HomeMy WebLinkAbout12-11-2019 Administration Committee Meeting Complete Agenda Packet
December 4, 2019
NOTICE OF MEETING
ADMINISTRATION COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
Wednesday, December 11, 2019 – 5:00 P.M.
Administration Building
10844 Ellis Avenue
Fountain Valley, California 92708
WWW.OCSD.COM
A regular meeting of the Administration Committee of the Orange County
Sanitation District will be held at the above location, date, and time.
ADMINISTRATION COMMITTEE MEETING DATE
BOARD MEETING DATE
12/11/19 12/18/19 *
JANUARY DARK 01/22/20
02/19/20 ** 02/26/20
03/11/20 03/25/20
04/08/30 04/22/20
05/13/20 05/27/20
06/10/20 06/24/20
07/08/20 07/22/20
AUGUST DARK 08/26/20
09/09/20 09/23/20
10/14/20 10/28/20
11/10/20 ** 11/18/20 *
* Meeting will be held on the third Wednesday of the month
** Meeting will be held on the second Tuesday of the month
ROLL CALL ADMINISTRATION COMMITTEE Finance, Information Technology, Environmental Services
and Human Resources
Meeting Date: December 11, 2019 Time: 5:00 p.m. Adjourn:
COMMITTEE MEMBERS (13)
Chad Wanke, Chair
Richard Murphy, Vice-Chair Jim Ferryman
Cecilia Iglesias
Peter Kim
Mark Murphy
Steve Nagel
Andrew Nguyen
Glenn Parker
Erik Peterson
Christina Shea
David Shawver (Board Chair) John Withers (Board Vice-Chair)
OTHERS
Brad Hogin, General Counsel
STAFF
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
Wally Ritchie, Controller
Kelly Lore, Clerk of the Board
ORANGE COUNTY SANITATION DISTRICT Effective 05/22/2019 BOARD OF DIRECTORS
Complete Roster
AGENCY/CITIES
ACTIVE DIRECTOR
ALTERNATE
DIRECTOR
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 J. 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
Bob 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
Board of Supervisors Doug Chaffee Michelle Steel
Orange County Sanitation District
ADMINISTRATION COMMITTEE
Regular Meeting Agenda
Wednesday, December 11, 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, December 11, 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 Committee, after one motion,
without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in
the regular order of business.
1.2019-787APPROVAL OF MINUTES
RECOMMENDATION:
Approve Minutes of the Regular Meeting of the Administration Committee held
November 13, 2019.
Originator:Kelly Lore
Agenda Report
11-13-2019 Administration Committee Minutes
Attachments:
2.2019-778PAYMENT OF ANNUAL NATIONAL POLLUTANT DISCHARGE AND
ELIMINATION SYSTEM (NPDES) PERMIT FEES
RECOMMENDATION: Recommend to the Board of Directors to:
Approve payment of $653,081 for annual NPDES (ocean discharge) permit fees.
Originator:Lan Wiborg
Agenda ReportAttachments:
Page 1 of 3
ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, December 11, 2019
NON-CONSENT:
3.2019-674INVEST AND/OR REINVEST ORANGE COUNTY SANITATION
DISTRICT’S FUNDS AND ADOPT INVESTMENT POLICY STATEMENT
RECOMMENDATION: 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, Authorizing the Orange County Sanitation
District’s Treasurer to Invest and/or Reinvest Orange County Sanitation District’s
Funds, Adopting the Orange County Sanitation District’s Investment Policy Statement
and Performance Benchmarks, and Repealing Resolution No. OCSD 18-23.
Originator:Lorenzo Tyner
Agenda Report
OCSD Calendar Year 2020 Investment Policy Statement
(Clean)
OCSD Calendar Year 2019 Investment Policy Statement
(Redline)
Proposed Resolution No. OCSD 19-XX
Attachments:
INFORMATION ITEMS:
4.2019-797ORANGE COUNTY SANITATION DISTRICT’S PROCUREMENT
PROCESS
RECOMMENDATION:
Information Item.
Originator:Lorenzo Tyner
Agenda ReportAttachments:
5.2019-798ORANGE COUNTY SANITATION DISTRICT - ENVIRONMENTAL
SERVICES
RECOMMENDATION:
Information Item.
Originator:Lan Wiborg
Agenda ReportAttachments:
Page 2 of 3
ADMINISTRATION COMMITTEE Regular Meeting Agenda Wednesday, December 11, 2019
DEPARTMENT HEAD REPORTS:
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY:
BOARD OF DIRECTORS INITIATED ITEMS FOR A FUTURE MEETING:
At this time Committee members may request staff to place an item on a future agenda.
ADJOURNMENT:
The next Administration Committee meeting is scheduled for Wednesday, February 19, 2020
at 5:00 p.m.
Page 3 of 3
Orange County Sanitation District
ADMINISTRATION COMMITTEE
Agenda Report
Administration Building
10844 Ellis Avenue
Fountain Valley, CA 92708
(714) 593-7433
File #:2019-787 Agenda Date:12/11/2019 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 November 13, 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 19-19
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 November 13, 2019
Orange County Sanitation District Printed on 11/26/2019Page 1 of 1
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Orange County Sanitation District
Minutes for the
ADMINISTRATION COMMITTEE
Wednesday, November 13, 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 November 13, 2019 at 5:04
p.m. in the Administration Building of the Orange County Sanitation District. Director Erik
Peterson led the Flag Salute.
DECLARATION OF QUORUM:
A quorum was declared present as follows:
Present:Chad Wanke, James Ferryman, Cecilia Iglesias, Peter Kim, Steve
Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea,
David Shawver, John Withers, Kim Nichols (Alternate) and Dean
Grose (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; Janine Aguilar; Kim Cardenas; Daisy Covarrubias; Rhea de
Guzman; Al Garcia; Bryce Hockensmith; Laura Maravilla; Riaz Moinuddin; Nasrin Nasrollahi;
Adam Nazaroff; Ddaze Phuong; Tyler Ramirez; Kevin Schuler; Eros Yong; and Ruth Zintzun.
OTHERS PRESENT:
Brad Hogin, General Counsel; Amanda Eom and Peter George, Macias Gini & O'Connell
(MGO).
PUBLIC COMMENTS:
None.
REPORTS:
Chair Wanke and General Manager Jim Herberg did not provide reports.
Lorenzo Tyner, Assistant General Manager, reported that a firm was recently selected to
conduct internal audit services for the next fiscal year.
Page 1 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
CONSENT CALENDAR:
1.APPROVAL OF MINUTES 2019-640
Originator: Kelly Lore
MOVED, SECONDED, AND DULY CARRIED TO:
Approve Minutes of the Regular Meeting of the Administration Committee held
September 11, 2019.
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
2.2019 CONFLICT OF INTEREST CODE 2019-666
Originator: Kelly Lore
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
Orange County Sanitation District adopting a Conflict of Interest Code which
supersedes all prior Conflict of Interest Codes and amendments previously adopted”.
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
3.UPDATE TO THE ESTABLISHED RULES OF PROCEDURE FOR THE
CONDUCT OF BUSINESS OF THE ORANGE COUNTY SANITATION
DISTRICT
2019-699
Originator: Kelly Lore
MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of
Directors to:
Page 2 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
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”.
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
4.GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS
TO THE PRE-APPROVED OEM SOLE SOURCE LIST
2019-709
Originator: Lorenzo Tyner
MOVED, SECONDED, AND DULY CARRIED TO: 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
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
Page 3 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
5.CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER
ENDED SEPTEMBER 30, 2019
2019-707
Originator: Lorenzo Tyner
MOVED, SECONDED, AND DULY CARRIED TO: 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.
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
6.LEASE AGREEMENT WITH MEGDAL GREEN, LLC PROVIDING
ORANGE COUNTY SANITATION DISTRICT PARCEL FOR PARKING
AND/OR RELATED ACTIVITIES
2019-702
Originator: Lorenzo Tyner
MOVED, SECONDED, AND DULY CARRIED TO: 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.
Ayes:Chad Wanke, James Ferryman, Peter Kim, Steve Nagel, Andrew
Nguyen, Glenn Parker, Erik Peterson, Christina Shea, David Shawver
and John Withers
Noes:None
Absent:Cecilia Iglesias, Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
Page 4 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
NON-CONSENT:
Director Cecilia Iglesias arrived at 5:08 p.m., at the start of the presentations for Item No. 7.
7.ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE
ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE
30, 2019
2019-705
Originator: Lorenzo Tyner
Mr. Tyner introduced Wally Ritchie, Controller, who introduced various staff members
and outside auditors that contributed to the preparation of the audit and provided a
PowerPoint presentation on this item. The presentation included information on the
purpose of the Consolidated Annual Financial Report (CAFR), an overview of the
CAFR and three areas of review, financial position, capital assets, available resources,
and financial performance - debt service and operations.
In response to a request from the Board Chair, staff committed to providing the Board
with a summary of the amount the Sanitation District has potentially saved by paying
off unfunded pension liability.
Mr. Ritchie introduced Peter George, MGO, who provided a PowerPoint presentation
that included the responsibilities and deliverables of MGO and required
communications to the Administration Committee.
MOVED, SECONDED, AND DULY CARRIED TO: 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.
Ayes:Chad Wanke, James Ferryman, Cecilia Iglesias, Peter Kim, Steve
Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea,
David Shawver and John Withers
Noes:None
Absent:Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
Page 5 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
8.PROFESSIONAL RISK MANAGEMENT CONSULTANT AGREEMENT 2019-708
Originator: Lorenzo Tyner
Mr. Tyner provided a verbal report on this item including providing background on how
this individual was selected.
MOVED, SECONDED, AND DULY CARRIED TO:
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.
Ayes:Chad Wanke, James Ferryman, Cecilia Iglesias, Peter Kim, Steve
Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea,
David Shawver and John Withers
Noes:None
Absent:Kim Nichols (Alternate) and Dean Grose (Alternate)
Abstentions:None
Alternate Director Kim Nichols arrived at 5:23 p.m., prior to the verbal report on Item No. 9.
9.POSITION CHANGES FOR FISCAL YEAR 2019-20 2019-711
Originator: Celia Chandler
Celia Chandler, Director of Human Resources, provided a verbal report on this item.
Ms. Chandler and Rob Thompson, Assistant General Manager, responded to questions
from the Committee regarding this item. Staff agreed to provide milestone reports on
preventative maintenance optimization on some recurring basis to be determined,
perhaps quarterly.
