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HomeMy WebLinkAbout11-16-2011 Steering Committee Agenda Packet _ Wednesday, November 16, 2011 Orange County Sanitation District --'- 5:00 P.M. Regular Meeting of the Administration Building Steering Committee , Conference Rooms A & B 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7130 AGENDA DECLARATION OF QUORUM: PUBLIC COMMENTS: If you wish to speak,please complete a Speaker's Form and give it to the Clerk of the Board. Speakers are requested to limit comments to three minutes. REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors. CONSENT CALENDAR: 1. Approve minutes of the October 26, 2011 Steering Committee Meeting. ACTION ITEMS: 2. Recommend to the Board of Directors to: A. Approve the Five-Year Strategic Plan dated November 2011; and, B. Direct staff to implement the goals and levels of service contained in the Plan. INFORMATION ITEMS: 3. Public Affairs Report CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations,pending or potential litigation, or personnel matters,pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.61 as noted. Reports relating to(a)purchase and sale of real property;(b)matters of pending or potential litigation;(c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. Convene in closed session. 11/16/11 Steering Committee Agenda Page 1 of 2 (1) CONFERENCE WITH LEGAL COUNSEL RE ANTICIPATED LITIGATION (Government Code Section 54956.9(b)) Significant Exposure to Litigation Number of Potential Cases: 3 (a) Claim for Damages by Vallejo Gallery, LLC (b) Government Tort Claim of Jamie Nicole Maddux (c) Government Tort Claim of Debbie E. Schmidt Reconvene in regular session. Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Steering Committee meeting is scheduled for Wednesday, December 21, 2011, at 5:00 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at(714)593- 7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley,California,not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item,including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Maria E.Ayala Clerk of the Board (714)593-7130 mayala(@ocsd.com 11/16/11 Steering Committee Agenda Page 2 of 2 STEERING COMMITTEE Meeting Date To Bd. of Dir. 11/16/11 11/16/11 AGENDA REPORT Item Number Item Number 2 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Robert P. Ghirelli, Assistant General Manager GENERAL MANAGER'S RECOMMENDATION A. Approve the Five-Year Strategic Plan dated November 2011; and, B. Direct staff to implement the goals and levels of service contained in the Plan. SUMMARY The strategic plan has been updated for 2011-12 and contains a summary of accomplishments over the past year as well as changes to the levels of service and strategic goals. The plan does not carry any additional costs associated with the changes to the strategic goals and levels of service. PRIOR COMMITTEE/BOARD ACTIONS October 19, 2011: The Board of Directors conducted a strategic planning workshop. ADDITIONAL INFORMATION Strategic Plan Update Process In 2007, the Board of Directors held a series of workshops to develop a Five-Year Strategic Plan containing strategic goals and levels of service and updated statements of mission, vision and core values. The three month process culminated in adoption of a new plan in November 2007. Every year since, the Board of Directors held a strategic planning workshop and subsequently approved an updated plan with new strategic goals and levels of service. Board Input The executive management team met in July 2011 to discuss preliminary ideas and suggestions for updates to the plan. On October 19, the Board of Directors participated in a workshop to discuss the progress to date and heard presentations by members of the executive management team regarding biosolids management, full cost recovery for the urban runoff program, ocean protection, rates, and leadership development. The discussion resulted in recommendations to add or change several strategic goals and levels of service. Form No.DW-102.1 Page 1 of 4 In addition to the discussion of the agenda topics, several board members had comments and questions about other issues. A summary of the comments and staff responses is presented below: Board roles and responsibilities -- look for opportunities to improve communication between staff and the board to ensure staff is meeting the Board Members' needs for quality content and timely information in agenda reports and staff presentations. Staff response: staff will work with the Steering Committee to explore ways to improve the lines of communication between the board members and staff, including enhancements to the Directors' website and the orientation program for new board members. Sole source contracts -- explore options for a more competitive procurement process with less reliance on the use of sole source contracts for the procurement of goods and services. Staff response: staff will schedule an information item to brief the board of directors on the procedures used by staff to procure goods and services. We will incorporate a discussion of the procurement process as part of the orientation program for new board members. Litigation costs -- review the standard language in our contracts to eliminate ambiguities that could be misinterpreted and possibly lead to litigation. Staff response: staff will review our standard form contracts to ensure the language is clear and unambiguous and minimizes exposure to litigation. Plan Changes Based on the outcome of the strategic planning workshop, the following changes are proposed in this update of the Strategic Plan: Wastewater Management Levels of Service -- OCSD will implement a sustainable biosolids program: ( Percent of biosolids recycled -- amend level of service target to allow up to 12% (from current 5%) of biosolids production to go to landfills through 2017 to reflect opportunity to utilize lower-cost in-county landfill capacity to manage OCSD biosolids during peak production period. Environmental Stewardship Goals -- add new goal as follows: ( "Ocean Protection -- Undertake studies to determine the cause of benthic community changes near the ocean outfall and take corrective action to return affected areas to reference conditions." Business Principle Goals -- add new goal as follows: Form No.DW-102.1 Page 2 of 4 ( "Full Cost Recovery -- Implement a direct charging mechanism to recover the full cost of urban runoff treatment starting July 1, 2013, when the new rate structure is in place." Business Principle Goals -- add new goal as follows: ( "Five Year Rate Plan -- prepare an updated five year rate schedule for Board consideration to go into effect July 1 , 2013." Workplace Environment Goals: change targeted completion date (FY 10-11) for existing goal as follows: ( "Providing Ongoing Leadership Development -- Maximize the development of a pool of dedicated and talented employees ready to lead OCSD into the future. Targeted for completion in FY 11-12." In addition to the changes discussed at the workshop, staff further recommends the following changes and additions to the plan as follows: Business Principles Levels of Service -- OCSD will exercise sound financial management: ( Add a new level of service target -- "Maintain AAA bond rating" -- to demonstrate OCSD's commitment to sound financial management. Wastewater Management Levels of Service -- OCSD will provide a safe, reliable effluent for recycling: ( Concentration of emerging chemical constituents of concern in Plant No. 1 secondary effluent: Change level of service target for 1,4 dioxane to 5 ppb from 10 ppb to reflect current public health standard. ( Thirty-day geometric mean of total coliform bacteria in effluent after initial dilution of 180:1: Change dilution factor to 250:1 from 180:1 to reflect current operating conditions. Wastewater management Levels of Service -- OCSD will manage flows reliably: ( Frequency of unplanned use of emergency one-mile (78-inch diameter) outfall: Add the word "unplanned" to reflect the Sanitation District's intent to use the one-mile outfall only in unplanned or emergency situations. Workplace Environment Levels of Service -- OCSD will take care of its people: ( Meet mandatory OSHA training requirements: change the level of service target to "greater than 95%" from "100%" which more accurately reflects OCSD's experience in achieving this level of service. Environmental Stewardship Goals: change targeted completion date (FY 11-12) as follows: ( Santa Ana River Interceptor Line Relocation -- Work in conjunction with the County of Orange and Federal Government to relocate the Santa Ana River Interceptor Line by June 2013. Targeted for completion in FY 12-13. Form No.DW-102.1 Page 3 of 4 All of the proposed changes listed above are incorporated into the November 2011 update of the OCSD Strategic Plan. CONTINUAL IMPROVEMENT Overall, the updated Strategic Plan continues OCSD's goal of moving from good to great through annual assessments and incremental changes. Each year, the Board will be asked to provide strategic leadership and guidance to District staff for setting goals and levels of service. The Steering Committee and Board are asked to adopt the new Five-Year strategic plan, which contains no new costs and will help guide the strategic direction of the organization and staff. CEQA Adoption of the strategic plan is statutorily exempt from CEQA because it involves only feasibility or planning studies for possible future actions which the board has not approved, adopted, or funded. The strategic plan will not have a legally binding effect on later activities. BUDGET / DELEGATION OF AUTHORITY COMPLIANCE N/A ATTACHMENT November 2011 Strategic Plan Form No.DW-102.1 Page 4 of 4 I� • ( ' r Orange County Sanitation I - Five-Year Strategic November 2011 Charles ober Proud OCSD EmployeeSince •• We' re here for you . Orange County Sanitation District Five-Year Strategic Plan ��.\N S A N l rq T jo 0o ti CD THE EN November 2011 Five-Year Strategic Plan Update November 2011 Table of Contents OCSD Board of Directors Message from the General Manager Executive Summary 1 The Beyond 2012 Planning Framework 2 Overview 3 Mission Statement 4 Vision Statement 5 Core Values 6 Risk Register 7 Strategic Goals & Levels of Service 8 Goals Completed Since 2007 9 Environmental Stewardship 12 Business Principles 14 Wastewater Management 16 Workplace Environment 18 Appendix A: New Issue Paper 20 Appendix B: Previous Issue Papers 26 Appendix C: Glossary 41 Five-Year Strategic Plan Update November 2011 OCSD Board of Directors Chair Larry Crandall Vice Chair Troy Edgar City Active Director Anaheim Harry Sidhu Brea Roy Moore Buena Park Fred Smith Cypress Prakash Narain Fountain Valley Larry Crandall Fullerton Sharon Quirk-Silva Garden Grove Bill Dalton Huntington Beach Joe Carchio Irvine Jeffrey Lalloway La Habra Tom Beamish La Palma Mark Waldman Los Alamitos Troy Edgar Newport Beach Steven Rosansky Orange Jon Dumitru Placentia Constance Underhill Santa Ana Sal Tinajero Seal Beach Michael Levitt Stanton David Shawver Tustin John Nielsen Villa Park Brad Reese Yorba Linda John Anderson Sanitary/Water Districts Costa Mesa Sanitary District James M. Ferryman Midway City Sanitary District Joy L. Neugebauer Irvine Ranch Water District John Withers Orange County Board of Supervisors Janet Nguyen Five-Year Strategic Plan Update November 2011 Message from the General Manager The past year posed another set of challenges for the Orange County Sanitation District, but our Board of Directors piloted us through and pushed for greater efficiencies and cost savings. Indeed, our State and Country continue to struggle economically but OCSD remains committed to our daily mission of protecting the public health and environment for the 2.5 million people we serve. One year from now, we will complete our half-billion dollar upgrade to full secondary treatment ensuring that the water going to the ocean and the Groundwater Replenishment System is of the highest quality. One year ago, we made significant organizational changes to meet future challenges and ensure we are providing service to the tax payers of Orange County in a manner they have come to expect—efficiently and effectively. We are proud that during these challenging times,we continue to innovate.Three major milestones occurred in 2011, including the start-up of the fuel cell research project, groundbreaking for the Santa Ana River Interceptor relocation project and the commissioning of our new secondary treatment facilities to ensure their readiness to meet the December 2012 consent decree deadline. This strategic plan update recognizes our austere times. Specifically focused on internal operations and our back to basics philosophy to support our mission and vision, we continue to evolve and improve without adding staff and holding the line on costs. Our Board continues to drive our staff to make the most of existing resources. Last year we focused on preparing ourselves for the future, always recognizing the times we face and this year we continue that trend. Our Board continues to stress that staff focus on cost savings and driving efficiency at every level, and it is part of our everyday culture. I thank our Board of Directors for their support and leadership, and I am proud of our 2011 Strategic Plan Update that charts a course for the coming year. Also thank you to the Executive Management Team and our outstanding employees who are here protecting public health and the environment for our ratepayers. Respectfully submitted, James D. Ruth General Manager iii Five-Year Strategic Plan Update November 2011 Executive Summary In November 2007,the Board of Directors adopted a new comprehensive strategic plan to steer OCSD's efforts and engage the organization to envision service levels and operational needs for the next five years. The strategic plan is being updated to continue looking at a five-year horizon. This year's update took a slightly different course as we made the decision to focus on our internal operations to make the most of tax dollars and continue our drive towards greater efficiencies. Driven by our mission,vision and core values,this 2011 Strategic Plan update maintains our aggressive efforts to meet the sanitation, health, and safety needs of the 2.5 million people we serve in a cost effective manner, while protecting the environment where we live. Since 2007, 79 percent of the strategic goals identified in the five-year plan have been completed. As a result of the discussion at the October 19 workshop,four new goals were added, one modification to existing levels of service was made and a continuation of a previous goal was included in the plan. New Goals: • Full-Cost Recovery: Urban runoff division program—Implement a direct charging mechanism to recover the cost of urban runoff treatment starting July 1, 2013 when the new rate structure is in place. • Ocean Protection—Undertake studies to determine the cause of benthic community changes near the ocean outfall and take corrective action to return affected areas to reference conditions. • Updating the sewer service fee five-year rate plan—Prepare an updated five-year rate schedule for Board consideration to go into effect July 1, 2013. Modification to Levels of Service: • The level of service for biosolids will continue to be 95 percent recycled, with an exception of up to 12 percent to landfill during peak solids production through 2017. Continuation of previous Goal: • Providing ongoing leadership development— Maximize the development of a pool of dedicated and talented employees ready to lead OCSD into the future. The issue papers describing these goals and level of service are contained in Appendix A. This strategic plan continues to chart a focused roadmap of success for the future of the Orange County Sanitation District. It addresses critical issues and challenges, and communicates clear and concise future direction to OCSD staff. 