th day of November 2019. Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District Formatted: Superscript Formatted: Superscript OCSD 18-1219-XX-15 TABLE 1 BOARD PROCEDURES AND ORGANIZATION SUMMARY OF MOTIONS A. PRIVILEGED MOTIONS Kind of Motion Second Required Debatable Amendable Vote Required Purpose Adjourn Yes No No Majority To end the meeting To Take a Recess Yes No No Majority To interrupt a meeting for a short time or to provide an intermission Raise a Question of Privilege No No No None To obtain action immediately in an emergency B. MAIN MOTION AND RELATED SUBSIDIARY MOTIONS Kind of Motion Second Required Debatable Amendable Vote Required Purpose Main Motion Yes Yes Yes Majority To introduce new business Amend Main Motion Yes Yes Yes Majority To modify or alter a motion Substitute Motion Yes Yes Yes Majority To replace the main motion entirely OCSD 18-1219-XX-16 Previous Question Yes No No Majority To close debate on the main or amended motion immediately Continue to a Certain Time Yes Yes Yes Majority To defer action To Table Yes No No Majority To discontinue consideration until brought back by vote of the Board Take a Motion from the Table Yes No No Majority To bring before the group a motion previously tabled Limit or Extend Limits of Debate Yes No Yes Majority To limit or extend limits of debate Refer to a Committee Yes Yes Yes Majority To place business in hands of a Committee Withdraw a Motion No No No None To withdraw a motion before it is voted on Reconsider Yes Yes No Majority must be by a Director who voted for the prevailing side on the original motion To secure a new vote on a motion previously voted upon OCSD 18-1219-XX-17 C. INCIDENTAL RULES NON-RANKING Kind of Motion Second Required Debatable Amendable Vote Required Purpose Request to Suspend the Rules Yes No No Two- Thirds To facilitate business ordinarily contrary to the rules of the organization Override Order of the Chair Yes No No Majority To have Board majority rule on the order Point of Order No No No None To enforce the rules of the organization Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-709 Agenda Date:11/13/2019 Agenda Item No:4. FROM:James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: A. Receive and file Orange County Sanitation District purchases made under the General Manager’s authority for the period of July 1, 2019 to September 30, 2019; and B. Approve the following additions to the pre-approved OEM Sole Source List for the period of July 1, 2019 to September 30, 2019: ·ALLEN-BRADLEY - Medium Voltage Variable Frequency Drive ·CLEAVER-BROOKS - Burner Elements ·EATON - Self-Cleaning Strainers ·SONETICS - Wireless headsets and system ·TRM/Maximo - Rules Manager SE and Lock out Tag Out (LOTO) Software ·VAUGHAN - Mixing Nozzles..body ..body BACKGROUND Staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved and executed purchases between $50,000 and $100,000;maintenance and repair Services Task Orders between $50,000 and $300,000;and additions to the pre-approved OEM Sole Source List. The list of additions to the pre-approved OEM Sole Source List displays the original equipment manufacturers (OEM)added this quarter that require sole source procurement to maintain,service, or replace equipment currently in operation at Orange County Sanitation District facilities,because the parts and/or service can only be provided by the OEM or their designated representative. Orange County Sanitation District Printed on 11/6/2019Page 1 of 4 powered by Legistar™ File #:2019-709 Agenda Date:11/13/2019 Agenda Item No:4. RELEVANT STANDARDS ·Quarterly financial reporting ·Ensure the public’s money is wisely spent PRIOR COMMITTEE/BOARD ACTIONS The Board of Directors authorizes the General Manager to ratify additions and deletions to the OEM Sole Source list quarterly on the General Manager’s approved purchases agenda report. ADDITIONAL INFORMATION In accordance with Board purchasing policies,Ordinance No.OCSD-52,the General Manager has authority to approve and execute purchases between $50,000 and $100,000.Below is a summary of General Manager approved purchases,in amounts exceeding $50,000,for the first quarter of fiscal year 2019-20: Vendor Name Amount Department Description/Discussion CE SCHMIDT, ENVIRONMENTAL CONSULTANT $70,248.00 Engineering Sampling Methodology and Field Testing Services for Trickling Filter Research Test at Plant No. 1, Project No. RE18-01 Sole Source Justification 2164 Reason: Unique Product/Service FIRE SERVICE CORP. $69,251.50 Operations & Maintenance Annual Service Maintenance and Preventative Maintenance, Testing and Inspection for Fire Sprinkler, Fire Extinguishers and Misc. Systems 7/1/19 to 6/30/20 with 4 Optional 1-yr Renewal Periods Specification No. S- 2019-1073 GST $66,590.51 Administrative Services Purchase, Installation and Configuration of Audio Visual Equipment for OCSD Boardroom Specification No. S-2019-1023 KEENAN & ASSOCIATES $95,000.00 Human Resources Consulting Services from a Risk Management Professional 8/26/19 to 12/31/19 HR Sole Source Justification MICROSOFT CORPORATION $92,890.00 Administrative Services Microsoft Premier Support Services 9/17/19 to 9/16/20 Board Approved OEM Sole Source List M.O. 12/14/16, Item 12 MURPHY INDUSTRIAL COATINGS, INC. $66,570.00 Operations & Maintenance Plant 1 Secondary Clarifier #31 Catwalk Coating Repairs Specification No. S-2019-1057 NORTH AMERICAN CRANE COMPANY $55,000.00 Operations & Maintenance Crane Inspection Finding Repairs Sole Source Justification 2157 Reason: Emergency PROTEIN MATRIX LLC $74,250.00 Engineering Pilot Test Use of a Proprietary Product that may Improve Accumulation of Fats, Oils and Grease (FOG) Sole Source Justification 2136 Reason: Unique Product/Service PROTEIN MATRIX LLC $74,250.00 Engineering Super Base for Pilot Test at Plant 1 Sole Source Justification 2165 Reason: Unique Product/Service QUINCY COMPRESSOR $63,912.13 Operations & Maintenance Provide Quincy Air Compressor per Proposal No. BMA-656512 Sole Source Justification 2146 Reason: Time Sensitive/Standardization of Air Compressors SC FUELS $76,635.97 Operations & Maintenance Purchase of 5,000 Gallons (Bulk Oil) of Chevron 5200 HDAX Low Ash 40 (No Sub) Sole Source Justification 2137 Reason: Unique Product/Service SGS US WEST COAST LLC $59,500.00 Operations & Maintenance 120-Inch Ocean Outfall Pipeline External ROV Video Inspection Services Specification No. S-2019- 1027 SIEMENS INDUSTRY, INC. $75,685.00 Operations & Maintenance Three (3) Year Technical Service Agreement to Perform Annual Preventative Maintenance 10/1/19 to 9/30/22 Board Approved OEM Sole Source List M.O. 12/14/16, Item 12 Orange County Sanitation District Printed on 11/6/2019Page 2 of 4 powered by Legistar™ File #:2019-709 Agenda Date:11/13/2019 Agenda Item No:4. Vendor Name Amount Department Description/DiscussionCE SCHMIDT,ENVIRONMENTALCONSULTANT $70,248.00 Engineering Sampling Methodology and FieldTesting Services for Trickling FilterResearch Test at Plant No. 1, ProjectNo. RE18-01 Sole SourceJustification 2164 Reason: UniqueProduct/ServiceFIRE SERVICECORP.$69,251.50 Operations &Maintenance Annual Service Maintenance andPreventative Maintenance, Testingand Inspection for Fire Sprinkler, FireExtinguishers and Misc. Systems7/1/19 to 6/30/20 with 4 Optional 1-yrRenewal Periods Specification No. S-2019-1073GST$66,590.51 AdministrativeServices Purchase, Installation andConfiguration of Audio VisualEquipment for OCSD BoardroomSpecification No. S-2019-1023KEENAN &ASSOCIATES $95,000.00 HumanResources Consulting Services from a RiskManagement Professional 8/26/19 to12/31/19 HR Sole SourceJustificationMICROSOFTCORPORATION$92,890.00 AdministrativeServices Microsoft Premier Support Services9/17/19 to 9/16/20 Board ApprovedOEM Sole Source List M.O. 12/14/16, Item 12 MURPHY INDUSTRIAL COATINGS, INC. $66,570.00 Operations & Maintenance Plant 1 Secondary Clarifier #31 Catwalk Coating Repairs Specification No. S-2019-1057 NORTH AMERICAN CRANE COMPANY $55,000.00 Operations & Maintenance Crane Inspection Finding Repairs Sole Source Justification 2157 Reason: Emergency PROTEIN MATRIX LLC $74,250.00 Engineering Pilot Test Use of a Proprietary Product that may Improve Accumulation of Fats, Oils and Grease (FOG) Sole Source Justification 2136 Reason: Unique Product/Service PROTEIN MATRIX LLC $74,250.00 Engineering Super Base for Pilot Test at Plant 1 Sole Source Justification 2165 Reason: Unique Product/Service QUINCY COMPRESSOR $63,912.13 Operations & Maintenance Provide Quincy Air Compressor per Proposal No. BMA-656512 Sole Source Justification 2146 Reason: Time Sensitive/Standardization of Air Compressors SC FUELS $76,635.97 Operations & Maintenance Purchase of 5,000 Gallons (Bulk Oil) of Chevron 5200 HDAX Low Ash 40 (No Sub) Sole Source Justification 2137 Reason: Unique Product/Service SGS US WEST COAST LLC $59,500.00 Operations & Maintenance 120-Inch Ocean Outfall Pipeline External ROV Video Inspection Services Specification No. S-2019- 1027 SIEMENS INDUSTRY, INC. $75,685.00 Operations & Maintenance Three (3) Year Technical Service Agreement to Perform Annual Preventative Maintenance 10/1/19 to 9/30/22 Board Approved OEM Sole Source List M.O. 12/14/16, Item 12 Additionally,in accordance with Board purchasing policies,Ordinance No.OCSD-52,the General Manager has authority to approve and execute maintenance and repair Services Task Orders between $50,000 and $300,000.Below is a summary of General Manager approved maintenance and repair Services Task Orders,in amounts exceeding $50,000,for the first quarter of fiscal year 2019-20: Vendor Name Amount Department Description/Discussion AECOM ENERGY & CONSTRUCTION, INC. $115,000.00 Operations & Maintenance Standby Generator replacements at Power Building 3A (P1) and Power Building "C" (P2) Specification No. TOB-2019-1064 of Master Service Contract S-2018-942BD-1 AECOM ENERGY & CONSTRUCTION, INC. $89,741.00 Operations & Maintenance Plant 2 Digester F Valves Replacement, and Pipe and Concrete Repair (P2-91-1K) Specification No. TOB-2019-1101 of Master Service Contract S-2018-942BD-1 J R FILANC CONSTRUCTION $139,664.00 Operations & Maintenance Primary Basin 4 Repairs at Plant 1 Specification No. TOB-2019-1080 of Master Service Contract S-2018- 942BD-4 J R FILANC CONSTRUCTION $265,230.60 Operations & Maintenance Elevator Modernization Project, Phase II at Plant 1 (MP-301) Specification No. TOB-2019-1082 of Master Service Contract S-2018-942BD-4 W.A. RASIC CONSTRUCTION CO., INC. $71,060.00 Operations & Maintenance Lighting Replacement at Plant 1 Specification No. TOB-2019-1094 of Master Service Contract S-2018- 942BD-7 Orange County Sanitation District Printed on 11/6/2019Page 3 of 4 powered by Legistar™ File #:2019-709 Agenda Date:11/13/2019 Agenda Item No:4. Vendor Name Amount Department Description/DiscussionAECOM ENERGY & CONSTRUCTION, INC. $115,000.00 Operations & Maintenance Standby Generator replacements at Power Building 3A (P1) and Power Building "C" (P2) Specification No. TOB-2019-1064 of Master Service Contract S-2018-942BD-1 AECOM ENERGY & CONSTRUCTION, INC. $89,741.00 Operations & Maintenance Plant 2 Digester F Valves Replacement, and Pipe and Concrete Repair (P2-91-1K) Specification No. TOB-2019-1101 of Master Service Contract S-2018-942BD-1 J R FILANC CONSTRUCTION $139,664.00 Operations & Maintenance Primary Basin 4 Repairs at Plant 1 Specification No. TOB-2019-1080 of Master Service Contract S-2018- 942BD-4 J R FILANC CONSTRUCTION $265,230.60 Operations & Maintenance Elevator Modernization Project, Phase II at Plant 1 (MP-301) Specification No. TOB-2019-1082 of Master Service Contract S-2018-942BD-4 W.A. RASIC CONSTRUCTION CO., INC. $71,060.00 Operations & Maintenance Lighting Replacement at Plant 1 Specification No. TOB-2019-1094 of Master Service Contract S-2018- 942BD-7 CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)may be viewed on-line at the OCSD website (www.ocsd.com)with the complete agenda package: N/A Orange County Sanitation District Printed on 11/6/2019Page 4 of 4 powered by Legistar™ Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-707 Agenda Date:11/13/2019 Agenda Item No:5. FROM:James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2019 GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2019. BACKGROUND Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2019: ·First Quarter Budget Review The Budget Review Summary provides the Directors,staff,and general public with a comprehensive overview of the financial results of the Orange County Sanitation District (Sanitation District) through the first quarter ended September 30, 2019. ·Quarterly Treasurer’s Report This section reports on financial portfolio performance with respect to the Sanitation District’s funds.Both Long-Term and Liquid Operating Monies Portfolios are summarized.A performance summary table can be found on page 2 of this agenda report.The report also contains information on the U.S.and global economic outlook from the Sanitation District’s investment manager, Chandler Asset Management. ·Certificates of Participation Quarterly Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. RELEVANT STANDARDS ·Quarterly financial reporting Orange County Sanitation District Printed on 11/6/2019Page 1 of 3 powered by Legistar™ File #:2019-707 Agenda Date:11/13/2019 Agenda Item No:5. ADDITIONAL INFORMATION The quarterly treasurer’s report contained within the Consolidated Financial Reports for the First Quarter Ended September 30,2019 is being submitted in accordance with the Sanitation District’s investment policy that requires the report be submitted to the governing body following the end of each quarter and includes the following information: ·Performance results in comparison with the ICE BAML 3-month treasury bill index for the liquid operating portfolio;and the ICE BAML Corp./Govt.1-5 Year Bond index for the long-term portfolio as identified in the investment policy;and the time-weighted total rate of return for the portfolio for the prior three months,six months,nine months,twelve months,and since inception compared to the Benchmark returns for the same periods: Portfolio Performance Summary As of September 30, 2019 Liquid Operating Monies (%)Long-Term Operating Monies (%) Total Rate of Return Benchmark Total Rate of Return Benchmark 3 Months 0.59 0.56 0.88 0.82 6 Months 1.28 1.20 2.59 2.69 9 Months 1.92 1.81 4.14 4.15 12 Months 2.50 2.39 5.52 5.79 Annualized Since Inception 30 Nov 2014 1.12 1.02 1.84 1.79 ·A listing of individual securities held at the end of each reporting period (see the detailed listings of each security contained within the report). ·Cost and market values of the portfolios: Liquid Operating Long-Term Cost $67.8 M $535.6 M Market Value $68.2 M $548.1 M ·Modified duration of the portfolio compared to the Benchmark: Liquid Operating Long-Term District Policy < 0.50 < 5.00 Benchmark 0.16 2.53 Portfolio 0.30 2.46 ·Dollar change in value of the portfolio for a one percent (1%) change in interest rates: Liquid Operating - $207,478 Long- Term - $13,474,939 ·None of the portfolios are currently invested in reverse repurchase agreements. Orange County Sanitation District Printed on 11/6/2019Page 2 of 3 powered by Legistar™ File #:2019-707 Agenda Date:11/13/2019 Agenda Item No:5. ·The percent of the Liquid Operating Monies portfolio maturing within 90 days: 21.5% ·Average portfolio credit quality: Liquid Operating - AA+/Aa1 Long- Term - AA/Aa1 ·Percent of portfolio with credit ratings below “A”by any rating agency and a description of such securities: Liquid Operating - no exceptions Long- Term - Percent of portfolio - 0.6% Cost Maturity Date Moody S&P Fitch SLMA 2008-9 A $13,290.71 4/25/2023 Baa3 B B AMRESCO Residential Securities 1999-1 A $92,461.32 6/25/2029 NR A+BBB Morgan Stanley Note $3,200,848.00 7/28/2021 A3 BBB+A ·All investments are in compliance with this policy and the California Government Code,except for the following Lehman Brother holdings that the Sanitation District is pursuing collection through the bankruptcy court: Lehman Brothers Note-Defaulted $ 600,000 par value purchased 9/19/2008 Lehman Brothers Note-Defaulted $2,000,000 par value purchased 9/18/2008 ·Sufficient funds are available for the Sanitation District to meet its operating expenditure requirements for the next six months. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)may be viewed on-line at the OCSD website (www.ocsd.com)with the complete agenda package: ·Consolidated Financial Report for the First Quarter Ended September 30, 2019 Orange County Sanitation District Printed on 11/6/2019Page 3 of 3 powered by Legistar™ Orange County, California Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2019 Table of Contents Executive Summary………………………………………………………………………..…….………1 Budget Review Section 1 – Consolidated Financial Reports .......................................................................... 1 Section 2 – Operating Budget Review Chart of the Cost per Million Gallons by Department – Budget and Actual .............. 1 Chart of the Net Expenses by Major Category – Budget and Actual ....................... 1 Divisional Contributions to Cost Per Million Gallons ................................................ 2 Comparison of Expenses by Department ................................................................. 3 Summary of Collection, Treatment, and Disposal Expenses by Major Category ..... 4 Summary of District-Wide Revenues ....................................................................... 5 Summary of Collection, Treatment and Disposal Revenues .................................... 5 Summary of Collection, Treatment, and Disposal Expenses by Line Item ............... 6 Summary of Collection, Treatment, and Disposal Expenses by Process................. 8 Chart of Staffing Trends ........................................................................................... 9 Section 3 – Capital Improvement Program Budget Review Capital Improvement Program Graphs by Type and Funding Source...................... 1 Summary of Capital Improvement Construction Requirements - Current Year........ 2 Summary of Capital Improvement Construction Requirements - Project Life .......... 6 Section 4 – Capital Assets Schedule & Debt Service Budget Review Capital Assets Schedule .......................................................................................... 1 Debt Service Budget Review .................................................................................... 1 Section 5 – Self Insurance Budget Review General Liability and Property Fund Budget Review ................................................ 1 Workers’ Compensation Fund Budget Review ......................................................... 2 Quarterly Treasurer’s Report…………………………………………………………………………….1 Quarterly COP Report…………………………………………………………………………………....1 FY 2019-20 First Quarter Financial Report This Page Intentionally Left Blank Executive Summary Page 1 Consolidated Financial Reports For the First Quarter Ended September 30, 2019 Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2019:  First Quarter Budget Review: The Consolidated Financial Reports Section provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2019. Contained within the Consolidated Financial Reports is the budget-to-actual status of the Collections, Treatment and Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of September 30, 2019. The chart below provides for a summary of these activities. Various detail information can be found in this report. Below is a descriptive summary of these activities through September 30th: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 4.4 percent of the $465.7 million budget, mainly due to the timing of property tax and sewer fee distribution from the County that occurs mostly after the first quarter. These two revenue sources make up 84.7 percent of the District’s total budgeted revenue. Except for Service Fees, Property Taxes, Capital Assessments-IRWD, CIP Reimbursements, Grant Revenue, Rents & Leases, and Other Revenues, most major revenue sources are currently tracking close to or exceeding revenue estimates. $20.6M $41.4M $20.0M $11.9M $619K 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Oper. Rev Oper Exp Capital Outlays Debt Service Self Ins Outlays First Quarter Results as a Percentage of Budget FY 2019-20 First Quarter Financial Report Page 2 Overall, total revenues are projected to approximate budget at year-end. More detailed information on District revenues is provided within Section 1 – Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Consolidated Financial Reports Section of this report, the net operating requirements through the first quarter of $41.4 million is currently tracking at 24.6 percent of the $168.2 million budget. In addition, net operating expenses have increased $5.4 million or 14.9 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain within budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. The total cost per million gallons is $2,396 based on flows of 188 million gallons per day. This is $55 per million gallons, or 2.2 percent lower than the budgeted cost per million gallons per day. A further description of these costs and benchmarking with other agencies is contained within Section 1 – Pages 6 through 8. d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2019-20 has been revised to $155.5 million, or 101.4 percent of the board approved cash outlay of $153.3 million. The actual cash outlay spending through the first quarter is $20.0 million, or 13.0 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3.  Quarterly Treasurer’s Report This section reports on financial portfolio performance with respect to the Sanitation District’s funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District’s money manager, Chandler Asset Management (Chandler). Chandler notes the Long-Term Portfolio quarterly return of 88 basis points outperformed the ICE BAML 1-5 Year US Corp/Govt Rated AAA-A Index return of 82 basis points, while the Liquid Operating Monies Portfolio quarterly return of 59 basis points outperformed the ICE BAML 3-Month US Treasury Bill Index return of 56 basis points. Chandler further notes that the labor market and consumer fundamentals remain favorable, but manufacturing data continue to disappoint. We believe economic growth has slowed from earlier this year and downside risks to the outlook remain elevated. The US economy continues to face headwinds from trade disputes, slowing global economic growth, and an uncertain outlook for Brexit. However, we believe accommodative US monetary policy and a collective dovish stance by all Executive Summary Page 3 of the major global central banks should help to combat the headwinds. We also believe the Trump administration faces significant political pressure to make progress toward a trade agreement with China as we head into an election year. The Federal Open Market Committee (FOMC) lowered the target fed funds rate by 25 basis points in September (for the second time this year) to a range of 1.75%-2.00%. There were three dissenting votes; one policymaker favored a 50- basis point rate cut, and two policymakers favored leaving the fed funds rate unchanged. According to the Fed's dot plot, only seven out of 17 policymakers are anticipating another rate cut before year-end. Although there is a growing disparity among policymakers about the appropriate path of monetary policy, Fed Chair Powell’s press conference suggested the Fed will be flexible and data dependent. Powell indicated more rate cuts may be appropriate if the economy slows further, but the Fed is not on a preset course. We continue to believe the FOMC is likely to cut the fed funds target rate again before year-end, in the absence of a trade resolution or meaningful improvement in market-based measures of inflation. The next FOMC meeting is scheduled for October 29-30. The Treasury yield curve steepened modestly in September, although the curve remains partially inverted. The 3-month T-bill yield declined nearly 17 basis points to 1.81%, the 2-year Treasury yield increased nearly twelve basis points to 1.62%, and the 10-year Treasury yield increased about 17 basis points to 1.67%. An inversion of the yield curve in which the 10-year Treasury yield is lower than the 3-month T-bill yield is generally viewed as a powerful predictive signal of an upcoming recession. However, we believe increased short-term Treasury issuance to fund the deficit, and negative sovereign bond yields in other countries may be distorting the US Treasury yield curve. German sovereign bond yields (from 1-month out to 30-years) remained negative at September month-end. The shape of the Treasury yield curve has changed significantly on a year-over- year basis. As of September month-end, the 3-month T-bill yield was down 39 basis points, the 2-Year Treasury yield was down nearly 120 basis points, and the 10-Year Treasury yield was down nearly 140 basis points, year-over-year. The current shape of the yield curve implies that market participants are pricing-in additional rate cuts. We believe the year-over-year decline in long-term Treasury yields reflects a high level of market participants' nervousness about the outlook for global economic growth and a decline in global inflation expectations. The Consumer Price Index (CPI) was up 1.7% year-over-year in August, versus up 1.8% year-over-year in July. Core CPI (CPI less food and energy) was up 2.4% year-over-year in August, versus up 2.2% year-over-year in July. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in August, unchanged from July. Core PCE, which is the Fed's primary inflation gauge, was up 1.8% year-over-year in August versus 1.7% year-over-year in July. Core PCE remains below the Fed’s 2.0% inflation target. FY 2019-20 First Quarter Financial Report Page 4 Economic Outlook US Treasury yields dropped precipitously during the quarter as the US/China trade impasse continued to negatively influence global manufacturing trends. In particular, the manufacturing weakness in Europe is becoming acute, with German purchasing managers indices rolling over into recessionary territory. The manufacturing weakness helped to accelerate the negative yield conundrum in Europe, with the ten-year German Bund bottoming out at negative 72 basis points during September and closing the quarter at negative 57 basis points. The lack of any meaningful fiscal response in Europe is exacerbating the downturn; considering the empirical evidence thus far on utilizing negative interest rates as a policy tool fiscal stimulus is long overdue in Germany in Chandler’s judgement. The Chandler team has long held the view the inability of interest rates to normalize in developed overseas markets, arguably most importantly Germany, would serve as a ceiling for how high US interest rates could adjust. The team’s beginning of year analysis did not accurately account for the degree to which developed market benchmark rates overseas could move into negative territory which served as a catalyst for the US ten-year Treasury notes to close the quarter at 1.67%, compared to 2.01% at the end of June and 2.69% at year-end. In a pre- emptive move to sustain the economic expansion the Federal Reserve was active during the quarter, cutting the Fed Funds rate two times to a current range of 1.75% to 2.00%, compared to 2.25% to 2.50% at the end of June. Policymakers are describing the monetary stimulus adjustment as “mid-cycle” and in Chandler’s view have little interest in pushing the policy rate close to the zero lower bound considering the current readings on the health of the US economy. One of the primary factors influencing the dovish shift by the Federal Reserve is the market’s pricing of long-term inflation becoming unanchored. The ten-year TIPS break even rate continued to drift lower during the quarter, with a spread of 1.52% as of quarter-end, well below the 2.25% to 2.60% considered “normal” and consistent with the Federal Reserve’s 2.0% inflation objective. TIPS breakeven rates moving higher will mitigate the pressure on the Federal Reserve to remain hyper accommodative with monetary policy settings. The service sector focus of the US economy continues to insulate the domestic economy from the global manufacturing weakness. The underlying tenets of the US economy remain sound, with current unemployment rate at 3.5%, the underemployment rate at 6.9%, weekly jobless claims hovering at multi-year lows with a recent reading of 210k, and the domestic saving rates elevated as the US personal savings rate as a percentage of disposable income is currently at 8.1%. Additionally, the reduction in interest rates is providing a positive catalyst for the more cyclical sectors of the economy, with the housing market improving as both new and existing home sales have seen an uptick in volume with the contraction in mortgage rates. Given the lack of visibility globally, business investment remains soft, but the lower cost of capital linked to the reduction in interest rates should ultimately lead to an uptick in capital spending. The Chandler team continues to look for modest incremental progress on the US/China trade Executive Summary Page 5 negotiations to help sustain economic growth. The key issue for a more comprehensive deal remains intellectual property reform in China. In our view President Trump’s administration will become more motivated to make progress on US/China trade as the Democratic field for the Presidential nomination narrows; the probability of President Trump hitting the campaign trail with little progress on US/China trade is low. The fixed income markets are forecasted to remain volatile but given our internal view the domestic economy is not on the precipice of a recession, the relative performance of the portfolio compared to the benchmark should improve as the economic expansion is sustained.  Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. FY 2019-20 First Quarter Financial Report Page 6 This Page Intentionally Left Blank Consolidated Financial Reports Section 1 - Page 1 First Quarter Financial Report September 30, 2019 Financial Management is pleased to present the FY 2019-20 first quarter financial report. This report provides a comprehensive overview of the financial condition of the Sanitation District and reports on the status of all capital projects in progress. A summary of the sections contained within this report is provided below. Operating Budget Review: This section reports on collection, treatment and disposal net operating requirements. At September 30, 2019, 24.6 percent, or $41.4 million of the FY 2019-20 net operating budget of $168.2 million has been expended. Net operating expenses increased from the same period last year by $5.4 million, or 14.9 percent, mainly due to an increase of $3.5 million in Repairs and Maintenance, $701,000 in Operating Materials and Supplies, $671,000 in Salaries and Benefits, $571,000 in Research and Monitoring, $311,000 in Administrative Expenses, $225,000 in Other Operating Supplies, $93,000 in Professional Services, and a decrease of $109,000 in indirect costs allocated out to capital projects, partially offset by a decrease of $653,000 in Contractual Services, $111,000 in Utilities, and $28,000 in Training and Meetings. These and other variances that factor into this net increase in expenses are discussed in more detail below. Overall, staff expects the total operating costs to remain at or slightly below budget throughout the remainder of the year. Significant operating results as of September 30, 2019 include the following:  Salaries, Wages and Benefits – Personnel costs of $24.2 million are on target at 24.6 percent of budget through the first quarter of FY 2019-20. Although the budget is based on a 5 percent vacancy factor, staffing is 24 full-time equivalents (FTE’s), or 3.8 percent below the total 640 FTE’s approved in the FY 2019-20 budget. Salary and benefit costs are $671,000 or 2.9 percent higher than the $23.5 million incurred in the same period last year, mainly due to an increases of $345,000 in salaries and wages resulting from cost of living adjustments included in the current Memorandums of Understanding for all employee bargaining units and $326,000 in employee benefits due to increases in costs for retirement and group insurances. Net operating personnel costs are expected to approximate budget throughout the remainder of the year.  Administrative Expenses – Administrative Expenses totaled $780,000, or 38.5 percent of the $2.0 million budget through September 30. These costs are $311,000 or 66.4 percent higher at September 30 in comparison with the prior year, mainly due to increases of $153,000 in purchases of small computer items including HP Elitebooks, $85,000 in memberships, attributable to timing of payments, and $39,000 in minor furniture and fixtures for workstation installations and ergonomic chairs. It is anticipated that administrative costs will approximate budget at year-end. FY 2019-20 First Quarter Financial Report Section 1 - Page 2  Printing and Publication Expenses – Printing and Publication Expenses totaled $72,000, or 21.7 percent of the $330,000 budget through September 30. These costs are $9,000 or 14.4 percent higher at September 30 in comparison with the prior year. Printing and publication costs are expected to approximate budget at year-end.  Training and Meetings – Training and meetings of $130,000 are below target at 11.7 percent of the $1.1 million budget. This account is lower than the proportionate budget due to the timing and need for training throughout the year. These costs have decreased over the same period last year by $28,000 or 17.6 percent. Total training and meeting costs are anticipated to be below budget at year-end.  Operating Materials and Supplies – Operating materials and supplies of $4.8 million is on target at 23.1 percent of the $21.0 million budget through September 30. Operating Materials and Supplies are higher than the prior year by $701,000 or 16.9 percent, primarily due to an increase in Chemical Coagulants of $1.2 million brought about by higher chemical unit costs and usage as compared to the prior year, partially offset by a decrease in Odor Control of $438,000. Based on current processes, operating materials and supplies are anticipated to approximate budget at year-end.  Contractual Services – Contractual services is below target at $4.5 million or 20.3 percent of the $22.0 million budget through September 30. Contractual Services is lower by $653,000 or 12.7 percent over the same period last year. Solids Removal costs, budgeted at $13.4 million, comprise the majority of this expense category at $3.0 million, or 22.5 percent of budget at September 30. These costs decreased by $897,000 or 22.9 percent, due to a reduction in biosolids production attributable to the new dewatering centrifuges that replaced aging belt presses. This decrease is offset by increases in Other Contractual Services of $157,000 for industrial cleaning and digester assessment services and Temporary Services of $51,000 as a result of position vacancies in the current period. County Service Fees totaled only $5,000, or 0.9 percent of the $512,000 budget through the first quarter as the preponderance of these fees are billed by the County in the fourth quarter. Total contractual services costs are anticipated to approximate budget at year- end.  Professional Services – Professional services costs totaled $762,000 or 13.6 percent of the $5.6 million budget through September 30. Professional service costs, such as Audit & Accounting, Engineering, Environmental Scientific Consulting, Industrial Hygiene, and Other Services, are proportionately low through September 30 due to a variety of factors such as timing of services and re-evaluation of needs for services. These costs are $93,000 or 13.9 percent higher at September 30 in comparison with the prior year, mainly due to increases of $139,000 in Legal costs and $47,000 in Software Program Consulting, offset by a decrease of $90,000 in Engineering services. It is anticipated that the costs for this category will be below budget at year-end. Consolidated Financial Reports Section 1 - Page 3  Research and Monitoring – Research and monitoring costs totaled $720,000, or 65.4 percent of the $1.1 million budget through September 30. These costs are $571,000, or 384.3 percent higher at September 30 in comparison with the prior year, mainly due to increases of $363,000 in Research costs, reflecting the annual contribution to Southern California Coastal Water Research Project which is now expensed in full when paid instead of allocating on a quarterly basis, $150,000 in Environmental Monitoring costs for ocean water quality analysis, and $59,000 in Air Quality Monitoring costs for emissions testing. Total research and monitoring costs are anticipated to exceed budget at year-end.  Repairs and Maintenance – Repair and maintenance costs totaled $7.5 million, or 31.8 percent of the $23.5 million budget through September 30. These costs are $3.5 million, or 86.9 percent higher at September 30 in comparison with the prior year, mainly for repair and maintenance services such as digester cleaning and mechanical rehabilitation and overhaul of primary clarifier tanks. It is anticipated that the costs for this category will exceed budget at year-end.  Utilities – Utilities costs totaled $2.4 million, or 25.5 percent of the $9.3 million budget through September 30. These costs are $111,000 or 4.5 percent lower at September 30 in comparison with the prior year, primarily due to a decrease in natural gas costs because of a volatile natural gas market in the prior period that caused unit prices to spike. It is anticipated that the costs will approximate budget at year-end.  Other Operating Supplies – Other operating supplies costs totaled $685,000, or 23.0 percent of the $3.0 million budget through September 30. Property and General Liability Insurance, budgeted at $1.7 million, comprise the majority of this expense category at $430,000. These costs are $105,000 or 32.4 percent higher at September 30 in comparison with the prior year primarily due to an increase in budgeted in-lieu premium charges to maintain recommended reserve balances. In addition, Regulatory Operating Fees increased by $93,000 due to timing of payments for equipment permit fees. It is anticipated that other operating supplies costs will approximate budget at year-end.  Revenues – Service Fees and Property Taxes – Through September 30, revenues from service fees are at $7,000, or 0.0 percent of the $298.1 million budget and property taxes are at $2.3 million, or 2.4 percent of the $96.4 million budget. These items comprise the majority of the Sanitation District’s revenues and are mostly collected by the County through the property tax roll and distributed to the Sanitation District throughout the year based on a set distribution schedule that begins in November of each year. The low sewer service fee revenue is attributable to no sewer service fee apportionments scheduled or received from the County through the first quarter, while sewer service rebates have been issued for overcharges in prior years. The increase of $338,000 is due to a reduction in user fee rebates issued in the current period as well as higher sewer service rates. The property tax revenue reduction of $123,000 or 5.0 percent over the prior period is a result of timing of property tax collections from the County, offset by growth in FY 2019-20 First Quarter Financial Report Section 1 - Page 4 assessed property values. These revenues are expected to approximate budget at year-end.  Revenues – Permittee User Fees – Permittee User Fees are at $3.3 million, or 33.2 percent of the $9.9 million budget. The revenues through the first quarter are lower than the same period last year by $1.5 million or 30.9 percent due to the actual discharge for industrial users was significantly less than the estimated billings in the prior year, with adjustments made in the current year. The number of permittees fluctuates from year to year as businesses are established or close their operations. Permit user fees revenues are expected to approximate or exceed budget at year-end.  Revenues – Inter District Sewer Use – SAWPA and SBSD – Inter District Sewer revenues - SAWPA and SBSD are at $726,000, or 27.4 percent of the $2.7 million budget. This revenue is derived from charges to the Santa Ana Watershed Protection Agency (SAWPA) and Sunset Beach Sanitary District (SBSD) for treatment of flows. The revenues through the first quarter are higher than the same period last year by $101,000 or 16.1 percent due to an increase in flows received from these agencies and a resulting increase in operation and maintenance charges. These revenues are expected to approximate budget at year-end.  Revenues – Intra District Sewer Use – IRWD – Intra District Sewer revenues - IRWD are at $1.2 million, or 17.0 percent of the $6.9 million budget. This revenue is derived from charges to the Irvine Ranch Water District (IRWD) for treatment of flows. The revenues through the first quarter are higher than the same period last year by $155,000 or 15.3 percent, mainly due to an increase of $79,000 in operation and maintenance charges to IRWD and a decrease of $76,000 in interest income allocated to IRWD based on lower cash reserves. These revenues are expected to be below budget at year-end.  Revenues - Sludge Disposal – IRWD – Sludge Disposal fees - IRWD are at $2.2 million, or 41.6 percent of the $5.4 million budget. The revenue is for the handling, treatment and disposal of solids, derived from flows discharged from IRWD to the Sanitation District. The revenues through the first quarter are higher than the same period last year by $252,000 or 12.6 percent, mainly due to increased solids received from IRWD. The current fiscal year quarterly billing to IRWD is based on estimates. The budget reflects the anticipated completion of IRWD solids processing facilities that would cease solids to the OCSD line. However, the timeline is no longer forecasted to be complete during the current fiscal year. It is anticipated that IRWD sludge disposal revenues will exceed budget at year-end.  Revenues – Capital Assessments – IRWD – Capital Assessments-IRWD are at $502,000, or 9.3 percent of the $5.4 million budget. The revenues through the first quarter are lower than the same period last year by $530,000 or 51.4 percent, mainly due to a decrease in joint capital costs allocable to IRWD. It is estimated that IRWD capital assessments revenues will be below budget at year-end. Consolidated Financial Reports Section 1 - Page 5  Revenues – Capital Facilities Capacity Charges (CFCC) – CFCC are at $3.3 million, or 18.5 percent of the $18.0 million budget. The revenues through the first quarter are lower than the same period last year by $1.4 million or 28.9 percent, due to less supplemental capital facilities capacity charges assessed to industrial dischargers than at this time last year, partially offset by an increase in connection fees collected from cities. These revenues are expected to be below the budget at year-end.  Revenues – Interest Earnings – Interest Earnings are at $5.8 million or 87.7 percent of the $6.6 million budget. The revenues through the first quarter are higher than the same period last year by $3.5 million or 151.7 percent due to higher account balances and yields earned on securities held in the investment portfolios. It is estimated that interest earnings will exceed the budget amount at year-end.  Revenues – CIP Reimbursements – CIP Reimbursements are at $657,000 or 11.0 percent of the $6.0 million budget. This revenue is $657,000 or 100.0 percent higher than the same period last year. The increase is due to timing of reimbursements received for construction projects from the Orange County Water District for P2-122 Headworks Modifications at Plant 2 for GWRS Final Expansion. No reimbursements were received for these projects during the same period in the prior year. These revenues are expected to be below budget at year-end.  Revenues – Wastehauler – Wastehauler revenues are at $194,000 or 25.9 percent of the $750,000 budget. This revenue is derived from fees charged to wastehaulers allowing them to dump waste into the Sanitation District’s system. The revenues through the first quarter are higher than the same period last year by $56,000 or 40.0 percent due to an increase in waste dumping. These revenues are expected to approximate budget at year-end.  Revenues – CNG Sales – CNG Sales revenues are at $71,000 or 17.7 percent of the $400,000 budget. This revenue is derived from public sales at the District’s Compressed Natural Gas (CNG) fueling station. The revenues through the first quarter are lower than the same period last year by $2,000 or 2.6 percent. These revenues are expected to be below budget at year-end.  Revenues – Rents & Leases – Rents & Leases revenues are at $227,000 or 10.0 percent of the $2.3 million budget. The revenues through the first quarter are lower than the same period last year by $173,000 or 43.3 percent due to less rent received as tenants move out of the properties acquired for construction of the new headquarters building. These revenues are expected to be below budget at year- end. FY 2019-20 First Quarter Financial Report Section 1 - Page 6 Comparison of First Quarter Cost per Million Gallon Results with Budget Last Five Years As demonstrated in the preceding graph for each of the last four fiscal years, the cost per million gallons at the end of the first quarter has been between 3.4 percent to 13.7 percent lower than the annual budget. The FY 2019-20 first quarter cost per million gallons of $2,396 is 2.2 percent lower when compared with this year’s budget. The increase in cost per million gallons of $314 from the previous year is primarily due to an increase in operating expenses, which are 14.9 percent higher than the same period last year and a decrease in flows, which are 0.1 percent lower than the same period last year. Staff believes that overall operating costs will be below budget at year-end. The total cost per million gallons at September 30 is $2,396 based on flows of 188 million gallons per day. This is $55 per million gallons, or 2.2 percent, lower than the budgeted cost per million gallons of $2,451. There is an inverse relationship between the amount of flows and the cost per unit of collection, treatment, and disposal. Consequently, the lower cost per million gallons is due to net expenses being 1.6 percent less than the proportionate budget through September 30, with flows of 188 million gallons per day being equal to the budgeted flow of 188 million gallons per day. More detailed information on operating revenues, costs, and related information is provided within Section 2. Consolidated Financial Reports Section 1 - Page 7 Following are data tables showing the last five years of Single Family Residential User Fees (SFR) and the cost per MG to collect, treat, and dispose of wastewater for OCSD and for similar agencies. The agencies used in the table were determined to be those that most closely resembled OCSD in terms of services provided and treatment levels. The summaries demonstrate that OCSD’s SFR and cost per million gallons are each one of the lowest in their respective group. 2015 2016 2017 2018 2019 Agency SFR SFR SFR SFR SFR Notes San Francisco 784$ 842$ 937$ 988$ 1,076$ Vallejo Sanitation/Flood Control District 520$ 520$ 520$ 585$ 656$ Central Contra Costa Sanitary District 471$ 503$ 530$ 567$ 598$ City of Los Angeles 464$ 495$ 527$ 561$ 597$ Note 1 City of San Diego 573$ 573$ 573$ 573$ 573$ Note 4 Dublin San Ramon Services District 382$ 382$ 397$ 423$ 447$ Sacramento County 384$ 420$ 432$ 444$ 444$ East Bay MUD 355$ 373$ 391$ 410$ 423$ Union Sanitary District 377$ 380$ 393$ 407$ 421$ City of Hayward 347$ 358$ 375$ 394$ 412$ Orange County Sanitation District 322$ 327$ 331$ 335$ 339$ Irvine Ranch Water District 289$ 309$ 309$ 309$ 313$ Note 2 City of Fresno 309$ 309$ 309$ 309$ 309$ Note 3 Oro Loma Sanitary District 206$ 221$ 238$ 256$ 275$ Los Angeles County 177$ 182$ 186$ 191$ N/A Note 5 Notes: (1) - Data is for the typical SFR customer rate. (2) - Data represents the usage of 10 hundred cubic feet per unit. (3) - Data represents the minimum SFR rate not including flow. (4) - Data represents the base sewer fee plus the average usage of 9 hundred cubic feet per month. (5) - Data represents the Average Service Charge Rates for the prior fiscal year. N/A - Not currently available. Benchmark Study Five-Year Single Family Residential Rate Rates as of July FY 2019-20 First Quarter Financial Report Section 1 - Page 8 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 Agency Svc. Trt. Cost/MG Cost/MG Cost/MG Cost/MG Cost/MG Notes Central Contra Costa Sanitary District B 4 5,778$ 6,281$ 6,454$ 6,081$ 5,588$ Vallejo Sanitation/Flood Control District B 3 6,153$ 5,590$ 5,396$ 4,745$ 5,393$ San Francisco B 3 5,400$ 5,358$ 5,268$ 4,916$ 5,295$ Union Sanitary District B 3 3,832$ 3,911$ 3,957$ 4,039$ 4,757$ City of San Diego B 4 3,156$ 3,592$ 3,606$ 3,834$ 4,147$ Dublin San Ramon Services District B 4 2,507$ 2,522$ 2,896$ 2,961$ 3,422$ East Bay MUD T 3 2,559$ 2,728$ 2,599$ 2,353$ 3,137$ Sacramento County T 4 2,375$ 2,494$ 2,571$ 2,752$ 2,831$ City of Los Angeles B 4 2,163$ 2,269$ 2,452$ 2,487$ 2,329$ Note 2 Orange County Sanitation District B 3 1,935$ 2,071$ 2,110$ 2,055$ 2,069$ City of Fresno B 4 1,552$ 1,629$ 1,678$ 1,796$ 1,813$ Los Angeles County B 4 1,224$ 1,239$ 1,371$ 1,151$ 1,365$ Note 1 Legend for Service Provided and Treatment Level: B - Agency operates both collection and treatment facilities T - Agency provides treatment services but not collection 3 - Secondary treatment 4 - Advanced secondary or secondary with some tertiary treatment Notes: (1) - Does not include source control or overhead costs. (2) - 2017 Influent flow has not been reduced by the amount of sludge discharged to the sewers from DCTWRP and LAGWRP. Benchmark Study Five-Year Cost per MG Consolidated Financial Reports Section 1 - Page 9 Capital Outlay Review: As depicted by the preceding chart, Capital Outlays totaled $20.0 million or 13.0 percent of the capital outlay cash flow budget for FY 2019-20 as of September 30, 2019. Costs are proportionately low through the first quarter as some projects are still in the design phase or have experienced various delays or deferrals. Examples as of September 30 are Ocean Outfall System Rehabilitation, which has a budget of $26.9 million but actual costs of $3.7 million, Newhope-Placentia Trunk Replacement, which has a budget of $22.7 million but actual costs of $2.8 million, Headquarters Complex and Site Security at Plant 1, which has a budget of $9.8 million but actual costs of $300,000, and Rehabilitation of Western Regional Sewers, which has a budget of $9.6 million but actual costs of $466,000. Overall, the capital outlay costs of the capital improvement program are expected to approximate $155.5 million, or 101.4 percent of the capital outlay cash flow budget at year-end. More detailed information on the capital improvement program is provided within Section 3. Capital Assets Schedule and Debt Service Budget Review: Section 4 is the Capital Assets Schedule and Debt Service Section. This section shows the cost value of the Sanitation District’s capital facilities at September 30, 2019, as well as the debt service costs resulting from the need to provide funding for the construction of capital facilities. The majority of principal payments on debt issues are due in February during the third quarter of each fiscal year. As of September 30, 2019, no principal payments have been made through the end of the first quarter. Total principal payments, excluding FY 2019-20 First Quarter Financial Report Section 1 - Page 10 refundings, are expected to approximate budget at year-end. Interest costs are expensed ratably throughout the fiscal year. Interest expense is anticipated to approximate budget at year-end. Self-Insurance Budget Reviews: Section 5 is the Self-Insurance Section. Through September 30, the Self-Insurance Fund revenues totaled $787,000 or 31.1 percent of the budget, while expenses were $619,000 or 24.5 percent of the budget. Separate fund accounting is used for recording the revenue and expenses incurred in managing these liability claims. The revenues to these funds represent charges to operating divisions. Expenses to these funds include actual claims paid, claims administration, and excess loss policies. Operating Budget Review $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 Ex e c u t i v e M a n a g e m e n t Hu m a n R e s o u r c e s Ad m i n i s t r a t i v e S e r v i c e s En v i o r n m e n t a l S e r v i c e s En g i n e e r i n g Op e r a t i o n s & M a i n t e n a n c e Cost per Million Gallons by Department Budget and Actual September 30, 2019 Budget Actual $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 Sa l a r y & W a g e s Em p l o y e e B e n e f i t s Ad m i n i s t r a t i v e E x p e n s e s Pr i n t i n g & P u b l i c a t i o n Tr a i n i n g & M e e t i n g s Op e r a t i n g E x p e n s e s Co n t r a c t u a l S e r v i c e s Pr o f e s s i o n a l S e r v i c e s Re s e a r c h & M o n i t o r i n g Re p a i r s & M a i n t e n a n c e Ut i l i t i e s Ot h e r M a t e r i a l s , S u p p l i e s , & S v c s Collection, Treatment, & Disposal Expenses by Major Category Budget and Actual (in thousands) September 30, 2019 Budget Actual Section 2 - Page 1 Divisional Contributions to Cost Per Million Gallons For the Three Months Ended September 30, 2019 2019-20 9/30/17 9/30/18 Annual 9/30/19 Actual Actual Budget Actual Flow in Million Gallons 17,320.06 17,286.08 68,620.00 17,268.33 Flow in Million Gallons per Day 188.26 187.89 188.00 187.70 Executive Management Department General Management Administration 30.70$ 28.94$ 46.24$ 33.90$ Board Services 8.92 8.50 10.11 8.62 Public Affairs 13.82 13.74 16.84 16.84 Subtotal 53.44 51.18 73.19 59.36 Human Resources Department Human Resources 48.94 51.22 72.68 58.62 Risk Management / Safety / Security 83.53 68.34 84.31 77.04 Subtotal 132.47 119.56 156.99 135.66 Administrative Services Department Administrative Services 6.94 6.78 2.63 7.58 Financial Management 45.80 34.32 50.17 38.81 Contracts, Purchasing, & Materials Mgmt. 62.27 64.97 72.38 60.76 Information Technology 184.43 202.83 177.20 243.60 Subtotal 299.44 308.90 302.38 350.75 Environmental Services Department Environmental Services Administration 12.07 12.88 9.03 33.21 Resource Protection 75.62 83.11 83.86 77.56 Laboratory, Monitoring and Compliance 154.21 149.46 166.03 176.72 Subtotal 241.90 245.45 258.92 287.49 Engineering Department Engineering Administration 6.08 6.99 10.99 13.22 Planning 49.37 50.22 78.91 51.38 Project Management Office 34.83 42.65 73.15 65.18 Design 117.63 120.78 110.52 105.39 Construction Management 66.38 70.98 82.63 93.14 Subtotal 274.29 291.62 356.20 328.31 Operations & Maintenance Department Operations & Maintenance Administration 8.43 8.61 11.73 3.86 Collections Facilities O & M 186.66 194.08 194.83 160.12 Fleet Services 26.70 26.27 27.40 25.83 Plant No. 1 Operations 373.60 402.43 459.68 445.91 Plant No. 2 Operations 289.79 300.46 276.73 261.64 Plant No. 1 Maintenance 198.98 197.38 369.47 357.46 Maintenance Reliability and Planning 95.42 85.40 - - Plant No. 2 Maintenance 164.09 156.85 260.88 279.25 Subtotal 1,343.67 1,371.48 1,600.72 1,534.07 Total Operating Expenses 2,345.21 2,388.19 2,748.40 2,695.64 Cost Allocation (295.42) (305.76) (297.40) (299.74) Net Operating Requirements 2,049.79$ 2,082.43$ 2,451.00$ 2,395.90$ FY 2019-20 First Quarter Financial Report Section 2 - Page 2 Comparison of Expenses by Department For the Three Months Ended September 30, 2019 2019-20 9/30/17 9/30/18 Year to Date Budget % Department and Division Actual Actual Budget 9/30/19 Realized Executive Management Department General Management Administration 531,754$ 500,317$ 3,172,680$ 585,471$ 18.45% Board Services 154,476 146,867 693,980 148,781 21.44% Public Affairs 239,435 237,539 1,155,600 290,832 25.17% Subtotal 925,665 884,723 5,022,260 1,025,084 20.41% Human Resources Department Human Resources 847,629 885,374 4,987,200 1,012,301 20.30% Risk Management / Safety / Security 1,446,767 1,181,374 5,785,360 1,330,391 23.00% Subtotal 2,294,396 2,066,748 10,772,560 2,342,692 21.75% Administrative Services Department Administrative Services 120,275 117,171 180,710 130,873 72.42% Financial Management 793,250 593,289 3,442,410 670,249 19.47% Contracts, Purchasing, & Materials Mgmt. 1,078,522 1,123,009 4,966,960 1,049,256 21.12% Information Technology 3,194,317 3,506,102 12,159,200 4,206,492 34.60% Subtotal 5,186,364 5,339,571 20,749,280 6,056,870 29.19% Environmental Services Department Environmental Services Administration 209,135 222,718 619,510 573,469 92.57% Resource Protection 1,309,788 1,436,715 5,754,790 1,339,345 23.27% Laboratory, Monitoring and Compliance 2,670,898 2,583,600 11,393,290 3,051,597 26.78% Subtotal 4,189,821 4,243,033 17,767,590 4,964,411 27.94% Engineering Department Engineering Administration 105,345 120,828 753,920 228,357 30.29% Planning 855,091 868,073 5,414,675 887,257 16.39% Project Management Office 603,334 737,206 5,019,310 1,125,582 22.43% Design 2,037,393 2,087,898 7,583,810 1,819,922 24.00% Construction Management 1,149,722 1,226,924 5,670,320 1,608,438 28.37% Subtotal 4,750,885 5,040,929 24,442,035 5,669,556 23.20% Operations & Maintenance Department Operations & Maintenance Administration 146,017 148,869 804,870 66,693 8.29% Collections Facilities O & M 3,232,914 3,354,942 13,369,492 2,764,942 20.68% Fleet Services 462,460 454,126 1,880,480 446,011 23.72% Plant No. 1 Operations 6,470,777 6,956,506 31,542,920 7,700,099 24.41% Plant No. 2 Operations 5,019,118 5,193,785 18,989,328 4,518,161 23.79% Plant No. 1 Maintenance 3,446,394 3,411,921 25,352,831 6,172,705 24.35% Maintenance Reliability and Planning 1,652,656 1,476,165 - - 0.00% Plant No. 2 Maintenance 2,842,015 2,711,247 17,901,451 4,822,142 26.94% Subtotal 23,272,351 23,707,561 109,841,372 26,490,753 24.12% Total Operating Expenses 40,619,482 41,282,565 188,595,097 46,549,366 24.68% Cost Allocation (5,117,058) (5,285,554) (20,378,610) (5,176,213) 25.40% Net Operating Requirements 35,502,424$ 35,997,011$ 168,216,487$ 41,373,153$ 24.60% Operating Budget Review Section 2 - Page 3 Summary of Collection, Treatment, & Disposal Expenses by Major Category For the Three Months Ended September 30, 2019 Expense Expense Increase Increase Percent Budget Through Through (Decrease) (Decrease)Budget Remaining 2019-20 9/30/19 9/30/18 $ % Realized Budget Salary & Wages 74,364,500$ 17,994,172 17,649,325 344,847$ 1.95% 24.20% 56,370,328$ Employee Benefits 24,069,740 6,216,211 5,889,801 326,410 5.54% 25.83% 17,853,529 Administrative Expenses 2,027,930 780,131 468,759 311,372 66.42% 38.47% 1,247,799 Printing & Publication 329,970 71,705 62,684 9,021 14.39% 21.73%258,265 Training & Meetings 1,109,740 129,506 157,090 (27,584) -17.56% 11.67%980,234 Operating Materials & Supplies 21,008,781 4,848,888 4,147,497 701,391 16.91% 23.08% 16,159,893 Contractual Services 22,033,974 4,480,474 5,133,841 (653,367) -12.73% 20.33% 17,553,500 Professional Services 5,586,170 761,765 668,690 93,075 13.92% 13.64% 4,824,405 Research & Monitoring 1,099,600 719,513 148,567 570,946 384.30% 65.43% 380,087 Repairs & Maintenance 23,469,642 7,469,206 3,996,894 3,472,312 86.88% 31.82% 16,000,436 Utilities 9,250,310 2,356,960 2,468,268 (111,308) -4.51% 25.48% 6,893,350 Other Materials, Supplies, and Services 4,244,740 720,835 491,149 229,686 46.77% 16.98% 3,523,905 Net Cost Allocation (20,378,610) (5,176,213) (5,285,554) 109,341 -2.07% 25.40% (15,202,397) Net Operating Requirements 168,216,487 41,373,153 35,997,011 5,376,142 14.93% 24.60% 126,843,334 Gallonage Flow (MG) 68,620.00 17,268.33 17,286.08 (17.75) -0.10% Gallonage Flow (MGD) 188.00 187.70 187.89 (0.19) -0.10% Gallonage Flow ($'s /MG) $2,451.00 $2,395.90 $2,082.43 $313.47 15.05% Description FY 2019-20 First Quarter Financial Report Section 2 - Page 4 Revenue Percent Revenue Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2019-20 9/30/19 Realized Budget 9/30/18 $ % Service Fees 298,144,000$ 7,095$ 0.00% 298,136,905$ (330,829)$ 337,924$ 102.14% Permit Fees 9,917,000 3,289,220 33.17% 6,627,780 4,760,889 (1,471,669) -30.91% Inter District Sewer Use-SAWPA & SBSD 2,654,000 726,065 27.36% 1,927,935 625,418 100,647 16.09% Intra District Sewer Use-IRWD 6,861,560 1,168,597 17.03% 5,692,963 1,013,278 155,319 15.33% Sludge Disposal-IRWD 5,400,000 2,244,149 41.56% 3,155,851 1,992,636 251,513 12.62% Capital Assessments-IRWD 5,397,000 502,008 9.30% 4,894,992 1,032,191 (530,183) -51.36% Capital Facilities Capacity Charges 18,000,000 3,324,839 18.47% 14,675,161 4,678,078 (1,353,239) -28.93% Property Taxes 96,354,000 2,326,912 2.41% 94,027,088 2,449,863 (122,951) -5.02% Interest Earnings 6,602,000 5,788,216 87.67% 813,784 2,299,559 3,488,657 151.71% CIP Reimbursements 5,987,869 657,477 10.98% 5,330,392 - 657,477 100.00% Wastehauler 750,000 194,244 25.90% 555,756 138,721 55,523 40.02% Grant Revenue 464,000 - 0.00% 464,000 - - 0.00% CNG Sales 400,000 70,670 17.67% 329,330 72,538 (1,868) -2.58% Rents & Leases 2,260,100 226,838 10.04% 2,033,262 399,845 (173,007) -43.27% Other Revenues 6,413,529 73,051 1.14% 6,340,478 68,460 4,591 6.71% Power Sales 25,000 32,306 129.22% (7,306) 12,204 20,102 164.72% Other Sales 50,000 8,867 17.73% 41,133 40,998 (32,131) -78.37% Total Revenues 465,680,058$ 20,640,554$ 4.43% 445,039,504$ 19,253,849$ 1,386,705$ 7.20% Summary of Revenues For the Three Months Ended September 30, 2019 Operating Budget Review Section 2 - Page 5 FY 2019-20 First Quarter Financial Report Summary of Collection, Treatment, & Disposal Expenses by Line Item For the Three Months Ended September 30, 2019 Expense Percent Expense Increase Budget Through Budget Remaining Through (Decrease) Description 2019-20 9/30/19 Expensed Budget 9/30/18 $ Salaries, Wages & Benefits Salaries & Wages 74,364,500$ 17,994,172$ 24.20% 56,370,328$ 17,649,325$ 344,847$ 1.95% Employee Benefits Retirement 11,478,840 3,073,082 26.77% 8,405,758 2,874,236 198,846 6.92% Group Insurances 11,006,200 2,715,032 24.67% 8,291,168 2,641,026 74,006 2.80% Tuition & Certification Reimb 98,100 20,241 20.63% 77,859 24,604 (4,363) -17.73% Edu. degrees, Cert. & Lic. 470,300 157,169 33.42% 313,131 131,458 25,711 19.56% Uniform Rental 140,800 29,322 20.83% 111,478 33,516 (4,194) -12.51% Workers' Compensation 780,000 194,998 25.00% 585,002 146,649 48,349 32.97% Unemployment Insurance 3,200 328 10.25% 2,872 1,244 (916) -73.63% EMT Supplemental Benefits 92,300 26,039 28.21% 66,261 37,068 (11,029) -29.75% Total Benefits 24,069,740 6,216,211 25.83% 17,853,529 5,889,801 326,410 5.54% Salaries, Wages & Benefits 98,434,240 24,210,383 24.60% 74,223,857 23,539,126 671,257 2.85% Matl, Supply, & Services Administrative Expenses Memberships 639,660 320,515 50.11% 319,145 235,829 84,686 35.91% Office Exp - Supplies 71,330 15,832 22.20% 55,498 7,163 8,669 121.02% Postage 43,330 7,097 16.38% 36,233 11,957 (4,860) -40.65% Books & Publications 62,340 35,617 57.13% 26,723 3,634 31,983 880.10% Forms 970 - 0.00% 970 1,245 (1,245) -100.00% Small Computer Items 900,300 350,785 38.96% 549,515 197,956 152,829 77.20% Minor Furniture & Fixtures 310,000 50,285 16.22% 259,715 10,975 39,310 358.18% Subtotal 2,027,930 780,131 38.47% 1,247,799 468,759 311,372 66.42% Printing & Publication Repro-In-House 200,790 58,805 29.29% 141,985 50,569 8,236 16.29% Printing-Outside 66,480 2,200 3.31% 64,280 4,215 (2,015) -47.81% Notices & Ads 62,650 10,700 17.08% 51,950 7,900 2,800 35.44% Photo Processing 50 - 0.00% 50 - - N/A Subtotal 329,970 71,705 21.73% 258,265 62,684 9,021 14.39% Training & Meetings Meetings 170,850 23,932 14.01% 146,918 22,705 1,227 5.40% Training 938,890 105,574 11.24% 833,316 134,385 (28,811) -21.44% Subtotal 1,109,740 129,506 11.67% 980,234 157,090 (27,584) -17.56% Operating Mat'ls & Supplies Chemical Coagulants 10,364,188 2,656,756 25.63% 7,707,432 1,506,429 1,150,327 76.36% Odor Control 7,415,288 1,493,511 20.14% 5,921,777 1,931,936 (438,425) -22.69% Disinfection 233,000 63,200 27.12% 169,800 37,793 25,407 67.23% Chemicals - Misc & Cogen 331,070 72,115 21.78% 258,955 84,507 (12,392) -14.66% Gasoline, Diesel & Oil 563,460 120,227 21.34% 443,233 152,692 (32,465) -21.26% Tools 469,135 103,645 22.09% 365,490 80,553 23,092 28.67% Safety equipment/tools 624,500 129,730 20.77% 494,770 119,502 10,228 8.56% Solv, Paints & Jan. Supplies 100,000 31,603 31.60% 68,397 25,136 6,467 25.73% Lab Chemicals & Supplies 639,570 149,353 23.35% 490,217 166,564 (17,211) -10.33% Other Operating Supplies 176,880 27,703 15.66% 149,177 42,514 (14,811) -34.84% Property Tax Fees 91,690 1,045 1.14% 90,645 (129) 1,174 -910.08% Subtotal 21,008,781 4,848,888 23.08% 16,159,893 4,147,497 701,391 16.91% Contractual Services Solids Removal 13,403,700 3,019,756 22.53% 10,383,944 3,916,758 (897,002) -22.90% Other Waste Disposal 840,900 179,945 21.40% 660,955 191,293 (11,348) -5.93% Groundskeeping 193,000 49,562 25.68% 143,438 41,829 7,733 18.49% Janitorial 444,360 129,636 29.17% 314,724 111,262 18,374 16.51% Outside Lab Services 260,000 35,592 13.69% 224,408 30,012 5,580 18.59% Oxygen 306,000 93,789 30.65% 212,211 77,712 16,077 20.69% County Service Fee 512,410 4,560 0.89% 507,850 10,113 (5,553) -54.91% Temporary Services 810,000 86,676 10.70% 723,324 35,251 51,425 145.88% Security Services 1,608,000 411,424 25.59% 1,196,576 406,713 4,711 1.16% Other 3,655,604 469,534 12.84% 3,186,070 312,898 156,636 50.06% Subtotal 22,033,974 4,480,474 20.33% 17,553,500 5,133,841 (653,367) -12.73% Increase (Decrease) % Section 2 - Page 6 (Continued) Operating Budget Review Summary of Expenses by Line Item For the Three Months Ended September 30, 2019 Expense Expense Increase Increase Budget Through Remaining Through (Decrease) (Decrease) Description 2019-20 9/30/19 Expensed Budget 9/30/18 $ % Continued: Professional Services Legal 1,565,820 303,212 19.36% 1,262,608 164,077 139,135 84.80% Audit & Accounting 241,110 31,925 13.24% 209,185 52,198 (20,273) -38.84% Engineering 1,361,000 69,894 5.14% 1,291,106 160,183 (90,289) -56.37% Enviro Scientific Consulting 200,000 388 0.19% 199,612 10,000 (9,612) -96.12% Software Prgm Consulting 376,000 129,033 34.32% 246,967 82,287 46,746 56.81% Advocacy Efforts 179,400 42,400 23.63% 137,000 39,000 3,400 8.72% Industrial Hygiene Services 50,000 110 0.22% 49,890 7,208 (7,098) -98.47% Labor Negotiation Services 80,000 28,748 35.94% 51,252 - 28,748 N/A Other 1,532,840 156,055 10.18% 1,376,785 153,737 2,318 1.51% Subtotal 5,586,170 761,765 13.64% 4,824,405 668,690 93,075 13.92% Research & Monitoring Environmental Monitoring 549,600 176,467 32.11% 373,133 26,510 149,957 565.66% Air Quality Monitoring 100,000 68,046 68.05% 31,954 9,557 58,489 612.00% Research 450,000 475,000 105.56% (25,000) 112,500 362,500 322.22% Subtotal 1,099,600 719,513 65.43% 380,087 148,567 570,946 384.30% Repairs & Maintenance Materials & Services 19,774,364 5,409,985 27.36% 14,364,379 2,544,507 2,865,478 112.61% Svc. Mtc. Agreements 3,695,278 2,059,221 55.73% 1,636,057 1,452,387 606,834 41.78% Subtotal 23,469,642 7,469,206 31.82% 16,000,436 3,996,894 3,472,312 86.88% Utilities Telephone 501,100 127,794 25.50% 373,306 104,367 23,427 22.45% Diesel For Generators 17,000 5,635 33.15% 11,365 9,469 (3,834) -40.49% Natural Gas 722,140 242,957 33.64% 479,183 375,875 (132,918) -35.36% Power 7,237,990 1,738,100 24.01% 5,499,890 1,805,197 (67,097) -3.72% Water 772,080 242,474 31.41% 529,606 173,360 69,114 39.87% Subtotal 9,250,310 2,356,960 25.48% 6,893,350 2,468,268 (111,308) -4.51% Other Operating Supplies Outside Equip Rental 122,000 21,766 17.84% 100,234 8,048 13,718 170.45% Insurance Premiums 37,800 28,501 75.40% 9,299 27,155 1,346 4.96% Prop & Gen Liab Insurance 1,720,000 429,999 25.00% 1,290,001 324,825 105,174 32.38% Freight 87,050 22,562 25.92% 64,488 18,848 3,714 19.71% Misc. Operating Expense 249,460 63,728 25.55% 185,732 55,058 8,670 15.75% Regulatory Operating Fees 769,000 118,791 15.45% 650,209 26,271 92,520 352.18% Subtotal 2,985,310 685,347 22.96% 2,299,963 460,205 225,142 48.92% General Mgr Contingency & Reappropriations 1,133,800 - 0.00% 1,133,800 - - N/A Other Non-Oper Expense 125,630 35,488 28.25% 90,142 30,944 4,544 14.68% Total Materials, Supplies & Services 90,160,857 22,338,983 24.78% 67,821,874 17,743,439 4,595,544 25.90% Total Expenditures 188,595,097 46,549,366 24.68% 142,045,731 41,282,565 5,266,801 12.76% Cost Allocation (20,378,610) (5,176,213) 25.40% (15,202,397) (5,285,554) 109,341 -2.07% Net Operating Requirements 168,216,487$ 41,373,153$ 24.60% 126,843,334$ 35,997,011$ 5,376,142$ 14.93% Percent Budget Section 2 - Page 7 FY 2019-20 First Quarter Financial Report Summary of Collection, Treatment, & Disposal Expenses by Process For the Three Months Ended September 30, 2019 Increase Increase Actual Actual (Decrease) (Decrease) 9/30/19 9/30/18 $ % Process: Preliminary Treatment 1,729,329$ 1,778,265$ (48,936)$ -2.75% Primary Treatment 6,252,735 3,384,203 2,868,532 84.76% Secondary Treatment 2,738,688 2,169,677 569,011 26.23% Cryogenic Plant (Plant 2)190,774 162,770 28,004 17.20% Effluent Disposal 183,311 225,825 (42,514) -18.83% Solids Handling 12,425,127 10,328,537 2,096,590 20.30% Cogeneration 4,659,215 4,685,747 (26,532) -0.57% Utilities 948,216 738,357 209,859 28.42% Electrical Distribution 418,488 418,054 434 0.10% Miscellaneous Buildings 2,457,228 2,276,232 180,996 7.95% External Location 87,689 82,512 5,177 6.27% Nerissa Vessel 66,771 52,892 13,879 26.24% Laboratory 4,451,240 3,786,837 664,403 17.55% Collections 4,764,342 5,907,103 (1,142,761) -19.35% Net Operating Requirements 41,373,153$ 35,997,011$ 5,376,142$ 14.93% Section 2 - Page 8 Staffing Trends Full Time Equivalents September 30, 2019 At September 30, 2019, the total head count was 633 employees, or a full time equivalency of 616. Operating Budget Review 450 500 550 600 650 700 6/30/16 6/30/17 6/30/18 6/30/19 9/30/19 572 578 603 614 616 52 49 32 22 24 Actual Vacant 636624627635 640 Section 2 - Page 9 FY 2019-20 First Quarter Financial Report This Page Intentionally Left Blank Section 2 - Page 10 Capital Improvement Program By Type and Funding Source For the Three Months Ended September 30, 2019 CIP Budget Review Total Capital Improvement Outlays - $19,990,410 Rehabilitation and Replacement: 51% Strategic Initiatives: 24% Additional Capacity: 15% Regulatory: 10% Total Capital Improvement Outlays - $19,990,410 Collections Facilities: 18.7% Liquid Treatment: 35.2% Solids Handling & Digestion: 16.5% Utility Systems: 5.4% Support Facilities: 9.4% Other: 14.8% Section 3 - Page 1 Summary of Capital Improvement Construction Requirements - Current Year For the Three Months Ended September 30, 2019 2019-20 2019-20 2019-20 Cashflow Actual at Projected Budget 9/30/2019 Outlay Collection System Improvement Projects Collections Facilities Taft Branch Improvements 105,676 - 105,700 Newhope - Placentia Trunk Grade Separation Replacement 71,875 270 54,000 Newhope-Placentia Trunk Replacement 22,653,359 2,835,034 17,141,100 Westminster Blvd Force Main Replacement 2,534,429 68,922 2,242,900 Rehabilitation of Western Regional Sewers 9,563,225 465,685 6,278,100 Interstate 405 Widening Project Impacts on OCSD Sewers 107,640 14,041 93,000 Seal Beach Pump Station Replacement 578,588 52,560 566,300 Newport Force Main Rehabilitation - 2,056 61,600 Bay Bridge Pump Station Replacement 1,039,692 43,669 1,070,400 Newport Beach Pump Station Odor Control Improvements 148,187 9,461 58,400 District 6 Trunk Sewer Relief 465,049 40,219 821,700 Gisler - Red Hill Trunk Improvements - Reach B - 1,865 195,300 Gisler - Red Hill Interceptor Rehabilitation 211,211 - 159,900 Main Street Pump Replacement & Force Main Rehabilitation 493,458 - 167,200 Small Construction Projects Program - Collections 1,688,579 124,189 124,200 Operations & Maintenance Capital Program - Collections - 13,981 14,000 Planning Studies Program - Collections - 21,878 21,900 SARI Rock Stabilizers Removal 4,065,703 32,404 3,267,000 Sunflower and Red-Hill Interceptor Repair 390,189 12,232 261,800 Additional Charges to CIP Closed at 6/30/19 - (8,400) (8,400) Subtotal - Collections Facilities 44,116,860 3,730,066 32,696,100 Revenue Area 14 Newport Force Main Rehabilitation (2.18%) - 46 1,400 Subtotal - Revenue Area 14 - 46 1,400 Total Collection System Improvement Projects 44,116,860 3,730,112 32,697,500 FY 2019-20 First Quarter Financial Report Section 3 - Page 2 (Continued) Summary of Capital Improvement Construction Requirements - Current Year For the Three Months Ended September 30, 2019 2019-20 2019-20 2019-20 Cashflow Actual at Projected Budget 9/30/2019 Outlay Treatment & Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 7,870,442 873,157 10,256,900 Headworks Modifications at P2 for GWRS Final Expansion 4,159,614 363,279 2,433,000 Subtotal - Headworks 12,030,056 1,236,436 12,689,900 Primary Treatment Primary Clarifier Reliability Improvements at Plant No. 1 480,336 61,788 651,400 Primary Treatment Rehabilitation at Plant 2 9,186,737 1,993,474 9,318,200 Subtotal - Primary Treatment 9,667,073 2,055,262 9,969,600 Secondary Treatment Return Activated Sludge Piping Replacement at Plant 1 2,803,867 40,054 3,973,800 Activated Sludge Aeration Basin Deck Repair at Plant 2 14,671 2,641 3,400 Return Activated Sludge Piping Replacement at Plant 2 3,234,395 52,851 1,264,500 Subtotal - Secondary Treatment 6,052,933 95,546 5,241,700 Solids Handling & Digestion Sludge Dewatering and Odor Control at Plant 1 6,781,194 2,253,034 5,849,800 Digester Ferric Chloride Piping Replacement at Plant No. 1 68,898 817 24,500 Plant No. 2 Digester Facilities Rehabilitation 2,770,904 - 1,208,300 Sludge Dewatering and Odor Control at Plant 2 5,998,220 906,789 4,763,300 Interim Food Waste Receiving Facility 641,684 75,995 630,600 TPAD Digester Facility at P2 874,204 53,254 971,200 Subtotal - Solids Handling & Digestion 17,135,104 3,289,889 13,447,700 Ocean Outfall Systems Ocean Outfall System Rehabilitation 26,862,720 3,654,612 24,552,900 Subtotal - Ocean Outfall Systems 26,862,720 3,654,612 24,552,900 Utility Systems Digester Gas Facilities Rehabilitation 3,957,325 138,460 3,512,800 Natural Gas Pipelines Replacement at Plants 1 and 2 283,122 129,807 252,100 Electrical Power Distribution System Improvements 851,397 29,526 597,000 Uninterruptable Power Supply Improvements at Plant 1 270,355 14,525 190,800 Consolidated Demolition and Utility Improvements at P2 3,545,396 768,191 5,061,600 Substation Replacement at Plant No. 2 506,550 - 506,600 Subtotal - Utility Systems 9,414,145 1,080,509 10,120,900 CIP Budget Review Section 3 - Page 3 (Continued) Summary of Capital Improvement Construction Requirements - Current Year For the Three Months Ended September 30, 2019 2019-20 2019-20 2019-20 Cashflow Actual at Projected Budget 9/30/2019 Outlay Process Related Special Projects Safety Improvements Program 7,701,072 1,349,664 7,532,900 Subtotal - Process Related Special Projects 7,701,072 1,349,664 7,532,900 Information Management Systems Process Control Systems Upgrades 578,902 - 579,000 Project Management Information System 1,860,070 53,647 700,800 Information Technology Capital Program 2,749,741 268,368 1,467,700 Geographic Information System 493,346 129,732 419,200 EAM Software and Process Implementation 976,100 72,335 651,000 Process Control Systems Upgrades Study 1,783,597 63,912 1,295,500 Subtotal - Information Management Systems 8,441,756 587,994 5,113,200 Strategic & Master Planning Planning Studies Program 5,562,122 269,025 7,357,500 Climate Resiliency Study 222,600 97,210 291,000 Subtotal - Strategic & Master Planning 5,784,722 366,235 7,648,500 Water Management Projects GWRS Final Expansion Coordination 182,157 12,712 372,100 Subtotal - Water Management Projects 182,157 12,712 372,100 Research Research Program 2,351,548 228,076 1,469,200 Subtotal - Research 2,351,548 228,076 1,469,200 Support Facilities Small Construction Projects Program 4,341,552 964,333 8,088,300 Fleet Services UST Leak Remediation at Plant 1 2,251,879 31,497 31,500 Operations & Maintenance Capital Program 5,061,149 297,708 2,877,300 18350 Mt. Langley Building Purchase and Improvement 155,080 7,570 205,700 Title 24 Access Compliance and Building Rehab Project 1,075,459 240,641 903,500 Headquarters Complex and Site Security at Plant 1 9,765,435 299,596 8,688,400 South Perimeter Security and Utility Improvements at Plant N 781,427 46,193 690,300 Plant 2 Warehouse Relocation 67,593 - 67,600 Subtotal - Support Facilities 23,499,574 1,887,538 21,552,600 FY 2019-20 First Quarter Financial Report Section 3 - Page 4 (Continued) Summary of Capital Improvement Construction Requirements - Current Year For the Three Months Ended September 30, 2019 2019-20 2019-20 2019-20 Cashflow Actual at Projected Budget 9/30/2019 Outlay Others Perimeter Screening at Plant 2 44,087 - 28,900 Capital Improvement Program Management Services 118,846 (17) 90,200 Subtotal - Others 162,933 (17) 119,100 Total Treatment and Disposal Projects 129,285,793 15,844,456 119,830,300 Capital Equipment Purchases 2,923,300 415,842 2,923,300 Total Collection, Treatment and Disposal Projects and Capital Equipment Purchases 176,325,953 19,990,410 155,451,100 Less: Savings and Deferrals (23,000,000) - - Net Collection, Treatment and Disposal Projects and Capital Equipment Purchases 153,325,953$ 19,990,410$ 155,451,100$ CIP Budget Review Section 3 - Page 5 FY 2019-20 First Quarter Financial Report Summary of Capital Improvement Construction Requirements - Project Life For the Three Months Ended September 30, 2019 Current Total Approved June 30, 2019 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2020 Budget Collection System Improvement Projects Collections Facilities Taft Branch Improvements 8,130,000 12,083 105,700 117,783 8,012,217 Newhope - Placentia Trunk Grade Separation Replacement 4,300,000 4,192,559 54,000 4,246,559 53,441 Newhope-Placentia Trunk Replacement 112,000,000 61,677,495 17,141,100 78,818,595 33,181,405 Yorba Linda Pump Station Abandonment 10,800,000 - - - 10,800,000 Beach Trunk/Knott Interceptor Sewer Relief 21,000,000 - - - 21,000,000 Westminster Blvd Force Main Replacement 54,000,000 6,690,994 2,242,900 8,933,894 45,066,106 Rehabilitation of Western Regional Sewers 202,000,000 15,684,536 6,278,100 21,962,636 180,037,364 Interstate 405 Widening Project Impacts on OCSD Sewers 528,000 94,547 93,000 187,547 340,453 Seal Beach Pump Station Replacement 78,900,000 141,174 566,300 707,474 78,192,526 Los Alamitos Sub-Trunk Extension 66,000,000 - - - 66,000,000 Newport Force Main Rehabilitation 58,367,238 58,305,659 61,600 58,367,259 (21) Crystal Cove Pumping Station Upgrade and Rehabilitation 17,900,000 - - - 17,900,000 Bay Bridge Pump Station Replacement 64,000,000 1,241,764 1,070,400 2,312,164 61,687,836 Newport Beach Pump Station Odor Control Improvements 4,066,000 52,522 58,400 110,922 3,955,078 District 6 Trunk Sewer Relief 7,965,000 7,086,802 821,700 7,908,502 56,498 Gisler - Red Hill Trunk Improvements - Reach B 25,213,000 25,017,792 195,300 25,213,092 (92) MacArthur Pump Station Rehabilitation 9,151,000 - - - 9,151,000 Main Street Pump Station Rehabilitation 40,660,000 - - - 40,660,000 Gisler - Red Hill Interceptor Rehabilitation 14,800,000 - 159,900 159,900 14,640,100 Main Street Pump Replacement & Force Main Rehabilitation 17,160,000 - 167,200 167,200 16,992,800 MacArthur Force Main Improvement 2,385,000 - - - 2,385,000 Edinger Bolsa Chica Trunk Improvements 5,159,000 - - - 5,159,000 Edinger Pump Station Upgrade and Rehabilitation 14,100,000 - - - 14,100,000 Slater Avenue Pump Station Rehabilitation 25,300,000 - - - 25,300,000 Small Construction Projects Program - Collections 9,258,000 3,606,091 124,200 3,730,291 5,527,709 Operations & Maintenance Capital Program - Collections 570,109 33,002 14,000 47,002 523,107 Planning Studies Program - Collections 4,258,600 3,178,275 21,900 3,200,175 1,058,425 Research Program - Collections 154,000 46,250 - 46,250 107,750 SARI Rock Stabilizers Removal 