MOVED, SECONDED, AND DULY CARRIED TO: 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).
Page 6 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
Ayes:Chad Wanke, James Ferryman, Cecilia Iglesias, Peter Kim, Steve
Nagel, Andrew Nguyen, Glenn Parker, Erik Peterson, Christina Shea,
David Shawver, John Withers and Kim Nichols (Alternate)
Noes:None
Absent:Dean Grose (Alternate)
Abstentions:None
INFORMATION ITEMS:
Board Vice-Chair Withers departed the meeting at 5:36 p.m., prior to Item No. 10.
Alternate Director Dean Grose arrived at 5:50 p.m., during the presentation on Item No. 10.
10.CLIMATE RESILIENCY STUDY, PROJECT NO. SP-152 2019-713
Originator: Kathy Millea
Kathy Millea, Director of Engineering, introduced Nasrin Nasrollahi, Senior Engineer,
who provided a PowerPoint presentation on this item. The presentation included
information on reducing greenhouse gas emissions, regulatory drivers, recent climate
science references, planning horizons for vulnerability assessment, climate forces,
extreme flow events, sea level rise, adaptation example, protecting the treatment plant,
summary of impacted facilities, study recommendations, and OCSD policy. Ms.
Nasrollahi and Mr. Thompson responded to questions from the Committee. Staff
committed to researching the reduction of insurance costs in relationship to the
expense of recommended protective efforts.
THIS ITEM WAS RECEIVED AS AN:
Information Item.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY:
None.
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, December 11, 2019 at 5:00 p.m.
Page 7 of 8
ADMINISTRATION
COMMITTEE
Minutes November 13, 2019
Submitted by:
_____________________
Tina Knapp, MMC
Assistant Clerk of the Board
Page 8 of 8
Orange County Sanitation District
ADMINISTRATION COMMITTEE
Agenda Report
Administration Building
10844 Ellis Avenue
Fountain Valley, CA 92708
(714) 593-7433
File #:2019-778 Agenda Date:12/11/2019 Agenda Item No:2.
FROM:James D. Herberg, General Manager
Originator: Lan C. Wiborg, Director of Environmental Services
SUBJECT:
PAYMENT OF ANNUAL NATIONAL POLLUTANT DISCHARGE AND ELIMINATION SYSTEM
(NPDES) PERMIT FEES
GENERAL MANAGER'S RECOMMENDATION
RECOMMENDATION: Recommend to the Board of Directors to:
Approve payment of $653,081 for annual NPDES (ocean discharge) permit fees.
BACKGROUND
Under the Clean Water Act,Orange County Sanitation District’s (Sanitation District)discharge to the
ocean requires an NPDES permit,which is jointly administered by the Santa Ana Regional Water
Quality Control Board and the USEPA.The payment of annual permit fees is required by Sections
13260 &13269 of the California Water Code in order to maintain this permit.The fee is based on the
Sanitation District’s facility design flow for dry weather.
Sanitation District staff has verified this year’s fee amount is consistent with the 13.4%increase
presented by the State Water Resources Control Board during their August 2019 Water Quality Fees
Stakeholder Workshop. The anticipated fee increase for next year is 4%.
RELEVANT STANDARDS
·Comply with California Water Code Sections 13260 & 13269
·Comply with environmental permit requirements
·Maintain collaborative and cooperative relationships with regulators,stakeholders,and
neighboring communities
PROBLEM
N/A
PROPOSED SOLUTION
N/A
Orange County Sanitation District Printed on 12/2/2019Page 1 of 2
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File #:2019-778 Agenda Date:12/11/2019 Agenda Item No:2.
TIMING CONCERNS
If not paid in a timely manner, the Sanitation District may be subject to late fees.
RAMIFICATIONS OF NOT TAKING ACTION
If not paid,the Sanitation District would be subject to penalties under provision of the Water Code
Section 13261.These actions could include daily penalties in addition to the fee or other actions
deemed appropriate by the Regional Board.
PRIOR COMMITTEE/BOARD ACTIONS
This fee is invoiced and paid annually per approval by the Sanitation District’s Board.
ADDITIONAL INFORMATION
N/A
CEQA
N/A
FINANCIAL CONSIDERATIONS
This request complies with authority levels of the Sanitation District's Purchasing Ordinance.This item has been
budgeted. (Budget Update FY2019-20, Line item: Page 43, Operating Expense, Other).
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 12/2/2019Page 2 of 2
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Orange County Sanitation District
ADMINISTRATION COMMITTEE
Agenda Report
Administration Building
10844 Ellis Avenue
Fountain Valley, CA 92708
(714) 593-7433
File #:2019-674 Agenda Date:12/11/2019 Agenda Item No:3.
FROM:James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
INVEST AND/OR REINVEST ORANGE COUNTY SANITATION DISTRICT’S FUNDS AND ADOPT
INVESTMENT POLICY STATEMENT
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 the Orange
County Sanitation District,Authorizing the Orange County Sanitation District’s Treasurer to Invest
and/or Reinvest Orange County Sanitation District’s Funds,Adopting the Orange County Sanitation
District’s Investment Policy Statement and Performance Benchmarks,and Repealing Resolution No.
OCSD 18-23.
BACKGROUND
There were no significant changes on the Investment Policy Statement or the Local Agency
Investment Guidelines based on the California Government Code investment statutes over the past
year.This agenda item presents an update to the Orange County Sanitation District’s (Sanitation
District)Investment Policy Statement to the Administration Committee for consideration in the
Committee’s capacity as the oversight committee for the Investment Policy (Section 18.2).With
adoption of the Resolution,the Board of Directors would readopt the Sanitation District's current
Investment Policy Statement,portfolio performance benchmarks,and monitoring and reporting
requirements for calendar year 2020.
The Sanitation District’s Investment Policy Statement was previously approved by the Administration
Committee and the Board of Directors for calendar year 2019 in December 2018.
RELEVANT STANDARDS
·Comply with OCSD Policy - Orange County Sanitation District Investment Policy
·California Government Code Sections 53607 and 53646
PROBLEM
California Government Code Section 53607 allows for the Board of Directors to delegate authority to
invest and/or reinvest the Sanitation District’s funds to the Treasurer for a one-year period.California
Government Code Section 53646 requires the Sanitation District to review its Investment Policy
Orange County Sanitation District Printed on 12/2/2019Page 1 of 3
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File #:2019-674 Agenda Date:12/11/2019 Agenda Item No:3.
Government Code Section 53646 requires the Sanitation District to review its Investment Policy
annually and readopt its Policy at a public meeting,which will establish specific performance
benchmarks and objectives,and specific monitoring and reports.On December 19,2018,the Board
of Directors adopted Resolution No.OCSD 18-23,entitled:“A Resolution of the Board of Directors of
the Orange County Sanitation District,Authorizing the District’s Treasurer to Invest and/or Reinvest
District’s Funds,Adopting District’s Investment Policy Statement and Performance Benchmarks;and
Repealing Resolution No.OCSD 17-17”.Authority delegated by the Board of Directors to the
Assistant General Manager &Director of Finance and Administrative Services/Treasurer to invest
and/or reinvest the Sanitation District’s funds expires on December 31,2019.Pursuant to California
Government Code Section 53646,the Sanitation District’s Investment Policy must be reviewed and
readopted prior to December 31, 2019.
PROPOSED SOLUTION
With adoption of the Resolution,the Board of Directors would renew its delegation of investment
authority to the Assistant General Manager &Director of Finance and Administrative
Services/Treasurer for a one-year period,January 1,2020 to December 31,2020,in compliance with
the requirements of California Government Code Section 53607.Each year,the Board of Directors
will consider similar actions,along with the annual reconsideration of the Sanitation District's
Investment Policy.
TIMING CONCERNS
The Board of Directors delegation of authority to the Assistant General Manager &Director of
Finance and Administrative Services/Treasurer to invest and/or reinvest the Sanitation District’s funds
will expire on December 31,2019.Pursuant to California Government Code Section 53646,the
Sanitation District’s Investment Policy must be reviewed and readopted prior to December 31, 2019.
RAMIFICATIONS OF NOT TAKING ACTION
The Sanitation District’s Assistant General Manager &Director of Finance and Administrative
Services/Treasurer will not have the authority to invest and/or reinvest the Sanitation District’s funds
and the Sanitation District will not be in compliance with California Government Code Section 53646.
PRIOR COMMITTEE/BOARD ACTIONS
December 2018 -Board adopted Resolution No.OCSD 18-23,entitled:“A Resolution of the Board of
Directors of the Orange County Sanitation District,Authorizing the District’s Treasurer to Invest
and/or Reinvest District’s Funds,Adopting District’s Investment Policy Statement and Performance
Benchmarks; and Repealing Resolution No. OCSD 17-17”.
ADDITIONAL INFORMATION
The Sanitation District Investment Policy Statement is a comprehensive document describing the
policy, authorizations, benchmarks, delegations, and investment limitations.
The Investment Policy will govern the investment activities of Chandler Asset Management,the
Sanitation District's external money manager, on behalf of the Sanitation District.
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File #:2019-674 Agenda Date:12/11/2019 Agenda Item No:3.
Annual Review of Investment Policy
The Investment Policy includes the requirement that the Sanitation District shall review its Investment
Policy annually (Sections 1.2 and 18.1).Chandler Asset Management reviewed the existing policy to
ensure that the language remains current with the California Government Code.The proposed
Investment Policy is attached with redlined changes from the most recent approved policy in
December 2018.
Annual Delegation of Investment Authority
Effective January 1,1997,California Government Code Section 53607 states that governing boards
of local agencies may only delegate authority to invest and/or reinvest agency funds to the agency's
Treasurer for a one-year period.
CEQA
N/A
FINANCIAL CONSIDERATIONS
N/A
ATTACHMENT
The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website
(www.ocsd.com) with the complete agenda package:
·OCSD Calendar Year 2020 Investment Policy Statement (clean)
·OCSD Calendar Year 2019 Investment Policy Statement (redline)
·Proposed Resolution No. OCSD 19-XX
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Page 1
ORANGE COUNTY SANITATION DISTRICT
INVESTMENT POLICY STATEMENT
1.0 Policy:
It is the policy of the Orange County Sanitation District (OCSD) to invest public funds in
a manner which ensures the safety and preservation of capital while meeting
reasonably anticipated operating expenditure needs, achieving a reasonable rate of
return and conforming to all state and local statutes governing the investment of public
funds.