1 Five-Year Strategic Plan Update November 2011 Beyond 2012 Planning Framework In 2010,the General Manager directed the management team to take a critical look at how OCSD is allocating its resources to support its mission. During that summer,the executive team adopted a comprehensive approach to priority setting, strategic planning and budgeting, known as the Beyond 2012 Strategic Planning Framework. The planning framework is illustrated below and shows how the Board of Directors play a critical role in strategic planning and resource allocation. In 2011, staff will focus on fully implementing the planning framework that will unify and align our mission with strategic planning and budgeting. The strategic planning effort starts with the Board of Directors setting overall policy and priorities for the Sanitation District. Based on that policy direction, staff develops the annual operational plan and budget. Monitoring Strategic New or altered & Evaluation y Planning k" Levels of Service Board Strategic Board Approval of Planning Approval of Budget Framework Strategic Plan Budget Operational Goals & Planning Objectives 2 Five-Year Strategic Plan Update November 2011 Overview Since 1954,the Orange County Sanitation District has provided wastewater treatment to the residents and businesses of northern and central Orange County. It is the third largest wastewater treatment agency west of the Mississippi River. During fiscal year 2010-2011, OCSD collected and treated over 200 million gallons of wastewater each day, recycled 100 percent of its biosolids and reclaimed over 80 million gallons per day. In July 2002,the Board of Directors approved disinfecting the effluent and proceeding with the planning, design, and ,, construction of facilities that will ultimately allow OCSD effluent to meet Federal Clean Water Act secondary _4 "�•:; treatment standards.The current disinfection program includes over$5 million annually for chemicals,while the _ +�-� •j estimated capital construction cost to meet secondary treatment standards is $649 million. OCSD is currently in the midst of a $2.9 billion, 20-year capital improvement program with an budget of nearly$130 million. Reclamation Plant No. I in Fountain Valley In addition to OCSD's partnership in the Groundwater Replenishment System and secondary treatment expansion, •'�— our capital improvement program includes critical w rehabilitation of aging collection systems and treatment ' plant facilities, and upgrades to provide enhanced odor `"-- control and reduced air emissions. rIIL. . Against this backdrop of challenging issues, and to meet the large and complex needs of providing services to 2.5 million i,�' , people in the most effective and efficient way possible, the Treatment Plant No.2 in Huntington Beach strategic planning process began in 2007 to continually map a five-year strategy. Beginning with gathering input from the staff, with the leadership of the Board of Directors, OCSD revisited its mission,vision, and values to allow all levels of the organization to take ownership in the strategic planning process. The original plan was adopted in November 2007. This is the fourth annual update to this five-year strategic plan. 3 Five-Year Strategic Plan Update November 2011 OCSD Mission Statement The Mission Statement is the basic foundation that defines why we exist. "We protect public health and the environment by providing effective wastewater collection, treatment, and recycling." f 'j �a.. Jpir! � 4 Five-Year Strategic Plan Update November 2011 OCSD Vision Statement The Vision Statement supports the Mission Statement by expressing a broad philosophy of what the Orange County Sanitation District strives to achieve now and in the future in the delivery of services to our customers,vendors, other agencies,the general public, and each other. The Orange County Sanitation District is committed to: Making decisions in an open and honest way r - to produce optimum financial, environmental and societal results. 1 Cooperating with other stakeholders to protect the ocean and regional water resources for the people we serve. Beneficially recycling wastewater, biosolids and ' 1 ; other resources using safe and effective processes and systems. Developing the best possible workforce by a� providing employees with opportunities to advance their careers through enhanced growth, responsibility, and professional development. 5 Five-Year Strategic Plan Update November 2011 Core Values The Core Values support the Mission and Vision Statements by expressing the values, beliefs, and philosophy that guides our daily actions.They help form the framework of our organization and reinforce our professional work ethic. Honesty, Trust and Respect We aspire to the highest degree of integrity, honesty,trust, and respect in our interaction with each other, our suppliers, our customers, and our community. Teamwork and Problem Solving We strive to reach OCSD goals through cooperative efforts and collaboration with each other and our constituencies. We work to solve problems in a creative, cost-effective and safe manner, and we acknowledge team and individual efforts. Leadership and Commitment We lead by example, acknowledging the value of our resources and using them wisely and safely to achieve our objectives and goals. We are committed to act in the best interest of our employees, our organization, and our community. Learning/Teaching We continuously develop ourselves, enhancing our talents, skills, and abilities, knowing that only through personal growth and development will we continue to progress as an agency and as individuals. Recognition/Rewards We seek to recognize, acknowledge, and reward contributions to OCSD by our many talented employees. 6 Five-Year Strategic Plan Update November 2011 Risk Register The Risk Register is an annual compilation of the various risks facing the Orange County Sanitation District, as seen by the Sanitation District's management team. The 2011 Risk Register Update was conducted as the world was reeling from the effects of the Japanese and New Zealand earthquakes. The Japanese earthquake, in particular, brought home that one disaster could have multiple consequences; including earthquake,tsunami, nuclear mishap and even supply chain problems. The world also continued to make a slow recovery from the financial crash of 2008. In addition to spotting downside risks, management was asked to also identify opportunities—items that had an "upside"—where the risk was that the opportunity might be missed. The 2011 Risk Register Update identified these as the top risks: • Disaster and aftermath—refers to natural disasters and their consequences, such as the need for business continuity, with earthquakes being the most-frequently mentioned natural disaster. • California financial instability/California takes property taxes away—points to the continuing monetary turmoil in California state government and the possibility that decisions by the state could impact OCSD funds collected for state assistance. • Lack of support for rate increases- refers to the risk that the public might not be disposed to provide support if rate increases are needed in 2013. • Retirement of experienced employees—reflects the fact that many OCSD employees are nearing or are eligible for retirement. • Difficult economy—refers to the possibility that tight economic times may continue to affect the District's opportunities to invest, borrow, and make necessary purchases. The top opportunities for the 2011 update are: • Hire good staff—refers to the opportunity to find and hire competent and experienced people during a time when many are available. • Be prepared for emergencies and aftermath—involves the opportunity to become ready to respond to a variety of emergencies that may arise in the future. • Train staff for new facilities and tasks, as well as further transition planning and training—as new construction finishes and comes online, and as long-time employees retire,there is an opportunity to prepare OCSD and its staff for these changes. Staff is in the process of developing plans to mitigate the identified risks and take advantage of the opportunities. For example,the Sanitation District recently completed a major reorganization of its staff to streamline its operations and eliminate duplicative functions as we prepare to commission full secondary treatment in 2012. We modified our hiring process by moving to an "open recruitment" approach to accelerate the hiring of employees who are needed to operate and maintain the new facilities coming online in the next two years. In addition, we negotiated labor agreements with our employees' bargaining units that will keep salary and budget costs at a reasonable level for the next several years. Five-Year Strategic Plan Update November 2011 Strategic Goals & Levels of Service On the following pages are the strategic goals and levels of service for the next five years. New goals for this report are noted and all goals include a projected completion time. The levels of service standards are measures of service that are seen by our customers as high priorities. Goals and levels of service are divided into four areas: • Environmental Stewardship—OCSD participates collaboratively in the protection of regional water resources for the benefit of the people we serve. • Business Principles—OCSD makes every decision based on short and long-term environmental, societal, and financial impacts (the triple bottom line). • Wastewater Management—OCSD beneficially reuses and recycles water and other resources using safe and effective wastewater systems. • Workplace Environment—OCSD provides an environment of partnership, growth, opportunity, responsibility and accountability. _ a i - i 8 Five-Year Strategic Plan Update November 2011 Goals completed since adoption of the 2007 five-year plan Environmental Stewardship 1. Contaminants of Potential Concern (CPC)—Complete three phase testing and analysis of 550+ CPC, prepare report on findings and recommendations, develop initial source control strategy if there are CPCs identified that require control. Completed FY07-08 2. Management System for Environmental Compliance—Implement a management control system for environmental compliance information that incorporates a dashboard-style report. Completed FY 07-08 3. Engine Emission Compliance—Complete study to evaluate alternatives for complying with lower emission limits in the South Coast Air Quality Management's Rule 1110.2. Initiate planning and design of demonstration testing of the most promising technology(s) identified in the study. Completed FY 07-08 4. Fuel Cell Evaluation—Start up 300 kW demonstration unit. Completed FY10-11 a. Evaluate cost feasibility of replacing or supplementing CGS engines with fuel cells. Completed FY 10-11 5. Climate Change/Environmental Footprint Initiative—Develop an overall strategy for responding to climate change regulations and proactively adapting to the effects of climate change including identification and mitigation of greenhouse gases and adapting to any impacts to our facilities and operations. Completed FY 08-09 a. Develop models to estimate greenhouse gas and traditional pollutant emissions for determination of our environmental footprint. (Functional predictive greenhouse gas model completed.) Completed in FY 10-11 6. Reclaiming Santa Ana River Interceptor Line (SARI) Flows—Meet with stakeholders, develop a list of obstacles that need to be overcome to reclaim the SARI Line and develop a strategy to obtain regulatory approval of reclaiming SARI Line flows. This goal was cancelled in FY08-09 due to inability to obtain regulatory approval. 