6,860,000 1,059,637 3,267,000 4,326,637 2,533,363 Sunflower and Red-Hill Interceptor Repair 5,500,000 20,888 261,800 282,688 5,217,312 Additional Charges to CIP Closed at 6/30/19 - - (8,400) (8,400) 8,400 Subtotal - Collections Facilities 890,484,947 188,142,070 32,696,100 220,838,170 669,646,777 Revenue Area 14: Newport Force Main Rehabilitation (2.18%) 1,300,762 1,299,390 1,400 1,300,790 (28) Subtotal - Revenue Area 14 1,300,762 1,299,390 1,400 1,300,790 (28) Total Collection System Improvement Projects 891,785,709 189,441,460 32,697,500 222,138,960 669,646,749 Section 3 - Page 6 (Continued) Summary of Capital Improvement Construction Requirements - Project Life For the Three Months Ended September 30, 2019 Current Total Approved June 30, 2019 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2020 Budget Treatment & Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 406,000,000 19,524,945 10,256,900 29,781,845 376,218,155 Headworks Modifications at P2 for GWRS Final Expansion 54,000,000 5,356,267 2,433,000 7,789,267 46,210,733 Subtotal - Headworks 460,000,000 24,881,212 12,689,900 37,571,112 422,428,888 Primary Treatment Primary Clarifiers Replacements and Improvements at P1 106,000,000 521,057 - 521,057 105,478,943 Primary Clarifier Reliability Improvements at Plant No. 1 12,000,000 198,647 651,400 850,047 11,149,953 Primary Treatment Rehabilitation at Plant 2 245,000,000 16,832,705 9,318,200 26,150,905 218,849,095 B/C-Side Primary Clarifiers Rehabilitation at Plant 2 249,560,000 - - - 249,560,000 Subtotal - Primary Treatment 612,560,000 17,552,409 9,969,600 27,522,009 585,037,991 Secondary Treatment Return Activated Sludge Piping Replacement at Plant 1 10,300,000 964,280 3,973,800 4,938,080 5,361,920 Activated Sludge Aeration Basin Deck Repair at Plant 2 1,800,000 1,612,387 3,400 1,615,787 184,213 Return Activated Sludge Piping Replacement at Plant 2 20,000,000 849,751 1,264,500 2,114,251 17,885,749 Subtotal - Secondary Treatment 32,100,000 3,426,418 5,241,700 8,668,118 23,431,882 Solids Handling & Digestion Digester Rehabilitation at Plant 1 66,000,000 65,609,228 - 65,609,228 390,772 Sludge Dewatering and Odor Control at Plant 1 199,500,000 191,251,029 5,849,800 197,100,829 2,399,171 Digester Ferric Chloride Piping Replacement at Plant No. 1 1,360,000 - 24,500 24,500 1,335,500 Plant No. 2 Digester Facilities Rehabilitation 15,500,000 14,717 1,208,300 1,223,017 14,276,983 Sludge Dewatering and Odor Control at Plant 2 90,477,000 80,701,878 4,763,300 85,465,178 5,011,822 Interim Food Waste Receiving Facility 6,300,000 448,580 630,600 1,079,180 5,220,820 TPAD Digester Facility at P2 405,100,000 - 971,200 971,200 404,128,800 Digester P, Q, R, and S Replacement 166,000,000 - - - 166,000,000 Subtotal - Solids Handling & Digestion 950,237,000 338,025,432 13,447,700 351,473,132 598,763,868 Ocean Outfall Systems Ocean Outfall System Rehabilitation 166,000,000 38,447,897 24,552,900 63,000,797 102,999,203 Subtotal - Ocean Outfall Systems 166,000,000 38,447,897 24,552,900 63,000,797 102,999,203 Utility Systems UPS System Upgrades 4,700,000 - - - 4,700,000 Digester Gas Facilities Rehabilitation 156,500,000 4,894,979 3,512,800 8,407,779 148,092,221 Natural Gas Pipelines Replacement at Plants 1 and 2 1,310,000 221,027 252,100 473,127 836,873 Electrical Power Distribution System Improvements 30,000,000 138,428 597,000 735,428 29,264,572 CIP Budget Review Section 3 - Page 7 (Continued) FY 2019-20 First Quarter Financial Report Summary of Capital Improvement Construction Requirements - Project Life For the Three Months Ended September 30, 2019 Current Total Approved June 30, 2019 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2020 Budget Utility Systems (continued) Central Generation Rehabilitation at Plant 1 87,000,000 - - - 87,000,000 Uninterruptable Power Supply Improvements at Plant 1 7,000,000 79,108 190,800 269,908 6,730,092 Consolidated Demolition and Utility Improvements at P2 31,000,000 26,399,159 5,061,600 31,460,759 (460,759) Central Generation Rehabilitation at Plant 2 114,000,000 - - - 114,000,000 Substation Replacement at Plant No. 2 40,261,000 - 506,600 506,600 39,754,400 Subtotal - Utility Systems 471,771,000 31,732,701 10,120,900 41,853,601 429,917,399 Process Related Special Projects Safety Improvements Program 19,000,000 8,118,140 7,532,900 15,651,040 3,348,960 Subtotal - Process Related Special Projects 19,000,000 8,118,140 7,532,900 15,651,040 3,348,960 Information Management Systems Process Control Systems Upgrades 46,000,000 - 579,000 579,000 45,421,000 Project Management Information System 4,000,000 1,149,166 700,800 1,849,966 2,150,034 SCADA System and Network Upgrades 5,000,000 4,970,908 - 4,970,908 29,092 Information Technology Capital Program 10,000,000 1,250,053 1,467,700 2,717,753 7,282,247 Geographic Information System 4,568,000 3,058,209 419,200 3,477,409 1,090,591 EAM Software and Process Implementation 7,500,000 5,219,288 651,000 5,870,288 1,629,712 Process Control Systems Upgrades Study 3,554,000 1,224,489 1,295,500 2,519,989 1,034,011 Subtotal - Information Management Systems 80,622,000 16,872,113 5,113,200 21,985,313 58,636,687 Strategic & Master Planning Planning Studies Program 24,393,400 8,690,620 7,357,500 16,048,120 8,345,280 Climate Resiliency Study 878,000 586,978 291,000 877,978 22 Subtotal - Strategic & Master Planning 25,271,400 9,277,598 7,648,500 16,926,098 8,345,302 Water Management Projects GWRS Final Expansion Coordination 1,132,000 232,090 372,100 604,190 527,810 Subtotal - Water Management Projects 1,132,000 232,090 372,100 604,190 527,810 Research Research Program 8,346,000 617,093 1,469,200 2,086,293 6,259,707 Subtotal - Research 8,346,000 617,093 1,469,200 2,086,293 6,259,707 Section 3 - Page 8 (Continued) Summary of Capital Improvement Construction Requirements - Project Life For the Three Months Ended September 30, 2019 Current Total Approved June 30, 2019 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2020 Budget Support Facilities Small Construction Projects Program 29,040,000 12,847,554 8,088,300 20,935,854 8,104,146 Fleet Services UST Leak Remediation at Plant 1 14,952,000 374,111 31,500 405,611 14,546,389 Operations & Maintenance Capital Program 15,051,891 1,334,458 2,877,300 4,211,758 10,840,133 18350 Mt. Langley Building Purchase and Improvement 10,200,000 9,907,140 205,700 10,112,840 87,160 Laboratory Rehabilitation at Plant No. 1 15,000,000 - - - 15,000,000 Title 24 Access Compliance and Building Rehab Project 18,400,000 17,054,173 903,500 17,957,673 442,327 Headquarters Complex and Site Security at Plant 1 167,500,000 24,758,304 8,688,400 33,446,704 134,053,296 South Perimeter Security and Utility Improvements at Plant N 10,500,000 543,599 690,300 1,233,899 9,266,101 Plant 2 Warehouse Relocation 9,800,000 - 67,600 67,600 9,732,400 Plant 2 Collections Yard Relocation 1,840,000 - - - 1,840,000 Subtotal - Support Facilities 292,283,891 66,819,339 21,552,600 88,371,939 203,911,952 Others Banning Gate Relocation and Grading at Plant 2 2,931,000 - - - 2,931,000 Perimeter Screening at Plant 2 2,800,000 64,040 28,900 92,940 2,707,060 Capital Improvement Program Management Services 700,000 184,309 90,200 274,509 425,491 Subtotal - Others 6,431,000 248,349 119,100 367,449 6,063,551 Total Treatment and Disposal Projects 3,125,754,291 556,250,791 119,830,300 676,081,091 2,449,673,200 Capital Equipment Purchases 9,727,153 - 2,923,300 2,923,300 6,803,853 Total Collection, Treatment and Disposal Projects and Capital Equipment Purchases 4,027,267,153$ $745,692,251 $155,451,100 $901,143,351 $3,126,123,802 CIP Budget Review Section 3 - Page 9 FY 2019-20 First Quarter Financial Report This Page Intentionally Left Blank Section 3 - Page 10 Capital Assets Schedule For the Three Months Ended September 30, 2019 Balance Year-to-Date Balance 07/01/19 Activity 6/30/19 CONSTRUCTION IN PROGRESS: Treatment Plant 447,941,678$ 16,260,298$ 464,201,976$ Collection System 73,889,956 3,730,112 77,620,068 Subtotal 521,831,634 19,990,410 541,822,044 PROPERTY, PLANT & EQUIPMENT (at cost): Land and Property Rights 41,967,355 - 41,967,355 Collection Lines and Pump Stations 886,790,503 - 886,790,503 Treatment Facilities 2,478,726,934 - 2,478,726,934 Effluent disposal facilities 96,972,016 - 96,972,016 Solids disposal facilities 3,463,236 - 3,463,236 General and administrative facilities 257,168,345 - 257,168,345 Excess purchase price over book value on acquired assets 19,979,000 - 19,979,000 Subtotal 3,785,067,389 - 3,785,067,389 Total Property, Plant & Equipment & CIP 4,306,899,023$ 19,990,410$ 4,326,889,433$ 2019-20 Year-to-Date Remaining Budget Payments % of Budget Budget Principal Payments by Debt Issue: 2010A BABs - - 0.00% - 2010C BABs - - 0.00% - 2011A COP - - 0.00% - 2012A COP - - 0.00% - 2012B COP 20,915,000 - 0.00% 20,915,000 2014A COP 7,400,000 - 0.00% 7,400,000 2015A COP - - 0.00% - 2016A COP 4,415,000 - 0.00% 4,415,000 2017A COP - - 0.00% - 2018A CANs - - 0.00% - Subtotal Principal Payments 32,730,000 - 0.00% 32,730,000 Interest Expense by Debt Issue: 2010A BABs 2,897,700 992,488 34.25% 1,905,212 2010C BABs 6,523,800 2,234,587 34.25% 4,289,213 2011A COP 3,348,400 837,175 25.00% 2,511,225 2012A COP 3,735,900 934,050 25.00% 2,801,850 2012B COP 2,191,400 547,800 25.00% 1,643,600 2014A COP 3,566,500 891,650 25.00% 2,674,850 2015A COP 6,375,500 1,593,850 25.00% 4,781,650 2016A COP 6,977,300 1,744,350 25.00% 5,232,950 2017A COP 3,318,500 829,650 25.00% 2,488,850 2018A CANs 5,110,000 1,277,500 25.00% 3,832,500 Subtotal Interest Expense 44,045,000 11,883,100 26.98% 15,825,950 Total Debt Service 76,775,000$ 11,883,100$ 15.48% 48,555,950$ Section 4 - Page 1 Capital Facilities Budget Review Capital Assets Schedule & Debt Service Budget Review Debt Service Budget Review FY 2019-20 First Quarter Financial Report This Page Intentionally Left Blank Section 4 - Page 2 General Liability and Property Fund Budget Review For the Three Months Ended September 30, 2019 Actual Actual 2019-20 Through Through Budget 9/30/19 9/30/18 Revenues: In-Lieu Premiums 1,720,000$ 429,999$ 25.00% 1,290,001$ 324,825$ 105,174$ Miscellaneous Other Revenue 10,000 135,416 1354.16% - - 135,416 Service Department Allocations 20,000 (774) -3.87% 20,774 (774) - Total Revenues 1,750,000 564,641 32.27%1,310,775 324,051 240,590 Expenses: Benefits/Claims 360,000 - 0.00% 360,000 - - Legal Services 40,000 - 0.00% 40,000 - - Professional Services 10,000 - 0.00% 10,000 - - Subtotal 410,000 - 0.00%410,000 - - Policy Premium Expense 1,340,000 354,732 26.47% 985,268 319,224 35,508 Total Expenses 1,750,000 354,732 20.27%1,395,268 319,224 35,508 Excess Revenue (Expense)- 209,909 (84,493)$ 4,827 205,082 Beginning Reserves 55,000,000 55,389,842 55,367,246 22,596 Ending Reserves 55,000,000$ 55,599,751$ 55,372,073$ 227,678$ 9/30/19 Budget (Decrease) Self Insurance Budget Review Percent of Budget Remaining Through 2019-20 Increase Section 5 - Page 1 FY 2019-20 First Quarter Financial Report Workers' Compensation Fund Budget Review For the Three Months Ended September 30, 2019 Actual Actual 2019-20 Through Through Budget 9/30/19 9/30/19 9/30/18 Revenues: In-Lieu Premiums 780,000$ 195,000$ 25.00% 585,000$ 146,650$ 48,350$ Service Department Allocations - 27,174 N/A (27,174) 27,174 - Total Revenues 780,000 222,174 28.48%557,826 173,824 48,350 Expenses: Benefits/Claims 430,000 159,525 37.10% 270,475 89,848 69,677 Legal Services 80,000 38,978 48.72% 41,022 5,388 33,590 Professional Services 60,000 11,417 19.03% 48,583 18,473 (7,056) Subtotal 570,000 209,920 36.83%360,080 113,709 96,211 Policy Premium Expense 210,000 54,441 25.92% 155,559 54,832 (391) Total Expenses 780,000 264,361 33.89%515,639 168,541 95,820 Excess Revenue (Expense)- (42,187) 42,187$ 5,283 (47,470) Beginning Reserves 2,000,000 2,036,708 2,085,542 (48,834) Ending Reserves 2,000,000$ 1,994,521$ 2,090,825$ (96,304)$ Budget (Decrease) Percent of Budget Remaining Through 2019-20 Increase Section 5 - Page 2 OCSD ♦ P.O. Box 8127 ♦ Fountain Valley, CA 92728-8127 ♦ (714) 962-2411 October 31, 2019 STAFF REPORT Quarterly Treasurer’s Report For the Period Ended September 30, 2019 SUMMARY Section 17.0 of the Sanitation District's Investment Policy includes quarterly reporting requirements for the Sanitation District's two investment portfolios. These two funds, the "Liquid Operating Monies," and the "Long-Term Operating Monies" are managed by Chandler Asset Management, the Sanitation District's external money manager. The ongoing monitoring of the Sanitation District's investment program by staff and Callan Associates, the Sanitation District's independent investment advisor, indicates that the Sanitation District's investments are in compliance with the Sanitation District's adopted Investment Policy and the California Government Code, and that overall performance has tracked with benchmark indices. In addition, sufficient liquidity and anticipated revenues are available for the Sanitation District to meet budgeted expenditures for the next six months. The Sanitation District's portfolios do not include any reverse repurchase agreements or derivative securities. ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Review, prepared by Chandler Asset Management, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, is attached for reference. Also attached are Long-Term and Liquid Operating Monies Summary of Performance Data and Portfolio Statistics charts that depict the performance results, estimated yield and duration, credit quality, and sector diversification of the Sanitation District's portfolios, as of September 30, 2019. The Liquid Operating Monies portfolio, with an average maturity of 113 days, consists entirely of high quality fixed income investments consistent with the Sanitation District’s investment policy. Portfolio Performance Summary The following table presents a performance summary of the Sanitation District's portfolios as compared to their benchmarks as of September 30, 2019. Quarterly Treasurer’s Report For the Period Ended September 30, 2019 Page 2 of 4 (1) Benchmarks:  Liquid Operating Portfolio: ICE BAML 3-Month Treasury Bill Index  Long-Term Operating Portfolio: ICE BAML Corp/Govt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Quarter Ending Liquid Operating Monies ($M) Long-Term Operating Monies ($M) 31 Dec 18 176.7 498.8 31 Mar 19 108.5 506.2 30 Jun 19 164.5 558.1 30 Sep 19 68.2 548.1 Portfolio Performance Summary As of September 30, 2019 Liquid Operating Monies (%)Long-Term Operating Monies (%) Total Rate of Return Benchmark(1) Total Rate of Return Benchmark(1) 3 Months 0.59 0.56 0.88 0.82 6 Months 1.28 1.20 2.59 2.69 9 Months 1.92 1.81 4.14 4.15 12 Months 2.50 2.39 5.52 5.79 Annualized Since inception 30 Nov 2014 1.12 1.02 1.84 1.79 Market Value $68.2 M $548.1 M Average Quality “AA+”/”Aa1” “AA”/”Aa1” Current Yield (%) 1.88 2.29 Estimated Yield to Maturity (%) 2.01 1.79 Quarterly Deposits (Withdrawals) ($97.0 M) ($15.0 M) Estimated Annual Income $1.5 M $12.9 M Quarterly Treasurer’s Report For the Period Ended September 30, 2019 Page 3 of 4 The Sanitation District’s Investment Account Balances as of September 30, 2019 Investment Accounts Book Balances September 30, 2019 Estimated Yield (%) State of California LAIF Banc of California Checking Account Banc of California Overnight Sweep Account Banc of California W/C Checking Union Bank Mount Langley Account Union Bank Bandilier Account Chandler/U.S. Bank – Short-term Portfolio Chandler/U.S. Bank – Long-term Portfolio Petty Cash BNY Mellon OCIP Reserve TOTAL Debt Service Reserves w/Trustees $61,265,396 2,365,784 653,979 79,793 114,567 617,377 68,233,258 548,126,927 3,000 3,649,362 $685,109,443 $1,571 2.28 0.55 0.20 0.55 0.75 0.75 2.01 1.79 N/A 0.00 1.84 2.24 The Sanitation District’s Cost of Funds on Debt Issues as of September 30, 2019 Cost of Funds Issue Description Outstanding COP Balance Annual Interest Rate (%) 2010A Fixed 2010C Fixed 2011A Fixed 2012A Fixed 2012B Fixed 2014A Fixed 2015A Fixed 2016A Fixed 2017A Fixed 2018A Fixed TOTAL Weighted Avg. Cost of Funds 80,000,000 157,000,000 75,370,000 100,645,000 46,475,000 71,330,000 127,510,000 145,880,000 66,370,000 102,200,000 $972,780,000 3.68 4.11 2.61 3.54 1.50 2.34 3.30 3.02 2.55 2.02 3.05 Quarterly Treasurer’s Report For the Period Ended September 30, 2019 Page 4 of 4 ATTACHMENTS 1. Chandler Quarterly Report 2. Summary of Performance Data and Portfolio Statistics – Liquid Operating Monies 3. Summary of Performance Data and Portfolio Statistics – Long Term Operating Monies 4. Investment Transactions and Balances in LAIF 5. Asset Summary by Asset Type – Liquid Operating Portfolio 6. Asset Summary by Asset Type – Long Term Portfolio 7. Asset Summary by Asset Type – Owner Controlled Insurance Program Escrow Account 8. Investment Listing (Yield Analysis Report) 9. Asset Detail – Consolidated 10. Custody Transaction History – Consolidated 11. Callan Quarterly Review 12. Chandler Quarterly Review 13. Rating Agency Comparisons 1 September 30, 2019 Mr. Lorenzo Tyner Assistant General Manager Director of Finance and Administrative Services Orange County Sanitation District 10844 Ellis Avenue Fountain Valley CA 92708-7018 Dear Lorenzo, Bond Market Recap Labor market and consumer fundamentals remain favorable, but manufacturing data continue to disappoint. We believe economic growth has slowed from earlier this year and downside risks to the outlook remain elevated. The US economy continues to face headwinds from trade disputes, slowing global economic growth, and an uncertain outlook for Brexit. However, we believe accommodative US monetary policy and a collective dovish stance by all of the major global central banks should help to combat the headwinds. We also believe the Trump administration faces significant political pressure to make progress toward a trade agreement with China as we head into an election year. The Federal Open Market Committee (FOMC) lowered the target fed funds rate by 25 basis points in September (for the second time this year) to a range of 1.75%-2.00%. There were three dissenting votes; one policymaker favored a 50-basis point rate cut, and two policymakers favored leaving the fed funds rate unchanged. According to the Fed's dot plot, only seven out of 17 policymakers are anticipating another rate cut before year-end. Although there is a growing disparity among policymakers about the appropriate path of monetary policy, Fed Chair Powell’s press conference suggested the Fed will be flexible and data dependent. Powell indicated more rate cuts may be appropriate if the economy slows further, but the Fed is not on a preset course. We continue to believe the FOMC is likely to cut the fed funds target rate again before year-end, in the absence of a trade resolution or meaningful improvement in market-based measures of inflation. The next FOMC meeting is scheduled for October 29-30. The Treasury yield curve steepened modestly in September, although the curve remains partially inverted. The 3-month T-bill yield declined nearly 17 basis points to 1.81%, the 2-year Treasury yield increased nearly twelve basis points to 1.62%, and the 10-year Treasury yield increased about 17 basis points to 1.67%. An inversion of the yield curve in which the 10-year Treasury yield is lower than the 3-month T-bill yield is generally viewed as a powerful predictive signal of an upcoming recession. However, we believe increased short-term Treasury issuance to fund the deficit, and negative sovereign bond yields in other countries may be distorting the US Treasury yield curve. German sovereign bond yields (from 1-month out to 30-years) remained negative at September month-end. The shape of the Treasury yield curve has changed significantly on a year-over-year basis. As of September month-end, the 3-month T-bill yield was down 39 basis points, the 2-Year Treasury yield was down nearly 120 basis points, and the 10-Year Treasury yield was down nearly 140 basis points, year-over-year. The current shape of the yield curve implies that market participants are pricing-in additional rate cuts. We believe the year-over-year decline in long-term Treasury yields reflects a high level of market participants' nervousness about the outlook for global economic growth and a decline in global inflation expectations. 2 Consumer Prices The Consumer Price Index (CPI) was up 1.7% year-over-year in August, versus up 1.8% year-over-year in July. Core CPI (CPI less food and energy) was up 2.4% year-over-year in August, versus up 2.2% year-over-year in July. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in August, unchanged from July. Core PCE, which is the Fed's primary inflation gauge, was up 1.8% year-over-year in August versus 1.7% year-over-year in July. Core PCE remains below the Fed’s 2.0% inflation target. Retail Sales Retail sales in August were moderately above consensus expectations, coming in at 0.4% compared to the 0.2% estimate. Excluding auto and gas, retail sales were up 0.1% compared to expectations for a 0.2% increase. On a year-over-year basis, retail sales increased by 4.1%, a modest increase from the prior year-over-year number of 3.6%. Labor Market U.S. nonfarm payrolls rose by 136,000 in September, slightly below expectations of 145,000. However, August payrolls were revised higher by 38,000. On a trailing 3-month and 6-month average basis, payrolls increased an average of about 157,000 and 154,000 per month, respectively. The unemployment rate declined to 3.5% (the lowest rate since December 1969) from 3.7% in August, and the participation rate held steady at 63.2%. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, dropped to 6.9% in September from 7.2% in August. Wages were flat in September, missing expectations for a 0.3% increase, and the average workweek was unchanged. On a year-over-year basis, wages were up 2.9% in September, versus up 3.2% in August. Housing Starts Housing starts were much stronger than expected in August, up 12.3% month-over-month to a 1.364 million annualized rate. Multi-family starts jumped 32.8% month-over-month to an annualized rate of 445,000, while single-family starts rose 4.4% to an annualized rate of 919,000. On a year-over-year basis, total housing starts were up 6.6% in August. Permits were also stronger than expected in the month. Although housing data tends to be volatile on a month-over-month basis, the August report and three-month moving averages suggest that housing activity is accelerating. 3 TREASURY YIELDS 9/30/2019 6/30/2019 CHANGE 3 Month 1.81 2.09 (0.28) 2 Year 1.62 1.76 (0.14) 3 Year 1.56 1.71 (0.15) 5 Year 1.54 1.77 (0.23) 7 Year 1.61 1.88 (0.27) 10 Year 1.67 2.01 (0.34) 30 Year 2.11 2.51 (0.40) 4 Performance Attribution Long-Term Portfolio The portfolio outperformed the benchmark during the quarter, generating a return of 0.88% compared to the 0.82% return of the ICE Bank of America Merrill Lynch 1-5 Year US Corporate and Government AAA-A Index. The overall asset allocation of the portfolio led to the modest outperformance during the reporting period. In particular, the overweight exposure to the Agency, Asset Backed and Corporate sectors of the allocation all were additive to the quarterly results. From a term structure perspective, the positive deviations in exposure relative to the benchmark in the shorter and longer maturity segments of the portfolio were also positive differentiators to the total return of the portfolio. A diverse set of securities in the Treasury, Agency, Asset Backed, Commercial Paper and Corporate sectors were purchased during the quarter to keep the portfolio positioned in-line with Chandler objectives. The purchased securities ranged in maturity from November 2019 to July 2024. One security was sold, one was called, and several matured to facilitate the new holdings in the portfolio. Additionally, $15 million was withdrawn from the portfolio late in the quarter to account for the liquidity needs of the District. The sector allocation was relatively stable during the quarter. Notably the Money Market allocation decreased by 2.4% to 0.7% of the portfolio partially offset by the 2.0% increase in the Agency allocation to 25.6% of the portfolio. The duration of the portfolio moderately increased, currently 2.46 compared to 2.43 at the end of the prior reporting period. The Chandler team anticipates keeping the overall duration of the portfolio close to the benchmark in the coming quarter. Liquid Portfolio The Liquidity portfolio modestly outperformed the benchmark, generating a return of 0.59% compared to the 0.56% return of the ICE Bank of America Merrill Lynch US Treasury 3 Month Treasury Bill Index. Multiple securities were purchased across the Treasury, Agency, Commercial Paper and Corporate sectors of the market to keep the portfolio fully invested in the liquidity strategy. The purchased securities ranged in maturity from October 2019 to May 2020. One security was called and many matured to facilitate the two liquidity needs totaling $97 million. The sector allocation evolved with the drop-in market value due to the liquidity needs during the reporting period. The two largest adjustments were the 4.6% decline in the US Treasury allocation, to 69.2% of the portfolio, more than offset by the 8.4% increase in the US Corporate allocation, to 17.0% of the portfolio. The duration of the portfolio moderately increased to 0.30 compared to 0.24 at the end of the prior reporting period. The Chandler team continues to utilize the Treasury and Agency sectors to immunize the large forecasted liquidity needs and overlay spread product (i.e. Commercial Paper and Corporates) to enhance the total return strategy of the portfolio. 5 Economic Outlook US Treasury yields dropped precipitously during the quarter as the US/China trade impasse continued to negatively influence global manufacturing trends. In particular, the manufacturing weakness in Europe is becoming acute, with German purchasing managers indices rolling over into recessionary territory. The manufacturing weakness helped to accelerate the negative yield conundrum in Europe, with the ten-year German Bund bottoming out at negative 72 basis points during September and closing the quarter at negative 57 basis points. The lack of any meaningful fiscal response in Europe is exacerbating the downturn; considering the empirical evidence thus far on utilizing negative interest rates as a policy tool fiscal stimulus is long overdue in Germany in Chandler’s judgement. The Chandler team has long held the view the inability of interest rates to normalize in developed overseas markets, arguably most importantly Germany, would serve as a ceiling for how high US interest rates could adjust. The team’s beginning of year analysis did not accurately account for the degree to which developed market benchmark rates overseas could move into negative territory which served as a catalyst for the US ten-year Treasury notes to close the quarter at 1.67%, compared to 2.01% at the end of June and 2.69% at year-end. In a pre-emptive move to sustain the economic expansion the Federal Reserve was active during the quarter, cutting the Fed Funds rate two times to a current range of 1.75% to 2.00%, compared to 2.25% to 2.50% at the end of June. Policymakers are describing the monetary stimulus adjustment as “mid-cycle” and in Chandler’s view have little interest in pushing the policy rate close to the zero lower bound considering the current readings on the health of the US economy. One of the primary factors influencing the dovish shift by the Federal Reserve is the market’s pricing of long-term inflation becoming unanchored. The ten-year TIPS break even rate continued to drift lower during the quarter, with a spread of 1.52% as of quarter-end, well below the 2.25% to 2.60% considered “normal” and consistent with the Federal Reserve’s 2.0% inflation objective. TIPS breakeven rates moving higher will mitigate the pressure on the Federal Reserve to remain hyper accommodative with monetary policy settings. The service sector focus of the US economy continues to insulate the domestic economy from the global manufacturing weakness. The underlying tenets of the US economy remain sound, with current unemployment rate at 3.5%, the underemployment rate at 6.9%, weekly jobless claims hovering at multi-year lows with a recent reading of 210k, and the domestic saving rates elevated as the US personal savings rate as a percentage of disposable income is currently at 8.1%. Additionally, the reduction in interest rates is providing a positive catalyst for the more cyclical sectors of the economy, with the housing market improving as both new and existing home sales have seen an uptick in volume with the contraction in mortgage rates. Given the lack of visibility globally, business investment remains soft, but the lower cost of capital linked to the reduction in interest rates should ultimately lead to an uptick in capital spending. The Chandler team continues to look for modest incremental progress on the US/China trade negotiations to help sustain economic growth. The key issue for a more comprehensive deal remains intellectual property reform in China. In our view President Trump’s administration will become more motivated to make progress on US/China trade as the Democratic field for the Presidential nomination narrows; the probability of President Trump hitting the campaign trail with little progress on US/China trade is low. The fixed income markets are forecasted to remain volatile but given our internal view the domestic economy is not on the precipice of a recession, the relative performance of the portfolio compared to the benchmark should improve as the economic expansion is sustained. 6 Strategy Strategy highlights for the Long-Term Portfolio in coming months: • Continue to focus on optimizing the underlying mix of securities held in the Corporate sector allocation. o Focus on adding attractively valued foreign bank names that meet the requirements of the investment policy and California Government Code. o Continue to seek out exposure to entities with steeper credit curves to maintain the overall corporate duration of the portfolio at a greater level than the benchmark. • Increase the diversification of the Asset Backed holdings via greater utilization of the new issue calendar. • Within the Agency allocation, bias the portfolio more towards the Federal Home Loan Bank where valuations are more attractive compared to Fannie Mae and Freddie Mac. • The portfolio will continue to be biased towards a barbell structure, relative to the benchmark, given the Chandler team’s outlook for interest rates over the coming six months. Strategy highlights for the Liquidity Portfolio in coming months: • Continue to ladder the Treasury and Agency exposure to coincide with forecasted liquidity needs. • Opportunistically add Corporate, Negotiable CD and Commercial Paper exposure to the portfolio where the additional spread compensation versus like maturity Treasury notes is attractive. • Maintain a dedicated exposure to the Treasury sector on an ongoing basis to ensure ample liquidity in the portfolio for unexpected cash flow needs. 7 Compliance Issues Category Standard Comment Treasury Issues 5 years maxmaturity; Minimum allocation of 10%Complies* U.S. Agencies 20% max issuer; 5 years max maturity Complies Supranational "AA" rated or better by a NRSRO; 30% maximum; 5 years max maturity; USD denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, or IADB Complies Corporate (MTNs)"A" rated or better long term debt by a NRSRO; 30% maximum; 5% max issuer; 5 years max maturity; Issued by corporations organized and operating within the U.S. or issued by depository institutions licensed by the U.S.Complies Municipal Securities "A" rated or higher by a NRSRO; 10% maximum; 5% max issuer; 5 years max maturity Complies Asset Backed/ CMOs/ Mortgage-backed "AA" rated or better by a NRSRO; "A" or higher issuer rating by a NRSRO; 20% maximum; 5% max issuer (excluding govt agency/mbs); 5 years max maturity Complies* Negotiable CDs "A" rated or better long term debt by a NRSRO; or "A-1"/ highest short term rating by a NRSRO; 30% maximum; 5% max issuer; 5 years max maturity Complies Certificates of Deposit 5% max issuer; 5 years max maturity; Secured/ collateralized Complies Banker’s Acceptances A-1 rated or equivalent short term rating by a NRSRO; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1 rated or equivalent short term rating by a NRSRO; "A" or better long term debt issuer by a NRSRO; Issued by a domestic corporation organized and operating in the US with AUM > $500million; 25% maximum; 5% max issuer; 270 days max maturity Complies Mutual Fund & Money Market Mutual Fund Highest rating or "AAA" rated by two NRSROs; SEC registered adviser with AUM >$500 million and experience greater than 5 years; 10% per one Mutual Fund; 20% max per issuer on Money Market Mutual Funds; 20% max of the District's surplus money Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies OCIP Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to 120% of the benchmark)Complies Max Per Issuer 5% of portfolio (except Supranationals, U.S. Government, Agencies, Mutual Fund)Complies Maximum Maturity 5 years maximum maturity Complies* Orange County Sanitation District Long Term Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy *The portfolio has twenty (20) securities with maturities greater than 5 years including four (4) CMOs and sixteen (16) MBS. All securities were inherited from the previous manager and complied at time of purchase. 8 Category Standard Comment Treasury Issues 1 year max maturity; Minimum allocation of 10%Complies U.S. Agencies 20% max issuer; 1 year max maturity Complies Supranational "AA" rated or better by a NRSRO; 30% maximum; 1 year max maturity; USD denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, or IADB Complies Corporate (MTNs)"A" rated or better long term debt by a NRSRO; 30% maximum; 5% max issuer; 1 year max maturity; Issued by corporations organized and operating within the U.S. or issued by depository institutions licensed by the U.S.Complies Asset Backed/ CMOs "AA" rated or better by a NRSRO; "A" or higher issuer rating by a NRSRO; 20% maximum; 5% max issuer; 1 year max maturity Complies Negotiable CDs "A" rated or better long term debt by a NRSRO; or "A-1"/ highest short term rating by a NRSRO; 30% maximum; 5% max issuer; 1 year max maturity Complies Certificates of Deposit 5% max issuer; 1 year max maturity; Secured/collateralized Complies Banker’s Acceptances A-1 rated or equivalent short term rating by a NRSRO; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1 rated or equivalent short term rating by a NRSRO; "A" or better long term debt issuer by a NRSRO; Issued by a domestic corporation organized and operating in the US with AUM > $500million; 25% maximum; 5% max issuer; 270 days max maturity Complies Mutual Fund & Money Market Mutual Fund Highest rating or "AAA" rated by two NRSROs; SEC registered adviser with AUM >$500 million and experience greater than 5 years; 10% per one Mutual Fund; 20% max per issuer on Money Market Mutual Funds; 20% max of the District's surplus money Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies OCIP Not used by investment adviser Complies Prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Not to exceed 180 days; Max duration of 1/2 year Complies Max Per Issuer 5% of portfolio (except Supranationals, U.S. Government, Agencies, Mutual Fund)Complies Maximum Maturity 1 year maximum maturity Complies Orange County Sanitation District Liquid Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy 9 Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max; 5 years maturity; Includes only: IADB, IBRD, and IFC per CGC Complies U.S. Agencies 20% max issuer; 5 years maximum maturity Complies U.S. Corporate (MTNs)"A" or better long term rating by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity Complies* Municipal Securities "A" or higher by 1 of 3 NRSROS; 10% maximum; 5% max issuer; 5 years maximum maturity Complies Asset Backed/ CMOs/ Mortgage-backed "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; 20% maximum; 5% max issuer (excluding MBS/govt agency); 5 years max maturity Complies Negotiable CDs "A" or better on its long term debt by 1 of 3 NRSROs ; "A1/P1" or highest short term ratings by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity Complies CDs/ TDS 5% max issuer; 5 years max maturity Complies Banker’s Acceptances A-1, or equivalent highest short term rating by 1 of 3 NRSROS; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1, or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term debt issued; 25% maximum; 5% max issuer; 270 days max maturity Complies Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to 120% of the benchmark)Complies Maximum Maturity 5 years maximum maturity Complies OCSD Lehman Exposure Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy * Account holds $2 million face value (cusip 525ESC0Y6) and $600,000 face value (cusip 525ESC1B7) of defaulted Lehman Bros Holdings that were purchased by the previous manager. Complied at time of purchase. 10 Defaulted Bonds OCSD Lehman Exposure -Account #10284 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost ValueBook Value Mkt Price Mkt YTM Market Value Accrued Int.% of Port.Gain/Loss Moody/S&P Fitch Maturity Duration Common Stock SLHOPNTA4 Lehman Brothers, Inc Open Position Long Exposure0.000% Due 09/30/2019 60,641.49 11/21/20140.00%57,842.6457,842.64 0.42 0.00%25,621.03 0.00 41.36% (32,221.61)NR / NRNR 0.000.00 TOTAL Common Stock 60,641.49 0.00%57,842.6457,842.64 0.00%25,621.030.00 41.36%(32,221.61)NR / NRNR 0.000.00 US Corporate 525ESCIB7 Lehman Brothers Note-Defaulted0.000% Due 01/24/2020 600,000.00 09/19/20080.00%320,227.27320,227.27 1.42 0.00%8,520.00 0.00 13.76% (311,707.27)NR / NRNR 0.320.00 525ESC0Y6 Lehman Brothers Note-Defaulted0.000% Due 10/22/2049 2,000,000.00 09/18/20080.00%1,031,998.651,031,998.65 1.39 0.00%27,800.00 0.00 44.88% (1,004,198.65)NR / NRNR 30.080.00 TOTAL US Corporate 2,600,000.00 0.00%1,352,225.92 1,352,225.92 0.00% 36,320.00 0.00 58.64% (1,315,905.92) NR / NR NR 23.10 0.00 TOTAL PORTFOLIO 2,660,641.49 0.00%1,410,068.561,410,068.56 0.00%61,941.030.00 100.00%(1,348,127.53)NR / NRNR 13.550.00 TOTAL MARKET VALUE PLUS ACCRUALS 61,941.03 11 Ratings AAA AA A <A NR 09/30/19 8.9%66.5%16.9%0.5%7.2% 06/30/19 9.7%65.2%16.5%0.5%8.1% Source: S&P Ratings September 30, 2019 vs. June 30, 2019 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% AAA AA A <A NR 9/30/2019 6/30/2019 Orange County Sanitation District Long Term AAA AA A <A NR 09/30/19 24.0%59.0%17.0%0.0%0.0% 06/30/19 13.0%78.4%8.6%0.0%0.0% Source: S&P Ratings September 30, 2019 vs. June 30, 2019 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% AAA AA A <A NR 9/30/2019 6/30/2019 Orange County Sanitation District Liquid 12 HISTORICAL YIELD CURVE $- $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 OCSD Investment Program Quarter End Portfolio Value Liquid Operating Monies Long-Term Operating Monies 0.00% 1.00% 2.00% 3.00% 4.00% SEP 2019 AUG 2019 SEP 2018 ACCOUNT SUMMARY Beg. Values as of 8/31/19 End Values as of 9/30/19 Market Value 92,692,564 67,964,485 Accrued Interest 360,101 254,745 Total Market Value 93,052,665 68,219,230 Income Earned 186,163 184,656 Cont/WD -25,000,000 Par 92,775,197 68,050,213 Book Value 92,619,041 67,909,224 Cost Value 92,385,249 67,777,379 TOP ISSUERS Government of United States 69.2% HSBC Holdings PLC 3.7% Bank of Nova Scotia Houston 3.4% General Dynamics Corp 3.0% Bank of America Corp 3.0% Qualcomm Inc 3.0% Toyota Motor Corp 2.9% MUFG Bank Ltd/NY 2.7% Total 90.8% PORTFOLIO CHARACTERISTICS Average Modified Duration 0.30 Average Coupon 1.88% Average Purchase YTM 2.26% Average Market YTM 2.01% Average S&P/Moody Rating AA+/Aa1 Average Final Maturity 0.31 yrs Average Life 0.25 yrs CREDIT QUALITY (S&P)MATURITY DISTRIBUTIONSECTOR ALLOCATION Portfolio Summary As of September 30, 2019 Orange County Sanitation District Liquid Account #10282 PERFORMANCE REVIEW Annualized TOTAL RATE OF RETURN 1M 3M YTD 1YR 2YRS 3YRS 5YRS 10YRS 11/30/2014 Orange County Sanitation District Liquid 0.18% 0.59% 1.92% 2.50% 2.06% 1.61% N/A N/A 1.12% ICE BAML 3-Month US Treasury Bill Index 0.17% 0.56% 1.81% 2.39% 1.99% 1.54% N/A N/A 1.02% Execution Time: 10/1/2019 10:19:10 PMChandler Asset Management - CONFIDENTIAL Page 1 ACCOUNT SUMMARY Beg. Values as of 8/31/19 End Values as of 9/30/19 Market Value 561,436,498 545,604,957 Accrued Interest 2,598,094 2,507,363 Total Market Value 564,034,592 548,112,320 Income Earned 1,084,220 1,079,547 Cont/WD -14,981,899 Par 550,933,428 536,717,789 Book Value 550,299,112 536,487,490 Cost Value 549,567,055 535,563,737 TOP ISSUERS Government of United States 30.4% Federal Home Loan Bank 10.2% Federal National Mortgage Assoc 9.1% Federal Home Loan Mortgage Corp 5.9% Inter-American Dev Bank 3.2% Honda ABS 3.0% John Deere ABS 2.5% MUFG Bank Ltd/NY 2.0% Total 66.3% PORTFOLIO CHARACTERISTICS Average Modified Duration 2.46 Average Coupon 2.29% Average Purchase YTM 2.36% Average Market YTM 1.79% Average S&P/Moody Rating AA/Aa1 Average Final Maturity 2.82 yrs Average Life 2.58 yrs CREDIT QUALITY (S&P)MATURITY DISTRIBUTIONSECTOR ALLOCATION Portfolio Summary As of September 30, 2019 Orange County Sanitation District Long Term Account #10268 PERFORMANCE REVIEW Annualized TOTAL RATE OF RETURN 1M 3M YTD 1YR 2YRS 3YRS 5YRS 10YRS 11/30/2014 Orange County Sanitation District Long Term -0.17% 0.88% 4.14% 5.52% 2.69% 1.97% N/A N/A 1.84% ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index -0.20% 0.82% 4.15% 5.79% 2.65% 1.85% N/A N/A 1.79% ICE BAML US 1-5 Yr US Corp/Govt Rated AAA-BBB Indx -0.16% 0.90% 4.52% 6.02% 2.80% 2.04% N/A N/A 1.95% Execution Time: 10/1/2019 10:11:28 PMChandler Asset Management - CONFIDENTIAL Page 1 Par Value Book Value Market Value Rate Yield Balance September 1, 2019 $45,865,396 $45,865,396 $45,865,396 2.28 2.28 Deposits: 9/30/2019 39,900,000 39,900,000 39,900,000 2.28 2.28 Total Deposits 39,900,000 39,900,000 39,900,000 2.28 2.28 Quarterly Interest Distribution - - - 2.28 2.28 Withdrawals: 9/3/2019 (8,100,000) (8,100,000) (8,100,000) 2.28 2.28 9/9/2019 (2,300,000) (2,300,000) (2,300,000) 2.28 2.28 9/10/2019 (1,700,000) (1,700,000) (1,700,000) 2.28 2.28 9/13/2019 (500,000) (500,000) (500,000) 2.28 2.28 9/18/2019 (4,700,000) (4,700,000) (4,700,000) 2.28 2.28 9/24/2019 (3,600,000) (3,600,000) (3,600,000) 2.28 2.28 9/25/2019 (3,600,000) (3,600,000) (3,600,000) 2.28 2.28 Total Withdrawals (24,500,000) (24,500,000) (24,500,000) 2.28 2.28 Balance September 30, 2019 $61,265,396 $61,265,396 $61,265,396 2.28 2.28 Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund September 30, 2019 U.S. Bank Asset Summary - Liquid As of 09/30/2019 Industry Name Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss Cash Equivalents COMMERCIAL PAPER 3,860,000.0000 3,811,916.91 3,842,880.80 5.65 30,963.89 FIRST AMERICAN SHORT TERM FDS 1,740,212.5600 1,740,212.56 1,740,212.56 2.56 - U. S. GOVERNMENT 11,150,000.0000 11,095,680.14 11,106,741.50 16.34 11,061.36 Cash Equivalents Total 16,750,212.5600 16,647,809.61 16,689,834.86 24.55 42,025.25 Fixed Income FINANCE 7,500,000.0000 7,484,210.00 7,505,520.00 11.04 21,310.00 INDUSTRIAL 2,000,000.0000 2,011,340.00 2,010,420.00 2.96 (920.00) INFORMATION TECHNOLOGY 2,000,000.0000 2,002,700.00 2,000,840.00 2.94 (1,860.00) SHORT TERM FUNDS 3,800,000.0000 3,803,917.20 3,803,274.00 5.60 (643.20) U. S. GOVERNMENT 36,000,000.0000 35,827,402.35 35,963,370.00 52.91 135,967.65 Fixed Income Total 51,300,000.0000 51,129,569.55 51,283,424.00 75.45 153,854.45 Grand Total 68,050,212.5600 67,777,379.16 67,973,258.86 100.00 195,879.70 1 of 1 U.S. Bank Asset Summary - Long-Term As of 09/30/2019 Industry Name Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss Cash Equivalents COMMERCIAL PAPER 11,255,000.0000 11,194,685.71 11,224,386.40 2.06 29,700.69 FIRST AMERICAN SHORT TERM FDS 3,794,924.7000 3,794,924.70 3,794,924.70 0.70 - Cash Equivalents Total 15,049,924.7000 14,989,610.41 15,019,311.10 2.75 29,700.69 Fixed Income CONSUMER DISCRETIONARY 4,064,000.0000 4,055,701.78 4,236,379.07 0.78 180,677.29 CONSUMER STAPLES 3,880,000.0000 3,878,991.40 4,084,282.00 0.75 205,290.60 ENERGY 9,000,000.0000 8,942,542.40 9,174,330.00 1.68 231,787.60 FINANCE 66,494,000.0000 65,657,463.39 65,614,038.26 12.03 (43,425.13) FOREIGN CORPORATE 19,000,000.0000 19,106,195.00 19,449,335.00 3.56 343,140.00 HEALTH CARE 2,000,000.0000 1,948,640.00 2,059,160.00 0.38 110,520.00 INDUSTRIAL 4,410,000.0000 4,388,275.50 4,547,081.60 0.83 158,806.10 INFORMATION TECHNOLOGY 28,715,000.0000 28,626,584.95 29,190,193.75 5.35 563,608.80 INVESTMENT GRADE-MUNI REVENUE 4,240,000.0000 4,307,633.89 4,302,946.00 0.79 (4,687.89) MTG RELATED SECURITY 49,241,351.0500 49,185,445.13 49,626,842.36 9.10 441,397.23 SUPRANATIONAL 33,005,000.0000 32,742,600.25 33,126,886.15 6.07 384,285.90 U. S. GOVERNMENT 153,006,521.3900 151,173,978.03 154,654,079.46 28.35 3,480,101.43 U.S. GOVERNMENT TIPS 11,236,992.0000 11,092,272.09 11,222,945.76 2.06 130,673.67 US AGY - LONG TERM ISSUES 135,975,000.0000 136,788,232.45 139,283,961.25 25.53 2,495,728.80 Fixed Income Total 524,267,864.4400 521,894,556.26 530,572,460.66 97.25 8,677,904.40 Grand Total 539,317,789.1400 536,884,166.67 545,591,771.76 100.00 8,707,605.09 1 of 1 The Bank of New York Mellon may utilize subsidiaries and affiliates to provide services and certain products to the Account. Subsidiaries and affiliates may be compensated for their services and products. The value of securities set forth on this Account Statement are determined by The Bank of New York Mellon for Corporate Trust on the basis of market prices and information obtained by The Bank of New York Mellon from unaffiliated third parties (including independent pricing vendors) ("third party pricing services"). The Bank of New York Mellon has not verified such market values or information and makes no assurances as to the accuracy or correctness of such market values or information or that the market values set forth on this Account Statement reflect the value of the securities that can be realized upon the sale of such securities. In addition, the market values for securities set forth in this Account Statement may differ from the market prices and information for the same securities used by other business units of The Bank of New York Mellon or its subsidiaries or affiliates based upon market prices and information received from other third party pricing services utilized by such other business units. Corporate Trust does not compare its market values with those used by, or reconcile different market values used by, other business units of The Bank of New York Mellon or its subsidiaries or its affiliates. The Bank of New York Mellon shall not be liable for any loss, damage or expense incurred as a result of or arising from or related to the market values or information provided by third party pricing services or the differences in market prices or information provided by other third party pricing services. No Transactions This Period Accrued Estimated Market Shares/Par Value Asset Description Market Price Market Value Cost Average Cost Income Income Yield Realized Transaction Date Transaction Description Income Principal Cost Gains/Losses Statement Period 09/01/2019 Through 09/30/2019 Statement of Assets Held by Asset Classification Statement of Transactions by Transaction Date Account 300282 Base Currency = USD OCSD LIBERTY MUTUAL 3,681,000.000 UNITED STATES TREASURY BILL 99.07000 3,646,766.70 3,599,335.48 97.78146 0.00 0.00 0.00% CUSIP: 912796SH3 MATURITY DATE: 03/26/2020 RATE: 0.000% CASH BALANCE 2,595.51 2,595.51 0.00000 0.00 0.00 0.00% Total Market Value Plus Total Accrued Income 3,649,362.21 Cumulative realized capital gain and loss position from 12/31/2018 for securities held in principal of account: Short Term: 46,968.75 * Long Term: 0.00 * * The above gain and loss position does not include transactions where tax cost information is incomplete or unavailable. CASH AND SHORT TERM Total CASH AND SHORT TERM 3,649,362.21 3,601,930.99 0.00 0.00 0.00% ACCOUNT TOTALS 3,649,362.21 3,601,930.99 0.00 0.00 0.00% e 0 9 4 8 1 1 n 0 7 7 2 4 0 a 0 1 t D O M i W I s 2 6 4 , 6 3 3 U.S. Bank Investment Listing - Yield As of 09/30/2019 Asset Category CUSIP Asset Short Name Yield Shares/Units Moody's S&P Rating Price Cost Basis Market Value Cash Equivalents 31846V567 FIRST AM GOVT OB FD CL Z 1.7005% 1,740,212.5600 1.00 1,740,212.56 1,740,212.56 Cash Equivalents 31846V567 FIRST AM GOVT OB FD CL Z 1.7005% 3,794,924.7000 1.00 3,794,924.70 3,794,924.70 Cash Equivalents 62479MYK3 MUFG BANK LTD NY BRAN C P 11/19/19 0.0000% 1,860,000.0000 99.73 1,850,032.47 1,854,940.80 Cash Equivalents 62479MYK3 MUFG BANK LTD NY BRAN C P 11/19/19 0.0000% 11,255,000.0000 99.73 11,194,685.71 11,224,386.40 Cash Equivalents 89233GAH9 TOYOTA MOTOR CREDIT CO C P 1/17/20 0.0000% 2,000,000.0000 99.40 1,961,884.44 1,987,940.00 Cash Equivalents 912796RY7 U S TREASURY BILL 1/30/20 1.7844% 7,000,000.0000 N/A N/A 99.40 6,950,415.19 6,958,140.00 Cash Equivalents 912796SL4 U S TREASURY BILL 10/03/19 1.6251% 1,650,000.0000 N/A N/A 99.99 1,646,687.63 1,649,851.50 Cash Equivalents 912796VY2 U S TREASURY BILL 10/08/19 1.7181% 1,250,000.0000 N/A N/A 99.97 1,249,517.42 1,249,575.00 Cash Equivalents 912796VZ9 U S TREASURY BILL 10/15/19 1.7074% 1,250,000.0000 N/A N/A 99.93 1,249,059.90 1,249,175.00 Fixed Income 00440EAP2 ACE INA HOLDINGS 2.700% 3/13/23 2.6422% 2,000,000.0000 A3 A 102.19 1,937,000.00 2,043,720.00 Fixed Income 00440EAU1 ACE INA HOLDINGS 2.875% 11/03/22 2.8048% 4,169,000.0000 A3 A 102.50 4,232,453.17 4,273,391.76 Fixed Income 02587AAJ3 AMERICAN EXPRESS 1.930% 9/15/22 1.9315% 6,270,000.0000 AAA N/A 99.92 6,174,085.15 6,265,046.70 Fixed Income 02665WCZ2 AMERICAN HONDA MTN 2.400% 6/27/24 2.3744% 1,219,000.0000 A2 A 101.08 1,213,843.63 1,232,140.82 Fixed Income 02665WCJ8 AMERICAN HONDA MTN 3.450% 7/14/23 3.2893% 845,000.0000 A2 A 104.89 843,538.15 886,278.25 Fixed Income 02665WCQ AMERICAN HONDA MTN 3.625% 10/10/23 3.4231% 2,000,000.0000 A2 A 105.90 1,998,320.00 2,117,960.00 Fixed Income 03215PFN4 AMRESCO 2.95841% 6/25/29 3.0451% 123,127.8500 N/A A+ 97.15 92,461.32 119,621.17 Fixed Income 037833BS8 APPLE INC 2.250% 2/23/21 2.2398% 4,000,000.0000 AA1 AA+ 100.46 4,050,840.00 4,018,200.00 Fixed Income 037833CU2 APPLE INC 2.850% 5/11/24 2.7470% 3,000,000.0000 AA1 AA+ 103.75 3,017,760.00 3,112,470.00 Fixed Income 06051GHF9 BANK OF AMERICA 3.550% 3/05/24 3.4159% 6,675,000.0000 A2 A- 103.93 6,770,625.75 6,937,060.50 Fixed Income 06051GFN4 BANK OF AMERICA MTN 2.250% 4/21/20 2.2476% 2,000,000.0000 A2 A- 100.11 2,001,960.00 2,002,140.00 Fixed Income 06417G5Q7 BANK OF NOVA C D 2.610% 12/23/19 2.6071% 2,300,000.0000 100.11 2,300,614.40 2,302,599.00 Fixed Income 06406HCZ0 BANK OF NY MELLO MTN 2.150% 2/24/20 2.1494% 1,500,000.0000 A1 A 100.03 1,493,925.00 1,500,390.00 Fixed Income 06406RAA5 BANK OF NY MTN 2.600% 2/07/22 2.5638% 2,500,000.0000 A1 A 101.41 2,504,475.00 2,535,250.00 Fixed Income 06406RAE7 BANK OF NY MTN 2.950% 1/29/23 2.8726% 2,500,000.0000 A1 A 102.70 2,489,555.00 2,567,400.00 Fixed Income 084670BR8 BERKSHIRE HATHAWAY 2.750% 3/15/23 2.6826% 2,500,000.0000 AA2 AA 102.51 2,440,950.00 2,562,825.00 Fixed Income 084664BT7 BERKSHIRE HATHAWAY 3.000% 5/15/22 2.9154% 4,000,000.0000 AA2 AA 102.90 4,131,120.00 4,116,040.00 Fixed Income 09247XAL5 BLACKROCK INC 3.500% 3/18/24 3.2777% 1,000,000.0000 AA3 AA- 106.78 1,036,330.00 1,067,820.00 Fixed Income 808513AT2 CHARLES SCHWAB CORP 2.650% 1/25/23 2.6031% 6,750,000.0000 A2 A 101.80 6,729,480.00 6,871,635.00 Fixed Income 166764BG4 CHEVRON CORP 2.100% 5/16/21 2.0919% 2,500,000.0000 AA2 AA 100.39 2,485,350.00 2,509,650.00 Fixed Income 166764AH3 CHEVRON CORP 3.191% 6/24/23 3.0607% 3,500,000.0000 AA2 AA 104.26 3,441,095.00 3,648,960.00 Fixed Income 30231GAV4 EXXON MOBIL 2.222% 3/01/21 2.2104% 3,000,000.0000 AAA AA+ 100.52 3,016,097.40 3,015,720.00 Fixed Income 3133EKWV4 F F C B DEB 1.850% 7/26/24 1.8304% 5,000,000.0000 AAA AA+ 101.07 5,048,280.00 5,053,600.00 Fixed Income 3130A1XJ2 F H L B 2.875% 6/14/24 2.7230% 11,110,000.0000 AAA AA+ 105.58 11,589,031.30 11,730,160.20 Fixed Income 3130A7CV5 F H L B DEB 1.375% 2/18/21 1.3822% 5,365,000.0000 AAA AA+ 99.48 5,343,325.40 5,336,941.05 Fixed Income 313383HU8 F H L B DEB 1.750% 6/12/20 1.7512% 5,000,000.0000 AAA AA+ 99.93 5,008,950.00 4,996,450.00 Fixed Income 313379RB7 F H L B DEB 1.875% 6/11/21 1.8708% 4,000,000.0000 AAA AA+ 100.22 4,030,160.00 4,008,880.00 Fixed Income 3130A2UW4 F H L B DEB 2.875% 9/13/24 2.7194% 2,500,000.0000 AAA AA+ 105.72 2,635,950.00 2,643,025.00 1 of 5 U.S. Bank Investment Listing - Yield As of 09/30/2019 Asset Category CUSIP Asset Short Name Yield Shares/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 313383QR5 F H L B DEB 3.250% 6/09/23 3.0775% 5,000,000.0000 AAA AA+ 105.61 5,083,350.00 5,280,250.00 Fixed Income 313383YJ4 F H L B DEB 3.375% 9/08/23 3.1664% 10,000,000.0000 AAA AA+ 106.59 10,211,831.00 10,658,700.00 Fixed Income 3130A0F70 F H L B DEB 3.375% 12/08/23 3.1544% 10,000,000.0000 AAA AA+ 106.99 10,269,043.75 10,699,200.00 Fixed Income 3137EAEN5 F H L M C 2.750% 6/19/23 2.6431% 10,000,000.0000 AAA AA+ 104.04 9,956,500.00 10,404,300.00 Fixed Income 3137EADM8 F H L M C M T N 1.250% 10/02/19 1.2500% 7,500,000.0000 WR N/R 100.00 7,399,650.00 7,499,775.00 Fixed Income 3137EAEK1 F H L M C M T N 1.875% 11/17/20 1.8731% 5,000,000.0000 AAA AA+ 100.10 4,986,225.00 5,005,150.00 Fixed Income 3137EAEL9 F H L M C M T N 2.375% 2/16/21 2.3559% 7,500,000.0000 AAA AA+ 100.81 7,484,475.00 7,560,675.00 Fixed Income 31348SWZ3 F H L M C #786064 4.678% 1/01/28 4.5658% 1,845.5200 N/A N/A 102.46 1,800.58 1,890.88 Fixed Income 3133TCE95 F H L M C MLTCL MTG 4.016% 8/15/32 4.0007% 7,928.5000 N/A N/A 100.38 7,936.80 7,958.79 Fixed Income 31398VJ98 F H L M C MLTCL MTG 4.251% 1/25/20 4.2441% 659,054.7400 N/A N/A 100.16 696,435.51 660,129.00 Fixed Income 31394JY35 F H L M C MLTCL MTG 6.500% 9/25/43 5.7059% 686,785.6800 N/A N/A 113.92 777,784.78 782,372.51 Fixed Income 3135G0F73 F N M A 1.500% 11/30/20 1.5053% 7,500,000.0000 AAA AA+ 99.65 7,370,726.00 7,473,450.00 Fixed Income 3135G0T45 F N M A 1.875% 4/05/22 1.8623% 5,000,000.0000 AAA AA+ 100.68 4,972,500.00 5,034,050.00 Fixed Income 3135G0S38 F N M A 2.000% 1/05/22 1.9858% 3,000,000.0000 AAA AA+ 100.72 2,994,570.00 3,021,480.00 Fixed Income 3135G0V34 F N M A 2.500% 2/05/24 2.4092% 5,000,000.0000 AAA AA+ 103.77 4,980,850.00 5,188,500.00 Fixed Income 3135G0U35 F N M A 2.750% 6/22/21 2.7021% 7,500,000.0000 AAA AA+ 101.77 7,515,225.00 7,632,975.00 Fixed Income 31371NUC7 F N M A #257179 4.500% 4/01/28 4.2658% 14,717.5300 N/A N/A 105.49 15,565.23 15,525.38 Fixed Income 31376KT22 F N M A #357969 5.000% 9/01/35 4.5262% 98,885.2800 N/A N/A 110.47 106,301.67 109,237.58 Fixed Income 31381PDA3 F N M A #466397 3.400% 11/01/20 3.3735% 337,358.0300 N/A N/A 100.79 330,057.41 340,009.66 Fixed Income 31403DJZ3 F N M A #745580 5.000% 6/01/36 4.5274% 92,510.2700 N/A N/A 110.44 99,448.54 102,166.49 Fixed Income 31403GXF4 F N M A #748678 5.000% 10/01/33 4.5758% 1,781.1400 N/A N/A 109.27 1,914.73 1,946.25 Fixed Income 31406PQY8 F N M A #815971 5.000% 3/01/35 4.5317% 157,142.7900 N/A N/A 110.34 168,928.51 173,383.50 Fixed Income 31406XWT5 F N M A #823358 4.722% 2/01/35 4.5121% 109,269.4000 N/A N/A 104.65 108,415.73 114,353.71 Fixed Income 31407BXH7 F N M A #826080 5.000% 7/01/35 4.5270% 18,677.2900 N/A N/A 110.45 20,078.08 20,628.69 Fixed Income 31410F4V4 F N M A #888336 5.000% 7/01/36 4.5284% 180,164.2100 N/A N/A 110.42 193,676.52 198,928.31 Fixed Income 3138EG6F6 F N M A #AL0869 4.500% 6/01/29 4.2238% 10,044.9200 N/A N/A 106.54 10,623.50 10,701.76 Fixed Income 31417YAY3 F N M A #MA0022 4.500% 4/01/29 4.2238% 16,436.7800 N/A N/A 106.54 17,383.51 17,511.75 Fixed Income 3135G0J20 F N M A DEB 1.375% 2/26/21 1.3825% 10,000,000.0000 AAA AA+ 99.46 10,040,950.00 9,946,100.00 Fixed Income 3135G0D75 F N M A DEB 1.500% 6/22/20 1.5042% 5,000,000.0000 AAA AA+ 99.72 4,955,650.00 4,986,050.00 Fixed Income 3135G0T94 F N M A DEB 2.375% 1/19/23 2.3174% 5,000,000.0000 AAA AA+ 102.49 4,910,990.00 5,124,250.00 Fixed Income 31397QRE0 F N M A GTD REMIC 2.825% 2/25/41 2.6683% 186,495.6800 N/A N/A 101.13 186,437.40 188,597.49 Fixed Income 36225CAZ9 G N M A I I #080023 4.125% 12/20/26 4.0045% 15,348.4000 N/A N/A 103.01 15,601.96 15,810.08 Fixed Income 36225CC20 G N M A I I #080088 3.875% 6/20/27 3.8369% 15,097.0500 N/A N/A 100.99 15,427.31 15,246.96 Fixed Income 36225CNM4 G N M A I I #080395 3.875% 4/20/30 3.7330% 6,521.3900 N/A N/A 103.80 6,462.26 6,769.46 Fixed Income 36225CN28 G N M A I I #080408 3.875% 5/20/30 3.7329% 49,754.7600 N/A N/A 103.81 49,249.44 51,648.92 Fixed Income 36225DCB8 G N M A I I #080965 3.750% 7/20/34 3.5940% 45,340.4700 N/A N/A 104.34 45,312.14 47,308.70 Fixed Income 369550BA5 GENERAL DYNAMICS 2.875% 5/11/20 2.8601% 2,000,000.0000 A2 A+ 100.52 2,011,340.00 2,010,420.00 2 of 5 U.S. Bank Investment Listing - Yield As of 09/30/2019 Asset Category CUSIP Asset Short Name Yield Shares/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 369550BE7 GENERAL DYNAMICS 3.000% 5/11/21 2.9484% 3,160,000.0000 A2 A+ 101.75 3,138,038.00 3,215,331.60 Fixed Income 43814RAC0 HONDA AUTO 1.210% 12/18/20 1.2123% 563,719.9400 N/A AAA 99.81 557,532.23 562,648.87 Fixed Income 43814PAC4 HONDA AUTO 1.790% 9/20/21 1.7915% 2,115,225.6000 N/A AAA 99.92 2,081,679.44 2,113,448.81 Fixed Income 43815NAB0 HONDA AUTO 1.900% 4/15/22 1.9019% 3,530,000.0000 AAA AAA 99.90 3,529,752.90 3,526,540.60 Fixed Income 43814WAB1 HONDA AUTO 2.750% 9/20/21 2.7386% 4,395,000.0000 N/A AAA 100.42 4,394,716.96 4,413,371.10 Fixed Income 43815HAC1 HONDA AUTO 2.950% 8/22/22 2.9163% 3,970,000.0000 AAA N/A 101.16 3,969,455.32 4,015,893.20 Fixed Income 43814UAG4 HONDA AUTO 3.010% 5/18/22 2.9802% 1,710,000.0000 N/A AAA 101.00 1,709,962.72 1,727,082.90 Fixed Income 404280BF5 HSBC HOLDINGS PLC 2.650% 1/05/22 2.6312% 4,500,000.0000 A2 A 100.72 4,429,980.00 4,532,175.00 Fixed Income 40428HPR7 HSBC USA INC MTN 2.350% 3/05/20 2.3469% 2,500,000.0000 A2 A 100.13 2,493,300.00 2,503,325.00 Fixed Income 40428HPR7 HSBC USA INC MTN 2.350% 3/05/20 2.3469% 2,500,000.0000 A2 A 100.13 2,472,287.50 2,503,325.00 Fixed Income 44932HAH6 IBM CREDIT CORP 3.000% 2/06/23 2.9163% 5,670,000.0000 A2 A 102.87 5,603,264.40 5,832,672.30 Fixed Income 458140BD1 INTEL CORP 2.875% 5/11/24 2.7665% 5,000,000.0000 A1 A+ 103.92 5,025,900.00 5,196,050.00 Fixed Income 4581X0CS5 INTER AMER BK M T N 1.875% 3/15/21 1.8722% 5,000,000.0000 AAA AAA 100.15 5,059,610.00 5,007,600.00 Fixed Income 4581X0CX4 INTER AMER DEV BK 1.625% 5/12/20 1.6281% 3,035,000.0000 AAA AAA 99.81 3,027,807.05 3,029,142.45 Fixed Income 4581X0CZ9 INTER AMER DEV BK 1.750% 9/14/22 1.7449% 6,500,000.0000 AAA AAA 100.30 6,249,655.00 6,519,175.00 Fixed Income 4581X0CW6 INTER AMER DEV BK 2.125% 1/18/22 2.1034% 3,000,000.0000 AAA N/A 101.03 2,996,310.00 3,030,810.00 Fixed Income 459058FY4 INTL BK 2.000% 1/26/22 1.9843% 10,000,000.0000 AAA N/A 100.79 10,006,350.00 10,078,900.00 Fixed Income 45950KCM0 INTL BK M T N 2.250% 1/25/21 2.2372% 2,970,000.0000 AAA AAA 100.57 2,961,268.20 2,986,958.70 Fixed Income 45950KCJ7 INTL FINANCE CORP 1.125% 7/20/21 1.1367% 2,500,000.0000 AAA AAA 98.97 2,441,600.00 2,474,300.00 Fixed Income 24422EUM9 JOHN DEERE MTN 3.650% 10/12/23 3.4259% 1,250,000.0000 A2 A 106.54 1,250,237.50 1,331,750.00 Fixed Income 47788NAD0 JOHN DEERE OWNER 1.490% 5/15/23 1.4904% 1,003,712.9300 AAA N/A 99.97 987,088.93 1,003,451.96 Fixed Income 47788BAD6 JOHN DEERE OWNER 1.820% 10/15/21 1.8228% 441,393.7800 AAA N/A 99.85 441,361.46 440,709.62 Fixed Income 477870AB5 JOHN DEERE OWNER 2.280% 5/16/22 2.2748% 2,800,000.0000 AAA N/A 100.23 2,799,989.36 2,806,440.00 Fixed Income 47788CAB8 JOHN DEERE OWNER 2.420% 10/15/20 2.4198% 180,610.3100 AAA N/A 100.01 180,243.45 180,622.95 Fixed Income 47788CAC6 JOHN DEERE OWNER 2.660% 4/18/22 2.6492% 1,340,000.0000 AAA N/A 100.41 1,339,903.65 1,345,480.60 Fixed Income 47789JAB2 JOHN DEERE OWNER 2.850% 12/15/21 2.8369% 3,265,000.0000 AAA N/A 100.46 3,264,851.12 3,280,051.65 Fixed Income 47788EAC2 JOHN DEERE OWNER 3.080% 11/15/22 3.0401% 4,630,000.0000 AAA N/A 101.31 4,629,649.05 4,690,791.90 Fixed Income 46625HRL6 JP MORGAN CHASE CO 2.700% 5/18/23 2.6554% 5,000,000.0000 A2 A- 101.68 4,821,910.00 5,084,050.00 Fixed Income 46647PAU0 JPMORGAN CHASE CO 3.797% 7/23/24 3.6002% 2,500,000.0000 A2 A- 105.47 2,632,175.00 2,636,675.00 Fixed Income 525ESC0Y6 LEHMAN BRTH HLD ESC 0.0000% 2,000,000.0000 - 1,031,998.65 - Fixed Income 525ESCIB7 LEHMAN BRTH MTN ES 0.00001% 1/24/13 0.0007% 600,000.0000 N/A N/A 1.42 320,227.27 8,520.00 Fixed Income 58933YAF2 MERCK CO INC 2.800% 5/18/23 2.7196% 2,000,000.0000 A1 AA 102.96 1,948,640.00 2,059,160.00 Fixed Income 594918BP8 MICROSOFT CORP 1.550% 8/08/21 1.5565% 3,045,000.0000 AAA AAA 99.58 3,041,385.15 3,032,241.45 Fixed Income 61747WAL3 MORGAN STANLEY 5.500% 7/28/21 5.1832% 2,800,000.0000 A3 BBB+ 106.11 3,200,848.00 2,971,136.00 Fixed Income 64971M5E8 NEW YORK CITY NY 4.075% 11/01/20 3.9890% 1,400,000.0000 AA1 AAA 102.16 1,400,000.00 1,430,170.00 Fixed Income 65478VAD9 NISSAN AUTO 1.320% 1/15/21 1.3213% 252,050.0200 AAA N/A 99.90 250,031.65 251,800.49 Fixed Income 65478GAD2 NISSAN AUTO 1.750% 10/15/21 1.7523% 2,063,703.3300 AAA N/A 99.87 2,031,699.81 2,060,958.60 3 of 5 U.S. Bank Investment Listing - Yield As of 09/30/2019 Asset Category CUSIP Asset Short Name Yield Shares/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 65479GAD1 NISSAN AUTO 3.060% 3/15/23 3.0164% 3,560,000.0000 AAA AAA 101.45 3,559,884.66 3,611,477.60 Fixed Income 68389XBK0 ORACLE CORP 1.900% 9/15/21 1.9022% 3,000,000.0000 A1 A+ 99.88 2,892,240.00 2,996,460.00 Fixed Income 69353RFL7 PNC BANK NA 3.500% 6/08/23 3.3335% 5,000,000.0000 A2 A 105.00 4,993,318.05 5,249,800.00 Fixed Income 69353RFB9 PNC BANK NA MTN 2.625% 2/17/22 2.5890% 1,000,000.0000 A2 A 101.39 974,940.00 1,013,890.00 Fixed Income 73358WAG9 PORT AUTH NY NJ 5.309% 12/01/19 5.2805% 2,440,000.0000 AA3 AA- 100.54 2,507,633.89 2,453,176.00 Fixed Income 747525AD5 QUALCOMM INC 2.250% 5/20/20 2.2491% 2,000,000.0000 A2 A- 100.04 2,002,700.00 2,000,840.00 Fixed Income 747525AD5 QUALCOMM INC 2.250% 5/20/20 2.2491% 5,000,000.0000 A2 A- 100.04 4,995,195.40 5,002,100.00 Fixed Income 78013XZU5 ROYAL BANK OF MTN 2.550% 7/16/24 2.5159% 6,500,000.0000 A2 A 101.35 6,581,445.00 6,588,010.00 Fixed Income 83162CLJ0 S B A GTD DEV PART 6.340% 3/01/21 6.2464% 11,184.5600 N/A N/A 101.50 11,184.56 11,352.22 Fixed Income 78445JAA5 S L M A 3.8594% 4/25/23 3.8368% 13,344.8500 BAA3 B 100.59 13,290.71 13,423.58 Fixed Income 89114QCA4 TORONTO DOMINION MTN 2.650% 6/12/24 2.6010% 3,000,000.0000 AA3 A 101.89 3,000,570.00 3,056,550.00 Fixed Income 89114QC48 TORONTO MTN 3.500% 7/19/23 3.3190% 5,000,000.0000 AA1 AA- 105.45 5,094,200.00 5,272,600.00 Fixed Income 89238BAB8 TOYOTA AUTO 2.100% 10/15/20 2.1001% 683,639.4400 AAA AAA 100.00 683,569.57 683,618.93 Fixed Income 89239AAB9 TOYOTA AUTO 2.830% 10/15/21 2.8201% 3,615,000.0000 AAA AAA 100.35 3,614,671.76 3,627,652.50 Fixed Income 912828WU0 U S TREASURY I P S 0.125% 7/15/24 0.1252% 11,236,992.0000 AAA N/A 99.88 11,092,272.09 11,222,945.76 Fixed Income 912828T34 U S TREASURY NT 1.125% 9/30/21 1.1366% 7,000,000.0000 AAA N/A 98.98 6,757,914.08 6,928,390.00 Fixed Income 912828H52 U S TREASURY NT 1.250% 1/31/20 1.2528% 13,500,000.0000 AAA N/A 99.78 13,396,542.97 13,469,895.00 Fixed Income 912828T67 U S TREASURY NT 1.250% 10/31/21 1.2602% 6,000,000.0000 AAA N/A 99.19 5,813,691.98 5,951,280.00 Fixed Income 912828UL2 U S TREASURY NT 1.375% 1/31/20 1.3776% 5,000,000.0000 AAA N/A 99.81 4,988,671.88 4,990,650.00 Fixed Income 912828N89 U S TREASURY NT 1.375% 1/31/21 1.3822% 6,000,000.0000 AAA N/A 99.48 5,895,840.41 5,968,620.00 Fixed Income 912828L99 U S TREASURY NT 1.375% 10/31/20 1.3814% 10,000,000.0000 AAA N/A 99.54 9,850,311.40 9,953,900.00 Fixed Income 912828XE5 U S TREASURY NT 1.500% 5/31/20 1.5037% 5,000,000.0000 AAA N/A 99.75 4,966,423.00 4,987,700.00 Fixed Income 912828F62 U S TREASURY NT 1.500% 10/31/19 1.5007% 2,500,000.0000 AAA N/A 99.95 2,486,718.75 2,498,775.00 Fixed Income 912828G61 U S TREASURY NT 1.500% 11/30/19 1.5014% 7,500,000.0000 AAA N/A 99.91 7,449,634.50 7,493,100.00 Fixed Income 912828R69 U S TREASURY NT 1.625% 5/31/23 1.6218% 5,000,000.0000 AAA N/A 100.20 4,757,226.56 5,009,750.00 Fixed Income 912828J76 U S TREASURY NT 1.750% 3/31/22 1.7433% 5,000,000.0000 AAA N/A 100.38 4,976,383.94 5,019,150.00 Fixed Income 912828XW5 U S TREASURY NT 1.750% 6/30/22 1.7424% 5,000,000.0000 AAA N/A 100.44 4,973,454.25 5,021,900.00 Fixed Income 912828L57 U S TREASURY NT 1.750% 9/30/22 1.7414% 13,000,000.0000 AAA N/A 100.50 12,763,554.69 13,064,480.00 Fixed Income 912828U65 U S TREASURY NT 1.750% 11/30/21 1.7461% 7,000,000.0000 AAA N/A 100.22 6,900,492.20 7,015,610.00 Fixed Income 912828V72 U S TREASURY NT 1.875% 1/31/22 1.8647% 3,000,000.0000 AAA N/A 100.56 3,004,814.74 3,016,650.00 Fixed Income 912828L24 U S TREASURY NT 1.875% 8/31/22 1.8594% 6,000,000.0000 AAA N/A 100.84 5,987,832.60 6,050,400.00 Fixed Income 9128283S7 U S TREASURY NT 2.000% 1/31/20 1.9995% 15,000,000.0000 AAA N/A 100.03 14,955,468.75 15,004,050.00 Fixed Income 912828XX3 U S TREASURY NT 2.000% 6/30/24 1.9619% 5,000,000.0000 AAA N/A 101.94 5,028,710.94 5,097,050.00 Fixed Income 912828M80 U S TREASURY NT 2.000% 11/30/22 1.9752% 8,000,000.0000 AAA N/A 101.26 7,907,500.00 8,100,640.00 Fixed Income 912828W48 U S TREASURY NT 2.125% 2/29/24 2.0757% 10,000,000.0000 AAA N/A 102.38 9,911,718.75 10,237,500.00 Fixed Income 912828U57 U S TREASURY NT 2.125% 11/30/23 2.0792% 15,000,000.0000 AAA N/A 102.20 14,723,632.81 15,330,450.00 Fixed Income 912828N30 U S TREASURY NT 2.125% 12/31/22 2.0893% 5,000,000.0000 AAA N/A 101.71 4,926,562.50 5,085,350.00 4 of 5 U.S. Bank Investment Listing - Yield As of 09/30/2019 Asset Category CUSIP Asset Short Name Yield Shares/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 912828V80 U S TREASURY NT 2.250% 1/31/24 2.1879% 7,500,000.0000 AAA 102.84 7,491,503.91 7,712,700.00 Fixed Income 9128284D9 U S TREASURY NT 2.500% 3/31/23 2.4238% 10,000,000.0000 AAA N/A 103.15 9,887,265.63 10,314,500.00 Fixed Income 912828WJ5 U S TREASURY NT 2.500% 5/15/24 2.4011% 7,000,000.0000 AAA N/A 104.12 7,193,046.88 7,288,190.00 Fixed Income 913366EJ5 UNIV OF CALIFORNIA 5.035% 5/15/21 4.7998% 400,000.0000 AA3 AA- 104.90 400,000.00 419,600.00 Fixed Income 90331HNL3 US BANK NA MTN 2.850% 1/23/23 2.7861% 5,000,000.0000 A1 AA- 102.29 4,981,600.00 5,114,600.00 Fixed Income 931142EK5 WALMART INC 3.400% 6/26/23 3.2299% 3,880,000.0000 AA2 AA 105.27 3,878,991.40 4,084,282.00 Fixed Income 94974BGM6 WELLS FARGO CO MTN 2.600% 7/22/20 2.5878% 5,000,000.0000 A2 A- 100.47 5,001,650.00 5,023,600.00 Fixed Income 94974BGF1 WELLS FARGO MTN 2.150% 1/30/20 2.1506% 1,000,000.0000 A2 A- 99.97 996,600.00 999,700.00 Fixed Income 94988J5G8 WELLS FARGO MTN 2.150% 12/06/19 2.1502% 500,000.0000 AA2 A+ 99.99 498,425.00 499,965.00 Fixed Income 95000U2B8 WELLS FARGO MTN 2.625% 7/22/22 2.5962% 3,000,000.0000 A2 A- 101.11 2,954,520.00 3,033,300.00 Fixed Income 96130AAK4 WESTPAC BKING C D 2.970% 10/18/19 2.9687% 1,500,000.0000 100.05 1,503,302.80 1,500,675.00 Total Consolidated 613,565,030.62 5 of 5 U.S. Bank Asset Detail - Consolidated As of 09/30/2019 CUSIP Asset Short Name Price Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss Cash Equivalents Total 31846V567 FIRST AM GOVT OB FD CL Z 1.00 1,740,212.5600 1,740,212.56 1,740,212.56 0.28 - 31846V567 FIRST AM GOVT OB FD CL Z 1.00 3,794,924.7000 3,794,924.70 3,794,924.70 0.62 - 62479MYK3 MUFG BANK LTD NY BRAN C P 11/19/19 99.73 1,860,000.0000 1,850,032.47 1,854,940.80 0.30 4,908.33 62479MYK3 MUFG BANK LTD NY BRAN C P 11/19/19 99.73 11,255,000.0000 11,194,685.71 11,224,386.40 1.83 29,700.69 89233GAH9 TOYOTA MOTOR CREDIT CO C P 1/17/20 99.40 2,000,000.0000 1,961,884.44 1,987,940.00 0.32 26,055.56 912796RY7 U S TREASURY BILL 1/30/20 99.40 7,000,000.0000 6,950,415.19 6,958,140.00 1.13 7,724.81 912796SL4 U S TREASURY BILL 10/03/19 99.99 1,650,000.0000 1,646,687.63 1,649,851.50 0.27 3,163.87 912796VY2 U S TREASURY BILL 10/08/19 99.97 1,250,000.0000 1,249,517.42 1,249,575.00 0.20 57.58 912796VZ9 U S TREASURY BILL 10/15/19 99.93 1,250,000.0000 1,249,059.90 1,249,175.00 0.20 115.10 Cash Equivalents Total 31,800,137.2600 31,637,420.02 31,709,145.96 5.17 71,725.94 Fixed Income 00440EAP2 ACE INA HOLDINGS 2.700% 3/13/23 102.19 2,000,000.0000 1,937,000.00 2,043,720.00 0.33 106,720.00 00440EAU1 ACE INA HOLDINGS 2.875% 11/03/22 102.50 4,169,000.0000 4,232,453.17 4,273,391.76 0.70 40,938.59 02587AAJ3 AMERICAN EXPRESS 1.930% 9/15/22 99.92 6,270,000.0000 6,174,085.15 6,265,046.70 1.02 90,961.55 02665WCZ2 AMERICAN HONDA MTN 2.400% 6/27/24 101.08 1,219,000.0000 1,213,843.63 1,232,140.82 0.20 18,297.19 02665WCJ8 AMERICAN HONDA MTN 3.450% 7/14/23 104.89 845,000.0000 843,538.15 886,278.25 0.14 42,740.10 02665WCQ2 AMERICAN HONDA MTN 3.625% 10/10/23 105.90 2,000,000.0000 1,998,320.00 2,117,960.00 0.35 119,640.00 03215PFN4 AMRESCO 2.95841% 6/25/29 97.15 123,127.8500 92,461.32 119,621.17 0.02 27,159.85 037833BS8 APPLE INC 2.250% 2/23/21 100.46 4,000,000.0000 4,050,840.00 4,018,200.00 0.65 (32,640.00) 037833CU2 APPLE INC 2.850% 5/11/24 103.75 3,000,000.0000 3,017,760.00 3,112,470.00 0.51 94,710.00 06051GHF9 BANK OF AMERICA 3.550% 3/05/24 103.93 6,675,000.0000 6,770,625.75 6,937,060.50 1.13 166,434.75 06051GFN4 BANK OF AMERICA MTN 2.250% 4/21/20 100.11 2,000,000.0000 2,001,960.00 2,002,140.00 0.33 180.00 06417G5Q7 BANK OF NOVA C D 2.610% 12/23/19 100.11 2,300,000.0000 2,300,614.40 2,302,599.00 0.38 1,984.60 06406HCZ0 BANK OF NY MELLO MTN 2.150% 2/24/20 100.03 1,500,000.0000 1,493,925.00 1,500,390.00 0.24 6,465.00 06406RAA5 BANK OF NY MTN 2.600% 2/07/22 101.41 2,500,000.0000 2,504,475.00 2,535,250.00 0.41 30,775.00 06406RAE7 BANK OF NY MTN 2.950% 1/29/23 102.70 2,500,000.0000 2,489,555.00 2,567,400.00 0.42 77,845.00 084670BR8 BERKSHIRE HATHAWAY 2.750% 3/15/23 102.51 2,500,000.0000 2,440,950.00 2,562,825.00 0.42 121,875.00 084664BT7 BERKSHIRE HATHAWAY 3.000% 5/15/22 102.90 4,000,000.0000 4,131,120.00 4,116,040.00 0.67 (15,080.00) 09247XAL5 BLACKROCK INC 3.500% 3/18/24 106.78 1,000,000.0000 1,036,330.00 1,067,820.00 0.17 31,490.00 808513AT2 CHARLES SCHWAB CORP 2.650% 1/25/23 101.80 6,750,000.0000 6,729,480.00 6,871,635.00 1.12 142,155.00 166764BG4 CHEVRON CORP 2.100% 5/16/21 100.39 2,500,000.0000 2,485,350.00 2,509,650.00 0.41 24,300.00 166764AH3 CHEVRON CORP 3.191% 6/24/23 104.26 3,500,000.0000 3,441,095.00 3,648,960.00 0.59 207,865.00 30231GAV4 EXXON MOBIL 2.222% 3/01/21 100.52 3,000,000.0000 3,016,097.40 3,015,720.00 0.49 (377.40) 3133EKWV4 F F C B DEB 1.850% 7/26/24 101.07 5,000,000.0000 5,048,280.00 5,053,600.00 0.82 5,320.00 3130A1XJ2 F H L B 2.875% 6/14/24 105.58 11,110,000.0000 11,589,031.30 11,730,160.20 1.91 141,128.90 3130A7CV5 F H L B DEB 1.375% 2/18/21 99.48 5,365,000.0000 5,343,325.40 5,336,941.05 0.87 (6,384.35) 313383HU8 F H L B DEB 1.750% 6/12/20 99.93 5,000,000.0000 5,008,950.00 4,996,450.00 0.81 (12,500.00) 313379RB7 F H L B DEB 1.875% 6/11/21 100.22 4,000,000.0000 4,030,160.00 4,008,880.00 0.65 (21,280.00) 3130A2UW4 F H L B DEB 2.875% 9/13/24 105.72 2,500,000.0000 2,635,950.00 2,643,025.00 0.43 7,075.00 313383QR5 F H L B DEB 3.250% 6/09/23 105.61 5,000,000.0000 5,083,350.00 5,280,250.00 0.86 196,900.00 1 of 4 U.S. Bank Asset Detail - Consolidated As of 09/30/2019 CUSIP Asset Short Name Price Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss 313383YJ4 F H L B DEB 3.375% 9/08/23 106.59 10,000,000.0000 10,211,831.00 10,658,700.00 1.74 446,869.00 3130A0F70 F H L B DEB 3.375% 12/08/23 106.99 10,000,000.0000 10,269,043.75 10,699,200.00 1.74 430,156.25 3137EAEN5 F H L M C 2.750% 6/19/23 104.04 10,000,000.0000 9,956,500.00 10,404,300.00 1.70 447,800.00 3137EADM8 F H L M C M T N 1.250% 10/02/19 100.00 7,500,000.0000 7,399,650.00 7,499,775.00 1.22 100,125.00 3137EAEK1 F H L M C M T N 1.875% 11/17/20 100.10 5,000,000.0000 4,986,225.00 5,005,150.00 0.82 18,925.00 3137EAEL9 F H L M C M T N 2.375% 2/16/21 100.81 7,500,000.0000 7,484,475.00 7,560,675.00 1.23 76,200.00 31348SWZ3 F H L M C #786064 4.678% 1/01/28 102.46 1,845.5200 1,800.58 1,890.88 0.00 90.30 3133TCE95 F H L M C MLTCL MTG 4.016% 8/15/32 100.38 7,928.5000 7,936.80 7,958.79 0.00 21.99 31398VJ98 F H L M C MLTCL MTG 4.251% 1/25/20 100.16 659,054.7400 696,435.51 660,129.00 0.11 (36,306.51) 31394JY35 F H L M C MLTCL MTG 6.500% 9/25/43 113.92 686,785.6800 777,784.78 782,372.51 0.13 4,587.73 3135G0F73 F N M A 1.500% 11/30/20 99.65 7,500,000.0000 7,370,726.00 7,473,450.00 1.22 102,724.00 3135G0T45 F N M A 1.875% 4/05/22 100.68 5,000,000.0000 4,972,500.00 5,034,050.00 0.82 61,550.00 3135G0S38 F N M A 2.000% 1/05/22 100.72 3,000,000.0000 2,994,570.00 3,021,480.00 0.49 26,910.00 3135G0V34 F N M A 2.500% 2/05/24 103.77 5,000,000.0000 4,980,850.00 5,188,500.00 0.85 207,650.00 3135G0U35 F N M A 2.750% 6/22/21 101.77 7,500,000.0000 7,515,225.00 7,632,975.00 1.24 117,750.00 31371NUC7 F N M A #257179 4.500% 4/01/28 105.49 14,717.5300 15,565.23 15,525.38 0.00 (39.85) 31376KT22 F N M A #357969 5.000% 9/01/35 110.47 98,885.2800 106,301.67 109,237.58 0.02 2,935.91 31381PDA3 F N M A #466397 3.400% 11/01/20 100.79 337,358.0300 330,057.41 340,009.66 0.06 9,952.25 31403DJZ3 F N M A #745580 5.000% 6/01/36 110.44 92,510.2700 99,448.54 102,166.49 0.02 2,717.95 31403GXF4 F N M A #748678 5.000% 10/01/33 109.27 1,781.1400 1,914.73 1,946.25 0.00 31.52 31406PQY8 F N M A #815971 5.000% 3/01/35 110.34 157,142.7900 168,928.51 173,383.50 0.03 4,454.99 31406XWT5 F N M A #823358 4.722% 2/01/35 104.65 109,269.4000 108,415.73 114,353.71 0.02 5,937.98 31407BXH7 F N M A #826080 5.000% 7/01/35 110.45 18,677.2900 20,078.08 20,628.69 0.00 550.61 31410F4V4 F N M A #888336 5.000% 7/01/36 110.42 180,164.2100 193,676.52 198,928.31 0.03 5,251.79 3138EG6F6 F N M A #AL0869 4.500% 6/01/29 106.54 10,044.9200 10,623.50 10,701.76 0.00 78.26 31417YAY3 F N M A #MA0022 4.500% 4/01/29 106.54 16,436.7800 17,383.51 17,511.75 0.00 128.24 3135G0J20 F N M A DEB 1.375% 2/26/21 99.46 10,000,000.0000 10,040,950.00 9,946,100.00 1.62 (94,850.00) 3135G0D75 F N M A DEB 1.500% 6/22/20 99.72 5,000,000.0000 4,955,650.00 4,986,050.00 0.81 30,400.00 3135G0T94 F N M A DEB 2.375% 1/19/23 102.49 5,000,000.0000 4,910,990.00 5,124,250.00 0.84 213,260.00 31397QRE0 F N M A GTD REMIC 2.825% 2/25/41 101.13 186,495.6800 186,437.40 188,597.49 0.03 2,160.09 36225CAZ9 G N M A I I #080023 4.125% 12/20/26 103.01 15,348.4000 15,601.96 15,810.08 0.00 208.12 36225CC20 G N M A I I #080088 3.875% 6/20/27 100.99 15,097.0500 15,427.31 15,246.96 0.00 (180.35) 36225CNM4 G N M A I I #080395 3.875% 4/20/30 103.80 6,521.3900 6,462.26 6,769.46 0.00 307.20 36225CN28 G N M A I I #080408 3.875% 5/20/30 103.81 49,754.7600 49,249.44 51,648.92 0.01 2,399.48 36225DCB8 G N M A I I #080965 3.750% 7/20/34 104.34 45,340.4700 45,312.14 47,308.70 0.01 1,996.56 369550BA5 GENERAL DYNAMICS 2.875% 5/11/20 100.52 2,000,000.0000 2,011,340.00 2,010,420.00 0.33 (920.00) 369550BE7 GENERAL DYNAMICS 3.000% 5/11/21 101.75 3,160,000.0000 3,138,038.00 3,215,331.60 0.52 77,293.60 43814RAC0 HONDA AUTO 1.210% 12/18/20 99.81 563,719.9400 557,532.23 562,648.87 0.09 5,116.64 43814PAC4 HONDA AUTO 1.790% 9/20/21 99.92 2,115,225.6000 2,081,679.44 2,113,448.81 0.34 31,769.37 43815NAB0 HONDA AUTO 1.900% 4/15/22 99.90 3,530,000.0000 3,529,752.90 3,526,540.60 0.57 (3,212.30) 43814WAB1 HONDA AUTO 2.750% 9/20/21 100.42 4,395,000.0000 4,394,716.96 4,413,371.10 0.72 18,654.14 43815HAC1 HONDA AUTO 2.950% 8/22/22 101.16 3,970,000.0000 3,969,455.32 4,015,893.20 0.65 46,437.88 2 of 4 U.S. Bank Asset Detail - Consolidated As of 09/30/2019 CUSIP Asset Short Name Price Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss 43814UAG4 HONDA AUTO 3.010% 5/18/22 101.00 1,710,000.0000 1,709,962.72 1,727,082.90 0.28 17,120.18 404280BF5 HSBC HOLDINGS PLC 2.650% 1/05/22 100.72 4,500,000.0000 4,429,980.00 4,532,175.00 0.74 102,195.00 40428HPR7 HSBC USA INC MTN 2.350% 3/05/20 100.13 2,500,000.0000 2,493,300.00 2,503,325.00 0.41 10,025.00 40428HPR7 HSBC USA INC MTN 2.350% 3/05/20 100.13 2,500,000.0000 2,472,287.50 2,503,325.00 0.41 31,037.50 44932HAH6 IBM CREDIT CORP 3.000% 2/06/23 102.87 5,670,000.0000 5,603,264.40 5,832,672.30 0.95 229,407.90 458140BD1 INTEL CORP 2.875% 5/11/24 103.92 5,000,000.0000 5,025,900.00 5,196,050.00 0.85 170,150.00 4581X0CS5 INTER AMER BK M T N 1.875% 3/15/21 100.15 5,000,000.0000 5,059,610.00 5,007,600.00 0.82 (52,010.00) 4581X0CX4 INTER AMER DEV BK 1.625% 5/12/20 99.81 3,035,000.0000 3,027,807.05 3,029,142.45 0.49 1,335.40 4581X0CZ9 INTER AMER DEV BK 1.750% 9/14/22 100.30 6,500,000.0000 6,249,655.00 6,519,175.00 1.06 269,520.00 4581X0CW6 INTER AMER DEV BK 2.125% 1/18/22 101.03 3,000,000.0000 2,996,310.00 3,030,810.00 0.49 34,500.00 459058FY4 INTL BK 2.000% 1/26/22 100.79 10,000,000.0000 10,006,350.00 10,078,900.00 1.64 72,550.00 45950KCM0 INTL BK M T N 2.250% 1/25/21 100.57 2,970,000.0000 2,961,268.20 2,986,958.70 0.49 25,690.50 45950KCJ7 INTL FINANCE CORP 1.125% 7/20/21 98.97 2,500,000.0000 2,441,600.00 2,474,300.00 0.40 32,700.00 24422EUM9 JOHN DEERE MTN 3.650% 10/12/23 106.54 1,250,000.0000 1,250,237.50 1,331,750.00 0.22 81,512.50 47788NAD0 JOHN DEERE OWNER 1.490% 5/15/23 99.97 1,003,712.9300 987,088.93 1,003,451.96 0.16 16,363.03 47788BAD6 JOHN DEERE OWNER 1.820% 10/15/21 99.85 441,393.7800 441,361.46 440,709.62 0.07 (651.84) 477870AB5 JOHN DEERE OWNER 2.280% 5/16/22 100.23 2,800,000.0000 2,799,989.36 2,806,440.00 0.46 6,450.64 47788CAB8 JOHN DEERE OWNER 2.420% 10/15/20 100.01 180,610.3100 180,243.45 180,622.95 0.03 379.50 47788CAC6 JOHN DEERE OWNER 2.660% 4/18/22 100.41 1,340,000.0000 1,339,903.65 1,345,480.60 0.22 5,576.95 47789JAB2 JOHN DEERE OWNER 2.850% 12/15/21 100.46 3,265,000.0000 3,264,851.12 3,280,051.65 0.53 15,200.53 47788EAC2 JOHN DEERE OWNER 3.080% 11/15/22 101.31 4,630,000.0000 4,629,649.05 4,690,791.90 0.76 61,142.85 46625HRL6 JP MORGAN CHASE CO 2.700% 5/18/23 101.68 5,000,000.0000 4,821,910.00 5,084,050.00 0.83 262,140.00 46647PAU0 JPMORGAN CHASE CO 3.797% 7/23/24 105.47 2,500,000.0000 2,632,175.00 2,636,675.00 0.43 4,500.00 525ESC0Y6 LEHMAN BRTH HLD ESC - 2,000,000.0000 1,031,998.65 - - (1,031,998.65) 525ESCIB7 LEHMAN BRTH MTN ES 0.00001% 1/24/13 1.42 600,000.0000 320,227.27 8,520.00 0.00 (311,707.27) 58933YAF2 MERCK CO INC 2.800% 5/18/23 102.96 2,000,000.0000 1,948,640.00 2,059,160.00 0.34 110,520.00 594918BP8 MICROSOFT CORP 1.550% 8/08/21 99.58 3,045,000.0000 3,041,385.15 3,032,241.45 0.49 (9,143.70) 61747WAL3 MORGAN STANLEY 5.500% 7/28/21 106.11 2,800,000.0000 3,200,848.00 2,971,136.00 0.48 (229,712.00) 64971M5E8 NEW YORK CITY NY 4.075% 11/01/20 102.16 1,400,000.0000 1,400,000.00 1,430,170.00 0.23 30,170.00 65478VAD9 NISSAN AUTO 1.320% 1/15/21 99.90 252,050.0200 250,031.65 251,800.49 0.04 1,768.84 65478GAD2 NISSAN AUTO 1.750% 10/15/21 99.87 2,063,703.3300 2,031,699.81 2,060,958.60 0.34 29,258.79 65479GAD1 NISSAN AUTO 3.060% 3/15/23 101.45 3,560,000.0000 3,559,884.66 3,611,477.60 0.59 51,592.94 68389XBK0 ORACLE CORP 1.900% 9/15/21 99.88 3,000,000.0000 2,892,240.00 2,996,460.00 0.49 104,220.00 69353RFL7 PNC BANK NA 3.500% 6/08/23 105.00 5,000,000.0000 4,993,318.05 5,249,800.00 0.86 256,481.95 69353RFB9 PNC BANK NA MTN 2.625% 2/17/22 101.39 1,000,000.0000 974,940.00 1,013,890.00 0.17 38,950.00 73358WAG9 PORT AUTH NY NJ 5.309% 12/01/19 100.54 2,440,000.0000 2,507,633.89 2,453,176.00 0.40 (54,457.89) 747525AD5 QUALCOMM INC 2.250% 5/20/20 100.04 2,000,000.0000 2,002,700.00 2,000,840.00 0.33 (1,860.00) 747525AD5 QUALCOMM INC 2.250% 5/20/20 100.04 5,000,000.0000 4,995,195.40 5,002,100.00 0.82 6,904.60 78013XZU5 ROYAL BANK OF MTN 2.550% 7/16/24 101.35 6,500,000.0000 6,581,445.00 6,588,010.00 1.07 6,565.00 83162CLJ0 S B A GTD DEV PART 6.340% 3/01/21 101.50 11,184.5600 11,184.56 11,352.22 0.00 167.66 78445JAA5 S L M A 3.8594% 4/25/23 100.59 13,344.8500 13,290.71 13,423.58 0.00 132.87 89114QCA4 TORONTO DOMINION MTN 2.650% 6/12/24 101.89 3,000,000.0000 3,000,570.00 3,056,550.00 0.50 55,980.00 3 of 4 U.S. Bank Asset Detail - Consolidated As of 09/30/2019 CUSIP Asset Short Name Price Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss 89114QC48 TORONTO MTN 3.500% 7/19/23 105.45 5,000,000.0000 5,094,200.00 5,272,600.00 0.86 178,400.00 89238BAB8 TOYOTA AUTO 2.100% 10/15/20 100.00 683,639.4400 683,569.57 683,618.93 0.11 49.36 89239AAB9 