1.1.This Investment Policy is set forth by OCSD for the following purposes:
1.1.1.To establish a clear understanding for the Board of Directors,
OCSD management, responsible employees and third parties of the
objectives, policies and guidelines for the investment of OCSD’s idle and
surplus funds.
1.1.2.To offer guidance to investment staff and any external
investment advisors on the investment of OCSD funds.
1.1.3.To establish a basis for evaluating investment results.
1.2. OCSD establishes investment policies which meet its current investment
goals. OCSD shall review this policy annually and may change its policies
as its investment objectives change.
2.0 Scope:
This Investment Policy applies to all financial assets of OCSD; except for the proceeds
of OCSD's capital projects financing program, which are invested in accordance with
provisions of their specific bond indentures; and such other funds excluded by law or
other Board-approved covenant or agreement.
These funds are accounted for by OCSD as Enterprise Funds as represented in
OCSD's Comprehensive Annual Financial Report.
3.0 Standard of Prudence:
The standard of prudence to be used by OCSD internal staff, and any authorized
investment advisor(s), shall be as described in Section 53600.3 of the California
Government Code as follows: Except as provided in subdivision (a) of Section 27000.3,
all governing bodies of local agencies or persons authorized to make investment
decisions on behalf of those local agencies investing public funds pursuant to this
chapter are trustees and therefore fiduciaries subject to the prudent investor standard.
When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing
public funds, a trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general economic
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conditions and the anticipated needs of the agency, that a prudent person acting in a
like capacity and familiarity with those matters would use in the conduct of funds of a
like character and with like aims, to safeguard the principal and maintain the liquidity
needs of the agency. Within the limitations of this section and considering individual
investments as part of an overall strategy, investments may be acquired as authorized
by law.
4.0 Investment Objectives:
The primary objectives of OCSD’s investment activities, in priority order, and as
described in Section 53600.5 of the California Government Code, shall be:
4.1 Safety: The safety and preservation of principal is the foremost objective
of the investment program of OCSD. Investments shall be selected in a
manner that seeks to ensure the preservation of capital in OCSD's overall
portfolio. This will be accomplished through a program of diversification,
more fully described in Section 13.0, and maturity limitations, more fully
described in Section 14.0, in order that potential losses on individual
securities do not exceed the income generated from the remainder of the
portfolio.
4.2 Liquidity:The investment program will be administered in a manner that
will ensure that sufficient funds are available for OCSD to meet its
reasonably anticipated operating expenditure needs.
4.3 Return on Investments:The OCSD investment portfolio will be
structured and managed with the objective of achieving a rate of return
throughout budgetary and economic cycles, commensurate with legal,
safety, and liquidity considerations.
5.0 Delegation of Authority:
5.1 Authority to manage OCSD’s investment program is derived from the
California Government Code Sections 53600 et seq.and Sections 53635
et seq. The Board of Directors hereby delegates management
responsibility for the OCSD investment program to its Assistant General
Manager & Director of Finance and Administrative Services/Treasurer,
who shall establish written procedures for the operation of the investment
program, consistent with this Policy. The Controller/Assistant Treasurer
shall be responsible for day-to-day administration, monitoring, and the
development of written administrative procedures for the operation of the
investment program, consistent with this Policy. No person may engage
in an investment transaction except as provided under the terms of this
Policy and the procedures established by the Treasurer. The Treasurer
shall be responsible for all transactions undertaken by OCSD internal
staff, and shall establish a system of controls to regulate the
activities of internal staff and external investment advisors engaged in
accordance with Section 5.3.
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5.2 The administrative procedures for the operation of OCSD's investment
program will provide for, but not be limited to, the following:
5.2.1 Formats for monthly and quarterly reports to the Administration
Committee and the Board of Directors.
5.2.2 Compliance with generally accepted accounting principles of
the Government Accounting Standards Board.
5.2.3 Establishment of benchmarks for performance measurement.
5.2.4 Establishment of a system of written internal controls.
5.2.5 Establishment of written procedures for competitive bids and
offerings of securities that may be purchased or sold by internal OCSD
staff.
5.2.6 Establishment of a Desk Procedures Manual for treasury
operations and management.
5.3 The Board of Directors may, in its discretion, engage the services of one
or more registered investment advisors to assist in the management of
OCSD’s investment portfolio in a manner consistent with OCSD’s
objectives. Such external investment advisors, which shall be selected
through a competitive process, shall be granted discretion to purchase
and sell investment securities in accordance with this Investment Policy.
Such advisors must be registered under the Investment Advisers Act of
1940 or be exempt from such registration.
6.0 Ethics and Conflicts of Interest:
Officers and employees of OCSD involved in the investment process shall refrain from
personal business activities that could conflict with proper execution of OCSD's
investment program, or which could impair their ability to make impartial investment
decisions. Employees and investment officials shall disclose to the General Manager
any material financial interests in financial institutions that conduct business within
OCSD's boundaries, and they shall further disclose any large personal
financial/investment positions, the performance of which could be related to the
performance of positions in OCSD’s portfolio.
7.0 Authorized Financial Dealers and Institutions:
7.1 For investment transactions conducted by OCSD internal staff, the
Treasurer will maintain a list of financial institutions authorized to provide
investment services to OCSD, including "primary" or regional dealers that
qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform
Net Capital rule), and Federal or State of California chartered banks. No
public deposit shall be made except in a qualified public depository as
established by State law.
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All financial institutions which desire to become qualified bidders for
investment transactions with OCSD must supply the following for
evaluation by the Treasurer:
7.1.1.Audited financial statements for the institution’s three (3) most
recent fiscal years.
7.1.2.A statement, in the format prescribed by the Government
Finance Officers Association (GFOA), certifying that the institution has
reviewed OCSD’s Investment Policy and that all securities offered to
OCSD shall comply fully and in every instance with all provisions of the
California Government Code and with this Investment Policy. The current
statement is presented in Appendix "A."
7.1.3.A statement describing the regulatory status of the dealer, and
the background and expertise of the dealer's representatives.
Selection of financial institutions, broker/dealers, and banks authorized to
engage in transactions with OCSD shall be made through a competitive
process. An annual review of the financial condition of qualified
institutions will be conducted by the Treasurer.
7.2 Selection of broker/dealers used by external investment advisors retained
by OCSD, shall be in compliance with contract provisions between OCSD
and any external investment advisors, and shall be in substantially the
following form:
Use of Securities Brokers: Neither the Investment Advisor nor any parent,
subsidiary or related firm shall act as a securities broker with respect to
any purchases or sales of securities which may be made on behalf of
OCSD, provided that this limitation shall not prevent the Investment
Advisor from utilizing the services of a securities broker which is a parent,
subsidiary or related firm, provided such broker effects transactions on a
"cost only" or "nonprofit" basis to itself and provides competitive execution.
The Investment Advisor shall provide OCSD with a list of suitable
independent brokerage firms (including names and addresses) meeting
the requirements of Government Code Section 53601.5, and, unless
otherwise directed by OCSD, the Investment Advisor may utilize the
service of any of such independent securities brokerage firms it deems
appropriate to the extent that such firms are competitive with respect to
price of services and execution.
8.0 Authorized and Suitable Investments:
All investments shall be made in accordance with the California Government Code
including Sections 16429.1 et seq., 53600 et seq., and 53684, and as described within
this Investment Policy. Permitted investments under this Policy shall include:
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8.1 Securities, obligations, participations, or other instruments of, or
issued by, or fully guaranteed as to principal and interest by the US
Government, a federal agency, or a US Government-sponsored
enterprise pursuant to Section 53601 (f) of the California Government
Code. US Treasury securities must make up at least 10% of the portfolio.
8.2 Supranational Obligations issued or unconditionally guaranteed by the
International Bank for Reconstruction and Development, International
Finance Corporation, or Inter-American Development Bank. Securities
must be eligible for purchase in the United States and be US dollar
denominated senior unsecured unsubordinated obligations, with a
maximum maturity of five years. Securities eligible for purchase under this
section must be rated “AA” or better by a Nationally Recognized Statistical
Rating Organization (NRSRO) and shall not exceed 30% of the total
portfolio.
8.3 Mortgage pass-through security, collateralized mortgage obligation,
mortgage-backed or other pay-through bond, equipment lease-
backed certificate, consumer receivable pass-through certificate, or
consumer receivable-backed bond. Securities eligible for investment
under this subdivision shall be rated in a rating category of “AA” or its
equivalent or better by an NRSRO and have a maximum remaining
maturity of five years or less. Purchase of securities authorized by this
subdivision may not exceed 20 percent of the agency’s surplus moneys
that may be invested pursuant to this section. Purchase of mortgage
derivatives, which include interest-only payments (IOs) and principal-only
payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage
Investment Conduits), is hereby prohibited.
8.4 Commercial paper of "prime" quality of the highest ranking or of the
highest letter and number rating as provided by an NRSRO, and issued by
a domestic corporation organized and operating in the United States with
assets in excess of $500 million and having a rating of "A" or better on its
long-term debt as provided by an NRSRO. Purchases of eligible
commercial paper may not exceed 270 days to maturity from the date of
purchase. Purchases of commercial paper shall not exceed 25% of the
market value of the portfolio. No more than 5% of the market value of the
portfolio, or 10% of the issuer's outstanding paper, may be invested in
commercial paper issued by any one (1) eligible corporation.
8.5 Banker’s acceptances issued by institutions, the short-term obligations of
which are rated of the highest ranking or the highest letter and number
rating as provided by an NRSRO provided that: (a) the acceptance is
eligible for purchase by the Federal Reserve System; (b) the maturity does
not exceed 180 days; (c) no more than 40% of the total portfolio may be
invested in banker’s acceptances; and (d) no more than 5% of the total
portfolio may be invested in the banker's acceptances of any one (1)
commercial bank.
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8.6 Medium term (or corporate) notes of a maximum of five (5) years
maturity issued by corporations organized and operating within the United
States, or issued by depository institutions licensed by the United States,
or any state, and operating within the United States with assets in excess
of $500 million, and which is rated in a rating category of “A” or better on
its long-term debt as provided by an NRSRO. If, after purchase, the rating
of an eligible note falls below the minimum rating category stipulated
above, the external investment advisor shall notify OCSD of the
downgrade, and shall present an analysis and recommendations as to the
disposition of the note consistent with the investment objectives of this
Investment Policy. No more than 30% of the portfolio may be invested in
medium term notes.