9 Five-Year Strategic Plan Update November 2011 Business Principles 1. Sewer Rate for Green Development—Submit for Board approval an amendment to sewer rate ordinance with incentives for green developments. Completed FY 07-08 2. Complete Facilities Master Plan Update—Complete a comprehensive update of the Facilities Master Plan and obtain Board approval. Completed FY07-08 3. Enterprise Information Technology Strategic Plan—Complete a District-wide Information Technology Strategic Plan. Completed FY09-10 4. Updating OCSD's Risk Register—Review and update OCSD's risk register to include an assessment of technical, regulatory,financial, and political risks (among others) and possible mitigation strategies. Completed FY07-08 5. Annex Unincorporated Areas—With Board concurrence, annex unincorporated areas into OCSD's service area. Completed FY07-08 6. Review Interagency Agreements—Conduct a comprehensive review of agreements with the Santa Ana Watershed Project Authority and Irvine Ranch Water District, and, if appropriate, reopen for discussion. Completed FY09-10 7. Strategic Business Plan—With Board concurrence, annually update and implement the Strategic Plan and Business Plan. Completed FY10-11 8. Business Accountability Charters—Create Business Accountability Charters for each department, consistent with those developed by managers and supervisors. Completed FY 10-11 9. Chemical Supplies—Develop a Chemical Sustainability Plan that provides OCSD with options for obtaining wastewater treatment chemicals during chemical shortages, emergencies or complete stoppages. Completed FY 10-11 10. Full-Cost Recovery 2010-11—Conduct a comprehensive review of the Sanitation District's Urban Runoff Program to ensure a fair share recovery of costs for services. Completed in FY 10-11 10 Five-Year Strategic Plan Update November 2011 Wastewater Management 1. Groundwater Replenishment System—Maximize the production of GWR System product water to augment and protect the Orange County groundwater basin with a goal of 70 mgd. Completed FY 08-09 2. Sustainable Biosolids Program—Complete new in-county Compost Take-Back Program Plan strategy. Completed FY 07-08 a. Evaluate the feasibility of deep injection/methane recovery including commissioning a study of the geological formations below Plants 1 and 2, and availability and acceptability of any existing wells. Completed FY08-09 b. Evaluate option of processing some biosolids at the City of Los Angeles Terminal Island demonstration well. Completed FY 08-09 3. Implement Energy Master Plan—After the completion of the plan, assess final recommendations to ensure adequate power resources and energy management. Completed FY09-10 4. Disinfection of Final Effluent—Develop a cost effective program to sustain protection of public health associated with bacteria in the effluent and incorporate program elements into our NPDES Permit. Completed in FY10-11 Workplace Environment 1. Space Planning Study Recommendations—Complete relocation of staff housed in Information Technology Trailers to the Administration Building, Control Center and Building 6. Completed FY 07-08 2. Improve the Sanitation District Security—Provide long-term security enhancements at both treatment plants and within OCSD's Collections System. Completed FY07-08 3. Safety and Health Strategic Plan—Develop and implement a Safety and Health Strategic Plan for all OCSD activities. Completed FY 08-09 4. Human Resources Strategic Plan—Design, develop and implement human resources policies, practices, systems and tools to ensure OCSD has a workforce that meets future needs of OCSD and the public it serves. Completed FY08-09 5. Succession Plan—Implement the Succession Management Plan including management training and the creation of a Leadership Academy. Completed FY08-09 6. North County Yard—Open the North County Maintenance Yard and complete the relocation of selected staff and equipment to the facility. Implement flex space for added agency-wide needs as appropriate. This goal was cancelled in FY 10-11 and the facility will be leased or sold. 11 Five-Year Strategic Plan Update November 2011 Environmental Stewardship Goals OCSD participates collaboratively in the protection of regional water resources for the benefit of the people we serve. 1. Santa Ana River Interceptor Line Relocation—Work in conjunction with the County of Orange and the Federal Government to relocate the Santa Ana River Interceptor Line by June 2013. Targeted for completion in FY 12-13 2. Engine Emission Compliance—Implement capital improvements or operational modifications in order to achieve compliance. Targeted for completion in FY 13-14 3. Fuel Cell Evaluation—Evaluate performance and fuel clean up effectiveness. Targeted for completion in FY 12-13 Environmental Stewardship Levels of Service FY 10-11 Level of Service OCSD will protect public health and the environment Results Target Accept dry weather urban runoff diversion flows without imposing fees. 1.5 mgd Up to 4 mgd Maximum off-site odor impact • Reclamation Plant No. 1 42 D/T 14 D/T by 2016 • Treatment Plant No. 2 48 D/T 17 D/T by 2018 Air emissions health risk to community and employees, 9 < 10 per one million people (for each treatment plant) No Notices of Violation (NOVs)with air, land, and water permits 1 0 FY 10-11 Level of Service OCSD will be a good neighbor Results Target Odor complaint response: • Treatment Plants within 1 hour 100% 100% • Collection System within 1 working day 100% 100% Number of odor complaints: • Reclamation Plant No. 1 6 32 • Treatment Plant No. 2 1 4 • Collection System 16 34 *These numbers do not reflect those odors listed as, "cannot determine source." (added in FY 2009-10) Respond to collection system spills within 1 hour 100% 100% 12 Five-Year Strategic Plan Update November 2011 YM... 1'- 1 imp-,-� - - - I Al � I. u ® � P Both the fuel cell and a hydrogen fueling station have been installed and operational at Plant No.1.The research project consists of constructing a fuel cell to utilize a portion of OCSD's digester gas(a"renewable resource")at Plant No.1 to generate both electricity for on-site use and extract hydrogen gas for fueling automobiles. This technology could potentially replace the central power generation system engines,thus reducing air emissions while producing power,heat,and hydrogen fuel. 13 Five-Year Strategic Plan Update November 2011 Business Principles Goals OCSD makes every decision based on short and long-term environmental, societal, and financial impacts (the triple bottom line). 1. Local Sewer Services—Transfer back to cities and sanitary districts the local sewer assets that are not serving a true regional purpose. Targeted for completion in FY12-13 2. Full-Cost Recovery(new)—Implement a direct charging mechanism to recover the full cost of urban runoff treatment starting July 1, 2013 when the new rate structure is in place. Targeted for completion in FY 12-13 3. Five-Year Rate Plan (new)—Prepare an updated 5-year rate schedule for Board consideration to go into effect July 1, 2013. Targeted for completion in FY 12-13 y 14 Five-Year Strategic Plan Update November 2011 Business Principles Levels of Service FY 10-11 Level of Service OCSD will exercise sound financial management Results Target COP service principal and interest <O&M expenses <O&M expenses Annual user fees Sufficient Sufficient to cover all 0&M requirements Actual collection, treatment, and disposal costs per 8.70% under budget <_ 10%of budget million gallons in comparison with the budget Annual variance from adopted reserve policy -0.0046% >_ Budgeted reserves Maintain AAA Bond Rating 100% 100% FY 10-11 Level of Service OCSD will be responsive to our customers Results Target Respond to public complaints or inquiries regarding 100% >90% construction projects within 1 working day New connection permits processed within 100% >90% one working day Dollars Comparison of Single-Family Residence Rates per Year O u ly 20 1 0) $700 $613 $600 $500 $400 $300 $244 — $200 0 L 4 $141 o U $100 mil w" � U � en rig Comparison Agencies 15 Five-Year Strategic Plan Update November 2011 Wastewater Management Goals OCSD beneficially reuses and recycles water and other resources using safe and effective wastewater systems. I. Sustainable Biosolids Program-Conduct research to reduce the amount of biosolids produced and increase digester gas production. Targeted for completion in FY 12-13 2. Odor Control— Implement odor control projects at Plant 1 (trickling filters) and Plant 2 (solids loading facility) by 2018. Targeted for completion in FY 15-16 and FY 17-18 3. Ocean Protection (new)—Undertake studies to determine the cause of benthic community changes near the ocean outfall and take corrective action to return affected areas to reference conditions. Targeted for completion in FY 11-12 A. ,e 14 • may,' A portion of the treated wastewater from our two treatment plants is released over four miles out into the ocean at a depth of two hundred feet below the surface of the water.To ensure that the marine environment and public health are protected,the Orange County Sanitation District has maintained an extensive ocean monitoring program for over 25 years. 16 Five-Year Strategic Plan Update November 2011 Wastewater Management Levels of Service FY 10-11 Level of Service OCSD will provide a safe reliable effluent for recycling Results Target Concentration of emerging chemical constituents 41 NDMA< 150 ppt of concern in Plant No. 1 secondary effluent 1.6 1,4-Dioxane< 5 ppb Meet GWRS specification requirements for Plant 1 secondary effluent 3.4 5 NTU Thirty-day geometric mean of total coliform bacteria in effluent 352.5 < 1,000 mpn after initial dilution of 250:1 Compliance with core industrial pretreatment requirements 100% 100% Meet secondary treatment standards BOD 29 mg/L BOD 100 mg/L BOD 30 mg1L by 2012 TSS 24 mg/L TSS 55 mg/L TSS 30 mg1L by 2012 FY 10-11 Level of Service OCSD will manage flows reliably Results Target Frequency of unplanned use of emergency one-mile (78-inch 0 0 per year during diameter) outfall dry weather less than once per 3 years in peak wet weather Sanitary sewer spills per 100 miles 0.23 < 2.1 Contain sanitary sewer spills within 5 hours 100% 100% FY 10-11 Level of Service OCSD's effluent will be recycled Results Target Provide up to 104 mgd specification effluent to the 82.7 mgd 104 mgd Groundwater Replenishment System OCSD will implement a sustainable biosolids management FY 10-11 Level of Service program Results Target National Biosolids Partnership Certification for Biosolids 5 Year Maintain Environmental Management System Recertification July certification 2008 Percent of biosolids recycled 100% recycled >95% recycled 0% landfill < 5% landfill *Exception: Percent of biosolids recycled 100% recycled* >88% recycled* during peak solids production through 2017 0% landfill < 12% landfill Respond to all biosolids contractor violations within a week of 100% 100% violation notice 17 Five-Year Strategic Plan Update November 2011 Workplace Environment Goals OCSD provides an environment of partnership, growth, opportunity, responsibility and accountability. 1. Providing Ongoing Leadership Development- Maximize the development of a pool of dedicated and talented employees ready to lead OCSD into the future. Targeted for completion in FY 11-12 VeaderS, o6 t "S for TO BLAST is an internal program that is being developed by employees for employees with the ongoing support from management. BLAST continuously promotes and offers opportunities for lifelong learning in an effort to build OCSD's bench for future leadership positions. 18 Five-Year Strategic Plan Update November 2011 Workplace Environment Levels of Service FY 10-11 Level of OCSD will take care of its people Results Service Target Training hours per employee 50 45 per year Employee injury incident rate—accidents per 100 employees 5 Industry average 4.6 Meet mandatory OSHA training requirements 95.5% >95% Hours worked since last lost work day 70,000 1,000,000 Achieve annual agency target of days away from work, days of 1.8 2.5 restricted work activity, or job transferred as a result of a work- related injury or illness f41, r � r i a �� California �, Water Environment Association LARGE PLANT OF THE YEAR 2010 The Orange County Sanitation District's Plant No. 1 received Plant of the Year award from the California Water Environment Association in 2010. 19 Five-Year Strategic Plan Update November 2011 Appendix A: New Issue Papers In preparation for the October 19, 2011 Board of Director Strategic Planning Workshop to discuss the proposed goals for 2011, staff prepared five issue papers related to the new goals. The appendix includes issue papers on the following topics: • Revisiting OCSD's 95 percent recycling level of service for biosolids management • Full-cost recovery: Urban runoff diversion program • Evaluation of natural community decline around ocean outfall • Leadership of the future • Updating the sewer service fee five-year rate plan 20 Five-Year Strategic Plan Update November 2011 Revisiting OCSD's 95 percent Recycling Level of Service for Biosolids Management Should OCSD consider landfill options for biosolids? Why is this issue important to the District? OCSD's Board Resolution (OCSD 06-10) supports biosolids reuse and encourages its member agencies to use OCSD compost. This policy is implemented through a 95 percent recycling Level of Service goal. OCSD's solids are increasing from a historic average of 650 tons per day to a peak of about 800 tons per day until dewatering centrifuges are installed at both plants and the Irvine Ranch Water District manages its own solids. These projects are all scheduled for completion by 2017. The use of in-county landfills for OCSD's biosolids could potentially reduce the costs of managing solids during this interim period. Goals • Use landfills as a biosolids management option during the interim peak production period when there is a clear advantage to OCSD to do so. Clear advantages include: costs, problems with existing contractors, weather, and other management challenges. • Change short term diversion goals to allow greater amounts of biosolids going to the landfill during the interim period. • Continue to investigate and evaluate the use of landfills as a biosolids management option and at the same time consider the triple bottom line (environmental, financial, and societal), State of California's recycling policies, greenhouse gas emissions, and our recent survey of stakeholders to prioritize biosolids management. • Recognize that there is an interest by the County of Orange to work with OCSD to utilize local landfills as a potential biosolids management option. • Continue dialogue with the County of Orange and local agencies to build relationships and partnerships for local landfill options. • Utilize landfills that use biogas recovery and energy production. Desired outcome • Allow the use of landfills as a biosolids management option during the interim peak production period. • Develop a biosolids management strategy that benefits both OCSD and local county landfills. • Continue recycling biosolids and utilizing them for their nutrients, carbon sequestration, and energy values. • Maintain a diversity of biosolids options. • Maintain operational flexibility. • Maintain fail-safe biosolids management options and capacity, including locally. 