TOYOTA AUTO 2.830% 10/15/21 100.35 3,615,000.0000 3,614,671.76 3,627,652.50 0.59 12,980.74 912828WU0 U S TREASURY I P S 0.125% 7/15/24 99.88 11,236,992.0000 11,092,272.09 11,222,945.76 1.83 130,673.67 912828T34 U S TREASURY NT 1.125% 9/30/21 98.98 7,000,000.0000 6,757,914.08 6,928,390.00 1.13 170,475.92 912828H52 U S TREASURY NT 1.250% 1/31/20 99.78 13,500,000.0000 13,396,542.97 13,469,895.00 2.20 73,352.03 912828T67 U S TREASURY NT 1.250% 10/31/21 99.19 6,000,000.0000 5,813,691.98 5,951,280.00 0.97 137,588.02 912828UL2 U S TREASURY NT 1.375% 1/31/20 99.81 5,000,000.0000 4,988,671.88 4,990,650.00 0.81 1,978.12 912828N89 U S TREASURY NT 1.375% 1/31/21 99.48 6,000,000.0000 5,895,840.41 5,968,620.00 0.97 72,779.59 912828L99 U S TREASURY NT 1.375% 10/31/20 99.54 10,000,000.0000 9,850,311.40 9,953,900.00 1.62 103,588.60 912828XE5 U S TREASURY NT 1.500% 5/31/20 99.75 5,000,000.0000 4,966,423.00 4,987,700.00 0.81 21,277.00 912828F62 U S TREASURY NT 1.500% 10/31/19 99.95 2,500,000.0000 2,486,718.75 2,498,775.00 0.41 12,056.25 912828G61 U S TREASURY NT 1.500% 11/30/19 99.91 7,500,000.0000 7,449,634.50 7,493,100.00 1.22 43,465.50 912828R69 U S TREASURY NT 1.625% 5/31/23 100.20 5,000,000.0000 4,757,226.56 5,009,750.00 0.82 252,523.44 912828J76 U S TREASURY NT 1.750% 3/31/22 100.38 5,000,000.0000 4,976,383.94 5,019,150.00 0.82 42,766.06 912828XW5 U S TREASURY NT 1.750% 6/30/22 100.44 5,000,000.0000 4,973,454.25 5,021,900.00 0.82 48,445.75 912828L57 U S TREASURY NT 1.750% 9/30/22 100.50 13,000,000.0000 12,763,554.69 13,064,480.00 2.13 300,925.31 912828U65 U S TREASURY NT 1.750% 11/30/21 100.22 7,000,000.0000 6,900,492.20 7,015,610.00 1.14 115,117.80 912828V72 U S TREASURY NT 1.875% 1/31/22 100.56 3,000,000.0000 3,004,814.74 3,016,650.00 0.49 11,835.26 912828L24 U S TREASURY NT 1.875% 8/31/22 100.84 6,000,000.0000 5,987,832.60 6,050,400.00 0.99 62,567.40 9128283S7 U S TREASURY NT 2.000% 1/31/20 100.03 15,000,000.0000 14,955,468.75 15,004,050.00 2.45 48,581.25 912828XX3 U S TREASURY NT 2.000% 6/30/24 101.94 5,000,000.0000 5,028,710.94 5,097,050.00 0.83 68,339.06 912828M80 U S TREASURY NT 2.000% 11/30/22 101.26 8,000,000.0000 7,907,500.00 8,100,640.00 1.32 193,140.00 912828W48 U S TREASURY NT 2.125% 2/29/24 102.38 10,000,000.0000 9,911,718.75 10,237,500.00 1.67 325,781.25 912828U57 U S TREASURY NT 2.125% 11/30/23 102.20 15,000,000.0000 14,723,632.81 15,330,450.00 2.50 606,817.19 912828N30 U S TREASURY NT 2.125% 12/31/22 101.71 5,000,000.0000 4,926,562.50 5,085,350.00 0.83 158,787.50 912828V80 U S TREASURY NT 2.250% 1/31/24 102.84 7,500,000.0000 7,491,503.91 7,712,700.00 1.26 221,196.09 9128284D9 U S TREASURY NT 2.500% 3/31/23 103.15 10,000,000.0000 9,887,265.63 10,314,500.00 1.68 427,234.37 912828WJ5 U S TREASURY NT 2.500% 5/15/24 104.12 7,000,000.0000 7,193,046.88 7,288,190.00 1.19 95,143.12 913366EJ5 UNIV OF CALIFORNIA 5.035% 5/15/21 104.90 400,000.0000 400,000.00 419,600.00 0.07 19,600.00 90331HNL3 US BANK NA MTN 2.850% 1/23/23 102.29 5,000,000.0000 4,981,600.00 5,114,600.00 0.83 133,000.00 931142EK5 WALMART INC 3.400% 6/26/23 105.27 3,880,000.0000 3,878,991.40 4,084,282.00 0.67 205,290.60 94974BGM6 WELLS FARGO CO MTN 2.600% 7/22/20 100.47 5,000,000.0000 5,001,650.00 5,023,600.00 0.82 21,950.00 94974BGF1 WELLS FARGO MTN 2.150% 1/30/20 99.97 1,000,000.0000 996,600.00 999,700.00 0.16 3,100.00 94988J5G8 WELLS FARGO MTN 2.150% 12/06/19 99.99 500,000.0000 498,425.00 499,965.00 0.08 1,540.00 95000U2B8 WELLS FARGO MTN 2.625% 7/22/22 101.11 3,000,000.0000 2,954,520.00 3,033,300.00 0.49 78,780.00 96130AAK4 WESTPAC BKING C D 2.970% 10/18/19 100.05 1,500,000.0000 1,503,302.80 1,500,675.00 0.24 (2,627.80) Fixed Income Total 575,567,864.4400 573,024,125.81 581,855,884.66 94.83 8,831,758.85 Grand Total 607,368,001.7000 604,661,545.83 613,565,030.62 100.00 8,903,484.79 4 of 4 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss ACQUISITIONS 07/01/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,113,125.0000 1.000000 -2,113,125.00 2,113,125.00 0.00 07/02/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 12,397.2400 1.000000 -12,397.24 12,397.24 0.00 07/02/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 34,814.0700 1.000000 -34,814.07 34,814.07 0.00 07/05/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 89,625.0000 1.000000 -89,625.00 89,625.00 0.00 07/08/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 53,087.7200 1.000000 -53,087.72 53,087.72 0.00 07/12/2019 02665WCZ2 PURCHASED PAR VALUE OF AMERICAN HONDA MTN 2.400% 6/27/24 /J.P. MORGAN SECURITIES LLC/1,219,000 PAR VALUE AT 99.577 % 1,219,000.0000 0.995770 -1,213,843.63 1,213,843.63 0.00 07/12/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,130,000.0000 1.000000 -1,130,000.00 1,130,000.00 0.00 07/12/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,943.7500 1.000000 -4,943.75 4,943.75 0.00 07/12/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 298,478.6200 1.000000 -298,478.62 298,478.62 0.00 07/15/2019 912828XX3 PURCHASED PAR VALUE OF U S TREASURY NT 2.000% 6/30/24 /J.P. MORGAN SECURITIES LLC/5,000,000 PAR VALUE AT 100.5742188 % 5,000,000.0000 1.005742 -5,028,710.94 5,028,710.94 0.00 07/15/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 14,083.3600 1.000000 -14,083.36 14,083.36 0.00 07/16/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 217,968.1200 1.000000 -217,968.12 217,968.12 0.00 07/18/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 7,473.6200 1.000000 -7,473.62 7,473.62 0.00 07/18/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 368,080.0400 1.000000 -368,080.04 368,080.04 0.00 07/19/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 146,875.0000 1.000000 -146,875.00 146,875.00 0.00 07/22/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 133,436.4600 1.000000 -133,436.46 133,436.46 0.00 07/23/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 16,875.0000 1.000000 -16,875.00 16,875.00 0.00 07/23/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 93,750.0000 1.000000 -93,750.00 93,750.00 0.00 07/24/2019 477870AB5 PURCHASED PAR VALUE OF JOHN DEERE OWNER 2.280% 5/16/22 /RBC CAPITAL MARKETS, LLC/2,800,000 PAR VALUE AT 99.99962 % 2,800,000.0000 0.999996 -2,799,989.36 2,799,989.36 0.00 07/25/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 100,248.5000 1.000000 -100,248.50 100,248.50 0.00 07/25/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 144,986.2600 1.000000 -144,986.26 144,986.26 0.00 07/26/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 100,000.0000 1.000000 -100,000.00 100,000.00 0.00 07/29/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 13,702.5000 1.000000 -13,702.50 13,702.50 0.00 07/29/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,890,000.0000 1.000000 -1,890,000.00 1,890,000.00 0.00 07/29/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 113,875.0000 1.000000 -113,875.00 113,875.00 0.00 07/30/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 10,750.0000 1.000000 -10,750.00 10,750.00 0.00 07/31/2019 313384MD8 PURCHASED PAR VALUE OF F H L B DISC NTS 9/25/19 /WELLS FARGO SECURITIES, LLC/2,500,000 PAR VALUE AT 99.6702224 % 2,500,000.0000 0.996702 -2,491,755.56 2,491,755.56 0.00 07/31/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 76,203,125.0000 1.000000 -76,203,125.00 76,203,125.00 0.00 07/31/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 5,194,375.0000 1.000000 -5,194,375.00 5,194,375.00 0.00 08/02/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 13,196.2900 1.000000 -13,196.29 13,196.29 0.00 1 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/02/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 29,177.6400 1.000000 -29,177.64 29,177.64 0.00 08/05/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 61,458.3400 1.000000 -61,458.34 61,458.34 0.00 08/06/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 85,050.0000 1.000000 -85,050.00 85,050.00 0.00 08/07/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 32,500.0000 1.000000 -32,500.00 32,500.00 0.00 08/08/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 23,598.7500 1.000000 -23,598.75 23,598.75 0.00 08/09/2019 06051GFN4 PURCHASED PAR VALUE OF BANK OF AMERICA MTN 2.250% 4/21/20 /MORGAN STANLEY & CO. LLC/2,000,000 PAR VALUE AT 100.098 % 2,000,000.0000 1.000980 -2,001,960.00 2,001,960.00 0.00 08/09/2019 747525AD5 PURCHASED PAR VALUE OF QUALCOMM INC 2.250% 5/20/20 /BARCLAYS CAPITAL INC. FIXED IN/2,000,000 PAR VALUE AT 100.135 % 2,000,000.0000 1.001350 -2,002,700.00 2,002,700.00 0.00 08/12/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,083,000.0000 1.000000 -1,083,000.00 1,083,000.00 0.00 08/12/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 6,498.0000 1.000000 -6,498.00 6,498.00 0.00 08/14/2019 3133EKWV4 PURCHASED PAR VALUE OF F F C B DEB 1.850% 7/26/24 /J.P. MORGAN SECURITIES LLC/5,000,000 PAR VALUE AT 100.9656 % 5,000,000.0000 1.009656 -5,048,280.00 5,048,280.00 0.00 08/15/2019 369550BA5 PURCHASED PAR VALUE OF GENERAL DYNAMICS 2.875% 5/11/20 /PERSHING LLC/2,000,000 PAR VALUE AT 100.567 % 2,000,000.0000 1.005670 -2,011,340.00 2,011,340.00 0.00 08/15/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 22,241.2500 1.000000 -22,241.25 22,241.25 0.00 08/15/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 28,481.4000 1.000000 -28,481.40 28,481.40 0.00 08/15/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 3,462,512.3700 1.000000 -3,462,512.37 3,462,512.37 0.00 08/16/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 89,062.5000 1.000000 -89,062.50 89,062.50 0.00 08/19/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 3,290,000.0000 1.000000 -3,290,000.00 3,290,000.00 0.00 08/19/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 11,522,306.1200 1.000000 -11,522,306.12 11,522,306.12 0.00 08/20/2019 62479MYK3 PURCHASED PAR VALUE OF MUFG BANK LTD NY BRAN C P 11/19/19 /MUFG UNION BK NA/MMI/PIMS/IPA/1,860,000 PAR VALUE AT 99.46411129 % 1,860,000.0000 0.994641 -1,850,032.47 1,850,032.47 0.00 08/20/2019 62479MYK3 PURCHASED PAR VALUE OF MUFG BANK LTD NY BRAN C P 11/19/19 /MUFG UNION BK NA/MMI/PIMS/IPA/11,255,000 PAR VALUE AT 99.46411115 % 11,255,000.0000 0.994641 -11,194,685.71 11,194,685.71 0.00 08/20/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,974.5400 1.000000 -1,974.54 1,974.54 0.00 08/21/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 9,759.5800 1.000000 -9,759.58 9,759.58 0.00 08/23/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 45,000.0000 1.000000 -45,000.00 45,000.00 0.00 08/26/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 16,125.0000 1.000000 -16,125.00 16,125.00 0.00 08/26/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 139,881.5700 1.000000 -139,881.57 139,881.57 0.00 08/27/2019 43815NAB0 PURCHASED PAR VALUE OF HONDA AUTO 1.900% 4/15/22 /SG AMERICAS SECURITIES, LLC/3,530,000 PAR VALUE AT 99.993 % 3,530,000.0000 0.999930 -3,529,752.90 3,529,752.90 0.00 08/27/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,504,012.5000 1.000000 -1,504,012.50 1,504,012.50 0.00 08/27/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,005,350.0000 1.000000 -2,005,350.00 2,005,350.00 0.00 08/28/2019 912796VW6 PURCHASED PAR VALUE OF U S TREASURY BILL 9/24/19 /NOMURA SECURITIES INTERNATIONA/1,650,000 PAR VALUE AT 99.84681273 % 1,650,000.0000 0.998468 -1,647,472.41 1,647,472.41 0.00 2 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/28/2019 912796SL4 PURCHASED PAR VALUE OF U S TREASURY BILL 10/03/19 /NOMURA SECURITIES INTERNATIONA/1,650,000 PAR VALUE AT 99.7992503 % 1,650,000.0000 0.997993 -1,646,687.63 1,646,687.63 0.00 08/28/2019 912828UL2 PURCHASED PAR VALUE OF U S TREASURY NT 1.375% 1/31/20 /GOLDMAN SACHS & CO. LLC/5,000,000 PAR VALUE AT 99.7734376 % 5,000,000.0000 0.997734 -4,988,671.88 4,988,671.88 0.00 09/03/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 199,797.0500 1.000000 -199,797.05 199,797.05 0.00 09/04/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 14,244.3100 1.000000 -14,244.31 14,244.31 0.00 09/04/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 29,015.3700 1.000000 -29,015.37 29,015.37 0.00 09/05/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 29,375.0000 1.000000 -29,375.00 29,375.00 0.00 09/05/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 147,856.2500 1.000000 -147,856.25 147,856.25 0.00 09/09/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 168,750.0000 1.000000 -168,750.00 168,750.00 0.00 09/11/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,120,000.0000 1.000000 -2,120,000.00 2,120,000.00 0.00 09/11/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 24,380.0000 1.000000 -24,380.00 24,380.00 0.00 09/12/2019 78013XZU5 PURCHASED PAR VALUE OF ROYAL BANK OF MTN 2.550% 7/16/24 /RBC CAPITAL MARKETS, LLC/6,500,000 PAR VALUE AT 101.253 % 6,500,000.0000 1.012530 -6,581,445.00 6,581,445.00 0.00 09/13/2019 3130A2UW4 PURCHASED PAR VALUE OF F H L B DEB 2.875% 9/13/24 /MORGAN STANLEY & CO. LLC/2,500,000 PAR VALUE AT 105.438 % 2,500,000.0000 1.054380 -2,635,950.00 2,635,950.00 0.00 09/13/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 3,500,000.0000 1.000000 -3,500,000.00 3,500,000.00 0.00 09/13/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 33,783.7500 1.000000 -33,783.75 33,783.75 0.00 09/16/2019 46647PAU0 PURCHASED PAR VALUE OF JPMORGAN CHASE CO 3.797% 7/23/24 /RBC CAPITAL MARKETS, LLC/2,500,000 PAR VALUE AT 105.287 % 2,500,000.0000 1.052870 -2,632,175.00 2,632,175.00 0.00 09/16/2019 912796RY7 PURCHASED PAR VALUE OF U S TREASURY BILL 1/30/20 /NOMURA SECURITIES INTERNATIONA/4,000,000 PAR VALUE AT 99.292611 % 4,000,000.0000 0.992926 -3,971,704.44 3,971,704.44 0.00 09/16/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 61,307.6100 1.000000 -61,307.61 61,307.61 0.00 09/16/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 3,460,497.0400 1.000000 -3,460,497.04 3,460,497.04 0.00 09/18/2019 912796RY7 PURCHASED PAR VALUE OF U S TREASURY BILL 1/30/20 /CITIGROUP GLOBAL MARKETS INC./3,000,000 PAR VALUE AT 99.29035833 % 3,000,000.0000 0.992904 -2,978,710.75 2,978,710.75 0.00 09/18/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 881,289.2500 1.000000 -881,289.25 881,289.25 0.00 09/18/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 17,500.0000 1.000000 -17,500.00 17,500.00 0.00 09/18/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 335,432.6300 1.000000 -335,432.63 335,432.63 0.00 09/20/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,714.6400 1.000000 -2,714.64 2,714.64 0.00 09/23/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 9,759.5800 1.000000 -9,759.58 9,759.58 0.00 09/24/2019 912828TR1 PURCHASED PAR VALUE OF U S TREASURY NT 1.000% 9/30/19 /NOMURA SECURITIES INTERNATIONA/1,650,000 PAR VALUE AT 99.98437515 % 1,650,000.0000 0.999844 -1,649,742.19 1,649,742.19 0.00 09/25/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,500,000.0000 1.000000 -2,500,000.00 2,500,000.00 0.00 09/25/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,617.5700 1.000000 -4,617.57 4,617.57 0.00 09/25/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 84,359.7400 1.000000 -84,359.74 84,359.74 0.00 3 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/26/2019 912828F39 PURCHASED PAR VALUE OF U S TREASURY NT 1.750% 9/30/19 /CITIGROUP GLOBAL MARKETS INC./1,350,000 PAR VALUE AT 99.99609407 % 1,350,000.0000 0.999961 -1,349,947.27 1,349,947.27 0.00 09/30/2019 912796VY2 PURCHASED PAR VALUE OF U S TREASURY BILL 10/08/19 /WELLS FARGO SECURITIES, LLC/1,250,000 PAR VALUE AT 99.9613936 % 1,250,000.0000 0.999614 -1,249,517.42 1,249,517.42 0.00 09/30/2019 912796VZ9 PURCHASED PAR VALUE OF U S TREASURY BILL 10/15/19 /NOMURA SECURITIES INTERNATIONA/1,250,000 PAR VALUE AT 99.924792 % 1,250,000.0000 0.999248 -1,249,059.90 1,249,059.90 0.00 09/30/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 22,640,235.1800 1.000000 -22,640,235.18 22,640,235.18 0.00 09/30/2019 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 6,172,625.0000 1.000000 -6,172,625.00 6,172,625.00 0.00 TOTAL ACQUISITIONS 225,878,801.0800 -226,168,935.54 226,168,935.54 0.00 DISPOSITIONS 07/01/2019 912828WS5 MATURED PAR VALUE OF U S TREASURY NT 1.625% 6/30/19 2,000,000 PAR VALUE AT 100 % -2,000,000.0000 1.000000 2,000,000.00 -1,996,861.44 3,138.56 07/08/2019 31398VJ98 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.251% 1/25/20 -54,896.1900 0.003221 54,896.19 -58,009.83 -3,113.64 07/08/2019 31398VJ98 PAID DOWN-RV PAR VALUE OF F H L M C MLTCL MTG 4.251% 1/25/20 RATE CHANGE 6/25/19 1,808.4700 0.000000 -1,808.47 1,911.04 102.57 07/12/2019 02665WAH4 SOLD PAR VALUE OF AMERICAN HONDA MTN 2.250% 8/15/19 /PERSHING LLC/1,500,000 PAR VALUE AT 99.984 % -1,500,000.0000 0.999840 1,499,760.00 -1,514,655.00 -14,895.00 07/12/2019 25468PDL7 MATURED PAR VALUE OF WALT DISNEY MTN 0.875% 7/12/19 1,130,000 PAR VALUE AT 100 % -1,130,000.0000 1.000000 1,130,000.00 -1,114,812.80 15,187.20 07/15/2019 3133TCE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.016% 8/15/32 -532.8500 0.000000 532.85 -533.41 -0.56 07/15/2019 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C #786064 4.677% 1/01/28 JUNE FHLMC DUE 7/15/19 -24.6700 0.000000 24.67 -24.07 0.60 07/15/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -4,213,772.7800 1.000000 4,213,772.78 -4,213,772.78 0.00 07/15/2019 43814QAC2 PAID DOWN PAR VALUE OF HONDA AUTO 1.390% 4/15/20 CMO FINAL PAYDOWN -6,808.6400 0.000000 6,808.64 -6,808.51 0.13 07/15/2019 47788BAD6 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.820% 10/15/21 -31,420.2200 12.419054 31,420.22 -31,417.92 2.30 07/15/2019 47788CAB8 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 2.420% 10/15/20 -124,097.1500 3.144387 124,097.15 -123,845.08 252.07 07/15/2019 65477UAD2 PAID DOWN PAR VALUE OF NISSAN AUTO 1.500% 9/15/21 CMO FINAL PAYDOWN -217,968.1200 0.000000 217,968.12 -216,605.82 1,362.30 07/15/2019 65478GAD2 PAID DOWN PAR VALUE OF NISSAN AUTO 1.750% 10/15/21 -173,517.4600 2.248819 173,517.46 -170,826.58 2,690.88 07/15/2019 65478VAD9 PAID DOWN PAR VALUE OF NISSAN AUTO 1.320% 1/15/21 -80,576.8400 4.842699 80,576.84 -79,931.60 645.24 07/15/2019 89238BAB8 PAID DOWN PAR VALUE OF TOYOTA AUTO 2.100% 10/15/20 -333,070.3700 1.171552 333,070.37 -333,036.33 34.04 07/18/2019 43814PAC4 PAID DOWN PAR VALUE OF HONDA AUTO 1.790% 9/20/21 -188,638.4700 0.000000 188,638.47 -185,646.78 2,991.69 07/18/2019 43814RAC0 PAID DOWN PAR VALUE OF HONDA AUTO 1.210% 12/18/20 -128,232.7900 0.000000 128,232.79 -126,825.23 1,407.56 07/22/2019 36225CAZ9 PAID DOWN PAR VALUE OF G N M A I I #080023 4.125% 12/20/26 JUNE GNMA DUE 7/20/19 -1,074.9000 0.000000 1,074.90 -1,092.66 -17.76 4 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/22/2019 36225CC20 PAID DOWN PAR VALUE OF G N M A I I #080088 3.625% 6/20/27 JUNE GNMA DUE 7/20/19 -1,306.6000 0.000000 1,306.60 -1,335.18 -28.58 07/22/2019 36225CN28 PAID DOWN PAR VALUE OF G N M A I I #080408 3.625% 5/20/30 JUNE GNMA DUE 7/20/19 -1,152.2200 0.000000 1,152.22 -1,140.52 11.70 07/22/2019 36225CNM4 PAID DOWN PAR VALUE OF G N M A I I #080395 3.625% 4/20/30 JUNE GNMA DUE 7/20/19 -158.0800 0.000000 158.08 -156.65 1.43 07/22/2019 36225DCB8 PAID DOWN PAR VALUE OF G N M A I I #080965 3.750% 7/20/34 JUNE GNMA DUE 7/20/19 -1,098.2400 0.000000 1,098.24 -1,097.55 0.69 07/24/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -2,799,989.3600 1.000000 2,799,989.36 -2,799,989.36 0.00 07/25/2019 03215PFN4 PAID DOWN PAR VALUE OF AMRESCO 3.14513% 6/25/29 -4,442.3000 0.000000 4,442.30 -3,335.89 1,106.41 07/25/2019 31371NUC7 PAID DOWN PAR VALUE OF F N M A #257179 4.500% 4/01/28 JUNE FNMA DUE 7/25/19 -150.7800 0.000000 150.78 -159.46 -8.68 07/25/2019 31376KT22 PAID DOWN PAR VALUE OF F N M A #357969 5.000% 9/01/35 JUNE FNMA DUE 7/25/19 -1,239.7900 0.000000 1,239.79 -1,332.77 -92.98 07/25/2019 31381PDA3 PAID DOWN PAR VALUE OF F N M A #466397 3.400% 11/01/20 JUNE FNMA DUE 7/25/19 -739.8600 0.000000 739.86 -723.85 16.01 07/25/2019 3138EG6F6 PAID DOWN PAR VALUE OF F N M A #AL0869 4.500% 6/01/29 JUNE FNMA DUE 7/25/19 -201.7200 0.000000 201.72 -213.34 -11.62 07/25/2019 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 6.500% 9/25/43 -8,120.9900 0.000000 8,120.99 -9,197.02 -1,076.03 07/25/2019 31397QRE0 PAID DOWN PAR VALUE OF F N M A GTD REMIC 1.113% 2/25/41 -2,626.6000 0.000000 2,626.60 -2,625.78 0.82 07/25/2019 31398VJ98 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.251% 1/25/20 -85,346.9400 0.000000 85,346.94 -90,187.71 -4,840.77 07/25/2019 31403DJZ3 PAID DOWN PAR VALUE OF F N M A #745580 5.000% 6/01/36 JUNE FNMA DUE 7/25/19 -1,195.7000 0.000000 1,195.70 -1,285.38 -89.68 07/25/2019 31403GXF4 PAID DOWN PAR VALUE OF F N M A #748678 5.000% 10/01/33 JUNE FNMA DUE 7/25/19 -8.8600 0.000000 8.86 -9.52 -0.66 07/25/2019 31406PQY8 PAID DOWN PAR VALUE OF F N M A #815971 5.000% 3/01/35 JUNE FNMA DUE 7/25/19 -2,095.9000 0.000000 2,095.90 -2,253.09 -157.19 07/25/2019 31406XWT5 PAID DOWN PAR VALUE OF F N M A #823358 4.722% 2/01/35 JUNE FNMA DUE 7/25/19 -437.8000 0.000000 437.80 -434.38 3.42 07/25/2019 31407BXH7 PAID DOWN PAR VALUE OF F N M A #826080 5.000% 7/01/35 JUNE FNMA DUE 7/25/19 -86.3000 0.000000 86.30 -92.77 -6.47 07/25/2019 31410F4V4 PAID DOWN PAR VALUE OF F N M A #888336 5.000% 7/01/36 JUNE FNMA DUE 7/25/19 -3,239.4100 0.000000 3,239.41 -3,482.37 -242.96 07/25/2019 31417YAY3 PAID DOWN PAR VALUE OF F N M A #MA0022 4.500% 4/01/29 JUNE FNMA DUE 7/25/19 -385.7000 0.000000 385.70 -407.92 -22.22 07/25/2019 78445JAA5 PAID DOWN PAR VALUE OF S L M A 4.12559% 4/25/23 -669.6900 0.000000 669.69 -666.97 2.72 07/29/2019 69353REX2 MATURED PAR VALUE OF PNC BANK MTN 1.450% 7/29/19 1,890,000 PAR VALUE AT 100 % -1,890,000.0000 1.000000 1,890,000.00 -1,872,668.70 17,331.30 5 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/31/2019 313384JV2 MATURED PAR VALUE OF F H L B DISC NTS 7/31/19 5,500,000 PAR VALUE AT 100 % -5,500,000.0000 1.000000 5,461,946.11 -5,461,946.11 0.00 07/31/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -74,491,755.5600 1.000000 74,491,755.56 -74,491,755.56 0.00 07/31/2019 9128282K5 MATURED PAR VALUE OF U S TREASURY NT 1.375% 7/31/19 35,000,000 PAR VALUE AT 100 % -35,000,000.0000 1.000000 35,000,000.00 -34,810,156.26 189,843.74 07/31/2019 912828TH3 MATURED PAR VALUE OF U S TREASURY NT 0.875% 7/31/19 15,000,000 PAR VALUE AT 100 % -15,000,000.0000 1.000000 15,000,000.00 -14,874,023.44 125,976.56 07/31/2019 912828WW6 MATURED PAR VALUE OF U S TREASURY NT 1.625% 7/31/19 20,000,000 PAR VALUE AT 100 % -20,000,000.0000 1.000000 20,000,000.00 -19,923,437.51 76,562.49 07/31/2019 912828WW6 MATURED PAR VALUE OF U S TREASURY NT 1.625% 7/31/19 5,000,000 PAR VALUE AT 100 % -5,000,000.0000 1.000000 5,000,000.00 -5,012,388.70 -12,388.70 08/09/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -4,028,035.0000 1.000000 4,028,035.00 -4,028,035.00 0.00 08/12/2019 69371RN36 MATURED PAR VALUE OF PACCAR FINANCIAL MTN 1.200% 8/12/19 1,083,000 PAR VALUE AT 100 % -1,083,000.0000 1.000000 1,083,000.00 -1,069,484.16 13,515.84 08/14/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -5,052,905.0000 1.000000 5,052,905.00 -5,052,905.00 0.00 08/15/2019 02665WAH4 MATURED PAR VALUE OF AMERICAN HONDA MTN 2.250% 8/15/19 1,977,000 PAR VALUE AT 100 % -1,977,000.0000 1.000000 1,977,000.00 -1,972,709.91 4,290.09 08/15/2019 02665WAH4 MATURED PAR VALUE OF AMERICAN HONDA MTN 2.250% 8/15/19 2,500,000 PAR VALUE AT 100 % -2,500,000.0000 1.000000 2,500,000.00 -2,531,985.00 -31,985.00 08/15/2019 3133TCE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.016% 8/15/32 -327.6500 0.000000 327.65 -327.99 -0.34 08/15/2019 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C #786064 4.677% 1/01/28 JULY FHLMC DUE 8/15/19 -17.5100 0.000000 17.51 -17.08 0.43 08/15/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -49,353.8900 1.000000 49,353.89 -49,353.89 0.00 08/15/2019 47788BAD6 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.820% 10/15/21 -41,039.5800 10.101764 41,039.58 -41,036.58 3.00 08/15/2019 47788CAB8 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 2.420% 10/15/20 -158,985.8800 2.607604 158,985.88 -158,662.94 322.94 08/15/2019 47788NAD0 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.490% 5/15/23 -42,667.9300 9.716248 42,667.93 -41,961.24 706.69 08/15/2019 65478GAD2 PAID DOWN PAR VALUE OF NISSAN AUTO 1.750% 10/15/21 -202,815.7200 2.044083 202,815.72 -199,670.49 3,145.23 08/15/2019 65478VAD9 PAID DOWN PAR VALUE OF NISSAN AUTO 1.320% 1/15/21 -87,902.0400 4.716297 87,902.04 -87,198.14 703.90 08/15/2019 89238BAB8 PAID DOWN PAR VALUE OF TOYOTA AUTO 2.100% 10/15/20 -369,146.5800 1.123056 369,146.58 -369,108.85 37.73 08/19/2019 43814PAC4 PAID DOWN PAR VALUE OF HONDA AUTO 1.790% 9/20/21 -196,780.7500 0.000000 196,780.75 -193,659.93 3,120.82 08/19/2019 43814RAC0 PAID DOWN PAR VALUE OF HONDA AUTO 1.210% 12/18/20 -131,592.8900 0.000000 131,592.89 -130,148.45 1,444.44 08/19/2019 62479MVK6 MATURED PAR VALUE OF MUFG BANK LTD NY BRAN C P 8/19/19 11,125,000 PAR VALUE AT 100 % -11,125,000.0000 1.000000 11,081,427.08 -11,081,427.08 0.00 08/19/2019 62479MVK6 MATURED PAR VALUE OF MUFG BANK LTD NY BRAN C P 8/19/19 3,290,000 PAR VALUE AT 100 % -3,290,000.0000 1.000000 3,277,114.17 -3,277,114.17 0.00 08/20/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -1,850,032.4700 1.000000 1,850,032.47 -1,850,032.47 0.00 08/20/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -11,194,685.7100 1.000000 11,194,685.71 -11,194,685.71 0.00 6 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/20/2019 36225CAZ9 PAID DOWN PAR VALUE OF G N M A I I #080023 4.125% 12/20/26 JULY GNMA DUE 8/20/19 -159.4000 0.000000 159.40 -162.03 -2.63 08/20/2019 36225CC20 PAID DOWN PAR VALUE OF G N M A I I #080088 3.875% 6/20/27 JULY GNMA DUE 8/20/19 -175.0500 0.000000 175.05 -178.88 -3.83 08/20/2019 36225CN28 PAID DOWN PAR VALUE OF G N M A I I #080408 3.875% 5/20/30 JULY GNMA DUE 8/20/19 -935.2900 0.000000 935.29 -925.79 9.50 08/20/2019 36225CNM4 PAID DOWN PAR VALUE OF G N M A I I #080395 3.875% 4/20/30 JULY GNMA DUE 8/20/19 -41.7300 0.000000 41.73 -41.35 0.38 08/20/2019 36225DCB8 PAID DOWN PAR VALUE OF G N M A I I #080965 3.750% 7/20/34 JULY GNMA DUE 8/20/19 -225.8200 0.000000 225.82 -225.68 0.14 08/26/2019 03215PFN4 PAID DOWN PAR VALUE OF AMRESCO 6.88883% 6/25/29 -5,170.7400 0.000000 5,170.74 -3,882.90 1,287.84 08/26/2019 31371NUC7 PAID DOWN PAR VALUE OF F N M A #257179 4.500% 4/01/28 JULY FNMA DUE 8/25/19 -133.6400 0.000000 133.64 -141.34 -7.70 08/26/2019 31376KT22 PAID DOWN PAR VALUE OF F N M A #357969 5.000% 9/01/35 JULY FNMA DUE 8/25/19 -2,305.8700 0.000000 2,305.87 -2,478.81 -172.94 08/26/2019 31381PDA3 PAID DOWN PAR VALUE OF F N M A #466397 3.400% 11/01/20 JULY FNMA DUE 8/25/19 -697.4800 0.000000 697.48 -682.39 15.09 08/26/2019 3138EG6F6 PAID DOWN PAR VALUE OF F N M A #AL0869 4.500% 6/01/29 JULY FNMA DUE 8/25/19 -237.8800 0.000000 237.88 -251.58 -13.70 08/26/2019 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 6.500% 9/25/43 -2,847.9200 0.000000 2,847.92 -3,225.27 -377.35 08/26/2019 31397QRE0 PAID DOWN PAR VALUE OF F N M A GTD REMIC 1.113% 2/25/41 -4,128.0900 0.000000 4,128.09 -4,126.80 1.29 08/26/2019 31398VJ98 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.251% 1/25/20 -34,844.9200 0.000000 34,844.92 -36,821.28 -1,976.36 08/26/2019 31403DJZ3 PAID DOWN PAR VALUE OF F N M A #745580 5.000% 6/01/36 JULY FNMA DUE 8/25/19 -1,200.6000 0.000000 1,200.60 -1,290.64 -90.04 08/26/2019 31403GXF4 PAID DOWN PAR VALUE OF F N M A #748678 5.000% 10/01/33 JULY FNMA DUE 8/25/19 -8.9000 0.000000 8.90 -9.57 -0.67 08/26/2019 31406PQY8 PAID DOWN PAR VALUE OF F N M A #815971 5.000% 3/01/35 JULY FNMA DUE 8/25/19 -3,829.3500 0.000000 3,829.35 -4,116.55 -287.20 08/26/2019 31406XWT5 PAID DOWN PAR VALUE OF F N M A #823358 4.722% 2/01/35 JULY FNMA DUE 8/25/19 -443.0000 0.000000 443.00 -439.54 3.46 08/26/2019 31407BXH7 PAID DOWN PAR VALUE OF F N M A #826080 5.000% 7/01/35 JULY FNMA DUE 8/25/19 -589.9700 0.000000 589.97 -634.22 -44.25 08/26/2019 31410F4V4 PAID DOWN PAR VALUE OF F N M A #888336 5.000% 7/01/36 JULY FNMA DUE 8/25/19 -2,768.1900 0.000000 2,768.19 -2,975.80 -207.61 08/26/2019 31417YAY3 PAID DOWN PAR VALUE OF F N M A #MA0022 4.500% 4/01/29 JULY FNMA DUE 8/25/19 -313.7600 0.000000 313.76 -331.83 -18.07 08/27/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -3,529,752.9000 1.000000 3,529,752.90 -3,529,752.90 0.00 7 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/27/2019 46625HKA7 PURCHASE OFFER PAR VALUE OF JPMORGAN CHASE CO 2.250% 1/23/20 /TENDER/PURCHASE OFFER/TENDER OFFER PAID AT $1000.55 PER $1000 -1,500,000.0000 1.000550 1,500,825.00 -1,490,940.00 9,885.00 08/27/2019 46625HKA7 PURCHASE OFFER PAR VALUE OF JPMORGAN CHASE CO 2.250% 1/23/20 /TENDER/PURCHASE OFFER/TENDER OFFER PAID AT $1000.55 PER $1000 -2,000,000.0000 1.000550 2,001,100.00 -1,994,880.00 6,220.00 08/28/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -8,288,062.9000 1.000000 8,288,062.90 -8,288,062.90 0.00 09/03/2019 83162CLJ0 PAID DOWN PAR VALUE OF S B A GTD DEV PART 6.340% 3/01/21 -3,501.5000 0.000000 3,501.50 -3,501.50 0.00 09/11/2019 06406HCW7 MATURED PAR VALUE OF BANK OF NY MTN 2.300% 9/11/19 2,120,000 PAR VALUE AT 100 % -2,120,000.0000 1.000000 2,120,000.00 -2,142,175.20 -22,175.20 09/12/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -6,607,228.3300 1.000000 6,607,228.33 -6,607,228.33 0.00 09/13/2019 21687BWD9 MATURED PAR VALUE OF COOPERATIEVE CENTRAL C P 9/13/19 2,000,000 PAR VALUE AT 100 % -2,000,000.0000 1.000000 1,957,864.44 -1,957,864.44 0.00 09/13/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -2,608,950.0000 1.000000 2,608,950.00 -2,608,950.00 0.00 09/13/2019 96130ABJ6 MATURED PAR VALUE OF WESTPAC BKING C D 2.970% 9/13/19 1,500,000 PAR VALUE AT 100 % -1,500,000.0000 1.000000 1,500,000.00 -1,500,000.00 0.00 09/16/2019 24422ESS9 MATURED PAR VALUE OF JOHN DEERE CAP MTN 2.300% 9/16/19 5,000,000 PAR VALUE AT 100 % -5,000,000.0000 1.000000 5,000,000.00 -5,046,984.00 -46,984.00 09/16/2019 3133TCE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.016% 8/15/32 -426.1500 0.000000 426.15 -426.60 -0.45 09/16/2019 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C #786064 4.677% 1/01/28 AUGUST FHLMC DUE 9/15/19 -10.2600 0.000000 10.26 -10.01 0.25 09/16/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -3,971,704.4400 1.000000 3,971,704.44 -3,971,704.44 0.00 09/16/2019 47788BAD6 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.820% 10/15/21 -33,250.3900 0.193666 33,250.39 -33,247.96 2.43 09/16/2019 47788CAB8 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 2.420% 10/15/20 -132,838.5800 0.048476 132,838.58 -132,568.75 269.83 09/16/2019 47788NAD0 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.490% 5/15/23 -104,619.1400 0.061551 104,619.14 -102,886.39 1,732.75 09/16/2019 65478GAD2 PAID DOWN PAR VALUE OF NISSAN AUTO 1.750% 10/15/21 -184,963.4900 0.034815 184,963.49 -182,095.11 2,868.38 09/16/2019 65478VAD9 PAID DOWN PAR VALUE OF NISSAN AUTO 1.320% 1/15/21 -78,512.8800 0.082018 78,512.88 -77,884.16 628.72 09/16/2019 89238BAB8 PAID DOWN PAR VALUE OF TOYOTA AUTO 2.100% 10/15/20 -338,320.6100 0.019034 338,320.61 -338,286.03 34.58 09/18/2019 313384LW7 MATURED PAR VALUE OF F H L B DISC NTS 9/18/19 2,850,000 PAR VALUE AT 100 % -2,850,000.0000 1.000000 2,835,718.33 -2,835,718.33 0.00 09/18/2019 43814PAC4 PAID DOWN PAR VALUE OF HONDA AUTO 1.790% 9/20/21 -191,465.2700 0.000000 191,465.27 -188,428.75 3,036.52 09/18/2019 43814RAC0 PAID DOWN PAR VALUE OF HONDA AUTO 1.210% 12/18/20 -125,470.4900 0.000000 125,470.49 -124,093.26 1,377.23 09/18/2019 69353RDZ8 FULL CALL PAR VALUE OF PNC BANK NA MTN 2.400% 10/18/19 /CALLS/ -1,000,000.0000 1.000000 1,000,000.00 -999,000.00 1,000.00 09/20/2019 36225CAZ9 PAID DOWN PAR VALUE OF G N M A I I #080023 4.125% 12/20/26 AUGUST GNMA DUE 9/20/19 -168.0000 0.000000 168.00 -170.78 -2.78 09/20/2019 36225CC20 PAID DOWN PAR VALUE OF G N M A I I #080088 3.875% 6/20/27 AUGUST GNMA DUE 9/20/19 -172.1100 0.000000 172.11 -175.88 -3.77 09/20/2019 36225CN28 PAID DOWN PAR VALUE OF G N M A I I #080408 3.875% 5/20/30 AUGUST GNMA DUE 9/20/19 -1,313.3300 0.000000 1,313.33 -1,299.99 13.34 8 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/20/2019 36225CNM4 PAID DOWN PAR VALUE OF G N M A I I #080395 3.875% 4/20/30 AUGUST GNMA DUE 9/20/19 -107.5000 0.000000 107.50 -106.53 0.97 09/20/2019 36225DCB8 PAID DOWN PAR VALUE OF G N M A I I #080965 3.750% 7/20/34 AUGUST GNMA DUE 9/20/19 -521.4100 0.000000 521.41 -521.08 0.33 09/24/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -7,721.7000 1.000000 7,721.70 -7,721.70 0.00 09/24/2019 912796VW6 MATURED PAR VALUE OF U S TREASURY BILL 9/24/19 1,650,000 PAR VALUE AT 100 % -1,650,000.0000 1.000000 1,647,472.41 -1,647,472.41 0.00 09/25/2019 03215PFN4 PAID DOWN PAR VALUE OF AMRESCO 3.08529% 6/25/29 -1,002.4000 0.000000 1,002.40 -752.74 249.66 09/25/2019 313384MD8 MATURED PAR VALUE OF F H L B DISC NTS 9/25/19 2,500,000 PAR VALUE AT 100 % -2,500,000.0000 1.000000 2,491,755.56 -2,491,755.56 0.00 09/25/2019 31371NUC7 PAID DOWN PAR VALUE OF F N M A #257179 4.500% 4/01/28 AUGUST FNMA DUE 9/25/19 -152.2000 0.000000 152.20 -160.97 -8.77 09/25/2019 31376KT22 PAID DOWN PAR VALUE OF F N M A #357969 5.000% 9/01/35 AUGUST FNMA DUE 9/25/19 -1,514.2800 0.000000 1,514.28 -1,627.85 -113.57 09/25/2019 31381PDA3 PAID DOWN PAR VALUE OF F N M A #466397 3.400% 11/01/20 AUGUST FNMA DUE 9/25/19 -700.3700 0.000000 700.37 -685.21 15.16 09/25/2019 3138EG6F6 PAID DOWN PAR VALUE OF F N M A #AL0869 4.500% 6/01/29 AUGUST FNMA DUE 9/25/19 -166.2300 0.000000 166.23 -175.80 -9.57 09/25/2019 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 6.500% 9/25/43 -11,750.1900 0.000000 11,750.19 -13,307.09 -1,556.90 09/25/2019 31397QRE0 PAID DOWN PAR VALUE OF F N M A GTD REMIC 2.825% 2/25/41 -4,168.6800 1,910.816505 4,168.68 -4,167.38 1.30 09/25/2019 31398VJ98 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 4.251% 1/25/20 -49,947.5300 0.000000 49,947.53 -52,780.49 -2,832.96 09/25/2019 31403DJZ3 PAID DOWN PAR VALUE OF F N M A #745580 5.000% 6/01/36 AUGUST FNMA DUE 9/25/19 -1,592.2000 0.000000 1,592.20 -1,711.62 -119.42 09/25/2019 31403GXF4 PAID DOWN PAR VALUE OF F N M A #748678 5.000% 10/01/33 AUGUST FNMA DUE 9/25/19 -8.9400 0.000000 8.94 -9.61 -0.67 09/25/2019 31406PQY8 PAID DOWN PAR VALUE OF F N M A #815971 5.000% 3/01/35 AUGUST FNMA DUE 9/25/19 -2,093.3300 0.000000 2,093.33 -2,250.33 -157.00 09/25/2019 31406XWT5 PAID DOWN PAR VALUE OF F N M A #823358 4.722% 2/01/35 AUGUST FNMA DUE 9/25/19 -438.9600 0.000000 438.96 -435.53 3.43 09/25/2019 31407BXH7 PAID DOWN PAR VALUE OF F N M A #826080 5.000% 7/01/35 AUGUST FNMA DUE 9/25/19 -300.8600 0.000000 300.86 -323.42 -22.56 09/25/2019 31410F4V4 PAID DOWN PAR VALUE OF F N M A #888336 5.000% 7/01/36 AUGUST FNMA DUE 9/25/19 -3,923.7200 0.000000 3,923.72 -4,218.00 -294.28 09/25/2019 31417YAY3 PAID DOWN PAR VALUE OF F N M A #MA0022 4.500% 4/01/29 AUGUST FNMA DUE 9/25/19 -248.4500 0.000000 248.45 -262.76 -14.31 09/26/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -1,361,501.5700 1.000000 1,361,501.57 -1,361,501.57 0.00 09/30/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -24,982,984.4400 1.000000 24,982,984.44 -24,982,984.44 0.00 09/30/2019 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -15,000,000.0000 1.000000 15,000,000.00 -15,000,000.00 0.00 9 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/30/2019 89114MM20 MATURED PAR VALUE OF TORONTO DOMINION C D 2.470% 9/30/19 2,000,000 PAR VALUE AT 100 % -2,000,000.0000 1.000000 2,000,000.00 -2,000,066.62 -66.62 09/30/2019 9128282X7 MATURED PAR VALUE OF U S TREASURY NT 1.375% 9/30/19 10,000,000 PAR VALUE AT 100 % -10,000,000.0000 1.000000 10,000,000.00 -9,962,500.00 37,500.00 09/30/2019 912828F39 MATURED PAR VALUE OF U S TREASURY NT 1.750% 9/30/19 1,350,000 PAR VALUE AT 100 % -1,350,000.0000 1.000000 1,350,000.00 -1,349,947.27 52.73 09/30/2019 912828F39 MATURED PAR VALUE OF U S TREASURY NT 1.750% 9/30/19 5,800,000 PAR VALUE AT 100 % -5,800,000.0000 1.000000 5,800,000.00 -5,873,186.87 -73,186.87 09/30/2019 912828TR1 MATURED PAR VALUE OF U S TREASURY NT 1.000% 9/30/19 1,650,000 PAR VALUE AT 100 % -1,650,000.0000 1.000000 1,650,000.00 -1,649,742.19 257.81 09/30/2019 912828TR1 MATURED PAR VALUE OF U S TREASURY NT 1.000% 9/30/19 10,000,000 PAR VALUE AT 100 % -10,000,000.0000 1.000000 10,000,000.00 -9,937,500.00 62,500.00 TOTAL DISPOSITIONS -333,973,193.3100 333,813,176.41 -333,437,975.64 375,200.77 OTHER TRANSACTIONS 07/01/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 6/30/2019 INTEREST FROM 6/1/19 TO 6/30/19 0.0000 0.000000 12,397.24 0.00 0.00 07/01/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 6/30/2019 INTEREST FROM 6/1/19 TO 6/30/19 0.0000 0.000000 34,814.07 0.00 0.00 07/01/2019 912828N30 INTEREST EARNED ON U S TREASURY NT 2.125% 12/31/22 $1 PV ON 5000000.0000 SHARES DUE 6/30/2019 0.0000 0.000000 53,125.00 0.00 0.00 07/01/2019 912828WS5 INTEREST EARNED ON U S TREASURY NT 1.625% 6/30/19 $1 PV ON 2000000.0000 SHARES DUE 6/30/2019 0.0000 0.000000 16,250.00 0.00 0.00 07/01/2019 912828XW5 INTEREST EARNED ON U S TREASURY NT 1.750% 6/30/22 $1 PV ON 5000000.0000 SHARES DUE 6/30/2019 0.0000 0.000000 43,750.00 0.00 0.00 07/05/2019 3135G0S38 INTEREST EARNED ON F N M A 2.000% 1/05/22 $1 PV ON 3000000.0000 SHARES DUE 7/5/2019 0.0000 0.000000 30,000.00 0.00 0.00 07/05/2019 404280BF5 INTEREST EARNED ON HSBC HOLDINGS PLC 2.650% 1/05/22 $1 PV ON 4500000.0000 SHARES DUE 7/5/2019 0.0000 0.000000 59,625.00 0.00 0.00 07/08/2019 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1/25/20 $1 PV ON 3131.8900 SHARES DUE 6/25/2019 $0.00354/PV ON 884,090.32 PV DUE 6/25/19 0.0000 0.000000 3,131.89 0.00 0.00 07/08/2019 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1/25/20 $1 PV ON 3131.8900 SHARES DUE 6/25/2019 RATE CHANGE 6/25/19 0.0000 0.000000 -3,131.89 0.00 0.00 07/11/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12688.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 07/11/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12688.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 12,688.00 0.00 07/11/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12688.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 12,688.0000 0.000000 0.00 0.00 0.00 10 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/11/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12688.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 07/12/2019 02665WAH4 RECEIVED ACCRUED INTEREST ON SALE OF AMERICAN HONDA MTN 2.250% 8/15/19 0.0000 0.000000 13,781.25 0.00 0.00 07/12/2019 02665WCZ2 PAID ACCRUED INTEREST ON PURCHASE OF AMERICAN HONDA MTN 2.400% 6/27/24 0.0000 0.000000 -1,219.00 0.00 0.00 07/12/2019 25468PDL7 INTEREST EARNED ON WALT DISNEY MTN 0.875% 7/12/19 $1 PV ON 1130000.0000 SHARES DUE 7/12/2019 INTEREST ON 7/12/19 MATURITY 0.0000 0.000000 4,943.75 0.00 0.00 07/15/2019 02587AAJ3 INTEREST EARNED ON AMERICAN EXPRESS 1.930% 9/15/22 $1 PV ON 10084.2400 SHARES DUE 7/15/2019 $0.00161/PV ON 6,270,000.00 PV DUE 7/15/19 0.0000 0.000000 10,084.24 0.00 0.00 07/15/2019 02665WCJ8 INTEREST EARNED ON AMERICAN HONDA MTN 3.450% 7/14/23 $1 PV ON 845000.0000 SHARES DUE 7/14/2019 0.0000 0.000000 14,576.25 0.00 0.00 07/15/2019 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 4.016% 8/15/32 $1 PV ON 30.8400 SHARES DUE 7/15/2019 $0.00335/PV ON 9,215.15 PV DUE 7/15/19 0.0000 0.000000 30.84 0.00 0.00 07/15/2019 31348SWZ3 INTEREST EARNED ON F H L M C #786064 4.677% 1/01/28 $1 PV ON 7.4000 SHARES DUE 7/15/2019 MAY FHLMC DUE 7/15/19 0.0000 0.000000 7.40 0.00 0.00 07/15/2019 43814QAC2 INTEREST EARNED ON HONDA AUTO 1.390% 4/15/20 $1 PV ON 7.8900 SHARES DUE 7/15/2019 $0.00116/PV ON 6,808.64 PV DUE 7/15/19 0.0000 0.000000 7.89 0.00 0.00 07/15/2019 47788BAD6 INTEREST EARNED ON JOHN DEERE OWNER 1.820% 10/15/21 $1 PV ON 829.7700 SHARES DUE 7/15/2019 $0.00152/PV ON 547,103.97 PV DUE 7/15/19 0.0000 0.000000 829.77 0.00 0.00 07/15/2019 47788CAB8 INTEREST EARNED ON JOHN DEERE OWNER 2.420% 10/15/20 $1 PV ON 1203.0100 SHARES DUE 7/15/2019 $0.00202/PV ON 596,531.92 PV DUE 7/15/19 0.0000 0.000000 1,203.01 0.00 0.00 07/15/2019 47788CAC6 INTEREST EARNED ON JOHN DEERE OWNER 2.660% 4/18/22 $1 PV ON 2970.3300 SHARES DUE 7/15/2019 $0.00222/PV ON 1,340,000.00 PV DUE 7/15/19 0.0000 0.000000 2,970.33 0.00 0.00 07/15/2019 47788EAC2 INTEREST EARNED ON JOHN DEERE OWNER 3.080% 11/15/22 $1 PV ON 11883.6700 SHARES DUE 7/15/2019 $0.00257/PV ON 4,630,000.00 PV DUE 7/15/19 0.0000 0.000000 11,883.67 0.00 0.00 07/15/2019 47788NAD0 INTEREST EARNED ON JOHN DEERE OWNER 1.490% 5/15/23 $1 PV ON 1429.1600 SHARES DUE 7/15/2019 $0.00124/PV ON 1,151,000.00 PV DUE 7/15/19 0.0000 0.000000 1,429.16 0.00 0.00 07/15/2019 47789JAB2 INTEREST EARNED ON JOHN DEERE OWNER 2.850% 12/15/21 $1 PV ON 7754.3800 SHARES DUE 7/15/2019 $0.00238/PV ON 3,265,000.00 PV DUE 7/15/19 0.0000 0.000000 7,754.38 0.00 0.00 07/15/2019 65477UAD2 INTEREST EARNED ON NISSAN AUTO 1.500% 9/15/21 $1 PV ON 272.4600 SHARES DUE 7/15/2019 $0.00125/PV ON 217,968.12 PV DUE 7/15/19 0.0000 0.000000 272.46 0.00 0.00 07/15/2019 65478GAD2 INTEREST EARNED ON NISSAN AUTO 1.750% 10/15/21 $1 PV ON 3828.1200 SHARES DUE 7/15/2019 $0.00146/PV ON 2,625,000.00 PV DUE 7/15/19 0.0000 0.000000 3,828.12 0.00 0.00 07/15/2019 65478VAD9 INTEREST EARNED ON NISSAN AUTO 1.320% 1/15/21 $1 PV ON 548.9500 SHARES DUE 7/15/2019 $0.00110/PV ON 499,041.78 PV DUE 7/15/19 0.0000 0.000000 548.95 0.00 0.00 07/15/2019 65479GAD1 INTEREST EARNED ON NISSAN AUTO 3.060% 3/15/23 $1 PV ON 9078.0000 SHARES DUE 7/15/2019 $0.00255/PV ON 3,560,000.00 PV DUE 7/15/19 0.0000 0.000000 9,078.00 0.00 0.00 11 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/15/2019 89238BAB8 INTEREST EARNED ON TOYOTA AUTO 2.100% 10/15/20 $1 PV ON 3017.3100 SHARES DUE 7/15/2019 $0.00175/PV ON 1,724,177.00 PV DUE 7/15/19 0.0000 0.000000 3,017.31 0.00 0.00 07/15/2019 89239AAB9 INTEREST EARNED ON TOYOTA AUTO 2.830% 10/15/21 $1 PV ON 8525.3700 SHARES DUE 7/15/2019 $0.00236/PV ON 3,615,000.00 PV DUE 7/15/19 0.0000 0.000000 8,525.37 0.00 0.00 07/15/2019 912828WU0 INTEREST EARNED ON U S TREASURY I P S 0.125% 7/15/24 $1 PV ON 11203608.0000 SHARES DUE 7/15/2019 0.0000 0.000000 7,002.26 0.00 0.00 07/15/2019 912828XX3 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 2.000% 6/30/24 0.0000 0.000000 -4,076.09 0.00 0.00 07/18/2019 43814PAC4 INTEREST EARNED ON HONDA AUTO 1.790% 9/20/21 $1 PV ON 4015.7300 SHARES DUE 7/18/2019 $0.00149/PV ON 2,692,110.09 PV DUE 7/18/19 0.0000 0.000000 4,015.73 0.00 0.00 07/18/2019 43814RAC0 INTEREST EARNED ON HONDA AUTO 1.210% 12/18/20 $1 PV ON 956.9200 SHARES DUE 7/18/2019 $0.00101/PV ON 949,016.11 PV DUE 7/18/19 0.0000 0.000000 956.92 0.00 0.00 07/18/2019 43814UAG4 INTEREST EARNED ON HONDA AUTO 3.010% 5/18/22 $1 PV ON 4289.2500 SHARES DUE 7/18/2019 $0.00251/PV ON 1,710,000.00 PV DUE 7/18/19 0.0000 0.000000 4,289.25 0.00 0.00 07/18/2019 43814WAB1 INTEREST EARNED ON HONDA AUTO 2.750% 9/20/21 $1 PV ON 10071.8800 SHARES DUE 7/18/2019 $0.00229/PV ON 4,395,000.00 PV DUE 7/18/19 0.0000 0.000000 10,071.88 0.00 0.00 07/18/2019 4581X0CW6 INTEREST EARNED ON INTER AMER DEV BK 2.125% 1/18/22 $1 PV ON 3000000.0000 SHARES DUE 7/18/2019 0.0000 0.000000 31,875.00 0.00 0.00 07/18/2019 525ESC0Y6 Unknown LEHMAN BRTH HLD ESC PARTIAL LIQUIDATING DISTRIBUTION PAID @ 2.87/SHARE 0.0000 0.000000 5,744.23 -5,744.23 0.00 07/18/2019 525ESCIB7 Unknown LEHMAN BRTH MTN ES 0.00001% 1/24/13 PARTIAL LIQUIDATING DISTRIBUTION PAID @ 2.88/SHARE 0.0000 0.000000 1,729.39 -1,729.39 0.00 07/19/2019 3135G0T94 INTEREST EARNED ON F N M A DEB 2.375% 1/19/23 $1 PV ON 5000000.0000 SHARES DUE 7/19/2019 0.0000 0.000000 59,375.00 0.00 0.00 07/19/2019 89114QC48 INTEREST EARNED ON TORONTO MTN 3.500% 7/19/23 $1 PV ON 5000000.0000 SHARES DUE 7/19/2019 0.0000 0.000000 87,500.00 0.00 0.00 07/22/2019 36225CAZ9 INTEREST EARNED ON G N M A I I #080023 4.125% 12/20/26 $1 PV ON 57.5800 SHARES DUE 7/20/2019 JUNE GNMA DUE 7/20/19 0.0000 0.000000 57.58 0.00 0.00 07/22/2019 36225CC20 INTEREST EARNED ON G N M A I I #080088 3.625% 6/20/27 $1 PV ON 50.6000 SHARES DUE 7/20/2019 JUNE GNMA DUE 7/20/19 0.0000 0.000000 50.60 0.00 0.00 07/22/2019 36225CN28 INTEREST EARNED ON G N M A I I #080408 3.625% 5/20/30 $1 PV ON 160.5700 SHARES DUE 7/20/2019 JUNE GNMA DUE 7/20/19 0.0000 0.000000 160.57 0.00 0.00 07/22/2019 36225CNM4 INTEREST EARNED ON G N M A I I #080395 3.625% 4/20/30 $1 PV ON 20.6300 SHARES DUE 7/20/2019 JUNE GNMA DUE 7/20/19 0.0000 0.000000 20.63 0.00 0.00 07/22/2019 36225DCB8 INTEREST EARNED ON G N M A I I #080965 3.750% 7/20/34 $1 PV ON 147.4600 SHARES DUE 7/20/2019 JUNE GNMA DUE 7/20/19 0.0000 0.000000 147.46 0.00 0.00 07/22/2019 43815HAC1 INTEREST EARNED ON HONDA AUTO 2.950% 8/22/22 $1 PV ON 9759.5800 SHARES DUE 7/21/2019 $0.00246/PV ON 3,970,000.00 PV DUE 7/21/19 0.0000 0.000000 9,759.58 0.00 0.00 07/22/2019 45950KCJ7 INTEREST EARNED ON INTL FINANCE CORP 1.125% 7/20/21 $1 PV ON 2500000.0000 SHARES DUE 7/20/2019 0.0000 0.000000 14,075.00 0.00 0.00 12 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/22/2019 94974BGM6 INTEREST EARNED ON WELLS FARGO CO MTN 2.600% 7/22/20 $1 PV ON 5000000.0000 SHARES DUE 7/22/2019 0.0000 0.000000 65,000.00 0.00 0.00 07/22/2019 95000U2B8 INTEREST EARNED ON WELLS FARGO MTN 2.625% 7/22/22 $1 PV ON 3000000.0000 SHARES DUE 7/22/2019 0.0000 0.000000 39,375.00 0.00 0.00 07/23/2019 46625HKA7 INTEREST EARNED ON JPMORGAN CHASE CO 2.250% 1/23/20 $1 PV ON 1500000.0000 SHARES DUE 7/23/2019 0.0000 0.000000 16,875.00 0.00 0.00 07/23/2019 46625HKA7 INTEREST EARNED ON JPMORGAN CHASE CO 2.250% 1/23/20 $1 PV ON 2000000.0000 SHARES DUE 7/23/2019 0.0000 0.000000 22,500.00 0.00 0.00 07/23/2019 90331HNL3 INTEREST EARNED ON US BANK NA MTN 2.850% 1/23/23 $1 PV ON 5000000.0000 SHARES DUE 7/23/2019 0.0000 0.000000 71,250.00 0.00 0.00 07/25/2019 31371NUC7 INTEREST EARNED ON F N M A #257179 4.500% 4/01/28 $1 PV ON 56.8300 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 56.83 0.00 0.00 07/25/2019 31376KT22 INTEREST EARNED ON F N M A #357969 5.000% 9/01/35 $1 PV ON 433.1100 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 433.11 0.00 0.00 07/25/2019 31381PDA3 INTEREST EARNED ON F N M A #466397 3.400% 11/01/20 $1 PV ON 961.9000 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 961.90 0.00 0.00 07/25/2019 3138EG6F6 INTEREST EARNED ON F N M A #AL0869 4.500% 6/01/29 $1 PV ON 39.9400 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 39.94 0.00 0.00 07/25/2019 31394JY35 INTEREST EARNED ON F H L M C MLTCL MTG 6.500% 9/25/43 $1 PV ON 3843.1500 SHARES DUE 7/25/2019 $0.00542/PV ON 709,504.78 PV DUE 7/25/19 0.0000 0.000000 3,843.15 0.00 0.00 07/25/2019 31397QRE0 INTEREST EARNED ON F N M A GTD REMIC 1.113% 2/25/41 $1 PV ON 507.4300 SHARES DUE 7/25/2019 $0.00257/PV ON 197,419.05 PV DUE 7/25/19 0.0000 0.000000 507.43 0.00 0.00 07/25/2019 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1/25/20 $1 PV ON 2937.4200 SHARES DUE 7/25/2019 $0.00354/PV ON 829,194.13 PV DUE 7/25/19 0.0000 0.000000 2,937.42 0.00 0.00 07/25/2019 31403DJZ3 INTEREST EARNED ON F N M A #745580 5.000% 6/01/36 $1 PV ON 402.0800 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 402.08 0.00 0.00 07/25/2019 31403GXF4 INTEREST EARNED ON F N M A #748678 5.000% 10/01/33 $1 PV ON 7.5300 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 7.53 0.00 0.00 07/25/2019 31406PQY8 INTEREST EARNED ON F N M A #815971 5.000% 3/01/35 $1 PV ON 688.1700 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 688.17 0.00 0.00 07/25/2019 31406XWT5 INTEREST EARNED ON F N M A #823358 4.722% 2/01/35 $1 PV ON 435.1700 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 435.17 0.00 0.00 07/25/2019 31407BXH7 INTEREST EARNED ON F N M A #826080 5.000% 7/01/35 $1 PV ON 81.8900 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 81.89 0.00 0.00 07/25/2019 31410F4V4 INTEREST EARNED ON F N M A #888336 5.000% 7/01/36 $1 PV ON 792.0600 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 792.06 0.00 0.00 07/25/2019 31417YAY3 INTEREST EARNED ON F N M A #MA0022 4.500% 4/01/29 $1 PV ON 65.1900 SHARES DUE 7/25/2019 JUNE FNMA DUE 7/25/19 0.0000 0.000000 65.19 0.00 0.00 13 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/25/2019 45950KCM0 INTEREST EARNED ON INTL BK M T N 2.250% 1/25/21 $1 PV ON 2970000.0000 SHARES DUE 7/25/2019 0.0000 0.000000 33,412.50 0.00 0.00 07/25/2019 78445JAA5 INTEREST EARNED ON S L M A 4.12559% 4/25/23 $1 PV ON 144.5500 SHARES DUE 7/25/2019 $0.01031/PV ON 14,014.54 PV DUE 7/25/19 0.0000 0.000000 144.55 0.00 0.00 07/25/2019 808513AT2 INTEREST EARNED ON CHARLES SCHWAB CORP 2.650% 1/25/23 $1 PV ON 6750000.0000 SHARES DUE 7/25/2019 0.0000 0.000000 89,437.50 0.00 0.00 07/26/2019 459058FY4 INTEREST EARNED ON INTL BK 2.000% 1/26/22 $1 PV ON 10000000.0000 SHARES DUE 7/26/2019 0.0000 0.000000 100,000.00 0.00 0.00 07/29/2019 06406RAE7 INTEREST EARNED ON BANK OF NY MTN 2.950% 1/29/23 $1 PV ON 2500000.0000 SHARES DUE 7/29/2019 0.0000 0.000000 36,875.00 0.00 0.00 07/29/2019 61747WAL3 INTEREST EARNED ON MORGAN STANLEY 5.500% 7/28/21 $1 PV ON 2800000.0000 SHARES DUE 7/28/2019 0.0000 0.000000 77,000.00 0.00 0.00 07/29/2019 69353REX2 INTEREST EARNED ON PNC BANK MTN 1.450% 7/29/19 $1 PV ON 1890000.0000 SHARES DUE 7/29/2019 INTEREST ON 7/29/19 MATURITY 0.0000 0.000000 13,702.50 0.00 0.00 07/29/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12272.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 07/29/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12272.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 12,272.00 0.00 07/29/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12272.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 12,272.0000 0.000000 0.00 0.00 0.00 07/29/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 12272.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 07/30/2019 94974BGF1 INTEREST EARNED ON WELLS FARGO MTN 2.150% 1/30/20 $1 PV ON 1000000.0000 SHARES DUE 7/30/2019 0.0000 0.000000 10,750.00 0.00 0.00 07/31/2019 313384JV2 INTEREST EARNED ON F H L B DISC NTS 7/31/19 $1 PV ON 5500000.0000 SHARES DUE 7/31/2019 5,500,000 PAR VALUE AT 100 % 0.0000 0.000000 38,053.89 0.00 0.00 07/31/2019 9128282K5 INTEREST EARNED ON U S TREASURY NT 1.375% 7/31/19 $1 PV ON 35000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 240,625.00 0.00 0.00 07/31/2019 9128283S7 INTEREST EARNED ON U S TREASURY NT 2.000% 1/31/20 $1 PV ON 15000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 150,000.00 0.00 0.00 07/31/2019 912828H52 INTEREST EARNED ON U S TREASURY NT 1.250% 1/31/20 $1 PV ON 13500000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 84,375.00 0.00 0.00 07/31/2019 912828N89 INTEREST EARNED ON U S TREASURY NT 1.375% 1/31/21 $1 PV ON 6000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 41,250.00 0.00 0.00 07/31/2019 912828TH3 INTEREST EARNED ON U S TREASURY NT 0.875% 7/31/19 $1 PV ON 15000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 65,625.00 0.00 0.00 07/31/2019 912828V72 INTEREST EARNED ON U S TREASURY NT 1.875% 1/31/22 $1 PV ON 3000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 28,125.00 0.00 0.00 14 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 07/31/2019 912828V80 INTEREST EARNED ON U S TREASURY NT 2.250% 1/31/24 $1 PV ON 7500000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 84,375.00 0.00 0.00 07/31/2019 912828WW6 INTEREST EARNED ON U S TREASURY NT 1.625% 7/31/19 $1 PV ON 20000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 162,500.00 0.00 0.00 07/31/2019 912828WW6 INTEREST EARNED ON U S TREASURY NT 1.625% 7/31/19 $1 PV ON 5000000.0000 SHARES DUE 7/31/2019 0.0000 0.000000 40,625.00 0.00 0.00 07/31/2019 CASH DISBURSEMENT PAID TO BANC OF CALIFORNIA OUTGOING DOMESTIC WIRE PER DIR DTD 7/30/19 0.0000 0.000000 -72,000,000.00 0.00 0.00 08/01/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 7/31/2019 INTEREST FROM 7/1/19 TO 7/31/19 0.0000 0.000000 13,196.29 0.00 0.00 08/01/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 7/31/2019 INTEREST FROM 7/1/19 TO 7/31/19 0.0000 0.000000 29,177.64 0.00 0.00 08/05/2019 3135G0V34 INTEREST EARNED ON F N M A 2.500% 2/05/24 $1 PV ON 5000000.0000 SHARES DUE 8/5/2019 0.0000 0.000000 61,458.34 0.00 0.00 08/06/2019 44932HAH6 INTEREST EARNED ON IBM CREDIT CORP 3.000% 2/06/23 $1 PV ON 5670000.0000 SHARES DUE 8/6/2019 0.0000 0.000000 85,050.00 0.00 0.00 08/07/2019 06406RAA5 INTEREST EARNED ON BANK OF NY MTN 2.600% 2/07/22 $1 PV ON 2500000.0000 SHARES DUE 8/7/2019 0.0000 0.000000 32,500.00 0.00 0.00 08/08/2019 594918BP8 INTEREST EARNED ON MICROSOFT CORP 1.550% 8/08/21 $1 PV ON 3045000.0000 SHARES DUE 8/8/2019 0.0000 0.000000 23,598.75 0.00 0.00 08/09/2019 06051GFN4 PAID ACCRUED INTEREST ON PURCHASE OF BANK OF AMERICA MTN 2.250% 4/21/20 0.0000 0.000000 -13,500.00 0.00 0.00 08/09/2019 747525AD5 PAID ACCRUED INTEREST ON PURCHASE OF QUALCOMM INC 2.250% 5/20/20 0.0000 0.000000 -9,875.00 0.00 0.00 08/12/2019 69371RN36 INTEREST EARNED ON PACCAR FINANCIAL MTN 1.200% 8/12/19 $1 PV ON 1083000.0000 SHARES DUE 8/12/2019 INTEREST ON 8/12/19 MATURITY 0.0000 0.000000 6,498.00 0.00 0.00 08/13/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1768.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 08/13/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1768.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 1,768.00 0.00 08/13/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1768.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 1,768.0000 0.000000 0.00 0.00 0.00 08/13/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1768.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 08/14/2019 3133EKWV4 PAID ACCRUED INTEREST ON PURCHASE OF F F C B DEB 1.850% 7/26/24 0.0000 0.000000 -4,625.00 0.00 0.00 08/15/2019 02587AAJ3 INTEREST EARNED ON AMERICAN EXPRESS 1.930% 9/15/22 $1 PV ON 10084.2400 SHARES DUE 8/15/2019 $0.00161/PV ON 6,270,000.00 PV DUE 8/15/19 0.0000 0.000000 10,084.24 0.00 0.00 08/15/2019 02665WAH4 INTEREST EARNED ON AMERICAN HONDA MTN 2.250% 8/15/19 $1 PV ON 1977000.0000 SHARES DUE 8/15/2019 INTEREST ON 8/15/19 MATURITY 0.0000 0.000000 22,241.25 0.00 0.00 15 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/15/2019 02665WAH4 INTEREST EARNED ON AMERICAN HONDA MTN 2.250% 8/15/19 $1 PV ON 2500000.0000 SHARES DUE 8/15/2019 INTEREST ON 8/15/19 MATURITY 0.0000 0.000000 28,125.00 0.00 0.00 08/15/2019 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 4.016% 8/15/32 $1 PV ON 28.7500 SHARES DUE 8/15/2019 $0.00335/PV ON 8,682.30 PV DUE 8/15/19 0.0000 0.000000 28.75 0.00 0.00 08/15/2019 31348SWZ3 INTEREST EARNED ON F H L M C #786064 4.677% 1/01/28 $1 PV ON 7.3000 SHARES DUE 8/15/2019 JUNE FHLMC DUE 8/15/19 0.0000 0.000000 7.30 0.00 0.00 08/15/2019 369550BA5 PAID ACCRUED INTEREST ON PURCHASE OF GENERAL DYNAMICS 2.875% 5/11/20 0.0000 0.000000 -15,013.89 0.00 0.00 08/15/2019 47788BAD6 INTEREST EARNED ON JOHN DEERE OWNER 1.820% 10/15/21 $1 PV ON 782.1200 SHARES DUE 8/15/2019 $0.00152/PV ON 515,683.75 PV DUE 8/15/19 0.0000 0.000000 782.12 0.00 0.00 08/15/2019 47788CAB8 INTEREST EARNED ON JOHN DEERE OWNER 2.420% 10/15/20 $1 PV ON 952.7400 SHARES DUE 8/15/2019 $0.00202/PV ON 472,434.77 PV DUE 8/15/19 0.0000 0.000000 952.74 0.00 0.00 08/15/2019 47788CAC6 INTEREST EARNED ON JOHN DEERE OWNER 2.660% 4/18/22 $1 PV ON 2970.3300 SHARES DUE 8/15/2019 $0.00222/PV ON 1,340,000.00 PV DUE 8/15/19 0.0000 0.000000 2,970.33 0.00 0.00 08/15/2019 47788EAC2 INTEREST EARNED ON JOHN DEERE OWNER 3.080% 11/15/22 $1 PV ON 11883.6700 SHARES DUE 8/15/2019 $0.00257/PV ON 4,630,000.00 PV DUE 8/15/19 0.0000 0.000000 11,883.67 0.00 0.00 08/15/2019 47788NAD0 INTEREST EARNED ON JOHN DEERE OWNER 1.490% 5/15/23 $1 PV ON 1429.1600 SHARES DUE 8/15/2019 $0.00124/PV ON 1,151,000.00 PV DUE 8/15/19 0.0000 0.000000 1,429.16 0.00 0.00 08/15/2019 47789JAB2 INTEREST EARNED ON JOHN DEERE OWNER 2.850% 12/15/21 $1 PV ON 7754.3800 SHARES DUE 8/15/2019 $0.00238/PV ON 3,265,000.00 PV DUE 8/15/19 0.0000 0.000000 7,754.38 0.00 0.00 08/15/2019 65478GAD2 INTEREST EARNED ON NISSAN AUTO 1.750% 10/15/21 $1 PV ON 3575.0800 SHARES DUE 8/15/2019 $0.00146/PV ON 2,451,482.54 PV DUE 8/15/19 0.0000 0.000000 3,575.08 0.00 0.00 08/15/2019 65478VAD9 INTEREST EARNED ON NISSAN AUTO 1.320% 1/15/21 $1 PV ON 460.3100 SHARES DUE 8/15/2019 $0.00110/PV ON 418,464.94 PV DUE 8/15/19 0.0000 0.000000 460.31 0.00 0.00 08/15/2019 65479GAD1 INTEREST EARNED ON NISSAN AUTO 3.060% 3/15/23 $1 PV ON 9078.0000 SHARES DUE 8/15/2019 $0.00255/PV ON 3,560,000.00 PV DUE 8/15/19 0.0000 0.000000 9,078.00 0.00 0.00 08/15/2019 89238BAB8 INTEREST EARNED ON TOYOTA AUTO 2.100% 10/15/20 $1 PV ON 2434.4300 SHARES DUE 8/15/2019 $0.00175/PV ON 1,391,106.63 PV DUE 8/15/19 0.0000 0.000000 2,434.43 0.00 0.00 08/15/2019 89239AAB9 INTEREST EARNED ON TOYOTA AUTO 2.830% 10/15/21 $1 PV ON 8525.3700 SHARES DUE 8/15/2019 $0.00236/PV ON 3,615,000.00 PV DUE 8/15/19 0.0000 0.000000 8,525.37 0.00 0.00 08/16/2019 3137EAEL9 INTEREST EARNED ON F H L M C M T N 2.375% 2/16/21 $1 PV ON 7500000.0000 SHARES DUE 8/16/2019 0.0000 0.000000 89,062.50 0.00 0.00 08/19/2019 3130A7CV5 INTEREST EARNED ON F H L B DEB 1.375% 2/18/21 $1 PV ON 5365000.0000 SHARES DUE 8/18/2019 0.0000 0.000000 36,884.38 0.00 0.00 08/19/2019 43814PAC4 INTEREST EARNED ON HONDA AUTO 1.790% 9/20/21 $1 PV ON 3734.3500 SHARES DUE 8/18/2019 $0.00149/PV ON 2,503,471.62 PV DUE 8/18/19 0.0000 0.000000 3,734.35 0.00 0.00 08/19/2019 43814RAC0 INTEREST EARNED ON HONDA AUTO 1.210% 12/18/20 $1 PV ON 827.6200 SHARES DUE 8/18/2019 $0.00101/PV ON 820,783.32 PV DUE 8/18/19 0.0000 0.000000 827.62 0.00 0.00 16 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/19/2019 43814UAG4 INTEREST EARNED ON HONDA AUTO 3.010% 5/18/22 $1 PV ON 4289.2500 SHARES DUE 8/18/2019 $0.00251/PV ON 1,710,000.00 PV DUE 8/18/19 0.0000 0.000000 4,289.25 0.00 0.00 08/19/2019 43814WAB1 INTEREST EARNED ON HONDA AUTO 2.750% 9/20/21 $1 PV ON 10071.8800 SHARES DUE 8/18/2019 $0.00229/PV ON 4,395,000.00 PV DUE 8/18/19 0.0000 0.000000 10,071.88 0.00 0.00 08/19/2019 62479MVK6 INTEREST EARNED ON MUFG BANK LTD NY BRAN C P 8/19/19 $1 PV ON 11125000.0000 SHARES DUE 8/19/2019 11,125,000 PAR VALUE AT 100 % 0.0000 0.000000 43,572.92 0.00 0.00 08/19/2019 62479MVK6 INTEREST EARNED ON MUFG BANK LTD NY BRAN C P 8/19/19 $1 PV ON 3290000.0000 SHARES DUE 8/19/2019 3,290,000 PAR VALUE AT 100 % 0.0000 0.000000 12,885.83 0.00 0.00 08/19/2019 69353RFB9 INTEREST EARNED ON PNC BANK NA MTN 2.625% 2/17/22 $1 PV ON 1000000.0000 SHARES DUE 8/17/2019 0.0000 0.000000 13,125.00 0.00 0.00 08/20/2019 36225CAZ9 INTEREST EARNED ON G N M A I I #080023 4.125% 12/20/26 $1 PV ON 53.8900 SHARES DUE 8/20/2019 JULY GNMA DUE 8/20/19 0.0000 0.000000 53.89 0.00 0.00 08/20/2019 36225CC20 INTEREST EARNED ON G N M A I I #080088 3.875% 6/20/27 $1 PV ON 49.8700 SHARES DUE 8/20/2019 JULY GNMA DUE 8/20/19 0.0000 0.000000 49.87 0.00 0.00 08/20/2019 36225CN28 INTEREST EARNED ON G N M A I I #080408 3.875% 5/20/30 $1 PV ON 167.9300 SHARES DUE 8/20/2019 JULY GNMA DUE 8/20/19 0.0000 0.000000 167.93 0.00 0.00 08/20/2019 36225CNM4 INTEREST EARNED ON G N M A I I #080395 3.875% 4/20/30 $1 PV ON 21.5400 SHARES DUE 8/20/2019 JULY GNMA DUE 8/20/19 0.0000 0.000000 21.54 0.00 0.00 08/20/2019 36225DCB8 INTEREST EARNED ON G N M A I I #080965 3.750% 7/20/34 $1 PV ON 144.0200 SHARES DUE 8/20/2019 JULY GNMA DUE 8/20/19 0.0000 0.000000 144.02 0.00 0.00 08/21/2019 43815HAC1 INTEREST EARNED ON HONDA AUTO 2.950% 8/22/22 $1 PV ON 3970000.0000 SHARES DUE 8/21/2019 0.0000 0.000000 9,759.58 0.00 0.00 08/23/2019 037833BS8 INTEREST EARNED ON APPLE INC 2.250% 2/23/21 $1 PV ON 4000000.0000 SHARES DUE 8/23/2019 0.0000 0.000000 45,000.00 0.00 0.00 08/26/2019 03215PFN4 INTEREST EARNED ON AMRESCO 6.88883% 6/25/29 $1 PV ON 742.2800 SHARES DUE 8/25/2019 $0.00574/PV ON 129,300.99 PV DUE 8/25/19 0.0000 0.000000 742.28 0.00 0.00 08/26/2019 06406HCZ0 INTEREST EARNED ON BANK OF NY MELLO MTN 2.150% 2/24/20 $1 PV ON 1500000.0000 SHARES DUE 8/24/2019 0.0000 0.000000 16,125.00 0.00 0.00 08/26/2019 3135G0J20 INTEREST EARNED ON F N M A DEB 1.375% 2/26/21 $1 PV ON 10000000.0000 SHARES DUE 8/26/2019 0.0000 0.000000 68,750.00 0.00 0.00 08/26/2019 31371NUC7 INTEREST EARNED ON F N M A #257179 4.500% 4/01/28 $1 PV ON 56.2600 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 56.26 0.00 0.00 08/26/2019 31376KT22 INTEREST EARNED ON F N M A #357969 5.000% 9/01/35 $1 PV ON 427.9400 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 427.94 0.00 0.00 08/26/2019 31381PDA3 INTEREST EARNED ON F N M A #466397 3.400% 11/01/20 $1 PV ON 991.8000 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 991.80 0.00 0.00 08/26/2019 3138EG6F6 INTEREST EARNED ON F N M A #AL0869 4.500% 6/01/29 $1 PV ON 39.1800 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 39.18 0.00 0.00 17 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/26/2019 31394JY35 INTEREST EARNED ON F H L M C MLTCL MTG 6.500% 9/25/43 $1 PV ON 3799.1600 SHARES DUE 8/25/2019 $0.00542/PV ON 701,383.79 PV DUE 8/25/19 0.0000 0.000000 3,799.16 0.00 0.00 08/26/2019 31397QRE0 INTEREST EARNED ON F N M A GTD REMIC 1.113% 2/25/41 $1 PV ON 478.2200 SHARES DUE 8/25/2019 $0.00246/PV ON 194,792.45 PV DUE 8/25/19 0.0000 0.000000 478.22 0.00 0.00 08/26/2019 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1/25/20 $1 PV ON 2635.0800 SHARES DUE 8/25/2019 $0.00354/PV ON 743,847.19 PV DUE 8/25/19 0.0000 0.000000 2,635.08 0.00 0.00 08/26/2019 31403DJZ3 INTEREST EARNED ON F N M A #745580 5.000% 6/01/36 $1 PV ON 397.1000 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 397.10 0.00 0.00 08/26/2019 31403GXF4 INTEREST EARNED ON F N M A #748678 5.000% 10/01/33 $1 PV ON 7.5000 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 7.50 0.00 0.00 08/26/2019 31406PQY8 INTEREST EARNED ON F N M A #815971 5.000% 3/01/35 $1 PV ON 679.4400 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 679.44 0.00 0.00 08/26/2019 31406XWT5 INTEREST EARNED ON F N M A #823358 4.722% 2/01/35 $1 PV ON 433.4500 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 433.45 0.00 0.00 08/26/2019 31407BXH7 INTEREST EARNED ON F N M A #826080 5.000% 7/01/35 $1 PV ON 81.5300 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 81.53 0.00 0.00 08/26/2019 31410F4V4 INTEREST EARNED ON F N M A #888336 5.000% 7/01/36 $1 PV ON 778.5700 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 778.57 0.00 0.00 08/26/2019 31417YAY3 INTEREST EARNED ON F N M A #MA0022 4.500% 4/01/29 $1 PV ON 63.7500 SHARES DUE 8/25/2019 JULY FNMA DUE 8/25/19 0.0000 0.000000 63.75 0.00 0.00 08/27/2019 46625HKA7 INTEREST EARNED ON JPMORGAN CHASE CO 2.250% 1/23/20 $1 PV ON 1500000.0000 SHARES DUE 8/26/2019 $2.125 PER $1000 ACCD INT (34 DAYS) 0.0000 0.000000 3,187.50 0.00 0.00 08/27/2019 46625HKA7 INTEREST EARNED ON JPMORGAN CHASE CO 2.250% 1/23/20 $1 PV ON 2000000.0000 SHARES DUE 8/26/2019 $2.125 PER $1000 ACCD INT (34 DAYS) 0.0000 0.000000 4,250.00 0.00 0.00 08/28/2019 912828UL2 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.375% 1/31/20 0.0000 0.000000 -5,230.98 0.00 0.00 08/28/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1248.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 08/28/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1248.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 1,248.00 0.00 08/28/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1248.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 1,248.0000 0.000000 0.00 0.00 0.00 08/28/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 1248.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 09/03/2019 30231GAV4 INTEREST EARNED ON EXXON MOBIL 2.222% 3/01/21 $1 PV ON 3000000.0000 SHARES DUE 9/1/2019 0.0000 0.000000 33,330.00 0.00 0.00 09/03/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 8/31/2019 INTEREST FROM 8/1/19 TO 8/31/19 0.0000 0.000000 14,244.31 0.00 0.00 09/03/2019 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 8/31/2019 INTEREST FROM 8/1/19 TO 8/31/19 0.0000 0.000000 29,015.37 0.00 0.00 18 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/03/2019 83162CLJ0 INTEREST EARNED ON S B A GTD DEV PART 6.340% 3/01/21 $1 PV ON 465.5500 SHARES DUE 9/1/2019 $0.03170/PV ON 14,686.06 PV DUE 9/ 1/19 0.0000 0.000000 465.55 0.00 0.00 09/03/2019 912828L24 INTEREST EARNED ON U S TREASURY NT 1.875% 8/31/22 $1 PV ON 6000000.0000 SHARES DUE 8/31/2019 0.0000 0.000000 56,250.00 0.00 0.00 09/03/2019 912828W48 INTEREST EARNED ON U S TREASURY NT 2.125% 2/29/24 $1 PV ON 10000000.0000 SHARES DUE 8/31/2019 0.0000 0.000000 106,250.00 0.00 0.00 09/05/2019 06051GHF9 INTEREST EARNED ON BANK OF AMERICA 3.550% 3/05/24 $1 PV ON 6675000.0000 SHARES DUE 9/5/2019 0.0000 0.000000 118,481.25 0.00 0.00 09/05/2019 40428HPR7 INTEREST EARNED ON HSBC USA INC MTN 2.350% 3/05/20 $1 PV ON 2500000.0000 SHARES DUE 9/5/2019 0.0000 0.000000 29,375.00 0.00 0.00 09/05/2019 40428HPR7 INTEREST EARNED ON HSBC USA INC MTN 2.350% 3/05/20 $1 PV ON 2500000.0000 SHARES DUE 9/5/2019 0.0000 0.000000 29,375.00 0.00 0.00 09/09/2019 313383YJ4 INTEREST EARNED ON F H L B DEB 3.375% 9/08/23 $1 PV ON 10000000.0000 SHARES DUE 9/8/2019 0.0000 0.000000 168,750.00 0.00 0.00 09/11/2019 06406HCW7 INTEREST EARNED ON BANK OF NY MTN 2.300% 9/11/19 $1 PV ON 2120000.0000 SHARES DUE 9/11/2019 INTEREST ON 9/11/19 MATURITY 0.0000 0.000000 24,380.00 0.00 0.00 09/12/2019 78013XZU5 PAID ACCRUED INTEREST ON PURCHASE OF ROYAL BANK OF MTN 2.550% 7/16/24 0.0000 0.000000 -25,783.33 0.00 0.00 09/12/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 8736.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 09/12/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 8736.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 8,736.00 0.00 09/12/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 8736.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 8,736.0000 0.000000 0.00 0.00 0.00 09/12/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 8736.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 09/13/2019 00440EAP2 INTEREST EARNED ON ACE INA HOLDINGS 2.700% 3/13/23 $1 PV ON 2000000.0000 SHARES DUE 9/13/2019 0.0000 0.000000 27,000.00 0.00 0.00 09/13/2019 21687BWD9 INTEREST EARNED ON COOPERATIEVE CENTRAL C P 9/13/19 $1 PV ON 2000000.0000 SHARES DUE 9/13/2019 2,000,000 PAR VALUE AT 100 % 0.0000 0.000000 42,135.56 0.00 0.00 09/13/2019 96130ABJ6 INTEREST EARNED ON WESTPAC BKING C D 2.970% 9/13/19 $1 PV ON 1500000.0000 SHARES DUE 9/13/2019 INTEREST ON 9/13/19 MATURITY 0.0000 0.000000 33,783.75 0.00 0.00 09/16/2019 02587AAJ3 INTEREST EARNED ON AMERICAN EXPRESS 1.930% 9/15/22 $1 PV ON 10084.2400 SHARES DUE 9/15/2019 $0.00161/PV ON 6,270,000.00 PV DUE 9/15/19 0.0000 0.000000 10,084.24 0.00 0.00 09/16/2019 084670BR8 INTEREST EARNED ON BERKSHIRE HATHAWAY 2.750% 3/15/23 $1 PV ON 2500000.0000 SHARES DUE 9/15/2019 0.0000 0.000000 34,375.00 0.00 0.00 09/16/2019 24422ESS9 INTEREST EARNED ON JOHN DEERE CAP MTN 2.300% 9/16/19 $1 PV ON 5000000.0000 SHARES DUE 9/16/2019 INTEREST ON 9/16/19 MATURITY 0.0000 0.000000 57,500.00 0.00 0.00 09/16/2019 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 4.016% 8/15/32 $1 PV ON 27.9600 SHARES DUE 9/15/2019 $0.00335/PV ON 8,354.65 PV DUE 9/15/19 0.0000 0.000000 27.96 0.00 0.00 19 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/16/2019 31348SWZ3 INTEREST EARNED ON F H L M C #786064 4.677% 1/01/28 $1 PV ON 7.2300 SHARES DUE 9/15/2019 JULY FHLMC DUE 9/15/19 0.0000 0.000000 7.23 0.00 0.00 09/16/2019 43815NAB0 INTEREST EARNED ON HONDA AUTO 1.900% 4/15/22 $1 PV ON 3353.5000 SHARES DUE 9/15/2019 $0.00095/PV ON 3,530,000.00 PV DUE 9/15/19 0.0000 0.000000 3,353.50 0.00 0.00 09/16/2019 4581X0CS5 INTEREST EARNED ON INTER AMER BK M T N 1.875% 3/15/21 $1 PV ON 5000000.0000 SHARES DUE 9/15/2019 0.0000 0.000000 46,875.00 0.00 0.00 09/16/2019 4581X0CZ9 INTEREST EARNED ON INTER AMER DEV BK 1.750% 9/14/22 $1 PV ON 6500000.0000 SHARES DUE 9/14/2019 0.0000 0.000000 56,875.00 0.00 0.00 09/16/2019 46647PAU0 PAID ACCRUED INTEREST ON PURCHASE OF JPMORGAN CHASE CO 3.797% 7/23/24 0.0000 0.000000 -13,975.07 0.00 0.00 09/16/2019 477870AB5 INTEREST EARNED ON JOHN DEERE OWNER 2.280% 5/16/22 $1 PV ON 9044.0000 SHARES DUE 9/15/2019 $0.00323/PV ON 2,800,000.00 PV DUE 9/15/19 0.0000 0.000000 9,044.00 0.00 0.00 09/16/2019 47788BAD6 INTEREST EARNED ON JOHN DEERE OWNER 1.820% 10/15/21 $1 PV ON 719.8800 SHARES DUE 9/15/2019 $0.00152/PV ON 474,644.17 PV DUE 9/15/19 0.0000 0.000000 719.88 0.00 0.00 09/16/2019 47788CAB8 INTEREST EARNED ON JOHN DEERE OWNER 2.420% 10/15/20 $1 PV ON 632.1200 SHARES DUE 9/15/2019 $0.00202/PV ON 313,448.89 PV DUE 9/15/19 0.0000 0.000000 632.12 0.00 0.00 09/16/2019 47788CAC6 INTEREST EARNED ON JOHN DEERE OWNER 2.660% 4/18/22 $1 PV ON 2970.3300 SHARES DUE 9/15/2019 $0.00222/PV ON 1,340,000.00 PV DUE 9/15/19 0.0000 0.000000 2,970.33 0.00 0.00 09/16/2019 47788EAC2 INTEREST EARNED ON JOHN DEERE OWNER 3.080% 11/15/22 $1 PV ON 11883.6700 SHARES DUE 9/15/2019 $0.00257/PV ON 4,630,000.00 PV DUE 9/15/19 0.0000 0.000000 11,883.67 0.00 0.00 09/16/2019 47788NAD0 INTEREST EARNED ON JOHN DEERE OWNER 1.490% 5/15/23 $1 PV ON 1376.1800 SHARES DUE 9/15/2019 $0.00124/PV ON 1,108,332.07 PV DUE 9/15/19 0.0000 0.000000 1,376.18 0.00 0.00 09/16/2019 47789JAB2 INTEREST EARNED ON JOHN DEERE OWNER 2.850% 12/15/21 $1 PV ON 7754.3800 SHARES DUE 9/15/2019 $0.00238/PV ON 3,265,000.00 PV DUE 9/15/19 0.0000 0.000000 7,754.38 0.00 0.00 09/16/2019 65478GAD2 INTEREST EARNED ON NISSAN AUTO 1.750% 10/15/21 $1 PV ON 3279.3100 SHARES DUE 9/15/2019 $0.00146/PV ON 2,248,666.82 PV DUE 9/15/19 0.0000 0.000000 3,279.31 0.00 0.00 09/16/2019 65478VAD9 INTEREST EARNED ON NISSAN AUTO 1.320% 1/15/21 $1 PV ON 363.6200 SHARES DUE 9/15/2019 $0.00110/PV ON 330,562.90 PV DUE 9/15/19 0.0000 0.000000 363.62 0.00 0.00 09/16/2019 65479GAD1 INTEREST EARNED ON NISSAN AUTO 3.060% 3/15/23 $1 PV ON 9078.0000 SHARES DUE 9/15/2019 $0.00255/PV ON 3,560,000.00 PV DUE 9/15/19 0.0000 0.000000 9,078.00 0.00 0.00 09/16/2019 68389XBK0 INTEREST EARNED ON ORACLE CORP 1.900% 9/15/21 $1 PV ON 3000000.0000 SHARES DUE 9/15/2019 0.0000 0.000000 28,500.00 0.00 0.00 09/16/2019 89238BAB8 INTEREST EARNED ON TOYOTA AUTO 2.100% 10/15/20 $1 PV ON 1788.4300 SHARES DUE 9/15/2019 $0.00175/PV ON 1,021,960.05 PV DUE 9/15/19 0.0000 0.000000 1,788.43 0.00 0.00 09/16/2019 89239AAB9 INTEREST EARNED ON TOYOTA AUTO 2.830% 10/15/21 $1 PV ON 8525.3700 SHARES DUE 9/15/2019 $0.00236/PV ON 3,615,000.00 PV DUE 9/15/19 0.0000 0.000000 8,525.37 0.00 0.00 09/18/2019 09247XAL5 INTEREST EARNED ON BLACKROCK INC 3.500% 3/18/24 $1 PV ON 1000000.0000 SHARES DUE 9/18/2019 0.0000 0.000000 17,500.00 0.00 0.00 20 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/18/2019 313384LW7 INTEREST EARNED ON F H L B DISC NTS 9/18/19 $1 PV ON 2850000.0000 SHARES DUE 9/18/2019 2,850,000 PAR VALUE AT 100 % 0.0000 0.000000 14,281.67 0.00 0.00 09/18/2019 43814PAC4 INTEREST EARNED ON HONDA AUTO 1.790% 9/20/21 $1 PV ON 3440.8100 SHARES DUE 9/18/2019 $0.00149/PV ON 2,306,690.87 PV DUE 9/18/19 0.0000 0.000000 3,440.81 0.00 0.00 09/18/2019 43814RAC0 INTEREST EARNED ON HONDA AUTO 1.210% 12/18/20 $1 PV ON 694.9300 SHARES DUE 9/18/2019 $0.00101/PV ON 689,190.43 PV DUE 9/18/19 0.0000 0.000000 694.93 0.00 0.00 09/18/2019 43814UAG4 INTEREST EARNED ON HONDA AUTO 3.010% 5/18/22 $1 PV ON 4289.2500 SHARES DUE 9/18/2019 $0.00251/PV ON 1,710,000.00 PV DUE 9/18/19 0.0000 0.000000 4,289.25 0.00 0.00 09/18/2019 43814WAB1 INTEREST EARNED ON HONDA AUTO 2.750% 9/20/21 $1 PV ON 10071.8800 SHARES DUE 9/18/2019 $0.00229/PV ON 4,395,000.00 PV DUE 9/18/19 0.0000 0.000000 10,071.88 0.00 0.00 09/18/2019 69353RDZ8 INTEREST EARNED ON PNC BANK NA MTN 2.400% 10/18/19 $1 PV ON 1000000.0000 SHARES DUE 9/18/2019 0.0000 0.000000 10,000.00 0.00 0.00 09/20/2019 36225CAZ9 INTEREST EARNED ON G N M A I I #080023 4.125% 12/20/26 $1 PV ON 53.3400 SHARES DUE 9/20/2019 AUGUST GNMA DUE 9/20/19 0.0000 0.000000 53.34 0.00 0.00 09/20/2019 36225CC20 INTEREST EARNED ON G N M A I I #080088 3.875% 6/20/27 $1 PV ON 49.3100 SHARES DUE 9/20/2019 AUGUST GNMA DUE 9/20/19 0.0000 0.000000 49.31 0.00 0.00 09/20/2019 36225CN28 INTEREST EARNED ON G N M A I I #080408 3.875% 5/20/30 $1 PV ON 164.9100 SHARES DUE 9/20/2019 AUGUST GNMA DUE 9/20/19 0.0000 0.000000 164.91 0.00 0.00 09/20/2019 36225CNM4 INTEREST EARNED ON G N M A I I #080395 3.875% 4/20/30 $1 PV ON 21.4100 SHARES DUE 9/20/2019 AUGUST GNMA DUE 9/20/19 0.0000 0.000000 21.41 0.00 0.00 09/20/2019 36225DCB8 INTEREST EARNED ON G N M A I I #080965 3.750% 7/20/34 $1 PV ON 143.3200 SHARES DUE 9/20/2019 AUGUST GNMA DUE 9/20/19 0.0000 0.000000 143.32 0.00 0.00 09/23/2019 43815HAC1 INTEREST EARNED ON HONDA AUTO 2.950% 8/22/22 $1 PV ON 9759.5800 SHARES DUE 9/21/2019 $0.00246/PV ON 3,970,000.00 PV DUE 9/21/19 0.0000 0.000000 9,759.58 0.00 0.00 09/24/2019 912796VW6 INTEREST EARNED ON U S TREASURY BILL 9/24/19 $1 PV ON 1650000.0000 SHARES DUE 9/24/2019 1,650,000 PAR VALUE AT 100 % 0.0000 0.000000 2,527.59 0.00 0.00 09/24/2019 912828TR1 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.000% 9/30/19 0.0000 0.000000 -7,979.51 0.00 0.00 09/25/2019 03215PFN4 INTEREST EARNED ON AMRESCO 3.08529% 6/25/29 $1 PV ON 319.1500 SHARES DUE 9/25/2019 $0.00257/PV ON 124,130.25 PV DUE 9/25/19 0.0000 0.000000 319.15 0.00 0.00 09/25/2019 313384MD8 INTEREST EARNED ON F H L B DISC NTS 9/25/19 $1 PV ON 2500000.0000 SHARES DUE 9/25/2019 2,500,000 PAR VALUE AT 100 % 0.0000 0.000000 8,244.44 0.00 0.00 09/25/2019 31371NUC7 INTEREST EARNED ON F N M A #257179 4.500% 4/01/28 $1 PV ON 55.7600 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 55.76 0.00 0.00 09/25/2019 31376KT22 INTEREST EARNED ON F N M A #357969 5.000% 9/01/35 $1 PV ON 418.3300 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 418.33 0.00 0.00 09/25/2019 31381PDA3 INTEREST EARNED ON F N M A #466397 3.400% 11/01/20 $1 PV ON 989.7600 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 989.76 0.00 0.00 09/25/2019 3138EG6F6 INTEREST EARNED ON F N M A #AL0869 4.500% 6/01/29 $1 PV ON 38.2900 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 38.29 0.00 0.00 21 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/25/2019 31394JY35 INTEREST EARNED ON F H L M C MLTCL MTG 6.500% 9/25/43 $1 PV ON 3783.7400 SHARES DUE 9/25/2019 $0.00542/PV ON 698,535.87 PV DUE 9/25/19 0.0000 0.000000 3,783.74 0.00 0.00 09/25/2019 31397QRE0 INTEREST EARNED ON F N M A GTD REMIC 2.825% 2/25/41 $1 PV ON 448.8900 SHARES DUE 9/25/2019 $0.00235/PV ON 190,664.36 PV DUE 9/25/19 0.0000 0.000000 448.89 0.00 0.00 09/25/2019 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1/25/20 $1 PV ON 2511.6400 SHARES DUE 9/25/2019 $0.00354/PV ON 709,002.27 PV DUE 9/25/19 0.0000 0.000000 2,511.64 0.00 0.00 09/25/2019 31403DJZ3 INTEREST EARNED ON F N M A #745580 5.000% 6/01/36 $1 PV ON 392.0900 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 392.09 0.00 0.00 09/25/2019 31403GXF4 INTEREST EARNED ON F N M A #748678 5.000% 10/01/33 $1 PV ON 7.4600 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 7.46 0.00 0.00 09/25/2019 31406PQY8 INTEREST EARNED ON F N M A #815971 5.000% 3/01/35 $1 PV ON 663.4800 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 663.48 0.00 0.00 09/25/2019 31406XWT5 INTEREST EARNED ON F N M A #823358 4.722% 2/01/35 $1 PV ON 431.7000 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 431.70 0.00 0.00 09/25/2019 31407BXH7 INTEREST EARNED ON F N M A #826080 5.000% 7/01/35 $1 PV ON 79.0800 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 79.08 0.00 0.00 09/25/2019 31410F4V4 INTEREST EARNED ON F N M A #888336 5.000% 7/01/36 $1 PV ON 767.0300 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 767.03 0.00 0.00 09/25/2019 31417YAY3 INTEREST EARNED ON F N M A #MA0022 4.500% 4/01/29 $1 PV ON 62.5700 SHARES DUE 9/25/2019 AUGUST FNMA DUE 9/25/19 0.0000 0.000000 62.57 0.00 0.00 09/26/2019 912828F39 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.750% 9/30/19 0.0000 0.000000 -11,554.30 0.00 0.00 09/26/2019 912828WU0 BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 09/26/2019 912828WU0 FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 9,360.00 0.00 09/26/2019 912828WU0 PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.0000 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 9,360.0000 0.000000 0.00 0.00 0.00 09/26/2019 912828WU0 STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 0.0000 0.000000 0.00 0.00 0.00 09/30/2019 89114MM20 INTEREST EARNED ON TORONTO DOMINION C D 2.470% 9/30/19 $1 PV ON 2000000.0000 SHARES DUE 9/30/2019 INTEREST ON 9/30/19 MATURITY 0.0000 0.000000 17,015.56 0.00 0.00 09/30/2019 9128282X7 INTEREST EARNED ON U S TREASURY NT 1.375% 9/30/19 $1 PV ON 10000000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 68,750.00 0.00 0.00 09/30/2019 9128284D9 INTEREST EARNED ON U S TREASURY NT 2.500% 3/31/23 $1 PV ON 10000000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 125,000.00 0.00 0.00 09/30/2019 912828F39 INTEREST EARNED ON U S TREASURY NT 1.750% 9/30/19 $1 PV ON 1350000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 11,812.50 0.00 0.00 09/30/2019 912828F39 INTEREST EARNED ON U S TREASURY NT 1.750% 9/30/19 $1 PV ON 5800000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 50,750.00 0.00 0.00 22 of 23 U.S. Bank Transaction History 07/01/2019 Thru 09/30/2019 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 09/30/2019 912828J76 INTEREST EARNED ON U S TREASURY NT 1.750% 3/31/22 $1 PV ON 5000000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 43,750.00 0.00 0.00 09/30/2019 912828L57 INTEREST EARNED ON U S TREASURY NT 1.750% 9/30/22 $1 PV ON 13000000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 113,750.00 0.00 0.00 09/30/2019 912828T34 INTEREST EARNED ON U S TREASURY NT 1.125% 9/30/21 $1 PV ON 7000000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 39,375.00 0.00 0.00 09/30/2019 912828TR1 INTEREST EARNED ON U S TREASURY NT 1.000% 9/30/19 $1 PV ON 11650000.0000 SHARES DUE 9/30/2019 0.0000 0.000000 58,250.00 0.00 0.00 09/30/2019 CASH DISBURSEMENT PAID TO BANC OF CALIFORNIA OUTGOING DOMESTIC WIRE PER DIR DTD 9/26/19 0.0000 0.000000 -25,000,000.00 0.00 0.00 09/30/2019 CASH DISBURSEMENT PAID TO BANC OF CALIFORNIA OUTGOING DOMESTIC WIRE PER DIR DTD 9/26/19 0.0000 0.000000 -15,000,000.00 0.00 0.00 TOTAL OTHER TRANSACTIONS 46,072.0000 -107,644,240.87 38,598.38 0.00 23 of 23 September 30, 2019 Orange County Sanitation District Investment Measurement Service Quarterly Review Information contained herein includes confidential, trade secret and proprietary information. Neither this Report nor any specific information contained herein is to be used other than by the intended recipient for its intended purpose or disseminated to any other person without Callan’s permission. Certain information herein has been compiled by Callan and is based on information provided by a variety of sources believed to be reliable for which Callan has not necessarily verified the accuracy or completeness of or updated. This content may consist of statements of opinion, which are made as of the date they are expressed and are not statements of fact. This content is for informational purposes only and should not be construed as legal or tax advice on any matter. Any decision you make on the basis of this content is your sole responsibility. You should consult with legal and tax advisers before applying any of this information to your particular situation. Past performance is no guarantee of future results. For further information, please see Appendix for Important Information and Disclosures. Table of Contents September 30, 2019 Capital Market Review 1 Active Management Overview Market Overview 7 Domestic Fixed Income 8 Asset Allocation Investment Manager Asset Allocation 10 Investment Manager Returns 11 Asset Class Risk and Return 15 Manager Analysis Chandler-Long Term Operating Fund 17 Chandler-Liquid Operating Money 21 Callan Research/Education 23 Definitions 26 Disclosures 31 Orange County Sanitation District Executive Summary for Period Ending September 30, 2019 Asset Allocation Performance * Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% FTSE 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Recent Developments  During the quarter, $15.0 million was withdrawn from the Long Term Operating Fund and $97.0 million was withdrawn from the Liquid Operating Monies for a combined withdrawal of $112.0 million. Organizational Issues  N/A Fixed Income Market Snapshot  The Federal Open Market Committee (FOMC) met market expectations with two 25 basis point rate cuts in the third quarter (July and September) to finish the period at a target range of 1.75- 2.00%. Another rate cut is expected at the Fed’s meeting in late October. Yields fell across the maturity spectrum, with the long-end of the curve realizing the largest drop. Significantly, the closely watched spread between the two- and ten-year Treasury yields briefly inverted toward the end of August and the 30-year rate fell below 2.00% to 1.94% on August 28th. In September, the repo market saw a significant increase in volatility, with rates reaching as high September 30, 2019 June 30, 2019 Market Value Weight Net New Inv.Inv. Return Market Value Weight Domestic Fixed Income Long Term Operating Fund*548,126,927 88.93%(15,000,000)4,926,318 558,200,609 77.23% Liquid Operating Monies*68,233,258 11.07%(97,000,000)666,613 164,566,646 22.77% Total Fund $616,360,185 100.0%$(112,000,000)$5,592,930 $722,767,255 100.0% Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^0.88%5.57%2.04%1.98%1.40% Chandler 0.88%5.57%2.04%-- Blmbg Govt/Cred 1-5 Year Idx 0.89%6.01%2.01%2.01%1.65% ML 1-5 Govt/Corp 0.90%6.02%2.04%2.05%1.70% Liquid Operating Monies^0.58%2.48%1.61%1.08%0.81% Chandler 0.58%2.48%1.61%-- Citigroup 3-Month Treasury Bill 0.56%2.36%1.52%0.96%0.70% Total Fund 0.86%4.98%1.91%1.78%1.26% Target*0.84%5.28%1.94%1.83%1.50% 2 Orange County Sanitation District as 10%, causing the Fed to temporarily inject funds in an attempt to level out the market. The spike was largely idiosyncratic and partially caused by the simultaneous settling of a significant amount of Treasury debt and federal tax payments coming due. Treasuries rallied in the third quarter in response to fears of slowing growth, geopolitical concerns, and trade tensions with China. The two-year fell 12 bps to finish the quarter at 1.63%, the 10-year fell 32 bps to finish at 1.68% and the 30-year fell 40 bps to finish at 2.12%. Corporate spreads were steady in the third quarter as issuance was offset by investor demand; investment grade corporates performed well Manager Performance  The Long Term Operating Fund returned 0.88% during the quarter, which was generally in line with the return of the ML U.S. 1-5 Corp/Gov Index (+0.90%). Over the trailing 12 months, the Fund has underperformed the benchmark by 45 basis points. However, ranked against the Callan Short Term Fixed Income Peer Group, the Fund is performing in the top quartile over the trailing year (15th percentile) and ranked above median in the third quarter of 2019 (37th percentile). The manager increased the portfolio’s duration slightly in the third quarter to 2.46 from 2.43 in the prior quarter. Even with the uptick, duration remains lower than that of the benchmark. From a term structure perspective, the portfolio has larger exposure to the front and back end of the curve versus the benchmark. The fund also holds overweight positions in the Agency, Asset Backed and Corporate sectors which benefited relative performance during the quarter. The portfolio had less than 30% invested in credit (22%) and less than the permitted 20% invested in the combination of asset-backed securities (9%), commercial mortgage backed securities (0%), and CMOs (0%) as of September 30, 2019 (see page 20).  