8.7 Notes, bonds, or other obligations that are at all times secured by a
valid first priority security interest in securities of the types listed by
California Government Code Section 53651 as eligible securities for the
purpose of securing local agency deposits having a market value at least
equal to that required by California Government Code Section 53652 for
the purpose of securing local agency deposits. The securities serving as
collateral shall be placed by delivery or book entry into the custody of a
trust company or the trust department of a bank that is not affiliated with
the issuer of the secured obligation, and the security interest shall be
perfected in accordance with the requirements of the Uniform Commercial
Code or federal regulations applicable to the types of securities in which
the security interest is granted.
8.8 Shares of mutual funds investing in securities permitted under this policy
and under Section 53601 (l) of the California Government Code. Such
funds must either: (1) attain the highest ranking, or the highest letter and
numerical rating, provided by not less than two of the three largest
nationally recognized rating services; or (2) have an Investment Advisor
registered with the Securities and Exchange Commission with not less
than five (5) years of experience investing in the securities and obligations
authorized under this Policy and under California Government Code
Section 53601, and with assets under management in excess of $500
million. The purchase price of shares of beneficial interest purchased
pursuant to this policy, and the California Government Code may not
include any commission that the companies may charge, and shall not
exceed 20% of OCSDs surplus money that may be invested pursuant
to this section. No more than 10% of OCSD’s surplus funds may be
invested in shares of beneficial interest of any one (1) mutual fund
pursuant to this section. Money market mutual funds are limited to 20%
per issuer and are not subject to the 10% stipulation.
8.9 Certificates of deposit:
8.9.1 Secured (collateralized) time deposits issued by a nationally or
state-chartered bank or state or federal savings and loan association, as
defined by Section 5102 of the California Financial Code, and having a net
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operating profit in the two (2) most recently completed fiscal years.
Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500
et seq., and Chapter 4.5, Savings and Loan Association and Credit Union
Deposit Law, Section 16600 et seq., of the California Government Code.
8.9.2 Negotiable certificates of deposit (NCDs)issued by a nationally
or state-chartered bank or state of federal savings and loan association,
as defined by Section 5102 of the California Financial Code; and which
shall have a rating of "A" or better on its long-term debt as provided by a
NRSRO; or which shall have the highest letter and number rating for
deposits as provided by a NRSRO; or as otherwise approved by the Board
of Directors. No more than 30% of the portfolio may be invested in
securities pursuant to this section.
8.9.3 To be eligible to receive local agency money, a bank, savings
association, federal association, or federally insured individual loan
company shall have received an overall rating of not less than
“satisfactory” in its most recent evaluation by the appropriate federal
financial supervisorial agency of its record of meeting the credit needs of
California’s communities, including low and moderate income
neighborhoods, pursuant to Section 2906 of Title 12 of the United States
Code.
8.10 Taxable or tax-exempt municipal bonds issued by any of the 50 United
States. Such securities must be rated “A” or higher by a NRSRO; or as
otherwise approved by the Board of Directors.
8.11 The State of California Local Agency Investment Fund (LAIF). The
LAIF is an investment alternative for California's local governments and
special districts managed by the State Treasurer's Office. LAIF is more
fully described in the Glossary (See Appendix "C"). OCSD shall use LAIF
as a short-term cash management facility. Investment of OCSD funds in
LAIF shall be subject to investigation and due diligence prior to investing,
and on a continual basis to a level of review pursuant to Section 3.0,
Standard of Prudence, of this Policy.
8.12 The Orange County Treasurer's Money Market Commingled
Investment Pool (OCCIP). The OCCIP is a money market investment
pool managed by the Orange County Treasurer's Office. OCCIP is more
fully described in the Glossary (See Appendix "C"). OCSD has no funds
invested in OCCIP at this time. Investment of OCSD funds in OCCIP
would be subject to investigation and due diligence prior to
investing, and on a continual basis to a level of review pursuant to Section
3.0, Standard of Prudence, of this Policy.
8.13 Repurchase agreements provided that:
8.13.1 All repurchase agreements shall be collateralized with
securities eligible for purchase under this Policy. In order to anticipate
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market changes and to provide a level of security for all repurchase
agreement transactions, collateralization shall be maintained at a level of
at least 102% of the market value of the repurchase agreements and shall
be adjusted no less than weekly.
8.13.2 All repurchase agreements must be the subject of a Master
Repurchase Agreement between OCSD and the provider of the
repurchase agreement. The Master Repurchase Agreement shall be
substantially in the form developed by The Bond Market Association.
8.14 Reverse repurchase agreements provided that:
8.14.1 No more than five percent (5%) of OCSD’s portfolio shall be
invested in reverse repurchase agreements, and there shall be no long-
term reverse repurchase agreements unless otherwise authorized by the
Board of Directors.
8.14.2 The maximum maturity of reverse repurchase agreements shall
be ninety (90) days.
8.14.3 Reverse repurchase agreements shall mature on the exact
date of a known cash flow which will be unconditionally available to repay
the maturing reverse repurchase agreement.
8.14.4 Proceeds of reverse repurchase agreements shall be used
solely to supplement portfolio income or to provide portfolio liquidity and
shall not be used to speculate on market movements.
8.14.5 All reverse repurchase agreements must be the subject of a
Master Repurchase Agreement between OCSD and the provider of the
reverse repurchase agreement. The Master Repurchase Agreement shall
be substantially in the form developed by The Bond Market Association.
8.15 Sales of OCSD-owned securities in the secondary market may incur
losses in order to improve the risk or return characteristics of the portfolio,
to prevent anticipated further erosion of principal, or when trading for
securities that result in an expected net economic gain to OCSD.
8.16 If securities owned by the OCSD are downgraded below the quality
required by this Investment Policy, it shall be OCSD’s policy to review the
credit situation and make a determination as to whether to sell or retain
such securities in the portfolio. If a decision is made to retain the
downgraded securities in the portfolio, their presence in the portfolio will
be monitored and reported quarterly to the OCSD General Manager, the
Administration Committee and Board of Directors.
9.0 Review of Investment Portfolio:
The securities held by OCSD must be in compliance with Section 8.0 “Authorized and
Suitable Investments” at time of purchase. If at a later date, a security is no longer in
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compliance with Section 8.0, the Treasurer shall report the non-compliant security to the
Administration Committee and the Board of Directors and shall include a disclosure in
the quarterly Treasurer’s Report if the security is held at the date the report is prepared.
10.0 Investment Pools/Mutual Funds:
A thorough investigation of the pool/fund is required prior to investing, and on a
continual basis. A questionnaire shall be developed that will provide the following
information:
10.1 A description of eligible investment securities, and a written statement of
investment policy and objectives.
10.2 A description of interest calculations and how they are distributed, and
how gains and losses are treated.
10.3 A description of how the securities are safeguarded (including the
settlement processes) and how often the securities are priced and the
program audited.
10.4 A description of who may invest in the program, how often, and what size
deposits and withdrawals are allowed.
10.5 A schedule for receiving statements and portfolio listings.
10.6 A description of the utilization and level of reserves, retained earnings or
other collateral and how they are used by the fund.
10.7 A fee schedule, and when and how is it assessed.
10.8 Whether the pool/fund is eligible for bond proceeds and/or whether it will
accept such proceeds.
11.0 Collateralization:
Generally, the value to secure deposits under this Policy shall comply with Section
53652 of the California Government Code. Collateralization will be required for secured
time deposits, as more fully described in Section 8.9.1; and repurchase agreements, as
more fully described in Section 8.13.1. Collateral will always be held by an independent
third-party, as more fully described in Section 12.0. The right of collateral substitution is
granted.
12.0 Safekeeping and Custody:
All securities transactions, including collateral for repurchase agreements, entered into
by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (DVP)
basis. Securities will be held by OCSD's third-party custodian bank, which shall be
selected through a competitive process, or that agent's representative, or in the agent's
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account at the Federal Reserve Bank, or within clearing corporations in the U.S.,
and evidenced by book entry statements.
13.0 Diversification:
OCSD will diversify its investments by security type, issuer, and financial institution in
accordance with the following:
13.1 There is no limit on investment in securities issued by or guaranteed by
the full faith and credit of the U.S. government.
13.2 No more than 20% of the portfolio may be invested in securities of a single
agency of the U.S. government, which does not provide the full faith and
credit of the U.S. government.
13.3 No more than 5% of the portfolio may be invested in securities of any one
issuer, other than Supranationals, the U.S. government or its agencies.
Investment in mutual funds is not governed by this Section 13.3. See
Section 13.8 for conditions of purchase of mutual funds.
13.4 No individual holding shall constitute more than 5% of the total debt
outstanding of any issuer.
13.5 No more than 40% of the portfolio may be invested in banker’s
acceptances.
13.6 No more than 25% of the portfolio may be invested in commercial paper.
13.7 No more than 30% of the portfolio may be invested in medium-term
(corporate) notes.
13.8 No more than 20% of the portfolio may be invested in mutual funds. No
more than 10% of OCSD’s portfolio may be invested in shares of
beneficial interest of any one (1) mutual fund. Money market mutual funds
are limited to 20% per issuer and are not subject to the 10% stipulation.
13.9 No more than 30% of the portfolio may be invested in negotiable
certificates of deposit.
13.10 No more than 10% of the portfolio may be invested in eligible municipal
bonds.
13.11 No more than 20% of the Long Term Operating Monies portfolio may be
invested in a combination of mortgage-backed securities, CMOs and
asset-backed securities.
13.12 No more than the lesser of 15% of the portfolio or the statutory maximum
may be invested in LAIF.
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13.13 No more than 15% of the portfolio may be invested in the Orange County
Investment Pool.
13.14 No more than 20% of the portfolio may be invested in repurchase
agreements.
13.15 No more than 5% of the portfolio may be invested in reverse repurchase
agreements.
14.0 Maximum Maturities:
To the extent possible, OCSD will attempt to match its investments with reasonably
anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow
forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall
designate, from time-to-time, the amounts to be allocated to the investment portfolio.
OCSD monies invested in accordance with this Policy are divided into two (2)
categories:
14.1 Liquid Operating Monies. Funds needed for current operating and
capital expenditures are known as Liquid Operating Monies.
14.1.1 The maximum final stated maturity of individual securities in the
Liquid Operating Monies account portfolio shall be one (1) year from the
date of settlement.
14.1.2 The average duration of the Liquid Operating Monies account
portfolio shall be recommended by the Treasurer based on OCSD’s cash
flow requirements but may never exceed 180 days.
14.2 Long Term Operating Monies. Funds needed for longer term purposes
are known as the Long Term Operating Monies.