21 Five-Year Strategic Plan Update November 2011 Full-Cost Recovery: Urban Runoff Diversion Program Should OCSD charge the County of Orange the cost of providing urban runoff treatment or continue to absorb the costs within our budget? Why is this issue important to the District? In September 2000, the Board of Directors adopted a dry weather urban runoff policy to assist in remediation of the public health and environmental problems associated with urban runoff. The original resolution and its subsequent amendment, (Resolution No. 01-07), initially waived all fees and charges associated with the urban runoff discharges for flows below 4 million gallons per day (MGD). During the past 11 years, the District has treated a total of 5.8 billion gallons of urban runoff from the city of Huntington Beach, Orange County Public Works, city of Newport Beach, Irvine Ranch Water District, and The Irvine Company. The District's urban runoff treatment cost for 2010-2011 was $976,593 based upon a reported discharge flow of 538 million gallons. These treatment costs are projected to increase steadily. While the program has been successful in reducing beach contamination, OCSD continues to provide benefits to agencies without capturing the cost of delivering this service, while our costs increase as we move to full secondary treatment in 2012. The Board of Directors directed staff to review this matter during its discussion of the 2010 strategic plan update and to return with a recommendation for this year's strategic plan update. Because of the current economic environment, OCSD must review this program and ensure that our agreements provide full cost recovery for the treatment of urban runoff from participating agencies and cities. Goals • Meet with participating agencies and cities to explain the issues and costs associated with the current Urban Runoff Diversion Program. • Amend the District's Fee Ordinance to include Urban Runoff User charges to the appropriate agency or agencies. • Recover the cost of providing the service from the agencies currently receiving the benefit. Desired Outcome • Charge the County of Orange, the NPDES permit holder of the Municipal Separate Storm Sewer Systems (MS4s), for Urban Runoff costs starting July 1, 2013 when the new rate structure is in place. 22 Five-Year Strategic Plan Update November 2011 Evaluation of Natural Community Decline Around Ocean Outfall Should OCSD reconsider its use of chlorine disinfection? Why is this issue important to the District? The Clean Water Act requires the District to protect the natural communities that live around the ocean outfall pipe. Communities of small animals that live in the sediments in the vicinity of the outfall pipe began changing in 2005, and showed significant degradation by 2009. Changes in small animal populations have been seen up to one-half mile beyond the pipe. The District is at risk of being non-compliant with its ocean discharge permit requirements unless this trend is reversed. Ocean monitoring data shows this trend is not caused by usual sewage contaminants and is not the result of natural changes occurring in the ocean environment. There are no discernible changes over time in animal populations at clean reference areas, nor are other treatment plants (POTWs) experiencing similar occurrences, including those POTWs that disinfect their effluent. There appears to be a strong correlation between these changes and the District's use of chlorine as a disinfectant. Total chlorine use and daily maximum chlorine residual concentrations correlate to the changes we are seeing in the communities of small animals. The use of chlorine as an anti-fouling agent for the Groundwater Replenishment System's (GWRS) reverse osmosis membrane filters may also be a contributing factor. There is also a correlation with decreased final effluent flows discharged out the ocean outfall as a result of water going to GWRS. If chlorine byproducts, and their interactions with the more concentrated solids during periods of low flow are determined to be significant causes of these changes, staff would recommend discontinuing effluent disinfection to eventually reverse these adverse effects in the ocean around our outfall. Such a recommendation would be controversial because some interest groups believe disinfection prevents beach water contamination, despite evidence to the contrary. Goals • Determine if chlorine is the cause of the decline and changes in animal communities near the outfall. • Develop and implement mitigation strategies to reverse the decline. • Communicate results to regulators and stakeholders and seek approval to cease chlorine disinfection if shown to be the cause. Desired Outcomes • Definitive identification of the source(s) of the decline and changes. • Successful mitigation of the cause(s). • Return affected area to reference conditions. 23 Five-Year Strategic Plan Update November 2011 Leadership of the Future Should OCSD continue devoting resources toward leadership development programs to meet future challenges of employee attrition? Why is this issue important to the District? During the past year, we have experienced increasing numbers of employees retiring, resulting in a rapid loss of institutional knowledge. We expect this trend to continue. Currently, fifty-six percent of all managers and supervisors are eligible to retire. Five year projections indicate that the retirement eligibility trend will continue. The Board has indicated that future leadership is important to maintaining service levels and ensuring our continued success. Building a bench of leaders is an important initiative that helps meet this challenge of staff attrition. The retirement impact coincides with plans to reduce the overall number of OCSD management positions; a direction given by the Board to maintain our financial strength and sustainability. While these events are complementary, they emphasize the importance of developing a pool of individuals who possess skillful and competent abilities to be eligible to compete for future leadership positions. Leadership development efforts can also aid in retaining talent. Goals • Apply Workforce Planning Assessments to advanced development efforts. • Strengthen staffing processes. • Improve talent management programs. • Increase accessibility of leadership development programs. • Support initiatives that provide the essential skills needed to develop successful leaders. • Ensure programs reinforce core values, promote fairness and equity, and are inclusive and open to all. • Partner with other organizations to share resources aimed at leadership development. Desired outcome • Enhance and accelerate the development of diverse, dedicated, and talented employees ready to lead OCSD into the future. 24 Five-Year Strategic Plan Update November 2011 Updating the Sewer Service Fee Five-Year Rate Plan Should OCSD develop a new five-year rate plan in 2013? Why is this issue important to the District? Long-term financial planning is critical to meeting the objectives of the District's long-term strategic plan. In February 2008, the Board approved a five-year rate plan to meet the objectives of the five-year strategic plan including the design and construction of full secondary treatment facilities by December 2012 as mandated by the U. S. Court Consent Decree. This rate plan is set to expire June 30, 2013. As a result, the District will need to establish a new rate plan. The benefits of implementing a five-year rate plan include the assurance that funding will be available to support the initiatives contained within the five-year strategic plan. It also provides our rate payers the ability to plan for future business expenses and personal finances. Approving a five-year rate plan for sewer service fees is fiscally advisable considering the preparation and cost of annual public notices to our 550,000 rate payers. Lastly, it provides sustainability of wastewater collection and treatment services into the future. Goals • Identify key stakeholders impacted by sewer service fee rates and develop an outreach strategy. • Prepare an updated sewer service fee rate study for the regional and local areas served. • Utilizing the sewer service fee rate study, update the 10-year forecast. • Prepare a Proposition 218 Notice which includes sewer service fee rates for the next five years. • Present the proposed five-year sewer service fee rate schedule to the Board for approval. Desired outcome • The establishment of a new five-year sewer service fee rate schedule that balances users fees, service levels and the use of debt to ensure the sustainability of the Orange County Sanitation District. 25 Five-Year Strategic Plan Update November 2011 Appendix B: Previous Issue Papers Due to the complex nature of many of the challenges that went into the preparation of this Strategic Plan, a series of issue papers were created to assist in better understanding the issues facing the Orange County Sanitation District. Included in this appendix are past year position papers on the following subjects: 2010 Issue Paper: • Full-Cost Recovery: Urban Runoff Diversion Program 2009 Issue Papers: • Providing Ongoing Leadership Development • Assessing and Mitigating the Risks of Chemical Supply Shortages • Full-Cost Recovery: External agreements 2008 Issue Papers: • Groundwater Replenishment System • Disinfection of Final Effluent • Environmental Footprint Initiative • Updating OCSD's Risk Register • Human Resources Strategic Plan 2007 Issue Papers: • Biosolids Management • Groundwater Replenishment System • Air Quality • Odor Control • Proposition 218 Notification 26 Five-Year Strategic Plan Update November 2011 Full-Cost Recovery: Urban Runoff Diversion Program November 2010 Why is this issue important to the District? Dry weather urban runoff is contaminated water that is generated from day-to-day activities such as over-irrigating lawns, washing cars and hosing down driveways. This untreated, bacteria-laden water flows into storm drains and eventually makes its way to the Pacific Ocean. A 1999 Huntington Beach closure investigation found this runoff may have caused or contributed to shoreline contamination and high bacteria levels. As part of a regional best management practice, OCSD agreed to reroute the dry weather urban runoff from storm water pump stations and storm channels located in the cities of Huntington Beach and Newport Beach into OCSD's sewer system for treatment. The Urban Runoff Program began in December 1999 and was formalized in September 2001 with a Board-approved resolution that allowed up to 10 million gallons per day of runoff into the District's system and waived any fees associated with the approved discharge of urban runoff into OCSD's sewer system if the total volume of all dry weather urban runoff discharges does not exceed four million gallons a day. This threshold was established to accommodate the expected volume of runoff from coastal cities that were experiencing beach contamination problems. While the program has been successful in reducing beach contamination, OCSD continues to provide benefits to agencies without fully capturing the cost of delivering this service. As the district moves to full secondary treatment in 2012, the cost of providing this service will increase. And, in light of the current economic environment and requirements of Proposition 218, OCSD must review this program and ensure that our agreements provide full cost recovery from participating agencies. Goals • Meet with all affected parties to understand the issues and costs associated with the Urban Runoff Diversion Program. • Conduct a comprehensive review of the Urban Runoff Program to delineate the costs and benefits of moving to a full cost recovery business model. • Negotiate new agreements that ensure all agencies are paying a fair share for services provided by the District. Desired Outcome • Finalize agreements that are comprehensive and agreeable to all agencies and ensure a fair share recovery of costs for District services. 27 Five-Year Strategic Plan Update November 2011 Providing Ongoing Leadership Development November 2009 Why is this issue important to the District? As baby boomers begin to retire in significant numbers over the next five years,the nation's workforce will begin to experience a shortage in qualified leaders. OCSD will be impacted by this trend as well. For example, by 2015 around half the current managers and supervisors will be eligible for retirement. While the District has pursued an aggressive strategy to strengthen and grow future leaders through its Profession of Management and Leadership Academy programs, this clearly will not be enough. By next year all management staff will have completed these programs and the Succession Management program will be fully established. However,these tools are only a foundation and in order to maintain a world-class organization,the District needs to take its leadership development to the next level. A broader leadership development program needs to be implemented to identify and train future leaders. Goals • Identify key employees that will lead OCSD into the future. • Define and build upon the essential qualities needed to develop successful leaders for OCSD's future.These qualities will focus on dealing with change, motivating others, enhancing morale and promoting productivity and job satisfaction, among others. • Identify what other organizations are doing and what incentives and training might be needed to build a talented and stable leadership team. • Develop a new model for addressing OCSD's operational, environmental regulatory and leadership priorities in an era of limited resources and greater public scrutiny. Desired outcome • Maximize the development of a pool of dedicated and talented employees ready to lead OCSD into the future. 111 • Huntington { Beach County of Orange v�j ......... ... Huntington Pier Newport •• Beach J ....,j..................... .s OCSD Off shore Irvine Ranch Pipeline ® Pump station Water District 0 Diversion Dam ..