The Liquid Operating Portfolio appreciated 0.55% (after fees) in the third quarter, performing in line with the 3-month Treasury return of 0.56%. Over the trailing 12 months, the Portfolio gained 2.33%, which ranked in the 26th percentile among peers. Cordially, Gordon M. Weightman, CFA Senior Vice President                     Capital Market Review     Russell 3000 Russell 1000 Russell 1000 Growth Russell 1000 Value S&P 500 Russell Midcap Russell 2500 Russell 2000 U.S. Equity: Quarterly Returns 1.2% 1.4% 1.5% 1.4% 1.7% 0.5% -1.3% -2.4% Russell 3000 Russell 1000 Russell 1000 Growth Russell 1000 Value S&P 500 Russell Midcap Russell 2500 Russell 2000 U.S. Equity: One-Year Returns 2.9% 3.9% 3.7% 4.0% 4.3% 3.2% -4.0% -8.9% Source: Standard & Poor’s U.S. EQUITY U.S. equity markets posted mixed results amid a market that saw 30-year Treasury yields hit historic lows and the most meaningful, albeit short-lived, factor rotation among equities since the Global Financial Crisis (GFC). Large cap (+1.4%) and mid cap stocks (+0.5%) posted modest gains for the quarter while small caps declined (Russell 2000: -2.4%). Ongoing U.S.-China trade tension, earnings and interest rate uncertainty, and the global political landscape continued to drive investor uncertainty. Large Cap U.S. Equity (S&P 500: +1.7%; Russell 1000: +1.4%) –Top sectors were in defensive areas including Utilities (+9.3%), Real Estate (+7.7%), and Consumer Staples (+6.1%) in response to investors’ continued flight to quality. –Energy, hurt by falling oil prices, fell 6.3%; Health Care lagged (-2.2%) amid discussions around price transparency and pricing reform by U.S. presidential candidates. –Cyclical sector exposure has been volatile given uncertainty around the trade deal (and continued sideways movement of markets) along with slowed global growth. –Up to September, momentum stocks (which have shifted to include many of the market’s least volatile stocks) outperformed as investors shunned the cheapest quintile of value (and more volatile) stocks. This trend sharply reversed in early September as the 10-year Treasury yield rose from 1.46% to 1.73% and momentum stocks fell precipitously while value stocks traded up over the course of two days. The magnitude of the reversal gave a boost to value stocks across market capitalizations for the quarter. Growth vs. Value (Russell 1000 Value: +1.4%, Russell 1000 Growth: +1.5%; Russell 2000 Value: -0.6%, Russell 2000 Growth: -4.2%) –While value continues to trail growth year-to-date, it gained ground during September’s factor reversal, finishing the quarter essentially in line with growth within large caps. –Within small cap, value benefited as investors favored the cheapest 20% of small caps while the most expensive quintile within the Russell 2000 declined double digits. Capital Market Overview September 30, 2019 S&P Sector Returns, Quarter Ended September 30, 2019 Last Quarter 2.2% 0.5% 6.1% -6.3% 2.0% -2.2% 3.3% 1.0% -0.1% 7.7% 9.3% Services Communication Discretionary Consumer Staples Consumer Energy Financials Health Care Industrials Technology Information Materials Real Estate Utilities Sources: FTSE Russell, Standard & Poor’s Capital Market Overview (continued) September 30, 2019 MSCI EAFE MSCI ACWI MSCI World MSCI ACWI ex USA MSCI World ex USA MSCI ACWI ex USA SC MSCI World ex USA SC MSCI Europe ex UK MSCI United Kingdom MSCI Pacific ex Japan MSCI Japan MSCI Emerging Markets MSCI China MSCI Frontier Markets Global Equity: Quarterly Returns -1.1% 0.0% 0.5% -1.8% -0.9% -1.2% -0.3% -1.5% -2.5% -5.2% 3.1% -4.2% -4.7% -1.1% MSCI EAFE MSCI ACWI MSCI World MSCI ACWI ex USA MSCI World ex USA MSCI ACWI ex USA SC MSCI World ex USA SC MSCI Europe ex UK MSCI United Kingdom MSCI Pacific ex Japan MSCI Japan MSCI Emerging Markets MSCI China MSCI Frontier Markets Global Equity: One-Year Returns 1.1% 5.7% 6.3% 1.3% 1.3% -5.9% -6.2% 3.4% -2.0% 8.1% -4.2% 1.2% -6.7% 4.9% Source: MSCI NON-U.S./GLOBAL EQUITY Global equity markets turned negative in the third quarter. After more modest positive results in the second quarter, fears over continued trade war impacts, a no-deal Brexit, and a potential global slowdown impacted investor behavior. Given this backdrop, more defensive areas of the market outperformed. Global/Non-U.S. Developed (MSCI EAFE: -1.1%; MSCI World ex USA: -0.9%; MSCI ACWI ex USA: -1.8%; MSCI Hong Kong: -11.9%; MSCI Japan: +3.1%) –Boris Johnson’s attempted suspension of Parliament and no- deal Brexit proclamations weighed on U.K. stocks (-2.5%). –Germany (-4.0%) experienced recession fears; industrial production dropped 1.5% in June from the prior month, while the estimate was -0.5%. –Hong Kong protests proved to be a headwind as the market fell -11.9% over the three-month period. –Japan was one of the few bright spots within developed markets as low short-term interest rates remain unchanged and a resolution to the Japan/South Korea trade war looked more promising. –Cyclical sectors trailed as investors were positioned defensively; Energy (-6.5%) had the worst performance. –For the quarter, factor performance reflected cautious investor behavior as quality and low volatility did well. However, the month of September saw a brief recovery in value across all markets as trade talks improved and central banks eased. Emerging Markets (MSCI Emerging Markets Index: -4.2%) –Emerging markets fared worst among global markets; uncertainty weighed heavily on these volatile countries. –Though most emerging market countries fell during the quarter, Turkey (+11.7%) had strong results as its central bank cut rates two times in less than two months. –Factor performance in emerging markets favored quality and price momentum as investors moved toward safe assets. Non-U.S. Small Cap (MSCI World ex USA Small Cap: -0.3%; MSCI EM Small Cap: -4.6%; MSCI ACWI ex USA Small Cap: -1.2%) –Small cap marginally outperformed large cap, both in developed and all country ex-U.S. markets; despite overall defensive posturing, idiosyncratic businesses pushed past global market issues. –Japan (+4.0%) helped drive developed returns as small cap companies also benefited from low rates and resolved trade tensions; Hong Kong (-7.6%) detracted as local businesses were hurt by the protests. Blmberg Barclays Gov/Cr 1-3 Yr Blmberg Barclays Interm Gov/Cr Blmberg Barclays Aggregate Blmberg Barclays Long Gov/Cr Blmberg Barclays Universal CS Leveraged Loans Blmberg Barclays High Yield Blmberg Barclays TIPS U.S. Fixed Income: Quarterly Returns 2.3% 2.1% 0.7% 1.4% 6.6% 0.9% 1.3% 1.3% Blmberg Barclays Gov/Cr 1-3 Yr Blmberg Barclays Interm Gov/Cr Blmberg Barclays Aggregate Blmberg Barclays Long Gov/Cr Blmberg Barclays Universal CS Leveraged Loans Blmberg Barclays High Yield Blmberg Barclays TIPS U.S. Fixed Income: One-Year Returns 10.3% 10.1% 4.6% 8.2% 21.9% 3.1% 6.4% 7.1% 0% 1% 2% 3% 4% 0 5 10 15 20 25 30 Maturity (Years) 9/30/2019 6/30/2019 9/30/2018 U.S. Treasury Yield Curves FIXED INCOME The Federal Open Market Committee (FOMC) cut short-term interest rates by 25 basis points twice in the third quarter amid an economic backdrop that has been supported by strong consumer spending and a solid labor market, but challenged by weakening manufacturing data and business investment. The Fed chair stated that the FOMC would act as “appropriate to sustain the expansion,” and the European Central Bank and other central banks around the world also moved in the direction of easing monetary policy. Yields fell in the U.S. and abroad given global growth headwinds fueled by mounting trade tensions as well as geopolitical uncertainty. U.S. Fixed Income (Bloomberg Barclays US Aggregate Bond Index: +2.3%) –Treasuries returned 2.4% as rates fell across the yield curve. –While the widely monitored 2- and 10-year key rates remained positive, the spread between the 3-month and 10- year key rates remained inverted. –Long Treasuries soared (+7.9%) as 30-year yields fell roughly 40 bps. –Nominal Treasuries outperformed TIPS as inflation expectations continued to fall; 10-year breakeven spreads were 1.53% as of quarter-end, down from 1.69% as of June 30. The 10-year real yield dipped briefly into negative territory in early September. Investment Grade Corporates (Bloomberg Barclays Corporate: +3.1%) –Investment grade corporate credit spreads were range- bound, but their yield advantage was enough to generate positive excess returns versus like-duration Treasuries. –Issuance in the corporate bond market was $320 billion in the quarter, $50 billion higher than a year ago; demand remained solid. BBB-rated corporates (+3.1%) modestly outperformed A-rated or higher corporates (+3.0%). High Yield (Bloomberg Barclays Corporate High Yield: +1.3%) –BB-rated corporates (+2.0%) outperformed CCC-rated corporates (-1.8%). BB- and B-rated spreads narrowed slightly, but the rally in rates helped drive outperformance as a result of higher quality bonds’ greater sensitivity to interest rate movements. –CCC-rated bond spreads widened significantly, representing some concern about deteriorating quality at the lower-end of the spectrum. Leveraged Loans (CS Leveraged Loans: +0.9%) –Bank loans, which have floating rate coupons, underperformed high yield bonds as rates rallied and investors worried about deteriorating credit quality. –CLO issuance continued to exceed expectations, providing positive technical support to the leveraged loan market. Capital Market Overview (continued) September 30, 2019 Sources: Bloomberg, Bloomberg Barclays, Credit Suisse Blmberg Barclays Gl Aggregate Blmberg Barclays Gl Agg (hdg) Blmberg Barclays Gl High Yield Blmberg Barclays Gl Agg ex US JPM EMBI Global Diversified JPM GBI-EM Global Diversified JPM EMBI Gl Div/JPM GBI-EM Gl Div JPM CEMBI Global Fixed Income: Quarterly Returns 0.7% 2.6% -0.7% -0.6% 1.5% -0.8% 0.4% 2.0% Blmberg Barclays Gl Aggregate Blmberg Barclays Gl Agg (hdg) Blmberg Barclays Gl High Yield Blmberg Barclays Gl Agg ex US JPM EMBI Global Diversified JPM GBI-EM Global Diversified JPM EMBI Gl Div/JPM GBI-EM Gl Div JPM CEMBI Global Fixed Income: One-Year Returns 7.6% 10.6% 5.0% 5.3% 11.6% 10.1% 10.9% 11.9% 17 bps 13 bps 1 bps 20 bps 6 bps 0 5 10 15 20 25 U.S. Treasury Germany U.K. Canada Japan 2Q19 to 3Q19 Change in 10-Year Global Government Bond Yields NON-U.S. FIXED INCOME Global Fixed Income (Bloomberg Barclays Global Aggregate (unhedged): +0.7%; (hedged): +2.6%) –Developed market sovereign bond yields rallied, pushing European sovereigns further into negative territory as the ECB reduced its deposit rate and announced a new bond purchasing stimulus program. –Negative yielding debt totals nearly $17 trillion, a record high. –The U.S. dollar was up 3.4% versus a basket of trade partner currencies and up 4.3% vs the beleaguered euro. US$ EMD (JPM EMBI Global Diversified: +1.5%), Local Currency EMD (JPM GBI-EM Global Diversified: -0.8%) –Broadly, emerging market currencies depreciated versus the U.S. dollar, hampering local currency returns. –Within the dollar-denominated benchmark, Argentina (-42%) and Venezuela (-51%) were among the few to post negative returns. Conversely, returns in the local debt benchmark were more mixed with Turkey (+19%) and Argentina (-60%) being outliers. Capital Market Overview (continued) September 30, 2019 Sources: Bloomberg, Bloomberg Barclays, JP Morgan                     Active Management Overview     Market Overview Active Management vs Index Returns Market Overview The charts below illustrate the range of returns across managers in Callan’s Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes. An appropriate index is also shown for each asset class for comparison purposes. As an example, the first bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the Large Cap Equity manager database. Range of Separate Account Manager Returns by Asset Class One Quarter Ended September 30, 2019 Re t u r n s (8%) (6%) (4%) (2%) 0% 2% 4% 6% Large Cap Small Cap Non-US Domestic Non-US Real Equity Equity Equity Fixed Income Fixed Income Estate vs vs vs vs vs vs S&P 500 Russell 2000 MSCI EAFE Blmbg Aggr Bd Citi Non-US Govt NCREIF Index (31) (60) (35) (83) (13) (75) 10th Percentile 2.73 1.10 0.15 2.49 (0.08)3.05 25th Percentile 1.95 (0.29) (0.75)2.45 (0.28)2.20 Median 1.16 (1.84) (1.44)2.36 (0.71)1.81 75th Percentile (0.08) (3.72) (2.05)2.29 (1.95)1.4090th Percentile (1.03) (5.63) (2.71)2.21 (2.57)0.77 Index 1.70 (2.40) (1.07)2.27 (0.11)1.41 Range of Separate Account Manager Returns by Asset Class One Year Ended September 30, 2019 Re t u r n s (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% Large Cap Small Cap Non-US Domestic Non-US Real Equity Equity Equity Fixed Income Fixed Income Estatevs vs vs vs vs vsS&P 500 Russell 2000 MSCI EAFE Blmbg Aggr Bd Citi Non-US Govt NCREIF Index (35) (63) (43) (69) (27)(63) 10th Percentile 8.46 (0.24)3.16 11.08 7.77 13.43 25th Percentile 5.46 (3.74)0.63 10.82 6.80 8.21Median 2.83 (7.07) (2.10)10.52 5.92 6.99 75th Percentile (0.31) (10.61) (4.70)10.26 3.34 5.80 90th Percentile (1.87) (13.09) (6.52)9.97 (0.14)3.85 Index 4.25 (8.89) (1.34)10.30 6.78 6.24 7Orange County Sanitation District Domestic Fixed Income Active Management Overview Ten-year U.S. Treasury yields were volatile in the third quarter, especially in September, hitting a 2019 low of 1.40% on Sept. 4, soaring to 1.90% mid-month and closing the quarter at 1.68%, down 32 bps from June 30. U.S. Treasuries thus posted strong results (Bloomberg Barclays US Treasury Index: +2.4%). Long U.S. Treasuries soared (Bloomberg Barclays Long US Treasury Index: +7.9%; +19.8% YTD) in the falling rate environment. The Bloomberg Barclays Aggregate rose 2.3%, bringing its YTD result to an impressive +8.5%. High yield was up just over 1% (+11.4% YTD) but, notably, lower quality significantly underperformed (CCC: -1.8% vs BB: +2.0%, and +5.6% vs +12.8% YTD) representing some concern about deteriorating quality at the lower end of the spectrum. TIPS (Bloomberg Barclays TIPS: +1.3%) underperformed as inflation expectations waned; 10-year breakeven spreads were 1.53% as of quarter-end, down from 1.69% as of 6/30/19. The 10-year real yield dipped briefly into negative territory in early September. Separate Account Style Group Median Returns for Quarter Ended September 30, 2019 0% 2% 4% 6% 8% 10% 0.84 Defensive 1.42 Intermed 2.36 Core Bond 2.34 Core Plus 6.63 Extended Maturity 1.24 Bank Loans 1.55 High Yield Re t u r n s Blmbg Aggregate: 2.27% Blmbg High Yield: 1.33% Blmbg Long Gov/Cred: 6.58% Separate Account Style Group Median Returns for One Year Ended September 30, 2019 0% 5% 10% 15% 20% 25% 30% 4.87 Defensive 7.98 Intermed 10.52 Core Bond 10.41 Core Plus 22.12 Extended Maturity 3.50 Bank Loans 6.86 High Yield Re t u r n s Blmbg Aggregate: 10.30% Blmbg High Yield: 6.36% Blmbg Long Gov/Cred: 21.88% 8Orange County Sanitation District                     Asset Allocation     Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund’s investment managers as of September 30, 2019, with the distribution as of June 30, 2019. The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers September 30, 2019 June 30, 2019 Market Value Weight Net New Inv. Inv. Return Market Value Weight Domestic Fixed Income Long Term Operating Fund* 548,126,927 88.93%(15,000,000)4,926,318 558,200,609 77.23% Liquid Operating Monies* 68,233,258 11.07%(97,000,000)666,613 164,566,646 22.77% Total Fund $616,360,185 100.0%$(112,000,000)$5,592,930 $722,767,255 100.0% *Chandler replaced PIMCO during the 4th quarter of 2014. Assets were transferred in-kind as of 12/01/2014. 10Orange County Sanitation District Investment Manager Returns The table below details the rates of return for the Fund’s investment managers over various time periods ended September 30, 2019. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns for Periods Ended September 30, 2019 Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^ 0.88% 5.57% 2.04% 1.98% 1.40% Chandler 0.88% 5.57% 2.04% - - Blmbg Govt/Cred 1-5 Year Idx 0.89% 6.01% 2.01% 2.01% 1.65% ML 1-5 Govt/Corp 0.90% 6.02% 2.04% 2.05% 1.70% Liquid Operating Monies^ 0.58% 2.48% 1.61% 1.08% 0.81% Chandler 0.58% 2.48% 1.61% - - Citigroup 3-Month Treasury Bill 0.56% 2.36% 1.52% 0.96% 0.70% Total Fund 0.86% 4.98% 1.91% 1.78% 1.26% Target* 0.84% 5.28% 1.94% 1.83% 1.50% * Current Quarter Target = 80.0% ML:Corp/Gov 1-5 Yr and 20.0% FTSE 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. 11Orange County Sanitation District Investment Manager Returns The table below details the rates of return for the Fund’s investment managers over various time periods ended September 30, 2019. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns for Periods Ended September 30, 2019 Last Last Last 10 15 24 Years Years Years Domestic Fixed Income Long Term Operating Fund^ 2.19% 3.11% 4.25% Blmbg Govt/Cred 1-5 Year Idx 2.12% 2.89% 4.08% ML 1-5 Govt/Corp 2.18% 2.92% 4.11% Liquid Operating Monies^ 0.63% 1.54% 2.58% Citigroup 3-Month Treasury Bill 0.51% 1.32% 2.29% Total Fund 1.90% 2.81% 3.98% Target*1.85% 2.60% 3.75% * Current Quarter Target = 80.0% ML:Corp/Gov 1-5 Yr and 20.0% FTSE 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. 12Orange County Sanitation District Investment Manager Returns The table below details the rates of return for the Fund’s investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. 12/2018- 9/2019 2018 2017 2016 2015 Domestic Fixed Income Long Term Operating Fund^ 4.17% 1.60% 1.18% 1.58% 0.85% Chandler 4.17% 1.60% 1.18% 1.58% 0.85% Blmbg Govt/Cred 1-5 Year Idx 4.48% 1.38% 1.27% 1.56% 0.97% ML 1-5 Govt/Corp 4.52% 1.40% 1.28% 1.62% 1.05% Liquid Operating Monies^ 1.88% 1.90% 0.91% 0.47% 0.22% Chandler 1.88% 1.90% 0.91% 0.47% 0.22% Citigroup 3-Month Treasury Bill 1.78% 1.86% 0.84% 0.27% 0.03% Total Fund 3.74% 1.72% 1.02% 1.15% 0.80% Target* 3.97% 1.49% 1.19% 1.35% 0.85% * Current Quarter Target = 80.0% ML:Corp/Gov 1-5 Yr and 20.0% FTSE 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. 13Orange County Sanitation District Investment Manager Returns The table below details the rates of return for the Fund’s investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. 2014 2013 2012 2011 2010 Domestic Fixed Income Long Term Operating Fund^ 1.98%(1.77%)3.06% 4.59% 4.42% Blmbg Govt/Cred 1-5 Year Idx 1.42% 0.28% 2.24% 3.14% 4.08% ML 1-5 Govt/Corp 1.51% 0.32% 2.47% 3.10% 4.17% Liquid Operating Monies^ 0.09% 0.13% 0.17% 0.24% 0.25% Citigroup 3-Month Treasury Bill 0.03% 0.05% 0.07% 0.08% 0.13% Total Fund 1.73%(1.49%)2.70% 3.70% 3.68% Target* 1.21% 0.26% 1.99% 2.49% 3.36% * Current Quarter Target = 80.0% ML:Corp/Gov 1-5 Yr and 20.0% FTSE 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. 14Orange County Sanitation District Asset Class Risk and Return The charts below show the seven year annualized risk and return for each asset class component of the Total Fund. The first graph contrasts these values with those of the appropriate index for each asset class. The second chart contrasts them with the risk and return of the median portfolio in each of the appropriate CAI comparative databases. In each case, the crosshairs on the chart represent the return and risk of the Total Fund. Seven Year Annualized Risk vs Return Asset Classes vs Benchmark Indices 0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Total Fund Blmbg Gov/Cred 1-5 Yr FTSE 3 Mo T-Bill Total Fund Target ML:Corp/Gov 1-5 Yr Standard Deviation Re t u r n s Seven Year Annualized Risk vs Return Asset Classes vs Asset Class Median 0.30%0.40%0.50%0.60%0.70%0.80%0.90%1.00%1.10%1.20%1.30%1.40% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Total Fund Callan Money Market Funds Callan Short Fixed Inc Standard Deviation Re t u r n s 15Orange County Sanitation District                     Manager Analysis     Chandler-Long Term Operating Fund Period Ended September 30, 2019 Investment Philosophy Chandler Asset Management’s Short Term Bond strategy is driven by quantitative models and focuses on active duration management, sector selection and term structure. The strategy seeks to achieve consistent above-benchmark returns with low volatility relative to the style’s performance benchmark. The firm has a unique focus on high quality fixed income management, and places risk control as a higher objective than return. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Quarterly Summary and Highlights Long Term Operating Fund’s portfolio posted a 0.88% return for the quarter placing it in the 37 percentile of the Callan Short Term Fixed Income group for the quarter and in the 15 percentile for the last year. Long Term Operating Fund’s portfolio underperformed the ML:Corp/Gov 1-5 Yr by 0.02% for the quarter and underperformed the ML:Corp/Gov 1-5 Yr for the year by 0.45%. Quarterly Asset Growth Beginning Market Value $558,200,609 Net New Investment $-15,000,000 Investment Gains/(Losses) $4,926,318 Ending Market Value $548,126,927 Performance vs Callan Short Term Fixed Income (Gross) 0% 1% 2% 3% 4% 5% 6% 7% Last Qtr Last Last 3 Yrs Chandler Last 5 Yrs Last 7 Yrs Last 10 Yrs Since 9/30/95 Yr Inception B(37)A(37)(36) B(5)A(15) (5) A(75)B(79)(75)B(52) A(58)(49)B(48) A(52)(45)B(59)A(84)(52) A(44)B(47)(44) A(16) B(31)(28) 10th Percentile 1.03 5.67 2.81 2.61 2.53 2.25 3.14 4.40 25th Percentile 0.95 5.29 2.47 2.33 2.27 2.02 2.62 4.14 Median 0.84 4.87 2.21 2.06 2.00 1.70 2.10 3.89 75th Percentile 0.75 4.49 2.04 1.84 1.78 1.50 1.72 3.67 90th Percentile 0.68 3.78 1.83 1.61 1.57 1.28 1.37 3.32 Long Term Operating Fund A 0.88 5.57 2.04 1.97 1.98 1.40 2.19 4.25 Blmbg Govt/Cred 1-5 Year Idx B 0.89 6.01 2.01 2.03 2.01 1.65 2.12 4.08 ML:Corp/Gov 1-5 Yr 0.90 6.02 2.04 2.07 2.05 1.70 2.18 4.11 Relative Return vs ML:Corp/Gov 1-5 Yr Re l a t i v e R e t u r n s (1.4%) (1.2%) (1.0%) (0.8%) (0.6%) (0.4%) (0.2%) 0.0% 0.2% 0.4% 0.6% 12 2013 2014 2015 2016 2017 2018 2019 Long Term Operating Fund Callan Short Term Fixed Income (Gross) Annualized Seven Year Risk vs Return 0.0 0.5 1.0 1.5 2.0 2.5 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Blmbg Govt/Cred 1-5 Year Idx Long Term Operating Fund ML:Corp/Gov 1-5 Yr Standard Deviation Re t u r n s 17Orange County Sanitation District Long Term Operating Fund Return Analysis Summary Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager’s ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Performance vs Callan Short Term Fixed Income (Gross) (3%) (2%)(1%)0%1%2% 3%4%5%6% 12/18- 9/19 2018 2017 2016 2015 2014 2013 2012 2011 2010 B(17)A(33)16 A(65)B(87)87 B(58)A(65)57 A(49)B(50)47 B(35)A(63)24 A(4)B(17)10 B(90) A(100) 89 A(21)B(38)27 A(1) B(4)4 A(15)B(20)17 10th Percentile 4.87 1.99 2.23 2.82 1.17 1.50 1.20 4.46 2.72 4.7125th Percentile 4.36 1.81 1.74 2.17 1.01 1.27 0.80 2.60 2.30 4.01 Median 3.89 1.69 1.31 1.56 0.91 1.11 0.65 1.81 1.85 3.18 75th Percentile 3.57 1.54 0.95 1.18 0.75 0.87 0.40 1.45 1.65 2.72 90th Percentile 3.00 1.33 0.66 1.03 0.64 0.73 0.29 0.92 1.44 2.41 Long Term Operating Fund A 4.17 1.60 1.18 1.58 0.85 1.98 (1.77)3.06 4.59 4.42 Blmbg Govt/Cred 1-5 Year Idx B 4.48 1.38 1.27 1.56 0.97 1.42 0.28 2.24 3.14 4.08 ML:Corp/Gov 1-5 Yr 4.52 1.40 1.28 1.62 1.05 1.51 0.32 2.47 3.10 4.17 Cumulative and Quarterly Relative Return vs ML:Corp/Gov 1-5 Yr Re l a t i v e R e t u r n s (4%) (3%) (2%) (1%) 0% 1% 2% 3% 09 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Long Term Operating Fund Blmbg Govt/Cred 1-5 Year Idx Callan Short Fixed Inc Risk Adjusted Return Measures vs ML:Corp/Gov 1-5 Yr Rankings Against Callan Short Term Fixed Income (Gross) Seven Years Ended September 30, 2019 (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 Alpha Sharpe Excess Return Ratio Ratio B(94)A(98) B(89)A(97) A(87) B(97) 10th Percentile 0.94 1.49 0.97 25th Percentile 0.63 1.23 0.46 Median 0.37 0.97 0.01 75th Percentile 0.18 0.80 (0.36) 90th Percentile 0.05 0.63 (0.65) Long Term Operating Fund A (0.26)0.45 (0.56) Blmbg Govt/Cred 1-5 Year Idx B (0.05)0.65 (0.95) 18Orange County Sanitation District Long Term Operating Fund Bond Characteristics Analysis Summary Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Fixed Income Portfolio Characteristics Rankings Against Callan Short Term Fixed Income as of September 30, 2019 (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Average Effective Coupon OA Duration Life Yield Rate Convexity (10)(8)(22)(18) (92) (88) (62) (4) 10th Percentile 2.46 3.13 2.79 3.31 0.06 25th Percentile 2.09 2.54 2.30 2.96 0.04 Median 1.88 2.10 2.14 2.79 0.02 75th Percentile 1.79 1.97 1.99 2.54 0.00 90th Percentile 1.09 1.21 1.92 2.20 (0.13) Long Term Operating Fund 2.46 2.58 - 2.29 - ML:Corp/Gov 1-5 Yr 2.54 2.70 1.87 2.64 0.08 Sector Allocation and Quality Ratings The first graph compares the manager’s sector allocation with the average allocation across all the members of the manager’s style. The second graph compares the manager’s weighted average quality rating with the range of quality ratings for the style. Sector Allocation September 30, 2019 0%10%20%30%40%50%60%70%80% US Trsy 30.4 24.4 62.1 Gov Related 25.6 50 % Mg r M V 50 % Mg r M V 1.5 9.9 Corp (incl 144A) 21.8 51.7 28.0 Other 11.7 ABS 8.5 17.2 Tax-Exempt US Muni 0.8 Cash 0.7 1.3 CMOs 0.3 0.1 CMBS 0.2 2.1 RMBS 1.9 Long Term Operating Fund Callan Short Term Fixed Income ML:Corp/Gov 1-5 Yr Quality Ratings vs Callan Short Term Fixed Income A- A A+ AA- AA AA+ AAA Trsy Weighted Average Quality Rating (60)(11) 10th Percentile AA 25th Percentile AA Median AA 75th Percentile A 90th Percentile A Long TermOperating Fund AA ML:Corp/Gov 1-5 Yr AA 19Orange County Sanitation District Long Term Operating Fund Portfolio Characteristics Summary As of September 30, 2019 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sectors. The second chart compares the duration distribution. The last chart compares the distribution across quality ratings. Sector Allocation Long Term Operating Fund US Trsy 30% CMBS 0% Gov Related26% CMOs 0%Corp (incl 144A)22% Cash 1% Other 12% Tax-Exempt US Muni 1% ABS 9% ML:Corp/Gov 1-5 Yr US Trsy 62% Gov Related 10% Corp (incl 144A) 28% Duration Distribution 0% 10% 20% 30% 40% 50% 60% 70% 80% <1 17.0 2.1 1-3 39.4 60.6 3-5 43.6 37.2 5-7 7-10 >10 Years Duration Pe r c e n t o f P o r t f o l i o Weighted Average: Duration Long Term Operating Fund: ML:Corp/Gov 1-5 Yr: 2.46 2.54 Quality Distribution 0% 20% 40% 60% 80% 100% AAA 8.9 68.2 AA 66.5 5.6 A 16.912.5 BBB 0.5 13.7 BB B CCC CC C D N/R 7.2 Quality Rating Pe r c e n t o f P o r t f o l i o Weighted Average: Quality Long Term Operating Fund: ML:Corp/Gov 1-5 Yr: AA AA 20Orange County Sanitation District Chandler-Liquid Operating Money Period Ended September 30, 2019 Investment Philosophy Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Quarterly Summary and Highlights Liquid Operating Money Net’s portfolio posted a 0.55% return for the quarter placing it in the 28 percentile of the Callan Money Market Funds group for the quarter and in the 26 percentile for the last year. Liquid Operating Money Net’s portfolio underperformed the Citigroup 3-Month Treasury Bill by 0.02% for the quarter and underperformed the Citigroup 3-Month Treasury Bill for the year by 0.03%. Quarterly Asset Growth Beginning Market Value $164,566,646 Net New Investment $-97,000,000 Investment Gains/(Losses) $666,613 Ending Market Value $68,233,258 Performance vs Callan Money Market Funds (Net) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Last Qtr Last Last 3 Yrs Chandler Last 5 Yrs Last 7 Yrs Last 10 Yrs Since 9/30/95 Yr Inception (28)(26) (26)(24) (30)(26) (27)(26)(27)(26) (25)(22) (23)(21) (12)(25) 10th Percentile 0.66 2.90 1.96 1.55 1.48 1.12 1.03 2.62 25th Percentile 0.57 2.34 1.55 1.02 0.97 0.66 0.47 2.29 Median 0.49 2.05 1.25 0.80 0.76 0.53 0.38 2.13 75th Percentile 0.44 1.86 1.07 0.68 0.64 0.46 0.32 2.00 90th Percentile 0.37 1.57 0.85 0.52 0.49 0.35 0.25 1.85 Liquid Operating Money Net 0.55 2.33 1.45 0.98 0.93 0.65 0.48 2.43 Citigroup 3-Month Treasury Bill 0.56 2.36 1.52 1.01 0.96 0.70 0.51 2.29 Relative Returns vs Citigroup 3-Month Treasury Bill Re l a t i v e R e t u r n s (0.08%) (0.06%) (0.04%) (0.02%) 0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 12 2013 2014 2015 2016 2017 2018 2019 Liquid Operating Money Net Callan Money Market Funds (Net) Annualized Seven Year Risk vs Return 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Liquid Operating Money Net Citigroup 3-Month Treasury Bill Standard Deviation Re t u r n s 21Orange County Sanitation District Liquid Operating Money Net Return Analysis Summary Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager’s ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Performance vs Callan Money Market Funds (Net) (0.5%) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 12/18- 9/19 2018 2017 2016 2015 2014 2013 2012 2011 2010 2827 2212 3530 3033 2236 9822 9820 4424 1315 1915 10th Percentile 2.57 1.89 1.42 1.32 0.28 0.35 0.30 0.85 0.12 0.24 25th Percentile 1.84 1.72 0.91 0.40 0.06 0.03 0.04 0.06 0.04 0.08 Median 1.57 1.53 0.61 0.14 0.01 0.01 0.01 0.01 0.01 0.02 75th Percentile 1.42 1.30 0.42 0.04 0.01 0.01 0.01 0.01 0.01 0.0190th Percentile 1.20 1.04 0.23 0.01 0.00 0.00 0.00 0.00 0.00 0.00 Liquid Operating Money Net 1.77 1.75 0.76 0.32 0.07 (0.06) (0.02)0.02 0.09 0.10 Citigroup 3-Month Treasury Bill 1.78 1.86 0.84 0.27 0.03 0.03 0.05 0.07 0.08 0.13 Cumulative and Quarterly Relative Return vs Citigroup 3-Month Treasury Bill Re l a t i v e R e t u r n s (0.50%) (0.40%) (0.30%) (0.20%) (0.10%) 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 09 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Liquid Operating Money Net Callan Money Market Funds Risk Adjusted Return Measures vs Citigroup 3-Month Treasury Bill Rankings Against Callan Money Market Funds (Net) Seven Years Ended September 30, 2019 (3.0) (2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 Alpha Sharpe Excess Return Ratio Ratio (31)(25) (28) 10th Percentile 0.38 0.71 1.22 25th Percentile (0.03) (0.14) (0.37) Median (0.15) (0.48) (1.98) 75th Percentile (0.23) (0.76) (2.27) 90th Percentile (0.34) (1.26) (2.46) Liquid Operating Money Net (0.07) (0.15) (0.82) 22Orange County Sanitation District Callan Research/Education  Research and Educational Programs The Callan Institute provides research to update clients on the latest industry trends and carefully structured educational programs to enhance the knowledge of industry professionals. Visit www.callan.com/library to see all of our publications, and www.callan.com/blog to view our blog “Perspectives.” For more information contact Barb Gerraty at 415-274-3093 / institute@callan.com. New Research from Callan’s Experts DTS Offers Some Key Advantages for Evaluating Fixed Income Portfolios | This paper describes duration times spread (DTS), which measures systematic credit-spread risk exposure. DTS estimates the return of any bond, by percentage, if its spread were to change from the current level, all else equal. DTS offers several advantages for monitoring risk in credit portfolios over other methods. 2019 ESG Survey | Callan’s seventh annual survey assessing the status of environmental, social, and governance (ESG) investing in the U.S. institutional investment market. Callan’s DC Index in Detail | A video about the Callan DC Index™: why we started it, what it measures, and how it can beneit deined contribution plan sponsors. DC Plan Hacks: Tips for an Eficient Design | Deined contribution plan sponsors should regularly evaluate their plans to make sure they serve the organization’s beneits philosophy. When evaluating changes, the sponsor should consider its demographics, cost of beneits, vendor capabilities, impact on nondiscrimination testing, communication capabilities, and legal requirements. 2019 June Workshop Summary: In the Age of Illiquidity | For many nonproits and deined beneit plans, the shift to higher- returning but less liquid asset classes has myriad implications. This summary discusses how consultants, institutional investors, and investment managers can work together to identify solutions tailored to each plan. The Keys to Unlocking Private Equity Portfolio Assessment Private equity performance evaluation has some unique considerations, so return calculations and benchmarking methodologies differ from public securities. Closed-end private equity vehicles are assessed using ratio analyses and internal rate of return (IRR) measures. Using performance metrics, private equity portfolios can be evaluated at the partnership level, at the vintage year level, and then at the total portfolio level. Survivorship Bias and the Walking Dead | Survivorship bias, the predisposition to evaluate a data set by focusing on the “survivors” rather than also examining the record of non-survivors, is important to understand for hedge fund peer groups, which tend to have a relatively large number of constituents that disappear. Using a proprietary approach, Callan is able to adjust peer group comparisons for survivorship bias. This better-informed perspective enables a more honest assessment in considering performance relative to other opportunities. Quarterly Periodicals Private Equity Trends | A newsletter on private equity activity, covering both the fundraising cycle and performance over time. Market Pulse Flipbook | A market reference guide covering trends in the U.S. economy, developments for institutional investors, and the latest data for U.S. and non-U.S. equities and ixed income, alternatives, and deined contribution plans. Active vs. Passive Charts | This series of charts compares active managers alongside relevant benchmarks over the long term. Capital Market Review | A newsletter providing analysis and a broad overview of the economy and public and private market activity each quarter across a wide range of asset classes. Education 3rd Quarter 2019 Events Miss out on a Callan conference or workshop? Event summaries and speakers’ presentations are available on our website: www.callan.com/library/ Please mark your calendar and look forward to upcoming invitations. 2020 National Conference Celebrating the 40th anniversary of the Callan Institute January 27-29, 2020 – San Francisco Please also keep your eye out for upcoming Webinars in 2019! We will be sending invitations to register for these events and will also have registration links on our website at www.callan.com/ webinarsupcoming. For more information about events, please contact Barb Gerraty: 415-274-3093 / gerraty@callan.com The Center for Investment Training Educational Sessions The Center for Investment Training, better known as the “Callan College,” provides a foundation of knowledge for industry professionals who are involved in the investment decision-making process. It was founded in 1994 to provide clients and non-clients alike with basic- to intermediate-level instruction. Introduction to Investments April 21-22, 2020 July 21-22, 2020 This program familiarizes institutional investor trustees and staff and asset management advisers with basic investment theory, terminology, and practices. It lasts one-and-a-half days and is designed for individuals who have less than two years of experience with asset-management oversight and/or support responsibilities. Tuition for the Introductory “Callan College” session is $2,350 per person. Tuition includes instruction, all materials, breakfast and lunch on each day, and dinner on the irst evening with the instructors. Learn more at www.callan.com/events/callan-college-intro Unique pieces of research the Institute generates each year50+ Total attendees of the “Callan College” since 19943,700 Year the Callan Institute was founded1980 Attendees (on average) of the Institute’s annual National Conference525 Education: By the Numbers @CallanLLC Callan “Research is the foundation of all we do at Callan, and sharing our best thinking with the investment community is our way of helping to foster dialogue to raise the bar across the industry.” Greg Allen, CEO and Chief Research Oficer                     Definitions     Risk/Reward Statistics The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill). Alpha measures a portfolio’s return in excess of the market return adjusted for risk. It is a measure of the manager’s contribution to performance with reference to security selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk which was taken for that level of market exposure. Beta measures the sensitivity of rates of portfolio returns to movements in the market index. A portfolio’s beta measures the expected change in return per 1% change in the return on the market. If a beta of a portfolio is 1.5, a 1 percent increase in the return on the market will result, on average, in a 1.5 percent increase in the return on the portfolio. The converse would also be true. Downside Risk stems from the desire to differentiate between "good risk" (upside volatility) and "bad risk" (downside volatility). Whereas standard deviation punishes both upside and downside volatility, downside risk measures only the standard deviation of returns below the target. Returns above the target are assigned a deviation of zero. Both the frequency and magnitude of underperformance affect the amount of downside risk. Excess Return Ratio is a measure of risk adjusted relative return. This ratio captures the amount of active management performance (value added relative to an index) per unit of active management risk (tracking error against the index.) It is calculated by dividing the manager’s annualized cumulative excess return relative to the index by the standard deviation of the individual quarterly excess returns. The Excess Return Ratio can be interpreted as the manager’s active risk/reward tradeoff for diverging from the index when the index is mandated to be the "riskless" market position. Information Ratio measures the manager’s market risk-adjusted excess return per unit of residual risk relative to a benchmark. It is computed by dividing alpha by the residual risk over a given time period. Assuming all other factors being equal, managers with lower residual risk achieve higher values in the information ratio. Managers with higher information ratios will add value relative to the benchmark more reliably and consistently. R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of .75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio’s returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio’s return and the market. Relative Standard Deviation is a simple measure of a manager’s risk (volatility) relative to a benchmark. It is calculated by dividing the manager’s standard deviation of returns by the benchmark’s standard deviation of returns. A relative standard deviation of 1.20, for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark. Residual Portfolio Risk is the unsystematic risk of a fund, the portion of the total risk unique to the fund (manager) itself and not related to the overall market. This reflects the "bets" which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors, maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio. 27 Risk/Reward Statistics Rising Declining Periods refer to the sub-asset class cycles vis-a-vis the broader asset class. This is determined by evaluating the cumulative relative sub-asset class index performance to that of the broader asset class index. For example, to determine the Growth Style cycle, the S&P 500 Growth Index (sub-asset class) performance is compared to that of the S&P 500 Index (broader asset class). Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-free" return (usually 3 Month Treasury Bill) from the portfolio return and dividing the resulting "excess return" by the portfolio’s risk level (standard deviation). The result is a measure of return gained per unit of risk taken. Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1) the statistical significance of the denominator, and (2) its reliance on the persistence of skewness in return distributions. Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns, the higher the standard deviation of returns, and the higher the portfolio risk. If returns are normally distributed (ie. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean. Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market (non-diversifiable or systematic) risk and residual (diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual risk of the portfolio. Tracking Error is a statistical measure of a portfolio’s risk relative to an index. It reflects the standard deviation of a portfolio’s individual quarterly or monthly returns from the index’s returns. Typically, the lower the Tracking Error, the more "index-like" the portfolio. Treynor Ratio represents the portfolio’s average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed. Note: Alpha, Total Risk, and Residual Risk are annualized. 28 Fixed Income Portfolio Characteristics All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector - Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio’s weights with those of the index to identify any significant sector bets. Average Coupon - The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody’s Rating for Total Portfolio - A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody’s Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality - lowest credit risk) to C (lowest investment quality - highest credit risk). Average Option Adjusted (Effective) Convexity - Convexity is a measure of the portfolio’s exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally, securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security’s duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted (Effective) Duration - Duration is one measure of the portfolio’s exposure to interest rate risk. Generally, the higher a portfolio’s duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price - The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity - This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Years to Stated Maturity - The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns, or prepayments. Current Yield - The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. 29 Fixed Income Portfolio Characteristics Duration Dispersion - Duration dispersion is the market-value weighted standard deviation of the portfolio’s individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ("barbellness"), and the smaller the dispersion, the more concentrated the holdings’ durations around the overall portfolio’s ("bulletness"). The purpose of this statistic is to gauge the "bulletness" or "barbellness" of a portfolio relative to its total duration and to that of its benchmark index. Effective Yield - The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns, expected mortgage principal prepayments, and the exercise of any "in-the-money" imbedded put or call options. Weighted Average Life - The weighted average life of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. 30                     Disclosures    List of Callan’s Investment Manager Clients Confidential – For Callan Client Use Only Callan takes its fiduciary and disclosure responsibilities to clients very seriously. We recognize that there are numerous potential conflicts of interest encountered in the investment consulting industry and that it is our responsibility to manage those conflicts effectively and in the best interest of our clients. At Callan, we employ a robust process to identify, manage, monitor and disclose potential conflicts on an on-going basis. The list below is an important component of our conflicts management and disclosure process. It identifies those investment managers that pay Callan fees for educational, consulting, software, database or reporting products and services. We update the list quarterly because we believe that our fund sponsor clients should know the investment managers that do business with Callan, particularly those investment manager clients that the fund sponsor clients may be using or considering using. Please note that if an investment manager receives a product or service on a complimentary basis (e.g. attending an educational event), they are not included in the list below. Callan is committed to ensuring that we do not consider an investment manager’s business relationship with Callan, or lack thereof, in performing evaluations for or making suggestions or recommendations to its other clients. Please refer to Callan’s ADV Part 2A for a more detailed description of the services and products that Callan makes available to investment manager clients through our Institutional Consulting Group, Independent Adviser Group and Fund Sponsor Consulting Group. Due to the complex corporate and organizational ownership structures of many investment management firms, parent and affiliate firm relationships are not indicated on our list. Fund sponsor clients may request a copy of the most currently available list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by particular fund manager clients. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department. Quarterly List as of September 30, 2019 Knowledge. Experience. Integrity. Page 1 of 2 Manager Name Aberdeen Standard Investments Acadian Asset Management LLC AEGON USA Investment Management Inc. Alcentra AllianceBernstein Allianz Global Investors Allianz Life Insurance Company of North America American Century Investments Amundi Pioneer Asset Management AQR Capital Management Ares Management LLC Ariel Investments, LLC Atlanta Capital Management Co., LLC Aurelius Capital Management Aviva Investors Americas AXA Investment Managers Baillie Gifford International, LLC Baird Advisors Baron Capital Management, Inc. Barrow, Hanley, Mewhinney & Strauss, LLC BlackRock BMO Global Asset Management BNP Paribas Asset Management BNY Mellon Asset Management Boston Partners Brandes Investment Partners, L.P. Brandywine Global Investment Management, LLC BrightSphere Investment Group Brown Brothers Harriman & Company Cambiar Investors, LLC Capital Group Carillon Tower Advisers CastleArk Management, LLC Causeway Capital Management LLC Chartwell Investment Partners Manager Name ClearBridge Investments, LLC Cohen & Steers Capital Management, Inc. Columbia Threadneedle Investments Columbus Circle Investors Corbin Capital Partners, L.P. Cooke & Bieler, L.P. Credit Suisse Asset Management DePrince, Race & Zollo, Inc. Diamond Hill Capital Management, Inc. Dimensional Fund Advisors LP Doubleline Duff & Phelps Investment Management Co. DWS EARNEST Partners, LLC Eaton Vance Management Epoch Investment Partners, Inc. Fayez Sarofim & Company Federated Investors Fidelity Institutional Asset Management Fiera Capital Corporation Financial Engines First Hawaiian Bank Wealth Management Division First State Investments Fisher Investments Franklin Templeton Fred Alger Management, Inc. GAM (USA) Inc. Glenmeade Investment Management, LP GlobeFlex Capital, L.P. Goldman Sachs Green Square Capital Advisors, LLC Guggenheim Investments GW&K Investment Management Harbor Capital Group Trust Hartford Investment Management Co. Knowledge. Experience. Integrity. September 30, 2019 Page 2 of 2 Manager Name Heitman LLC Hotchkis & Wiley Capital Management, LLC HSBC Global Asset Management Income Research + Management, Inc. Insight Investment Management Limited Intech Investment Management, LLC Intercontinental Real Estate Corporation Invesco Investec Asset Management North America, Inc. Ivy Investments J.P. Morgan Janus Jarislowsky Fraser Global Investment Management Jennison Associates LLC Jobs Peak Advisors KeyCorp Lazard Asset Management Legal & General Investment Management America Lincoln National Corporation LMCG Investments, LLC Logan Circle Partners, L.P. Longview Partners Loomis, Sayles & Company, L.P. Lord Abbett & Company Los Angeles Capital Management LSV Asset Management MacKay Shields LLC Macquarie Investment Management (MIM) Manulife Investment Management Marathon Asset Management, L.P. McKinley Capital Management, LLC Mellon MFS Investment Management MidFirst Bank Mondrian Investment Partners Limited Montag & Caldwell, LLC Morgan Stanley Investment Management Mountain Lake Investment Management LLC Mountain Pacific Advisors, LLC MUFG Union Bank, N.A. Natixis Investment Managers Neuberger Berman Newton Investment Management Nikko Asset Management Co., Ltd. Northern Trust Asset Management Nuveen OFI Global Asset Management Manager Name Osterweis Capital Management, LLC P/E Investments Pacific Investment Management Company Pathway Capital Management Peregrine Capital Management, LLC. Perkins Investment Management PGIM Fixed Income PineBridge Investments PNC Capital Advisors, LLC Polen Capital Management Principal Global Investors Putnam Investments, LLC QMA LLC RBC Global Asset Management Regions Financial Corporation Robeco Institutional Asset Management, US Inc. Rockefeller Capital Management Rothschild & Co. Asset Management US Russell Investments Schroder Investment Management North America Inc. Smith Graham & Co. Investment Advisors, L.P. South Texas Money Management, Ltd. State Street Global Advisors Strategic Global Advisors Stone Harbor Investment Partners, L.P. Sun Life Investment Management T. Rowe Price Associates, Inc. The TCW Group, Inc. Thompson, Siegel & Walmsley LLC Thornburg Investment Management, Inc. Tri-Star Trust Bank UBS Asset Management VanEck Versus Capital Group Victory Capital Management Inc. Virtus Investment Partners, Inc. Vontobel Asset Management, Inc. Voya WCM Investment Management WEDGE Capital Management Wellington Management Company, LLP Wells Fargo Asset Management Western Asset Management Company LLC Westfield Capital Management Company, LP William Blair & Company LLC CHANDLER ASSET MANAGEMENT, INC. | 800.317.4747 | www.chandlerasset.com INVESTMENT REPORT Period Ending September 30, 2019 Orange County Sanitation District SECTION 1 Economic Update SECTION 2 Account Profile SECTION 3 Consolidated Information SECTION 4 Portfolio Holdings SECTION 5 Transactions Table of Contents As of September 30, 2019 1 SECTION ||||||||||||||Section 1 |Economic Update 2 Economic Update ƒ ƒ ƒ Labormarketandconsumerfundamentalsremainfavorable,butmanufacturingdatacontinueƐtodisappoint.Webelieve economicgrowthhasslowedfromearlierthisyearanddownsideriskstotheoutlookremainelevated.TheUSeconomy continuestofaceheadwindsfromtradedisputes,slowingglobaleconomicgrowth,andanuncertainoutlookforBrexit. However,webelieveaccommodativeUSmonetarypolicyandacollectivedovishstancebyallofthemajorglobalcentral banksshouldhelptocombatheadwinds.WealsobelievetheTrumpadministrationfacessignificantpoliticalpressureto make progress toward a trade agreement with China as we head into an election year. TheFederalOpenMarketCommittee(FOMC)loweredthetargetfedfundsrateby25basispointsinSeptember(forthe secondtimethisyear)toarangeof1.75%-2.00%.Therewerethreedissentingvotes;onepolicymakerfavoreda50-basis pointratecut,andtwopolicymakersfavoredleavingthefedfundsrateunchanged.AccordingtotheFed'sdotplot,only seven out of 17 policymakers are anticipating another rate cut before year-end. Although there is a growing disparity among policymakersabouttheappropriatepathofmonetarypolicy,FedChairPowell’spressconferencesuggestedtheFedwillbe flexibleanddatadependent.Powellindicatedmoreratecutsmaybeappropriateiftheeconomyslowsfurther,buttheFed isnotonapresetcourse.WecontinuetobelievetheFederalReserveislikelytocutthefedfundstargetrateagainbefore year-end,intheabsenceofatraderesolutionormeaningfulimprovementinmarket-basedmeasuresofinflation.Thenext Federal Open Market Committee (FOMC) meeting is scheduled for October 29-30. TheTreasuryyieldcurvesteepenedmodestlyinSeptember,althoughthecurveremainspartiallyinverted.The3-monthT- billyielddeclinednearly17basispointsto1.81%,the2-yearTreasuryyieldincreasednearlytwelvebasispointsto1.62%, andthe10-yearTreasuryyieldincreasedabout17basispointsto1.67%.Aninversionoftheyieldcurveinwhichthe10-year Treasuryyieldislowerthanthe3-monthT-billyieldisgenerallyviewedasapowerfulpredictivesignalofanupcoming recession.However,webelieveincreasedshort-termTreasuryissuancetofundthedeficit,andnegativesovereignbond yieldsinothercountriesmaybedistortingtheUSTreasuryyieldcurve.Germansovereignbondyields(from1-monthoutto 30-years) remained negative at September month-end. Source: Bloomberg 3 U.S. nonfarm payrolls rose by 136,000 in September, slightly below expectations of 145,000. However, August payrolls were revised higher by 38,000. On a trailing 3-month and 6-month average basis, payrolls increased an average of about 157,000 and 154,000per month, respectively. The unemploymentrate declinedto 3.5%(the lowestrate sinceDecember 1969) from 3.7% in August, and the participation rate held steady at 63.2%. A broadermeasure of unemploymentcalled the U-6, which includes those whoare marginallyattached tothe laborforce andemployed part time for economicreasons, dropped to 6.9% in Septemberfrom 7.2% in August. Wages were flat inSeptember, missingexpectations fora 0.3% increase, and the average workweek was unchanged. On a year-over-year basis, wages were up 2.9% in September, versus up 3.2% in August. Source: US Department of Labor Source: US Department of Labor 0 50 100 150 200 250 300 350 MO M C h a n g e I n ( 0 0 0 ' s ) Nonfarm Payroll (000's) Non-farm Payroll (000's) 3 month average (000's) 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% Unemployment Rate Underemployment Rate (U6) Unemployment Rate (U3) Ra t e ( % ) Employment 4 TheConsumerPrice Index(CPI) wasup 1.7%year-over-year inSeptember, unchanged from August. Core CPI (CPI less food and energy) was up 2.4% year-over-year in September, also unchanged from August. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over- year in August, unchanged from July. Core PCE, which is the Fed's primary inflation gauge, was up 1.8% year-over-year in August versus 1.7% year-over-year in July. Core PCE remains below the Fed’s 2.0% inflation target. Source: US Department of Labor Source: US Department of Commerce 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Consumer Price Index (CPI) CPI YOY % Change Core CPI YOY % Change YO Y ( % ) C h a n g e 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Personal Consumption Expenditures (PCE) PCE Price Deflator YOY % Change PCE Core Deflator YOY % Change YO Y ( % ) C h a n g e Inflation 5 Retail sales in August were moderately above consensus expectations, coming in at 0.4% compared to the 0.2% estimate. Excluding autoand gas, retail sales were up 0.1% compared toexpectations fora0.2% increase. On ayear-over-year basis, retail sales increased by 4.1%, amodest increase from the prior year-over-year number of 3.6%. The Consumer Confidence Index unexpectedly declined to 125.1 in September from 134.2 in August. Nevertheless, the index remains at a strong level. Source: US Department of Commerce Source: The Conference Board 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Retail Sales YOY % Change YO Y ( % ) C h a n g e 110 115 120 125 130 135 140 145 In d e x L e v e l Consumer Confidence Consumer 6 The LeadingEconomicIndex (LEI) was flatin August, in line with expectations,followinga0.4%increaseinJuly.Whilethe LEIremains higheron a year-over-year basis (up 1.1% in August) the pace of year-over-year improvement continues to decline, and the index suggests broad economic growth will continue to slow. The Chicago Fed National Activity Index (CFNAI) increased to 0.10in Augustfrom -0.41in July. On a3- month moving average basis, the index improved to -0.06 in August versus -0.14 in July. Negative values are generally consistent with below- average growth. However, periods of economic contraction have historically been associated with values below -0.70 on a 3-month moving average basis. -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% Leading Economic Indicators (LEI) MO M ( % ) C h a n g e -0.70 -0.50 -0.30 -0.10 0.10 0.30 0.50 0.70 Chicago Fed National Activity Index (CFNAI) 3 M o n t h A v e r a g e Source: The Conference Board Source: Federal Reserve Bank of Chicago Economic Activity 7 Housingstarts were much strongerthan expected in August, up 12.3% month-over-month toa 1.364million annualized rate. Multi-family starts jumped 32.8% month-over-month to an annualized rate of 445,000, while single-family starts rose 4.4% to an annualized rate of 919,000. On a year-over-year basis, total housing starts were up 6.6% in August. Permits were also stronger than expected in the month. Although housing data tends to be volatile on a month-over-month basis, the August report and three-month moving averages suggest that housing activity is accelerating. According to the Case-Shiller 20-City home price index, home prices were up just 2.0% year-over-year in July, versus up 2.2% in June. The year-over-year pace of price appreciation is at a 7-year low. Source: US Department of Commerce Source: S&P 0 200 400 600 800 1000 1200 1400 1600 1800 MO M C h a n g e ( I n T h o u s a n d s o f U n i t s ) Housing Starts Multi Family Housing Starts Single Family Housing Starts 1.5% 2.5% 3.5% 4.5% 5.5% 6.5% 7.5% S&P/Case-Shiller 20 City Composite Home Price Index YO Y ( % ) C h a n g e Housing 8 The Institute for Supply Management (ISM) manufacturing index declined to 47.8 in September from 49.1 in August. The reading was worse than expected and suggests the manufacturing sector remains in contraction. New orders and backlog orders also remained below 50.0 in September. Overall, the ISM Manufacturing report suggests the outlook for the manufacturing sector is weak. The Industrial Production index was up 0.4% year-over-year in August versus up 0.5% year-over-year in July. On a month-over-month basis, the index rose 0.6% in August, above the consensus forecast of 0.2%. The manufacturing componentof the index rose 0.5% in August, above the 0.1% consensus, followinga 0.4% decline in July. Capacity Utilization increased to 77.9% in August from 77.5% in July, but remains below the long-run average of 79.8% indicating there is still excess capacity for growth. Source: Institute for Supply Management Source: Federal Reserve 46 48 50 52 54 56 58 60 62 64 Institute of Supply Management Purchasing Manager Index EXPANDING CONTRACTING 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Industrial Production YO Y ( % ) C h a n g e Manufacturing 9 Second quarter GDP grew at an annualized rate of 2.0% following growth of 3.1%in thefirst quarter.Although theoverall paceof GDPgrowth slowed in the second quarter (as expected), personal consumption expenditures accelerated and were up 4.6% in Q2, following sluggish growth of just 1.1% in Q1. Personal consumption expenditures contributed 3.00 percentage points to Q2 GDP, federal government spending contributed 0.53 percentage points, and state & local government spending contributed 0.29 percentage points. Meanwhile, gross private domestic investment and net exports were a drag on Q2 GDP growth. The consensus forecast calls for GDP growth of 1.9% in the third quarter and 1.7% in the fourth quarter, for full year growth of about 2.0-2.5% versus 2.9% growth in 2018. Source: US Department of Commerce Source: US Department of Commerce 9/18 12/18 3/19 6/19 2.3% 1.0% 0.8% 3.0% 2.3% 0.5% 1.1% -1.2% -2.1% -0.4% 0.7% -0.7% 0.2% 0.1% 0.1% 0.5% 0.2% -0.1% 0.4% 0.3% 2.9% 1.1% 3.1% 2.0%Total Components of GDP Net Exports and Imports Personal Consumption Expenditures Gross Private Domestic Investment Federal Government Expenditures State and Local (Consumption and Gross Investment) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Gross Domestic Product (GDP) GDP QOQ % Change GDP YOY % Change Gross Domestic Product (GDP) 10 Source: Bloomberg The shape of the Treasury yield curve has changed significantly on a year-over-yearbasis. As of Septembermonth-end, the 3-month T-bill yield wasdown39basispoints,the2-YearTreasuryyieldwasdownnearly120basis points, and the 10-Year Treasury yield was down nearly 140basis points, year-over-year. The current shape of the yield curve implies that market participants are pricing-in additional rate cuts. We believe the year-over-year decline in long-term Treasury yields reflects a high level of market participants' nervousness about the outlook for global economic growth and a decline in global inflation expectations. Source: Bloomberg 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% US Treasury Note Yields 2-Year 5-Year 10-Year Yi e l d ( % ) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% US Treasury Yield Curve Sep-19 Jun-19 Sep-18 Yi e l d ( % ) Bond Yields 11 Section 2|SECTION ||||||||||||||Section 2 |Account Profile 12 Objectives Chandler Asset Management Performance Objective Liquid Operating Monies – will be compared to the 3-month T-Bill rate and operate with a maximum maturity of one year. Long-Term Operating Monies – will be compared to the ICE BAML 1-5 Year Corporate Government Rated AAA – A Index. Investment Objectives The investment objectives of the Orange County Sanitation District are first, to provide safety of principal to ensure the preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the safety and liquidity objectives. Strategy In order to achieve these objectives, the portfolio invests in high quality fixed income securities consistent with the investment policy and California Government Code. 13 Compliance As of September 30, 2019 Category Standard Comment Treasury Issues 5 years maxmaturity; Minimum allocation of 10%Complies* U.S. Agencies 20% max issuer; 5 years max maturity Complies Supranational "AA" rated or better by a NRSRO; 30% maximum; 5 years max maturity; USD denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, or IADB Complies Corporate (MTNs)"A" rated or better long term debt by a NRSRO; 30% maximum; 5% max issuer; 5 years max maturity; Issued by corporations organized and operating within the U.S. or issued by depository institutions licensed by the U.S.Complies Municipal Securities "A" rated or higher by a NRSRO; 10% maximum; 5% max issuer; 5 years max maturity Complies Asset Backed/ CMOs/ Mortgage-backed "AA" rated or better by a NRSRO; "A" or higher issuer rating by a NRSRO; 20% maximum; 5% max issuer (excluding govt agency/mbs); 5 years max maturity Complies* Negotiable CDs "A" rated or better long term debt by a NRSRO; or "A-1"/ highest short term rating by a NRSRO; 30% maximum; 5% max issuer; 5 years max maturity Complies Certificates of Deposit 5% max issuer; 5 years max maturity; Secured/ collateralized Complies Banker’s Acceptances A-1 rated or equivalent short term rating by a NRSRO; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1 rated or equivalent short term rating by a NRSRO; "A" or better long term debt issuer by a NRSRO; Issued by a domestic corporation organized and operating in the US with AUM > $500million; 25% maximum; 5% max issuer; 270 days max maturity Complies Mutual Fund & Money Market Mutual Fund Highest rating or "AAA" rated by two NRSROs; SEC registered adviser with AUM >$500 million and experience greater than 5 years; 10% per one Mutual Fund; 20% max per issuer on Money Market Mutual Funds; 20% max of the District's surplus money Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies OCIP Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to 120% of the benchmark)Complies Max Per Issuer 5% of portfolio (except Supranationals, U.S. Government, Agencies, Mutual Fund)Complies Maximum Maturity 5 years maximum maturity Complies* Orange County Sanitation District Long Term Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy *The portfolio has twenty (20) securities with maturities greater than 5 years including four (4) CMOs and sixteen (16) MBS. All securities were inherited from the previous manager and complied at time of purchase. 14 Portfolio Characteristics Orange County Sanitation District Long Term 9/30/2019 6/30/2019 Benchmark* Portfolio Portfolio Average Maturity (yrs)2.67 2.82 2.77 Average Modified Duration 2.53 2.46 2.43 Average Purchase Yield n/a 2.36% 2.36% Average Market Yield 1.75% 1.79% 1.98% Average Quality**AAA AA/Aa1 AA/Aa1 Total Market Value 548,112,320 558,146,074 *ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index **Benchmark is a blended rating of S&P, Moody’s, and Fitch. Portfolio is S&P and Moody’s respectively. A diverse set of securities in the Treasury, Agency, Asset Backed, Commercial Paper and Corporate sectors were purchased during the quarter to keep the portfolio positioned in-line with Chandler objectives. The purchased securities ranged in maturity from November 2019 to July 2024. One security was sold, one was called, and several matured to facilitate the new holdings in the portfolio. Additionally, $15 million was withdrawn from the portfolio late in the quarter to account for the liquidity needs of the District. As of September 30, 2019 15 Orange County Sanitation District Long Term Sector Distribution ABS 8.5% Agency 25.6% CMO 0.3% Commercial Paper 2.0% Foreign Corporate 3.6%Money Market Fund FI 0.7% Mortgage Pass Thru 0.2% Municipal Bonds 0.8% Supranational 6.1% US Corporate 21.8% US Treasury 30.4% September 30, 2019 June 30, 2019 ABS 7.9% Agency 23.6% CMO 0.4% Commercial Paper 2.0% Foreign Corporate 2.3% Money Market Fund FI 3.1% Mortgage Pass Thru 0.2% Municipal Bonds 0.8% Supranational 6.0% US Corporate 23.0% US Treasury 30.7% As of September 30, 2019 The sector allocation was relatively stable during the quarter. Notably the Money Market allocation decreased by 2.4% to 0.7% of the portfolio partially offset by the 2.0% increase in the Agency allocation to 25.6% of the portfolio. 16 Issue Name Investment Type % Portfolio Government of United States US Treasury 30.37% Federal Home Loan Bank Agency 10.16% Federal National Mortgage Association Agency 8.87% Federal Home Loan Mortgage Corp Agency 5.59% Inter-American Dev Bank Supranational 3.22% Honda ABS ABS 2.99% John Deere ABS ABS 2.51% MUFG Bank Ltd/NY Commercial Paper 2.05% Intl Bank Recon and Development Supranational 1.85% Toronto Dominion Holdings Foreign Corporate 1.53% Wells Fargo Corp US Corporate 1.48% JP Morgan Chase & Co US Corporate 1.42% Apple Inc US Corporate 1.31% Bank of America Corp US Corporate 1.27% Charles Schwab Corp/The US Corporate 1.26% Berkshire Hathaway US Corporate 1.23% Royal Bank of Canada Foreign Corporate 1.21% Chubb Corporation US Corporate 1.16% PNC Financial Services Group US Corporate 1.15% American Express ABS ABS 1.14% ChevronTexaco Corp US Corporate 1.13% Nissan ABS ABS 1.08% IBM Corp US Corporate 1.07% International Finance Corp Supranational 1.00% Intel Corp US Corporate 0.96% US Bancorp US Corporate 0.94% Bank of New York US Corporate 0.94% Federal Farm Credit Bank Agency 0.93% Qualcomm Inc US Corporate 0.92% HSBC Holdings PLC Foreign Corporate 0.83% Toyota ABS ABS 0.79% Honda Motor Corporation US Corporate 0.78% Wal-Mart Stores US Corporate 0.75% First American Govt Obligation Fund Class-Z Money Market Fund FI 0.69% General Dynamics Corp US Corporate 0.59% Microsoft US Corporate 0.55% Exxon Mobil Corp US Corporate 0.55% Oracle Corp US Corporate 0.55% Issuers Orange County Sanitation District Long Term – Account #10268 As of September 30, 2019 17 Issue Name Investment Type % Portfolio Morgan Stanley US Corporate 0.55% HSBC Holdings PLC US Corporate 0.46% Port Authority of New York and New Jersey Municipal Bonds 0.46% Merck & Company US Corporate 0.38% Federal Home Loan Mortgage Corp CMO 0.27% New York City Transitional Finance Authority Municipal Bonds 0.27% Deere & Company US Corporate 0.25% Federal National Mortgage Association Mortgage Pass Thru 0.20% BlackRock Inc/New York US Corporate 0.20% University of California Municipal Bonds 0.08% Federal National Mortgage Association CMO 0.03% GNMA Mortgage Pass Thru 0.03% AMRESCO Residental Securities Corp CMO 0.02% SLM Corp ABS 0.00% Small Business Administration ABS 0.00% Federal Home Loan Mortgage Corp Mortgage Pass Thru 0.00% TOTAL 100.00% Issuers Orange County Sanitation District Long Term – Account #10268 As of September 30, 2019 18 AAA AA A <A NR 09/30/19 8.9% 66.5% 16.9% 0.5% 7.2% 06/30/19 9.7% 65.2% 16.5% 0.5% 8.1% Source: S&P Ratings September 30, 2019 vs. June 30, 2019 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% AAA AA A <A NR 9/30/2019 6/30/2019 Quality Distribution Orange County Sanitation District Long Term As of September 30, 2019 19 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5+ Orange County Sanitation District Long Term ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index Portfolio Compared to the Benchmark as of September 30, 2019 0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5+ Portfolio 6.6% 2.7% 7.7% 22.3% 17.1% 27.7% 15.9% 0.0% Benchmark* 0.2% 0.1% 1.9% 34.0% 27.7% 22.3% 13.8% 0.0% *ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index Duration Distribution Orange County Sanitation District Long Term As of September 30, 2019 The duration of the portfolio moderately increased, currently 2.46 compared to 2.43 at the end of the prior reporting period. The Chandler team anticipates keeping the overall duration of the portfolio close to the benchmark in the coming quarter. 20 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Long Term ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index Total Rate of Return Annualized Since Inception 11/30/2014 Annualized TOTAL RATE OF RETURN 3 months 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Long Term 0.88% 5.52% 2.69% 1.97%N/A N/A 1.84% ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index 0.82% 5.79% 2.65% 1.85% N/A N/A 1.79% Total rate of return: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. Investment Performance Orange County Sanitation District Long Term As of September 30, 2019 21 Compliance As of September 30, 2019 Category Standard Comment Treasury Issues 1 year max maturity; Minimum allocation of 10%Complies U.S. Agencies 20% max issuer; 1 year max maturity Complies Supranational "AA" rated or better by a NRSRO; 30% maximum; 1 year max maturity; USD denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, or IADB Complies Corporate (MTNs)"A" rated or better long term debt by a NRSRO; 30% maximum; 5% max issuer; 1 year max maturity; Issued by corporations organized and operating within the U.S. or issued by depository institutions licensed by the U.S.Complies Asset Backed/ CMOs "AA" rated or better by a NRSRO; "A" or higher issuer rating by a NRSRO; 20% maximum; 5% max issuer; 1 year max maturity Complies Negotiable CDs "A" rated or better long term debt by a NRSRO; or "A-1"/ highest short term rating by a NRSRO; 30% maximum; 5% max issuer; 1 year max maturity Complies Certificates of Deposit 5% max issuer; 1 year max maturity; Secured/collateralized Complies Banker’s Acceptances A-1 rated or equivalent short term rating by a NRSRO; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1 rated or equivalent short term rating by a NRSRO; "A" or better long term debt issuer by a NRSRO; Issued by a domestic corporation organized and operating in the US with AUM > $500million; 25% maximum; 5% max issuer; 270 days max maturity Complies Mutual Fund & Money Market Mutual Fund Highest rating or "AAA" rated by two NRSROs; SEC registered adviser with AUM >$500 million and experience greater than 5 years; 10% per one Mutual Fund; 20% max per issuer on Money Market Mutual Funds; 20% max of the District's surplus money Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies OCIP Not used by investment adviser Complies Prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Not to exceed 180 days; Max duration of 1/2 year Complies Max Per Issuer 5% of portfolio (except Supranationals, U.S. Government, Agencies, Mutual Fund)Complies Maximum Maturity 1 year maximum maturity Complies Orange County Sanitation District Liquid Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy 22 Portfolio Characteristics Orange County Sanitation District Liquid 9/30/2019 6/30/2019 Benchmark* Portfolio Portfolio Average Maturity (yrs)0.16 0.31 0.24 Average Modified Duration 0.16 0.30 0.24 Average Purchase Yield n/a 2.26% 2.48% Average Market Yield 1.84% 2.01% 2.24% Average Quality**AAA AA+/Aa1 AA+/Aaa Total Market Value 68,219,230 164,545,331 *ICE BAML 3-Month US Treasury Bill Index **Benchmark is a blended rating of S&P, Moody’s, and Fitch. Portfolio is S&P and Moody’s respectively. Multiple securities were purchased across the Treasury, Agency, Commercial Paper and Corporate sectors of the market to keep the portfolio fully invested in the liquidity strategy. The purchased securities ranged in maturity from October 2019 to May 2020. One security was called and many matured to facilitate the two liquidity needs totaling $97 million. As of September 30, 2019 23 Orange County Sanitation District Liquid Sector Distribution Commercial Paper 5.6%Money Market Fund FI 2.6% Negotiable CD 5.7% US Corporate 17.0% US Treasury 69.2% September 30, 2019 June 30, 2019 Commercial Paper 4.4%Money Market Fund FI 3.6% Negotiable CD 4.5% US Corporate 8.6% US Treasury 73.8% Agency 5.1% As of September 30, 2019 The sector allocation evolved with the drop-in market value due to the liquidity needs during the reporting period. The two largest adjustments were the 4.6% decline in the US Treasury allocation, to 69.2% of the portfolio, more than offset by the 8.4% increase in the US Corporate allocation, to 17.0% of the portfolio. 24 Issue Name Investment Type % Portfolio Government of United States US Treasury 69.15% HSBC Holdings PLC US Corporate 3.68% Bank of Nova Scotia Houston Negotiable CD 3.42% General Dynamics Corp US Corporate 2.98% Bank of America Corp US Corporate 2.96% Qualcomm Inc US Corporate 2.96% Toyota Motor Corp Commercial Paper 2.91% MUFG Bank Ltd/NY Commercial Paper 2.72% First American Govt Obligation Fund Class-Z Money Market Fund FI 2.55% Westpac Banking Corp NY Negotiable CD 2.26% Wells Fargo Corp US Corporate 2.21% Bank of New York US Corporate 2.20% TOTAL 100.00% Issuers Orange County Sanitation District Liquid – Account #10282 As of September 30, 2019 25 AAA AA A <A NR 09/30/19 24.0% 59.0% 17.0% 0.0% 0.0% 06/30/19 13.0% 78.4% 8.6% 0.0% 0.0% Source: S&P Ratings September 30, 2019 vs. June 30, 2019 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% AAA AA A <A NR 9/30/2019 6/30/2019 Quality Distribution Orange County Sanitation District Liquid As of September 30, 2019 26 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 1.5 1.5 - 2 2 - 2.5 2.5 - 3 3+ Orange County Sanitation District Liquid ICE BAML 3-Month US Treasury Bill Index Portfolio Compared to the Benchmark as of September 30, 2019 0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 1.5 1.5 - 2 2 - 2.5 2.5 - 3 3+ Portfolio 21.5% 69.6% 8.9% 0.0% 0.0% 0.0% 0.0% 0.0% Benchmark* 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% *ICE BAML 3-Month US Treasury Bill Index Duration Distribution Orange County Sanitation District Liquid As of September 30, 2019 The duration of the portfolio moderately increased to 0.30 compared to 0.24 at the end of the prior reporting period. The Chandler team continues to utilize the Treasury and Agency sectors to immunize the large forecasted liquidity needs and overlay spread product (i.e. Commercial Paper and Corporates) to enhance the total return strategy of the portfolio. 27 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Liquid ICE BAML 3-Month US Treasury Bill Index Total Rate of Return Annualized Since Inception 11/30/2014 Annualized TOTAL RATE OF RETURN 3 months 12 months 2 years 3 years 5 years 10 years Since Inception Orange County Sanitation District Liquid 0.59% 2.50% 2.06% 1.61% N/A N/A 1.12% ICE BAML 3-Month US Treasury Bill Index 0.56% 2.39% 1.99% 1.54% N/A N/A 1.02% Total rate of return: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. Investment Performance Orange County Sanitation District Liquid As of September 30, 2019 28 Compliance As of September 30, 2019 Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max; 5 years maturity; Includes only: IADB, IBRD, and IFC per CGC Complies U.S. Agencies 20% max issuer; 5 years maximum maturity Complies U.S. Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity Complies* Municipal Securities "A" or higher by 1 of 3 NRSROS; 10% maximum; 5% max issuer; 5 years maximum maturity Complies Asset Backed/ CMOs/ Mortgage-backed "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; 20% maximum; 5% max issuer (excluding MBS/govt agency); 5 years max maturity Complies Negotiable CDs "A" or better on its long term debt by 1 of 3 NRSROs ; "A1/P1" or highest short term ratings by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity Complies CDs/ TDS 5% max issuer; 5 years max maturity Complies Banker’s Acceptances A-1, or equivalent highest short term rating by 1 of 3 NRSROS; 40% maximum; 5% max issuer; 180 days max maturity Complies Commercial Paper A-1, or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term debt issued; 25% maximum; 5% max issuer; 270 days max maturity Complies Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to 120% of the benchmark)Complies Maximum Maturity 5 years maximum maturity Complies OCSD Lehman Exposure Assets managed by Chandler Asset Management are in full compliance with state law and with the investment policy * Account holds $2 million face value (cusip 525ESC0Y6) and $600,000 face value (cusip 525ESC1B7) of defaulted Lehman Bros Holdings that were purchased by the previous manager. Complied at time of purchase. 