14.2.1 The maximum final stated maturity of individual securities in the
Long Term Operating Monies account portfolio shall be five (5) years from
the date of settlement.
14.2.2 The duration of the Long Term Operating Monies account
portfolio shall be recommended by the Treasurer based on OCSD’s five-
year cash flow forecast but may never exceed 60 months.
14.2.3 The duration of the Long Term Operating Monies account
portfolio shall never exceed 120% of the duration as established in
accordance with Section 14.2.2.
14.2.4 The duration of the Long Term Operating Monies account
portfolio shall never be less than 80% of the duration as established in
accordance with Section 14.2.2.
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15.0 Internal Control:
The Treasurer shall establish an annual process of independent review by an
external auditor. This review will provide internal control by assuring compliance
with policies and procedures.
16.0 Performance Objectives and Benchmarks:
16.1 Overall objective. The investment portfolio of OCSD shall be designed
with the overall objective of obtaining a rate of return throughout budgetary
and economic cycles, commensurate with investment risk constraints and
reasonably anticipated cash flow needs.
16.2 The Liquid Operating Monies. The investment performance objective
for the Liquid Operating Monies shall be to earn a total rate of return over
a market cycle which exceeds the return on a market index approved by
the Administration Committee and by the Board of Directors, when the
duration of the portfolio is established. This market index is
more fully described in Board Resolution No. OCSD19-XX (see Appendix
"B").
16.3 The Long Term Operating Monies. The investment performance
objective for the Long Term Operating Monies shall be to earn a total rate
of return over a market cycle which exceeds the return on a market index
selected by the Administration Committee and approved by the Board of
Directors, when the duration of the portfolio is established. This market
index is more fully described in Board Resolution No. OCSD 19-XX (See
Appendix "B").
17.0 Reporting:
17.1 Monthly transaction reports in accordance with California Government
Code Section 53607 shall be submitted by the Treasurer to the Board of
Directors.
17.2 Quarterly investment reports will be submitted by the Treasurer to the
Administration Committee which shall forward the reports to the Board of
Directors. The quarterly reports shall provide clear and concise status
information on OCSD’s portfolios at the end of each reporting period,
including performance measures using the benchmarks described in
Section 14.0 of this Investment Policy. These reports shall contain listings
of individual securities held at the end of each reporting period, and shall
disclose, at a minimum, the following information about the risk
characteristics of OCSD’s portfolio:
17.2.1 Cost and accurate and complete market value of the portfolio.
17.2.2 Modified duration of the portfolio compared to Benchmark.
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17.2.3 Dollar change in value of the portfolio for a one-percent (1%)
change in interest rates.
17.2.4 Percent of portfolio invested in reverse repurchase
agreements, and a schedule which matches the maturity of such reverse
repurchase agreements with the cash flows which are available to repay
them at maturity.
17.2.5 For the Liquid Operating Monies account only, the percent of
portfolio maturing within 90 days.
17.2.6 Average portfolio credit quality.
17.2.7 Percent of portfolio with credit ratings below "A" by any rating
agency, and a description of such securities.
17.2.8 State that all investments are in compliance with this policy and
the California Government Code or provide a listing of any transactions or
holdings which do not comply with this policy or with the California
Government Code.
17.2.9 Time-weighted total rate of return for the portfolio for the prior
three months, twelve months, year to date, and since inception compared
to the Benchmark returns for the same periods.
17.2.10 State that sufficient funds are available for OCSD to meet its
operating expenditure requirements for the next six months, or if not, state
the reasons for the shortfall.
17.3 OCSD’s Treasurer shall meet quarterly with the Administration Committee
to review investment performance, proposed strategies and compliance
with this Investment Policy. External investment advisors may be
required to attend said meetings at the discretion of the Chairman of the
Administration Committee.
18.0 Investment Policy Adoption and Revision:
18.1 The Investment Policy of OCSD shall be adopted by resolution of the
Board of Directors. The Investment Policy shall be reviewed on an annual
basis in accordance with California Government Code Section 53646, by
the Administration Committee, which shall recommend revisions, as
appropriate, to the Board of Directors. Any modifications made thereto
shall be approved by the Board of Directors.
18.2 The Administration Committee shall serve as the oversight committee for
OCSD’s Investment program and shall adopt guidelines for the ongoing
review of duration, quality and liquidity of OCSD’s portfolio.
Page 1
ORANGE COUNTY SANITATION DISTRICT
INVESTMENT POLICY STATEMENT
1.0 Policy:
It is the policy of the Orange County Sanitation District (OCSD) to invest public funds in
a manner which ensures the safety and preservation of capital while meeting
reasonably anticipated operating expenditure needs, achieving a reasonable rate of
return and conforming to all state and local statutes governing the investment of public
funds.
1.1. This Investment Policy is set forth by OCSD for the following purposes:
1.1.1. To establish a clear understanding for the Board of Directors,
OCSD management, responsible employees and third parties of the
objectives, policies and guidelines for the investment of the OCSD’s idle
and surplus funds.
1.1.2. To offer guidance to investment staff and any external
investment advisors on the investment of OCSD funds (see Appendix "A").
1.1.3. To establish a basis for evaluating investment results.
1.2. OCSD establishes investment policies which meet its current investment
goals. OCSD shall review this policy annually, and may change its
policies as its investment objectives change.
2.0 Scope:
This Investment Policy applies to all financial assets of OCSD; except for the proceeds
of OCSD's capital projects financing program, which are invested in accordance with
provisions of their specific bond indentures; and such other funds excluded by law or
other Board-approved covenant or agreement.
These funds are accounted for by OCSD as Enterprise Funds as represented in
OCSD's Comprehensive Annual Financial Report.
3.0 Standard of Prudence:
The standard of prudence to be used by OCSD internal staff, and any authorized
investment advisor(s), shall be as described in Section 53600.3 of the California
Government Code as follows: Except as provided in subdivision (a) of Section 27000.3,
all governing bodies of local agencies or persons authorized to make investment
decisions on behalf of those local agencies investing public funds pursuant to this
chapter are trustees and therefore fiduciaries subject to the prudent investor standard.
When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing
public funds, a trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general economic
Page 2
conditions and the anticipated needs of the agency, that a prudent person acting in a
like capacity and familiarity with those matters would use in the conduct of funds of a
like character and with like aims, to safeguard the principal and maintain the liquidity
needs of the agency. Within the limitations of this section and considering individual
investments as part of an overall strategy, investments may be acquired as authorized
by law.
4.0 Investment Objectives:
The primary objectives of OCSD’s investment activities, in priority order, and as
described in Section 53600.5 of the California Government Code, shall be:
4.1 Safety: The safety and preservation of principal is the foremost objective
of the investment program of OCSD. Investments shall be selected in a
manner that seeks to ensure the preservation of capital in OCSD's overall
portfolio. This will be accomplished through a program of diversification,
more fully described in Section 13.0, and maturity limitations, more fully
described in Section 14.0, in order that potential losses on individual
securities do not exceed the income generated from the remainder of the
portfolio.
4.2 Liquidity: The investment program will be administered in a manner that
will ensure that sufficient funds are available for OCSD to meet its
reasonably anticipated operating expenditure needs.
4.3 Return on Investments: The OCSD investment portfolio will be
structured and managed with the objective of achieving a rate of return
throughout budgetary and economic cycles, commensurate with legal,
safety, and liquidity considerations.
5.0 Delegation of Authority:
5.1 Authority to manage OCSD’s investment program is derived from the
California Government Code Sections 53600 et seq. and Sections 53635
et seq. The Board of Directors hereby delegates management
responsibility for the OCSD investment program to its Assistant General
Manager & Director of Finance and Administrative Services/Treasurer,
who shall establish written procedures for the operation of the investment
program, consistent with this Policy. The Controller/Assistant Treasurer
shall be responsible for day-to-day administration, monitoring, and the
development of written administrative procedures for the operation of the
investment program, consistent with this Policy. The current treasury
management procedures are presented in Appendix "B." No person may
engage in an investment transaction except as provided under the terms
of this Policy and the procedures established by the Treasurer. The
Treasurer shall be responsible for all transactions undertaken by OCSD
internal staff, and shall establish a system of controls to regulate the
activities of internal staff and external investment advisors engaged in
accordance with Section 5.3.
Page 3
5.2 The administrative procedures for the operation of OCSD's investment
program will provide for, but not be limited to, the following:
5.2.1 Formats for monthly and quarterly reports to the Administration
Committee, and the Board of Directors.
5.2.2 Compliance with generally accepted accounting principles of
the Government Accounting Standards Board.
5.2.3 Establishment of benchmarks for performance measurement.
5.2.4 Establishment of a system of written internal controls.
5.2.5 Establishment of written procedures for competitive bids and
offerings of securities that may be purchased or sold by internal OCSD
staff.
5.2.6 Establishment of a Desk Procedures Manual for treasury
operations and management.
5.3 The Board of Directors of OCSD may, in its discretion, engage the
services of one or more registered investment advisors to assist in the
management of OCSD’s investment portfolio in a manner consistent with
OCSD’s objectives. Such external investment advisors, which shall be
selected through a competitive process, shall be granted discretion to
purchase and sell investment securities in accordance with this
Investment Policy. Such advisors must be registered under the
Investment Advisers Act of 1940, or be exempt from such registration.
6.0 Ethics and Conflicts of Interest:
Officers and employees of OCSD involved in the investment process shall refrain from
personal business activities that could conflict with proper execution of OCSD's
investment program, or which could impair their ability to make impartial investment
decisions. Employees and investment officials shall disclose to the General Manager
any material financial interests in financial institutions that conduct business within
OCSD's boundaries, and they shall further disclose any large personal
financial/investment positions, the performance of which could be related to the
performance of positions in OCSD’s portfolio.
7.0 Authorized Financial Dealers and Institutions:
7.1 For investment transactions conducted by OCSD internal staff, the
Treasurer will maintain a list of financial institutions authorized to provide
investment services to OCSD, including "primary" or regional dealers that
qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform
Net Capital rule), and Federal or State of California chartered banks. No
public deposit shall be made except in a qualified public depository as
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established by State law.
All financial institutions which desire to become qualified bidders for
investment transactions with OCSD must supply the following for
evaluation by the Treasurer:
7.1.1. Audited financial statements for the institution’s three (3) most
recent fiscal years.