••® ..... Orange County Watershed Boundaries 28 Five-Year Strategic Plan Update November 2011 Assessing and Mitigating the Risks of Chemical Supply Shortages November 2009 Why is this issue important to the District? OCSD uses large volumes of several chemicals to mitigate odors, enhance primary settling of solids, reduce bacteria formation in the activated sludge plants, flocculate solids to enhance dewatering, and disinfect and then dechlorinate the effluent prior to discharge into the receiving waters.These wastewater treatment chemicals play a critical role in protecting public health and the environment. OCSD and other large wastewater treatment agencies require large volumes of chemicals that can only be provided by one supplier or a very limited number of suppliers. All of these large agencies have also experienced price increases and chemical shortages in recent years. Goals • Investigate the domestic and global chemical markets for typical wastewater and odor chemicals. • Identify possible causes of disruptions in the chemical supply chain. • Identify potential temporary suppliers capable and willing to provide chemicals during shortages. • Identify viable alternative chemicals that can be substituted for current OCSD chemicals during shortages. • Identify not only the procurement costs, but the transportations costs, of possible temporary or alternative chemical procurements. • Identify quality control assurances of chemicals procured outside the country. Desired outcome • Develop a Chemical Sustainability Plan that provides OCSD with options for obtaining wastewater treatment chemicals during chemical shortages, emergencies or complete stoppages. 29 Five-Year Strategic Plan Update November 2011 Full-Cost Recovery: External agency agreements November 2009 Why is this issue important to the District? The District has several existing agreements with external agencies including the Santa Ana Watershed Project Authority(SAWPA) and the Irvine Ranch Water District (IRWD) which were originally signed in the 1970's and 1980's.There are other existing agreements signed between these agencies in the last 20 years. When many of these agreements were signed, the District often provided funds and resources to assist other agencies in improving the water quality and health of the citizens of the watershed. In this pursuit, OCSD allowed benefits to agencies without fully developing an equitable cost-sharing model. While this was well-intended and generated results,the District's mission was overly broad. Now,through a series of more focused efforts, OCSD has developed a mission-specific Strategic Plan with detailed goals and objectives. The combination of the District's new enhanced strategic focus, more stringent regulatory requirements (Federal Clean Water Act secondary treatment standards) and new economic realities (economic environment in general and requirements of Proposition 218), OCSD must review its external agreements and ensure that these agreements provide full cost recovery from the agencies with which it does business. District staff has already began working with these agencies to ensure the District is recovering the full costs of services provided. Goals • Continue to meet with SAWPA and IRWD staff for consensus or agreement on major issue resolution. • Continue to include future planning issues that may impact new agreements. • When possible, consolidate small agreements into more comprehensive future agreements. • Negotiate new agreements that ensure all agencies are paying a fair share for services provided by the District. Desired outcome • Finalize agreements that are comprehensive and agreeable to all agencies and ensure a fair share for District services. 30 Five-Year Strategic Plan Update November 2011 Groundwater Replenishment System November 2008 Why is this issue important to OCSD? The Orange County Sanitation District (OCSD) has shared in construction costs for Phase 1 of the Groundwater Replenishment (GWR)System with the Orange County Water District(OCWD), each agency paying equal shares of 50 percent.The first phase has been constructed to reclaim up to 70 million gallons per day(mgd) of water, and will defer the need for OCSD to construct a new ocean outfall. Ultimate planning for the GWR System allows for reclaiming up to 130 mgd.The major GWR System pipelines and other components have been sized to accommodate this expansion; however,the advanced water purification facilities are sized for 70 mgd. OCSD has not committed additional funding for expanding the GWR System beyond the present phase. The GWR System began operation in January 2008, and is presently producing about 45 mgd of product water, reducing OCSD's ocean discharge flow from 225 mgd to 180 mgd. Completion of the Steven Anderson Lift Station (formerly Ellis Avenue Pump Station)will increase the amount of treated secondary effluent (specification water) available to the OCWD, allowing GWR System production to increase to near 70 mgd. Goals • Continue to strive for 104 mgd supply of specification water for reclamation with no planned OCSD capital cost contribution for expansion of the GWR System; • Complete construction of Steven Anderson Lift Station in the fourth quarter of FY 2008-09 and • Continue to study the potential for treating flow from the Santa Ana River Interceptor at Reclamation Plant No. 1 to increase the supply of specification water for reclamation. Desired Outcome • Maximizing the production of GWR System product water to augment and protect the Orange County groundwater basin with a goal of 70 mgd of product water by the end of FY 2008-09. 31 Five-Year Strategic Plan Update November 2011 Disinfection of Final Effluent November 2008 Why is this issue important to OCSD? OCSD began disinfection of our treated effluent in 2002 in response to two factors: • concern from the public that our effluent might be the cause or contributing to elevated bacteria levels in Huntington State Beach and • ocean monitoring data suggesting that on at least one occasion our effluent plume had come to within % mile of the Newport Pier. Since 2002 evidence has shown that OCSD's effluent was not the source of shoreline bacteria in Huntington Beach and that our plume is not coming to shore and creating a public health concern. The annual budget for adding chlorine to the effluent for disinfection and sodium bisulfite to remove most of the chlorine before discharging to the ocean is approximately$7.0 million. Since OCSD's facilities were not originally designed with disinfection in mind,there are physical constraints to operating in an efficient manner. In 2006, staff believed that it was prudent to have an independent review of our disinfection program to determine if it is meeting the intended purpose of protecting public health in a cost-effective manner and not increasing risks to the marine environment.The independent review panel was composed of nine members including a medical doctor, a wastewater engineer, a marine ecologist, a regulator, and a chemist among others. Goals • Through the National Water Research Institute (NWRI), commission a panel of experts to review OCSD's disinfection program and provide feedback and recommendations; • Obtain final recommendations from the NWRI Panel on the appropriateness of our current disinfection program and alternatives that should be considered and • Develop and implement strategies for responding to the recommendations including demonstration testing, regulatory approval and outreach to stakeholders. Desired Outcome • Cost effective program to sustain protection of public health associated with bacteria in our effluent. • Acceptance of any changes to our disinfection program by regulators, public and stakeholders. 32 Five-Year Strategic Plan Update November 2011 Environmental Footprint Initiative November 2008 Why is this issue important to OCSD? The issue of global climate change is gaining considerable interest from both the public and policy makers.As a public agency chartered with the mission to protect public health and the environment, OCSD should demonstrate leadership in this area. Moreover, wastewater operations consume large amounts of energy and produce green house gases (GHG). Despite the scientific disagreements about climate change, policy makers are addressing the issue.There are many opportunities for OCSD to also address these issues and shrink our environmental footprint. Goals • Calculation of the environmental footprint of OCSD's facilities; • Develop outreach materials describing green initiatives undertaken by OCSD; • Evaluate additional initiatives that the OCSD Board should consider; • Evaluate information from OCSD's research program on emerging green technologies and • Maximize the use of renewable fuels (digester gas). Desired Outcomes • Greater awareness of OCSD's sustainable initiatives; • Reduction in OCSD's environmental footprint through immediate greenhouse gas reduction measures and • A plan for implementing future sustainable initiatives. 33 Five-Year Strategic Plan Update November 2011 Updating OCSD's Risk Register November 2008 Why is this issue important to OCSD? Many leading organizations are formally applying risk management processes to identify and manage risks across many aspects of their business.The formalization of risk management processes is a logical step towards increased accountability and transparency placed on the Board and District management. In February 2006, strategic level risk assessment and mitigation workshops were completed by OCSD's Executive Management Team and District Managers. In May 2008,the register was updated to include additional information and to ensure alignment with current strategic plan. Assessment of these risks and their potential impacts must be identified, reviewed and mitigated in alignment with OCSD's Strategic Plan. Goals • Identify and assess strategic and organization-wide risks facing OCSD (including technical, regulatory,financial, and political) and to develop a high level risk register; • Identify mitigation measures that OCSD currently has in place; • Propose additional mitigation measures that OCSD considers appropriate to manage; • Review of risk register to ensure it represents a balanced portfolio of the risks and that the mitigation strategies are appropriate; • Develop a plan to monitor the effect of mitigation strategies to ensure that controls are in place and effective; • Develop a formal reporting process to the Board that includes possible revisions to the overall risk profile; • Develop protocols to provide assurance to stakeholders that in the annual strategic business plan processes are in place to manage risks organization wide and • Develop an action plan of responsibilities and timeframes for follow-up. Desired Outcome • An update of the Risk Register including mitigation strategies (current and proposed) responsibilities, and timeframes. 34 Five-Year Strategic Plan Update November 2011 Human Resources Strategic Plan November 2008 Why is this issue important to OCSD? Human Resources (HR) management has become more complex, evolving from primarily processing employee transactions to serving as a business partner, change agent and leader. OCSD's most important asset is its workforce.As a generation of this workforce retires, OCSD must be prepared to fill vacancies and prepare the next generation for opportunities, including leadership continuity. The HR strategic plan provides the focus for HR, the outcomes to be achieved and the associated roles and competencies needed. It creates clarity for planning and allocating resources.A long-range HR strategy will assure that actions are aligned with OCSD's overall vision, mission,values, and strategies. Goals • Improve HR processes, systems and infrastructure to provide high levels of efficiency, quality, customer service and cost-effectiveness. • Develop leading practices in the recruitment, retention and development of our workforce. • Support and promote the health and well-being of the workforce. • Foster and maintain a working and learning environment that is inclusive, supportive and free from discrimination. • Provide for organizational change initiatives through labor relations program that have been identified by management to grow a performance-based culture. • Focus the HR community on the needs of its customers through programs such as recognition and succession management. Desired Outcome • Design, develop,fund and implement HR policies, strategies, practices, systems, and tools to ensure OCSD has a workforce that meets the future needs of OCSD and the public it serves. 35 Five-Year Strategic Plan Update November 2011 Setting OCSD's Level of Service for Biosolids Management November 2007 Policy Issue for LOS Determination: Recognizing the Board's Resolution (OCSD 06-10)that supports biosolids reuse and encourages its member agencies to use compost made from biosolids,should OCSD continue to pursue our beneficial reuse policy or include disposal options for the remaining 1/3 of its non-contractually committed biosolids production? Staff Recommendation: OCSD should continue to pursue beneficial reuse of the remaining 1/3 of its biosolids production.Staff will continue to utilize cost-effective land application reuse options in Kern County and Arizona for as long as possible (anticipated to be less than five years)while pursuing a biosolids-to-energy alternative for the balance of its biosolids production. Analysis: OCSD currently produces 650 tons of biosolids per day, by 2012 when the new secondary treatment processes are fully operational, biosolids production is projected to increase by approximately 30%to 840 tons per day.OCSD currently manages its biosolids as follows via two contracts using five options: 24 percent is land applied as Class A biosolids in Kern County($43.07/ton) • 26 percent is land applied as Class B biosolids in Yuma County,Arizona ($45.44) • 38 percent is composted to Class A in Kern County($63.09) • 12 percent is composted to Class A La Paz County,Arizona ($49.74) 3 percent is land filled in Yuma County,Arizona ($45.44) • In 2003,OCSD adopted the Long-Range Biosolids Master Plan (Plan).The main policy recommendations from the Plan were: • Obtain at least three diverse biosolids management options • Limit participation in any market to one-half of the biosolids produced Limit contracts to one-third of total biosolids production • Strive for increased biosolids-based compost use in Orange County • Since the completion of the Plan,OCSD has entered into two long-term contracts that will service approximately two-thirds of OCSD's biosolids production • EnerTech:225 tons/day of biosolids-to-fuel in Rialto($72.40) (on line 12/08) • Synagro: 250 tons/day of biosolids composting in Kern County($63.09) Staff is primarily investigating biosolids-to-energy technologies and markets for the remaining one-third of OCSD's biosolids production because of our concern that biosolids composting markets are being saturated which could result in de-valuing of the product, making it non-sustainable.The private sector has already significantly invested in developing biosolids-to-energy technologies which enables wastewater agencies to participate in proven and sustainable