29 Portfolio Characteristics OCSD Lehman Exposure 9/30/2019 Portfolio 6/30/2019 Portfolio Average Maturity (yrs)13.55 14.73 Modified Duration 0.00 0.00 Average Purchase Yield 0.00% 0.00% Average Market Yield 0.00% 0.00% Average Quality*NR/NR NR/NR Total Market Value 61,941 69,161 *Portfolio is S&P and Moody’s, respectively. As of September 30, 2019 30 SECTION ||||||||||||||Section 3 |Consolidated Information 31 Portfolio Characteristics Orange County Sanitation District Consolidated 9/30/2019 6/30/2019 Portfolio Portfolio Average Maturity (yrs)2.54 2.20 Modified Duration 2.22 1.93 Average Purchase Yield 2.35% 2.39% Average Market Yield 1.81% 2.04% Average Quality*AA/Aa1 AA/Aa1 Total Market Value 616,393,490 722,760,566 * Portfolio is S&P and Moody’s respectively. As of September 30, 2019 32 Orange County Sanitation District Consolidated Sector Distribution ABS 7.6% Agency 22.7% CMO 0.3% Commercial Paper 2.4% Foreign Corporate 3.2% Money Market Fund FI 0.9% Mortgage Pass Thru 0.2% Municipal Bonds 0.7% Negotiable CD 0.6% Supranational 5.4% US Corporate 21.3% US Treasury 34.7% September 30, 2019 June 30, 2019 ABS 6.1% Agency 19.4% CMO 0.3% Commercial Paper 2.5% Foreign Corporate 1.8% Money Market Fund FI 3.2% Mortgage Pass Thru 0.2% Municipal Bonds 0.6% Negotiable CD 1.0% Supranational 4.6% US Corporate 19.8% US Treasury 40.5% As of September 30, 2019 33 SECTION ||||||||||||||Section 4 |Portfolio Holdings 34 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration ABS 89238BAB8 Toyota Auto Receivables Owner 2018-A A2A 2.100% Due 10/15/2020 683,639.44 01/23/2018 2.12% 683,569.57 683,612.57 100.00 2.14% 683,622.21 638.06 0.12% 9.64 Aaa / AAA NR 1.04 0.07 47788CAB8 John Deere Owner Trust 2018-A A2 2.420% Due 10/15/2020 180,610.31 03/16/2018 2.59% 180,243.45 180,462.00 100.01 2.29% 180,623.78 194.26 0.03% 161.78 Aaa / NR AAA 1.04 0.05 43814RAC0 Honda Auto Receivables 2016-4 A3 1.210% Due 12/18/2020 563,719.94 02/07/2018 2.58% 557,532.23 561,085.86 99.81 2.17% 562,647.16 246.31 0.10% 1,561.30 NR / AAA AAA 1.22 0.20 65478VAD9 NAROT 2016-B A3 1.320% Due 01/15/2021 252,050.02 02/12/2018 1.87% 250,031.65 251,156.33 99.90 2.14% 251,800.82 36.97 0.05% 644.49 Aaa / NR AAA 1.30 0.12 83162CLJ0 Small Business Administration 2001-20C 6.340% Due 03/01/2021 11,184.56 03/06/2001 6.34% 11,184.56 11,184.56 101.50 4.10% 11,352.18 59.09 0.00% 167.62 Aaa / AA+ AAA 1.42 0.87 43814PAC4 Honda Auto Receivables Owner T 17-3 A3 1.790% Due 09/20/2021 2,115,225.60 06/28/2018 2.78% 2,081,679.44 2,094,739.40 99.92 1.96% 2,113,452.98 1,367.26 0.39% 18,713.58 NR / AAA AAA 1.98 0.53 43814WAB1 HAROT 2019-1 A2 2.750% Due 09/20/2021 4,395,000.00 02/19/2019 2.77% 4,394,716.96 4,394,782.28 100.42 2.11% 4,413,379.89 4,364.48 0.81% 18,597.61 NR / AAA AAA 1.98 0.63 47788BAD6 John Deere Owner Trust 2017-B A3 1.820% Due 10/15/2021 441,393.78 07/11/2017 1.83% 441,361.46 441,378.25 99.84 2.16% 440,709.33 357.04 0.08% (668.92) Aaa / NR AAA 2.04 0.46 65478GAD2 Nissan Auto Receivables Owner 2017-B A3 1.750% Due 10/15/2021 2,063,703.33 11/06/2018 3.10% 2,031,699.81 2,041,462.08 99.87 2.03% 2,060,954.09 1,605.10 0.38% 19,492.01 Aaa / NR AAA 2.04 0.49 89239AAB9 Toyota Auto Receivables 2019-A A2A 2.830% Due 10/15/2021 3,615,000.00 02/05/2019 2.85% 3,614,671.76 3,614,749.19 100.35 2.13% 3,627,645.27 4,546.87 0.66% 12,896.08 Aaa / AAA NR 2.04 0.49 47789JAB2 John Deere Owner Trust 2019-A A2 2.850% Due 12/15/2021 3,265,000.00 03/05/2019 2.87% 3,264,851.12 3,264,880.96 100.46 2.09% 3,280,045.12 4,135.67 0.60% 15,164.16 Aaa / NR AAA 2.21 0.59 43815NAB0 HAROT 2019-3 A2 1.900% Due 04/15/2022 3,530,000.00 08/20/2019 1.92% 3,529,752.90 3,529,767.39 99.90 1.99% 3,526,547.66 2,980.89 0.64% (3,219.73) Aaa / AAA NR 2.54 1.14 47788CAC6 John Deere Owner Trust 2018-A A3 2.660% Due 04/18/2022 1,340,000.00 02/21/2018 2.68% 1,339,903.65 1,339,940.66 100.41 2.12% 1,345,476.58 1,584.18 0.25% 5,535.92 Aaa / NR AAA 2.55 0.73 477870AB5 JDOT 2019-B A2 2.280% Due 05/16/2022 2,800,000.00 07/16/2019 2.29% 2,799,989.36 2,799,990.07 100.23 2.06% 2,806,445.60 2,837.33 0.51% 6,455.53 Aaa / NR AAA 2.63 0.99 43814UAG4 Honda Auto Receivables 2018-2 A3 3.010% Due 05/18/2022 1,710,000.00 05/22/2018 3.03% 1,709,962.72 1,709,975.30 101.00 2.10% 1,727,089.74 1,858.68 0.32% 17,114.44 NR / AAA AAA 2.63 1.07 43815HAC1 Honda Auto Receivables Owner 2018-3 A3 2.950% Due 08/22/2022 3,970,000.00 08/21/2018 2.98% 3,969,455.32 3,969,604.69 101.16 1.99% 4,015,905.07 3,253.19 0.73% 46,300.38 Aaa / NR AAA 2.90 1.18 02587AAJ3 American Express Credit 2017-1 1.930% Due 09/15/2022 6,270,000.00 Various 2.91% 6,174,085.15 6,202,803.05 99.92 2.16% 6,265,034.10 5,378.27 1.14% 62,231.05 Aaa / NR AAA 2.96 0.36 As of September 30, 2019 35 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 47788EAC2 John Deere Owner Trust 2018-B A3 3.080% Due 11/15/2022 4,630,000.00 07/18/2018 3.10% 4,629,649.05 4,629,745.59 101.31 1.99% 4,690,778.01 6,337.96 0.86% 61,032.42 Aaa / NR AAA 3.13 1.18 65479GAD1 Nissan Auto Receivables Owner 2018-B A3 3.060% Due 03/15/2023 3,560,000.00 07/17/2018 3.08% 3,559,884.66 3,559,914.14 101.45 2.08% 3,611,474.04 4,841.60 0.66% 51,559.90 Aaa / AAA NR 3.46 1.44 78445JAA5 SLMA 2008-9 A 3.820% Due 04/25/2023 13,344.85 08/22/2008 3.90% 13,290.71 13,331.68 100.59 3.36% 13,423.58 96.29 0.00% 91.90 Baa3 / B B 3.57 2.60 47788NAD0 John Deere Owner Trust 2016-B A4 1.490% Due 05/15/2023 1,003,712.93 06/27/2018 2.19% 987,088.93 991,373.27 99.97 2.28% 1,003,451.96 664.68 0.18% 12,078.69 Aaa / NR AAA 3.62 0.03 TOTAL ABS 46,413,584.76 2.77% 46,224,604.46 46,285,939.32 2.08% 46,631,859.17 47,384.18 8.52% 345,919.85 Aaa / AAA Aaa 2.57 0.78 Agency 3137EADM8 FHLMC Note 1.250% Due 10/02/2019 7,500,000.00 Various 1.61% 7,399,650.00 7,499,927.87 100.00 1.78% 7,499,775.00 46,614.58 1.38% (152.87) Aaa / AA+ AAA 0.01 0.01 313383HU8 FHLB Note 1.750% Due 06/12/2020 5,000,000.00 08/13/2015 1.71% 5,008,950.00 5,001,293.79 99.93 1.85% 4,996,425.00 26,493.06 0.92% (4,868.79) Aaa / AA+ NR 0.70 0.69 3135G0D75 FNMA Note 1.500% Due 06/22/2020 5,000,000.00 11/16/2015 1.70% 4,955,650.00 4,993,000.15 99.72 1.89% 4,986,065.00 20,625.00 0.91% (6,935.15) Aaa / AA+ AAA 0.73 0.72 3137EAEK1 FHLMC Note 1.875% Due 11/17/2020 5,000,000.00 Various 1.97% 4,986,225.00 4,994,713.15 100.10 1.78% 5,005,160.00 34,895.83 0.92% 10,446.85 Aaa / AA+ AAA 1.13 1.11 3135G0F73 FNMA Note 1.500% Due 11/30/2020 7,500,000.00 Various 1.87% 7,370,726.00 7,469,583.86 99.65 1.81% 7,473,480.00 37,812.50 1.37% 3,896.14 Aaa / AA+ AAA 1.17 1.15 3137EAEL9 FHLMC Note 2.375% Due 02/16/2021 7,500,000.00 02/26/2018 2.45% 7,484,475.00 7,492,788.39 100.81 1.78% 7,560,637.50 22,265.63 1.38% 67,849.11 Aaa / AA+ AAA 1.38 1.35 3130A7CV5 FHLB Note 1.375% Due 02/18/2021 5,365,000.00 02/17/2016 1.46% 5,343,325.40 5,358,997.07 99.48 1.76% 5,336,935.69 8,811.27 0.98% (22,061.38) Aaa / AA+ AAA 1.39 1.36 3135G0J20 FNMA Note 1.375% Due 02/26/2021 10,000,000.00 Various 1.28% 10,040,950.00 10,012,560.14 99.46 1.76% 9,946,070.00 13,368.06 1.82% (66,490.14) Aaa / AA+ AAA 1.41 1.38 313379RB7 FHLB Note 1.875% Due 06/11/2021 4,000,000.00 08/30/2017 1.67% 4,030,160.00 4,013,528.29 100.22 1.74% 4,008,896.00 22,916.67 0.74% (4,632.29) Aaa / AA+ AAA 1.70 1.66 3135G0U35 FNMA Note 2.750% Due 06/22/2021 7,500,000.00 06/28/2018 2.68% 7,515,225.00 7,508,807.85 101.77 1.70% 7,632,960.00 56,718.75 1.40% 124,152.15 Aaa / AA+ AAA 1.73 1.67 3135G0S38 FNMA Note 2.000% Due 01/05/2022 3,000,000.00 01/30/2017 2.04% 2,994,570.00 2,997,505.22 100.72 1.68% 3,021,465.00 14,333.33 0.55% 23,959.78 Aaa / AA+ AAA 2.27 2.20 3135G0T45 FNMA Note 1.875% Due 04/05/2022 5,000,000.00 05/05/2017 1.99% 4,972,500.00 4,985,935.58 100.68 1.60% 5,034,050.00 45,833.33 0.93% 48,114.42 Aaa / AA+ AAA 2.52 2.43 As of September 30, 2019 36 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 3135G0T94 FNMA Note 2.375% Due 01/19/2023 5,000,000.00 Various 2.78% 4,910,990.00 4,938,398.90 102.49 1.60% 5,124,270.00 23,750.00 0.94% 185,871.10 Aaa / AA+ AAA 3.31 3.16 313383QR5 FHLB Note 3.250% Due 06/09/2023 5,000,000.00 08/28/2018 2.87% 5,083,350.00 5,064,339.51 105.60 1.68% 5,280,245.00 50,555.56 0.97% 215,905.49 Aaa / AA+ NR 3.69 3.45 3137EAEN5 FHLMC Note 2.750% Due 06/19/2023 10,000,000.00 Various 2.84% 9,956,500.00 9,967,277.08 104.04 1.63% 10,404,280.00 77,916.66 1.91% 437,002.92 Aaa / AA+ AAA 3.72 3.51 313383YJ4 FHLB Note 3.375% Due 09/08/2023 10,000,000.00 Various 2.88% 10,211,831.00 10,179,259.32 106.59 1.64% 10,658,660.00 21,562.50 1.95% 479,400.68 Aaa / AA+ NR 3.94 3.69 3130A0F70 FHLB Note 3.375% Due 12/08/2023 10,000,000.00 Various 2.79% 10,269,043.75 10,228,287.46 106.99 1.64% 10,699,230.01 105,937.50 1.97% 470,942.55 Aaa / AA+ AAA 4.19 3.88 3135G0V34 FNMA Note 2.500% Due 02/05/2024 5,000,000.00 02/27/2019 2.58% 4,980,850.00 4,983,133.56 103.77 1.60% 5,188,510.00 19,444.44 0.95% 205,376.44 Aaa / AA+ AAA 4.35 4.10 3130A1XJ2 FHLB Note 2.875% Due 06/14/2024 11,110,000.00 Various 1.96% 11,589,031.30 11,561,434.66 105.58 1.64% 11,730,160.20 94,936.49 2.16% 168,725.54 Aaa / AA+ NR 4.71 4.37 3133EKWV4 FFCB Note 1.850% Due 07/26/2024 5,000,000.00 08/13/2019 1.65% 5,048,280.00 5,046,998.23 101.07 1.62% 5,053,585.00 16,701.39 0.93% 6,586.77 Aaa / AA+ AAA 4.82 4.59 3130A2UW4 FHLB Note 2.875% Due 09/13/2024 2,500,000.00 09/12/2019 1.73% 2,635,950.00 2,634,610.59 105.72 1.67% 2,643,027.50 3,593.75 0.48% 8,416.91 Aaa / AA+ AAA 4.96 4.62 TOTAL Agency 135,975,000.00 2.18% 136,788,232.45 136,932,380.67 1.70% 139,283,886.90 765,086.30 25.55% 2,351,506.23 Aaa / AA+ Aaa 2.66 2.52 CMO 31398VJ98 FHLMC FHMS K006 A2 4.251% Due 01/25/2020 659,054.74 11/23/2010 3.54% 696,435.51 660,351.44 100.16 2.36% 660,127.62 2,334.70 0.12% (223.82) Aaa / AA+ AAA 0.32 0.23 03215PFN4 AMRESCO Residential Securities 1999-1 A 2.994% Due 06/25/2029 123,127.85 05/20/2011 6.75% 92,461.32 106,627.24 98.45 3.31% 121,218.14 61.43 0.02% 14,590.90 NR / A+ BBB 9.74 5.91 3133TCE95 FHLMC FSPC E3 A 4.024% Due 08/15/2032 7,928.50 03/11/1998 3.98% 7,936.80 7,931.61 100.38 2.92% 7,958.80 26.59 0.00% 27.19 Aaa / AA+ AAA 12.88 2.31 31397QRE0 FNMA FNR 2011-3 FA 2.734% Due 02/25/2041 186,495.68 12/20/2010 2.74% 186,437.40 186,454.21 100.55 2.56% 187,530.73 84.97 0.03% 1,076.52 Aaa / AA+ AAA 21.42 4.19 31394JY35 FHLMC FSPC T-58 2A 6.500% Due 09/25/2043 686,785.68 06/09/2011 5.40% 777,784.78 754,392.51 117.31 0.10% 805,633.94 744.02 0.15% 51,241.43 Aaa / AA+ AAA 24.00 2.41 TOTAL CMO 1,663,392.45 4.51% 1,761,055.81 1,715,757.01 1.43% 1,782,469.23 3,251.71 0.33% 66,712.22 Aaa / AA+ Aaa 13.93 2.02 As of September 30, 2019 37 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration Commercial Paper 62479MYK3 MUFG Bank Ltd/NY Discount CP 2.120% Due 11/19/2019 11,255,000.00 08/20/2019 2.16% 11,194,685.71 11,222,523.07 99.71 2.16% 11,222,523.07 0.00 2.05% 0.00 P-1 / A-1 NR 0.14 0.14 TOTAL Commercial Paper 11,255,000.00 2.16% 11,194,685.71 11,222,523.07 2.16% 11,222,523.07 0.00 2.05% 0.00 P-1 / A-1 NR 0.14 0.14 Foreign Corporate 404280BF5 HSBC Holdings PLC Note 2.650% Due 01/05/2022 4,500,000.00 Various 3.08% 4,429,980.00 4,458,948.54 100.71 2.32% 4,532,157.00 28,487.50 0.83% 73,208.46 A2 / A AA- 2.27 2.17 89114QC48 Toronto Dominion Bank Note 3.500% Due 07/19/2023 5,000,000.00 02/26/2019 3.04% 5,094,200.00 5,081,557.68 105.45 2.00% 5,272,615.00 35,000.00 0.97% 191,057.32 Aa1 / AA- AA- 3.80 3.54 89114QCA4 Toronto Dominion Bank Note 2.650% Due 06/12/2024 3,000,000.00 06/12/2019 2.65% 3,000,570.00 3,000,535.96 101.89 2.22% 3,056,553.00 24,070.83 0.56% 56,017.04 Aa3 / A NR 4.70 4.37 78013XZU5 ROYAL BANK OF CANADA Note 2.550% Due 07/16/2024 6,500,000.00 09/10/2019 2.28% 6,581,445.00 6,580,570.24 101.35 2.25% 6,588,036.00 34,531.25 1.21% 7,465.76 A2 / A AA 4.80 4.47 TOTAL Foreign Corporate 19,000,000.00 2.73% 19,106,195.00 19,121,612.42 2.20% 19,449,361.00 122,089.58 3.57% 327,748.58 A1 / A+ AA- 3.92 3.67 Money Market Fund FI 31846V567 First American Govt Obligation MMKT Class-Z 3,794,924.70 09/30/2019 1.82% 3,794,924.70 3,794,924.70 1.00 1.82% 3,794,924.70 0.00 0.69% 0.00 P-1 / A-1+ F-1 0.00 0.00 TOTAL Money Market Fund FI 3,794,924.70 1.82% 3,794,924.70 3,794,924.70 1.82% 3,794,924.70 0.00 0.69% 0.00 Aaa / AAA AA 0.00 0.00 Mortgage Pass Thru 31381PDA3 FNMA FN 466397 3.400% Due 11/01/2020 337,358.02 12/01/2010 3.80% 330,057.40 336,556.93 100.79 2.56% 340,009.32 223.03 0.06% 3,452.39 Aaa / AA+ AAA 1.09 1.10 36225CAZ9 GNMA Pool# G2 80023 4.120% Due 12/20/2026 15,348.40 08/08/1997 4.01% 15,602.60 15,410.99 103.01 2.46% 15,810.11 52.70 0.00% 399.12 Aaa / AA+ AAA 7.23 2.37 36225CC20 GNMA Pool# G2 80088 3.410% Due 06/20/2027 15,097.04 08/11/1997 3.27% 15,427.30 15,182.52 100.99 2.77% 15,247.01 42.90 0.00% 64.49 Aaa / AA+ AAA 7.73 2.52 31348SWZ3 FHLMC FH 786064 4.737% Due 01/01/2028 1,845.51 02/18/2000 4.96% 1,800.57 1,832.20 102.46 3.24% 1,890.88 7.29 0.00% 58.68 Aaa / AA+ AAA 8.26 3.73 31371NUC7 FNMA FN 257179 4.500% Due 04/01/2028 14,717.52 12/05/2011 3.72% 15,565.22 15,159.52 105.49 2.32% 15,525.38 55.19 0.00% 365.86 Aaa / AA+ AAA 8.51 2.76 As of September 30, 2019 38 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 31417YAY3 FNMA Pool# FN MA0022 4.500% Due 04/01/2029 16,436.77 12/05/2011 3.76% 17,383.50 16,956.57 106.54 2.20% 17,511.77 61.64 0.00% 555.20 Aaa / AA+ AAA 9.51 2.91 3138EG6F6 FNMA FN AL0869 4.500% Due 06/01/2029 10,044.92 12/05/2011 3.77% 10,623.50 10,365.08 106.54 2.24% 10,701.72 8.79 0.00% 336.64 Aaa / AA+ AAA 9.68 2.96 36225CNM4 GNMA Pool# G2 80395 3.410% Due 04/20/2030 6,521.39 03/15/2000 3.49% 6,462.26 6,500.53 103.80 2.61% 6,769.44 18.53 0.00% 268.91 Aaa / AA+ AAA 10.56 3.67 36225CN28 GNMA Pool# G2 80408 3.410% Due 05/20/2030 49,754.80 03/15/2000 3.49% 49,249.47 49,575.61 103.81 2.48% 51,649.11 141.39 0.01% 2,073.50 Aaa / AA+ AAA 10.64 3.09 31403GXF4 FNMA Pool# FN 748678 5.000% Due 10/01/2033 1,781.14 06/10/2013 4.16% 1,914.73 1,873.67 109.27 2.17% 1,946.25 7.42 0.00% 72.58 Aaa / AA+ AAA 14.01 3.52 36225DCB8 GNMA Pool# G2 80965 4.100% Due 07/20/2034 45,340.46 07/19/2004 4.12% 45,312.13 45,326.44 104.34 2.55% 47,308.55 154.91 0.01% 1,982.11 Aaa / AA+ AAA 14.81 3.96 31406XWT5 FNMA Pool# FN 823358 4.724% Due 02/01/2035 109,269.40 01/11/2006 4.81% 108,415.73 108,818.24 104.65 3.15% 114,353.27 430.13 0.02% 5,535.03 Aaa / AA+ AAA 15.35 6.83 31406PQY8 FNMA Pool# FN 815971 5.000% Due 03/01/2035 157,142.80 06/10/2013 4.21% 168,928.52 165,543.05 110.34 2.31% 173,384.14 654.76 0.03% 7,841.09 Aaa / AA+ AAA 15.43 3.75 31407BXH7 FNMA Pool# FN 826080 5.000% Due 07/01/2035 18,677.30 06/10/2013 4.22% 20,078.10 19,681.84 110.45 2.30% 20,628.72 77.82 0.00% 946.88 Aaa / AA+ AAA 15.76 3.74 31376KT22 FNMA FN 357969 5.000% Due 09/01/2035 98,885.27 06/10/2013 4.22% 106,301.66 104,219.79 110.47 2.33% 109,237.27 96.14 0.02% 5,017.48 Aaa / AA+ AAA 15.93 3.77 31403DJZ3 FNMA Pool #745580 5.000% Due 06/01/2036 92,510.26 06/10/2013 4.26% 99,448.53 97,564.73 110.44 2.35% 102,166.11 385.46 0.02% 4,601.38 Aaa / AA+ AAA 16.68 3.80 31410F4V4 FNMA Pool# FN 888336 5.000% Due 07/01/2036 180,164.23 06/10/2013 4.25% 193,676.55 190,020.96 110.41 2.34% 198,927.79 750.68 0.04% 8,906.83 Aaa / AA+ AAA 16.76 3.79 TOTAL Mortgage Pass Thru 1,170,895.23 4.10% 1,206,247.77 1,200,588.67 2.49% 1,243,066.84 3,168.78 0.23% 42,478.17 Aaa / AA+ Aaa 11.19 3.24 Municipal Bonds 73358WAG9 Port Authority of NY & NJ TE-REV 5.309% Due 12/01/2019 2,440,000.00 Various 4.97% 2,507,633.89 2,441,084.71 100.54 2.07% 2,453,176.00 43,179.87 0.46% 12,091.29 Aa3 / AA- AA- 0.17 0.17 64971M5E8 New York NY TE-REV 4.075% Due 11/01/2020 1,400,000.00 10/27/2010 4.08% 1,400,000.00 1,400,000.00 102.16 2.06% 1,430,170.00 23,770.83 0.27% 30,170.00 Aa1 / AAA AAA 1.09 1.05 As of September 30, 2019 39 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 913366EJ5 Univ of California Rgts Med TE-REV 5.035% Due 05/15/2021 400,000.00 11/09/2010 5.04% 400,000.00 400,000.00 104.90 1.96% 419,600.00 7,608.44 0.08% 19,600.00 Aa3 / AA- AA- 1.62 1.54 TOTAL Municipal Bonds 4,240,000.00 4.68% 4,307,633.89 4,241,084.71 2.06% 4,302,946.00 74,559.14 0.80% 61,861.29 Aa2 / AA AA 0.62 0.59 Supranational 4581X0CX4 Inter-American Dev Bank Note 1.625% Due 05/12/2020 3,035,000.00 04/05/2017 1.70% 3,027,807.05 3,033,569.08 99.81 1.94% 3,029,130.31 19,042.52 0.56% (4,438.77) Aaa / AAA AAA 0.62 0.61 45950KCM0 International Finance Corp Note 2.250% Due 01/25/2021 2,970,000.00 01/18/2018 2.35% 2,961,268.20 2,966,159.92 100.57 1.81% 2,986,958.70 12,251.25 0.55% 20,798.78 Aaa / AAA NR 1.32 1.29 4581X0CS5 Inter-American Dev Bank Note 1.875% Due 03/15/2021 5,000,000.00 Various 1.68% 5,059,610.00 5,013,242.13 100.15 1.77% 5,007,595.00 4,166.67 0.91% (5,647.13) Aaa / AAA AAA 1.46 1.43 45950KCJ7 International Finance Corp Note 1.125% Due 07/20/2021 2,500,000.00 11/09/2016 1.64% 2,441,600.00 2,477,567.31 98.97 1.71% 2,474,287.50 5,546.88 0.45% (3,279.81) Aaa / AAA NR 1.81 1.77 4581X0CW6 Inter-American Dev Bank Note 2.125% Due 01/18/2022 3,000,000.00 01/10/2017 2.15% 2,996,310.00 2,998,302.52 101.03 1.67% 3,030,804.00 12,927.08 0.56% 32,501.48 Aaa / NR AAA 2.30 2.23 459058FY4 Intl. Bank Recon & Development Note 2.000% Due 01/26/2022 10,000,000.00 Various 1.99% 10,006,350.00 10,002,227.46 100.79 1.65% 10,078,930.00 36,111.12 1.85% 76,702.54 Aaa / NR AAA 2.33 2.25 4581X0CZ9 Inter-American Dev Bank Note 1.750% Due 09/14/2022 6,500,000.00 Various 2.65% 6,249,655.00 6,338,148.06 100.30 1.65% 6,519,188.00 5,371.52 1.19% 181,039.94 Aaa / AAA AAA 2.96 2.87 TOTAL Supranational 33,005,000.00 2.07% 32,742,600.25 32,829,216.48 1.71% 33,126,893.51 95,417.04 6.06% 297,677.03 Aaa / AAA Aaa 2.03 1.97 US Corporate 40428HPR7 HSBC USA Inc Note 2.350% Due 03/05/2020 2,500,000.00 Various 2.64% 2,472,287.50 2,497,043.44 100.13 2.03% 2,503,330.00 4,243.06 0.46% 6,286.56 A2 / A AA- 0.43 0.43 747525AD5 Qualcomm Inc Note 2.250% Due 05/20/2020 5,000,000.00 05/19/2015 2.27% 4,995,195.40 4,999,389.22 100.04 2.18% 5,002,085.00 40,937.51 0.92% 2,695.78 A2 / A- NR 0.64 0.63 94974BGM6 Wells Fargo Corp Note 2.600% Due 07/22/2020 5,000,000.00 07/16/2015 2.59% 5,001,650.00 5,000,266.42 100.47 2.01% 5,023,605.00 24,916.67 0.92% 23,338.58 A2 / A- A+ 0.81 0.80 037833BS8 Apple Inc Callable Note Cont 1/23/2021 2.250% Due 02/23/2021 4,000,000.00 05/23/2016 1.96% 4,050,840.00 4,014,329.54 100.45 1.90% 4,018,188.00 9,500.00 0.73% 3,858.46 Aa1 / AA+ NR 1.40 1.29 30231GAV4 Exxon Mobil Corp Callable Note Cont 2/1/2021 2.222% Due 03/01/2021 3,000,000.00 Various 2.10% 3,016,097.40 3,004,785.71 100.52 1.85% 3,015,714.00 5,555.01 0.55% 10,928.29 Aaa / AA+ NR 1.42 1.39 369550BE7 General Dynamics Corp Note 3.000% Due 05/11/2021 3,160,000.00 05/08/2018 3.24% 3,138,038.00 3,148,217.47 101.75 1.89% 3,215,334.76 36,866.67 0.59% 67,117.29 A2 / A+ NR 1.61 1.56 As of September 30, 2019 40 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 166764BG4 Chevron Corp Callable Note Cont 4/15/2021 2.100% Due 05/16/2021 2,500,000.00 05/20/2016 2.23% 2,485,350.00 2,495,218.79 100.39 1.84% 2,509,652.50 19,687.50 0.46% 14,433.71 Aa2 / AA NR 1.63 1.50 61747WAL3 Morgan Stanley Note 5.500% Due 07/28/2021 2,800,000.00 06/06/2014 3.24% 3,200,848.00 2,902,521.03 106.11 2.07% 2,971,144.40 26,950.00 0.55% 68,623.37 A3 / BBB+ A 1.83 1.73 594918BP8 Microsoft Callable Note Cont 7/8/2021 1.550% Due 08/08/2021 3,045,000.00 Various 1.57% 3,041,385.15 3,043,659.78 99.58 1.78% 3,032,244.49 6,948.52 0.55% (11,415.29) Aaa / AAA AA+ 1.86 1.82 68389XBK0 Oracle Corp Callable Note Cont 8/15/2021 1.900% Due 09/15/2021 3,000,000.00 06/28/2018 3.08% 2,892,240.00 2,934,371.04 99.88 1.96% 2,996,463.00 2,533.33 0.55% 62,091.96 A1 / A+ A 1.96 1.91 06406RAA5 Bank of NY Mellon Corp Callable Note Cont 1/7/2022 2.600% Due 02/07/2022 2,500,000.00 02/08/2017 2.56% 2,504,475.00 2,502,073.66 101.41 1.96% 2,535,242.50 9,750.00 0.46% 33,168.84 A1 / A AA- 2.36 2.19 69353RFB9 PNC Bank Callable Note Cont 1/18/2022 2.625% Due 02/17/2022 1,000,000.00 03/26/2018 3.32% 974,940.00 984,667.93 101.39 2.00% 1,013,893.00 3,208.33 0.19% 29,225.07 A2 / A A+ 2.39 2.22 084664BT7 Berkshire Hathaway Note 3.000% Due 05/15/2022 4,000,000.00 05/23/2017 2.30% 4,131,120.00 4,069,136.00 102.90 1.86% 4,116,024.00 45,333.33 0.76% 46,888.00 Aa2 / AA A+ 2.62 2.50 95000U2B8 Wells Fargo & Company Note 2.625% Due 07/22/2022 3,000,000.00 Various 2.99% 2,954,520.00 2,971,566.74 101.11 2.21% 3,033,306.00 15,093.76 0.56% 61,739.26 A2 / A- A+ 2.81 2.69 00440EAU1 Chubb INA Holdings Inc Callable Note Cont 9/3/2022 2.875% Due 11/03/2022 4,169,000.00 Various 2.54% 4,232,453.17 4,207,579.63 102.50 1.99% 4,273,408.44 49,275.26 0.79% 65,828.81 A3 / A A 3.10 2.77 90331HNL3 US Bank NA Callable Note Cont 12/23/22 2.850% Due 01/23/2023 5,000,000.00 01/29/2018 2.93% 4,981,600.00 4,987,753.58 102.29 2.11% 5,114,585.00 26,916.67 0.94% 126,831.42 A1 / AA- AA- 3.32 3.06 808513AT2 Charles Schwab Corp Callable Note Cont 12/25/2022 2.650% Due 01/25/2023 6,750,000.00 05/21/2019 2.74% 6,729,480.00 6,731,481.58 101.80 2.07% 6,871,601.25 32,793.75 1.26% 140,119.67 A2 / A A 3.32 3.08 06406RAE7 Bank of NY Mellon Corp Callable Note Cont 12/29/2022 2.950% Due 01/29/2023 2,500,000.00 Various 3.03% 2,489,555.00 2,493,670.01 102.70 2.09% 2,567,390.00 12,701.39 0.47% 73,719.99 A1 / A AA- 3.33 3.08 44932HAH6 IBM Credit Corp Note 3.000% Due 02/06/2023 5,670,000.00 Various 3.26% 5,603,264.40 5,623,851.42 102.87 2.11% 5,832,672.30 25,987.50 1.07% 208,820.88 A2 / A NR 3.36 3.17 00440EAP2 Chubb INA Holdings Inc Note 2.700% Due 03/13/2023 2,000,000.00 05/24/2018 3.42% 1,937,000.00 1,954,650.09 102.19 2.04% 2,043,726.00 2,700.00 0.37% 89,075.91 A3 / A A 3.45 3.28 084670BR8 Berkshire Hathaway Callable Note Cont 1/15/2023 2.750% Due 03/15/2023 2,500,000.00 04/20/2018 3.28% 2,440,950.00 2,458,307.92 102.51 1.96% 2,562,825.00 3,055.56 0.47% 104,517.08 Aa2 / AA A+ 3.46 3.14 58933YAF2 Merck & Co Note 2.800% Due 05/18/2023 2,000,000.00 10/26/2018 3.41% 1,948,640.00 1,959,029.50 102.96 1.95% 2,059,158.00 20,688.89 0.38% 100,128.50 A1 / AA A+ 3.63 3.42 As of September 30, 2019 41 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 46625HRL6 JP Morgan Chase Callable Note Cont 3/18/2023 2.700% Due 05/18/2023 5,000,000.00 Various 3.59% 4,821,910.00 4,852,279.35 101.68 2.19% 5,084,060.00 49,875.00 0.94% 231,780.65 A2 / A- AA- 3.63 3.27 69353RFL7 PNC Bank Callable Note Cont 5/9/2023 3.500% Due 06/08/2023 5,000,000.00 Various 3.53% 4,993,318.05 4,995,067.01 105.00 2.06% 5,249,810.00 54,930.56 0.97% 254,742.99 A2 / A NR 3.69 3.36 166764AH3 Chevron Corp Callable Note Cont 3/24/2023 3.191% Due 06/24/2023 3,500,000.00 11/08/2018 3.59% 3,441,095.00 3,452,358.31 104.26 1.92% 3,648,967.00 30,092.90 0.67% 196,608.69 Aa2 / AA NR 3.73 3.27 931142EK5 Wal-Mart Stores Callable Note Cont 5/26/2023 3.400% Due 06/26/2023 3,880,000.00 Various 3.41% 3,878,991.40 3,879,246.17 105.26 1.90% 4,084,266.48 34,812.22 0.75% 205,020.31 Aa2 / AA AA 3.74 3.41 02665WCJ8 American Honda Finance Note 3.450% Due 07/14/2023 845,000.00 07/11/2018 3.49% 843,538.15 843,892.39 104.88 2.10% 886,275.72 6,235.40 0.16% 42,383.33 A2 / A NR 3.79 3.53 02665WCQ2 American Honda Finance Note 3.625% Due 10/10/2023 2,000,000.00 Various 3.64% 1,998,320.00 1,998,628.05 105.90 2.09% 2,117,962.00 34,437.50 0.39% 119,333.95 A2 / A NR 4.03 3.69 24422EUM9 John Deere Capital Corp Note 3.650% Due 10/12/2023 1,250,000.00 11/28/2018 3.64% 1,250,237.50 1,250,196.74 106.54 1.96% 1,331,751.25 21,418.40 0.25% 81,554.51 A2 / A A 4.04 3.70 06051GHF9 Bank of America Corp Callable Note 1X 3/5/2023 3.550% Due 03/05/2024 6,675,000.00 Various 3.14% 6,770,625.75 6,761,171.09 103.93 2.35% 6,937,087.20 17,113.96 1.27% 175,916.11 A2 / A- A+ 4.43 3.22 09247XAL5 Blackrock Inc Note 3.500% Due 03/18/2024 1,000,000.00 05/09/2019 2.69% 1,036,330.00 1,033,437.55 106.78 1.91% 1,067,821.00 1,263.89 0.20% 34,383.45 Aa3 / AA- NR 4.47 4.14 458140BD1 Intel Corp Callable Note Cont 3/11/2024 2.875% Due 05/11/2024 5,000,000.00 05/09/2019 2.76% 5,025,900.00 5,023,829.76 103.92 1.95% 5,196,060.00 55,902.78 0.96% 172,230.24 A1 / A+ A+ 4.62 4.13 037833CU2 Apple Inc Callable Note Cont 3/11/2024 2.850% Due 05/11/2024 3,000,000.00 05/17/2019 2.72% 3,017,760.00 3,016,414.85 103.75 1.97% 3,112,458.00 33,250.00 0.57% 96,043.15 Aa1 / AA+ NR 4.62 4.13 02665WCZ2 American Honda Finance Note 2.400% Due 06/27/2024 1,219,000.00 07/10/2019 2.49% 1,213,843.63 1,214,074.13 101.08 2.16% 1,232,142.04 7,639.07 0.23% 18,067.91 A2 / A NR 4.75 4.44 46647PAU0 JP Morgan Chase & Co Callable Note Cont 7/23/2023 3.797% Due 07/23/2024 2,500,000.00 09/12/2019 2.35% 2,632,175.00 2,630,764.88 105.47 2.29% 2,636,682.50 17,930.28 0.48% 5,917.62 A2 / A- AA- 4.82 3.76 TOTAL US Corporate 115,963,000.00 2.89% 116,145,973.50 115,934,930.78 2.04% 118,896,935.83 790,544.67 21.84% 2,962,005.05 A1 / A+ A+ 2.97 2.68 US Treasury 912828G61 US Treasury Note 1.500% Due 11/30/2019 7,500,000.00 12/19/2014 1.64% 7,449,634.50 7,498,324.87 99.91 2.04% 7,493,130.00 37,807.38 1.37% (5,194.87) Aaa / AA+ AAA 0.17 0.17 912828XE5 US Treasury Note 1.500% Due 05/31/2020 5,000,000.00 12/21/2016 1.70% 4,966,423.00 4,993,503.81 99.75 1.87% 4,987,695.00 25,204.92 0.91% (5,808.81) Aaa / AA+ AAA 0.67 0.66 As of September 30, 2019 42 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 912828L99 US Treasury Note 1.375% Due 10/31/2020 10,000,000.00 Various 1.81% 9,850,311.40 9,954,972.20 99.54 1.81% 9,953,910.00 57,540.76 1.83% (1,062.20) Aaa / AA+ AAA 1.09 1.06 912828N89 US Treasury Note 1.375% Due 01/31/2021 6,000,000.00 Various 1.81% 5,895,840.41 5,966,419.39 99.48 1.77% 5,968,596.00 13,899.45 1.09% 2,176.61 Aaa / AA+ AAA 1.34 1.31 912828T34 US Treasury Note 1.125% Due 09/30/2021 7,000,000.00 Various 1.88% 6,757,914.08 6,899,279.35 98.98 1.65% 6,928,362.00 215.16 1.26% 29,082.65 Aaa / AA+ AAA 2.00 1.97 912828T67 US Treasury Note 1.250% Due 10/31/2021 6,000,000.00 12/13/2016 1.92% 5,813,691.98 5,920,437.48 99.19 1.65% 5,951,250.00 31,385.87 1.09% 30,812.52 Aaa / AA+ AAA 2.09 2.04 912828U65 US Treasury Note 1.750% Due 11/30/2021 7,000,000.00 12/28/2016 2.06% 6,900,492.20 6,956,198.85 100.22 1.64% 7,015,589.00 41,168.03 1.29% 59,390.15 Aaa / AA+ AAA 2.17 2.11 912828V72 US Treasury Note 1.875% Due 01/31/2022 3,000,000.00 02/27/2017 1.84% 3,004,814.74 3,002,284.19 100.55 1.63% 3,016,641.00 9,476.90 0.55% 14,356.81 Aaa / AA+ AAA 2.34 2.27 912828J76 US Treasury Note 1.750% Due 03/31/2022 5,000,000.00 04/25/2017 1.85% 4,976,383.94 4,988,034.53 100.38 1.59% 5,019,140.00 239.07 0.92% 31,105.47 Aaa / AA+ AAA 2.50 2.44 912828XW5 US Treasury Note 1.750% Due 06/30/2022 5,000,000.00 07/25/2017 1.86% 4,973,454.25 4,985,208.12 100.44 1.59% 5,021,875.00 22,112.77 0.92% 36,666.88 Aaa / AA+ AAA 2.75 2.66 912828L24 US Treasury Note 1.875% Due 08/31/2022 6,000,000.00 09/27/2017 1.92% 5,987,832.60 5,992,792.95 100.84 1.58% 6,050,388.00 9,581.04 1.11% 57,595.05 Aaa / AA+ AAA 2.92 2.83 912828L57 US Treasury Note 1.750% Due 09/30/2022 13,000,000.00 Various 2.15% 12,763,554.69 12,851,750.09 100.50 1.58% 13,064,493.00 621.58 2.38% 212,742.91 Aaa / AA+ AAA 3.00 2.91 912828M80 US Treasury Note 2.000% Due 11/30/2022 8,000,000.00 12/22/2017 2.25% 7,907,500.00 7,940,594.44 101.26 1.59% 8,100,624.00 53,770.49 1.49% 160,029.56 Aaa / AA+ AAA 3.17 3.04 912828N30 US Treasury Note 2.125% Due 12/31/2022 5,000,000.00 01/24/2018 2.44% 4,926,562.50 4,951,598.94 101.71 1.58% 5,085,350.00 26,851.22 0.93% 133,751.06 Aaa / AA+ AAA 3.25 3.12 9128284D9 US Treasury Note 2.500% Due 03/31/2023 10,000,000.00 Various 2.75% 9,887,265.63 9,920,185.30 103.14 1.57% 10,314,450.00 683.06 1.88% 394,264.70 Aaa / AA+ AAA 3.50 3.35 912828R69 US Treasury Note 1.625% Due 05/31/2023 5,000,000.00 05/30/2018 2.67% 4,757,226.56 4,822,107.96 100.20 1.57% 5,009,765.00 27,305.33 0.92% 187,657.04 Aaa / AA+ AAA 3.67 3.53 912828U57 US Treasury Note 2.125% Due 11/30/2023 15,000,000.00 Various 2.53% 14,723,632.81 14,761,703.80 102.20 1.58% 15,330,465.00 107,120.90 2.82% 568,761.20 Aaa / AA+ AAA 4.17 3.95 912828V80 US Treasury Note 2.250% Due 01/31/2024 7,500,000.00 Various 2.27% 7,491,503.91 7,492,293.08 102.84 1.57% 7,712,692.50 28,430.70 1.41% 220,399.42 Aaa / AA+ AAA 4.34 4.11 912828W48 US Treasury Note 2.125% Due 02/29/2024 10,000,000.00 04/24/2019 2.32% 9,911,718.75 9,919,644.62 102.38 1.57% 10,237,500.00 18,097.53 1.87% 317,855.38 Aaa / AA+ AAA 4.42 4.20 912828WJ5 US Treasury Note 2.500% Due 05/15/2024 7,000,000.00 06/10/2019 1.91% 7,193,046.88 7,181,035.07 104.12 1.57% 7,288,204.00 66,100.54 1.34% 107,168.93 Aaa / AA+ AAA 4.63 4.33 As of September 30, 2019 43 Holdings Report Orange County Sanitation District Long Term - Account #10268 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 912828XX3 US Treasury Note 2.000% Due 06/30/2024 5,000,000.00 07/12/2019 1.88% 5,028,710.94 5,027,475.04 101.94 1.57% 5,097,070.00 25,271.74 0.93% 69,594.96 Aaa / AA+ AAA 4.75 4.50 912828WU0 US Treasury Inflation Index Note 0.125% Due 07/15/2024 11,236,992.00 Various 0.23% 11,124,068.09 11,182,687.92 99.87 0.15% 11,222,900.78 2,977.21 2.05% 40,212.86 Aaa / AA+ AAA 4.79 4.77 TOTAL US Treasury 164,236,992.00 2.00% 162,291,583.86 163,208,532.00 1.54% 165,870,090.28 605,861.65 30.37% 2,661,558.28 Aaa / AA+ Aaa 3.05 2.94 TOTAL PORTFOLIO 536,717,789.14 2.37% 535,563,737.40 536,487,489.83 1.79% 545,604,956.53 2,507,363.05 100.00% 9,117,466.70 Aa1 / AA Aaa 2.82 2.46 TOTAL MARKET VALUE PLUS ACCRUALS 548,112,319.58 As of September 30, 2019 44 Holdings Report Orange County Sanitation District Liquid - Account #10282 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration Commercial Paper 62479MYK3 MUFG Bank Ltd/NY Discount CP 2.120% Due 11/19/2019 1,860,000.00 08/20/2019 2.16% 1,850,032.47 1,854,632.87 99.71 2.16% 1,854,632.87 0.00 2.72% 0.00 P-1 / A-1 NR 0.14 0.14 89233GAH9 Toyota Motor Credit Discount CP 2.560% Due 01/17/2020 2,000,000.00 04/23/2019 2.63% 1,961,884.44 1,984,640.00 99.23 2.63% 1,984,640.00 0.00 2.91% 0.00 P-1 / A-1+ NR 0.30 0.29 TOTAL Commercial Paper 3,860,000.00 2.41% 3,811,916.91 3,839,272.87 2.41% 3,839,272.87 0.00 5.63% 0.00 P-1 / A-1 NR 0.22 0.22 Money Market Fund FI 31846V567 First American Govt Obligation MMKT Class-Z 1,740,212.56 Various 1.82% 1,740,212.56 1,740,212.56 1.00 1.82% 1,740,212.56 0.00 2.55% 0.00 P-1 / A-1+ F-1 0.00 0.00 TOTAL Money Market Fund FI 1,740,212.56 1.82% 1,740,212.56 1,740,212.56 1.82% 1,740,212.56 0.00 2.55% 0.00 Aaa / AAA AA 0.00 0.00 Negotiable CD 96130AAK4 Westpac Banking Corp NY Yankee CD 2.970% Due 10/18/2019 1,500,000.00 06/25/2019 2.23% 1,503,302.80 1,500,488.24 100.03 2.23% 1,500,488.24 42,941.25 2.26% 0.00 P-1 / A-1+ F-1+ 0.05 0.05 06417G5Q7 Bank of Nova Scotia Yankee CD 2.610% Due 12/23/2019 2,300,000.00 04/05/2019 2.57% 2,300,614.40 2,300,194.64 100.01 2.57% 2,300,194.64 32,182.75 3.42% 0.00 P-1 / A-1 F-1+ 0.23 0.23 TOTAL Negotiable CD 3,800,000.00 2.43% 3,803,917.20 3,800,682.88 2.43% 3,800,682.88 75,124.00 5.68% 0.00 Aaa / AA+ Aaa 0.16 0.16 US Corporate 94988J5G8 Wells Fargo Bank Note 2.150% Due 12/06/2019 500,000.00 04/18/2019 2.66% 498,425.00 499,542.07 99.99 2.17% 499,966.50 3,434.03 0.74% 424.43 Aa2 / A+ AA- 0.18 0.18 94974BGF1 Wells Fargo Corp Note 2.150% Due 01/30/2020 1,000,000.00 05/21/2019 2.65% 996,600.00 998,367.46 99.97 2.23% 999,698.00 3,643.06 1.47% 1,330.54 A2 / A- A+ 0.33 0.33 06406HCZ0 Bank of New York Callable Note Cont 1/24/2020 2.150% Due 02/24/2020 1,500,000.00 04/23/2019 2.64% 1,493,925.00 1,497,091.97 100.03 2.07% 1,500,390.00 3,314.58 2.20% 3,298.03 A1 / A AA- 0.40 0.31 40428HPR7 HSBC USA Inc Note 2.350% Due 03/05/2020 2,500,000.00 05/10/2019 2.69% 2,493,300.00 2,496,468.92 100.13 2.03% 2,503,330.00 4,243.06 3.68% 6,861.08 A2 / A AA- 0.43 0.43 06051GFN4 Bank of America Corp Note 2.250% Due 04/21/2020 2,000,000.00 08/07/2019 2.11% 2,001,960.00 2,001,554.22 100.11 2.06% 2,002,132.00 20,000.00 2.96% 577.78 A2 / A- A+ 0.56 0.55 369550BA5 General Dynamics Corp Note 2.875% Due 05/11/2020 2,000,000.00 08/13/2019 2.10% 2,011,340.00 2,009,366.00 100.52 2.01% 2,010,418.00 22,361.11 2.98% 1,052.00 A2 / A+ NR 0.61 0.60 As of September 30, 2019 45 Holdings Report Orange County Sanitation District Liquid - Account #10282 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 747525AD5 Qualcomm Inc Note 2.250% Due 05/20/2020 2,000,000.00 08/07/2019 2.07% 2,002,700.00 2,002,197.89 100.04 2.18% 2,000,834.00 16,375.00 2.96% (1,363.89) A2 / A- NR 0.64 0.63 TOTAL US Corporate 11,500,000.00 2.36% 11,498,250.00 11,504,588.53 2.09% 11,516,768.50 73,370.84 16.99% 12,179.97 A2 / A AA- 0.50 0.48 US Treasury 912796SL4 US Treasury Bill 2.007% Due 10/03/2019 1,650,000.00 08/27/2019 2.04% 1,646,687.63 1,649,815.98 99.99 2.04% 1,649,815.98 0.00 2.42% 0.00 P-1 / A-1+ F-1+ 0.01 0.01 912796VY2 US Treasury Bill 1.737% Due 10/08/2019 1,250,000.00 09/27/2019 1.76% 1,249,517.42 1,249,577.74 99.97 1.76% 1,249,577.74 0.00 1.83% 0.00 P-1 / A-1+ F-1+ 0.02 0.02 912796VZ9 US Treasury Bill 1.805% Due 10/15/2019 1,250,000.00 09/27/2019 1.83% 1,249,059.90 1,249,122.57 99.93 1.83% 1,249,122.57 0.00 1.83% 0.00 P-1 / A-1+ F-1+ 0.04 0.04 912828F62 US Treasury Note 1.500% Due 10/31/2019 2,500,000.00 04/04/2019 2.44% 2,486,718.75 2,498,093.60 99.95 2.07% 2,498,775.00 15,692.93 3.69% 681.40 Aaa / AA+ AAA 0.08 0.08 912796RY7 US Treasury Bill 1.887% Due 01/30/2020 7,000,000.00 Various 1.93% 6,950,415.19 6,955,601.40 99.36 1.93% 6,955,601.40 0.00 10.20% 0.00 P-1 / A-1+ F-1+ 0.33 0.33 9128283S7 US Treasury Note 2.000% Due 01/31/2020 15,000,000.00 05/06/2019 2.41% 14,955,468.75 14,979,803.67 100.03 1.91% 15,004,095.00 50,543.48 22.07% 24,291.33 Aaa / AA+ AAA 0.34 0.33 912828H52 US Treasury Note 1.250% Due 01/31/2020 13,500,000.00 Various 2.35% 13,396,542.97 13,451,311.72 99.78 1.92% 13,469,935.50 28,430.70 19.79% 18,623.78 Aaa / AA+ AAA 0.34 0.33 912828UL2 US Treasury Note 1.375% Due 01/31/2020 5,000,000.00 08/27/2019 1.91% 4,988,671.88 4,991,140.83 99.81 1.94% 4,990,625.00 11,582.88 7.33% (515.83) Aaa / AA+ AAA 0.34 0.33 TOTAL US Treasury 47,150,000.00 2.22% 46,923,082.49 47,024,467.51 1.92% 47,067,548.19 106,249.99 69.15% 43,080.68 Aaa / AA+ Aaa 0.30 0.29 TOTAL PORTFOLIO 68,050,212.56 2.26% 67,777,379.16 67,909,224.35 2.01% 67,964,485.00 254,744.83 100.00% 55,260.65 Aa1 / AA+ Aaa 0.31 0.30 TOTAL MARKET VALUE PLUS ACCRUALS 68,219,229.83 As of September 30, 2019 46 Holdings Report OCSD Lehman Exposure - Account #10284 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration Common Stock SLHOPNTA4 Lehman Brothers, Inc Open Position Long Exposure 0.000% Due 09/30/2019 60,641.49 11/21/2014 0.00% 57,842.64 57,842.64 0.42 0.00% 25,621.03 0.00 41.36% (32,221.61) NR / NR NR 0.00 0.00 TOTAL Common Stock 60,641.49 0.00% 57,842.64 57,842.64 0.00% 25,621.03 0.00 41.36% (32,221.61) NR / NR NR 0.00 0.00 US Corporate 525ESCIB7 Lehman Brothers Note-Defaulted 0.000% Due 01/24/2020 600,000.00 09/19/2008 0.00% 320,227.27 320,227.27 1.42 0.00% 8,520.00 0.00 13.76% (311,707.27) NR / NR NR 0.32 0.00 525ESC0Y6 Lehman Brothers Note-Defaulted 0.000% Due 10/22/2049 2,000,000.00 09/18/2008 0.00% 1,031,998.65 1,031,998.65 1.39 0.00% 27,800.00 0.00 44.88% (1,004,198.65) NR / NR NR 30.08 0.00 TOTAL US Corporate 2,600,000.00 0.00% 1,352,225.92 1,352,225.92 0.00% 36,320.00 0.00 58.64% (1,315,905.92) NR / NR NR 23.10 0.00 TOTAL PORTFOLIO 2,660,641.49 0.00% 1,410,068.56 1,410,068.56 0.00% 61,941.03 0.00 100.00% (1,348,127.53) NR / NR NR 13.55 0.00 TOTAL MARKET VALUE PLUS ACCRUALS 61,941.03 As of September 30, 2019 47 SECTION ||||||||||||||Section 5 |Transactions 48 Transaction Ledger Orange County Sanitation District Long Term - Account #10268 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss ACQUISITIONS Purchase 07/12/2019 02665WCZ2 1,219,000.00 American Honda Finance Note 2.4% Due: 06/27/2024 99.577 2.49% 1,213,843.63 1,219.00 1,215,062.63 0.00 Purchase 07/15/2019 912828XX3 5,000,000.00 US Treasury Note 2% Due: 06/30/2024 100.574 1.88% 5,028,710.94 4,076.09 5,032,787.03 0.00 Purchase 07/24/2019 477870AB5 2,800,000.00 JDOT 2019-B A2 2.28% Due: 05/16/2022 100.000 2.29% 2,799,989.36 0.00 2,799,989.36 0.00 Purchase 08/14/2019 3133EKWV4 5,000,000.00 FFCB Note 1.85% Due: 07/26/2024 100.966 1.65% 5,048,280.00 4,625.00 5,052,905.00 0.00 Purchase 08/20/2019 62479MYK3 11,255,000.00 MUFG Bank Ltd/NY Discount CP 2.12% Due: 11/19/2019 99.464 2.16% 11,194,685.71 0.00 11,194,685.71 0.00 Purchase 08/27/2019 43815NAB0 3,530,000.00 HAROT 2019-3 A2 1.9% Due: 04/15/2022 99.993 1.92% 3,529,752.90 0.00 3,529,752.90 0.00 Purchase 09/12/2019 78013XZU5 6,500,000.00 ROYAL BANK OF CANADA Note 2.55% Due: 07/16/2024 101.253 2.28% 6,581,445.00 25,783.33 6,607,228.33 0.00 Purchase 09/13/2019 3130A2UW4 2,500,000.00 FHLB Note 2.875% Due: 09/13/2024 105.438 1.73% 2,635,950.00 0.00 2,635,950.00 0.00 Purchase 09/16/2019 46647PAU0 2,500,000.00 JP Morgan Chase & Co Callable Note Cont 7/23/2023 3.797% Due: 07/23/2024 105.287 2.47% 2,632,175.00 13,975.07 2,646,150.07 0.00 Subtotal 40,304,000.00 40,664,832.54 49,678.49 40,714,511.03 0.00 Security Contribution 07/31/2019 912828WU0 24,960.00 US Treasury Inflation Index Note 0.125% Due: 07/15/2024 100.000 24,960.00 1.36 24,961.36 0.00 Security Contribution 08/31/2019 912828WU0 3,016.00 US Treasury Inflation Index Note 0.125% Due: 07/15/2024 100.000 3,016.00 0.48 3,016.48 0.00 June 30, 2019 through September 30, 2019 As of September 30, 2019 49 Transaction Ledger Orange County Sanitation District Long Term - Account #10268 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss Security Contribution 09/30/2019 912828WU0 18,096.00 US Treasury Inflation Index Note 0.125% Due: 07/15/2024 100.000 18,096.00 4.73 18,100.73 0.00 Subtotal 46,072.00 46,072.00 6.57 46,078.57 0.00 TOTAL ACQUISITIONS 40,350,072.00 40,710,904.54 49,685.06 40,760,589.60 0.00 DISPOSITIONS Sale 07/12/2019 02665WAH4 1,500,000.00 American Honda Finance Note 2.25% Due: 08/15/2019 99.984 2.40% 1,499,760.00 13,781.25 1,513,541.25 -667.58 Subtotal 1,500,000.00 1,499,760.00 13,781.25 1,513,541.25 -667.58 Redemption 08/27/2019 46625HKA7 2,000,000.00 JP Morgan Chase Callable Note Cont 12/23/2019 2.25% Due: 01/23/2020 100.055 2.08% 2,001,100.00 4,250.00 2,005,350.00 1,522.18 Subtotal 2,000,000.00 2,001,100.00 4,250.00 2,005,350.00 1,522.18 Maturity 07/31/2019 912828WW6 5,000,000.00 US Treasury Note 1.625% Due: 07/31/2019 100.000 5,000,000.00 0.00 5,000,000.00 0.00 Maturity 08/15/2019 02665WAH4 2,500,000.00 American Honda Finance Note 2.25% Due: 08/15/2019 100.000 2,500,000.00 0.00 2,500,000.00 0.00 Maturity 08/19/2019 62479MVK6 11,125,000.00 MUFG Bank Ltd/NY Discount CP 2.35% Due: 08/19/2019 99.608 11,125,000.00 0.00 11,125,000.00 0.00 Maturity 09/11/2019 06406HCW7 2,120,000.00 Bank of New York Callable Note Cont 8/11/2019 2.3% Due: 09/11/2019 100.000 2,120,000.00 0.00 2,120,000.00 0.00 Maturity 09/16/2019 24422ESS9 5,000,000.00 John Deere Capital Corp Note 2.3% Due: 09/16/2019 100.000 5,000,000.00 0.00 5,000,000.00 0.00 June 30, 2019 through September 30, 2019 As of September 30, 2019 50 Transaction Ledger Orange County Sanitation District Long Term - Account #10268 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss Maturity 09/30/2019 912828F39 5,800,000.00 US Treasury Note 1.75% Due: 09/30/2019 100.000 5,800,000.00 0.00 5,800,000.00 0.00 Subtotal 31,545,000.00 31,545,000.00 0.00 31,545,000.00 0.00 TOTAL DISPOSITIONS 35,045,000.00 35,045,860.00 18,031.25 35,063,891.25 854.60 June 30, 2019 through September 30, 2019 As of September 30, 2019 51 Transaction Ledger Orange County Sanitation District Liquid - Account #10282 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss ACQUISITIONS Purchase 07/31/2019 313384MD8 2,500,000.00 FHLB Discount Note 2.12% Due: 09/25/2019 99.670 2.16% 2,491,755.56 0.00 2,491,755.56 0.00 Purchase 08/09/2019 06051GFN4 2,000,000.00 Bank of America Corp Note 2.25% Due: 04/21/2020 100.098 2.11% 2,001,960.00 13,500.00 2,015,460.00 0.00 Purchase 08/09/2019 747525AD5 2,000,000.00 Qualcomm Inc Note 2.25% Due: 05/20/2020 100.135 2.07% 2,002,700.00 9,875.00 2,012,575.00 0.00 Purchase 08/15/2019 369550BA5 2,000,000.00 General Dynamics Corp Note 2.875% Due: 05/11/2020 100.567 2.10% 2,011,340.00 15,013.89 2,026,353.89 0.00 Purchase 08/20/2019 62479MYK3 1,860,000.00 MUFG Bank Ltd/NY Discount CP 2.12% Due: 11/19/2019 99.464 2.16% 1,850,032.47 0.00 1,850,032.47 0.00 Purchase 08/28/2019 912796SL4 1,650,000.00 US Treasury Bill 2.007% Due: 10/03/2019 99.799 2.04% 1,646,687.63 0.00 1,646,687.63 0.00 Purchase 08/28/2019 912796VW6 1,650,000.00 US Treasury Bill 2.042% Due: 09/24/2019 99.847 2.07% 1,647,472.41 0.00 1,647,472.41 0.00 Purchase 08/28/2019 912828UL2 5,000,000.00 US Treasury Note 1.375% Due: 01/31/2020 99.773 1.91% 4,988,671.88 5,230.98 4,993,902.86 0.00 Purchase 09/16/2019 912796RY7 4,000,000.00 US Treasury Bill 1.873% Due: 01/30/2020 99.293 1.91% 3,971,704.44 0.00 3,971,704.44 0.00 Purchase 09/18/2019 912796RY7 3,000,000.00 US Treasury Bill 1.907% Due: 01/30/2020 99.290 1.95% 2,978,710.75 0.00 2,978,710.75 0.00 Purchase 09/24/2019 912828TR1 1,650,000.00 US Treasury Note 1% Due: 09/30/2019 99.984 1.94% 1,649,742.19 7,979.51 1,657,721.70 0.00 Purchase 09/26/2019 912828F39 1,350,000.00 US Treasury Note 1.75% Due: 09/30/2019 99.996 2.09% 1,349,947.27 11,554.30 1,361,501.57 0.00 Purchase 09/30/2019 912796VY2 1,250,000.00 US Treasury Bill 1.737% Due: 10/08/2019 99.961 1.76% 1,249,517.42 0.00 1,249,517.42 0.00 June 30, 2019 through September 30, 2019 As of September 30, 2019 52 Transaction Ledger Orange County Sanitation District Liquid - Account #10282 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss Purchase 09/30/2019 912796VZ9 1,250,000.00 US Treasury Bill 1.805% Due: 10/15/2019 99.925 1.83% 1,249,059.90 0.00 1,249,059.90 0.00 Subtotal 31,160,000.00 31,089,301.92 63,153.68 31,152,455.60 0.00 TOTAL ACQUISITIONS 31,160,000.00 31,089,301.92 63,153.68 31,152,455.60 0.00 DISPOSITIONS Call 09/18/2019 69353RDZ8 1,000,000.00 PNC Bank Callable Note Cont 9/18/2019 2.4% Due: 10/18/2019 100.000 2.40% 1,000,000.00 10,000.00 1,010,000.00 171.43 Subtotal 1,000,000.00 1,000,000.00 10,000.00 1,010,000.00 171.43 Redemption 08/27/2019 46625HKA7 1,500,000.00 JP Morgan Chase Callable Note Cont 12/23/2019 2.25% Due: 01/23/2020 100.055 2.08% 1,500,825.00 3,187.50 1,504,012.50 4,749.24 Subtotal 1,500,000.00 1,500,825.00 3,187.50 1,504,012.50 4,749.24 Maturity 07/12/2019 25468PDL7 1,130,000.00 TWDC Enterprises 18 Corp Note 0.875% Due: 07/12/2019 100.000 1,130,000.00 0.00 1,130,000.00 0.00 Maturity 07/29/2019 69353REX2 1,890,000.00 PNC Bank Callable Note Cont 6/29/2019 1.45% Due: 07/29/2019 100.000 1,890,000.00 0.00 1,890,000.00 0.00 Maturity 07/31/2019 313384JV2 5,500,000.00 FHLB Discount Note 2.395% Due: 07/31/2019 100.000 5,500,000.00 0.00 5,500,000.00 0.00 Maturity 07/31/2019 9128282K5 35,000,000.00 US Treasury Note 1.375% Due: 07/31/2019 100.000 35,000,000.00 0.00 35,000,000.00 0.00 Maturity 07/31/2019 912828TH3 15,000,000.00 US Treasury Note 0.875% Due: 07/31/2019 100.000 15,000,000.00 0.00 15,000,000.00 0.00 Maturity 07/31/2019 912828WW6 20,000,000.00 US Treasury Note 1.625% Due: 07/31/2019 100.000 20,000,000.00 0.00 20,000,000.00 0.00 Maturity 08/12/2019 69371RN36 1,083,000.00 Paccar Financial Corp Note 1.2% Due: 08/12/2019 100.000 1,083,000.00 0.00 1,083,000.00 0.00 Maturity 08/15/2019 02665WAH4 1,977,000.00 American Honda Finance Note 2.25% Due: 08/15/2019 100.000 1,977,000.00 0.00 1,977,000.00 0.00 June 30, 2019 through September 30, 2019 As of September 30, 2019 53 Transaction Ledger Orange County Sanitation District Liquid - Account #10282 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss Maturity 08/19/2019 62479MVK6 3,290,000.00 MUFG Bank Ltd/NY Discount CP 2.35% Due: 08/19/2019 99.608 3,290,000.00 0.00 3,290,000.00 0.00 Maturity 09/13/2019 21687BWD9 2,000,000.00 Rabobank Nederland NV NY Discount CP 2.83% Due: 09/13/2019 97.893 2,000,000.00 0.00 2,000,000.00 0.00 Maturity 09/13/2019 96130ABJ6 1,500,000.00 Westpac Banking Corp NY Yankee CD 2.97% Due: 09/13/2019 100.000 1,500,000.00 33,783.75 1,533,783.75 0.00 Maturity 09/18/2019 313384LW7 2,850,000.00 FHLB Discount Note 2.2% Due: 09/18/2019 100.000 2,850,000.00 0.00 2,850,000.00 0.00 Maturity 09/24/2019 912796VW6 1,650,000.00 US Treasury Bill 2.042% Due: 09/24/2019 100.000 1,650,000.00 0.00 1,650,000.00 0.00 Maturity 09/25/2019 313384MD8 2,500,000.00 FHLB Discount Note 2.12% Due: 09/25/2019 100.000 2,500,000.00 0.00 2,500,000.00 0.00 Maturity 09/30/2019 89114MM20 2,000,000.00 Toronto Dominion Bank Yankee CD 2.47% Due: 09/30/2019 100.000 2,000,000.00 17,015.56 2,017,015.56 0.00 Maturity 09/30/2019 9128282X7 10,000,000.00 US Treasury Note 1.375% Due: 09/30/2019 100.000 10,000,000.00 0.00 10,000,000.00 0.00 Maturity 09/30/2019 912828F39 1,350,000.00 US Treasury Note 1.75% Due: 09/30/2019 100.000 1,350,000.00 0.00 1,350,000.00 0.00 Maturity 09/30/2019 912828TR1 11,650,000.00 US Treasury Note 1% Due: 09/30/2019 100.000 11,650,000.00 0.00 11,650,000.00 0.00 Subtotal 120,370,000.00 120,370,000.00 50,799.31 120,420,799.31 0.00 TOTAL DISPOSITIONS 122,870,000.00 122,870,825.0 0 63,986.81 122,934,811.81 4,920.67 June 30, 2019 through September 30, 2019 As of September 30, 2019 54 Transaction Ledger OCSD Lehman Exposure - Account #10284 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss Other Transactions Cash Capital Distribution 07/18/2019 525ESC0Y6 0.00 Lehman Brothers Note-Defaulted Due: 10/22/2049 0.000 5,744.23 0.00 5,744.23 0.00 Cash Capital Distribution 07/18/2019 525ESCIB7 0.00 Lehman Brothers Note-Defaulted Due: 01/24/2020 0.000 1,729.39 0.00 1,729.39 0.00 Subtotal 0.00 7,473.62 0.00 7,473.62 0.00 TOTAL Other Transactions 0.00 7,473.62 0.00 7,473.62 0.00 June 30, 2019 through September 30, 2019 As of September 30, 2019 55 Important Disclosures 2019 Chandler Asset Management, Inc, An Independent Registered Investment Adviser. Information contained herein is confidential. Prices are provided by IDC, an independent pricing source. In the event IDC does not provide a price or if the price provided is not reflective of fair market value, Chandler will obtain pricing from an alternative approved third party pricing source in accordance with our written valuation policy and procedures. Our valuation procedures are also disclosed in Item 5 of our Form ADV Part2A. Performance results are presented gross-of-advisory fees and represent the client’s Total Return. The deduction of advisory fees lowers performance results. These results include the reinvestment of dividends and other earnings. Past performance may not be indicative of future results. Therefore, clients should not assume that future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Economic factors, market conditions or changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Index returns assume reinvestment of all distributions. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. It is not possible to invest directly in an index. Source ice Data Indices, LLC ("ICE"), used with permission. ICE permits use of the ICE indices and related data on an "as is" basis; ICE, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE data, its affiliates or their respective third party providers guarantee the quality, adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an "as is" basis and licensee's use it at licensee's own risk. ICE data, its affiliates and their respective third party do not sponsor, endorse, or recommend chandler asset management, or any of its products or services. This report is provided for informational purposes only and should not be construed as a specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest, credit and market risk.Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions, especially during periods of rising interest rates. Ratings information have been provided by Moody’s, S&P and Fitch through data feeds we believe to be reliable as of the date of this statement, however we cannot guarantee its accuracy. Security level ratings for U.S. Agency issued mortgage-backed securities (“MBS”) reflect the issuer rating because the securities themselves are not rated. The issuing U.S. Agency guarantees the full and timely payment of both principal and interest and carries a AA+/Aaa/AAA by S&P, Moody’s and Fitch respectively. As of September 30, 2019 56 Benchmark Disclosures ICE BAML 3-Month US Treasury Bill Index The ICE BAML US 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, three months from the rebalancing date. (Index: G0O1. Pleasevisit www.mlindex.ml.com for more information) ICE BAML 1-5 Yr US Corp/Govt Rated AAA-A Index The ICE BAML US Issuers 1-5 Year AAA-A US Corporate & Government Index tracks the performance of US dollar denominated investment grade debt publicly issued in the US domestic market, including US Treasury, US agency, foreign government, supranational and corporate securities. Qualifying securities must issued from US issuers and be rated AAA through A3 (based on an average of Moody’s, S&P and Fitch). In addition, qualifying securities must have at least one year remaining term to final maturity and less than five years remaining term to final maturity, at least 18 months to final maturity at point of issuance, a fixed coupon schedule and a minimum amount outstanding of $1 billion for US Treasuries and $250 million for all other securities.(Index: BV10. Please visit www.mlindex.ml.com for more information) ICE BAML US 1-5 Yr US Corp/Govt Rated AAA-BBB Indx The ICE BAML 1-5 Year US Corporate & Government Index tracks the performance of US dollar denominated investment grade debt publicly issued in the US domestic market, including US Treasury, US agency, foreign government, supranational and corporate securities. Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch). In addition, qualifying securities must have at least one year remaining term to final maturity and less than five years remaining term to final maturity, at least 18 months to final maturity at point of issuance, a fixed coupon scheduleand a minimum amount outstanding of $1billion for US Treasuriesand $250 million for all other securities. (Index:BVA0. Please visit www.mlindex.ml.com for more information) As of September 30, 2019 57 Rating Agency Comparisons A summary of investment grade ratings are listed below. More complete descriptions of Moody's and Standard & Poor's ratings are included in the following pages. Quality/Grade Moody’s Standard & Poor’s Fitch Best Quality Aaa AAA AAA High Quality Aa1 Aa2 Aa3 AA+ AA AA- AA+ AA AA- Upper Medium Grade A1 A2 A3 A+ A A- A+ A A- Medium Grade Baa1 Baa2 Baa3 BBB+ BBB BBB- BBB+ BBB BBB1 Moody's - Investment Grade "Aaa" - Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. "A" - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. "Baa" - Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Bonds in the Aa, A, and Baa are also assigned "1", "2", or "3" based on the strength of the issue within each category. Accordingly, "A1" would be the strongest group of A securities and "A3" would be the weakest A securities. Ba, B, Caa, Ca, and C - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and “C” represents the lowest rated class of bonds). "Caa”, "Ca" and “C” bonds may be in default. Standard and Poor's - Investment Grade AAA - Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal Is extremely strong. AA - Debt rated “AA” has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A - Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Standard and Poor's - Speculative Grade Rating Debt rated "BB", "B", "CCC", “CC" and "C" is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. "BB" indicates the least degree of speculation and "C" the highest. While such debt will likely have some quality and protective characteristics these are outweighed by major uncertainties or major exposures to adverse conditions. BB - Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB" rating. B - Debt rated "B" has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or "BB" rating. CCC - Debt rated "CCC" has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The "CCC" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "B" or "B" rating. CC - The rating "CC" typically is applied to debt subordinated to senior debt that is assigned an actual or implied "CCC" debt rating. C - The rating “C” typically is applied to debt subordinated to senior debt which is assigned an actual or implied “CCC” debt rating. The “C” rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. Cl - The rating "Cl" is reserved for income bonds on which no interest is being paid. D - Debt rated “D” is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The “D” rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. Plus (+) or Minus (-) - The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. NR - Indicates no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy. OCSD ♦ P.O. Box 8127 ♦ Fountain Valley, CA 92728-8127 ♦ (714) 962-2411 October 31, 2019 STAFF REPORT Certificates of Participation (COP) Quarterly Report for the Period Ended September 30, 2019 Summary The District began issuing Certificates of Participation (COPs) in 1990. These COPs were a part of our long-term financing plan that included both variable interest rate and traditional fixed rate borrowing. Following are the current outstanding debt issues of the District: In May 2010, the District issued $80 million of fixed rate BABs, Series 2010A at a true interest cost of 3.68 percent for the issue. In December 2010, the District issued $157 million of fixed rate BABs, Series 2010C at a true interest cost of 4.11 percent for the issue. In October 2011, the District issued $147.595 million of fixed rate COPs, Series 2011A refunding a portion of the Series 2000 variable rate debt and a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 2.61 percent. In March 2012, the District issued $100.645 million of fixed rate COPs, Series 2012A refunding the Series 2003 fixed rate debt. The true interest cost for the issue is 3.54 percent. In August 2012, the District issued $66.395 million of fixed rate COPs, Series 2012B refunding the Series 2000 variable rate debt. The true interest cost for the issue is 1.50 percent. With the issuance of Series 2012B, there remains no variable interest rate COPs at the District. In August 2014, the District issued $85.09 million of fixed rate COPs, Series 2014A, refunding a portion of Series 2007B debt. The true interest cost for the issue is 2.34 percent. Quarterly COP Report For the Period Ended September 30, 2019 Page 2 of 2 In February 2015, the District issued $127.51 million of fixed rate COPs, Series 2015A, refunding $152.99 million of the Series 2007B debt. The true interest cost for the issue is 3.30 percent. In March 2016, the District issued $145.88 million of fixed rate CANs, Series 2016A, refunding $162.78 million of the Series 2009A fixed rate debt. The true interest cost for the issue is 3.02 percent. In February 2017, the District issued $66.37 million of fixed rate COPs, Series 2017A, refunding $91.885 million of the Series 2007A debt. The true interest cost for the issue is 2.55 percent. In November 2018, the District issued $102.2 million of fixed rate CANs, Series 2018A, refunding the Series 2016B CANs. The true interest cost for the issue is 2.02 percent. Additional Information The graph entitled, "OCSD COP Rate History Report,” shows the various fixed interest rates of the District’s eleven debt issues. Attachments 1. Graph - OCSD COP Rate History Report Prepared by Finance, 10/29/2019, 5:05 PM H:\dept\asd\220\Common\Monthly and Quarterly Treasurer's Report\FY 19-20\COP Rate History Report FY 19-20 0.00 1.00 2.00 3.00 4.00 5.00 12 - S e p - 1 8 26 - S e p - 1 8 10 - O c t - 1 8 24 - O c t - 1 8 7- N o v - 1 8 21 - N o v - 1 8 5- D e c - 1 8 19 - D e c - 1 8 2- J a n - 1 9 16 - J a n - 1 9 30 - J a n - 1 9 13 - F e b - 1 9 27 - F e b - 1 9 13 - M a r - 1 9 27 - M a r - 1 9 10 - A p r - 1 9 24 - A p r - 1 9 8- M a y - 1 9 22 - M a y - 1 9 5- J u n - 1 9 19 - J u n - 1 9 3- J u l - 1 9 17 - J u l - 1 9 31 - J u l - 1 9 14 - A u g - 1 9 28 - A u g - 1 9 11 - S e p - 1 9 25 - S e p - 1 9 RA T E ( % ) DATE OCSD COP RATE HISTORY REPORT SEPTEMBER 2019 Series 2010A Fixed Series 2010C Fixed Series 2011A Fixed Series 2012A Fixed Series 2012B Fixed Series 2014A Fixed Series 2015A Fixed Series 2016A Fixed Series 2017A Fixed Series 2018A Fixed FY 2019-20 First Quarter Financial Report This Page Intentionally Left Blank ORANGE COUNTY SANITATION DISTRICTFINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.ocsd.com 09/30/19 Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-702 Agenda Date:11/13/2019 Agenda Item No:6. FROM:James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: LEASE AGREEMENT WITH MEGDAL GREEN,LLC PROVIDING ORANGE COUNTY SANITATION DISTRICT PARCEL FOR PARKING AND/OR RELATED ACTIVITIES GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Approve a five-year lease agreement with Megdal Green,LLC,a California limited liability company, to allow paving,striping,parking,and related improvements over a 4-foot wide portion of the Orange County Sanitation District’s 50-foot wide utility corridor which abuts 21532 South Brookhurst Street in Huntington Beach owned by Megdal Green, LLC, at an annual cost of $250, for a term of five-years. BACKGROUND The Orange County Sanitation District (Sanitation District)has leased a 4-foot wide strip of its 50-foot wide parcel to Carl Karcher Enterprises since 1993 for the purpose of creating additional parking spaces in this congested commercial center.The Carl’s Jr.restaurant has moved out of this center and Megdal Green,LLC has now leased its property to Starbucks Coffee Company.With parking in this center still a concern,Megdal Green contacted the Sanitation District and requested the opportunity to lease the same strip of land for the same purpose. The agreement is for a five-year period and provides for Megdal Green,LLC and its tenants to utilize the Sanitation District land,classified as an Interplant Pipeline and Utility Corridor,for the purpose of parking,outdoor seating,or related activities for the sum of $250 per year.Improvements such as paving,striping,etc.are to be maintained in good condition by Megdal Green,LLC for the term of the lease. This lease may be terminated by either party with 60-day written notice. RELEVANT STANDARDS ·Maintain collaborative and cooperative relationships with regulators,stakeholders,and neighboring communities PROBLEM The Sanitation District’s property is adjacent to a busy commercial center.A shortage of parking spaces, litter, and vagrancy can be a problem in this area. Orange County Sanitation District Printed on 11/6/2019Page 1 of 2 powered by Legistar™ File #:2019-702 Agenda Date:11/13/2019 Agenda Item No:6. PROPOSED SOLUTION By leasing this strip of land to Megdal Green,LLC,the lessee becomes responsible for keeping the area clean, maintained, and free from loitering. TIMING CONCERNS Starbucks is due to open December 2019. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District would not have an agreement with Megdal Green,LLC to maintain the area and Sanitation District staff or contractors would then have to monitor litter and loitering. PRIOR COMMITTEE/BOARD ACTIONS July 2018 - Board approved a one-year and five-month lease agreement with CKE. April 2008 -Board approved 5-year Lease extension with CKE,which included an additional 5-year extension option. August 2003 - Board approved 5-year Lease extension with CKE. August 1993 - Board approved Lease Agreement with Carl Karcher Enterprises (CKE). ADDITIONAL INFORMATION N/A CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)is included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Lease Agreement with Megdal Green, LLC Orange County Sanitation District Printed on 11/6/2019Page 2 of 2 powered by Legistar™ 1326921.2 1 LEASE AGREEMENT THIS LEASE AGREEMENT (“Agreement”), is made and entered into, to be effective this ___ day of ______________, 2019, by and between: ORANGE COUNTY SANITATION DISTRICT, a public agency (“DISTRICT”); AND MEGDAL GREEN, LLC, a California limited liability company (“MEGDAL”) RECITALS A.DISTRICT owns a parcel of land approximately fifty (50) feet wide (hereinafter, the “Property”), which abuts the easterly property line of those certain premises located at 21532 South Brookhurst Street, Huntington Beach, California (hereinafter, the “Brookhurst Premises”), and the westerly right-of-way line of the Santa Ana River Channel. B.The Brookhurst Premises are owned by MEGDAL and leased to Starbucks Coffee Company. C.DISTRICT owns certain utility improvements, including an Outfall Sewer, which is presently located in the subsurface of the Property. DISTRICT previously constructed additional improvements on the Property, including a permanent retaining wall. There remains a strip of the Property, approximately four (4) feet wide, that lies between the retaining wall and the Brookhurst Premises (hereinafter referred to as “Parcel A”). Parcel A is more particularly described and shown on Exhibits “A” and “B,” attached hereto and incorporated herein by this reference. 1326921.2 2 D.The Parties now desire to enter into an agreement wherein the DISTRICT would lease Parcel A to MEGDAL to allow MEGDAL to install and maintain paving, striping, parking, and related improvements within Parcel A pursuant to the terms and conditions stated herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and pursuant to the terms and conditions contained herein, the Parties hereby agree as follows: Section 1 – Recitals: The Recitals set forth above are incorporated herein as part of this Agreement. Section 2 – Rent:DISTRICT hereby leases Parcel A to MEGDAL for an annual sum of two hundred and fifty dollars ($250.00). MEGDAL shall pay the first year’s rent within five (5) business days following execution of this Agreement, and shall make all subsequent annual rent payments on or before November 1st of each year. Section 3 – Term: This Agreement shall have a term of five (5) years beginning on the date this Agreement is executed by the Parties. Section 4 – Early Termination: Notwithstanding Section 3 of this Agreement, either Party may terminate this Agreement for any reason by providing at least sixty (60) days advance written notice to the other Party. Section 5 – Maintenance:MEGDAL agrees to maintain Parcel A in good and fair condition, free of trash, and generally in a manner consistent with cleanliness standards for similar commercial properties in the area. Section 6 – Authorized Uses: MEGDAL shall make use of Parcel A only for vehicular traffic, parking, outdoor seating, and any related activities, or for the use of MEGDAL and its employees, invitees, and customers. MEGDAL shall not use Parcel A 1326921.2 3 for any other use or purpose. MEGDAL agrees, during the term of its leasehold interest, to pave, maintain, and keep in good condition and repair the paving and improvements to be installed by MEGDAL within Parcel A. Such maintenance shall include, but is not limited to, repairs, resurfacing, restriping, cleaning, and sweeping. Section 7 – DISTRICT Access:In consideration of this Lease, MEGDAL hereby grants to DISTRICT a license to enter Parcel A at any time during the term of this Agreement. Further, upon prior written notice to MEGDAL, DISTRICT may remove the retaining wall or any paving or parking area improvements for the purpose of accessing, maintaining, altering, or relocating DISTRICT’s Outfall Sewer, which is located on DISTRICT’s land and beneath the surface of Parcel A. Section 8 – DISTRICT Work:If DISTRICT exercises its license to enter and remove any improvements to the lease area, it agrees to act expeditiously to undertake and conclude all work affecting Parcel A. MEGDAL shall have the option to terminate this Lease (in accordance with Section 4 above) in the event of DISTRICT’s removal of improvements, but shall replace the improvements at its own expense if MEGDALchooses to continue the Lease. Section 9 – Indemnity & Duty to Defend:MEGDAL shall indemnify, assume the defense of, and hold free and harmless, DISTRICT, its agents, employees, successors, and assigns, from any and all obligations, liabilities, liens, claims, demands, losses, damages, costs, or causes of action (hereinafter “liability”) arising out of or in any way connected to MEGDAL’s use of Parcel A, or any act or omission to act by MEGDAL, including its agents, servants, employees, invitees, or guests, including but not limited to any liability arising from bodily injury (including death), personal property damage, damage to any of DISTRICT’s property, and reasonable attorneys’ fees, sustained at any 1326921.2 4 time by any person or persons arising out of or in consequence of MEGDAL’s use of Parcel A, whether or not such bodily injury or property damage is claimed to be due to the negligence, gross negligence, or willful misconduct of MEGDAL, its agents, servants, employees, invitees, or guests, excepting only liability arising from the sole negligence or willful misconduct of DISTRICT. Section 10 – No Assignment:No assignment or sublease of MEGDAL’s interest hereunder may be made without the written consent of DISTRICT, which may be withheld in its sole discretion. Section 11 – Insurance:MEGDAL agrees that it will, at its sole expense, maintain a policy or policies of insurance, written by one or more qualified and rated insurance carriers, and insuring DISTRICT and its employees against liability for injury, death of persons, or loss or damage to property in or about the lease area. This insurance requirement may be met by the naming of DISTRICT, its employees, officers and directors, as additional insureds to MEGDAL’s general liability insurance policy. The general liability coverage shall not be less than $1,000,000 per occurrence for bodily injury, including death, and $500,000 for property damage. Section 12 – Arbitration:Any controversy or claim between the Parties to this Agreement, including but not limited to, any claims, disputes, demands, differences, controversies, or misunderstandings arising under, out of, or in relation to this Lease, or any alleged breach thereof, shall be submitted to and determined by arbitration. The Rules of the American Arbitration Association shall apply. The prevailing party shall be entitled to recover reasonable attorneys’ fees and costs, as fixed by the Arbitrator. Section 13 – Entire Agreement:This instrument contains the entire agreement between the Parties relating to the rights herein granted and the obligations herein assumed. 1326921.2 5 Any oral representations or modifications concerning this instrument shall be of no force and effect, excepting a subsequent modification in writing, signed by the Party to be charged. Section 14 – Counterparts:This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same Agreement. IN WITNESS WHEREOF, DISTRICT and MEGDAL have executed this Lease Agreement on the day and year first above written. “DISTRICT” ORANGE COUNTY SANITATION DISTRICT, a public agency By___________________________________ David John Shawver, Chair, Board of Directors ATTEST: ___________________________________ Kelly A. Lore, Clerk of the Board APPROVED AS TO FORM: ___________________________________ Bradley R. Hogin, General Counsel “MEGDAL” MEGDAL GREEN, LLC, a California Limited Liability Company By___________________________________ Its: ____________________________ By___________________________________ Its: ____________________________ Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-705 Agenda Date:11/13/2019 Agenda Item No:7. FROM:James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2019 GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District’s Comprehensive Annual Financial Report for the year ended June 30, 2019, prepared by staff and audited by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, along with the following reports prepared by MGO: 1. Report to the Board of Directors; and 2. Independent Accountants’ Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. BACKGROUND The CAFR for the year ended June 30,2019 is enclosed for the Committee’s consideration.Included within the report are the Orange County Sanitation District’s financial statements for the year ended June 30, 2019, along with the Independent Auditor’s Report that includes the unmodified opinion. RELEVANT STANDARDS ·Produce appropriate financial reporting - annual financial report & audit letter ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Report to the Board of Directors ·Independent Accountant's Report on Applying Agreed-Upon Procedures Related to Appropriations Limit Calculation ·Comprehensive Annual Financial Report for the Year Ended June 30, 2019 (separately bound document) ·Single Audit Reports Orange County Sanitation District Printed on 11/6/2019Page 1 of 1 powered by Legistar™ www.mgocpa.com Macias Gini & O’Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 1 October 25, 2019 To the Board of Directors Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California We have audited the basic financial statements of the Orange County Sanitation District (OCSD) for the year ended June 30, 2019. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 30, 2019. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by OCSD are described in Note 1 to the basic financial statements. As described in Note 1 to the basic financial statements, OCSD implemented Governmental Accounting Standard Board (GASB) Statement No. 83, Certain Asset Retirement Obligations and also GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. However, implementation of these Standards did not materially impact OCSD. The application of existing policies was not changed during 2019. We noted no transactions entered into by OCSD during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting OCSD’s financial statements were: •Valuations of actuarially determined contributions, deferred outflows of resources, deferred inflows of resources, and net pension liability for OCSD’s employee pension plan and additional retiree benefit account plan are based on actuarial calculations, which incorporate actuarial methods and assumptions adopted by the Board of Directors. •Valuations of actuarially determined contributions, deferred outflows of resources, deferred inflows of resources, and net OPEB liability for OCSD’s employee OPEB plan are based on actuarial calculations, which incorporate actuarial methods and assumptions adopted by the Board of Directors. 2 • Management’s estimates of workers’ compensation and general liability are based on reports prepared by third party actuarial valuations. We evaluated the key factors and assumptions used to develop the estimate liability in determining that they are reasonable in relation to the financial statements taken as a whole. • Management’s estimate of the allowance for uncollectible accounts receivable is based on evaluating individual customer accounts receivable at least one year past due and considering the customer’s financial condition, credit history and current economic conditions. We evaluated the key factors and assumptions used to assess the collectability of the receivables in determining that they are reasonable in relation to the financial statements taken as a whole. • Management’s estimate of depreciation is based on the useful-lives of the capital assets. We evaluated the key factors and assumptions used to develop the useful-lives of the capital assets in determining that it is reasonable in relation to the financial statements taken as a whole. • Fair values of investments are based on quoted market prices or significant other observable inputs from independent published sources. We evaluated the key factors and assumptions used to develop the fair value of investments in determining that it is reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were: • The disclosure of net pension liability and OPEB benefits in Note 5 and 6 to the financial statements, respectively, are based on actuarial valuations. • Transactions with Irvine Ranch Water District – Revenue Area No. 14 as disclosed in Note 7. • Commitments and contingencies that will impact future resources of OCSD as disclosed in Note 9. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no misstatements detected as a result of audit procedures and corrected by management which were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. 3 Management Representations We have requested certain representations from management that are included in the management representation letter dated October 25, 2019. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to OCSD’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as OCSD’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the Management’s Discussion and Analysis, Schedule of Proportionate Share of Net Pension Liability (Asset) – OCERS Pension Plan, Schedule of District Contributions – OCERS Pension Plan, Schedule of Total Pension Liability – Additional Retiree Benefit Plan, Schedule of Changes in Total Pension Liability - Additional Retiree Benefit Plan, Schedule of Total OPEB Liability – Post Employment Medical Benefits Plan, and Schedule of Changes in Total OPEB Liability – Post Employment Medical Benefits Plan, which are required supplementary information (RSI) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the “Combining Area” financial statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 4 Restriction on Use This information is intended solely for the information and use of the Board of Directors and management of OCSD and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Newport Beach, California October 25, 2019 ORANGE COUNTY SANITATION DISTRICT Independent Accountant’s Report on Applying Agreed-Upon Procedures Related to Appropriations Limit Calculation Year Ended June 30, 2019 www.mgocpa.com Macias Gini & O’Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 1 Independent Accountant’s Report on Applying Agreed-Upon Procedures To the Board of Directors Orange County Sanitation District We have performed the procedures enumerated below to the accompanying Appropriations Limit Worksheet of the Orange County Sanitation District (OCSD) for the year ended June 30, 2019. These procedures, which were agreed to by OCSD and the League of California Cities (as presented in the publication titled Agreed-Upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution), were performed solely to assist OCSD in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution. OCSD’s management is responsible for the Appropriations Limit Worksheet. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings are as follows: 1. We obtained the completed worksheets setting forth the calculations necessary to establish OCSD’s appropriations limit and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of OCSD’s Board of Directors. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of OCSD’s Board of Directors. Finding: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Calculation, we added Line A, last year’s limit, to Line E, total adjustments, and compared the resulting amount to Line F, current year’s limit. Finding: No exceptions were noted as a result of our procedures. 3. We compared the current year information presented in the accompanying Appropriations Limit Calculation to the appropriate supporting calculations described in item 1 above. Finding: No exceptions were noted as a result of our procedures. 4. We compared the prior year Appropriations Limit presented in the accompanying Appropriations Limit Calculation to the prior year Appropriations Limit adopted by the Board of Directors for the prior year. Finding: No exceptions were noted as a result of our procedures. 2 This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Calculation of OCSD. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriations limit for the base year, as defined by Article XIII-B of the California Constitution. This report is intended solely for the information and use of the Board of Directors and management of OCSD, and is not intended to be, and should not be, used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. Newport Beach, California October 25, 2019 ORANGE COUNTY SANITATION DISTRICT Appropriations Limit Calculation Year Ended June 30, 2019 3 Amount Source A. Last year’s limit 105,998,787 $ B. Adjustment factors: 1. Population change 1.00310000 State Finance 2. Per capita change 1.03670000 State Finance Total adjustments [(B.1 x B.2)-1.0]0.03991377 C. Annual adjustment 4,230,811 (BxA) D. Other adjustments: 1. Lost responsibility (-) - 2. Transfer to private (-) - 3. Transfer to fees (-) - 4. Assumed responsibility (+) - Subtotal - E. Total adjustments 4,230,811 (C+D) F. This year’s limit 110,229,598 $ (A+E) Orange County Sanitation District Comprehensive Annual Financial Report for the year ended June 30, 2019 Orange County, California ORANGE COUNTY SANITATION DISTRICT ORANGE COUNTY, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 Prepared By: Administrative Services Department Financial Management Division Wally Ritchie Controller (THIS PAGE LEFT INTENTIONALLY BLANK) ORANGE COUNTY SANITATION DISTRICT Comprehensive Annual Financial Report Table of Contents For the Year Ended June 30, 2019 Page INTRODUCTORY SECTION: Letter of Transmittal ..................................................................................................................... i-vii GFOA Certificate of Achievement ............................................................................................... viii Board of Directors ........................................................................................................................ ix Organization Chart ...................................................................................................................... x Map of Service Area .................................................................................................................... xi FINANCIAL SECTION: Independent Auditors’ Report ...................................................................................................... 1-2 Management Discussion and Analysis – Required Supplementary Information ........................ 3-9 Basic Financial Statements: Statement of Net Position ................................................................................................... 12 Statement of Revenues, Expenses, and Changes in Net Position .................................... 13 Statement of Cash Flows .................................................................................................... 14 Notes to Basic Financial Statements .................................................................................. 15-48 Required Supplementary Information: Proportionate Share of the Net Pension Liability (Asset) – OCERS Pension Plan ............ 50 Schedule of District Contributions – OCERS Pension Plan ............................................... 51 Total Pension Liability – Additional Retiree Benefit Account .............................................. 52 Changes in Total Pension Liability – Additional Retiree Benefit Account ........................... 53 Total OPEB Liability –Post-Employment Medical Benefits Plan......................................... 54 Changes in Total OPEB Liability –Post-Employment Medical Benefits Plan ..................... 55 Supplementary Information: Combining Area Schedule of Net Position .......................................................................... 58 Combining Area Schedule of Revenues, Expenses, and Changes in Net Position .......... 59 Combining Area Schedule of Cash Flows .......................................................................... 60 STATISTICAL SECTION: Net Position by Component – Last Ten Fiscal Years .................................................................. 62 Revenues and Gross Capital Contributions by Source – Last Ten Fiscal Years ........................ 63 Expenses by Type – Last Ten Fiscal Years ................................................................................ 64 Change in Net Position – Last Ten Fiscal Years ......................................................................... 65 Cash and Investment Reserve Balances – Last Ten Fiscal Years ............................................. 66 Sewer Service Fees – Last Nine Fiscal Years and Next Fiscal Year .......................................... 67 Number of Accounts and Revenues by Customer Class – Last Ten Fiscal Years ..................... 68 Principal Sewer Service Customers – Current Fiscal Year and Nine Years Ago ....................... 69 Ratio of Annual Debt Service to Total Expenses – Last Ten Fiscal Years ................................. 70 Debt Coverage Ratios – Last Ten Fiscal Years .......................................................................... 71 Ratios of Outstanding Debt – Last Ten Fiscal Years .................................................................. 72 Comparison of the Volume of Wastewater Treated – Last Ten Fiscal Years ............................. 