7.1.2. A statement, in the format prescribed by the Government
Finance Officers Association (GFOA), certifying that the institution has
reviewed OCSD’s Investment Policy and that all securities offered to
OCSDthe Districts shall comply fully and in every instance with all
provisions of the California Government Code and with this Investment
Policy. The current statement is presented in Appendix "AC."
7.1.3. A statement describing the regulatory status of the dealer, and
the background and expertise of the dealer's representatives.
Selection of financial institutions, broker/dealers, and banks authorized to
engage in transactions with OCSD shall be made through a competitive
process. An annual review of the financial condition of qualified
institutions will be conducted by the Treasurer.
7.2 Selection of broker/dealers used by external investment advisors retained
by OCSD, shall be in compliance with contract provisions between OCSD
and any external investment advisors, and shall be in substantially the
following form:
Use of Securities Brokers: Neither the Investment Advisor nor any parent,
subsidiary or related firm shall act as a securities broker with respect to
any purchases or sales of securities which may be made on behalf of
OCSD, provided that this limitation shall not prevent the Investment
Advisor from utilizing the services of a securities broker which is a parent,
subsidiary or related firm, provided such broker effects transactions on a
"cost only" or "nonprofit" basis to itself and provides competitive execution.
The Investment Advisor shall provide the OCSDDistricts with a list of
suitable independent brokerage firms (including names and addresses)
meeting the requirements of Government Code Section 53601.5, and,
unless otherwise directed by OCSD, the Investment Advisor may utilize
the
service of any of such independent securities brokerage firms it deems
appropriate to the extent that such firms are competitive with respect to
price of services and execution.
8.0 Authorized and Suitable Investments:
All investments shall be made in accordance with the California Government Code
including Sections 16429.1 et seq., 53600 et seq., and 53684, and as described within
Page 5
this Investment Policy. Permitted investments under this Policy shall include:
8.1 Securities, obligations, participations, or other instruments of, or
issued by, or fully guaranteed as to principal and interest by the US
Government, a federal agency, or a US Government-sponsored
enterprise pursuant to Section 53601 (f) of the California Government
Code. US Treasury securities must make up at least 10% of the portfolio.
8.2 Supranational Obligations issued or unconditionally guaranteed by the
International Bank for Reconstruction and Development, International
Finance Corporation, or Inter-American Development Bank. Securities
must be eligible for purchase in the United States and be US dollar
denominated senior unsecured unsubordinated obligations, with a
maximum maturity of five years. Securities eligible for purchase under this
section must be rated “AA” or better by a Nationally Recognized Statistical
Rating Organization (NRSRO) and shall not exceed 30% of the total
portfolio.
8.3 Mortgage pass-through security, collateralized mortgage obligation,
mortgage-backed or other pay-through bond, equipment lease-
backed certificate, consumer receivable pass-through certificate, or
consumer receivable-backed bond. Securities eligible for investment
under this subdivision shall be rated in a rating category of “AA” or its
equivalent or better by an NRSRO and have a maximum remaining
maturity of five years or less. Purchase of securities authorized by this
subdivision may not exceed 20 percent of the agency’s surplus moneys
that may be invested pursuant to this section. Purchase of mortgage
derivatives, which include interest-only payments (IOs) and principal-only
payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage
Investment Conduits), is hereby prohibited.
8.4 Commercial paper of "prime" quality of the highest ranking or of the
highest letter and number rating as provided by an NRSRO, and issued by
a domestic corporation organized and operating in the United States with
assets in excess of $500 million and having a rating of "A" or better on its
long-term debt as provided by an NRSRO. Purchases of eligible
commercial paper may not exceed 270 days to maturity from the date of
purchase. Purchases of commercial paper shall not exceed 25% of the
market value of the portfolio. No more than 5% of the market value of the
portfolio, or 10% of the issuer's outstanding paper, may be invested in
commercial paper issued by any one (1) eligible corporation.
8.5 Banker’s acceptances issued by institutions, the short-term obligations of
which are rated of the highest ranking or the highest letter and number
rating as provided by an NRSRO provided that: (a) the acceptance is
eligible for purchase by the Federal Reserve System; (b) the maturity does
not exceed 180 days; (c) no more than 40% of the total portfolio may be
invested in banker’s acceptances; and (d) no more than 5% of the total
portfolio may be invested in the banker's acceptances of any one (1)
Page 6
commercial bank.
8.6 Medium term (or corporate) notes of a maximum of five (5) years
maturity issued by corporations organized and operating within the United
States, or issued by depository institutions licensed by the United States,
or any state, and operating within the United States with assets in excess
of $500 million, and which is rated in a rating category of “A” or better on
its long-term debt as provided by an NRSRO. If, after purchase, the rating
of an eligible note falls below the minimum rating category stipulated
above, the external investment advisor shall notify OCSDthe District of the
downgrade, and shall present an analysis and recommendations as to the
disposition of the note consistent with the investment objectives of this
Investment Policy. No more than 30% of the portfolio may be invested in
medium term notes.
8.7 Notes, bonds, or other obligations that are at all times secured by a
valid first priority security interest in securities of the types listed by
California Government Code Section 53651 as eligible securities for the
purpose of securing local agency deposits having a market value at least
equal to that required by California Government Code Section 53652 for
the purpose of securing local agency deposits. The securities serving as
collateral shall be placed by delivery or book entry into the custody of a
trust company or the trust department of a bank that is not affiliated with
the issuer of the secured obligation, and the security interest shall be
perfected in accordance with the requirements of the Uniform Commercial
Code or federal regulations applicable to the types of securities in which
the security interest is granted.
8.8 Shares of mutual funds investing in securities permitted under this policy
and under Section 53601 (l) of the California Government Code. Such
funds must either: (1) attain the highest ranking, or the highest letter and
numerical rating, provided by not less than two of the three largest
nationally recognized rating services; or (2) have an Investment Advisor
registered with the Securities and Exchange Commission with not less
than five (5) years of experience investing in the securities and obligations
authorized under this Policy and under California Government Code
Section 53601, and with assets under management in excess of $500
million. The purchase price of shares of beneficial interest purchased
pursuant to this policy, and the California Government Code may not
include any commission that the companies may charge, and shall not
exceed 20% of the DistrictOCSD’s surplus money that may be invested
pursuant
to this section. No more than 10% of the District’s OCSD’s surplus funds
may be invested in shares of beneficial interest of any one (1) mutual fund
pursuant to this section. Money market mutual funds are limited to 20%
per issuer and are not subject to the 10% stipulation.
8.9 Certificates of deposit:
Page 7
8.9.1 Secured (collateralized) time deposits issued by a nationally or
state-chartered bank or state or federal savings and loan association, as
defined by Section 5102 of the California Financial Code, and having a net
operating profit in the two (2) most recently completed fiscal years.
Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500
et seq., and Chapter 4.5, Savings and Loan Association and Credit Union
Deposit Law, Section 16600 et seq., of the California Government Code.
8.9.2 Negotiable certificates of deposit (NCDs) issued by a nationally
or state-chartered bank or state of federal savings and loan association,
as defined by Section 5102 of the California Financial Code; and which
shall have a rating of "A" or better on its long-term debt as provided by a
NRSRO; or which shall have the highest letter and number rating for
deposits as provided by a NRSRO; or as otherwise approved by the
District's the Board of Directors. No more than 30% of the portfolio may
be invested in securities pursuant to this section.
8.9.3 To be eligible to receive local agency money, a bank, savings
association, federal association, or federally insured individual loan
company shall have received an overall rating of not less than
“satisfactory” in its most recent evaluation by the appropriate federal
financial supervisorial agency of its record of meeting the credit needs of
California’s communities, including low and moderate income
neighborhoods, pursuant to Section 2906 of Title 12 of the United States
Code.
8.10 Taxable or tax-exempt municipal bonds issued by any of the 50 United
States. Such securities must be rated “A” or higher by a NRSRO; or as
otherwise approved by the Districts’ the Board of Directors.
8.11 The State of California Local Agency Investment Fund (LAIF). The
LAIF is an investment alternative for California's local governments and
special districts managed by the State Treasurer's Office. LAIF is more
fully described in the Glossary (See Appendix "CH."). OCSDThe District
shall use LAIF as a short-term cash management facility. Investment of
OCSDDistrict funds in LAIF shall be subject to investigation and due
diligence prior to investing, and on a continual basis to a level of review
pursuant to Section 3.0, Standard of Prudence, of this Policy. See
Appendix "D" for investment pool questionnaire.
8.12 The Orange County Treasurer's Money Market Commingled
Investment Pool (OCCIP). The OCCIP is a money market investment
pool managed by the Orange County Treasurer's Office. OCCIP is more
fully described in the Glossary. (See Appendix "CH."). OCSDThe District
has no funds invested in OCCIP at this time. Investment of OCSDDistrict
funds in OCCIP would be subject to investigation and due diligence prior
to
investing, and on a continual basis to a level of review pursuant to Section
3.0, Standard of Prudence, of this Policy.
Page 8
8.13 Repurchase agreements provided that:
8.13.1 All repurchase agreements shall be collateralized with
securities eligible for purchase under this Policy. In order to anticipate
market changes and to provide a level of security for all repurchase
agreement transactions, collateralization shall be maintained at a level of
at least 102% of the market value of the repurchase agreements, and
shall be adjusted no less than weekly.
8.13.2 All repurchase agreements must be the subject of a Master
Repurchase Agreement between OCSD and the provider of the
repurchase agreement. The Master Repurchase Agreement shall be
substantially in the form developed by The Bond Market Association.
8.14 Reverse repurchase agreements provided that:
8.14.1 No more than five percent (5%) of OCSD’s portfolio shall be
invested in reverse repurchase agreements, and there shall be no long-
term reverse repurchase agreements unless otherwise authorized by the
the Districts’ Board of Directors.
8.14.2 The maximum maturity of reverse repurchase agreements shall
be ninety (90) days.
8.14.3 Reverse repurchase agreements shall mature on the exact
date of a known cash flow which will be unconditionally available to repay
the maturing reverse repurchase agreement.
8.14.4 Proceeds of reverse repurchase agreements shall be used
solely to supplement portfolio income or to provide portfolio liquidity, and
shall not be used to speculate on market movements.
8.14.5 All reverse repurchase agreements must be the subject of a
Master Repurchase Agreement between OCSD and the provider of the
reverse repurchase agreement. The Master Repurchase Agreement shall
be substantially in the form developed by The Bond Market Association.