markets.Staff will also be investigating biosolids management via deep-well injection and methane production which is currently being evaluated by the City of Los Angeles. Alternatives: OCSD will pursue long term contracts if possible for non-beneficial reuse landfill disposal. Cost Implications for the remaining 1/3 of OCSD's biosolids(2007 dollars): Energy Production: $85/ton—Annual cost=$7.8M Deep Well Injection: $40/ton—Annual cost=$3.7M Landfill Disposal: $60/ton—Annual cost=$5.5M 36 Five-Year Strategic Plan Update November 2011 Setting OCSD's Level of Service for the GWR System November 2007 Policy Issue for LOS Determination: The Orange County Sanitation District(OCSD) has shared in construction costs for Phase 1 of the Groundwater Replenishment(GWR)System with the Orange County Water District (OCWD),with each agency paying equal shares of 50%. Phase 1 will reclaim up to 70 million gallons per day(mgd) of water,and will defer the need for OCSD to construct a new ocean outfall estimated at$200 million. Ultimate planning for the GWR System allows for reclamation up to 130 mgd.The major GWR System pipelines and other components have been sized to accommodate this expansion; however,the advanced water purification facilities are sized for 70 mgd.OCSD has not committed additional funding for expanding the GWR System beyond the present phase. Staff Recommendation: OCSD will maintain its commitment for Phase 1 of the GWR System.This commitment for Phase 1 of GWR System includes the following: • Providing OCWD with secondary effluent to produce 70 mgd of reclaimed water • Providing 50 percent of capital costs($250 million)for Phase 1 • Providing 50 percent of 0&M costs($500,000 per year)to remove 1,4-Dioxane and NDMA • In addition to the commitment for Phase 1,staff recommends exploring"low cost"or"no cost"options to expand water availability for the GWR System, including: • Revisiting the potential use of the SARI with the Department of Health Services • Considering grant funding of future sewer diversion projects Analysis: In 1999,the OCSD Board of Directors(Board)approved Phase 1 of the GWR System, a joint funded project of OCSD and OCWD.The objective of Phase 1 is to maximize the use of treated effluent for water recycling and to manage OCSD's peak flow,deferring the construction of a second ocean outfall beyond 2020. The GWR System is anticipated to be fully operational in November 2007.Currently,OCSD Reclamation Plant No. 1 has sufficient wastewater to allow the GWR System to produce about 55 mgd of reclaimed water for the first year of operations.When the new Ellis Pump Station is completed in 2009,there will be sufficient flow to operate the GWR System at its full 70 mgd capacity. Even though sufficient flows will be available for Phase 1 of the GWR System,the daily low flow period (1:00 am to 8:00 am)will limit water availability for expansion of the System beyond Phase 1.Camp Dresser and McKee(CDM) has analyzed options to pump additional flows to Plant No.1,segregating reclaimable and non-reclaimable (SAWPA flows)wastewater streams, and constructing separate treatment plants. In light of the benefits of the current level of service versus the high costs of making future flow available for the GWR System,staff recommends that OCSD continue to work with OCWD to study lower cost options to maximize the amount of water that can be reclaimed. Alternatives: OCSD will be directing all available reclaimable flows to Plant No. 1 to maximize reclamation. In the future,as OCSD flows increase substantially,staff will recommend implementation of the most feasible and cost- effective options for increasing the quantity of flow available for reclamation. Estimated Cost Implications for Future Phases: • OCSD Diversions and Infrastructure—up to$700 million • Expansion of OCWD Advanced Water Purification Facilities—about$150 million • Every$1 million in OCSD expenditures increases single family user rates by$1.13 per year. 37 Five-Year Strategic Plan Update November 2011 Setting OCSD's Level of Service for Air Quality November 2007 Policy Issue: OCSD expects the South Coast Air Quality Management District to amend existing regulations to require significant reductions in common pollutants (smog,visibility impairment) in December 2007.A secondary public health benefit of this regulation is the reduction in air toxic emissions.The estimated capital improvement cost to meet the new requirements is$31 million. • If the new regulations are not approved then OCSD will be required by 2012, under the existing regulations,to notify all affected residents and business surrounding our facilities of health risks associated with our emissions. • OCSD can avoid issuing notifications by proactively installing air pollution control equipment to reduce the air toxic emissions below the notification level. Analysis: Currently, State law and the South Coast Air Quality Management District require facilities to inventory their air toxic emissions and conduct a Health Risk Assessment of the health risk impact of their emissions to surrounding residents and businesses. Public notification is required if the cancer risk exceeds 10 in one million and non-cancer risk exceeds 1. This means that 10 out of 1 million residents exposed to District air emissions, over a 70-year period, can contract cancer. It is anticipated that after completion of full secondary facilities in 2012, OCSD will exceed the threshold established by South Coast Air Quality Management District and OCSD will be required to notify affected communities. New regulations proposed by the South Coast Air Quality Management District would require OCSD to make significant reductions in common pollutants.The most technically feasible and lowest cost solution will be to add air pollution controls to the existing engines, which would provide the added benefit of reducing air toxic emissions below levels that require public notification. Alternatives(if the new regulations are not enacted): • Notify the affected public of the potential health risk from OCSD's toxic air emissions. OCSD would notify the public via direct mailings to the residents, businesses, and schools followed by public meetings.The corresponding materials will also be listed on the SCAQMD Web site and, possibly, printed in local newspapers. • Add air pollution controls to reduce risk to community below public notification level. Staff Recommendation: OCSD should apply feasible and cost-effective controls in order to reduce the air toxic emissions below the health risk notification level to the surrounding community and OCSD employees. 38 Five-Year Strategic Plan Update November 2011 Setting OCSD's Level of Service for Odor Control November 2007 Policy Issue: Thousands of homes surround OCSD's two treatment plants. Under current operating procedures, OCSD's goal is to contain odor nuisances within our property boundary. Historically, OCSD based our Level of Service on meeting hydrogen sulfide levels at the exhaust of odor control equipment within the treatment plant and at the fence line of our property.Through significant study, staff has determined that hydrogen sulfide is not the best indicator of odor due to the presence of other odorous compounds.To gauge accurately odor nuisances, OCSD is changing to a scientifically based method of odor detection to determine accurately the Level of Service it wishes to achieve for communities surrounding our treatment plants.The Board must then choose the desired LOS. Analysis: In 2002, OCSD completed the Odor Control Master Plan, which provided specific recommendations and measures to control and reduce odors. Staff conducted an extensive evaluation of OCSD facilities by collecting and analyzing odor samples from the plant processing equipment. OCSD used a panel of 6-8 people, with average olfactory sensitivity,to determine the odor detection thresholds scientifically based on the number of times the sample needed to be diluted before the panelist detected odor. Staff then assigned an odor unit to the sample-the higher the number of dilutions needed to achieve the threshold,the stronger the odor. Staff then fed the data into a computer model to predict the impact to the community. With the modeling analyses completed, staff concluded that under normal operation conditions, by using a guideline of 10 D/T(dilutions to threshold) OCSD would eliminate odor to the surrounding community. OCSD currently meets a 40-50 D/T,which is 4 to 5 times greater than 10 D/T. After the currently approved CIP projects are constructed, OCSD is estimated to reach a level of 25-30 D/T(2.5 to 3 times greater than 10 D/T). Alternatives: • Adopt a treatment plant LOS of 25-30 dilutions/threshold. LOS will be achieved when the projects approved in the current CIP are constructed. Design and construct all future projects to a service level that will keep odors from that project on District property. Staff believes this level is 10 D/T but case-by-case modeling for the projects will be required.The result is no cost impact to the current approved CIP. • Adopt a treatment plant and future project design and construction LOS for odor control of 10 dilutions/threshold (within the fence line of OCSD) and incorporate four additional odor control projects into the CIP.The result is an increase of$69.6 million to the CIP and $648,000 for 0&M. Staff Recommendation: Establish OCSD odor standard based on total odor(D/T). Design all new processes, structures and equipment at the wastewater treatment plants so that odors remain within treatment plant boundaries. Add two additional odor control projects (Plant 1 trickling filters and Plant 2 biosolids truck loading)to the CIP.The result is an increase of$17.6 million to the CIP and $300,000 annually for O&M. Conduct research on cost-effective alternatives to control odors from the primary treatment facilities at both plants and report back to the Board on future staff recommendations for any further odor control. 39 Five-Year Strategic Plan Update November 2011 Proposition 218 Notices for Annual Sewer Service User Fees November 2007 Proposition 218 was a constitutional initiative governing the establishment of any new taxes, property- related fees or assessments.This initiative was approved by the state's voters in November 1996 and applies to each of California's nearly 7,000 cities, counties, special districts, schools, community college districts, redevelopment agencies, and regional organizations. In order to raise a new tax, assessment, or property-related fee, or to increase an existing one, local governments must comply with Proposition 218 regulations. In general, these requirements are that local governments may use assessments and property-related fees only to finance projects and services that directly benefit property and that most revenue-raising measures be approved in an election. Sewer service user fees are specifically exempted from some of the requirements of Proposition 218. Most notably,they are exempt from the election requirements, but not the requirement that fees cannot exceed the reasonable cost of service. The Board has agreed with staff, however,that we will comply with all of the rest of the requirements, in a spirit of good governance.A notice of rate changes is mailed to every property owner whenever the rates are proposed to increase. Based on the approval to charge for local sewer services, a second (separate) Proposition 218 notice would be included.The rates are adopted through the ordinance process, and that requires a public hearing,two Board meetings and a 2/3 majority approval of the Board. Proposition 218 Notices notify the property owners of the public hearing that coincides with the second reading of the ordinance. Notices must be mailed to property owners 45 days before the public hearing. Mailing of Proposition 218 notices requires significant Sanitation District resources and staff time as staff works with all stakeholders to ensure that notices are printed correctly and mailed to over 550,000 property owners.Additional temporary staff is needed to answer phone calls from customers. Historically,three OCSD staff and two temporary staff answer phone calls for a minimum of four weeks. In addition to written responses (including email), phone calls are also noted and tallied by city of residence.This information is made available to the Directors prior to the public hearing. 40 Five-Year Strategic Plan Update November 2011 Appendix C: Glossary 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. 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. Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process.This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Business Accountability Charters—A business unit strategic plan. 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. Dashboard—A computer based business tool used to visually track performance. Dilution to Threshold (D/T)—the dilution at which the majority of the people detect the odor becomes the D/T for that air sample. 1,4-Dioxane—A chemical used in solvents for manufacturing, fumigants and automotive coolant. Like NDMA, it occurs in the Groundwater Replenishment System water and is eliminated with hydrogen peroxide and additional ultra-violet treatment. Greenhouse gases—In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming("greenhouse effect"). 41 Five-Year Strategic Plan Update November 2011 Glossary continued Groundwater Replenishment(GWR)System—A joint water reclamation project that proactively responds to Southern California's current and future water needs.This joint project between the Orange County Water District and the Orange County Sanitation District will provide 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service(LOS)—Goals to support environmental and public expectations for performance. Million gallons per day(mgd)—A measure of flow used in the water industry. Most Probable Number(MPN)—Number of organisms per 100 ml that would yield a test result or the observed test result with the greatest frequency. Commonly used for coliform bacteria. NDMA—N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP)—An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF),with advisory support from the U.S. Environmental Protection Agency(EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. O&M—Operations and maintenance of the treatment plants facilities and collections system. Publicly-owned Treatment Works (POTW)— Municipal wastewater treatment plant. Recycling—The conversion of solid and liquid waste into usable materials or energy. Risk Register—An internal document that describes vulnerabilities of the Sanitation District. Santa Ana River Interceptor(SARI) Line—A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer—Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD)—Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. 