73 Authorized Full-time Equivalents by Function – Last Ten Fiscal Years ...................................... 74 Biosolids Produced – Last Ten Fiscal Years ............................................................................... 75 Capital Asset Statistics – Last Ten Fiscal Years ......................................................................... 76 Demographic Statistics – Last Ten Fiscal Years ......................................................................... 77 Estimated Population Served by Orange County Sanitation District .......................................... 78 Principal Orange County Employers – Current Fiscal Year and Nine Years Ago ....................... 79 Operating Indicators .................................................................................................................... 80 OTHER DATA & TRENDS: Cash and Investment Portfolio ................................................................................................... 82 Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years ............... 83 Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ................ 84 Property Tax and User Fee Levies and Collections – Last Ten Fiscal Years ............................. 85 Property Value and Construction – Last Ten Fiscal Years ......................................................... 86 Insurance in Force ....................................................................................................................... 87 (THIS PAGE LEFT INTENTIONALLY BLANK) i  October 25, 2019 The Board of Directors of the Orange County Sanitation District, Orange County, California Submitted herewith is the Comprehensive Annual Financial Report of the Orange County Sanitation District (OCSD), Orange County, California for the fiscal year ended June 30, 2019. This report includes the financial position and activity of individual revenue areas, as described within the Governmental Structure below, as of June 30, 2019 and was prepared by the Financial Management Division of OCSD’s Administrative Services Department. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with OCSD. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and changes in the financial position of OCSD. All disclosures necessary to enable the reader to gain an understanding of the agency’s financial activities have been included. Included within the accompanying financial statements are all of the organizations, activities, and functions controlled by OCSD’s Board of Directors in accordance with the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting. For the purpose of this evaluation, control was determined by the Board’s responsibility for: (1) adoption of the budget and user charges, (2) taxing authority, and (3) establishment of policies. The reporting entity and its services are described in further detail in Note 1 of the financial statements. An audit of the books, financial records and transactions of OCSD is conducted annually by independent certified public accountants. OCSD selected the accounting firm of Macias Gini & O’Connell LLP to perform the audit for the year ended June 30, 2019. The auditor’s report on OCSD’s basic financial statements and supplementary information is located on page 1 within the financial section of this report. This report renders an unmodified opinion on OCSD’s basic financial statements for the year ended June 30, 2019. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. GOVERNMENTAL STRUCTURE The Orange County Sanitation District encompasses the Northern section of Orange County. OCSD provides wastewater treatment for an area of the County covering 479 square miles and serving a population of approximately 2.6 million, or 81 percent of the County’s population. OCSD was originally incorporated in 1954 as nine separate public corporations, or districts. In April of 1998, at OCSD’s request, the Board of Supervisors of the County of Orange passed Resolution No. 98-140 ordering the consolidation of these nine County Sanitation Districts into a new, single sanitation district, to be known as the Orange County Sanitation District, effective July 1, 1998. This action was recommended to the Board by the Local Agency Formation Commission in order to simplify governance structures, reduce the size of the Board, ease administrative processes, streamline decision-making and consolidate accounting and auditing processes. The boundaries of the nine previous districts had remained intact for the purpose of collecting sewer user fees at the previously established rate schedules, and were referred to as nine individual revenue areas through June 30, 2000. Effective July 1,2003, all Revenue Areas, except Revenue Area 14, consolidated user fee rates and all enterprise fund accounting and budgeting activities and are now known as the Consolidated Revenue Area. i ii OCSD is managed by an administrative organization composed of directors appointed by the agencies or cities which are serviced by OCSD. Each of the two remaining Revenue Areas, the Consolidated Revenue Area and Revenue Area 14, has its own budget and is responsible for the construction and maintenance of its own collection system. All Revenue Areas, except Revenue Area 14 and the portion of the Consolidated Revenue Area previously known as Revenue Area 13, receive their own share of the one- percent ad valorem property tax levy. In addition, all Revenue Areas except Revenue Area 14, collect user fees from property owners. Revenue Area 14 receives all of its revenues from service charges to the Irvine Ranch Water District. The purpose of OCSD’s wastewater management program is to protect the public’s health, preserve the beneficial uses of the coastal waters, and maintain air quality. The objectives of operating the treatment plants are to process and dispose of the treated wastewater and the separated solids in accordance with Federal, state, and local laws including the Environmental Protection Agency. OCSD sewerage system includes approximately 389 miles of sewers that convey wastewater generated within OCSD’s boundaries to OCSD’s two wastewater treatment plants, Reclamation Plant No. 1 located in the City of Fountain Valley, and Treatment Plant No. 2 located in the City of Huntington Beach. Plants No. 1 and No. 2 have secondary treatment capacities of 182 million gallons per day (mgd) and 150 mgd, respectively. In fiscal year 2019-20, both plants are projected to receive a combined average daily wastewater flow of 188 million gallons per day from residential, commercial, and industrial sources. After wastewater receives secondary treatment at Plant No. 1, it flows to the Groundwater Water Replenishment System (GWRS) at the Orange County Water District, located adjacent to OCSD, where it undergoes a state-of-the-art purification process consisting of microfiltration, reverse osmosis, and ultraviolet light with hydrogen peroxide. The product water is near-distilled quality. Approximately 35 million gallons (132,500 cubic meters) per day of the GWRS water are pumped into injection wells to create a seawater intrusion barrier. Another 65 million gallons (246,000 cubic meters) are pumped daily to Orange County Water District's percolation basins in Anaheim where the GWRS water naturally filters through sand and gravel to the deep aquifers of the groundwater basin. Remaining outflows of treated wastewater from Plants 1 and 2 are combined and discharged to the ocean off the Huntington Beach coast through an outfall pipe that is 120 inches in diameter and approximately five miles long. The last mile of the outfall pipe is a diffuser that dilutes the wastewater with seawater in a ratio of 148 parts seawater to one part treated wastewater at an average depth of 185 feet. ECONOMIC CONDITIONS AND OUTLOOK According to the California Employment Development Department (EDD), Orange County generated a slight increase of approximately 0.3 percent in payroll jobs from August 2018 to August 2019. During this same time period, unemployment in Orange County decreased to 3.0 percent from 3.1 percent while the unemployment in California as a whole decreased to 4.2 percent from 4.3 percent. In June 2018, Chapman University forecasted Orange County’s 2019 total payroll employment to increase 1.2 percent over the prior year, or the addition of 20,000 payroll jobs in 2019. Despite the forecasted slowing in Orange County job growth, Chapman University continues to project an increase in housing appreciation of 1.2 percent. Short-run increases can occur when inventories remain tight. Longer-run economic and demographic forces will eventually dominate the pricing equation, especially when affordability, as measured by the median home price-to-median income ratio, is projected to continue increasing. According to Chapman University, residential permit valuation in the County is forecasted to increase from a 13.4 percent decline in 2018 to 2.5 percent decline in 2019. iii MAJOR INITIATIVES Following are the District’s current major initiatives as outlined in the General Manager’s work plan for FY 2019-20: 1. Safety and Security  Emergency Preparedness – Develop and conduct an external emergency response and recovery drill by June 30, 2020 that tests the Integrated Emergency Response Plan (IERP).  Safety Engineering Solutions – Complete six of the remaining eight Safety Improvement Construction Projects by June 30, 2020.  Voluntary Protection Plan (VPP) Certification – Apply for the VPP certification for Plant No. 1 by June 30, 2020  Physical Security Plan – Complete the development and implementation of a Physical Security Plan by June 30, 2020.  Cyber Security Plan – Complete the development and implementation of a Cyber Security Plan by June 30, 2020. 2. Succession Planning  Leadership Development – Provide at least two specialized trainings tailored to the Supervisory Level and one for the EMT/ Managers by June 30, 2020. 3. Resource Recovery  Groundwater Replenishment System (GWRS) Final Expansion – Meet the following milestones to support the final expansion of GWRS: o Advertise for Construction of Project P2-122, Headworks Modifications at Plant No. 2 for GWRS Expansion by January 31, 2020. o Issue Construction Contract Notice to Proceed for Project P2-122, Headworks Modifications at Plant No. 2 for GWRS Expansion by June 30, 2020.  Emerging Contaminants – Work with industry, academic, and agency partners to develop science-based regulations and an adaptive plan by June 30, 2020 to address the potential impact of PFAS to OCSD.  Food Waste Digestion Pricing Policy – Present a draft policy and pricing plan to the Board of Directors by June 30, 2020. 4. Reliability  Asset Management Plan – Develop an Asset Management Plan by December 31, 2019 that includes an inventory of critical assets for each process area and the collection system; an evaluation of their condition and performance; and an implementation plan to maintain, rehabilitate, and replace these assets to meet the required levels of service at the lowest life cycle cost and at an acceptable level of risk.  Central Generation Engines – Implement an in-house heavy mechanical maintenance team and award a contract by December 31, 2019 to overhaul two Central Generation Engines.  Pump Station Bypass Exercises – Bypass pump two Pump Stations to prove emergency readiness and use the exercise to do critical valve and electrical maintenance at those Pump Stations by June 30, 2020. iv 5. Operational Optimization  OCSD Headquarters Building – Advertise for Construction for Headquarters Complex Site Preparation, Contract No. P1-128C by February 29, 2020. Obtain City of Fountain Valley approvals for the Headquarters Building by June 30, 2020.  Document Management – Complete Records Management and Trusted System Needs Assessment by November 30, 2019.  Communications Audit – Complete the audit and provide a report to the Legislative and Public Affairs Committee by March 30, 2020.  Capital Project Delivery – Complete a formal design review framework by June 30, 2020. Complete a framework for regular updates of engineering policies and procedures, design guidelines, and engineering standards by June 30, 2020.  Solids Handling Optimization – Complete commissioning and optimize performance of new solids handling facilities at each plant by December 31, 2019.  Strategic Plan – Complete new Strategic Plan for adoption by the Board of Directors by November 30, 2019.  Two Year Budget – Complete new two-year budget for adoption by the Board of Directors on June 24, 2020. Strategic Planning In December 2017, the Board of Directors approved the biennium update to the rolling five-year strategic plan. This is a comprehensive strategic plan to steer OCSD’s efforts and engage the organization to envision service levels and operational needs for the next five years. This annual process begins with the General Manager’s Office initiating the planning effort with the Executive Management Team, and then soliciting input and ideas from managers and supervisors. A draft of the updated five-year strategic plan is then presented to the Board of Directors during a workshop, where Board Members discuss and deliberate changes and additions to the plan. Driven by our Mission, Vision and Core Values, the 2017 Strategic Plan update maintains the District’s aggressive efforts to meet the sanitation, health, and safety needs of the 2.6 million people being served in a cost effective manner, while protecting the environment where we live. Since implementation of the first comprehensive strategic plan in 2007, 40 strategic goals have been established and completed. In December 2017, the District updated the Five-Year Strategic Plan and, as part of the strategic planning process, reaffirmed the following goals:  Completion of the Odor Control Master Plan;  Development of Future Biosolids Management Options;  Research new energy efficiency and conversion technologies;  Complete the transfer of 174 miles of local sewers to a local agency;  Determine partnerships, needs, strategies, benefits and costs associated with recycling of Plant No. 2 effluent water; and  Workforce planning and development to ensure that the right people with the right skills and abilities, are in the right place, at the right time. This Strategic Plan continues to chart a focused roadmap of success for the future of the Orange County Sanitation District. It addresses critical operations and construction issues, financial and budgeting challenges, and gives a clear and concise direction to staff, ratepayers, regulatory agencies, and the general public. Every two years the Board of Directors revisits the Strategic Plan to assure that it captures the will of the Board of Directors and sets a proper planning basis for the two-year budgeting effort. The Board of Directors is scheduled to consider and adopt a finalized strategic plan in November 2019 to support the start of a new two-year budget in January 2020. v SERVICE EFFORTS AND ACCOMPLISHMENTS The following service efforts and accomplishments were achieved by OCSD during the year ended June 30, 2019:  Utility of the Future Award – 2019 Water Environmental Research Foundation, National Association of Clean Water Agencies, Water Environment Federation and Environmental Protection Agency  Platinum Peak Performance Award – 2019 National Association of Clean Water Agencies  2018 Excellence Award in Information Technology Practices from the Municipal Information Systems Association of California (MISAC)  Honor Award – 2019 Facilities Master Plan, American Academy of Environmental Engineers & Scientist  Superior Achievement Award – 2019 Collections System Odor Control, American Academy of Environmental Engineers & Scientist  Silver Award – 2019 GWRS Bottled Water Campaign, Mercury Excellence Awards  Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA)  District Transparency Certificate of Excellence from the Special District Leadership Foundation  Distinguished Budget Presentation Award from GFOA  American Graphic Design Award – Innovative, Resourceful, Reliable Annual Report, Graphic Design USA  Project Achievement Award – 2019 Interplant Effluent Pipeline Rehabilitation, Orange County Engineering Council  Engineering Merit Award – 2019 Orange County Engineering Council  OC Wastewater Treatment Project of the Year – 2019 Newhope-Placentia Trunk Sewer Project (State College Sewer Construction, American Society of Civil Engineers)  Award of Excellence – 2018 GWRS Bottled Water Campaign, Orange County Chapter of Public Relations Society of America  Achievement of Excellence in Procurement Award from the National Procurement Institute.  SARBS/CWEA 2019 o Quarter Century Award, Tony Lee o Community Engagement and Outreach Project of the Year, Plant No. 2 Neighborhood Outreach Program (Project leads: Tanya Chong and Daisy Covarrubias) o Supervisor of the Year 1st Place, Ted Gerber o Supervisor of the Year 2nd Place, Kevin Schuler o Mechanical Technician Person of the Year, Gilbert Barela o Operator of the Year, April Frost o SARBS Spotlight Award, Dindo Carrillo vi ACCOUNTING AND BUDGETARY CONTROLS OCSD’s accounting records are maintained on the accrual basis. In developing and evaluating OCSD’s accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. We believe that OCSD’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Each year OCSD’s Board of Directors adopts an annual operating plan. A joint works budget is first prepared that identifies the specific capital projects and operating activities to be undertaken by OCSD during the year. The budgetary level of control, the level at which expenses cannot exceed budget, is exercised at the individual district, or fund level. OCSD has adopted a Uniform Purchasing Policy that identifies the agreed upon purchasing standards. ACCUMULATED FUNDS AND RESERVES POLICY The Board of Directors of the Orange County Sanitation District has established the following Accumulated Funds and Reserves Policy: Cash Flow Reserve: is established to fund operations, maintenance and certificates of participation expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and the sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve will be established as the sum of an amount equal to six months operations and maintenance expenses and the total of the annual debt (COP) service payments due in August each year. Operating Contingency Reserve: is established to provide for non-recurring expenditures that were not anticipated when the annual budget and sewer service fees were considered and adopted. The level of this reserve will be established at an amount equal to ten percent of the annual operating budget. Capital Improvement Reserve: is established to fund annual increments of the capital improvement program. The long-term target is for one half of the capital improvement program to be funded from borrowing and for one half to be funded from current revenues and reserves. With this program in mind, the target level of this reserve has been established at one half of the average annual capital improvement program over the next ten years. Levels higher and lower than the target can be expected as a result of outlay variability in the annual capital improvement programs. Catastrophic Loss or Self-Insurance Reserves: are established for property damage including fire, flood and earthquake; for general liability; and for workers' compensation. These reserves are intended to supplement purchased insurance policies, FEMA disaster reimbursements and State disaster reimbursements. The potential infrastructure loss from a major earthquake has been estimated at $495 million. The level of this reserve has been set to fund the District's non-reimbursed costs, estimated to be $57 million. Capital Replacement/Renewal Reserve Policy: is established to provide thirty percent of the funding to replace or refurbish the current collection and treatment and disposal facilities at the end of their useful economic lives. The current replacement value of these facilities is estimated to be $10.8 billion. The initial criterion level was established at $50 million, which will be augmented by interest earnings and a small portion of the annual sewer user fees in order to meet projected needs over the next 20 years. Debt Service Reserves: Provisions of the various Certificate of Participation (COP) issues require debt service reserves to be under the control of the Trustee for that issue. These reserve funds are not available viii ix ORANGE COUNTY SANITATION DISTRICT Board of Directors As of June 30, 2019 Agency _ Active Director _ Alternate Director _      Cities:    Anaheim Lucille Kring Denise Barnes Brea Glenn Parker Steven Vargas Buena Park Fred Smith Sunny Park Cypress Mariellen Yarc Stacy Berry Fountain Valley Steve Nagel Patrick Harper Fullerton Jesus Silva Jan Flory Garden Grove Steve Jones John O'Neill Huntington Beach Erik Peterson Mike Posey Irvine Christina Shea Anthony Kuo La Habra Tim Shaw Tom Beamish La Palma Peter Kim Marshall Goodman Los Alamitos Richard Murphy Dean Grose Newport Beach Brad Avery Joy Brenner Orange Mark Murphy Kim Nichols Placentia Chad Wanke Ward Smith Santa Ana Cecilia Iglesias David Penaloza Seal Beach Sandra Massa-Lavitt Schelly Sustarsic Stanton David Shawver Carol Warren Tustin Allan Bernstein Chuck Puckett Villa Park Robert Collacott Chad Zimmerman Sanitary Water Districts: Costa Mesa Sanitary District James M. Ferryman Robert Ooten Midway City Sanitary District Andrew Nguyen Al Krippner Irvine Ranch Water District John Withers Douglas Reinhart Yorba Linda Water District Phil Hawkins Brooke Jones County Areas: Member of the Board of Supervisors Doug Chaffee Michelle Steel x ORANGE COUNTY SANITATION DISTRICT Organizational Chart As of June 30, 2019 xi ORANGE COUNTY SANITATION DISTRICT Map of Service Area As of June 30, 2019 xii (THIS PAGE LEFT INTENTIONALLY BLANK) www.mgocpa.com Macias Gini & O’Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 1 Independent Auditor’s Report To the Board of Directors Orange County Sanitation District Fountain Valley, California We have audited the accompanying financial statements of the Orange County Sanitation District (OCSD) as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise OCSD’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to OCSD’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of OCSD’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Orange County Sanitation District, as of June 30, 2019, and the changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedule of Proportionate Share of the Net Pension Liability (Asset) – OCERS Pension Plan, Schedule of District Contributions – OCERS Pension Plan, Schedule of Total Pension Liability – Additional Retiree Benefit Account, Schedule of Changes in Total Pension Liability – Additional Retiree Benefit Account, Schedule of Total OPEB Liability – Post-Employment Medical Benefits Plan, and Schedule of Changes in Total OPEB Liability – Post-Employment Medical Benefits Plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise OCSD’s basic financial statements. The separate “Combining Area” financial statements, introductory section, statistical section, and other data and trends are presented for purposes of additional analysis and are not a required part of the basic financial statements. The “Combining Area” financial statements are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the “Combining Area” financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections and other data and trends have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Newport Beach, California October 25, 2019 3 Management Discussion and Analysis June 30, 2019 This section of the financial statements of the Orange County Sanitation District (OCSD) is management’s narrative overview and analysis of the financial activities of OCSD for the fiscal year ended June 30, 2019. The information presented here is to be considered in conjunction with additional information provided within the letter of transmittal located in the Introductory Section of this report. Financial Highlights  As of June 30, 2019, OCSD’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $2,360.5 million (net position). Of this amount, $712.8 million represents unrestricted net position, which may be used to meet OCSD’s ongoing obligations to citizens and creditors.  Total net position increased $165.7 million, or 7.6 percent over the prior year.  Net capital assets, consisting of non-depreciable capital assets and depreciable capital assets net of accumulated depreciation, increased $43.3 million, or 1.6 percent over the prior year.  Net investment in capital assets increased $79.6 million, or 5.1 percent over the prior year.  Unrestricted net position increased $86.1 million, or 13.7 percent over the prior year.  Total outstanding bonded debt decreased by $39.3 million from the prior year to $972.8 million. Overview of the Basic Financial Statements OCSD operates as a utility enterprise and presents its financial statements using the economic resources measurement focus and the full accrual basis of accounting. As an enterprise fund, OCSD’s basic financial statements are comprised of two components: financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. In accordance with the GASB Codification of Governmental Accounting and Financial Reporting Standards, OCSD’s financial statements include a Statement of Net Position; Statement of Revenues, Expenses, and Changes in Net Position; and a Statement of Cash Flows. The Statement of Net Position includes OCSD’s assets, deferred outflow of resources, liabilities, and deferred inflows of resources; and provides information about the nature and amounts of investments in resources (assets) and the obligations to OCSD’s creditors (liabilities). It also provides the basis for computing the rate of return, evaluating the capital structure of OCSD, and assessing the liquidity and financial flexibility of OCSD. The Statement of Revenues, Expenses, and Changes in Net Position accounts for the current year’s revenues and expenses. This statement measures the success of OCSD’s operations over the past year and can be used to determine OCSD’s creditworthiness. It also highlights OCSD’s dependency on property tax revenues in supplementing user fees and other charges for recovering total cost. The final required financial statement, the Statement of Cash Flows, reports cash receipts, cash payments, and net changes in cash resulting from operations, investments, and financial activities of the reporting period. 4 Net Position As previously noted, net position increased $165.7 million, or 7.6 percent over the net position for FY 2017- 18, to $2,360.5 million in FY 2018-19. (Dollars in thousands) Assets Current and other assets 789,769$ 750,084$ 39,685$ 5.3% Net capital assets 2,669,309 2,626,015 43,294 1.6% Total assets 3,459,078 3,376,099 82,979 2.5% Deferred outflows of resources 122,683 83,940 38,743 46.2% Total assets and deferred outflows of resources 3,581,761 3,460,039 121,722 3.5% Liabilities Current liabilities 109,982 117,665 (7,683) -6.5% Noncurrent liabilities 1,065,679 1,083,311 (17,632) -1.6% Total liabilities 1,175,661 1,200,976 (25,315) -2.1% Deferred inflows of resources 45,598 64,274 (18,676) -29.1% Total liabilities and deferred inflows of resources 1,221,259 1,265,250 (43,991) -3.5% Net position Net investment in capital assets 1,647,723 1,568,118 79,605 5.1% Unrestricted 712,779 626,671 86,108 13.7% Total net position 2,360,502$ 2,194,789$ 165,713$ 7.6% Increase (Decrease) Percentage Increase (Decrease) June 30, 2018 June 30, 2019 5 Current and other assets increased $39.7 million, or 5.3 percent, due primarily to net cash provided by operations of $141.1 million, proceeds from debt issuance of $110.3 million, proceeds from property taxes of $99.2 million, receipt of capital facilities capacity charges of $23.2 million, interest received of $13.7 million, and contributions from other governments of $3.9 million, offset by bonded debt retirements of $141.5 million, capital outlays of $119.4 million, interest paid of $42.9 million, local sewer service transfer of $23.2 million, and net investment activities and other items of $24.7 million. Net Capital assets increased $43.3 million, or 1.6 percent, due mostly to the ongoing capital improvement program construction in progress additions of $134.4 million, land additions of $18.4 million, and capital equipment of $4.0 million, offset by depreciation of $102.2 million, land sales of $6.2 million, and $3.7 million of prior capital project expenses that were written off as expense. Included in total capital outlay additions is the Sludge Dewatering and Odor Control Project at Plant No. 1 and Plant No. 2 with total project budgets of $199.5 million and $90.5 million, respectively. These projects construct primary sludge thickening facilities to improve solids handling capacity, replace aging sludge dewatering facilities, reduce biosolids handling and disposal, and rehabilitate obsolete solids handling odor control equipment. In FY 2018-19, OCSD incurred project costs of $16.5 million at Plant No. 1 and $11.9 million at Plant No. 2 bringing the total cost-to-date to $191.3 million and $80.7 million, respectively. Collection system projects include the Newhope-Placentia Trunk Replacement. The Newhope-Placentia Trunk Replacement incurred outlays of $27.2 million in FY 2018-19 with a total project budget of $112.0 million through the projected completion in FY 2021-22. This project will increase the size of approximately 35,000 feet of the trunk line from Yorba Linda Boulevard to Orangewood Avenue. The upsized sewer will accommodate flows from the newly abandoned Yorba Linda Pump Station and the newly interconnected Atwood Sub-trunk. See page 8 for the Schedule of Capital Assets and listing of other major capital additions for FY 2018-19. Deferred Outflows of Resources increased $38.7 million, or 46.2 percent from the prior year, primarily due to $42.7 million increase in pension deferred outflows attributable to the change in projected and actual earnings on pension plan investments and changes of actuarial assumptions and other inputs, offset by a decrease of $4.0 million for the difference between carrying amount of the retired debt and the acquisition price of COP Series. Deferred Inflows of Resources decreased $18.7 million, or 29.1 percent under the prior year, primarily due to the increase in pension expense as a result of the change in projected and actual earnings on pension plan investments and changes of assumptions or other inputs. Net Investment in capital assets increased $79.6 million, or 5.1 percent over the prior year, primarily as a result of the net increase in capital assets of $43.3 million coupled with a $36.3 million decrease in related debt. Unrestricted net position increased $86.1 million, or 13.7 percent, due to the overall increase in net position of $165.7 million, offset by the increase in net investment in capital assets of $79.6 million. 6 Changes in Net Position Net position increased $4.6 million in FY 2018-19, or 2.8 percent over the prior year’s increase in net position. (Dollars in thousands) Revenues: Operating revenues Service charges 317,291$ 316,329$ 962$ 0.3% Permit and inspection fees 1,199 1,170 29 2.5% Total operating revenues 318,490 317,499 991 0.3% Non-operating revenues Property taxes 99,534 94,188 5,346 5.7% Investment and interest income 29,102 3,230 25,872 801.0% Contrib. from other governments 27,800 6,802 20,998 308.7% Other 2,162 809 1,353 167.2% Total non-operating revenues 158,598 105,029 53,569 51.0% Total revenues 477,088 422,528 54,560 12.9% Expenses: Operating expense other than depreciation and amortization 166,586 145,556 21,030 14.4% Depreciation and amortization 102,239 97,399 4,840 5.0% Non-operating expense 63,582 36,494 27,088 74.2% Total expenses 332,407 279,449 52,958 19.0% Income before capital contributions 144,681 143,079 1,602 1.1% Capital facilities capacity charges 21,032 18,077 2,955 16.3% Increase in net position 165,713 161,156 4,557 2.8% Beginning net position 2,194,789 2,033,633 161,156 7.9% Ending net position 2,360,502$ 2,194,789$ 165,713$ 7.6% June 30, 2019 June 30, 2018 Increase (Decrease) Percentage Increase (Decrease) As previously stated, an enterprise fund is used to account for the operations of OCSD, which is financed and operated in a manner similar to private business enterprises. This allows OCSD to determine that the costs (expenses, including depreciation and amortization) of providing wastewater management services on a continuing basis are financed or recovered primarily through user charges. Sewer service user fees are evaluated annually based primarily on budget requirements for total operation and maintenance expenses and capital outlays for providing wastewater management services. Property tax revenues are dedicated for the payment of debt service. 7 In FY 2018-19, operating revenues increased $1.0 million, or 0.3 percent from the prior year, primarily due to a 1.2 percent increase in the average sewer user fee rate, offset by a slight increase in user fee rebates issued over the prior year. The $53.6 million, or 51.0 percent increase in non-operating revenues primarily consists of a $25.9 million or 801.0 percent increase in investment and interest income, a $21.0 million or 308.7 percent increase in contributions from other governments, a $5.3 million or 5.7 percent increase in property taxes, and a $1.4 million or 167.2 percent increase in other revenues. The increase in investment and interest income is a result of higher account balances and yields earned on securities held in the investment portfolios. The increase in contributions from other governments is reflective of the increase in the integration adjustment of Revenue Area 14’s equity share in OCSD’s Joint Works Treatment Facilities based on the flows discharged to OCSD. The increase in property taxes revenue is primarily the result of the increase in total assessed valuation of 6.4 percent over the prior year. The increase in other revenues is mainly attributable to a $1.2 million increase in rents and leases from properties purchased for the new headquarters building. Operating expense before depreciation and amortization increased $21.0 million, or 14.4 percent from the prior year. The majority of this increase is attributable to the $18.1 million or 26.8 percent increase in salaries and benefits and the $2.7 million or 38.0 percent increase in other expenses. When including the salaries and benefits capitalized within the capital improvement program, total operating salaries and benefits costs were $102.9 million, a $18.9 million or 22.5 percent increase from the prior year total of $84.0 million. This increase is reflective of the $14.3 million or 358.3 percent increase in retirement expenses as a result of the change in projected and actual earnings on pension plan investments and changes of assumptions, and a $3.9 million or 5.7 percent increase in salaries and wages. The increase in other expenses is primarily attributable to a $2.0 million increase in reserves for claims and judgments. Non-operating expense increased $27.1 million, or 74.2 percent, and is primarily reflective of the $23.2 million transfer of local sewer service fee assets and replacement funds to the City of Santa Ana and a $5.5 million or 2706.2 percent increase in loss on disposal of capital assets. Somewhat offsetting this increase is the decrease in interest expense of $0.5 million or 1.6 percent decrease from the prior year total of $35.0 million. Capital Facility Capacity Charges increased $3.0 million, or 16.3 percent from the prior year, due to an increase in rates and connection fees collected from cities as well as more supplemental capital facilities capacity charges assessed to industrial dischargers than last year. 3% 73% 4% 21% Sources of Revenue June 30, 2019 Interest User Fees Other Taxes Levied 10% 40%31% 13% 6% Functional Expenses June 30, 2019 Collections Treatment & Disposal Depreciation & Amortization Interest Expense 8 Capital Assets At June 30, 2019, OCSD had a net investment of $2.7 billion in capital assets. This represents a net increase (including additions and deletions) of $43.3 million, or 1.6 percent over the prior year. (Dollars in thousands) Land 41,967$ 29,741$ 12,226$ 41.1% Construction in progress 521,832 427,996 93,836 21.9% Sewage collection facilities 508,164 494,171 13,993 2.8% Sewage treatment facilities 1,485,491 1,557,473 (71,982) -4.6% Effluent disposal facilities 31,696 33,178 (1,482) -4.5% Solids disposal facilities 278 288 (10) -3.5% General and administrative facilities 79,881 83,168 (3,287) -4.0% Capital assets, net 2,669,309$ 2,626,015$ 43,294$ 1.6% Schedule of Capital Assets (Net of Depreciation and Amortization) June 30, 2019 June 30, 2018 Increase (Decrease) Percentage Increase (Decrease) Major capital asset additions for the current fiscal year included the following:  $27.2 million Newhope-Placentia Trunk Replacement  $22.3 million Headquarters Complex at Plant No. 1 (includes land addition of $18.4 million)  $16.5 million Sludge Dewatering and Odor control at Plant 1  $13.4 million Ocean Outfall System Rehabilitation  $13.3 million Consolidated Demolition & Utility Improvements at Plant No. 2  $11.9 million Sludge Dewatering and Odor Control at Plant 2  $ 7.0 million Headworks Rehabilitation at Plant No. 1  $ 6.8 million Primary Clarifiers Replacement at Plant No. 2  $ 3.3 million Digester Gas Facilities Rehabilitation More detailed information about OCSD’s capital assets is provided in Notes 1 and 3 of Notes to Basic Financial Statements. 9 Debt Administration At June 30, 2019, OCSD had $972.8 million outstanding in bonded debt, a net decrease of $39.3 million, or 3.9 percent from the prior year. This reduction consisted of the accumulation of principal payments made in accordance with the schedule of debt service payments. During OCSD’s most recent debt refunding, Moody’s, Standard and Poor’s, and Fitch Ratings all reaffirmed their AAA rating of the Orange County Sanitation District. OCSD’s long-range financing plan is designed to maintain this high rating. Over the next five years, OCSD is projecting over $1.3 billion in future treatment plant and collection system capital improvements. In accordance with OCSD’s long-term debt fiscal policy, OCSD will restrict long-term borrowing to capital improvements that cannot be financed from current revenue. No new debt issuances are being proposed over the next five years to assist with the funding of the system improvements scheduled over this time period. During FY 2018-19, the Board of Directors of OCSD authorized and adopted Resolution No. OCSD 18-17 to issue the 2018A Certificate Anticipation Notes (CANs) of up to $109,875,000 in November 2018 which allowed OCSD to repay the 2016B CANs, which were due and payable on December 15, 2018, and avoid using $110 million of reserves for such purpose. For more information on long-term debt activities, see Note 4 of the Notes to Basic Financial Statements. Economic Factors and Next Year’s Budgets and Rates  The unemployment rate within the County of Orange is at 3.0 percent in June 2019, a slight decrease from the rate of 3.3 percent a year ago.  Inflation for the Los Angeles-Riverside-Orange County area increased 3.2 percent in 2018 over the prior year based on the actual percentage change in the consumer price index according to the U. S. Department of Labor, Bureau of Labor Statistics.  The yield on investments decreased from the 2.4 percent earnings rate in FY 2017-18 to 2.0 percent for FY 2018-19. All of these factors are considered in preparing OCSD’s biennium budget. As part of OCSD’s recently approved five-year rate schedule, user fees were increased by 1.2 percent for FY 2019-20 over the prior year. The Single Family Residential (SFR) fee, which is the underlying for all other user rates, is applicable to OCSD’s largest customer base: the SFR fee, increased by $4.00, from $335.00 to $339.00. This rate increase is necessary to finance OCSD’s cash flow needs including $168.2 million in operating costs, $76.8 million in debt service costs and $176.3 million in capital improvement outlays in 2019-20. Capital Improvement costs are projected to total $2.5 billion over the next 10 years in order to rehabilitate and upgrade existing facilities and maintain full secondary treatment standards. Requests for Information The financial report is designed to provide a general overview of OCSD’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Financial Management Division, Orange County Sanitation District, 10844 Ellis Avenue, Fountain Valley, CA 92708-7018. 10 (THIS PAGE LEFT INTENTIONALLY BLANK) ORANGE COUNTY SANITATION DISTRICT BASIC FINANCIAL STATEMENTS 11 ORANGE COUNTY SANITATION DISTRICT Statement of Net Position June 30, 2019 Current assets: Cash and cash equivalents 75,930,213$ Investments 684,538,124 Accounts receivable, net of allowance for uncollectibles $349,973 13,701,223 Accrued interest receivable 3,801,257 Connection fees receivable 1,735,064 Property tax receivable 1,586,671 Inventories 6,005,074 Due from other governmental agency 465,886 Prepaid expenses 1,966,446 Total current assets 789,729,958 Noncurrent assets: Restricted: Cash and cash equivalents held by fiscal agents 28,766 Unrestricted: Non-depreciable capital assets 563,798,989 Depreciable capital assets, net of accumulated depreciation 2,105,509,917 Other noncurrent assets, net 10,344 Total noncurrent assets 2,669,348,016 Total assets 3,459,077,974 Deferred outflows of resources: Deferred losses on defeasances 28,888,051 Deferred outflows related to pensions 93,794,964 Total deferred outflows of resources 122,683,015 Total assets and deferred outflows of resources 3,581,760,989 Current liabilities: Accounts payable 16,909,092 Accrued expenses 16,630,416 Retentions payable 3,845,922 Interest payable 18,270,200 Current portion of long-term obligations 54,326,759 Total current liabilities 109,982,389 Noncurrent liabilities: Noncurrent portion of long-term obligations 1,011,058,609 Total OPEB liability 4,013,291 Net pension liability - OCERS 29,029,147 Total pension liability - ARBA 21,577,464 Total noncurrent liabilities 1,065,678,511 Total liabilities 1,175,660,900 Deferred inflows of resources: Deferred inflows related to pensions 45,597,614 Total liabilities and deferred inflows of resources 1,221,258,514 Net position: Net investment in capital assets 1,647,723,350 Unrestricted 712,779,125 Total net position 2,360,502,475$ See Accompanying Notes to Basic Financial Statements. 12 ORANGE COUNTY SANITATION DISTRICT Statement of Revenues, Expenses, and Changes in Net Position For the Year Ended June 30, 2019 Operating revenues: Service charges 317,291,238$ Permit and inspection fees 1,199,294 Total operating revenues 318,490,532 Operating expenses other than depreciation and amortization: Salaries and benefits 85,506,144 Utilities 7,733,225 Supplies, repairs and maintenance 31,769,669 Contractual services 26,082,243 Feasibility studies 5,850,461 Other 9,644,588 Total operating expenses other than depreciation and amortization 166,586,330 Operating income before depreciation and amortization 151,904,202 Depreciation and amortization 102,238,914 Operating income 49,665,288 Non-operating revenues: Property taxes 99,534,027 Investment and interest income 29,101,612 Contributions from other governments 27,800,051 Other 2,162,262 Total non-operating revenues 158,597,952 Non-operating expenses: Interest 34,465,835 Local sewer service transfer 23,229,000 Other 392,996 Loss on disposal of assets 5,493,970 Total non-operating expenses 63,581,801 Income before capital contributions 144,681,439 Capital contributions: Capital facilities capacity charges 21,031,628 Change in net position 165,713,067 Total net position - beginning 2,194,789,408 Total net position - ending 2,360,502,475$ See Accompanying Notes to Basic Financial Statements. 13 ORANGE COUNTY SANITATION DISTRICT Statement of Cash Flows For the Year Ended June 30, 2019 Cash flows from operating activities: Receipts from customers and users 298,744,099$ Payments to employees (78,098,096) Payments to suppliers (79,534,001) Net cash provided by operating activities 141,112,002 Cash flows from noncapital financing activities: Proceeds from property taxes 99,174,491 Payments for sewer service transfer and other obligations (21,481,271) Net cash provided by noncapital financing activities 77,693,220 Cash flows from capital and related financing activities: Capital facilities capacity charges 23,167,640 Additions to capital assets (119,440,593) Interest paid (42,922,157) Principal payments on debt obligations (31,655,000) Proceeds released to escrow account on defeased debt (109,875,000) Proceeds from debt issuance 110,302,416 Debt issuance costs (402,429) Contribution from other governments 3,904,107 Net cash used in capital and related financing activities (166,921,016) Cash flows from investing activities: Proceeds from the sale of investments 300,864,608 Purchases of investments (431,416,584) Interest received 13,694,416 Net cash used in investing activities (116,857,560) Net decrease in cash and cash equivalents (64,973,354) Cash and cash equivalents, beginning of year 140,932,333 Cash and cash equivalents, end of year 75,958,979$ Reconciliation of operating income to net cash provided by operating activities: Operating income 49,665,288$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 102,238,914 Bad debt expense (net recoveries) (106,006) (Increase)/decrease in operating assets: Accounts receivable (392,277) Inventories 595,820 Due from other governmental agency (19,354,156) Prepaid and other assets (321,034) Increase/(decrease) in operating liabilities: Accounts payable (1,441,374) Accrued expenses 882,405 Net pension/OPEB liabilities 6,923,368 Compensated absences (3,185) Claims and judgments 2,424,239 Net cash provided by operating activities 141,112,002$ Noncash activities: Unrealized gain on the fair value of investments 14,464,176$ Capital assets acquired through accounts payable 5,353,308 Capital facilities capacity charges acquired (2,136,012) See Accompanying Notes to Basic Financial Statements. 14 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 15 (1) Summary of Significant Accounting Policies Reporting Entity The Orange County Sanitation District (OCSD) is a public agency which owns and operates certain wastewater facilities in order to provide regional wastewater collection, treatment, and disposal services to approximately 2.6 million people in the northern and central portion of the County of Orange, California. OCSD is overseen by a Board comprised of directors appointed by the agencies and cities which are serviced by OCSD. OCSD’s service area was originally formed in 1954 pursuant to the County Sanitation District Act and consisted of seven independent special districts. Two additional districts were formed and additional service areas were added in 1985 and 1986. These special districts were jointly responsible for the treatment and disposal facilities which they each used. In April of 1998, the Board of Supervisors of Orange County passed Resolution 98-140 approving the consolidation of the existing nine special districts into a new, single sanitation district. This action was taken in order to simplify the governance structures, reduce the size of OCSD’s Board of Directors, ease administrative processes, streamline decision-making and consolidate accounting and auditing processes. Pursuant to the Resolution and Government Code Section 57500, the predecessor special districts transferred and assigned all of their powers, rights, duties, obligations, functions and properties to OCSD, including all assets, liabilities, and equity. Effective July 1, 1998, the organization became known as the Orange County Sanitation District. The boundaries of one of the previous districts, now known as Revenue Area No. 14, have been maintained separately because their use of OCSD’s collection, treatment, and disposal system is funded by the Irvine Ranch Water District (IRWD). The boundaries of the other eight districts have been consolidated and are collectively referred to as the Consolidated Revenue Area. OCSD utilizes joint operating and capital outlay accounts to pay joint treatment, disposal, and construction costs. These joint costs are allocated to each revenue area based on gallons of sewage flow. The supplemental schedules and statements show internal segregations and are not intended to represent separate funds for presentation as major or non-major funds in the basic financial statements. The accompanying financial statements present OCSD and its blended component unit, the Orange County Sanitation District Financing Corporation (Corporation). The Corporation is a legally separate entity although in substance it is considered to be part of OCSD’s operations. OCSD is considered to be financially accountable for the Corporation which is governed by a board comprised entirely of OCSD’s board members. There is no requirement for separate financial statements of the Corporation; consequently, separate financial statements for the Corporation are not prepared. The Corporation had no financial activity during the fiscal year ended June 30, 2019, other than principal and interest payments on outstanding certificates of participation/ revenue obligations and notes (see Note 4). OCSD is independent of and overlaps other formal political jurisdictions. There are many governmental entities, including the County of Orange, that operate within OCSD’s jurisdiction; however, financial information for these entities is not included in the accompanying financial statements in accordance with the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 16 Measurement Focus and Basis of Accounting OCSD operates as an enterprise activity. Enterprise funds account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the Board of Directors is that the costs (expenses, including depreciation and amortization) of providing services to the general public on a continuing basis be financed or recovered primarily through user charges. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Enterprise funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of related cash flows. The accounting policies of OCSD conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governments. The GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles in the United States. Operating Plans Each year, OCSD staff prepares an annual operating plan which is adopted by the Board of Directors. The annual operating plan is used to serve as a basis for monitoring financial progress, estimating the levy and collection of taxes, and determining future service charge rates. During the year, these plans may be amended as circumstances or levels of operation dictate. Cash and Cash Equivalents Investments with original maturities of three months or less when purchased and money market mutual funds and external investment pools that can be withdrawn on demand are considered to be cash equivalents. Investments Except for certain investments in monies held by fiscal agents as disclosed in Note 2, section “Fair Value of Investments”, all other investments are stated at fair value (the price that would be received to sell an asset in an orderly transaction between market participants acting in their economic best interest at the measurement date). Changes in fair value that occur during the fiscal year are reported as part of investment and interest income. Investment and interest income includes interest earnings and realized and unrealized gains or losses in fair value. Investment and interest income are recorded as revenues and receivables when declared and realized gains or losses are recorded when the investment is sold. Accounts Receivable Accounts receivable is reported net of the allowance for uncollectible receivables. Uncollectible receivables were $349,973 at June 30, 2019. Unbilled sewer services through June 30, 2019 are recorded as revenue and receivables. Management determines the allowance for uncollectible receivables by evaluating individual accounts receivable at least one year past due and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivables are written off when deemed uncollectible. Recoveries of accounts receivables previously written off are recorded when received. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 17 Inventories Inventories, which are held for consumption and not resale, are stated at cost on a weighted- average basis and are expensed when used. Capital Assets Outlays for property, plant, equipment, and construction in progress are recorded in the revenue area which will use the asset. Such outlays may be for individual revenue area assets or for a revenue area’s share of joint assets. Capital assets of property, plant, and equipment are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life of at least three years. Such assets are recorded at cost, except for donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement, which are recorded at acquisition value at the time received. Cost includes labor; materials; outside services; vehicle and equipment usage; other ancillary costs consisting of direct charges such as engineering, purchasing, supervision, or fringe benefits. Interest costs, net of interest earnings, have been capitalized on projects prior to fiscal year 2017-2018. Commencing with fiscal year 2017-2018, OCSD early implemented GASB Statement No. 89, where interest costs incurred before the end of the construction period are no longer capitalized. Depreciation of plant and equipment is provided for over the estimated useful lives of the assets using the straight-line method in accordance with generally accepted accounting principles. OCSD also considers the guidelines of estimated useful lives as recommended in the State of California Controller’s Uniform System of Accounts for Waste Disposal Districts, which range from 3 to 75 years. The following are estimated useful lives for major classes of depreciable assets: Sewage collection facilities – 50 years, Sewage treatment facilities – 40 years, Sewage disposal facilities – 40 years, General plant and administrative structures – 40 years, and other General plant and administrative facilities and equipment – 4 to 25 years. Restricted Assets Certain assets are classified as restricted because their use is limited by applicable debt covenants. Specifically, the assets are restricted for installment payments due on certificates of participation and revenue obligations or are maintained by a trustee as a reserve requirement for the certificates of participation and revenue obligations. When both restricted and unrestricted resources are available for use, it is OCSD’s policy to use restricted resources first, then unrestricted resources as they are needed. Amortization Amortization of the excess purchase price over the book value of assets acquired is provided using the straight-line method over an estimated useful life of 30 years. Premiums and discounts on certificate anticipation notes and wastewater refunding revenue obligations are amortized to interest expense over the respective terms of the installment obligations based on the effective interest method (Note 4). ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 18 Deferred Charges on Defeasances For advance refundings resulting in defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt (i.e. deferred charges) is reported as a deferred outflow of resources and amortized to interest expense based on the effective interest method over the remaining life of the old debt or the life of the new debt, whichever is shorter. OCSD’s deferred charges on the refunding debt at June 30, 2019 are $28,888,051. Net Position Net position represents the total of assets and deferred outflows of resources less liabilities and deferred inflows of resources, and is classified into two categories: Net Investment in Capital Assets – This amount consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets and excludes unspent debt proceeds. Deferred outflows of resources that are attributable to the acquisition, construction or improvement of those assets or related debt also are included in this component of net position. Unrestricted – This amount represents the residual of amounts not classified in the other category and represents the net equity available for OCSD. Compensated Absences OCSD’s employees, other than operations and maintenance personnel, are granted vacation and sick leave in varying amounts with maximum accumulations of 200 hours and 560 hours for vacation and sick days earned but unused, respectively. Operations and maintenance personnel accrue between 80 and 250 personal leave hours per year depending on years of service, which can be accumulated up to a maximum of 440 hours. Vacation and sick leave benefits and personal days are recorded as an expense and liability when earned by eligible employees. The distribution between current and long-term portions of the liability is based on historical trends. Claims and Judgments OCSD records estimated losses when it is probable that a claim liability has been incurred and when the amount of the loss can be reasonably estimated. Claims payable includes an estimate for incurred but unreported claims. The distribution between current and long-term portions of the liability is based on historical trends. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 19 Pensions OCSD has two defined benefit pension plans for retirees: the plan maintained through and by the Orange County Employees’ Retirement System (OCERS) and the Additional Retiree Benefit Account (ARBA) administered directly by OCSD. For purposes of measuring the net pension liability, deferred outflows of resources related to pensions, deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of OCSD’s cost sharing multiple-employer plan with the OCERS plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by OCERS. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. A deferred outflow of resources and deferred inflow of resources related to pensions result from changes in the components of the net pension liability and are applicable to a future reporting period (Note 5). Property Taxes The County is permitted by State law (Proposition 13) to levy taxes at one percent of full market value (at time of purchase) and can increase the assessed value no more than two percent per year. OCSD receives a share of this basic levy, proportionate to what was received in the 1976 to 1978 period. Property taxes are determined annually and attached as enforceable liens on real property as of January 1 and are payable in two installments which become delinquent after December 10 and April 10. The County bills and collects the property taxes and remits them to OCSD in installments during the year. Property tax revenues are recognized when levied. The Board of Directors has designated property tax revenue to be used for the annual debt service requirements prior to being used as funding for current operations. Capital Facilities Capacity Charges Capital facilities capacity charges represent fees imposed at the time a structure is newly connected to OCSD’s system, directly or indirectly, or an existing structure or category of use is increased. This charge is to pay for District facilities in existence at the time the charge is imposed or to pay for new facilities to be constructed that are of benefit to the property being charged. Operating and Non-operating Revenues and Expenses Operating revenues and expenses result from collecting, treating, and disposing of wastewater and inspection and permitting services. OCSD’s operating revenues consist of charges to customers for the services provided. Operating expenses include the cost of providing these services, administrative expenses, and depreciation and amortization expenses. All revenues and expenses not meeting these definitions and which are not capital in nature are reported as non-operating revenues and expenses. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 20 Self-Insurance Plans For the year ended June 30, 2019, OCSD was self-insured for portions of workers’ compensation, property damage, and general liability. The self-insurance portion of the workers’ compensation exposure is the $1,000,000 deductible per occurrence under the outside excess insurance coverage to statutory levels. The self-insurance portion of the property damage exposure covering fire and other perils is the $500,000 per occurrence deductible (for most perils) under the outside excess property insurance coverage to $1 billion. The self-insurance portion of the property damage exposure covering flood is the $250,000 per occurrence deductible with outside excess property insurance coverage to $300 million. The self-insurance portion of the property damage exposure covering earthquake is the 5% per structure, minimum $5,000,000 deductible with outside excess insurance coverage to $25 million on covered structures. OCSD has insured a number of key structures against the peril of earthquake, all other structures are completely self- insured. The self-insurance portion of the boiler & machinery exposure is the deductible ranging from $25,000 to $350,000 under the outside excess boiler & machinery insurance coverage to $100 million per occurrence combined limit. The self-insurance portion of the general liability exposure is the $500,000 per occurrence deductible under the outside excess liability coverage to $40 million per occurrence and aggregate. The self-insurance portion of the pollution liability exposure is the $75,000 per loss deductible under the outside pollution liability insurance coverage to $10 million. There were no significant changes in insurance coverage during the fiscal year ended June 30, 2019. During the past three fiscal years there have been no settlements in excess of covered amounts. Claims against OCSD are processed by General Counsel or an outside claim administrator. These claims are charged to claims expense based on estimated or known amounts which will ultimately be paid. Claims incurred but not yet reported have been considered in determining the accrual for loss contingencies. Workers’ compensation reserves are actuarially determined and general liability estimated loss accruals are estimated using past experience adjusted for current trends and any other factors that would modify past experience. The estimate of the claims liability also includes any amounts for incremental and nonincremental claim adjustment expenses. OCSD management believes that there are no unrecorded claims as of June 30, 2019 that would materially affect the financial position of OCSD. Deferred Compensation Plan OCSD offers its employees a deferred compensation plan established in accordance with Internal Revenue Code Section 457. The plan permits all employees of OCSD to defer a portion of their salary until future years. The amount deferred is not available to employees until termination, retirement, death or for unforeseeable emergency. The assets of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. Since the plan assets are administered by an outside party and are not subject to the claims of OCSD’s general creditors, in accordance with GASB Statement 32, the plan’s assets and liabilities are not included within OCSD’s financial statements. New Accounting Pronouncements OCSD implemented GASB Statement No. 83, Certain Asset Retirement Obligations and GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements for the fiscal year ended June 30, 2019. Implementation of these Standards did not materially impact OCSD’s financial statements. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 21 (2) Cash and Investments Cash and investments as of June 30, 2019 are classified within the accompanying Statement of Net Position as follows: Statement of Net Position: Current, Unrestricted: Cash and cash equivalents 75,930,213$ Investments 684,538,124 Subtotal - current, unrestricted 760,468,337 Restricted: Cash and cash equivalents 28,766 Total cash and cash equivalents and investments 760,497,103$ Cash and investments consist of the following as of June 30, 2019: Cash on hand 3,000$ Deposits with financial institutions 2,343,869 Managed portfolio - cash and investments 758,121,468 Subtotal - unrestricted cash and investments 760,468,337 Monies held by trustees: Cash and cash equivalents 28,766 Grand total cash and investments 760,497,103$ ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 22 Investments Authorized by the California Government Code and OCSD’s Investment Policy The following table identifies the investment types that are authorized by the California Government Code and OCSD’s investment policy. This table and the subsequent tables identify certain provisions of either the California Government Code or OCSD’s investment policy (whichever is more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Authorized Maximum by OCSD's Maximum Investment Investment Type - Authorized by Investment Maximum Percentage in a Single the California Government Code Policy? Maturity (1 ) (3)of Portfolio (1 )Issuer (1 ) Local Agency Bonds Yes 5 years 10% (2) 5% (2) U.S. Treasury Obligations Yes 5 years No limit No limit California State Treasury Obligations Yes 5 years No limit No limit U.S. Agency Securities Yes 5 years No limit 20% (2) Banker's Acceptances Yes 180 days 40% 5% (2) Commercial Paper Yes 270 days 25% 5% (2) Negotiable Certificates of Deposit Yes 5 years 30% 5% (2) Repurchase Agreements Yes 1 year 20% (2) 5% (2) Reverse Repurchase Agreements Yes 90 days (2) 5% (2) 5% (2) Corporate Medium-Term Notes Yes 5 years 30% 5% (2) Mutual Funds Yes N/A 20% 10% Money Market Mutual Funds Yes N/A 20% 20% Mortgage Pass-Through Securities/ CMO/Asset-Backed Securities Yes 5 years 20% 5% (2) County Investment Pools Yes N/A 15% (2) 15% (2) Local Agency Investment Fund (LAIF) Yes N/A 15% (2) 15% (2) Supranational Obligations Yes 5 years 30% 30% Notes (1 ) Restrictions are in accordance with the California Government Code unless indicated otherwise. (2) The restriction is in accordance with OCSD's Investment Policy which is more restrictive than the California Government Code. (3) As allowed by California Government Code Section 53601, the Board of Directors has adopted a policy of a maximum maturity of 5 years for investments purchased by OCSD's external money manager for the long-term investment portfolio. The duration of the long-term investment portfolio can never exceed 60 months. Investments purchased for the short-term portfolio are subject to the maturity restrictions noted in this table. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 23 Investments Authorized by Debt Agreements The investment of debt proceeds held by trustees is governed by provisions of the debt covenant agreements, rather than the general provisions of the California Government Code or OCSD’s investment policy. The following table identifies the investment types that are authorized for investments held by OCSD’s debt trustees. This table and the subsequent tables identify certain provisions of the debt covenant agreements that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Investment Type - Authorized by the Maximum Percentage Investment in a Debt Covenant Agreement Maturity of Portfolio Single Issuer State and Local Agency Bonds 5 years No limit No limit U.S. Treasury Obligations 5 years No limit No limit U.S. Agency Securities 5 years No limit No limit Banker's Acceptances 180 days 40% 30% Commercial Paper 270 days 40% 10% Negotiable Certificates of Deposit 5 years 30% 30% Repurchase Agreements 1 year No limit No limit Corporate Medium-Term Notes 5 years 30% 30% Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 20% Local Agency Investment Fund (LAIF) N/A No limit No limit Guaranteed Investment Contracts N/A No limit No limit Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer an investment has before maturity, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that OCSD manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary to provide the cash flow and liquidity needed for operations. OCSD monitors the interest rate risk inherent in its managed portfolio by measuring the modified duration of its portfolio. The duration of monies held for shorter term purposes is recommended by OCSD’s Treasurer and is based on OCSD’s cash flow requirements in meeting current operating and capital needs. The average duration of monies invested for shorter term purposes may never exceed 180 days. The duration of monies held for longer term purposes is recommended annually by OCSD’s Treasurer and is based on OCSD’s five-year cash flow forecast. The average duration may not exceed 120 percent nor be less than 80 percent of the recommended duration. The average duration of monies invested for longer term purposes may never exceed 60 months. There is no stated maximum maturity for the Money Market Mutual Funds. The money market mutual funds for BlackRock Institutional Fund and First American Government Obligations Fund are daily liquid funds available on demand. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 24 Following is a table which summarizes OCSD’s managed portfolio investments by purpose with the modified duration as of June 30, 2019. Modified Modified Duration Duration Investment Type Fair Value (in years)(in months) Short-Term Portfolio: U.S. Treasury Notes 120,821,505$ 0.233 2.80 Local Agency Investment Fund 35,218,920 0.474 5.69 Corporate Medium-Term Notes 14,071,967 0.362 4.34 U.S. Agency Securities 8,326,426 0.129 1.55 Certificates of Deposit 7,304,306 0.321 3.85 Commercial Paper 7,246,498 0.265 3.18 Money Market Mutual Funds 5,955,570 - - U.S. Treasury Bills 3,629,890 0.563 6.76 Short-term portfolio subtotal 202,575,082$ 0.283 3.40 Long-Term Portfolio: U.S. Treasury Notes 161,747,910$ 2.753 33.04 Corporate Medium-Term Notes 140,474,618 2.664 31.96 U.S. Agency Securities* 132,290,121 2.632 31.58 Asset Backed Securities/CMO* 46,051,290 0.984 11.81 Supranationals 33,041,747 2.202 26.42 Money Market Mutual Funds 15,203,202 - - U.S. Treasury Inflation-Protected Securities (TIPS)** 11,171,448 5.020 60.24 Commercial Paper 11,089,623 0.135 1.62 Taxable Municipal Bonds 4,330,845 0.841 10.09 U.S. Govt. Backed Mortgage Pools (GNMA)* 145,582 3.362 40.34 Long-term portfolio subtotal 555,546,386$ 2.425 29.10 Total Portfolio 758,121,468$ * Includes highly sensitive securities. ** The investment's duration in excess of five years was permitted by OCSD's Investment Policy at the time it was purchased. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 25 OCSD monitors the interest rate risk inherent in its other investments using specific identification of the investments. Following is a table of these investments all held by trustees, as of June 30, 2019. Fair Value Maturities Cash equivalents held by fiscal agents: Money Market Mutual Funds: First American Government Obligations Fund 27,976$ 19 days BlackRock Institutional Funds 790 30 days Total fair value of investments held by fiscal agents 28,766$ Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations OCSD’s investments (including investments held by trustees) include the following investments that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above):  Mortgage-backed securities: These securities are subject to early payment in a period of declining interest rates. The resulting reduction in expected total cash flows affects the fair value of these securities, making them highly sensitive to change in interest rates. At fiscal year end, the fair value of investments in mortgage-backed securities totaled $3,346,950 including $2,064,262 of mortgage pass-through securities, $1,137,106 of U.S. agency securities, and $145,582 of U.S. government backed mortgage pools. Fair Value of Investments OCSD measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and Level 3: Unobservable inputs. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 26 At June 30, 2019, OCSD had the following fair value measurements for its managed investment portfolio: Quoted Prices in Active Significant Other Markets for Observable Unobservable Identical Assets Inputs Inputs Investment Type Fair Value Level 1 Level 2 Level 3 Investments in Short-Term Portfolio: U.S. Treasury Notes 120,821,505$ -$ 120,821,505$ -$ Corporate Medium-term Notes 14,071,967 14,071,967 - U.S. Agency Securities 8,326,426 - 8,326,426 - Certificates of Deposits 7,304,306 - 7,304,306 - Commercial Paper 7,246,498 - 7,246,498 - U.S. Treasury Bills 3,629,890 - 3,629,890 - Investments in Long-Term Portfolio: U.S. Treasury Notes 161,747,910 - 161,747,910 - Corporate Medium-term Notes 140,474,618 - 140,474,618 - U.S. Agency Securities 132,290,121 - 132,290,121 - Asset Backed Securities/CMO 46,051,290 - 46,051,290 - Supranationals 33,041,747 - 33,041,747 - US Treasury Inflation Protected Securities (TIPS) 11,171,448 - 11,171,448 - Commercial Paper 11,089,623 - 11,089,623 - Taxable Municipal Bonds 4,330,845 - 4,330,845 - U.S. Government Backed Mortgage Pools 145,582 - 145,582 - Fair Value Hierarchy Totals -$ 701,743,776$ -$ Investments Not Subject To Fair Value Hierarchy: Local Agency Investment Fund (LAIF)* 35,218,920 Money Market Mutual Funds* 5,955,570 Money Market Mutual Funds** 15,203,202 Total Portfolio 758,121,468$ * Invested in Short-Term Portfolio ** Invested in Long-Term Portfolio US Bank is the custodial bank for all of OCSD’s investments shown above in the managed portfolio, except for LAIF. Investments classified as Level 2 are valued using US Bank’s fair value hierarchy matrix based on the asset type classification. The fair value hierarchy level matrix is based on discussions with (1) pricing vendors, (2) broker/dealers, (3) investment managers, (4) industry groups, and (5) independent accounting firms. Monies held by trustees (fiscal agents) that are invested in money market mutual funds are reported at carrying cost. Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following table presents the minimum rating as required by the California Government Code, OCSD’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 27 Investments with no legal minimum rating & no required disclosure: U.S. Treasury Obligations 297,370,753$ U.S. Agency Securities - GNMA 145,582 Subtotal 297,516,335$ Investments with no legal minimum rating: U.S. Agency Securities (other than GNMA): Rating of AA+ (Standard & Poor's)132,290,121 Rating of P-1 (Moody's) 8,326,426 Municipal Bonds: Rating of Aa3 (Moody's)2,892,163 Rating of Aa1 (Moody's)1,438,682 Certificates of Deposits; Rating of Aa2 (Moody's) 3,003,150 Rating of A-1 (Standard and Poor's)2,300,276 Rating of P-1 (Moody's )2,000,880 Local Agency Investment Fund (LAIF): Not rated 35,218,920 Subtotal 187,470,618 Investments with a legal minimum rating (or its equivalent) of A: Corporate Medium-Term Notes: Rating of Aa1 (Moody's) 7,104,610 Rating of AA+ (Standard and Poor's)3,008,310 Rating of AA+ (Fitch)3,019,087 Rating of Aa2 (Moody's) 10,212,776 Rating of Aa3 (Moody's) 1,062,450 Rating of AA- (Standard & Poor's)5,245,600 Rating of A1 (Moody's)13,366,926 Rating of A+ (Fitch) 6,652,520 Rating of A+ (Standard and Poor's) 499,530 Rating of A2 (Moody's)38,262,689 Rating of A (Standard & Poor's) 17,523,943 Rating of A (Fitch) 9,818,790 Rating of A3 (Moody's)* 6,278,802 Rating of A- (Standard & Poor's)*29,505,524 Rating of BBB+ (Standard & Poor's)* 2,974,888 Not rated 10,140 Money Market Mutual Funds: Rating of P-1 (Moody's )21,158,772 Invested with fiscal agents: Rating of Aaa-mf (Moody's) 28,766 Subtotal 175,734,123 Investments with a legal minimum rating (or its equivalent) of AA: Asset Backed Securities/CMO: Rating of Aaa (Moody's) 34,200,405 Rating of AAA (Standard & Poor's) 9,772,451 Rating of AA+ (Standard and Poor's) 1,933,793 Rating of BBB (Fitch)* 130,469 Rating of B (Fitch)* 14,172 Supranational Obligations: Rating of Aaa (Moody's) 26,551,367 Rating of AAA (Fitch) 6,490,380 Subtotal 79,093,037 Investments with a legal minimum rating (or its equivalent) of "Prime": Commercial Paper: Rating of P-1 (Moody's)* 1,976,340 Rating of A-1 (Standard & Poor's)* 16,359,781 Subtotal 18,336,121 Total 758,150,234$ * Investment was in compliance with legal requirements at the time it was purchased. Fair ValueInvestment Type and the Lowest Rating Reported at Year End ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 28 Concentration of Credit Risk Limitations on the amount that OCSD is allowed to invest in any one issuer have been identified previously in the section “Investments Authorized by the California Government Code and OCSD’s Investment Policy” and in the section “Investments Authorized by Debt Agreements.” OCSD follows whichever guideline is the most restrictive. As of June 30, 2019, OCSD had the following investments representing five percent or more of total investments: Name of Issuer Fair Value % of Total Federal Home Loan Bank System (FHLB) 60,810,641$ 8.02% Federal National Mortgage Association (FNMA) 49,603,962$ 6.54% Custodial Credit Risk Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and OCSD’s investment policy contain legal requirements that limit the exposure to custodial credit risk for deposits as follows: a financial institution must secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Custodial credit risk for investments is the risk that in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and OCSD’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. As of June 30, 2019, in accordance with OCSD’s investment policy, none of OCSD’s investments were held with a counterparty. All of OCSD’s investments were held with an independent third party custodian bank registered in the name of OCSD. OCSD uses US Bank as a third party custody and safekeeping service for its investment securities. Investment in State Investment Pool OCSD is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of OCSD’s investment in this pool is reported in the accompanying financial statements at amounts based upon OCSD’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF’s investment portfolio are mortgage-backed securities, other asset-backed securities, loans to certain state funds, securities with interest rates that vary according to changes in rates greater than a one-for-one basis, and structured notes. The amounts invested in LAIF are recorded as cash and cash equivalents at June 30, 2019. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 29 (3) Capital Assets Capital asset activity for the year ended June 30, 2019 is as follows: Beginning Ending Balance at Additions / Deletions / Balance at July 1, 2018 Transfers Transfers June 30, 2019 Capital assets not depreciated: Cost: Land 29,741,243$ 18,422,112$ (6,196,000)$ 41,967,355$ Construction in progress 427,995,850 134,421,652 (40,585,868) 521,831,634 Total nondepreciable assets 457,737,093 152,843,764 (46,781,868) 563,798,989 Depreciable capital assets: Cost: Sewage collection facilities 860,710,368 34,905,828 (8,825,693) 886,790,503 Sewage treatment facilities 2,477,357,509 1,386,759 (17,334) 2,478,726,934 Effluent disposal facilities 97,014,820 - (42,804) 96,972,016 Solids disposal facilities 3,463,236 - - 3,463,236 General and administrative facilities 253,129,772 4,558,340 (519,767) 257,168,345 Excess purchase price over book value on acquired assets 19,979,000 - - 19,979,000 Subtotal 3,711,654,705 40,850,927 (9,405,598) 3,743,100,034 Accumulated depreciation: Sewage collection facilities (366,539,393) (19,557,558) 7,471,311 (378,625,640) Sewage treatment facilities (919,884,146) (73,369,661) 17,334 (993,236,473) Effluent disposal facilities (63,837,052) (1,439,304) - (65,276,356) Solids disposal facilities (3,175,690) (9,718) - (3,185,408) General and administrative facilities (169,961,690) (7,862,673) 537,123 (177,287,240) Excess purchase price over book value on acquired assets (19,979,000) - - (19,979,000) Subtotal (1,543,376,971) (102,238,914) 8,025,768 (1,637,590,117) Net depreciable assets 2,168,277,734 (61,387,987) (1,379,830) 2,105,509,917 Net capital assets 2,626,014,827$ 91,455,777$ (48,161,698)$ 2,669,308,906$ For the fiscal year ended June 30,2019, capitalasset additionsof $40.9 million in depreciable capitalassets are$0.3 million more than the $40.6 million transferred from Construction in Progress due to capital equipment purchases of $4.0 million, partially offset by $3.7 million of priorcapital project expensesthat were written offas expense.Also, the removal ofland of$6.2 million was due to the sale of property in May 2019. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 30 (4) Long-Term Liabilities The following is a summary of the changes in long-term liabilities for the year ended June 30, 2019: Beginning Ending Due w ithin Long-term Balance, July 1 Additions Deletions Balance, June 30 one year amount Compensated absences 8,025,854$ 7,590,606$ (7,593,791)$ 8,022,669$ 7,367,217$ 655,452$ Claims and judgments 4,436,087 2,820,028 (395,789) 6,860,326 673,070 6,187,256 Certificates of participation, revenue obligations & notes 1,012,110,000 102,200,000 (141,530,000) 972,780,000 32,730,000 940,050,000 Unamortized premium 83,627,610 8,102,416 (14,007,653) 77,722,373 13,556,472 64,165,901 Totals 1,108,199,551$ 120,713,050$ (163,527,233)$ 1,065,385,368$ 54,326,759$ 1,011,058,609$ Compensated Absences OCSD’s policies related to compensated absences are described in Note 1. OCSD’s liability at June 30, 2019 is $8,022,669 with an estimated $7,367,217 to be paid or used within the next fiscal year. Claims and Judgments Payable OCSD is self-insured in a number of areas as described in Note 1. The following is a summary of the change in claims and judgments payable for the years ended June 30, 2019 and 2018: 2018-19 2017-18 Claims and judgments payable at July 1 4,436,087$ 4,052,668$ Claims incurred during the fiscal year 2,820,028 971,427 Payments on claims during the fiscal year (395,789) (588,008) Claims and judgments payable at June 30 6,860,326 4,436,087 Less: current portion (673,070) (732,040) Total long-term claims and judgments payable 6,187,256$ 3,704,047$ ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 31 Certificates of Participation/ Revenue Obligations and Notes OCSD issues certificates of participation, revenue obligations and notes in order to finance construction of the treatment facilities. Each issuance represents a direct and proportionate interest in the semi-annual interest payments. Installment payments for the issues are payable from any source of lawfully available funds of OCSD. Certificates of participation, revenue obligations, and notes at June 30, 2019 are summarized as follows: Amount 2010A wastewater revenue obligations 80,000,000$ 2010C wastewater revenue obligations 157,000,000 2011A wastewater refunding revenue obligations 75,370,000 2012A wastewater refunding revenue obligations 100,645,000 2012B wastewater refunding revenue obligations 46,475,000 2014A wastewater refunding revenue obligations 71,330,000 2015A wastewater refunding revenue obligations 127,510,000 2016A wastewater refunding revenue obligations 145,880,000 2017A wastewater refunding revenue obligations 66,370,000 2018A revenue refunding certificate anticipation notes 102,200,000 Total certificates of participation, revenue obligations, and notes 972,780,000$ Outstanding Certificates of Participation / Revenue Obligations and Notes All of the outstanding debt of OCSD is senior lien debt with rate covenants that require a minimum coverage ratio of 1.25. The minimum coverage ratio is the ratio of net annual revenues available for debt service requirements to total annual debt service requirements. As of June 30, 2019, the coverage ratio for senior lien debt was 4.08. May 2010 Wastewater Revenue Obligations, Series 2010A On May 18, 2010, OCSD completed the sale of $80,000,000 of wastewater revenue obligations under the federally taxable Build America Bonds program. The obligations were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The stated interest rate on the obligations is fixed and will range from 5.56 percent to 5.58 percent, however, in accordance with their designation as Build America Bonds, OCSD expects to receive a cash subsidy from the United States Treasury equal to 35 percent of the interest payable with respect to these revenue obligations. The expected net interest rate on the obligations is fixed and will range from 3.614 percent to 3.627 percent. Annual principal payments are due on February 1, beginning February 1, 2034 through February 1, 2040. The trust agreement for the revenue obligations does not require the establishment of a reserve. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 32 December 2010 Wastewater Revenue Obligations, Series 2010C On December 8, 2010, OCSD completed the sale of $157,000,000 of wastewater revenue obligations under the federally taxable Build America Bonds program. The obligations were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The stated interest rate on the obligations is fixed and will range from 6.35 percent to 6.40 percent, however, in accordance with their designation as Build America Bonds, OCSD expects to receive a cash subsidy from the United States Treasury equal to 35 percent of the interest payable with respect to these revenue obligations. The expected net interest rate on the obligations is fixed and will range from 4.1275 percent to 4.16 percent. Annual principal payments are due on February 1, beginning February 1, 2031 through February 1, 2044. The trust agreement for the revenue obligations does not require the establishment of a reserve. October 2011 Wastewater Refunding Revenue Obligations, Series 2011A On October 3, 2011, OCSD completed the sale of $147,595,000 of wastewater refunding revenue obligations. The obligations were issued to refund $89,800,000 of the outstanding principal balance of 2000 Series A and B refunding certificates of participation, and $83,320,000 of the outstanding principal balance of 2003 certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 percent to 5 percent. Annual principal payments are due on August 1 and February 1, beginning August 1, 2012 through February 1, 2026. The trust agreement for the revenue obligations does not require the establishment of a reserve. March 2012 Wastewater Refunding Revenue Obligations, Series 2012A On March 22, 2012, OCSD completed the sale of $100,645,000 of wastewater refunding revenue obligations. The obligations were issued to refund the $108,180,000 outstanding principal balance of the 2003 certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 percent to 4 percent. Annual principal payments are due on February 1, beginning February 1, 2031 through February 1, 2033. The trust agreement for the revenue obligations does not require the establishment of a reserve. August 2012 Wastewater Refunding Revenue Obligations, Series 2012B On August 16, 2012, OCSD completed the sale of $66,395,000 of wastewater refunding revenue obligations. The obligations were issued to refund the remaining $91,900,000 outstanding principal balance of the Series 2000A and 2000B refunding certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 to 5 percent. Annual principal payments are due on February 1, beginning February 1, 2019 through February 1, 2026. The trust agreement for the revenue obligations does not require the establishment of a reserve. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 33 August 2014 Wastewater Refunding Revenue Obligations, Series 2014A On August 7, 2014, OCSD completed the sale of $85,090,000 of wastewater refunding revenue obligations. The obligations were issued to partially refund an amount of $93,930,000 of the outstanding principal balance of 2007 Series B certificates of participation. The stated interest rate on the obligations is fixed at 5 percent. Annual principal payments are due on February 1, beginning February 1, 2018 through February 1, 2027. The trust agreement for the revenue obligations does not require the establishment of a reserve. February 2015 Wastewater Refunding Revenue Obligations, Series 2015A On February 12, 2015, OCSD completed the sale of $127,510,000 of wastewater refunding revenue obligations. The obligations were issued to partially refund an amount of $152,990,000 of the outstanding principal balance of 2007 Series B certificates of participation. The stated interest rate on the obligations is fixed at 5 percent. Annual principal payments are due on February 1, beginning February 1, 2028 through February 1, 2037. The trust agreement for the revenue obligations does not require the establishment of a reserve. March 2016 Wastewater Refunding Revenue Obligations, Series 2016A On March 30, 2016, OCSD completed the sale of $145,880,000 of wastewater refunding revenue obligations. The obligations were issued to partially refund an amount of $162,780,000 of the outstanding principal balance of 2009 Series A certificates of participation. The stated interest rate on the obligations is fixed and will range from 4 to 5 percent. Annual principal payments are due on February 1, beginning February 1, 2020 through February 1, 2039. The trust agreement for the revenue obligations does not require the establishment of a reserve. February 2017 Wastewater Refunding Revenue Obligations, Series 2017A On February 1, 2017, OCSD completed the sale of $66,370,000 of wastewater refunding revenue obligations. The obligations were issued to refund $91,620,000 of the outstanding principal balance of 2007 Series A certificates of participation. The stated interest rate on the obligations is fixed at 5 percent. Annual principal payments are due on February 1, beginning February 1, 2021 through February 1, 2030. The trust agreement for the revenue obligations does not require the establishment of a reserve. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 34 November 2018 Revenue Refunding Certificate Anticipation Notes, Series 2018A On November 1, 2018, OCSD completed the sale of $102,200,000 of revenue refunding certificate anticipation notes. The notes were issued to fully refund the $109,875,000 outstanding principal balance of the 2016 Series B revenue refunding certificate anticipation notes. The interest rate on the notes is fixed at 5 percent. The notes will mature on August 15, 2021. OCSD expects the principal 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. The aggregate difference in debt service between the refunding debt and the refunded debt is a negative amount of approximately $7,052. The total future payments for the new debt provide a net present value loss of approximately $534,127 to refund the old debt. The trust agreement for the certificates does not require the establishment of a reserve. Annual Amortization Requirements The annual requirements to amortize all debt related to certificates of participation, revenue obligations, and anticipation notes as of June 30, 2019, including the Revenue Refunding Certificate Anticipation Notes, Series 2018A that currently matures in August 2021, are as follows: Year Ending June 30,Principal Estimated Interest Total 2020 32,730,000$ 44,044,869$ 76,774,869$ 2021 30,430,000 42,408,369 72,838,369 2022 130,605,000 38,331,869 168,936,869 2023 29,805,000 34,371,619 64,176,619 2024 31,140,000 33,041,769 64,181,769 2025-2029 175,555,000 142,236,946 317,791,946 2030-2034 257,560,000 94,348,085 351,908,085 2035-2039 214,870,000 39,392,596 254,262,596 2040-2044 70,085,000 6,378,599 76,463,599 Total 972,780,000$ 474,554,721$ 1,447,334,721$ ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 35 (5) Pension Benefits OCSD has two defined benefit pension plans for retirees: the plan maintained through and by the Orange County Employees’ Retirement System (OCERS) and the Additional Retiree Benefit Account (ARBA) administered directly by OCSD. A summary of pension amounts for OCSD’s plans at June 30, 2019 is presented below: OCERS ARBA Total Net pension liability - OCERS 29,029,147$ -$ 29,029,147$ Deferred outflows - pensions 91,463,662 2,331,302 93,794,964 Total pension liability - ARBA - 21,577,464 21,577,464 Deferred inflows - pensions 45,597,614 - 45,597,614 Pension expenses 16,730,225 1,695,688 18,425,913 A. Orange County Employees’ Retirement System (OCERS) Plan Description: All qualified permanent and probationary employees are eligible to participate in OCSD’s Employee Pension Plan (Plan), which is a cost-sharing multiple employer defined benefit pension plan administered by the Orange County Employees Retirement System (OCERS). OCERS was established in 1945 under the provisions of the County Employees Retirement Law of 1937 (CERL). The Plan operates under the provisions of the CERL, the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by OCERS’ Board of Retirement. The Plan’s authority to establish and amend the benefit terms are set by the CERL and PEPRA and may be amended by the California state legislature. The Plan is a tax qualified plan under Section 401(a) of the Internal Revenue Code Benefits Provided: OCERS provides service retirement, disability, death and survivor benefits to plan members who may be public employees or beneficiaries. The CERL and PEPRA establish benefit terms. Benefits are based on years of credited service equal to one year of full time employment. Members of plans B, G and H with ten years of service credit are entitled to receive a retirement allowance beginning at age 50; members of plan U with 5 years of service are eligible to receive a retirement allowance at age 52. Members attaining age 70 are eligible to retire regardless of credited service. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 36 Benefits are determined by plan formula, age, years of service and final average salary (FAS) as follows: Plan G Plan H Plan B Plan U Hire Date Prior to 9/21/79 After 9/21/79 Prof/Sup*: Before 10/1/10 OCEA*: Before 8/1/11 501*: Before 7/1/11 Prof/Sup: After 10/1/10 OCEA: After 8/1/11 501: After 7/1/11 All: Before 1/1/2013 On or after 1/1/2013 Final Average Compensation (FAS)Highest 12 months Highest 36 months Highest 36 months Highest 36 months Normal Retirement Age Age 55 Age 55 Age 57.5 Age 67 Age 70, any years Age 70, any years Age 70, any years Age 70, any years Age 50, 10 years Age 50, 10 years Age 50, 10 years Age 52, 5 years Benefit percent per year of service for normal retirement age 2.5% per year of FAS for every year of service credit 2.5% per year of FAS for every year of service credit 1.667% per year of FAS for every year of service credit 2.5% per year of FAS for every year of service credit Benefit Adjustments Reduced before age 55 Reduced before age 55 Reduced before age 57.5 Reduced before age 67 FAS Limitation Internal Revenue Code Section 401(a)(17) Internal Revenue Code Section 401(a)(17) Internal Revenue Code Section 401(a)(17) Public Employees Pension Reform Act (PEPRA): 120% of Social Security wage base per year * Prof/Sup: Professional and Supervisor employee groups, bargaining unit SPMG. * OCEA: Administrative, Clerical, Engineering, and Technical Services employee groups, bargaining unit OCEA. * 501: Operations and Maintenance employee groups, bargaining unit International Union of Operating Engineers Local 501. Service Requirement Eligibility A cost of living adjustment is provided to benefit recipients based on changes in the Consumer Price Index (CPI) up to a maximum of 3% per year. Any increase greater than 3% is banked and may be used in years when the CPI is less than 3%. The increase is established and approved annually by the Board of Retirement. The Plan also provides disability and death benefits to eligible members and their beneficiaries, respectively. For retirees the death benefit is determined by the retirement benefit option chosen. For all other members the beneficiary is entitled to benefits based on the member’s years of service and whether or not the cause of death is service related. At the December 31, 2018 measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits486 Inactive employees entitled to but not yet receiving benefits 117 Active employees 616 Total 1,219 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 37 Contributions: Participating employers and active members are required by statute to contribute a percentage of covered salary to the Plan. CERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and be effective on the July 1 following notice of a change in rate. Funding contributions are determined annually on an actuarial basis as of December 31 by OCERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the Plan from OCSD were $7,769,431 for the year ended June 30, 2019. Contribution rates in effect for the fiscal year ended June 30, 2019 are as follows: Plan G Plan H Plan B Plan U Employer Contribution Rate, 7/1/18 - 6/30/19 12.28% 12.28% 10.21% 9.27% Employee Contribution Rate, 7/1/18 - 6/30/19 (2)6.35-12.22% (1)5.88-12.22% (1)6.76-12.37% 6.42-13.65% Paid by Employer for Employee 3.50% 3.50% 0.00% 0.00% (1) Net of employer paid portion of 3.5%. (2) Employee rates are determined by the age of entry into the retirement system. For the year ended June 30, 2019, the contributions and average employer’s contribution rate as a percentage of covered payroll were as follows: Plans Employer Contributions Employee (Paid by Employer) Contributions Average Employer Contribution Rate (%) Plan G 18,141$ 5,171$ 0.03% Plan H 5,259,549 1,486,230 9.76% Plan B 666,923 - 0.97% Plan U 1,824,818 - 2.64% Total 7,769,431$ 1,491,401$ Pension Liabilities: As of June 30, 2019, OCSD reported a net pension liability of $29,029,147 for its proportionate share of OCERS’ net pension liability. The net pension liability was measured as of December 31, 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. OCSD’s proportion of the net pension liability was based on a projection of OCSD’s long-term share of contributions to the pension plan relative to the projected contribution of all participating employers, actuarially determined. At December 31, 2018, OCSD’s proportion of the net pension liability was 0.468%, which was an increase of 1.267% from its proportion measured as of December 31, 2017. The change in OCSD’s proportion of the net pension liability during the fiscal year ended June 30, 2019 was caused by the contributions and projections noted above. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 38 Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions: For the year ended June 30, 2019, OCSD recognized pension expense of $16,730,225 for its proportionate share of the pension expense. At June 30, 2019 OCSD reported its share of deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience 2,740,145$ 10,405,119$ Net difference between projected and actual investment earnings on pension plan investments 59,867,140 32,687,002 Changes of assumptions (1) 16,401,122 2,445,073 Changes in proportion and differences between employer contributions and proportionate share of contributions 872,851 60,420 Employer contributions paid to OCERS subsequent to the measurement date 11,582,404 - Total 91,463,662$ 45,597,614$ • adjustments to the mortality tables, • % in the rate of marriage for male and female members at retirement or pre-retirement death, • an increase in the Consumer Price Index of 2.75% per year, maximum increase is 3%, • and a slight increase of .50% in salaries per year. • retirement assumptions for deferred vested members (age at retirement 59, increase of 4.25% in reciprocity, and an increase in compensation increases), Detail for these changes is available in the Segal Actuarial Valuation for December 31, 2018, Section 3. This report is available on the OCERS w ebsite at w ww .ocers.org. (1) The monetary effects of changes in actuarial assumptions and method totals $16,401,122 for deferred outflow s and $2,445,073 for deferred inflows of resources. These changes include: The $11,582,404 reported as deferred outflows of resources related to pensions resulting from OCSD’s contributions to OCERS subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OCERS pensions will be recognized in pension expense as follows: Year ended June 30 Amount 2020 6,841,613$ 2021 3,479,359 2022 6,546,883 2023 16,876,166 2024 539,623 Total 34,283,644$ ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 39 Actuarial Assumptions and Methods: The total pension liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Investment rate of return 7.00% of net pension plan investment expenses, including inflation Discount rate 7.00% Inflation rate 2.75% Projected salary increases 4.25% to 12.25% Cost of living adjustment 2.75% of retirement income OCERS Economic and Demographic Assumptions: On October 16, 2017, the OCERS Board adopted the following significant changes to the economic and demographic actuarial assumptions, which will be used to establish retirement contribution rates effective July 1, 2019:  Reduced the assumed investment rate of return from 7.25% to 7%  Reduced the assumed rate of price inflation from 3.00% to 2.75%  Adopted the use of generational tables, which have identified reduced rates of mortality for members Additionally, the OCERS Board adopted a three-year phase-in of the impact to the contribution rates associated with the Unfunded Actuarially Accrued Liability. The cumulative effect of these changes will have the impact of increasing contribution rates for members and plan sponsors. The mortality assumptions used in the total pension liability at December 31, 2018 were based on the Headcount-Weighted RP-2014 Healthy Annuitant Mortality Table as a starting point, projected generationally using the two-dimensional Scale MP-2016, with age adjustments, and adjusted separately for healthy and disabled members. The basis for determining the mortality assumptions used were based on the results of the actuarial experience study for the period January 1, 2014 through December 31, 2016. Further details of the experience study can be found in the OCERS CAFR, available on their website at www.ocers.org. Long-Term Expected Real Rate of Return: The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. These returns are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation and deducting expected investment expenses. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 40 The target allocation and projected arithmetic real rates of return for each major asset class, after deducting inflation, but before investment expenses, used in the derivation of the long-term expected investment rate of return assumption are summarized in the following table for the calendar year ended December 31, 2018: Asset Class Target Allocation Long-Term Expected Real Rate of Return (Arithmetic) Global Equity 35.00% 6.38% Core Bonds 13.00% 1.03% High Yield Bonds 4.00% 3.52% Bank Loan 2.00% 2.86% TIPS 4.00% 0.96% Emerging Markets Debt 4.00% 3.78% Real Estate 10.00% 4.33% Core Infrastructure 2.00% 5.48% Natural Resources 10.00% 7.86% Risk Mitigation 5.00% 4.66% Mezzanine/Distressed Debts 3.00% 6.53% Private Equity 8.00% 9.48% Total 100.00% Discount Rate: The discount rate used to measure the total pension liability was 7.00% for the year ended December 31, 2018. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employer contributions that are intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries, as well as projected contributions from future plan members, are not included. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability as of December 31, 2018. Sensitivity of the Proportionate Share of Net Pension Liability to Changes in the Discount Rate: The following table represents OCSD’s proportionate share of the net pension liability calculated using the discount rate of 7.00%, as well as what OCSD’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate: Net Pension Liability December 31, 2018 $ 131,317,068 $ 29,029,145 $ (54,119,840) (6.00%) (7.00%) (8.00%) 1% Decrease Current Discount Rate 1% Increase ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 41 Pension Plan Fiduciary Net Position: Detailed information about OCERS’ fiduciary net position is available in a separately issued OCERS comprehensive annual financial report. That report may be obtained from OCERS at 2223 Wellington Avenue, Santa Ana, California 92708 or at their web site (www.ocers.org). B. Additional Retiree Benefit Account (ARBA) Plan Description: The OCSD ARBA plan is a single-employer defined benefit plan which was administered by OCERS until February 29, 2008, when OCSD began direct administration. This benefit was established by the OCSD Board of Directors on October 25, 1992. It provides 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 OCSD medical plan. The plan is currently paying benefits to 357 retirees. The ARBA plan is not subject to the reporting requirements of GASB 68 and 71 because a trust has not been set up for the plan. However, GASB 73 has been implemented for the ARBA plan in the fiscal year ended June 30, 2016. The plan is a funded on a pay-as-you-go plan from general funds and is administered by OCSD. Stand-alone financial statements are not issued for the plan. Benefits Provided: Employees who retire receive $10 per month for every year of service up to a maximum of 25 years, or $250 per month. This amount is independent of salary and is fixed at retirement. Because OCSD cannot ensure the use of the benefit for payment of eligible health insurance expenses, the benefit is taxable to the retiree. Survivor benefits are provided in the event that a retiree pre-deceases his/her spouse. For retirees hired prior to July 1, 1988, OCSD provides health insurance coverage for 2½ months per year of service (see Note 6 – Other Postemployment Benefits). ARBA benefits begin immediately after this benefit ends. For those hired on or after July 1, 1988, ARBA benefits begin immediately upon retirement and continue for life. Employees hired into the OCEA bargaining group after August 1, 2011 are ineligible for this benefit. Benefits are determined by hire date, bargaining unit and years of service as follows: Hire date All: Prior to 7/1/88 All: After 7/1/88 OCEA*: Before 8/1/11 Benefit amount per year of service for normal retirement age $10 per month x years of service up to a maximum of 25 years $10 per month x years of service up to a maximum of 25 years Service requirement eligibility Age 50 or over with 10 or more years Any age with 30 or more years Age 70 or over, any years Age 50 or over with 10 or more years Any age with 30 or more years Age 70 or over, any years Benefit payments Monthly for life Monthly for life Benefit schedule Immediately after retiree health insurance coverage ends Immediately upon retirement * OCEA: Administrative, Clerical, Engineering, and Technical Services employee groups, bargaining unit OCEA. No cost of living adjustment is provided to benefit recipients. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 42 At June 30, 2019, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits357 Inactive employees entitled to but not yet receiving benefits 44 Active employees 564 Total 965 Contributions: There are no employee contributions for this plan; OCSD covers 100% of the cost. OCSD utilizes a pay-as-you-go method for funding the plan. Contributions to the plan from OCSD were $816,450 for the year ended June 30, 2019. Pension Liabilities: As of June 30, 2019, OCSD reported total pension liability of $21,577,464 for its ARBA plan. The total pension liability was determined by an actuarial valuation as of July 1, 2017. OCSD funds benefits on a “pay as you go” basis and elected not to pre-fund its pension obligation. As a result, there are no plan assets and the total pension liability is equal to the net pension liability. Standard actuarial update procedures were used to project/discount from July 1, 2017 to the measurement date of June 30, 2019. The actuarial valuation performed as of July 1, 2017, used the entry age, level percent of pay cost method. This method represents the present value of all benefits accrued through the valuation date assuming that each employee’s liability is expensed from hire date until retirement date as a level percentage of pay. The following table shows the changes in the total pension liability: Total Pension Liability Increase (Decrease) Beginning balance at July 1, 2018 20,831,172$ Changes in the year: Service cost 570,409 Interest on total pension liability 663,852 Changes of benefit terms - Difference between expected and actual experience - Changes of assumptions 328,481 Benefit payments (1)(816,450) Net changes 746,292 Ending balance at June 30, 2019 21,577,464$ (1) As part of the July 1, 2017 actuarial valuation report, Demsey, Filliger & Associates prepared a projection of the expected annual cost to the District to pay ARBA benefits. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 43 Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension: For the year ended June 30, 2019, OCSD recognized pension expense of $1,695,688 for its ARBA plan. At June 30, 2019 OCSD reported its share of deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience 1,316,766$ -$ Changes of assumptions (1) 1,014,536 - Net difference between projected and actual investment earnings on pension plan investments - - Employer contributions over actuary projections - - Total 2,331,302$ -$ (1) The monetary effects of changes in actuarial assumptions and method totals $1,014,536. These changes include passage of time, a change in the discount rate from 3.25% to 3.13%, change in actuarial system, census and other losses. Amounts reported as deferred outflows of resources related to ARBA pensions will be recognized in pension expense as follows: Year ended June 30 Amount 2020 461,427$ 2021 461,427 2022 461,427 2023 461,427 2024 346,923 2025 138,671 Total 2,331,302$ Actuarial Assumptions and Methods: The total pension liability in the July 1, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Investment rate of return 3.25% per annum Discount rate 3.25% per annum as of July 1, 2017 (valuation date) 3.13% per annum as of June 30, 2019 (measurement date) Inflation rate 3.00% per annum Projected salary increases 3.00% per annum (for service cost only; benefits not pay-related) The mortality assumptions used in the total pension liability at July 1, 2017 were based on the RP- 2014 Employee Mortality and Health Annuitant Mortality Tables for Males or Females, as appropriate, without projection. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 44 Discount Rate: The discount rate used to measure the total pension liability was 3.25% as of the valuation date, July 1, 2017, and 3.13% as of the measurement date, June 30, 2019. Because there are no assets held in a trust that meets GASB 68 or 71, the discount rate is based on the 20- year, tax exempt general obligation municipal bonds with an average rating of AA or higher. Sensitivity of the Total Pension Liability to Changes in the Discount Rate: The following table represents the total pension liability calculated using the discount rate of 3.13% as of the measurement date, as well as what total pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.13%) or 1 percentage point higher (4.13%) than the current rate: Total Pension Liability June 30, 2019 $ 24,631,326 $ 21,577,464 $ 19,061,942 (2.13%) (3.13%) (4.13%) 1% Decrease Current Discount Rate 1% Increase (6) Other Postemployment Benefits (OPEB) Plan Description: The post-employment medical benefits plan is a single-employer defined benefit plan administered by OCSD. This plan was established and may be modified only by action of the OCSD Board of Directors. Stand-alone financial statements are not issued. Benefits Provided: OCSD offers medical insurance to active and retired employees, as well as their qualified dependents. All retirees may choose coverage in an OCSD medical plan, with retirees paying the full premium. However, for employees hired prior to July 1, 1988, medical benefits begin immediately at retirement with OCSD paying 2.5 months of premium for each year of continuous service toward the cost of coverage under OCSD medical plans. At the termination of this period the retiree may elect to continue coverage at his/her own expense. For the fiscal year ended June 30, 2019, premiums ranged between $225 and $4,067 per month, depending on the plan and number of dependents covered. At June 30, 2019, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits (includes 105 paying premiums and 44 with premiums paid by OCSD)149 Inactive employees entitled to but not yet receiving benefits 0 Active employees (includes 5 eligible for premiums paid by OCSD)605 Total 754 Contributions: There are no employee contributions to this plan; OCSD covers 100% of the cost for qualifying employees as stated above. Retirees opting to remain with the plan after employment pay 100% of the premium cost, except for those for whom OCSD pays for a period (see above). OCSD utilizes a pay-as-you-go method for funding the plan. Contributions to the plan from OCSD were $819,779 and the estimated implicit subsidy was $446,944, resulting in total payments of $1,266,723, and retirees contributed $1,060,261 for the year ended June 30, 2019. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 45 OPEB Liabilities: As of June 30, 2019, OCSD reported total OPEB liability of $4,013,291 for its post-employment retiree medical benefits plan. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017. OCSD funds benefits on a “pay as you go” basis and elected not to pre-fund its OPEB obligation. As a result, there are no plan assets and the total OPEB liability is equal to the net OPEB liability. Standard actuarial update procedures were used to project/discount from July 1, 2017 to the measurement date of June 30, 2019. The actuarial valuation performed as of July 1, 2017 used the entry age, level percent of pay cost method. This method represents the present value of benefits accrued through the valuation date, assuming that each employee’s liability is expensed from hire date until retirement date as a level percentage of pay. The following table shows the changes in the total OPEB liability: Total OPEB Liability Increase (Decrease) 5,025,395$ Changes in the year: Service cost 16,489 Interest on total OPEB liability 159,195 Changes of benefit terms Changes of assumptions 78,935 Benefit payments (1)(1,266,723) Net changes (1,012,104) 4,013,291$ (1) As part of the July 1, 2017 actuarial valuation report, Demsey, Filliger & Associates prepared a projection of the expected annual cost to the District to pay OPEB benefits. Ending balance at June 30, 2019 Beginning balance at July 1, 2018 OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB: For the year ended June 30, 2019, OCSD recognized OPEB expense of $254,619 for its post-employment retiree medical benefits plan. At June 30, 2019 OCSD reported $0 for its share of deferred outflows/inflows of resources related to OPEB. Actuarial Assumptions and Methods: The total OPEB liability in the July 1, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Investment rate of return 4.00% per annum Discount rate 3.13% per annum Inflation rate 3.00% per annum Healthcare cost trend rate 6.00% for 2017; 5.00% for 2018 and later years Projected salary increases 3.00% per annum ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 46 The mortality assumptions used in total OPEB liability at July 1, 2017 were based on the RP-2014 Employee Mortality Table for Males or Females, as appropriate, without projection for pre- retirement mortality rates and RP-2014 Health Annuitant Mortality Table for Males or Females, as appropriate, without projection for post-retirement mortality rates. Actuarial assumptions used in the July 1, 2017 valuation were based on a review of plan experience during the period July 1, 2015 through June 30, 2017. Discount Rate: The discount rate used to measure the total OPEB liability was 3.13% as of the valuation date, July 1, 2017, and 3.13% as of the measurement date, June 30, 2019. Because there are no assets held in a trust, for GASB 75 reporting purposes, the discount rate is based on a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate: The following table represents the total OPEB liability calculated using the discount rate of 3.13% as of the measurement date, as well as what total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.13%) or 1 percentage point higher (4.13%) than the current rate: Total OPEB Liability June 30, 2019 $ 4,181,167 $ 4,013,291 $ 3,854,570 (2.13%) (3.13%) (4.13%) 1% Decrease Current Discount Rate 1% Increase Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates: The following table represents the total OPEB liability calculated using the healthcare cost trend rate of 6.00% decreasing to 5.00% as of the measurement date, as well as what total OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1 percentage point lower (5.00% decreasing to 4.00%) or 1 percentage point higher (7.00% decreasing to 6.00%) than the current rate: Total OPEB Liability June 30, 2019 $ 3,767,993 $ 4,013,291 $ 4,278,841 (5.00% decreasing to 4.00%) (6.00% decreasing to 5.00%) (7.00% decreasing to 6.00%) 1% Decrease Current Trend Rate 1% Increase ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 47 (7) Transactions with Irvine Ranch Water District – Revenue Area No. 14 Formation of Revenue Area No. 14 & Excess Purchase Price Over Book Value of Acquired Assets On July 1, 1985, Revenue Area No. 14 was formed as an independent special district as a result of a negotiated agreement between OCSD and Irvine Ranch Water District (IRWD). At the time of Revenue Area 14’s creation, OCSD consisted of eight independent special districts (see Note 1 – Reporting Entity). The eight existing districts sold a portion of the joint treatment facilities and land to the newly created district and recorded capacity rights revenue at the time of the sale. In accordance with the negotiated agreement between OCSD and IRWD, IRWD paid OCSD $34,532,000 for an initial 15,000,000 gallons per day capacity in OCSD’s joint treatment facilities (with an ultimate collection capacity of 32,000,000 gallons per day) and for a pro-rata interest in real property (based on flow of 32,000,000 gallons per day). The book value of the assets acquired was determined to be $14,553,000 as of June 30, 1986; these assets were recorded at book value in Revenue Area 14. The excess of the purchase price over the assets' book value was $19,979,000 and was recorded as an intangible asset in Revenue Area 14. The excess of the purchase price over the assets’ book value was amortized over useful lives of the original assets acquired. As of June 30, 2019, the excess of purchase price over the assets' book value was fully amortized. Annual Transactions IRWD entered into a separate agreement with Revenue Area 14 on January 1, 1986 whereby IRWD agreed to fund quarterly payments of Revenue Area 14's proportionate share of OCSD's joint capital outlay revolving fund budget requirements and certain capital improvements during the term of the agreement, for which contributions of $4,213,751 were recorded as contribution from other government during the fiscal year ended June 30, 2019. IRWD also agreed to fund the annual integration adjustment of Revenue Area 14’s equity share in OCSD’s Joint Works Treatment Facilities based on the flows discharged to OCSD. Integration contributions of $19,682,194 to Revenue Area 14 were recognized and reported as reductions to contributions from other government during the fiscal year ended June 30, 2019. These contributions received from or credited to IRWD for their agreed-upon share of capital assets and equity share in OCSD’s Joint Works Treatment Facilities are calculated as prescribed in the agreements. In addition, a separate agreement for transfer of IRWD’s wastewater solids residuals to OCSD was entered on April 28, 2010. IRWD agreed to pay OCSD a charge for interim solids handling charge which include annual capital and quarterly operating expense components designed to compensate OCSD for IRWD’s share of the cost of operating and maintaining the existing facilities for the treatment of solids. As a result, $2,866,745 in annual solids capital handling charges were reported as operating revenue in Consolidated Revenue Area, and $7,115,846 in quarterly solids operating and maintenance charges were reported as operating revenue in Revenue Area No. 14 during the fiscal year ended June 30, 2019. Any amounts credited to IRWD are not refunded in cash but are held as a credit to satisfy future contributions required of IRWD. Amounts owed from IRWD are invoiced on a quarterly or annual basis. As a result, a balance of $465,886 was reported in due from other governmental agency as of June 30, 2019. Annual Cash Reserve Requirement The cash reserve contribution requirement from IRWD at June 30, 2019; in accordance with Amendment No. 2 to the Agreement between IRWD and OCSD Acquiring Ownership Interests, Assigning Rights, and Establishing Obligations; is $14.0 million. This cash reserve requirement is recognized as a liability to IRWD. ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2019 48 (8) Commitments and Contingencies Pollution Remediation: An Underground Storage Tank (UST) at Plant No. 1 failed the pressure test to ensure its tank integrity. As a result of the test failure, OCSD voluntarily took this UST out of service and tested the immediate surrounding area and determined that both gasoline and diesel were present. During the fiscal year ended June 30, 2017, OCSD completed an analysis of remediation alternatives resulting in a less costly remediation plan for the contaminated soil than the plan developed during the previous fiscal year. The new remediation plan received approval from the Orange County Health Care Agency, and based upon their feedback a final design is now completed. This new remediation plan calls for removal and disposal of approximately 2,200 tons of contaminated soil, and some limited groundwater treatment. This work was issued a construction contract in March 2019 and is anticipated to be completed by January 2020. As of June 30, 2019, actual costs of $374,112 were incurred. Total remaining costs are estimated not to exceed $5,000,000, including post-remediation monitoring costs for a five-year period and a project contingency of 50 percent for the remediation effort. Construction Commitments: OCSD has active construction projects to add additional capacity, improve treatment, or replace/ rehabilitate existing assets. At June 30, 2019, the outstanding commitments with contractors totaled $143,791,502. Litigation: Certain claims involving disputed construction costs have arisen in the ordinary course of business. Additionally, OCSD is a defendant in lawsuits. Although the outcome of these matters is not presently determinable, management does not expect that the resolution of these matters will have a material adverse impact on the financial condition of OCSD. (9) Local Sewer Facilities Transfer On February 5, 2019, OCSD entered into an agreement to transfer 44,400 linear feet (8.5 miles) of local sewer facilities to the City of Santa Ana. In accordance with this agreement, OCSD made a one-time disbursement of $23.2 million of local sewer accumulated capital repair and replacement funds to the City of Santa Ana during fiscal year 2018-19. Local sewer capital assets transferred had an approximate book value net of depreciation of approximately $33,617. ORANGE COUNTY SANITATION DISTRICT REQUIRED SUPPLEMENTARY INFORMATION 49 2015 2016 2017 2018 2019 1.13% 0.74% (0.20%) (0.80%) 0.47% 57,418,760$ 42,439,759$ (10,384,508)$ (39,571,100)$ 29,029,147$ 58,641,163$ 59,789,927$ 60,000,017$ 62,341,796$ 66,475,479$ 97.92% 70.98% (17.31%) (63.47%) 43.67% 89.61% 92.74% 101.70% 105.96% 95.86% (1) The amounts presented were determined as of the measurement date December 31. Data for fiscal years ended June 30, 2010 through 2014 is not available in a comparable format. (2) Covered payroll represents compensation earnable and pensionable compensation for the measurement period ended December 31. Only compensation earnable and pensionable compensation that would possibly go into the determination of retirement benefits are included. OCSD's covered payroll (2) OCSD's proportionate share of the net pension liability (asset) as a percentage of covered payroll OCERS' fiduciary net position as a percentage of the total pension liability OCSD's proportion of the net pension liability (asset) ORANGE COUNTY SANITATION DISTRICT Proportionate Share of the Net Pension Liability (Asset) Orange County Employees Retirement System (OCERS) Pension Plan Last 10 Fiscal Years (1) OCSD's proportionate share of the net pension liability (asset) Fiscal Year Ended June 30, 50 2015 2016 2017 2018 2019 17,201,569$ 12,222,849$ 7,709,734$ 7,525,655$ 7,769,431$ (17,201,569) (12,222,849) (7,709,734) (7,525,655) (7,769,431) -$ -$ -$ -$ -$ 60,025,942$ 60,595,474$ 62,266,907$ 65,390,144$ 69,101,109$ 28.66% 20.17% 12.38% 11.51% 11.24% (1) Data for fiscal years ended June 30, 2010 through 2014 is not available in a comparable format. (2) Covered payroll represents compensation earnable and pensionable compensation for the fiscal year ended June 30. Only compensation earnable and pensionable compensation that would possibly go into the determination of retirement benefits are included. Contribution deficiency (excess) Covered payroll (2) Contributions as a percentage of covered payroll Contractually required contribution ORANGE COUNTY SANITATION DISTRICT Orange County Employees Retirement System (OCERS) Pension Plan Schedule of District Contributions Last 10 Fiscal Years (1) Contributions in relation to the contractually required contribution Fiscal Year Ended June 30, 51 2015 2016 2017 2018 2019 16,680,614$ 18,313,122$ 18,467,361$ 20,831,172$ 21,577,464$ 62,139,375$ 62,977,577$ 65,120,945$ 68,126,103$ 71,948,599$ 26.84% 29.08% 28.36% 30.58% 29.99% (1) The amounts presented for each fiscal year were determined as of July 1. Data for fiscal years ended June 30, 2010 through 2014 is not available in a comparable format. (2) This plan is not administered through a trust or equivalent arrangement, thus covered-employee payroll is used. Covered-employee payroll represents total payroll of employees that are provided benefits through the pension plan for the fiscal year ended June 30. (3) “pay as you go” basis and elected not to pre-fund its pension obligation. As a result, there are no plan assets and the total pension liability is equal to the net pension liability. There are no assets in a trust compliant with GASB codification P22.101. OCSD funds benefits on a Covered-employee payroll (2) Total pension liability as a percentage of covered- employee payroll ORANGE COUNTY SANITATION DISTRICT Total Pension Liability (3) Additional Retiree Benefit Account (ARBA) Last 10 Fiscal Years (1) Total pension liability Fiscal Year Ended June 30, 52 2016 2017 2018 2019 16,680,614$ 18,313,122$ 18,467,361$ 20,831,172$ Changes in the year: Service cost 270,223 278,330 553,795 570,409 Interest on total pension liability 626,386 593,711 649,192 663,852 Changes of benefit terms - - - - Changes of assumptions 1,230,327 (70,952) 1,889,274 328,481 Benefit payments (2) (494,428) (646,850) (728,450) (816,450) Net changes 1,632,508 154,239 2,363,811 746,292 Ending balance at June 30 18,313,122$ 18,467,361$ 20,831,172$ 21,577,464$ (1) The amounts presented for each fiscal year were determined as of July 1. Data for fiscal years ended June 30, 2010 through 2015 is not available in a comparable format. (2) As part of the July 1, 2017 actuarial valuation report, Demsey, Filliger & Associates prepared a projection of the expected annual cost to OCSD to pay ARBA benefits. OCSD elected to use actual costs rather than the projected annual costs to pay ARBA benefits. (3)OCSD funds benefits on a “pay as you go” basis and elected not to pre-fund its pension obligation. As a result, there are no plan assets and the total pension liability is equal to the net pension liability. ORANGE COUNTY SANITATION DISTRICT Changes in Total Pension Liability (3) Additional Retiree Benefit Account (ARBA) Last 10 Fiscal Years (1) Beginning balance at July 1 Fiscal Year Ended June 30, 53 2017 2018 2019 6,398,694$ 5,025,395$ 4,013,291$ 65,120,945$ 68,126,103$ 71,948,599$ 9.83% 7.38% 5.58% (1) The amounts presented for each fiscal year were determined as of July 1. Data for fiscal years ended June 30, 2010 through 2016 is not available in a comparable format. (2) This plan is not administered through a trust or equivalent arrangement, thus covered-employee payroll is used. Covered-employee payroll represents total payroll of employees that are provided benefits through the OPEB plan for the fiscal year ended June 30. (3) “pay as you go” basis and elected not to pre-fund its OPEB obligation. As a result, there are no plan assets and the total OPEB liability is equal to the net OPEB liability. There are no assets in a trust compliant with GASB codification P52.101. OCSD funds benefits on a Covered-employee payroll (2) Total OPEB liability as a percentage of covered-employee payroll ORANGE COUNTY SANITATION DISTRICT Total OPEB Liability (3) Post-Employment Medical Benefits Plan Last 10 Fiscal Years (1) Fiscal Year Ended June 30, Total OPEB liability 54 2018 2019 Beginning balance at July 1 6,398,694$ 5,025,395$ Changes in the year: Service cost 18,182 16,489 Interest on total OPEB liability 177,395 159,195 Changes of benefit terms - - Changes of assumptions (95,279) 78,935 Benefit payments (2) (1,473,597) (1,266,723) Net changes (1,373,299) (1,012,104) Ending balance at June 30 5,025,395$ 4,013,291$ (1) The amounts presented for each fiscal year were determined as of July 1. Data for fiscal years ended June 30, 2010 through 2017 is not available in a comparable format. (2) Benefit payments include implicit subsidy associated with benefits paid. (3) OCSD funds benefits on a “pay as you go” basis and elected not to pre-fund its OPEB obligation. As a result, there are no plan assets and the total OPEB liability is equal to the net OPEB liability. Fiscal Year Ended June 30, ORANGE COUNTY SANITATION DISTRICT Changes in Total OPEB Liability (3) Post-Employment Medical Benefits Plan Last 10 Fiscal Years (1) 55 (THIS PAGE INTENTIONALLY LEFT BLANK) 56 ORANGE COUNTY SANITATION DISTRICT SUPPLEMENTARY INFORMATION 57 Revenue Consolidated Area No. 14 Revenue Area Eliminations Totals Current assets: Cash and cash equivalents -$ 75,930,213$ -$ 75,930,213$ Investments - 684,538,124 - 684,538,124 Accounts receivable, net of allowance for uncollectibles $349,973 - 13,701,223 - 13,701,223 Accrued interest receivable - 3,801,257 - 3,801,257 Connection fees receivable - 1,735,064 - 1,735,064 Property tax receivable - 1,586,671 - 1,586,671 Inventories - 6,005,074 - 6,005,074 Due from other revenue area - 465,886 (465,886) - Due from other governmental agency 465,886 - - 465,886 Prepaid expenses - 1,966,446 - 1,966,446 Total current assets 465,886 789,729,958 (465,886) 789,729,958 Noncurrent assets: Restricted: Cash and cash equivalents held by fiscal agents - 28,766 - 28,766 Unrestricted: Non-depreciable capital assets 22,266,597 541,532,392 - 563,798,989 Depreciable capital assets, net of accumulated depreciation 90,118,506 2,015,391,411 - 2,105,509,917 Other noncurrent assets, net - 10,344 - 10,344 Total noncurrent assets 112,385,103 2,556,962,913 - 2,669,348,016 Total assets 112,850,989 3,346,692,871 (465,886) 3,459,077,974 Deferred outflows of resources: Deferred losses on defeasances - 28,888,051 - 28,888,051 Deferred outflows related to pensions - 93,794,964 - 93,794,964 Total deferred outflows of resources - 122,683,015 - 122,683,015 Total assets and deferred outflows of resources 112,850,989 3,469,375,886 (465,886) 3,581,760,989 Current liabilities: Accounts payable - 16,909,092 - 16,909,092 Accrued expenses - 16,630,416 - 16,630,416 Due to other revenue area 465,886 - (465,886) - Retentions payable - 3,845,922 - 3,845,922 Interest payable - 18,270,200 - 18,270,200 Current portion of long-term obligations - 54,326,759 - 54,326,759 Total current liabilities 465,886 109,982,389 (465,886) 109,982,389 Noncurrent liabilities: Noncurrent portion of long-term obligations - 1,011,058,609 - 1,011,058,609 Total OPEB liability - 4,013,291 - 4,013,291 Net pension liability - OCERS - 29,029,147 - 29,029,147 Total pension liability - ARBA - 21,577,464 - 21,577,464 Total noncurrent liabilities - 1,065,678,511 - 1,065,678,511 Total liabilities 465,886 1,175,660,900 (465,886) 1,175,660,900 Deferred inflows of resources: Deferred inflows related to pensions - 45,597,614 - 45,597,614 Total liabilities and deferred inflows of resources 465,886 1,221,258,514 (465,886) 1,221,258,514 Net position: Net investment in capital assets: Collection system 14,850,908 506,835,384 - 521,686,292 Treatment and disposal -land 1,930,045 36,096,353 - 38,026,398 Treatment and disposal system 95,604,150 2,013,992,066 - 2,109,596,216 Capital assets related debt - (1,021,585,556) - (1,021,585,556) Subtotal 112,385,103 1,535,338,247 - 1,647,723,350 Unrestricted - 712,779,125 - 712,779,125 Total net position 112,385,103$ 2,248,117,372$ -$ 2,360,502,475$ ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Net Position June 30, 2019 58 Revenue Consolidated Area No. 14 Revenue Area Totals Operating revenues: Service charges 9,308,233$ 307,983,005$ 317,291,238$ Permit and inspection fees 17,499 1,181,795 1,199,294 Total operating revenues 9,325,732 309,164,800 318,490,532 Operating expenses other than depreciation and amortization: Salaries and benefits 2,806,581 82,699,563 85,506,144 Utilities 254,308 7,478,917 7,733,225 Supplies, repairs and maintenance 1,511,365 30,258,304 31,769,669 Contractual services 7,715,970 18,366,273 26,082,243 Feasibility studies 171,966 5,678,495 5,850,461 Other 491,935 9,152,653 9,644,588 Total operating expenses other than depreciation and amortization 12,952,125 153,634,205 166,586,330 Operating income (loss) before depreciation and amortization (3,626,393) 155,530,595 151,904,202 Depreciation and amortization 3,724,401 98,514,513 102,238,914 Operating income (loss) (7,350,794) 57,016,082 49,665,288 Non-operating revenues: Property taxes 3,027,217 96,506,810 99,534,027 Investment and interest income 437,514 28,664,098 29,101,612 Contributions from other governments 24,017,885 3,782,166 27,800,051 Other 64,292 2,097,970 2,162,262 Total non-operating revenues 27,546,908 131,051,044 158,597,952 Non-operating expenses: Interest - 34,465,835 34,465,835 Local sewer service transfer - 23,229,000 23,229,000 Other 3,033 389,963 392,996 Loss on disposal of assets 45,743 5,448,227 5,493,970 Total non-operating expenses 48,776 63,533,025 63,581,801 Income before capital contributions 20,147,338 124,534,101 144,681,439 Capital contributions: Capital facilities capacity charges - 21,031,628 21,031,628 Change in net position 20,147,338 145,565,729 165,713,067 Total net position - beginning 92,237,765 2,102,551,643 2,194,789,408 Total net position - ending 112,385,103$ 2,248,117,372$ 2,360,502,475$ ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Revenues, Expenses, and Changes in Net Position For the Year Ended June 30, 2019 59 ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Cash Flows For the Year Ended June 30, 2019 Revenue Consolidated Area No. 14 Revenue Area Eliminations Totals Cash flows from operating activities: Receipts from (refunds to) customers and users (9,562,055)$ 308,306,154$ -$ 298,744,099$ Payments to employees (2,806,581) (75,291,515) - (78,098,096) Payments to suppliers (10,145,544) (69,388,457) - (79,534,001) Net cash provided by (used in) operating activities (22,514,180) 163,626,182 - 141,112,002 Cash flows from noncapital financing activities: Proceeds from property taxes 3,027,217 96,147,274 - 99,174,491 Receipts (payments) for sewer service transfer and other obligations 39,722 (21,520,993) - (21,481,271) Net cash provided by noncapital financing activities 3,066,939 74,626,281 - 77,693,220 Cash flows from capital and related financing activities: Capital facilities capacity charges - 23,167,640 - 23,167,640 Additions to capital assets (23,895,944) (99,758,399) 4,213,750 (119,440,593) Disposal of capital assets - (19,682,194) 19,682,194 - Interest paid - (42,922,157) - (42,922,157) Principal payments on debt obligations - (31,655,000) - (31,655,000) Proceeds released to escrow account on defeased debt - (109,875,000) (109,875,000) Proceeds from debt issuance - 110,302,416 - 110,302,416 Debt issuance costs - (402,429) - (402,429) Contributions from other government 24,017,885 3,782,166 (23,895,944) 3,904,107 Net cash provided by (used in) capital and related financing activities 121,941 (167,042,957) - (166,921,016) Cash flows from investing activities: Proceeds from the sale of investments 15,085,667 285,778,941 - 300,864,608 Purchases of investments - (431,416,584) - (431,416,584) Interest received 437,514 13,256,902 - 13,694,416 Net cash provided by (used in) investing activities 15,523,181 (132,380,741) - (116,857,560) Net decrease in cash and cash equivalents (3,802,119) (61,171,235) - (64,973,354) Cash and cash equivalents, beginning of year 3,802,119 137,130,214 - 140,932,333 Cash and cash equivalents, end of year -$ 75,958,979$ -$ 75,958,979$ Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) (7,350,794)$ 57,016,082$ -$ 49,665,288$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization 3,724,401 98,514,513 - 102,238,914 Bad debt expense (net recoveries) - (106,006) - (106,006) (Increase)/decrease in operating assets: Accounts receivable 483 (392,760) - (392,277) Inventories - 595,820 - 595,820 Due from other governmental agency (18,888,270) (465,886) - (19,354,156) Prepaid and other assets - (321,034) - (321,034) Increase/(decrease) in operating liabilities: Accounts payable - (1,441,374) - (1,441,374) Accrued expenses - 882,405 - 882,405 Net pension/OPEB liabilities - 6,923,368 - 6,923,368 Compensated absences - (3,185) - (3,185) Claims and judgments - 2,424,239 - 2,424,239 Net cash provided by (used in) operating activities (22,514,180)$ 163,626,182$ -$ 141,112,002$ Noncash activities: Unrealized gain on the fair value of investments -$ 14,464,176$ 14,464,176$ Capital assets acquired through accounts payable - 5,353,308 5,353,308 Capital facilities capacity charges acquired - (2,136,012) (2,136,012) 60 ORANGE COUNTY SANITATION DISTRICT STATISTICAL SECTION Contents Pages Financial Position and Trends 62 - 66 Revenue Capacity 67 - 69 Debt Capacity 70 - 72 Operating Information 73 - 76 Demographic and Economic Factors 77 - 80 This part of the comprehensive annual financial report of the Orange County Sanitation District (OCSD) presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about OCSD's overall financial health. These schedules contain information to help the reader assess OCSD's most significant revenue source of sewer service fees. These schedules offer demographic information to help the reader understand the environment within which OCSD's financial activities take place. These schedules contain current and trend information to help the reader understand OCSD's financial position and how OCSD's financial performance and well-being have changed over time. These schedules contain data to help the reader understand how the information in OCSD's financial report relates to the services it provides and the activities it performs. These schedules present information to help the reader assess the affordability of OCSD's current levels of outstanding debt and OCSD's ability to issue additional debt in the future. All of OCSD's debt is recorded in a proprietary fund; consequently, many of the schedules which are applicable to governmental funds are not presented. 61 ORANGE COUNTY SANITATION DISTRICT Net Position by Component (Dollars in Thousands) Last Ten Fiscal Years Fiscal Year 2009-10 1,121,057$ 310,016$ 1,431,073$ 2010-11 1,131,063 379,423 1,510,486 2011-12 1,125,966 471,652 1,597,618 (1) 2012-13 1,180,298 520,427 1,700,725 2013-14 1,204,706 617,589 1,822,295 2014-15 1,327,384 434,460 1,761,844 (2) 2015-16 1,429,269 489,303 1,918,572 (3) 2016-17 1,504,898 536,327 2,041,225 2017-18 1,568,118 626,671 2,194,789 (4) 2018-19 1,647,723 712,779 2,360,502 (2) Beginning net position restated due to implementation of GASB 68. (3) Beginning net position restated due to implementation of GASB 73. (4) Beginning net position restated due to implementation of GASB 75. Source: Orange County Sanitation District's Financial Management Division. Total Net Position Net Investment in Capital Assets Unrestricted (1) Beginning net position restated due to implementation of GASB 65. $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Net Investment in Capital Assets Unrestricted 62 ORANGE COUNTY SANITATION DISTRICT Revenues and Gross Capital Contributions by Source (Dollars in Thousands) Last Ten Fiscal Years Fiscal Service Property Year Charges Taxes Interest Other 2009-10 225,059$ 629$ 225,688$ 64,759$ 19,166$ 6,939$ 90,864$ ($2,406) 2010-11 244,465 784 245,249 64,307 10,092 11,015 85,414 9,800 2011-12 259,491 1,030 260,521 67,882 15,747 8,486 92,115 8,936 2012-13 303,400 1,176 304,576 79,240 (3,913) 3,781 79,108 12,797 2013-14 300,611 848 301,459 74,944 6,498 12,595 94,037 14,093 2014-15 301,548 902 302,450 79,835 4,806 9,996 94,637 17,656 2015-16 314,477 951 315,428 84,407 9,183 14,658 108,248 17,974 2016-17 312,237 1,045 313,282 88,284 3,081 27,146 118,511 16,351 2017-18 316,329 1,170 317,499 94,188 3,230 7,611 105,029 18,077 2018-19 317,291 1,199 318,490 99,534 29,102 29,962 158,598 21,032 Source: Orange County Sanitation District's Financial Management Division. Total Non- Operating Non-Operating Revenue Fees Permit & Operating Revenue Inspection Total Operating Capital Contributions -$25,000 $0 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000 $300,000 $325,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Operating Revenue Non-Operating Revenue Capital Contributions 63 ORANGE COUNTY SANITATION DISTRICT Expenses by Type Operating Expense Non - Operating Expense Fiscal Year Salaries & Benefits Utilities Maint & Other Depr & Amort Interest Expense Other 2009-10 69,652$ 6,934$ 61,499$ 52,036$ 190,121$ 27,537$ 13,736$ 41,273$ 2010-11 73,112 6,948 63,328 49,288 192,676 29,129 39,245 68,374 2011-12 75,642 7,405 89,272 56,051 228,370 28,700 8,433 37,133 2012-13 76,878 6,403 66,536 63,907 213,724 42,315 37,335 79,650 2013-14 79,179 6,381 60,887 99,805 246,252 40,450 1,317 41,767 2014-15 79,657 7,246 62,323 94,186 243,412 34,112 3,168 37,280 2015-16 75,576 7,246 70,679 90,502 244,003 27,597 6,482 34,079 2016-17 74,291 6,119 69,843 96,320 246,573 25,648 53,270 78,918 2017-18 67,418 7,298 70,840 97,399 242,955 35,011 1,483 36,494 2018-19 85,506 7,733 73,347 102,239 268,825 34,466 29,116 63,582 Source: Orange County Sanitation District's Financial Management Division. (Dollars in Thousands) Last Ten Fiscal Years Total Non- Operating Total Operating $0 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Operating Expense Non-Operating Expense 64 ORANGE COUNTY SANITATION DISTRICT Change in Net Position (Dollars in Thousands) Last Ten Fiscal Years Fiscal Total Total Year 2009-10 314,146$ 231,394$ 82,752$ 1,348,321$ 1,431,073$ 2010-11 340,463 261,050 79,413 1,431,073 1,510,486 2011-12 361,572 265,503 96,069 1,501,549 (1)1,597,618 2012-13 396,481 293,374 103,107 1,597,618 1,700,725 2013-14 409,589 288,019 121,570 1,700,725 1,822,295 2014-15 414,743 280,692 134,051 1,627,793 (2)1,761,844 2015-16 441,650 278,082 163,568 1,755,004 (3)1,918,572 2016-17 448,144 325,491 122,653 1,918,572 2,041,225 2017-18 440,605 279,449 161,156 2,033,633 (4)2,194,789 2018-19 498,120 332,407 165,713 2,194,789 2,360,502 (2) Beginning net position restated due to implementation of GASB 68. (3) Beginning net position restated due to implementation of GASB 73. (4) Beginning net position restated due to implementation of GASB 75. Source: Orange County Sanitation District's Financial Management Division. Change in Beginning Ending (1) Beginning net position restated due to implementation of GASB 65. Net PositionRevenues Expenses Net Position Net Position $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Ending Net Position by Fiscal Year 65 ORANGE COUNTY SANITATION DISTRICT Cash and Investment Reserve Balances (Dollars in Millions) Last Ten Fiscal Years Fiscal Year Total 2009-10 185$ 57$ 102$ 129$ 473$ 2010-11 187 57 176 141 561 2011-12 196 57 186 138 577 2012-13 174 57 234 135 600 2013-14 189 57 296 131 673 2014-15 177 57 194 129 557 2015-16 181 57 190 117 545 2016-17 174 57 173 107 511 2017-18 173 57 350 100 680 2018-19 177 57 429 97 760 Notes: Source: Orange County Sanitation District's Financial Management Division. The Debt Service Required Reserves are monies held and controlled by a trustee pursuant to the provisions of certificates of participation issues, and the monies are not available for the general needs of the District. Debt Service Requirements Self- Insurance Capital Improvement Program Cash Flow Contingency The Cash Flow Contingency Reserve is to fund operations, 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. The Self-Insurance Reserve is to provide requirements for property damage including fire, flood and earthquake, general liability and workers' compensation. The Capital Improvement Program Reserve is to fund annual increments of the capital improvement program with a target level at one half of the average annual capital improvement program over the next 10 years. The Board of Directors of the Orange County Sanitation District has established the criteria below to determine the total funds required as listed in the Accumulated Funds and Reserves Policy: 66 ORANGE COUNTY SANITATION DISTRICT Sewer Service Fees Single Family Residence Rate Last Nine Fiscal Years and Next Fiscal Year 2010-11 244.00$ 2011-12 267.00 2012-13 294.00 2013-14 308.00 2014-15 316.00 2015-16 322.00 2016-17 327.00 2017-18 331.00 2018-19 335.00 2019-20 339.00 Source: Orange County Sanitation District's Financial Management Division. Sewer service fees are comprised of three categories: residential customers, commercial customers, and industrial customers. Although the majority of sewer service fee revenues are from residential and commercial customers (see the schedule of Number of Accounts and Revenues by Customer Class), the fee paid by each residential and commercial customer is less than the individual fees paid by industrial customers. The rates for commercial and industrial customers are derived from the base sewer service fee charged for a single-family residence and are based on the type of business and the strength and volume of waste that is discharged into the sewer system. Due to the complexity of the rate structure for commercial and industrial customers and since the rates are derivatives of the single-family residence rate, only the single-family residence rate is presented within the statistical section. Fiscal Year Sewer Service Charge 0 50 100 150 200 250 300 350 400 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 SF R A n n u a l F e e Fiscal Year Annual Sewer Service Fees Single Family Residence 67 ORANGE COUNTY SANITATION DISTRICT Number of Accounts and Revenues by Customer Class (Dollars in Millions) Last Ten Fiscal Years Number of Total Percentage Total Percentage Equivalent Sewer Svc. of Sewer Number of Sewer Svc. of Sewer Fiscal Single-Family Charge Service Charge Customer Charge Service Charge Year Dwellings Revenue Revenues Accounts Revenue Revenues 2009-10 880,213 194.5$ 95% 487 10.8$ 5% 2010-11 878,408 214.3 95% 479 10.1 5% 2011-12 874,008 233.4 96% 516 9.5 4% 2012-13 883,477 259.8 96% 527 10.8 4% 2013-14 873,308 269.0 95% 489 14.4 5% 2014-15 824,465 260.5 95% 467 14.2 5% 2015-16 863,317 278.0 96% 450 12.6 4% 2016-17 859,869 281.2 95% 466 13.8 5% 2017-18 871,338 288.4 94% 473 17.9 6% 2018-19 871,312 291.9 97% 476 9.7 3% Source: Orange County Sanitation District's Financial Management Division. Residential/Commercial Industrial $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Residential/Commercial Users Industrial Users 68 ORANGE COUNTY SANITATION DISTRICT Principal Sewer Service Customers For the Current Fiscal Year and Nine Years Ago Fiscal Year Ended 6/30/19 Fiscal Year Ended 6/30/10 Industrial % to Total Industrial % to Total Permittee Service Permittee Service Service Charge Service Charge Customer Charges Rank Revenue Charges Rank Revenue House Foods America Corp. 1,423,273$ 1 0.45% 534,052$ 5 0.24% Ameripec Inc. 752,128 2 0.24% 410,545 7 0.18% Stremicks Heritage Foods, LLC 747,890 3 0.24% 629,473 4 0.28% Pulmuone Wildwood, Inc. 681,048 4 0.21% 409,974 8 Kimberly-Clark Worldwide, Inc. 651,129 5 0.21% 1,325,796 1 0.59% Jazz Semiconductor 578,150 6 0.18% Nor-Cal Beverage Co. Inc. (Main) 505,790 7 0.16% Dae Shin USA, Inc. 471,401 8 0.15% MCP Foods, Inc. 414,959 9 0.13% 1,313,284 2 0.58% Broncs, Inc. dba WesCoast Textiles 355,395 10 0.11% Alstyle Apparel-A&G Inc. 1,019,603 3 0.45% Pepsi-Cola Bottling Group 419,539 6 0.19% Mornningstar Foods, LLC 360,198 9 0.16% Angelica Textile Services 321,568 10 0.14% 6,581,163$ 2.08% 6,744,032$ 2.81% Source: Orange County Sanitation District's Financial Management Division. Although the majority of sewer service fee revenues are from residential and commercial customers (see the schedule of Number of Accounts and Revenues by Customer Class), the fee paid by each residential and commercial customer is less than the individual fees paid by industrial customers. Consequently, this schedule shows the largest sewer service fee customers. 69 ORANGE COUNTY SANITATION DISTRICT Ratio of Annual Debt Service to Total Expenses (Dollars in Thousands) Last Ten Fiscal Years Total Fiscal Principal Total Debt Operating Year (1) Interest (4) Service (3) Expenses (2) 2009-10 24,030$ 46,052$ 70,082$ 138,085$ 50.75% 2010-11 25,895 49,426 75,321 143,388 52.53 2011-12 14,370 50,975 65,345 172,319 37.92 2012-13 23,965 53,640 77,605 149,817 51.80 2013-14 39,590 53,163 92,753 146,447 63.34 2014-15 27,875 53,586 81,461 149,226 54.59 2015-16 29,405 50,301 79,706 153,501 51.93 2016-17 35,575 47,143 82,718 150,253 55.05 2017-18 32,140 43,466 75,606 145,555 51.94 2018-19 31,655 44,481 76,136 166,586 45.70 Notes Source: Orange County Sanitation District's Financial Management Division. (4) - Excludes amortization of premium/discount and deferred amount. (3) - Debt consists of certificates of participation, revenue obligations, and anticipation notes. Ratio of Debt Service to Total Operating Expenses (2) - Excludes depreciation and amortization expense. (1) - Excludes principal reductions due to advanced refunding. 0% 10% 20% 30% 40% 50% 60% 70% 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 70 ORANGE COUNTY SANITATION DISTRICT Debt Coverage Ratios (Dollars in Millions) Last Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Operating & Non-operating Revenues: Service Charges, Net of Refunds-Regional 194.5$ 214.3$ 233.4$ 259.8$ 269.0$ 260.5$ 278.0$ 281.2$ 288.4$ 291.9$ Service Charges, Net of Refunds-Local (3) 5.6 5.7 5.7 5.8 5.7 5.5 5.7 1.3 (0.1) - Industrial Sewer Service Charges 10.8 10.1 9.5 10.8 14.4 14.2 12.6 13.8 17.9 9.4 SAWPA Assessment 6.6 4.9 3.6 2.7 2.4 2.7 3.2 3.3 2.7 2.9 IRWD Assessment 6.7 18.2 14.2 25.6 19.6 26.4 26.6 36.0 9.9 36.3 Ad Valorem Taxes 64.8 64.3 67.9 79.2 74.9 79.8 84.4 88.3 94.2 99.5 Interest Earnings 19.2 10.1 15.7 (3.9) 6.5 4.8 9.2 3.1 3.2 29.1 Other Revenues 8.4 3.0 2.5 3.7 3.0 3.2 4.0 5.0 6.4 8.0 Total Revenues 316.6 330.6 352.5 383.7 395.5 397.1 423.7 432.0 422.6 477.1 Operating Expenses (1) 138.1 143.4 172.3 149.8 146.4 149.2 153.5 150.3 145.6 166.6 Net Revenues 178.5$ 187.2$ 180.2$ 233.9$ 249.1$ 247.9$ 270.2$ 281.7$ 277.0$ 310.5$ Debt Service Requirements Principal Payments 24.0 25.9 14.4 24.0 39.6 27.9 29.4 35.6 32.1 31.7 Interest Payments 43.1 46.5 51.0 53.6 53.2 53.6 50.3 47.1 43.5 44.4 Total Debt Service Requirements 67.1$ 72.4$ 65.4$ 77.6$ 92.8$ 81.5$ 79.7$ 82.7$ 75.6$ 76.1$ Coverage Ratios 2.66 2.59 2.76 3.01 2.68 3.04 3.39 3.41 3.66 4.08 Ending Reserves (2) 344.0$ 420.0$ 439.0$ 465.0$ 542.0$ 428.0$ 428.0$ 404.0$ 580.0$ 663.0$ Notes (1) - Operating expenses exclude depreciation and amortization expenses. (2) - Excludes debt service reserves in accordance with the District's reserve policy. (3) - Local Sewer transferred to East Orange County Water District in FY2016-17. Source: Orange County Sanitation District's Financial Management Division. Fiscal Year Ending June 30, The Orange County Sanitation District has no legal debt limits as imposed by State legislation. The District does have contractual covenants within the existing Certificates of Participation indenture agreements which require minimum coverage ratios of 1.25. The coverage ratio is calculated as the ratio of net annual revenues available for debt service payments to total annual debt service requirements. - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2007-08 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 71 ORANGE COUNTY SANITATION DISTRICT Ratios of Outstanding Debt Last Ten Fiscal Years Debt as a (5) (3) Percentage Total Median of Median (4) Debt Fiscal Outstanding Family Family Population per Year Debt Income (1) Income Estimate (2) Capita 2009-10 1,306,255,753$ 87,200$ 0.007% 2,539,990 514.28 2010-11 1,427,792,453 84,200 0.006% 2,563,170 557.04 2011-12 1,376,404,782 85,300 0.006% 2,457,571 560.07 2012-13 1,325,928,512 84,100 0.006% 2,472,122 536.35 2013-14 1,278,998,124 84,900 0.007% 2,491,268 513.39 2014-15 1,241,140,357 85,900 0.007% 2,521,803 492.16 2015-16 1,206,722,347 85,000 0.007% 2,548,745 473.46 2016-17 1,140,679,773 88,000 0.008% 2,578,681 442.35 2017-18 1,095,737,610 92,700 0.008% 2,609,419 419.92 2018-19 1,050,502,373 97,900 0.009% 2,607,092 402.94 Notes & Data Sources (1) - Data is for the entire County of Orange. (2) - Data is for the estimated population served by the Orange County Sanitation District. (3) - Data Source: U.S. Department of Housing and Urban Development. (4) - Data Source: Demographic Research Unit, California Department of Finance. (5) - Data Source: Orange County Sanitation District. Debt includes certificates of participation, revenue obligations, and anticipation notes and is presented net of original issuance premiums. 72 ORANGE COUNTY SANITATION DISTRICT Comparison of the Volume of Wastewater Treated With Revenues and Expenses Last Ten Fiscal Years Millions of Gallons of Waste- water Treated Fiscal Per Year Day 2009-10 196 1,588.72$ 190,121$ 41,273$ 225,688$ 90,864$ 2010-11 207 1,816.62 192,676 68,374 245,249 85,414 2011-12 201 1,871.47 228,370 37,133 260,521 92,115 2012-13 200 1,906.01 213,724 79,650 304,576 79,108 2013-14 198 1,936.64 246,252 41,767 301,459 94,037 2014-15 187 2,070.97 243,412 37,280 302,450 94,637 2015-16 183 2,110.43 244,003 34,079 315,428 108,248 2016-17 188 2,054.56 246,573 78,918 313,282 118,511 2017-18 185 2,069.30 242,955 36,494 317,499 105,029 2018-19 191 2,274.73 268,825 63,582 318,490 158,598 Source: Orange County Sanitation District. Total Non-Operating Revenues (In Thousands) Total Operating (In Thousands) Revenues Non-Operating (In Thousands) Operating (In Thousands) TotalTotal CostsCosts Gallons Collection, Treatment & Disposal Cost per Million Total expenses in FY 2018-19 increased $101 million, or 43.7 percent since FY 2009-10, primarily as a result of expansion of the Capital Improvement Program (CIP) and increase in operational services levels with OCSD's decision beginning in FY 2002-03 to maximize existing secondary treatment facilities as OCSD moved from a 50/50 mix of primary and secondary effluent treatment to meeting secondary treatment standards as of December 31, 2012. Depreciation expense represents 49.7 percent of the increase as a result of the expansion in capital facilities and the financing associated with the expansion. Other non-operating expense represents 15.2 percent of the increase due to the local sewer facilities transfer to City of Santa Ana. Maintenance, chemicals, utilities, and other operating costs represent another 12.5 percent of the increase, primarily due to the increase in the levels of treatment referred to above. In FY 2018-19 personnel expenses increased 26.8 percent over the prior year. This increase is mainly due to the difference between projected and actual investment earnings on OCERS plan investments that have been recognized as pension expense. The full-time equivalent positions authorized increased by 1 in FY 2018-19. As depicted from the chart above, actual wastewater treatment flows were 196 mgd in FY 2009-10. The last several years of California's record-breaking drought and water conservation efforts have resulted in FY 2018-19 flows of only 191 mgd, a decrease of 5 mgd or 2.56 percent since FY 2009-10. 73 ORANGE COUNTY SANITATION DISTRICT Authorized Full-time Equivalents by Function Last Ten Fiscal Years Fiscal Year Ending June 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Management (1)13 13 13 12 12 14 15 15 15 14 Human Resources (2)17 27 17 16 18 16 27 27 27 27 Administrative Services (2)92 85 111 111 110 111 98 99 99 100 Environmental Services (3)- - - - - - - 91 91 91 Facilities Support Services (3)71 70 84 81 78 76 63 - - - Technical Services 105 102 - - - - - - - - Engineering 96 112 128 125 123 123 127 116 116 116 Operations and Maintenance 245 230 281 281 283 284 294 279 287 288 Total FTE's 639 639 634 626 624 624 624 627 635 636 Notes (1) - Management Discretion positions used on a temporary basis have been excluded from FTE count. (2) - In 2016, Risk Management moved from Administrative Services to Human Resources Department. (3) - In 2017, District reorganization created Environmental Services and eliminated Facilities Support Services. Source: Orange County Sanitation District's Financial Management Division. 