8.15 Sales of OCSD-owned securities in the secondary market may incur
losses in order to improve the risk or return characteristics of the portfolio,
to prevent anticipated further erosion of principal, or when trading for
securities that result in an expected net economic gain to OCSD.
8.16 If securities owned by the OCSD are downgraded below the quality
required by this Investment Policy, it shall be OCSD’s policy to review the
credit situation and make a determination as to whether to sell or retain
such securities in the portfolio. If a decision is made to retain the
downgraded securities in the portfolio, their presence in the portfolio will
be monitored and reported quarterly monthly to the OCSD General
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Page 9
Manager, the Administration Committee and Board of Directors.
9.0 Review of Investment Portfolio:
The securities held by OCSD must be in compliance with Section 8.0 “Authorized and
Suitable Investments” at time of purchase. If at a later date, a security is no longer in
compliance with Section 8.0, the Treasurer shall report the non-compliant security to the
Administration Committee and the Board of Directors and shall include a disclosure in
the quarterly Treasurer’s Report if the security is held at the date the date the report is
prepared.
10.0 Investment Pools/Mutual Funds:
A thorough investigation of the pool/fund is required prior to investing, and on a
continual basis. A questionnaire shall be developed that will provide the following
information:
10.1 A description of eligible investment securities, and a written statement of
investment policy and objectives.
10.2 A description of interest calculations and how they are distributed, and
how gains and losses are treated.
10.3 A description of how the securities are safeguarded (including the
settlement processes) and how often the securities are priced and the
program audited.
10.4 A description of who may invest in the program, how often, and what size
deposits and withdrawals are allowed.
10.5 A schedule for receiving statements and portfolio listings.
10.6 A description of the utilization and level of reserves, retained earnings or
other collateral and how they are used by the fund.
10.7 A fee schedule, and when and how is it assessed.
10.8 Whether the pool/fund is eligible for bond proceeds and/or whether it will
accept such proceeds.
11.0 Collateralization:
Generally, the value to secure deposits under this Policy shall comply with Section
53652 of the California Government Code. Collateralization will be required for secured
time deposits, as more fully described in Section 8.9.1; and repurchase agreements, as
more fully described in Section 8.13.1. Collateral will always be held by an independent
third-party, as more fully described in Section 12.0. The right of collateral substitution is
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Page 10
granted.
12.0 Safekeeping and Custody:
All securities transactions, including collateral for repurchase agreements, entered into
by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (DVP)
basis. Securities will be held by OCSD's third-party custodian bank, which shall be
selected through a competitive process, or that agent's representative, or in the agent's
account at the Federal Reserve Bank, or within clearing corporations in the U.S.,
and evidenced by book entry statements.
13.0 Diversification:
OCSD will diversify its investments by security type, issuer, and financial institution in
accordance with the following:
13.1 There is no limit on investment in securities issued by or guaranteed by
the full faith and credit of the U.S. government.
13.2 No more than 20% of the portfolio may be invested in securities of a single
agency of the U.S. government, which does not provide the full faith and
credit of the U.S. government.
13.3 No more than 5% of the portfolio may be invested in securities of any one
issuer, other than Supranationals, the U.S. government or its agencies.
Investment in mutual funds is not governed by this Section 13.3. See
Section 13.8 for conditions of purchase of mutual funds.
13.4 No individual holding shall constitute more than 5% of the total debt
outstanding of any issuer.
13.5 No more than 40% of the portfolio may be invested in banker’s
acceptances.
13.6 No more than 25% of the portfolio may be invested in commercial paper.
13.7 No more than 30% of the portfolio may be invested in medium-term
(corporate) notes.
13.8 No more than 20% of the portfolio may be invested in mutual funds. No
more than 10% of the DistrictOCSD’s portfolio may be invested in shares
of
beneficial interest of any one (1) mutual fund. Money market mutual funds
are limited to 20% per issuer and are not subject to the 10% stipulation.
13.9 No more than 30% of the portfolio may be invested in negotiable
certificates of deposit.
Page 11
13.10 No more than 10% of the portfolio may be invested in eligible municipal
bonds.
13.11 No more than 20% of the Long Term Operating Monies portfolio may be
invested in a combination of mortgage-backed securities, CMOs and
asset-backed securities.
13.12 No more than the lesser of 15% of the portfolio or the statutory maximum
may be invested in LAIF.
13.13 No more than 15% of the portfolio may be invested in the Orange County
Investment Pool.
13.14 No more than 20% of the portfolio may be invested in repurchase
agreements.
13.15 No more than 5% of the portfolio may be invested in reverse repurchase
agreements.
14.0 Maximum Maturities:
To the extent possible, OCSD will attempt to match its investments with reasonably
anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow
forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall
designate, from time-to-time, the amounts to be allocated to the investment portfolio.
OCSD monies invested in accordance with this Policy are divided into two (2)
categories:
14.1 Liquid Operating Monies. Funds needed for current operating and
capital expenditures are known as Liquid Operating Monies.
14.1.1 The maximum final stated maturity of individual securities in the
Liquid Operating Monies account portfolio shall be one (1) year from the
date of settlement.
14.1.2 The average duration of the Liquid Operating Monies account
portfolio shall be recommended by the Treasurer based on the
OCSD’sDistricts’ cash flow requirements, but may never exceed 180 days.
14.2 Long Term Operating Monies. Funds needed for longer term purposes
are known as the Long Term Operating Monies.
14.2.1 The maximum final stated maturity of individual securities in the
Long Term Operating Monies account portfolio shall be five (5) years from
the date of settlement.
14.2.2 The duration of the Long Term Operating Monies account
portfolio shall be recommended by the Treasurer based on the
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Page 12
OCSD’sDistrict’s five-year cash flow forecast, but may never exceed 60
months.
14.2.3 The duration of the Long Term Operating Monies account
portfolio shall never exceed 120% of the duration as established in
accordance with Section 14.2.2.
14.2.4 The duration of the Long Term Operating Monies account
portfolio shall never be less than 80% of the duration as established in
accordance with Section 14.2.2.
15.0 Internal Control:
The Treasurer shall establish an annual process of independent review by an
external auditor. This review will provide internal control by assuring compliance
with policies and procedures. The current treasury management procedures are
presented in Appendix "B."
16.0 Performance Objectives and Benchmarks:
16.1 Overall objective. The investment portfolio of OCSD shall be designed
with the overall objective of obtaining a rate of return throughout budgetary
and economic cycles, commensurate with investment risk constraints and
reasonably anticipated cash flow needs.
16.2 The Liquid Operating Monies. The investment performance objective
for the Liquid Operating Monies shall be to earn a total rate of return over
a market cycle which exceeds the return on a market index approved by
the Administration Committee, and by the the District's Board of Directors,
when the duration of the portfolio is established. This market index is
more fully described in Board Resolution No. OCSD198-XX23 (see
Appendix "BE").
16.3 The Long Term Operating Monies. The investment performance
objective for the Long Term Operating Monies shall be to earn a total rate
of return over a market cycle which exceeds the return on a market index
selected by the Administration Committee and approved by thethe
District’s Board of Directors, when the duration of the portfolio is
established. This market index is more fully described in Board
Resolution No. OCSD 198-XX23 (See Appendix "BE").
17.0 Reporting:
17.1 Monthly transaction reports in accordance with California Government
Code Section 53607 shall be submitted by the Treasurer to the the
District’s Board of Directors.
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17.2 Quarterly investment reports will be submitted by the Treasurer to the
Administration Committee which shall forward the reports to thethe
District's Board of Directors. The quarterly reports shall provide clear and
concise status information on OCSD’sthe District's portfolios at the end of
each reporting period, including performance measures using the
benchmarks described in Section 14.0 of this Investment Policy. Sample
quarterly reports are presented in Appendix "F." These reports shall
contain listings of individual securities held at the end of each reporting
period, and shall disclose, at a minimum, the following information about
the risk characteristics of OCSD’s portfolio:
17.2.1 Cost and accurate and complete market value of the portfolio.
17.2.2 Modified duration of the portfolio compared to Benchmark.
17.2.3 Dollar change in value of the portfolio for a one-percent (1%)
change in interest rates.
17.2.4 Percent of portfolio invested in reverse repurchase
agreements, and a schedule which matches the maturity of such reverse
repurchase agreements with the cash flows which are available to repay
them at maturity.
17.2.5 For the Liquid Operating Monies account only, the percent of
portfolio maturing within 90 days.
17.2.6 Average portfolio credit quality.
17.2.7 Percent of portfolio with credit ratings below "A" by any rating
agency, and a description of such securities.
17.2.8 State that all investments are in compliance with this policy and
the California Government Code, or provide a listing of any transactions or
holdings which do not comply with this policy or with the California
Government Code.
17.2.9 Time-weighted total rate of return for the portfolio for the prior
three months, twelve months, year to date, and since inception compared
to the Benchmark returns for the same periods.
17.2.10 State that sufficient funds are available for OCSD to meet its
operating expenditure requirements for the next six months, or if not, state
the reasons for the shortfall.
17.3 OCSD’s Treasurer shall meet quarterly with the Administration Committee
to review investment performance, proposed strategies and compliance
with this Investment Policy. External investment advisors may be
required to attend said meetings at the discretion of the Chairman of the
Administration Committee.
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18.0 Investment Policy Adoption and Revision:
18.1 The Investment Policy of OCSD shall be reviewed by the Administration
Committee and shall be adopted by resolution of the Board of Directors of
OCSD. The Investment Policy shall be reviewed on an annual basis in
accordance with California Government Code Section 53646, and this
Investment Policy, by the Administration Committee, which shall
recommend revisions, as appropriate, to the Board of Directors. Any
modifications made thereto shall be approved by the Board of Directors.
18.2 The Administration Committee shall serve as the oversight committee for
OCSD’sthe District's Investment program and shall adopt guidelines for
the ongoing review of duration, quality and liquidity of OCSD’sthe District’s
portfolio.