42 Five-Year Strategic Plan Update November 2011 Glossary continued 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. OCSD's service area is in the Santa Ana River Watershed. 43 o�JNj y S A N co = A ¢ c� o � • • �0 C �� �E ORANGE COUNTY SANITATION DISTRICT 10844 Ellis Avenue Fountain Valley, CA 92708-7018 (714) 962-2411 www.ocsd.com STEERING COMMITTEE Meeting Date To Bd. of Dir. 11/16/2011 AGENDA REPORT Item Number Item Number 2 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Michael Gold, Public Affairs Manager SUBJECT: Public Affairs update GENERAL MANAGER'S RECOMMENDATION Information Only SUMMARY This report is the monthly Public Affairs Division update that includes legislative and political information from Washington, D.C. and Sacramento, lobbyists' activities, and outreach education and communication programs to member cities, employees and the public. ADDITIONAL INFORMATION Public Affairs Update Community outreach As part of our efforts to educate the public about who we are and what we do, the Public Affairs team continues outreach efforts to the communities we serve. The following is a list of recent presentations. ( Tustin Kiwanis ( Placentia Rotary ( Tustin Chamber of Commerce ( Tustin Lions ( Garden Grove Lions ( La Habra Lions Staff will inform Board Members when our team is in your community via email. This month, OCSD participated in the Garden Grove Public Works event. Approximately 1,000 people visited our booth. We provided information about OCSD as well as information about the importance of keeping drugs, fats, oils and grease out of the drain. At the event, staff worked with Republic Services (a waste hauler) and provided them with information cards about proper drug disposal that they could provide to their customers. Page 1 of 5 Grants update As noted below, ENS Resources provided possible grant opportunities to staff, including brownfields-related funding. Staff reviewed possible opportunities and discussed Federal grants with Eric Sapirstein. We are pleased to announce that OCSD received $200,000 from the South Coast Air Quality Management District to retrofit digester gas engines for cleaner emissions. We are currently reviewing some research-related grants through the California Energy Commission. Staff will continue to watch for every available opportunity to seek grant funding. Federal Legislative Update Legislative Advocate: Eric Sapirstein, ENS Resources Highlights from Washington The ongoing budget deficit reduction debate continued during the past month. The Joint Select Committee on Deficit Reduction convened formal hearings on the heels of congressional committees submitting their budget recommendations to reduce federal program spending. These hearings illustrated the difficult task before the committee as they are challenged to find compromises on taxes and budget cuts. A November 23 deadline looms for the committee to report its legislative solution. Failing this, the Administration will be required to implement a decade's worth of across-the-board spending cuts totaling $1.2 trillion. The threat of such an outcome is serving as the catalyst for action; however, because the cuts would not take place until after the Presidential election, it is possible that both sides will wait it out and punt to the next Congress in 2013. Aside from the deficit reduction debate, the USEPA's budget and the development of other federal agencies' fiscal year 2012 budgets continued with a November 18 deadline to complete action to avoid a government shut-down. As of this writing, the activities of the House and Senate Committees on Appropriations during the past month, suggest that a final budget (or series of budgets) will be developed in time to avoid the shutdown. As part of this, we expect that funding of the Santa Ana Mainstem will receive somewhere in the neighborhood of $25 million, allowing for flood protection work to continue and to supplement the ongoing SARI Line relocation efforts. Additionally, the priority attached to hydrogen production is expected to receive a boost in funding for projects, which could assist future efforts by OCSD to expand the use of fuel cells for energy production. One area of particular concern to the District is the issue of infrastructure. It now appears that a consensus is emerging that the nation's public works needs should be addressed as part of any final deficit reduction agreement. This debate is centering on the creation of an infrastructure bank and establishing tax incentives for public private partnerships. This bank would provide low interest loans and subsidies to reduce construction costs. The bank would also be available to meet state SRF capitalization. Page 2 of 5 In addition to the bank, the committee is evaluating the re-establishment of Build America Bonds that the District used with positive outcomes during the past couple of years. The committee is also considering the expanded use of private activity bonds. Under discussion is lifting the cap on tax exempt financing of water and wastewater projects supported by the private sector. For the District, this means that any projects financed with these bonds would be off-budget with a private entity liable for bond repayment. Congressman Miller's 10 percent income rule bill On the legislative front, we continued to work on Mr. Miller's bill regarding serving on regional water boards. ENS Resources met with Representative Miller's staff as well as Committee on Transportation and Infrastructure, Subcommittee on Water Resources and Environment staff to discuss next steps. According to staff, USEPA has been asked to justify the 10 percent income restriction threshold. Staff indicates that they hope that an administrative fix could be implemented to avoid the need to move forward with a legislative fix. Nonetheless, Representative Miller's staff indicates that the legislative effort will move forward unless USEPA agrees to revise the income rule without delay in accordance with the District's and others' views of what is an appropriate test for a conflict of interest. Other issues In an effort to reduce federal red tape, the House approved legislation reversing a mandate that an agency withhold 3 percent of a contractor's payments to cover tax liability. The Senate has companion legislation pending and it is anticipated that the Senate will approve the measure, thereby eliminating a burden on the District. Representative Tim Bishop (D-NY) introduced the Water Quality Protection and Job Creation Act (H.R. 3145). This bipartisan wastewater infrastructure financing legislation would: 1) renew the SRF program at $13 billion over five years, 2) create an infrastructure bank, 3) establish grants for SSO controls, and 4) study the feasibility of a water infrastructure trust fund. The bill is considered a proposal that could serve as the basis of developing final reauthorization of an infrastructure program in the next session of Congress if the Joint Select Committee on Deficit Reduction fails to address the issue as part of a deficit reduction plan. Finally, Congress renewed the effort to renew the chemical security program otherwise known as CFATS. Senator Susan Collins (R-ME) the lead sponsor of legislation to renew the program has called for swift action on S. 473 that would provide for a three- year extension of the current program. This would mean no additional mandates on wastewater operators if enacted into law by the end of the year. On the agency front, we continued to monitor grant proposals that may be of interest to the District. We transmitted an announcement related to redevelopment of Brownfields for consideration by the District. Page 3 of 5 State Legislative Update Legislative Advocates: Christopher Townsend, Heather Dion and Casey Elliott, Townsend Public Affairs State political highlights With the Legislative session now concluded and all bills acted upon by the Governor, Governor Brown has shifted his focus to other issues, including addressing pension reform. On October 27t" Governor Brown released his 12-point pension reform package. The Governor is expected to ask the Legislature to approve most of the plan during the next legislative session, along with placing items requiring voter approval on the November 2012 ballot. The proposed changes would impact state, county, and municipal employees who are a part of the CalPERS system. Among the reforms, Governor Brown called for a mandatory hybrid retirement system, which would include some guaranteed benefits but also a 401 K-style plan that would be subject to investments. The primary opponents of the Governor's plan will likely be from organized labor and their Democratic allies. While Senate President Pro Tern Darrell Steinberg pledged consideration of a "robust pension reform package" next year, the Legislature will likely push for more modest proposals, such as Brown's suggested reform of prohibiting the purchase of additional retirement service credit, also known as "airtime." Many people doubt that the Democratic Legislature will rally in support of some of the Governor's more aggressive proposals, such as increasing the retirement age to 67 for most new employees outside the public safety sector and replacing defined-benefit pensions with the proposed "hybrid" system. Public employee unions immediately expressed skepticism regarding elements of the Governor's proposal, while the California Chamber of Commerce and California Business Roundtable applauded the plan. At this point it is difficult to determine how legislative Republicans will vote on the Governor's pension proposal. Most Republicans indicated that they thought that the Governor was moving in the right direction with his proposal, but that it did not go far enough. Many Republicans also feel that any changes to the public pension system should be in the form of constitutional amendments, so that the provisions cannot be modified by future legislatures. Concurrently, the Legislative Conference Committee on Pension Reform held its first meeting in Carson, California, on October 26. The Committee is chaired by Assembly Member Warren Furutani (D-Gardena) and consists of four Democratic and two Republican legislators. The two Republican committee members are both from the Orange County Delegation — Assembly Member Jim Silva and Senator Mimi Walters. The first hearing consisted of a discussion of the unique pension dynamics facing the state versus local municipalities. Looking at the remainder of 2011, the Governor and Legislature will remain focused on implementing and defending their budget proposals, which has been the source of numerous legal challenges and referenda efforts. In addition to the legal uncertainties surrounding the budget, State revenues continue to come in below expected levels. Page 4 of 5 The Governor and Legislature balanced the budget in part by assuming the state would collect $4 billion in unanticipated revenue; however, September revenue collections were approximately $300 million below expectations and California is now $705.5 million or 3.6 percent behind what state leaders expected. If the current revenue trend continues then the State will enact as much as $2.5 billion in "trigger cuts" to schools and social services that were approved earlier this year as part of the State budget. The Legislature will reconvene on January 4, 2012 unless the Governor calls for another extraordinary session. California Forward update California Forward released a draft summary of their November 2012 initiative language. The draft language is very general and provides a broad overview of the proposed initiative. The initiative focuses on three of the five draft recommendations included in the Framework: ( focus on outcomes ( aligning authority over responsibility, and ( adjusting the state role. Please find the draft initiative summary language attached to this report. Review of special districts Assembly Member Roger Dickinson previously requested that LAO study consolidation, transparency, and reform for special districts. Currently, LAO is performing a series of case studies of special districts in San Diego, San Bernardino, and Napa as well as meeting with CSDA, ACWA, and LAFCO as part of their report. The report will be confidential unless Assembly Member Roger Dickinson decides to release it publicly. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Attachments: California Forward Initiative Summary CEQA N/A BUDGET / DELEGATION OF AUTHORITY COMPLIANCE N/A Page 5 of 5 ■ CAFWD. • - • - - � THE GOVERNMENT PERFORMANCE & ACCOUNTABILITY ACT MODEL INITIATIVE SUMMARY What is this model initiative trying to achieve? The California Forward proposal is built around a simple idea: Californians need to know what they are getting for their tax dollars and what government is achieving. To accomplish this, the state and local governments must work together toward the goals voters want to pursue as a state—and then these governments must be given the right tools to get California there. The California Forward proposal does this in three basic steps: • A focus on results: The proposal refocuses all levels of California's government—from state agencies to county and city government—on improving the performance of public programs. It identifies five major areas (the Big Five Outcomes) where the state is already spending most of its money. It directs both state and local governments to be transparent about its goals in these areas—and to regularly review the performance of the programs addressing those goals. • More local control: To be effective, the proposal also gives local governments a way to get out from under the thumb of a dysfunctional government in Sacramento so they can improve local results. Through the proposal's Community Strategic Action Plans, local leaders will be able to gain the flexibility and authority they require to tailor local programs to meet this state's diverse array of local needs. • The right fiscal tools: The proposal also includes a number of common-sense budgetary tools and fiscal incentives that will help government at all levels stay focused on improving performance. These provisions include: Pay-Go and multi-year budgeting, and a new incentive fund that can be used to drive innovation in communities across the state. How is the final proposal different from the Framework you've been working on? Over the last year, California Forward has been working with stakeholders across the state to refine the Framework, a strategic action plan for improving the relationship between California's state and local governments. In its final form, the Framework included five draft recommendations: I. Focus on outcomes 2. Align authority with responsibility 3. Adjust the state role 4. Foster regional collaboration 5. Evaluate the efficiency of operations The California Forward model initiative has adopted the first three recommendations: • Focus on outcomes: The proposal requires governments to have performance-based budgets. • Align authority with responsibility: To be effective in improving results, local governments need more authority over how they operate local programs. The proposal gives them this authority through its Community Strategic Action Plans. • Adjust the state role: The state will continue to play a role in reviewing local Action Plans, but its role will be limited to granting waiver requests. The measure also emphasizes the importance of regional collaboration, and it provides state and local governments with a set of fiscal tools they need to improve performance. Recommendation #5 has been left for the future. CAFWD: CAFW D.O RG THE GOVERNMENT PERFORMANCE AND ACCOUNTABILITY ACT WHAT'S IN THE PROPOSAL The proposal requires all government budgets—state and local—to be performance-based. Governments must be explicit about the outcomes they are trying to achieve (including at least the Big Five Outcomes). Programs must measure their progress toward these goals and make program corrections where needed. To improve results, local governments need more authority over how they operate local programs. The proposal gives counties—in partnership with cities, school districts, and special districts—the authority to develop a Community Strategic Action Plan for integrating services and funding to improve outcomes and meet community priorities.The objective of the Action Plan is to grant extensive flexibility to local governments to provide local services with local and state funds. • What the plans do: Through a strategic plan, local governments can identify how they would provide services more effectively and efficiently. They could also identify any state laws, regulations or requirements local officials believe prevent them from efficiently and effectively providing public services. The Action Plan must propose a functionally equivalent way of achieving the objective of the state rule, along with how it would measure whether that objective was being met by the local plan. • How the plans work: The measure would authorize a county board of supervisors to initiate the plan, and require them to invite other local governments in the countywide planning effort. Cities, school districts, or special districts could petition a county to initiate a plan.A minimum number of cities and school districts would have to participate in the plan, which would be adopted by a majority vote of the governing board for each participating jurisdiction. Counties that complete an Action Plan would receive incentive funding from the state. • State review: After the plan is approved locally, it would be submitted to the Legislature,which would have 60 days to review it. If the Legislature takes no action, the local plan would be deemed certified and the local agencies would have the legal flexibility requested in the plan. If an Action Plan only seeks relief from a state regulation that is within the authority of an executive branch agency, that agency secretary would have the authority to certify the plan. Counties would be required to seek renewal of any waivers granted every four years. • Accountability measures: Counties that adopt a plan would also be required to review the plan at least once every four years. The review would include an opportunity for public comment and an evaluation of the degree to which the plan has increased equity in service-delivery. • Additional county authorities: Once the plans are certified, participating governments would have the following authorities: Counties, cities, schools, and special districts could reallocate among themselves locally-levied sales and property taxes—except for the portion of the property tax already allocated to schools—as determined in the plan. General law counties would have the authority to contract with another local government participating in the plan to execute aspects of the plan. THE KIGHT FISCAL I OOLS: The proposal also includes a set of fiscal tools to help governments focus on improving performance. • Pay-Go: New program commitments would be required to include a source of funding (Pay-Go). • Public oversight: To increase transparency of budget bills and implementation, legislation would have to be made available to the public three days before final action. The Department of Finance would also be required to update fiscal information three times per year. • Multi-year budgeting: To help the state avoid the ill effects of short-term budgeting,the state would be required to enact a two-year budget, with a supplemental budget if changing conditions warrant. • Local incentive fund: A new Performance and Accountability Trust Fund would direct a small portion of the existing state sales tax rate (0.035 percent) toward counties with Action Plans. October 17,2011 CAFWD: CAFW D.O RG THE GOVERNMENT PERFORMANCE AND ACCOUNTABILITY ACT OUR VISION California Forward's goal is a state government that works. This goal is shaped by the "Three Es:"At every level, government should be making simultaneous progress toward achieving: • A Prosperous Economy • A Quality Environment • Community Equity The Government Performance and Accountability Act is built around a simple idea: California's three most significant areas of state general fund spending—education, health and human services, and public safety—are fundamentally interrelated. Better education leads to better jobs, which leads to a healthier population, less poverty, less crime, and, ultimately, less pressure on government budgets. THE VIRTUOUS CYCLE Betterjob Better Better education Less health Pressure on the State Budget povertyLess Less crime Too often, these relationships are obscured by the current governance system. The California Forward proposal offers a straightforward approach—along with a comprehensive vision—aimed at addressing this problem. The state budget is already implicitly addressing these issues, given that the majority of it is spent on education, health and welfare, and prisons. The proposal would require the state to be explicit about the outcomes it is trying to achieve—while also refocusing both the state and local governments on improving a set of five basic outcomes. To improve results, it would give local governments more authority and flexibility over how they operate local programs. But in exchange, it would also require local governments to hold themselves accountable to these programs' results, to collaborate with other local governments, and to be more transparent. October 17,2011 CAFWD: CAFW D.O RG THE GOVERNMENT PERFORMANCE AND ACCOUNTABILITY ACT THE BIG FIVE OUTCOMES Californians need to know what they are getting for their tax dollars and what government is achieving. The Government Performance and Accountability Act introduces five major priorities for the state that will do just that. The intention is to focus structural and fiscal governance reforms on the Big Five Outcomes below, not just to balance the budget or close a shortfall—but to realign public programs at all levels to deliver these results. BIG FIVE OUTCOMES • Increased Employment • Improved Education • Decreased Poverty • Decreased Crime • Improved Health REALIGNMENT—AN IMMEDIATE OPPORTUNITY: The 2011 state budget took an important first step toward giving local governments more control by moving just over $5 billion in public safety and health and human services programs from the state to county governments. These revenues will support the transfer of thousands of inmates from state prisons to county jails, while also funding new county responsibilities for monitoring parolees, along with a range of substance abuse, foster care, and child welfare services. Realignment's impact is already being felt in neighborhoods across California. The Government Performance and Accountability Act would build on realignment by providing local governments the authority and flexibility they need to successfully operate these newly realigned programs. The 2011 realignment gave local governments responsibility for managing an array of new programs, but it did not alter the programs' funding streams or provide local leaders with any new authority to integrate services or pool resources. California Forward's proposal would allow counties to do just—by creating an Action Plan that would describe exactly how they would tailor their programs to meet local needs and improve local results. The proposal would also go further than realignment by requiring them to measure their progress. THE LONG-TERM SOLUTION: Counties that take advantage of this new authority in the California Forward proposal will take the first steps toward a fundamental restructuring of the relationship between the state and local governments—a shift that will ultimately lead to better outcomes and increased civic engagement. The Government Performance and Accountability Act can help move California's government into a virtuous cycle—improved education, more workforce participation, better health outcomes, and less crime—that can lead to the best possible outcome: A government that achieves positive social gains in a financially sustainable way. October 17,2011 CAFWD: CAFW D.O RG THE GOVERNMENT PERFORMANCE & ACCOUNTABILITY ACT PROPOSAL BACKGROUND Over the last several years, as California Forward has asked voters and community leaders from across the state what they think is ailing California, the same themes have emerged again and again: The current governance system is broken, it lacks focus on results, it is not transparent or accountable, and it is too complex. California Forward has supported a number of legislative efforts to remedy this situation by reforming the state budget, with some success. But to improve California's government, it has become increasingly clear the state needs more fundamental reform. The question has been how to do it. LOCAL GOVERNMENT TASK FORCE: In the fall of 2010, California Forward convened a workgroup of local government leaders to begin developing a set of options for taking on this challenge. A group of current and former city and county officials on what became known as the Local Government Task Force developed a set of principles that have served as the foundation of California Forward's approach. These principles also served as the guide for the initial draft of the Framework, a strategic action plan for improving the relationship between California's state and local governments: • Public programs should work collaboratively with a focus on shared outcomes. These outcomes should guide policy development, management decisions, and ultimately, accountability, through public reporting of results. • Fiscal control is essential if local governments are going to be empowered to integrate services, innovate, develop better practices, and achieve economies of scale. • Regional collaboration can make many services more efficient and effective by allowing local governments to meet large-scale challenges by working together across jurisdictions. SACRAMENTO STAKEHOLDER ROUNDTABLES: After the initial work of the Local Government Task Force, California Forward hosted a series of Stakeholder Roundtables in Sacramento in the winter of 2011 to refine its proposals. In a series of five collaborative meetings moderated by California Forward's Sunne Wright McPeak, a committed group of stakeholders and experts in education, local government, health and human services, economic development, and labor provided detailed feedback on the Framework. They also offered suggestions for improving its draft proposals. After each meeting, the Framework was revised and refined to incorporate stakeholders' suggestions. SPEAK UP CALIFORNIA: At the same time the Stakeholder Roundtable meetings were being held in Sacramento, California Forward led a statewide conversation called "Speak Up California" focusing on the challenges of restructuring. In more than 60 meetings across California through the winter and spring of 2011, groups of civic leaders, business leaders, non-profit advocates, elected officials, and other interested citizens came together to discuss how to reform California's government. The input from these meetings also helped shaped the Framework and its draft proposals. REGIONAL STAKEHOLDER ROUNDTABLES: To get more detailed feedback on the Framework from stakeholders across the state, California Forward next convened a series of Regional Stakeholder Roundtables. A total of ten Regional Stakeholder meetings were held in San Diego, Los Angeles, the Inland Empire, the Central Valley, and the Bay Area. Local elected officials and leaders from business, labor, government, and the nonprofit sector provided detailed feedback on the proposals. This input was also incorporated into the Framework—and helped shape the California Forward model initiative. October 17,2011 CAFWD: CAFW D.O RG 4:10kRko CALIFORNIA FORWARD California Forward's mission is to work with Californians to help create a "smart"government — one that's small enough to listen, big enough to tackle real problems, smart enough to spend our money wisely in good times and bad, and honest enough to be held accountable for results. Read California Forward's model initiative at: www.cafwd.org/framework CAFWD.ORG Sacramento San Francisco Los Angeles 1 107 9th Street, Suite 650 300 Montgomery Street, Suite 638 448 South Hill Street, Suite 1018 Sacramento, CA 95814 San Francisco, CA 94104 Los Angeles, CA 90013 Phone: 916-491-0022 Phone:415-362-9650 Phone: 213-488-9054 Fax: 916-491-0001 Fax:415-362-9656 Fax: 213-488-9377 6 October 17,2011