0 50 100 150 200 250 300 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Management (1)Human Resources (2)Administrative Services (2) Environmental Services (3)Facilities Support Services (3)Technical Services Engineering Operations and Maintenance 74 ORANGE COUNTY SANITATION DISTRICT Biosolids Produced Last Ten Fiscal Years Fiscal Year Wet Tonnage Dry Tonnage 2009-10 245,668 50,799 2010-11 253,557 49,133 2011-12 280,572 47,556 2012-13 274,957 43,365 2013-14 279,362 50,764 2014-15 275,943 45,515 2015-16 283,052 50,439 2016-17 288,771 50,641 2017-18 284,039 58,325 2018-19 254,616 50,421 Source: Orange County Sanitation District's Environmental Compliance Division. - 50,000 100,000 150,000 200,000 250,000 300,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Wet Tonnage Dry Tonnage 75 ORANGE COUNTY SANITATION DISTRICT Capital Asset Statistics Last Ten Fiscal Years Number Primary Secondary Fiscal of Pump Treatment Treatment Year Stations Capacity (1) Capacity (1) 2009-10 579 17 376 212 2010-11 587 17 376 212 2011-12 572 17 376 332 2012-13 572 17 376 332 2013-14 580 17 376 332 2014-15 580 17 376 332 2015-16 570 17 376 332 2016-17 396 (2) 17 376 332 2017-18 396 17 376 332 2018-19 389 17 376 332 Notes (1) - Capacity is presented as million gallons treated per day. (2) - In FY 2016-17, local sewers were transferred to East Orange County Water District. Source: Orange County Sanitation District Miles of Trunk & Subtrunk Sewers 76 ORANGE COUNTY SANITATION DISTRICT Demographic Statistics Covering The Entire County of Orange (1) Last Ten Fiscal Years Total (6) (2)Personal Per Capita Public (7) Fiscal Population Income Personal School Unemployment Year Estimates (in thousands) Income Enrollment Rate 2009-10 3,166,000 147,138,449$ (3)46,475$ 87,200$ 502,239 9.5% 2010-11 3,030,000 154,131,535 (3)50,868 84,200 502,903 9.2% 2011-12 3,056,000 169,584,000 (4)55,492 85,300 502,195 7.9% 2012-13 3,082,000 166,370,000 (4)53,981 84,100 501,801 6.1% 2013-14 3,114,000 179,141,000 (4)57,528 84,900 500,487 5.2% 2014-15 3,148,000 193,359,000 (4)61,423 85,900 497,116 4.3% 2015-16 3,183,000 199,442,000 (4)62,658 85,000 493,030 4.4% 2016-17 3,194,000 208,653,000 (4)65,327 88,000 490,430 3.8% 2017-18 3,221,000 220,368,000 (4)68,416 92,700 485,835 3.3% 2018-19 3,222,000 230,180,000 (4),(8)71,440 97,900 478,823 3.0% Notes and Data Sources (2) - Data Source: Demographic Research Unit, California Department of Finance. (3) - Data Source: Bureau of Economic Analysis, U.S. Department of Commerce. (4) - Data Source: A. Gary Anderson Center for Economic Research, Chapman University. (5) - Data Source: U.S. Department of Housing and Urban Development. (6) - Data Source: California Department of Education, Educational Demographics Unit. (7) - Data Source: State of California, Employment Development Department as of June 30 of each fiscal year. (8) - Forecasted number. Median (5) (1) -The Orange County Sanitation District services 479 square miles or 60% of the total 799 square miles that make up the boundaries of the County of Orange. Income Family 77 ORANGE COUNTY SANITATION DISTRICT Estimated Population Served by the Orange County Sanitation District June 30, 2019 Anaheim 359,339 Brea 45,606 Buena Park 83,384 Costa Mesa 115,830 Cypress 49,833 Fountain Valley 56,652 Fullerton 142,824 Garden Grove 175,155 Huntington Beach 203,761 Irvine 280,202 La Habra 63,542 La Palma 15,820 Los Alamitos 11,721 Newport Beach 87,180 Orange 141,691 Placentia 52,333 Santa Ana 337,716 Seal Beach 25,073 Stanton 39,307 Tustin 81,369 Villa Park 5,933 Westminster 92,610 Yorba Linda 68,706 Subtotal Cities (1)2,535,587 Estimated Population Served in Unincorporated Areas (2)71,505 2,607,092 Data Sources: (1) Demographic Research Unit, State of California Department of Finance (2) Center for Demographic Research, California State University, Fullerton. Population as of January 1, 2019 78 ORANGE COUNTY SANITATION DISTRICT Principal Orange County Employers (1) For the Current Fiscal Year and Nine Years Ago Fiscal Year Ended 6/30/19 Fiscal Year Ended 6/30/010 Percentage of Percentage of Number of Total County Number of Total County Employers Employees (2) Rank Employment (3) Employees (2) Rank Employment (4) Walt Disney Co. 30,000 1 1.92% 19,800 1 1.36% University of California, Irvine 23,884 2 1.53% 19,279 2 1.33% County of Orange 17,271 3 1.10% 17,895 3 1.23% St. Joseph Health 14,000 4 0.89% 10,929 4 0.75% Kaiser Permanente 8,178 5 0.52% 5,598 9 0.38% Albertsons Southern California 7,670 6 0.49% Target Corp. 6,300 7 0.40% 6,226 7 0.43% Wal-Mart Stores Inc. 6,200 8 0.40% Hoag Memorial Hospital 6,100 9 0.39% Boeing Co. 6,000 10 0.38% 8,477 5 0.58% Yum! Brands Inc 7,000 6 0.48% SuperValu, Inc.5,923 8 0.41% Memorial Health Services, Inc 5,533 10 0.38% Total 125,603 8.02% 106,660 7.33% Notes & Data Sources(1) - Data is for the entire County of Orange.(2) - Data Sources: Orange County Business Journal Book of Lists, County of Orange (3) - Data Source: State of California, Employment Development Department. - Percentage is calculated by dividing employees by total employment of 1,558,900 as of June 2019. (4) - Data Source: State of California, Employment Development Department. - Percentage is calculated by dividing employees by total employment of 1,454,700 as of June 2010. 79 ORANGE COUNTY SANITATION DISTRICT Operating Indicators June 30, 2019 Consolidated Revenue Area County of Orange (unincorporated areas) Cities: Anaheim Huntington Beach Santa Ana Brea Irvine Seal Beach Buena Park La Habra Stanton Costa Mesa La Palma Tustin Cypress Los Alamitos Villa Park Fountain Valley Newport Beach Westminster Fullerton Orange Yorba Linda Garden Grove Placentia Special Districts: Costa Mesa Sanitary District Midway City Sanitary District Yorba Linda Water District Revenue Area No. 14 County of Orange (unincorporated areas) Cities: Irvine Orange Tustin Special District: Irvine Ranch Water District Governing Body:25-member Board of Directors Authorized Full-Time Equivalent Employees:636 Operational Date:July 1, 1954 Authority:California Health & Safety Code Section 4700 et. seq. Services:Wastewater collection, treatment, and disposal Service Area:479 square miles Population Served:2.6 million Total Miles of Sewers (including force mains):389 miles Number of Pumping Stations:17 Wastewater System Treatment Capacities (Million Gallons per Day) Actual Flows Existing Secondary FY18-19 Treatment Capacity Plant 1 120 182 Plant 2 71 150 Total 191 332 Source: Orange County Sanitation District's Financial Management Division. District Organization:The Orange County Sanitation District is one consolidated district made up of two revenue areas which service unincorporated county areas and twenty-three cities and related special districts, as follows: Existing Primary 376 168 208 Treatment Capacity 80 ORANGE COUNTY SANITATION DISTRICT OTHER DATA & TRENDS Information within this section consists of other data and trends including additional annual disclosures as required by the Sanitation District's debt covenants beyond what is allowed to be reported in the Statistical Section. 81 Net Unrealized Cost Market Value Gain/(Loss) Shares Par Base Base % of Total Base INVESTMENT PORTFOLIO: CASH & CASH EQUIVALENTS (U.S. DOLLAR): COMMERCIAL PAPER 14,415,000$ 14,358,541$ 14,369,161$ 1.99% 10,620$ FIRST AMERICAN SHORT TERM FDS 21,158,772 21,158,772 21,158,772 2.93% - US AGENCY 2,850,000 2,835,718 2,836,491 0.39% 773 SUBTOTAL - CASH & CASH EQUIVALENTS 38,423,772 38,353,031 38,364,424 5.31% 11,393 FIXED INCOME SECURITIES (U.S. DOLLAR): COMMERCIAL PAPER 4,000,000 3,919,749 3,966,960 0.55% 47,211 CONSUMER DISCRETIONARY 8,822,000 8,861,208 8,959,006 1.24% 97,798 CONSUMER STAPLES 3,880,000 3,878,991 4,077,996 0.56%199,005 ENERGY 9,000,000 8,942,542 9,143,090 1.26%200,548 FINANCE 88,504,000 88,501,683 89,521,399 12.38% 1,019,716 HEALTH CARE 2,000,000 1,948,640 2,048,160 0.28% 99,520 INDUSTRIAL 10,493,000 10,504,744 10,613,239 1.47%108,495 INFORMATION TECHNOLOGY 28,715,000 28,626,585 29,054,181 4.02%427,596 INVESTMENT GRADE-MUNI REVENUE 4,240,000 4,307,634 4,330,845 0.60% 23,211 MTG RELATED SECURITY 46,930,801 46,861,535 47,326,912 6.55%465,377 SHORT TERM FUNDS 7,300,000 7,303,984 7,304,306 1.01% 322 SUPRANATIONAL 33,005,000 32,742,600 33,041,747 4.57%299,147 TELECOMMUNICATION SERVICES 1,130,000 1,114,813 1,129,514 0.16% 14,701 U. S. GOVERNMENT 285,487,829 282,973,692 286,206,371 39.59% 3,232,679 U.S. GOVERNMENT TIPS 11,190,920 11,046,200 11,171,448 1.55%125,248 US AGENCY 133,975,000 134,565,949 136,642,950 18.90% 2,077,001 SUBTOTAL - FIXED INCOME SECURITIES 678,673,550 676,100,549 684,538,124 94.69% 8,437,575 TOTAL INVESTMENT PORTFOLIO 717,097,322$ 714,453,580 722,902,548 100.00% 8,448,968$ DEMAND DEPOSITS AND CASH ON HAND 2,346,869 2,346,869 MONIES HELD WITH FISCAL AGENTS 28,766 28,766 MONIES WITH THE LOCAL AGENCY INVESTMENT FUND 35,158,735 35,218,920 TOTAL CASH AND INVESTMENTS 751,987,950$ 760,497,103$ Source: US Bank and Orange County Sanitation District's Financial Management Division. ORANGE COUNTY SANITATION DISTRICT Cash and Investment Portfolio As of June 30, 2019 82 ORANGE COUNTY SANITATION DISTRICT Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years Tax Rate OCSD 1958 OCSD's General Average Fiscal Basic Obligation Total Share of Year Levy Bonds Tax Rate Basic Levy 2009-10 1.00% 0.00% 1.00% 1.63% 2010-11 1.00% 0.00% 1.00% 1.64% 2011-12 1.00% 0.00% 1.00% 1.64% 2012-13 1.00% 0.00% 1.00% 1.64% 2013-14 1.00% 0.00% 1.00% 1.65% 2014-15 1.00% 0.00% 1.00% 1.63% 2015-16 1.00% 0.00% 1.00% 1.62% 2016-17 1.00% 0.00% 1.00% 1.61% 2017-18 1.00% 0.00% 1.00% 1.59% 2018-19 1.00% 0.00% 1.00% 1.59% Notes Source: County of Orange Auditor-Controller's Office. In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount of assessed value. This 1.00% is shared by all taxing agencies within which the subject property resides. In addition to the 1.00% fixed amount, property owners were charged taxes as a percentage of assessed property values for the payment of OCSD general obligation bonds (which were paid in full in fiscal year 1998-99). 83 ORANGE COUNTY SANITATION DISTRICT Assessed and Estimated Actual Value of Taxable Property (Dollars In Thousands) Last Ten Fiscal Years Percent Change in Fiscal Assessed Year Secured Unsecured Total Value 2009-10 299,038,654$ 6,116,530$ 305,155,184$ 5.08% 2010-11 298,099,034 6,238,834 304,337,868 -0.27% 2011-12 302,526,970 6,163,979 308,690,949 1.43% 2012-13 310,451,986 5,901,040 316,353,026 2.48% 2013-14 323,064,994 6,220,505 329,285,499 4.09% 2014-15 343,102,030 7,378,643 350,480,673 6.44% 2015-16 365,267,850 6,936,768 372,204,618 6.20% 2016-17 385,137,024 6,642,312 391,779,336 5.26% 2017-18 409,310,248 6,990,609 416,300,857 6.26% 2018-19 435,911,818 7,213,037 443,124,855 6.44% Source: Orange County Auditor - Controller's Office. In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an inflation factor which is limited to a maximum increase of 2%. With a few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Consequently, the assessed and estimated values are the same. $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Secured Unsecured 84 ORANGE COUNTY SANITATION DISTRICT Property Tax and User Fee Levies and Collections (Dollars in Thousands) Last Ten Fiscal Years (1) Total Tax Current Tax Percent Total Tax % of Total % of Pass- Fiscal and User and User Fee of Levy Delinquent and User Fee Collection O/S Delinquencies Through Year Fee Levy Collection Collected Collection Collection to Levy Delinquencies to Levy Payments 2009-10 272,050$ 272,110$ 100.02 226$ 272,336$ 100.11 (60)$ (0.02) -$ 2010-11 292,646 292,689 100.01 120 292,809 100.06 (43) (0.01) - 2011-12 314,077 314,133 100.02 121 314,254 100.06 (56) (0.02) 3,116 2012-13 340,298 340,156 99.96 64 340,220 99.98 142 0.04 14,687 2013-14 356,607 356,108 99.86 76 356,184 99.88 499 0.14 7,274 2014-15 362,978 362,927 99.99 108 363,035 100.02 51 0.01 8,447 (2) 2015-16 371,502 370,170 99.64 637 370,807 99.81 1,332 0.36 9,199 (2) 2016-17 381,226 380,078 99.70 608 380,686 99.86 1,148 0.30 9,751 2017-18 386,538 385,673 99.78 741 386,414 99.97 865 0.22 11,353 2018-19 394,641 393,809 99.79 786 394,595 99.99 832 0.21 12,524 Notes Source: Orange County Auditor - Controller's Office. (1)Upon dissolution of California redevelopment agencies during fiscal year 2011-12, property tax increment formerly remitted to OCSD by its member city redevelopment agencies was instead deposited into the newly formed Redevelopment Property Tax Trust Fund (RPTTF) from which the Auditor/Controller makes disbursements on behalf of the successor agencies. There is no tax levy associated with these collections; thus, they have been excluded from the "% of Total Collection to Levy" calculation. (2)In fiscal year 2014-15 and 2015-16, the County did not bill user fees for wholly exempt agencies not subject to property taxes. In fiscal year 2014-15 and 2015-16,OCSD internally billed user fees of $5 million and $4.5 million, respectively, to wholly exempt agencies. These amounts have been excluded from the levy and collection amounts above, as only tax and user fees included on County property tax billings are shown in this schedule. $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total Tax and User Fee Levy Total Tax and User Fee Collection 85 ORANGE COUNTY SANITATION DISTRICT Property Value and Construction Covering The Entire County of Orange (1) (Dollars In Thousands) Last Ten Fiscal Years Non- Residential Construction (3) Total Fiscal Calendar No. of Construction Year Value Year Value Units Value Value (3) 2009-10 422,965,596$ 2010 1,151,929$ 3,091 1,029,407$ 2,181,336$ 2010-11 420,751,575 2011 1,300,019 4,807 1,236,973 2,536,992 2011-12 424,769,642 2012 1,265,430 6,163 1,560,509 2,825,939 2012-13 432,902,274 2013 1,521,280 10,453 2,653,728 4,175,008 2013-14 447,749,156 2014 1,993,154 10,636 2,640,484 4,633,638 2014-15 476,303,290 2015 2,196,000 10,897 2,834,000 5,030,000 2015-16 504,650,360 2016 2,487,000 12,134 3,160,000 5,647,000 2016-17 531,052,158 2017 2,062,000 10,294 3,217,000 5,279,000 2017-18 563,662,044 2018 3,675,000 8,417 2,786,000 6,461,000 2018-19 598,901,016 2019 3,595,000 8,567 2,717,000 6,312,000 (4) Notes and Data Sources (2) - Data Source: Orange County Auditor-Controller's Office. (3) - Data Source: A. Gary Anderson Center for Economic Research, Chapman University. (4) - Forecasted numbers. (1) -The Orange County Sanitation District services 479 square miles or 60% of the total 799 square miles that make up the boundaries of the County of Orange. Residential Construction (3) Assessed Property Value (2) 86 ORANGE COUNTY SANITATION DISTRICT Insurance in Force As of June 30, 2019 Type Insurer Deductible All-Risk Property Fire and Other Perils Public Entity Property $500,000 per $1 billion/occurrence Insurance Program occurrence (multiple insurers) Flood Public Entity Property $2500,000 per $300 million/occurrence Insurance Program occurrence Earthquake Two insurers 5% per structure, $25 million (certain structures only) min. $5,000,000 Boiler & Machinery Public Entity Property $25,000 to $100 million/occurrence Insurance Program $350,000 (multiple insurers) Crime Insurance National Union Fire $25,000 $5 million Cyber Insurance Lloyd's of London (Beazley) $100,000 $2 million Excess Great American $500,000 $40 million/occurrence General Liability (first $10 million layer); and annual aggregate Berkley National ($20 million layer excess $10 million) Great American ($10 million layer excess $30 million) Travel & Accident Chubb Group of Insurance None Accidental Death & Dismemberment: Companies Class 1: Elected Officials, $500,000 per occurrence Class 2: Employees, 10X annual salary, up to $500,000 per occur. Excess Workers'CSAC Excess Insurance $1,000,000 Unlimited statutory coverage Compensation Authority Program Each Accident each accident, each employee $4 million employer's liability Pollution Liability CSAC Excess Insurance $75,000 $10,000,000 per loss Authority Program Watercraft Liability Atlantic Specialty $2,500 BI / $10 million $10,000 All other Hull & Machinery Atlantic Specialty $10,000 Pollution Liability Great American Ins. Co, None $5 million Source: Orange County Sanitation District's Risk Management Office. Limit $600,000 87 (THIS PAGE INTENTIONALLY LEFT BLANK) 88 ORANGE COUNTY SANITATION DISTRICTFINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.ocsd.com 06/30/19 ORANGE COUNTY SANITATION DISTRICT Single Audit Reports For the Year Ended June 30, 2019 ORANGE COUNTY SANITATION DISTRICT Single Audit Reports For the Year Ended June 30, 2019 Table of Contents Page Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....................................... 1 Independent Auditor's Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .................................................. 3 Schedule of Expenditures of Federal Awards .............................................................................................. 6 Notes to the Schedule of Expenditures of Federal Awards .......................................................................... 7 Schedule of Findings and Questioned Costs ................................................................................................ 8 www.mgocpa.com Macias Gini & O’Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 1 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards To the Board of Directors Orange County Sanitation District Fountain Valley, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Orange County Sanitation District (OCSD), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise OCSD’s basic financial statements, and have issued our report thereon dated October 25, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered OCSD’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of OCSD’s internal control. Accordingly, we do not express an opinion on the effectiveness of OCSD’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of OCSD’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether OCSD’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 2 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of OCSD’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering OCSD’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Newport Beach, California October 25, 2019 www.mgocpa.com Macias Gini & O’Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 3 Independent Auditor’s Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance To the Board of Directors Orange County Sanitation District Fountain Valley, California Report on Compliance for the Major Federal Program We have audited the Orange County Sanitation District’s (OCSD) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on OCSD’s major federal program for the year ended June 30, 2019. OCSD’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for OCSD’s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about OCSD’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of OCSD’s compliance. Opinion on the Major Federal Program In our opinion, OCSD complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2019. 4 Report on Internal Control Over Compliance Management of OCSD is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered OCSD’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of OCSD’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of OCSD as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise OCSD’s basic financial statements. We issued our report thereon dated October 25, 2019, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. 5 The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Newport Beach, California October 25, 2019 ORANGE COUNTY SANITATION DISTRICT Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2019 7 (1) BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of the Orange County Sanitation District (OCSD), under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of OCSD, it is not intended to and does not present the financial position, changes in financial position or cash flows of OCSD. (2) SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Under the accrual basis of accounting expenditures are recognized when incurred, regardless of the timing of cash flows. (3) PASS-THROUGH AMOUNTS TO SUB-RECIPIENTS OCSD did not pass through any federal awards to subrecipients during the year ended June 30, 2019. (4) INDIRECT COST RATES OCSD has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. There were no indirect costs charged to any of OCSD’s Federal programs during the year ended June 30, 2019. ORANGE COUNTY SANITATION DISTRICT Schedule of Findings and Questioned Costs For the Year Ended June 30, 2019 8 Section I - Summary of Auditor’s Results Financial Statements: Type of report the auditor issued on whether the financial statements were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: • Material weakness(es) identified? No • Significant deficiency(ies) identified? None reported Noncompliance material to financial statements noted? No Federal Awards: Internal control over major federal programs: • Material weakness(es) identified? No • Significant deficiency(ies) identified? No Type of auditor’s report issued on compliance for the major federal program: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No Identification of major federal program: CFDA Number Name of Federal Program 15.504 Title XVI Water Reclamation and Reuse Program Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as a low-risk auditee? No ORANGE COUNTY SANITATION DISTRICT Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2019 9 Section II - Financial Statement Findings A. Internal Control Matters None reported. B. Compliance Findings None reported. Section III – Federal Award Findings and Questioned Costs A. Internal Control Matters None reported. B. Compliance Findings None reported. Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-708 Agenda Date:11/13/2019 Agenda Item No:8. FROM:James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: PROFESSIONAL RISK MANAGEMENT CONSULTANT AGREEMENT GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Approve a sole source Professional Consultant Services Agreement with John J.Preston, Specification No.SSJ 2174,to perform professional risk management consulting services for the Orange County Sanitation District,which includes overseeing property and general liability loss control and setting loss control requirements on public bids and contracts,risk transfer,loss prevention,and risk reduction in an amount not to exceed $150,000 per year,for a term of one year beginning December 1, 2019 - November 30, 2020; with a one-year renewal option. BACKGROUND The Orange County Sanitation District (Sanitation District)entered into an agreement with Keenan and Associates (Keenan)in August 2019 to provide risk management consulting services through December 31,2019.The Sanitation District has an existing relationship with John J.Preston through Keenan providing risk management consulting services.Entering into a separate agreement with John J.Preston will provide a cost savings compared to the contract with Keenan and allow the Sanitation District to have greater direction and control of the services provided.Mr.Preston is familiar with the Sanitation District,has exhibited a clear understanding of Sanitation District processes,and is well-versed in Sanitation District operations.It would be in the best interest of the Sanitation District to retain John J.Preston's services for immediate risk management consulting needs to ensure business continuity while giving the Sanitation District the opportunity to evaluate the program and its management.Staff previously contacted risk management firms including Bickmore Risk Management Consulting (Bickmore)and Marsh Risk Consulting (Marsh)to inquire about their risk management services;however,Bickmore was unresponsive and Marsh does not provide the requested services. RELEVANT STANDARDS ·Commitment to safety & reducing risk in all operations Orange County Sanitation District Printed on 11/6/2019Page 1 of 2 powered by Legistar™ File #:2019-708 Agenda Date:11/13/2019 Agenda Item No:8. PROBLEM The agreement with Keenan ends on December 31,2019.The Sanitation District will be without professional risk management personnel during the evaluation of the program and its management as of this date. This scenario will expose the Sanitation District to greater risk and potential liability. PROPOSED SOLUTION Approve a sole source Professional Consultant Services Agreement with John J.Preston in accordance with Purchasing Ordinance No. OCSD-52, Section 107 A (Sole Source Procurement). TIMING CONCERNS The existing agreement ends on December 31, 2019. RAMIFICATIONS OF NOT TAKING ACTION Potentially exposing the Sanitation District to risk and liability. FINANCIAL CONSIDERATIONS It is estimated that the cost for professional risk management consulting services will not exceed $150,000.This request complies with authority levels of the Sanitation District's Purchasing Ordinance.Funding for this agreement is available from an open budgeted risk management position.This position is currently vacant following the retirement of a long-term employee and attempts to find a permanent replacement. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Professional Consultant Services Agreement Orange County Sanitation District Printed on 11/6/2019Page 2 of 2 powered by Legistar™ Orange County Sanitation District 1 of 10 Specification No. SSJ 2174 Version 080919 PROFESSIONAL CONSULTANT SERVICES AGREEMENT RISK MANAGEMENT LOSS CONTROL SERVICES AGREEMENT Specification No. SSJ 2174 THIS AGREEMENT is made and entered into as of the date fully executed below, by and between Orange County Sanitation District, with a principal place of business at 10844 Ellis Avenue, Fountain Valley, CA 92708 (hereinafter referred to as "OCSD") and John J. Preston with a principal place of business at 166 Fox Ln, Calimesa, CA 92320 (hereinafter referred to as "Consultant") collectively referred to as the “Parties”. W I T N E S S E T H WHEREAS, based on Consultant’s expertise and experience, OCSD desires to temporarily engage Consultant to provide Risk Management Consulting Services "Services” as described in Exhibit “B”; and WHEREAS, Consultant submitted its Proposal, and WHEREAS, on November 13, 2019, the Administration Committee of OCSD, by minute order, authorized execution of this Agreement between OCSD and Consultant; and WHEREAS, OCSD has chosen Consultant to conduct Services in accordance with Ordinance No. OCSD-52; and NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Introduction 1.1 This Agreement and all exhibits hereto (called the "Agreement") is made by OCSD and the Consultant. The terms and conditions herein exclusively govern the purchase of Services as described in Exhibit “B”. 1.2 Exhibits to this Agreement are incorporated by reference and made a part of this Agreement as though fully set forth at length herein. Exhibit “A” NOT USED Exhibit “B” Proposal Exhibit “C” Acknowledgement of Insurance Requirements Exhibit “D” OCSD Safety Standards Exhibit “E” Human Resources Policies Exhibit “F” NOT USED 1.3 In the event of any conflict or inconsistency between the provisions of this Agreement and any of the provisions of the exhibits hereto, the provisions of this Agreement shall in all respects govern and control. 1.4 This Agreement may not be modified, changed, or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by both Parties. 1.5 The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any section or provision hereof. Orange County Sanitation District 2 of 10 Specification No. SSJ 2174 Version 080919 1.6 The term “days”, when used in the Agreement, shall mean calendar days, unless otherwise noted as workdays. 1.7 The term “workday”. Workdays are defined as all days that are not Saturday, Sunday, or OCSD observed holidays. Meetings with OCSD staff shall be scheduled from Monday through Thursday between the hours of 8 a.m. and 4 p.m. (exception is Operations staff who maintain plant operations 24/7 and work a rotated 12-hour shift) and shall conform to OCSD work schedules. OCSD review periods shall not include OCSD observed holidays. 1.8 OCSD holidays (non-working days) are as follows: New Year’s Day, Lincoln’s Birthday, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve, and Christmas Day. 1.9 Work Hours: All work shall be scheduled Monday through Friday, between the hours of 7:30 a.m. and 5:30 p.m. OCSD will not pay for travel time. 1.10 Consultant shall provide OCSD with all required premiums and/or overtime work at no charge beyond the total amount of the Agreement. 1.11 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Consultant as a result of work performed in anticipation of purchases of said services by OCSD. 2. Scope of Work - Subject to the terms of this Agreement, Consultant shall perform the Services identified in Exhibit “B”. Consultant warrants that all of its Services shall be performed in a competent, professional, and satisfactory manner. 3. Modifications to Scope of Work Requests for modifications to the Scope of Work hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. A review of the time required for the modification will be made by OCSD and Consultant and the Agreement period adjusted accordingly. 4. Compensation Compensation to be paid by OCSD to Consultant for the Services provided under this Agreement shall be a total amount not to exceed One Hundred Fifty Thousand Dollars ($150,000.00). 5. California Department of Industrial Relations (DIR)Registration and Record of Wages 5.1 To the extent Consultant’s employees and/or subconsultants who will perform work for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 et seq, Consultant and subconsultants shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the work is subject to compliance monitoring and enforcement by the DIR. 5.2 The Consultant and subconsultants shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code 1771.4(a)(3). Penalties for non-compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. 5.3 Pursuant to Labor Code Section 1776, the Consultant and subconsultants shall furnish a copy of all certified payroll records to OCSD and/or general public upon request, provided Orange County Sanitation District 3 of 10 Specification No. SSJ 2174 Version 080919 the public request is made through OCSD, the Division of Apprenticeship Standards, or the Division of Labor Standards Enforcement of the Department of Industrial Relations. 5.4 The Consultant and subconsultants shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(e). 6. Payment and Invoicing 6.1 OCSD shall pay, net thirty (30) days, upon receipt and approval, by OCSD’s Project Manager or designee, of itemized invoices submitted monthly for Services rendered in accordance with Exhibit “B”. OCSD, at its sole discretion, shall be the determining party as to whether the Services have been satisfactorily completed. 6.2 Invoices shall be emailed by Consultant to OCSD Accounts Payable at APStaff@OCSD.com and “INVOICE” with the Purchase Order Number shall be referenced in the subject line. 7. Audit Rights Consultant agrees that, during the term of this Agreement and for a period of three (3) years after its termination, OCSD shall have access to and the right to examine any directly pertinent books, documents, and records of Consultant relating to the invoices submitted by Consultant pursuant to this Agreement. 8. Commencement and Term The Services provided under this Agreement shall be for the period of one (1) year commencing on December 1, 2019 and continuing through November 30, 2020. 9. Renewals 9.1 OCSD may exercise the option to renew this Agreement for (1) one-year period based upon the criteria set forth in Exhibit “B”, under the terms and conditions contained herein. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 9.2 This Agreement may be renewed by OCSD Purchase Order. 10. Extensions The term of this Agreement may be extended only by written instrument signed by both Parties. 11. Performance Time is of the essence in the performance of the provisions hereof. 12. Termination 12.1 OCSD reserves the right to terminate this Agreement for its convenience, with or without cause, in whole or in part, at any time, by written notice from OCSD. Upon receipt of a termination notice, Consultant shall immediately discontinue all work under this Agreement (unless the notice directs otherwise). OCSD shall thereafter, within thirty (30) days, pay Consultant for work performed (cost and fee) to the date of termination. Consultant expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Agreement. Such notice of termination shall terminate this Agreement and release OCSD from any further fee, cost or claim hereunder by Consultant other than for work performed to the date of termination. 12.2 OCSD reserves the right to terminate this Agreement immediately upon OCSD’s determination that Consultant is not complying with the Scope of Work requirements, if the level of service is inadequate, or any other default of this Agreement. Orange County Sanitation District 4 of 10 Specification No. SSJ 2174 Version 080919 12.3 OCSD may also immediately terminate for default of this Agreement in whole or in part by written notice to Consultant: • if Consultant becomes insolvent or files a petition under the Bankruptcy Act; or • if Consultant sells its business; or • if Consultant breaches any of the terms of this Agreement; or • if total amount of compensation exceeds the amount authorized under this Agreement. 12.4 All OCSD property in the possession or control of Consultant shall be returned by Consultant to OCSD on demand, or at the termination of this Agreement, whichever occurs first. 13. Indemnification and Hold Harmless Provision Consultant shall assume all responsibility for damages to property and/or injuries to persons, including accidental death, which may arise out of or be caused by Consultant's services under this Agreement, or by its subconsultant(s) or by anyone directly or indirectly employed by Consultant, and whether such damage or injury shall accrue or be discovered before or after the termination of the Agreement. Except as to the sole active negligence of or willful misconduct of OCSD, Consultant shall indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers, agents and employees, from and against any and all claims, liabilities, damages or expenses of any nature, including attorneys' fees: (a) for injury to or death of any person or damage to property or interference with the use of property, arising out of or in connection with Consultant's performance under the Agreement, and/or (b) on account of use of any copyrighted or uncopyrighted material, composition, or process, or any patented or unpatented invention, article or appliance, furnished or used under the Agreement, and/or (c) on account of any goods and services provided under this Agreement. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Consultant or anyone employed by or working under Consultant. To the maximum extent permitted by law, Consultant's duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have merit or are meritless, or which involve claims or allegations that any of the parties to be defended were actively, passively, or concurrently negligent, or which otherwise assert that the parties to be defended are responsible, in whole or in part, for any loss, damage, or injury. Consultant agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. This section shall survive the expiration or early termination of the Agreement. 14. Insurance Consultant and all subconsultants shall purchase and maintain, throughout the life of this Agreement and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements, Exhibit “C“. Consultant shall not commence work under this Agreement until all required insurance is obtained in a form acceptable to OCSD, nor shall Consultant allow any subconsultant to commence service pursuant to a subcontract until all insurance required of the subconsultant has been obtained. Failure to maintain required insurance coverage shall result in termination of this Agreement. 15. Key Personnel Personnel, as provided in Exhibit “B”, are considered “key” to the work under this Agreement and will be available for the term of the Agreement. No person designated as key under this Agreement shall be removed or replaced without prior written consent of OCSD. If OCSD asks Consultant to remove a person designated as key under this Agreement, Consultant agrees to do so immediately regardless of the reason, or the Orange County Sanitation District 5 of 10 Specification No. SSJ 2174 Version 080919 lack of reason, for OCSD's request. Consultant shall assign only competent personnel to perform services pursuant to this Agreement. 16. Confidentiality and Non-Disclosure 16.1 Consultant acknowledges that in performing the Services hereunder, OCSD may have to disclose to Consultant orally and in writing certain confidential information that OCSD considers proprietary and has developed at great expense and effort. 16.2 Consultant agrees to maintain in confidence and not disclose to any person, firm, or corporation, without OCSD's prior written consent, any trade secret or confidential information, knowledge or data relating to the products, process, or operation of OCSD. 16.3 Consultant further agrees to maintain in confidence and not to disclose to any person, firm, or corporation any data, information, technology, or material developed or obtained by Consultant during the term of this Agreement. 16.4 Consultant agrees as follows: • To use the confidential information only for the purposes described herein; to not reproduce the confidential information; to hold in confidence and protect the confidential information from dissemination to and use by anyone not a party to this Agreement; and to not use the confidential information to benefit itself or others. • To restrict access to the confidential information to its Consultant or personnel of Consultant who (1) have a need to have such access and (2) have been advised of and have agreed in writing to treat such information in accordance with the terms of this Agreement. • To return all confidential information in Consultant's possession upon termination of this Agreement or upon OCSD's request, whichever occurs first. • To hold in confidence information and materials, if any, developed pursuant to the Services hereunder. 16.5 The provisions of this section shall survive termination or expiration of this Agreement and shall continue for so long as the material remains confidential. 17. Ownership of Documents All drawings, specifications, reports, records, documents, memoranda, correspondence, computations, and other materials prepared by Consultant, its employees, subconsultants, and agents in the performance of this Agreement shall be the property of OCSD and shall be promptly delivered to OCSD upon request of OCSD’s Project Manager or designee, or upon the termination of this Agreement, and Consultant shall have no claim for further employment or additional compensation as a result of the exercise by OCSD of its full rights of ownership of the documents and materials hereunder. Any use of such completed documents for other projects and/or use of incomplete documents without specific written authorization by the Consultant will be at OCSD's sole risk and without liability to Consultant. Consultant shall ensure that all its subconsultants shall provide for assignment to OCSD of any documents or materials prepared by them. 18. Ownership of Intellectual Property 18.1 Consultant agrees that all designs, plans, reports, specifications, drawings, schematics, prototypes, models, inventions, and all other information and items made during the course of this Agreement and arising from the Services (hereinafter referred to as "New Developments") shall be and are assigned to OCSD as its sole and exclusive property. 18.2 Consultant agrees to promptly disclose to OCSD all such New Developments. Upon Orange County Sanitation District 6 of 10 Specification No. SSJ 2174 Version 080919 OCSD's request, Consultant agrees to assist OCSD, at OCSD's expense, to obtain patents or copyrights for such New Developments, including the disclosure of all pertinent information and data with respect thereto, the execution of all applications, specifications, assignments, and all other instruments and papers which OCSD shall deem necessary to apply for and to assign or convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in such New Developments. Consultant agrees to obtain or has obtained written assurances from its employees and contract personnel of their agreement to the terms hereof with regard to New Developments and confidential information. 18.3 Consultant warrants that Consultant has good title to any New Developments, and the right to assign New Developments to OCSD free of any proprietary rights of any other party or any other encumbrance whatever. 18.4 The originals of all computations, drawings, designs, graphics, studies, reports, manuals, photographs, videotapes, data, computer files, and other documents prepared or caused to be prepared by Consultant or its subconsultants in connection with these Services shall be delivered to and shall become the exclusive property of OCSD. OCSD may utilize these documents for OCSD applications on other projects or extensions of this project, at its own risk. 19. No Solicitation of Employees 19.1 Consultant agrees that it shall not, during the term of this Agreement and for a period of one (1) year immediately following termination of this Agreement, or any extension hereof, call on, solicit, or take away any of the employees whom Consultant became aware of as a result of Consultant's Services to OCSD. 19.2 Consultant acknowledges that OCSD’s employees are critical to its business and OCSD expends significant resources to hire, employ, and train employees. Should Consultant employ or otherwise engage OCSD’s employees during the term of this Agreement and for a period of one (1) year following termination of this Agreement, Consultant will pay OCSD fifty percent (50%) of the former employee’s most recent annual salary earned at OCSD to accurately reflect the reasonable value of OCSD’s time and costs. This payment is in addition to any other rights and remedies OCSD may have at law. 20. Independent Contractor Capacity 20.1 The relationship of Consultant to OCSD is that of an independent contractor and nothing herein shall be construed as creating an employment or agency relationship. 20.2 Consultant shall act independently and not as an officer or employee of OCSD. OCSD assumes no liability for Consultant’s action and performance, nor assumes responsibility for taxes, funds, payments or other commitments, implied or expressed, by or for Consultant. 20.3 Consultant shall not be considered an agent of OCSD for any purpose whatsoever, nor shall Consultant have the right to, and shall not, commit OCSD to any agreement, contract or undertaking. Consultant shall not use OCSD’s name in its promotional material or for any advertising or publicity purposes without expressed written consent. 20.4 Consultant shall not be entitled to any benefits accorded to those individuals listed on OCSD’s payroll as regular employees including, without limitation, worker's compensation, disability insurance, vacation, holiday or sick pay. Consultant shall be responsible for providing, at Consultant’s expense, disability, worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the Services hereunder. Orange County Sanitation District 7 of 10 Specification No. SSJ 2174 Version 080919 20.5 Consultant shall be obligated to pay any and all applicable Federal, State and local payroll and other taxes incurred as a result of fees hereunder. Consultant hereby indemnifies OCSD for any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of Consultant's breach of this provision. 20.6 Consultant shall not be eligible to join or participate in any benefit plans offered to those individuals listed on OCSD's payroll as regular employees. Consultant shall remain ineligible for such benefits or participation in such benefit plans even if a court later decides that OCSD misclassified Consultant for tax purposes. 21. Licenses, Permits Consultant represents and warrants to OCSD that it has obtained all licenses, permits, qualification and approvals of whatever nature that are legally required to engage in this work. Any and all fees required by Federal, State, County, City and/or municipal laws, codes and/or tariffs that pertain to work performed under the terms of this Agreement will be paid by Consultant. 22. Consultant's Representations In the performance of duties under this Agreement, Consultant shall adhere to the highest fiduciary standards, ethical practices and standards of care and competence for their trade/profession. Consultant agrees to comply with all applicable Federal, State and local laws and regulations. 23. Familiarity with Work By executing this Agreement, Consultant warrants that: 1) it has investigated the work to be performed; 2) it has investigated the site of the work and is aware of all conditions there; and 3) it understands the facilities, difficulties and restrictions of the work under this Agreement. Should Consultant discover any latent or unknown conditions materially differing from those inherent in the work or as represented by OCSD, it shall immediately inform OCSD of this and shall not proceed, except at Consultant’s risk, until written instructions are received from OCSD. 24. Right to Review Services, Facilities, and Records 24.1 OCSD reserves the right to review any portion of the Services performed by Consultant under this Agreement, and Consultant agrees to cooperate to the fullest extent possible. 24.2 Consultant shall furnish to OCSD such reports, statistical data, and other information pertaining to Consultant's Services as shall be reasonably required by OCSD to carry out its rights and responsibilities under its agreements with its bondholders or noteholders and any other agreement relating to the development of the project(s) and in connection with the issuance of its official statements and other prospectuses with respect to the offering, sale, and issuance of its bonds and other obligations. 24.3 The right of OCSD to review or approve drawings, specifications, procedures, instructions, reports, test results, calculations, schedules, or other data that are developed by Consultant shall not relieve Consultant of any obligation set forth herein. 25. Force Majeure Neither party shall be liable for delays caused by accident, flood, acts of God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force Majeure condition may be rescheduled by mutual consent or may be eliminated from the Agreement. 26. Severability If any section, subsection, or provision of this Agreement, or any agreement or instrument contemplated hereby, or the application of such section, subsection, or Orange County Sanitation District 8 of 10 Specification No. SSJ 2174 Version 080919 provision is held invalid, the remainder of this Agreement or instrument in the application of such section, subsection or provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate the expectations of the Parties. 27. Waiver The waiver of either party of any breach or violation of, or default under, any provision of this Agreement, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Agreement or default thereunder. Any breach by Consultant to which OCSD does not object shall not operate as a waiver of OCSD’s rights to seek remedies available to it for any subsequent breach. 28. Remedies In addition to other remedies available in law or equity, if the Consultant fails to make delivery of the goods or Services or repudiates its obligations under this Agreement, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD may (1) terminate the Agreement; (2) recover whatever amount of the purchase price OCSD has paid, and/or (3) “cover” by purchasing, or contracting to purchase, substitute goods or Services for those due from Consultant. In the event OCSD elects to “cover” as described in (3), OCSD shall be entitled to recover from Consultant as damages the difference between the cost of the substitute goods or Services and the Agreement price, together with any incidental or consequential damages. 29. Governing Law This Agreement shall be governed by and interpreted under the laws of the State of California and the Parties submit to jurisdiction in Orange County, in the event any action is brought in connection with this Agreement or the performance thereof. 30. Environmental Compliance Consultant shall, at its own cost and expense, comply with all Federal, State, and local environmental laws, regulations, and policies which apply to the Consultant, its sub-consultants, and the Services, including, but not limited to, all applicable Federal, State, and local air pollution control laws and regulations. 31. Attorney’s Fees If any action at law or inequity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which it may be entitled. 32. Dispute Resolution 32.1 In the event of a dispute as to the construction or interpretation of this Agreement, or any rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Agreement, through the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute resolution process. 32.2 In the event the Parties are unable to timely resolve the dispute through mediation, the issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure, Part 3, Title 9, Sections 1280 et seq. For such purpose, an agreed arbitrator shall be selected, or in the absence of agreement, each party shall select an arbitrator, and those two (2) arbitrators shall select a third. Discovery may be conducted in connection with the arbitration proceeding pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, or three (3) arbitrators acting as a board, shall take such evidence and make such investigation as deemed appropriate and shall render a written decision on the matter Orange County Sanitation District 9 of 10 Specification No. SSJ 2174 Version 080919 in question. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California. The arbitrator's decision and award shall be subject to review for errors of fact or law in the Superior Court for the County of Orange, with a right of appeal from any judgment issued therein. 33. Damage to OCSD's Property Any OCSD property damaged by Consultant will be subject to repair or replacement by Consultant at no cost to OCSD. 34. OCSD Safety Standards OCSD requires Consultant and its subconsultants to follow and ensure their employees follow all Federal, State and local regulations as well as OCSD Safety Standards while working at OCSD locations. If during the course of the Agreement it is discovered that OCSD Safety Standards do not comply with Federal, State or local regulations, then the Consultant is required to follow the most stringent regulatory requirement at no additional cost to OCSD. Consultant and all of its employees and subconsultants, shall adhere to all applicable OCSD Safety Standards attached hereto in Exhibit “D” and the Human Resources Policies in Exhibit “E”. 35. Freight (F.O.B. Destination) Consultant assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Agreement. 36. Assignments Consultant shall not delegate any duties nor assign any rights under this Agreement without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 37. Conflict of Interest and Reporting 37.1 Consultant shall at all times avoid conflicts of interest or appearance of conflicts of interest in performance of this Agreement. 37.2 Consultant affirms that to the best of its knowledge there exists no actual or potential conflict between Consultant’s families, business or financial interest or its Services under this Agreement, and in the event of change in either its private interests or Services under this Agreement, it will raise with OCSD any question regarding possible conflict of interest which may arise as a result of such change. 38. Third Party Rights Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than OCSD and Consultant. 39. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall be personally liable to Consultant, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to Consultant or to its successor, or for breach of any obligation of the terms of this Agreement. 40. Authority to Execute The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement and that by executing this Agreement, the Parties are formally bound. 41. Read and Understood By signing this Agreement, Consultant represents that it has read and understood the terms and conditions of the Agreement. 42. Entire Agreement This Agreement constitutes the entire agreement of the Parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties with respect to the subject matter Orange County Sanitation District 10 of 10 Specification No. SSJ 2174 Version 080919 hereof. 43. Notices All notices under this Agreement must be in writing. Written notice shall be delivered by personal service or sent by registered or certified mail, postage prepaid, return receipt requested, or by any other overnight delivery service which delivers to the noticed destination and provides proof of delivery to the sender. Any facsimile notice must be followed within three (3) days by written notice. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given as provided hereunder shall be deemed to be receipt of the notice, demand or request sent. All notices shall be effective when first received at the following addresses: OCSD: Darius Ghazi Senior Buyer Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Consultant: John J. Preston 166 Fox Ln Calimesa, CA 92320 Each party shall provide the other party written notice of any change in address as soon as practicable. IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this Agreement to be signed by the duly authorized representatives. ORANGE COUNTY SANITATION DISTRICT Dated: _________________ By: ___________________________________ Chad Wanke Chair, Administration Committee Dated: _________________ By: ___________________________________ Clerk of the Board Dated: _________________ By: ___________________________________ Ruth Zintzun Purchasing and Contracts Manager COMPANY Dated: _________________ By: ___________________________________ ______________________________________ Print Name and Title of Officer Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-711 Agenda Date:11/13/2019 Agenda Item No:9. FROM:James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: POSITION CHANGES FOR FISCAL YEAR 2019-20 GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Recommend to the Board of Directors to: Approve a position exchange and corresponding salary upgrade from a vacant Senior Mechanic (Salary Grade LOC67) position to Maintenance Specialist (Salary Grade PRO80). BACKGROUND Orange County Sanitation District (Sanitation District)management has evaluated its operations and identified opportunities to optimize planned maintenance strategies in the Operations &Maintenance (O&M)Department by creating a new Preventative Maintenance (PM)Optimization Group.Currently, maintenance specialists schedule up to six hundred (600)incoming work orders per week.The proposed PM Optimization Group will track,maintain,and manage assets throughout their lifecycle to maximize reliability at the lowest possible costs;ensuring both planned and corrective (unplanned) maintenance efforts are effective. The proposed PM Optimization Group will require four position exchanges with no increase to the overall number of full-time staff.Currently,the Sanitation District has four vacant budgeted positions with job titles/pay that can be exchanged for the position titles and salaries needed to form the group. Three of the four positions can be filled from vacant positions that are at a higher salary grade.One of the positions will require an upgrade as requested in the recommended action above.The proposed PM Optimization Group will be comprised of one Maintenance Supervisor and three Maintenance Specialists. Three position exchanges and salary downgrades were implemented through the meet and confer process including: ·Engineering Manager (Salary Grade EM18)to Maintenance Supervisor (Salary Grade SUP82); ·Principal Staff Analyst (Salary Grade PRO84)to Maintenance Specialist (Salary Grade PRO80); and ·Principal I.T. Analyst (Salary Grade PRO87) to Maintenance Specialist (Salary Grade PRO80). Orange County Sanitation District Printed on 11/6/2019Page 1 of 3 powered by Legistar™ File #:2019-711 Agenda Date:11/13/2019 Agenda Item No:9. RELEVANT STANDARDS ·Plan for and execute succession, minimizing vacant position times ·Maintain and adhere to appropriate internal planning documents (Budget Update,Fiscal Year 2019-20) ·Maintain a proactive asset management program ·Maintain a culture of improving efficiency to reduce the cost to provide the current service level or standard PROBLEM New and aging infrastructure in the Plants and collections system requires an increased level of planned maintenance.The Sanitation District has a limited level of resources available to perform this scheduled maintenance.With limited resources,the current maintenance schedules may exceed the capacity to perform the work in an effective, timely, and economical manner. PROPOSED SOLUTION Conduct an in-depth assessment to optimize Sanitation District planned maintenance schedules. Assign this effort to a new PM Optimization Group,which will consist of four positions in charge of tracking,maintaining,and managing assets.Form this new group by downgrading three existing vacancies and approve one vacant position exchange and corresponding salary upgrade. TIMING CONCERNS Staff recommends approval of the position change to allow establishment of the PM Optimization Group during the current fiscal year to begin to address needs and proceed with the proposed organizational structure without delays. RAMIFICATIONS OF NOT TAKING ACTION Deferring the requested position upgrade to the upcoming budget cycle for Fiscal Year 2020-21 would require that the position remain vacant and unutilized for the remainder of the current fiscal year,a timeframe of approximately eight (8)months.This would delay the Sanitation District’s launch of the PM Optimization Group,which is aimed to maximize efficiencies with the organization’s asset management program. PRIOR COMMITTEE/BOARD ACTIONS June 2019 - Approved Budget Update, Fiscal Year 2019-20. ADDITIONAL INFORMATION The O &M Department is responsible for the reliability and maintenance of the Sanitation District’s assets.To accomplish this,the Sanitation District utilizes a combination of routine preventative maintenance, predictive maintenance, managed activities, and corrective maintenance. Management has identified a need to create a new PM Optimization Group in the O&M Department. Orange County Sanitation District Printed on 11/6/2019Page 2 of 3 powered by Legistar™ File #:2019-711 Agenda Date:11/13/2019 Agenda Item No:9. Management has identified a need to create a new PM Optimization Group in the O&M Department. This group will be tasked with conducting an in-depth assessment to optimize planned maintenance strategies for new and existing assets and to establish maintenance approaches and strategies for assets installed by capital improvement projects prior to beneficial occupancy.The PM Optimization Program will track,maintain,and manage assets throughout their lifecycles from design, construction,commissioning,beneficial occupancy,operations and maintenance,to the eventual decommissioning or replacement of assets. This will ensure that asset life cycle is maximized with the lowest risk to process failure by achieving the intended reliability, at the lowest possible cost, and maximizing equipment availability. CEQA N/A FINANCIAL CONSIDERATIONS The recommended pay grade change represents a potential increased salary cost of $29,494 per year.The estimated salary savings from downgrading other positions is $105,768 per year.The net savings for FY 2019-20 is $76,274 as a result of the position changes. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·Preventative Maintenance Optimization Position Exchanges Orange County Sanitation District Printed on 11/6/2019Page 3 of 3 powered by Legistar™ Proposed Position Change for Approval Request Type Budgeted Position Current Pay Grade Annual Salary (Range Max) Current Barg Unit Proposed Position Proposed Pay Grade Annual Salary (Range Max) Proposed Barg Unit Upgrade Senior Mechanic LOC67 96,366.40$ Local 501 Maintenance Specialist PRO80 125,860.80$ Professional Salary Increase 29,494$ Position Exchanges (Background Information Only) Request Type Budgeted Position Current Pay Grade Annual Salary (Range Max) Current Barg Unit Updated Position Updated Pay Grade Annual Salary (Range Max) Updated Barg Unit Downgrade Engineering Manager EM18 201,198.40$ N/A Maintenance Supervisor SUP82 132,204.80$ Supervisor Downgrade Principal Staff Analyst PRO84 138,923.20$ Professional Maintenance Specialist PRO80 125,860.80$ Professional Downgrade Principal Information Technology Analyst PRO87 149,572.80$ Professional Maintenance Specialist PRO80 125,860.80$ Professional Salary Savings (105,768)$ Net Savings (76,274)$ PREVENTATIVE MAINTENANCE OPTIMIZATION POSITION EXCHANGES November 2019 Orange County Sanitation District ADMINISTRATION COMMITTEE Agenda Report Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 File #:2019-713 Agenda Date:11/13/2019 Agenda Item No:10. FROM:James D. Herberg, General Manager Originator: Kathy Millea, Director of Engineering SUBJECT: CLIMATE RESILIENCY STUDY, PROJECT NO. SP-152 GENERAL MANAGER'S RECOMMENDATION RECOMMENDATION: Information Item. BACKGROUND Governor's Executive Order #S-13-08 (EO-S-13-08)directs state agencies to plan for sea level rise and climate impacts through coordination of the State Climate Adaptation Strategy.The Orange County Sanitation District's (Sanitation District)Climate Change/Environmental Footprint Initiative started in 2007 and has completed a detailed carbon footprint study.In addition,the Sanitation District developed a strategy to respond to climate change regulations,public outreach and education, as well as research initiatives related to energy efficiency and sustainable technologies. The location of Plant No.2 and several pump stations along the coast make them vulnerable to disruptions due to climate change impacts.Similar studies done by other agencies on extreme events have shown that,in most cases,the costs of repairs were significantly higher than the costs of mitigation and adaptation strategies. Climate Resiliency Study,Project No.SP-152,which was awarded by the Board of Directors on November 28,2018,conducted a site-specific climate risk assessment for the Sanitation District’s coastal facilities and provided recommendations for mitigation and adaptation strategies.Staff will present an overview of the study recommendations. RELEVANT STANDARDS ·Maintain a proactive asset management program ·24/7/365 treatment plant reliability ·Protect Orange County Sanitation District assets ·Sustain 1, 5, 20-year planning horizons Orange County Sanitation District Printed on 11/6/2019Page 1 of 2 powered by Legistar™ File #:2019-713 Agenda Date:11/13/2019 Agenda Item No:10. PRIOR COMMITTEE/BOARD ACTIONS November 2018 -Approved a Professional Services Agreement with Hazen and Sawyer to provide engineering services for the Climate Resiliency Study,Project No.SP-152,for an amount not to exceed $697,952; and approved a contingency of $69,795 (10%). ADDITIONAL INFORMATION The Environmental Protection Agency (EPA)is currently drafting the Sanitation District’s NPDES Ocean Discharge Permit for renewal.The EPA has indicated that the new permit may include a requirement to address impacts with climate change and sea level rise.This study would comply with such requirements. CEQA The project is exempt from CEQA pursuant to CEQA Guidelines Section 15262 [Feasibility and Planning Studies].A Notice of Exemption was filed with the OC Clerk-Recorder on December 3, 2018. FINANCIAL CONSIDERATIONS This item is informational and does not require any commitment of funds. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: ·SP-152 OCSD Climate Resiliency Executive Summary (separately bound document) AN:sa:gc Orange County Sanitation District Printed on 11/6/2019Page 2 of 2 powered by Legistar™ Orange County Sanitation District Climate Resiliency Study Executive Summary 2019 Message from Our Director of Engineering Dear Orange County Residents, For the past 65 years, the Orange County Sanitation District (OCSD) has protected public health and the environment for the coastal region of Southern California. We are responsible for collecting, treating, and recycling wastewater, and have become an acknowledged leader in resource recovery. This includes our partnership with the Orange County Water District on the Groundwater Replenishment System—the world’s largest purification system for indirect potable reuse. Our customers count on us around the clock and in every situation, including during extreme weather and climate conditions. We have operated through heavy storms that threatened to overflow our sewers. High tides have carried seawater into our coastal pump stations. And recent wildfires have affected the lands around our service area. Throughout these challenges we have remained resilient. We use each as an opportunity to analyze possible risks and vulnerabilities in our system, and better prepare for the next. We pride ourselves on following the example of those who came before us, making forward-thinking decisions and investments to protect public health and the environment. To continue to look towards the future, OCSD has developed a Climate Resiliency Study. This study provides a comprehensive analysis of climate- related, site-specific risk assessments of OCSD’s facilities using the best available climate predictions, industry standards, and geographical information systems. We worked alongside industry experts to develop practical solutions that can be incorporated immediately to improve the resiliency of our facilities or folded into the design and construction of future projects. This Executive Summary provides an overview of the information obtained and generated during the preparation of the Climate Resiliency Study. Together, we will use what we have learned through this study to keep our facilities resilient, preserving Orange County’s natural beauty and the communities we enjoy long into the future. Kathleen T. Millea, P.E. Director of Engineering “Our infrastructure protects the environment and Orange County’s quality of life. We need to make sure that these important facilities can withstand extreme events.” - Jim Herberg, General Manager i Climate Resiliency Study 2019 Table of Contents Our Mission To protect public health and the environment by providing wastewater collection, treatment, and recycling. IntroductionPage 1 Climate ResiliencyPage 2 VulnerabilitiesPage 3 Flooding and Tsunami ImpactsPage 7 Page 9 Protection Against Heat and FirePage 10 Toolbox of AdaptationsPage 4 Causes of Flooding in Orange CountyPage 5 Thinking Globally: How OCSD is Reducing Greenhouse Gas Emissions Page 11 Looking to the FuturePage 12 Building Level Flood ProtectionPage 6 Boundary Level Flood ProtectionPage 8 LONGBEACH HUNTINGTONBEACH NEWPORTBEACH IRVINE ANAHEIM BUENAPARK SEALBEACH 405 5 73 91 241 Pump stations Treatment plants FOUNTAINVALLEY SANTAANA ORANGE VILLAPARK WESTMINSTER FULLERTON Sewer pipes are used to convey wastewater from cities and districts. Pump stations lift wastewater to elevations that enable gravity flow to the treatment plants. Treatment plants breakdown wastes to recover resources. OCSD SERVICE AREA WHO WE SERVE2.62.6 Million PeopleMillion People2020 CitiesCities 44 Special Districts Special Districts WHAT WE HAVE 389389 Miles of Sewer PipeMiles of Sewer Pipe 1515 Pump StationsPump Stations 22 Treatment PlantsTreatment Plants WHAT WE DO185185 Million Gallons of Wastewater Per Day Into Million Gallons of Wastewater Per Day Into 33 Valuable Resources: Recycled Water, Energy, and Reusable Solids Valuable Resources: Recycled Water, Energy, and Reusable Solids Parts of Unincorporated Orange County Parts of Unincorporated Orange County ++ Introduction The Orange County Sanitation District (OCSD) is a leader in regional wastewater collection, treatment, recycling, and disposal. 1 Climate Resiliency Study 2019 Climate Resiliency Study 2019 2 Climate Resiliency OCSD is constantly striving to be resilient, reliable, and forward-thinking. Recognizing the value of our infrastructure and the risks posed by different forces of nature, we have conducted a climate resiliency study to better prepare for the future. International National RegionalStatewide Climate forces considered as part of the study: Due to the importance of climate conditions in future planning and capital investment, we reviewed and analyzed a variety of climate-related studies as part of this effort. The climate projections, including sea level rise, are based on the work of the Rising Seas Report and California’s Fourth Climate Change Assessment as representing the “state of the science” for Southern California. Wildfires CO2 Reduction C02 Extreme Heat TsunamiSea Level Rise and Flooding Flooding threatens infrastructure near the coast and major channels, including Plant No. 2 and a number of pump stations. Coastal infrastructure is vulnerable to tsunamis. Inland areas are subject to higher temperatures and longer heat waves. Greenhouse gases, such as carbon dioxide, impact the earth’s atmosphere and climate. Fire and flying embers are a risk to buildings near heavy vegetation. SIGNALHILL LOSALAMITOS Plant No. 1 Slater Ave PS MainStreetPS RockyPointPS BayBridgePS CrystalCovePS Edinger PS Westside PS SealBeach PS Yorba Linda PS MacArthur PSCollege Ave PSPlant No. 2 Lido PS Bitter Point PS A Street PS 15th Street PS Extreme Heat Flooding Flooding + Sea Level Rise Tsunami OCSD PUMP STATIONS (PS) AND TREATMENT PLANTS Vulnerabilities Maintaining safe and continuous operation of wastewater conveyance and treatment processes during climate-related events is of high importance to OCSD. By focusing efforts on high priority infrastructure and understanding site-specific risks, OCSD can provide resiliency and adaptability within upgrades to infrastructure and facilities. 3 Toolbox of Adaptations There are many adaptations that can be used to reduce the impacts of climate change related events. Generally these adaptations involve updates to design guidelines and practices, training and communication, and modifications or redundancies to operations. Building-Level Adaptations for Flooding At the building level, floodproofing seeks to prevent water from entering a facility or coming in contact with access points and infrastructure. Asset-Level Adaptations for Flooding At the asset level, floodproofing seeks to keep operations running when flood water is at risk of coming in contact with assets and infrastructure. Building-Level Adaptations for Wildfires At the building level, wildfire protection is included in design guidelines and construction materials. Operation and Redundancy Adaptations Watertight hatches Floodproof/watertight electrical enclosures Floodproof/watertight pump/motor enclosures Stop logs over flood pathways (e.g., doors, windows, louvers) Concrete barrier around facility (e.g., wall or hump) Concrete barrier around facility with stop logs to cover opening New doors and floors above flood level Electric rooms above flood levels Access routes above flood levels Assets (e.g., pumps, motors, electrical equipment) elevated above flood levels Sandbagging around assets and/or flood pathways Securing tanks to floor to counter- act buoyancy forces during flooding Floodproofing electrical conduit and wiring Installing floodproof instrumentation (e.g., valves, flow meters) Training for flood, fire, and tsunami response Automatic controls for remote operation in emergencies Fireproof roofs and buildings Louvers that prevent embers and smoke from entering buildings Clear fire barriers around buildings Climate Resiliency Study 2019 4 Current Sea Level - 2019 Projected Future Sea Level - 2050 Projected Future Sea Level - 2070 5 Causes of Flooding in Orange County Many of OCSD’s facilities are located near the coast, enclosed bays, or rivers, making flooding a major risk to the services provided by OCSD. Flood risk is expected to increase with climate change. Climate change is expected to result in more extreme storms, increased flood depths, and raised sea levels. Tsunamis can cause extensive inland flooding, which is worsened by sea level rise. Storm Surge occurs when rainfall and wind over the ocean create larger waves that carry onto land. Storm surge may cause or contribute to flooding in coastal communities. Sea Level Rise is a result of thermal expansions caused by warming oceans and melting of land ice as temperatures rise due to climate change. Sea level rise increases flooding during storms and king tide events. Tsunamis are large and fast-moving waves generated by earthquakes, landslides, or volcanic eruptions. Tsunamis not only can cause flooding, but also may exert extreme force that can damage infrastructure. King Tide is the highest tide caused by the combined effects of the gravitational forces exerted by the moon, sun, and rotation of the earth. It can cause flooding in coastal communities. Storm Events exceeding intensity or duration of the design of local storm infrastructure may cause flooding in streets and communities. Climate Resiliency Study 2019 Orange County Register, 2012 Orange County Register, 1983 Barrier Barrier FLOODPATHWAY Control Room Hatch FLOODPATHWAY PUMP STATION Pump Room 100-yr FEMA Flood+ 2070 SLR 3.7 ft 500-yr FEMA Floodwithout SLR 2019 100-yr FEMA Flood+ 2050 SLR 1.5 ft 100-yr FEMA Floodwithout SLR 2019 Existing Hatch Waterproofed Hatch Hatches are one of the lowest entry points into a facility, making them the first vulnerability for flooding. Waterproofing access points prevents water from entering the facility. Existing Door Waterproofed Door Important access points include doors, louvers, and transformer enclosures. Waterproofing barriers protect access points and can be deployed when necessary. Climate Resiliency Study 2019 6 Building Level Flood Protection Simple adaptations can be incorporated into individual facilities to protect against flooding. Building level solutions generally protect a greater number of assets at a lower cost than asset level solutions by preventing flood water from entering the facility. SLR = Sea Level Rise 7 Possible Sewer Backups If a pump station is unable to operate, flow to and from will be limited, and tributary neighborhoods may see sewer backups. Safety and Access If OCSD staff are unable to safely drive or walk to flooded or non-flooded facilities due to flooded access roads, facilities would be inoperable and cause sewer backups or environmental damage to local waterways. Water Quality Impacts and Environmental Damage If a treatment plant is not able to operate, an emergency release of the raw or partially treated wastewater may be required. This would cause negative water quality impacts and damage to aquatic environments and nearby beaches. Climate Resiliency Study 2019 Other impacts from flooding on OCSD infrastructure include electrical or mechanical failure and unsafe conditions for operators and facility staff. An impacted OCSD facility can cause issues upstream and downstream in the network and affect surrounding communities and neighborhoods. Flooding and Tsunami Impacts Climate Resiliency Study 2019 8 A floodwall along Brookhurst Street is needed to prevent flooding with projected sea level rise for 2070. Additional floodwalls along the Talbert Channel and Santa Ana River will protect Plant No. 2 from flooding due to maximum tsunami risk for the region. SA N T A A N A R I V E R TALBERTCHANNEL BRO O K H U R S T S T R E E T HUNTINGTONBEACH SA N T A A N A R I V E R Plant No. 2 is above the 100-year floodplain, but sea level rise and tsunamis will increase the flood risk. These recommended adaptations will protect Plant No. 2 from flooding due to sea level rise and tsunami. = 100-year flood = Additional flooding - 2050 = Additional flooding - 2070 Floodgates Floodwalls A typical floodwall design to withstand storm surge, waves, flooding, and tsunami. Floodwall Flood Side ProtectedSide Plant No. 2 can treat up to 150 million gallons of wastewater per day and is located in a low-lying area close to the Pacific Ocean coast of Orange County. Numerous facilities at Plant No. 2 are at risk of flooding caused by extreme events such as a 500-year coastal flood and tsunamis, and this risk is exacerbated by sea level rise. Floodgates and floodwalls are recommended to protect Plant No. 2 from these risks. Boundary Level Flood Protection Elevated Risk of Utility-Associated Wildfire Extreme Risk of Utility-Associated Wildfire * Map data provided by the California Public Utilities Commission OCSD Service Area Extreme Heat Temperatures across California have been consistently rising due to climate change. We’ve experienced higher average temperatures during summer months, more intense and longer heat waves, and an increased frequency of extreme heat days. Inland areas of Orange County and urbanized areas have seen the largest impacts of these rising temperatures. Higher temperatures also dry out vegetation and soil, creating fuel for wildfires. Wildfires are a common threat for California communities, exacerbated by climate and land use stressors. Fires that begin in dry areas spread rapidly, often carried by extreme Santa Ana winds. Changes in weather patterns reduce the frequency of storms that could bring much- needed moisture to slow the spread of fires. Wildfires Extreme Heat and Wildfire Risks in California Climate Resiliency Study 2019 10 Protection Against Heat and Fire Stucco coating over concrete or block walls provides a fire-resistant building exterior. On-site storage of chemicals and supplies can keep operations running smoothly if fire interrupts normal delivery routes. Generators, fuel, and redundant power feeds will keep pumps and treatment equipment running during area-wide electrical blackouts. Fire-safe louvers prevent embers and smoke carried by high winds from entering the building. Metal or tile roofs provide fire-resistance. OCSD facilities are located within low wildfire risk areas of Orange County. Motors Electrical Wiring HVAC Extreme heat and increased temperatures can cause physical stress to materials and operational stress on equipment, such as electronics, electrical equipment, motors, and chemical handling facilities. OCSD systems are designed to withstand outdoor temperatures up to 104°F (40°C). Design Guidelines for OCSD Equipment: 104°F (40°C) The location and construction of OCSD pump stations and treatment plants are designed to protect critical infrastructure from heat and fire. C02 Climate Resiliency Study 201911 Thinking Globally: How OCSD is Reducing Greenhouse Gas Emissions OCSD implements measures to reduce greenhouse gas emissions to minimize contribution to climate change and remain resilient in the face of potential future regulations. The State of California aims to reduce greenhouse gas emissions in the state to 40% below 1990 levels by 2030. In an effort to accomplish this, the California Air Resources Board requires reporting of greenhouse gas emissions. Most of OCSD’s emissions are biogenic, sustainably produced through on-site anaerobic digestion of wastewater sludge, electricity generation, and heating. The remainder are below the 25,000 CO2 equivalent limit that would require participation in the Cap-and-Trade program. The many things that we do to reduce emissions also conserves natural resources and saves money for our ratepayers. Water recycling Avoid emissions from pumping imported water Renewable energy sources Solar panels designed for new headquarters building Low-emissions transportation Fuel-efficient and electric vehicles, compressed natural gas fueling Energy and resource recovery Methane produced during wastewater treatment used as an energy source High-efficiency assets Variable frequency drives on motors; occupancy sensors for lighting and HVAC Battery storage system Offset power demand during critical times CALIFORNIA GOAL Senate Bill 32 Reduce GHG emissions 40% below 1990 levels by 2030 40% Achieving Greenhouse Gas (GHG) Emission Goals at OCSD We have reduced GHG emissions using several different means Climate Resiliency Study 2019 12 Looking to the Future As infrastructure upgrades are planned and designed, there are opportunities to integrate resiliency measures and adaptations for flooding, sea level rise, tsunamis, extreme heat, and wildfires. Incorporating resiliency can also be applied program-wide through updates to design guidelines and emergency response plans. Orange County Sanitation District Climate and Catastrophic Event Resilience Policy The Sanitation District aims to design, maintain, and operate valuable wastewater assets that withstand or adapt to adverse conditions in a reasonable manner that is both cost-effective and sustainable for present and future generations. These adverse conditions include heavy rains, flooding, sea level rise, earthquakes, tsunamis, extreme heat, wildfires, and electrical grid interruptions. Updating design guidelines to build potential flood pathways of new facilities to be above identified flood elevations associated with sea level rise Resiliency Toolbox Integrating deployment, operation, and maintenance of adaptation strategies into emergency response plan Integrating climate resiliency into capital projects, even if resiliency is not the main goal of the project (e.g., a screening wall project that also provides flood protection) Reclamation Plant No. 1 (Administration Offices) 10844 Ellis Avenue • Fountain Valley, California 92708 • 714.962.2411 Treatment Plant No. 2 22212 Brookhurst Street • Huntington Beach, California 92646 Follow us on Facebook, Twitter, Instagram, and Youtube @OCSewers