OCSD 19-XX-1
RESOLUTION NO. OCSD 19-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT, AUTHORIZING THE ORANGE
COUNTY SANITATION DISTRICT'S TREASURER TO INVEST AND/OR
REINVEST THE ORANGE COUNTY SANITATION DISTRICT'S FUNDS,
ADOPTING THE ORANGE COUNTY SANITATION DISTRICT'S
INVESTMENT POLICY STATEMENT AND PERFORMANCE
BENCHMARKS, AND REPEALING RESOLUTION NO. OCSD 18-23
WHEREAS, on December 19, 2018, the Board of Directors adopted Resolution
No. 18-23, readopting the Orange County Sanitation District's (“OCSD”) Investment
Policy Statement, and establishing specific performance benchmarks and objectives,
together with a schedule of frequency of investment performance reports; and
WHEREAS, pursuant to California Government Code Section 53607, the Board of
Directors may delegate authority to invest and/or reinvest OCSD’s funds to the Treasurer
for a one-year period; and
WHEREAS, pursuant to California Government Code Section 53646, OCSD is
required to review its Investment Policy annually and readopt its Policy at a public
meeting, which Policy will establish specific performance benchmarks and objectives, and
specific monitoring and reports.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation
District, DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1:That the authority of the Board of Directors to invest or reinvest
surplus funds, or to sell or exchange securities so purchased, or to deposit for
safekeeping the funds and investments of OCSD with depositories, as provided for in
California Government Code Sections 53608 and 53630, is hereby delegated to the
OCSD’s Treasurer for a one-year period, January 1, 2020 through December 31, 2020,
as authorized by California Government Code Section 53607.
OCSD 19-XX-2
Section 2:That the Board of Directors hereby adopts the Investment Policy
Statement of the Orange County Sanitation District.
Section 3:That the Board of Directors hereby adopts the following specific
performance benchmarks for their two investment funds in accordance with Section 16.0
of the OCSDs Investment Policy:
LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared
to the three-month Bank of America Merrill Lynch T-Bill rate, and the Callan Active
Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group
represents a peer group of managers who operate with a maximum maturity of
one year.
LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be
compared to the Bank of America Merrill Lynch Corporate and Government One-
to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group.
Section 4:That the Board of Directors hereby adopts a performance monitoring
and reporting schedule, as required by Section 17.0 of OCSD's Investment Policy.
Section 5:That Resolution No. OCSD 18-23 is hereby repealed.
OCSD 19-XX-3
PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange
County Sanitation District held December 18, 2019.
David John Shawver
Board Chairman
ATTEST:
Kelly A. Lore, MMC
Clerk of the Board
OCSD 19-XX-4
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 18th day of December 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 18th day of December 2019.
Kelly A. Lore, MMC
Clerk of the Board of Directors
Orange County Sanitation District
Orange County Sanitation District
ADMINISTRATION COMMITTEE
Agenda Report
Administration Building
10844 Ellis Avenue
Fountain Valley, CA 92708
(714) 593-7433
File #:2019-797 Agenda Date:12/11/2019 Agenda Item No:4.
FROM:James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
ORANGE COUNTY SANITATION DISTRICT’S PROCUREMENT PROCESS
GENERAL MANAGER'S RECOMMENDATION
RECOMMENDATION:
Information Item.
BACKGROUND
Staff will provide an informational presentation on the Orange County Sanitation District’s
procurement process.
RELEVANT STANDARDS
·Ensure the public’s money is wisely spent
·Participate in local, state, and national cooperative purchasing programs
·Comply with OCSD Policy - Purchasing Ordinance No. OCSD-52
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 12/2/2019Page 1 of 1
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Orange County Sanitation District
ADMINISTRATION COMMITTEE
Agenda Report
Administration Building
10844 Ellis Avenue
Fountain Valley, CA 92708
(714) 593-7433
File #:2019-798 Agenda Date:12/11/2019 Agenda Item No:5.
FROM:James D. Herberg, General Manager
Originator: Lan Wiborg, Director of Environmental Services
SUBJECT:
ORANGE COUNTY SANITATION DISTRICT - ENVIRONMENTAL SERVICES
GENERAL MANAGER'S RECOMMENDATION
RECOMMENDATION:
Information Item.
BACKGROUND
Each month,staff provides an informational presentation on topics of interest to the Board of
Directors.This month’s topic:Orange County Sanitation District’s Environmental Services
Department - Regulatory Compliance Program.
RELEVANT STANDARDS
·Use all practical and effective means for resource recovery
·Comply with environmental permit requirements
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 12/2/2019Page 1 of 1
powered by Legistar™
ORANGE COUNTY SANITATION DISTRICT
COMMON ACRONYMS
ACWA Association of California
Water Agencies LAFCO Local Agency Formation
Commission RWQCB Regional Water Quality
Control Board
APWA American Public Works
Association LOS Level Of Service SARFPA Santa Ana River Flood
Protection Agency
AQMD Air Quality Management
District MGD Million Gallons Per Day SARI Santa Ana River
Interceptor
ASCE American Society of Civil
Engineers MOU Memorandum of
Understanding SARWQCB Santa Ana Regional Water
Quality Control Board
BOD Biochemical Oxygen Demand NACWA National Association of Clean
Water Agencies SAWPA Santa Ana Watershed
Project Authority
CARB California Air Resources
Board NEPA National Environmental
Policy Act SCADA Supervisory Control And
Data Acquisition
CASA California Association of
Sanitation Agencies NGOs Non-Governmental
Organizations SCAP
Southern California
Alliance of Publicly Owned
Treatment Works
CCTV Closed Circuit Television NPDES National Pollutant Discharge
Elimination System SCAQMD South Coast Air Quality
Management District
CEQA California Environmental
Quality Act NWRI National Water Research
Institute SOCWA South Orange County
Wastewater Authority
CIP Capital Improvement
Program O & M Operations & Maintenance SRF Clean Water State
Revolving Fund
CRWQCB California Regional Water
Quality Control Board OCCOG Orange County Council of
Governments SSMP Sewer System
Management Plan
CWA Clean Water Act OCHCA Orange County Health Care
Agency SSO Sanitary Sewer Overflow
CWEA California Water Environment
Association OCSD Orange County Sanitation
District SWRCB State Water Resources
Control Board
EIR Environmental Impact Report OCWD Orange County Water District TDS Total Dissolved Solids
EMT Executive Management Team OOBS Ocean Outfall Booster Station TMDL Total Maximum Daily Load
EPA US Environmental Protection
Agency OSHA Occupational Safety and
Health Administration TSS Total Suspended Solids
FOG Fats, Oils, and Grease PCSA
Professional
Consultant/Construction
Services Agreement
WDR Waste Discharge
Requirements
gpd gallons per day PDSA Professional Design Services
Agreement WEF Water Environment
Federation
GWRS Groundwater Replenishment
System POTW Publicly Owned Treatment
Works WERF Water Environment &
Reuse Foundation
ICS Incident Command System ppm parts per million WIFIA Water Infrastructure
Finance and Innovation Act
IERP Integrated Emergency
Response Plan PSA Professional Services
Agreement WIIN
Water Infrastructure
Improvements for the
Nation Act
JPA Joint Powers Authority RFP Request For Proposal WRDA Water Resources
Development Act
ORANGE COUNTY SANITATION DISTRICT
GLOSSARY OF TERMS
ACTIVATED SLUDGE PROCESS – A secondary biological wastewater treatment process where bacteria reproduce at a high
rate with the introduction of excess air or oxygen and consume dissolved nutrients in the wastewater.
BENTHOS – The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or near the seabed, also
known as the benthic zone.
BIOCHEMICAL OXYGEN DEMAND (BOD) – The amount of oxygen used when organic matter undergoes decomposition by
microorganisms. Testing for BOD is done to assess the amount of organic matter in water.
BIOGAS – A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used
as a fuel.
BIOSOLIDS – Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process.
This high-quality product can be recycled as a soil amendment on farmland or further processed as an earth-like product for
commercial and home gardens to improve and maintain fertile soil and stimulate plant growth.
CAPITAL IMPROVEMENT PROGRAM (CIP) – Projects for repair, rehabilitation, and replacement of assets. Also includes
treatment improvements, additional capacity, and projects for the support facilities.
COLIFORM BACTERIA – A group of bacteria found in the intestines of humans and other animals, but also occasionally found
elsewhere, used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater.
COLLECTIONS SYSTEM – In wastewater, it is the system of typically underground pipes that receive and convey sanitary
wastewater or storm water.
CERTIFICATE OF PARTICIPATION (COP) – A type of financing where an investor purchases a share of the lease revenues of
a program rather than the bond being secured by those revenues.
CONTAMINANTS OF POTENTIAL CONCERN (CPC) – Pharmaceuticals, hormones, and other organic wastewater
contaminants.
DILUTION TO THRESHOLD (D/T) – The dilution at which the majority of people detect the odor becomes the D/T for that air
sample.
GREENHOUSE GASES (GHG) – In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and
ozone gases that are considered the cause of global warming (“greenhouse effect”).
GROUNDWATER REPLENISHMENT SYSTEM (GWRS) – A joint water reclamation project that proactively responds to Southern
California’s current and future water needs. This joint project between the Orange County Water District and the Orange County
Sanitation District provides 70 million gallons per day of drinking quality water to replenish the local groundwater supply.
LEVEL OF SERVICE (LOS) – Goals to support environmental and public expectations for performance.
N-NITROSODIMETHYLAMINE (NDMA) – A N-nitrosamine suspected cancer-causing agent. It has been found in the
Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment.
NATIONAL BIOSOLIDS PARTNERSHIP (NBP) – An alliance of the National Association of Clean Water Agencies and Water
Environment Federation, with advisory support from the US Environmental Protection Agency. NBP is committed to developing
and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance
and promote public participation to enhance the credibility of local agency biosolids programs and improved communications that
lead to public acceptance.
PLUME – A visible or measurable concentration of discharge from a stationary source or fixed facility.
PUBLICLY OWNED TREATMENT WORKS (POTW) – A municipal wastewater treatment plant.
SANTA ANA RIVER INTERCEPTOR (SARI) LINE – A regional brine line designed to convey 30 million gallons per day of non-
reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment.
SANITARY SEWER – Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined
sewers carry both wastewater and urban runoff.
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT (SCAQMD) – Regional regulatory agency that develops plans and
regulations designed to achieve public health standards by reducing emissions from business and industry.
SECONDARY TREATMENT – Biological wastewater treatment, particularly the activated sludge process, where bacteria and
other microorganisms consume dissolved nutrients in wastewater.
SLUDGE – Untreated solid material created by the treatment of wastewater.
TOTAL SUSPENDED SOLIDS (TSS) – The amount of solids floating and in suspension in wastewater.
TRICKLING FILTER – A biological secondary treatment process in which bacteria and other microorganisms, growing as slime
on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them.
URBAN RUNOFF – Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and
oceans.
WASTEWATER – Any water that enters the sanitary sewer.
WATERSHED – A land area from which water drains to a particular water body. The Orange County Sanitation District’s service
area is in the Santa Ana River Watershed.