HomeMy WebLinkAbout12-19-2012 Steering Committee Agenda PacketDecember 13, 2012
NOTICE OF MEETING
STEERING COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
REGULAR MEETING – 5:00 P.M. Wednesday, December 19, 2012
Administration Building
10844 Ellis Avenue
Fountain Valley, California 92708
The Regular Meeting of the Steering Committee of the Orange County Sanitation District will be held at the above location, date and time.
STEERING COMMITTEE AND BOARD MEETING DATES
*December 19, 2012
January 23, 2013
February 27, 2013
March 27, 2013
April 24, 2013
May 22, 2013
June 28, 2013
July 24, 2013
August 28, 2013
September 25, 2013
October 23, 2013
*November 20, 2013
*Meeting being held the third Wednesday of the month.
12/19/12 Steering Committee Agenda Page 1 of 3
Orange County Sanitation District Regular Meeting of the
Steering Committee
Wednesday, December 19, 2012 5:00 P.M.
Administration Building
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 November 28, 2012 Steering Committee Meeting.
2. Recommend to the Board of Directors to:
Revise the recommendation of the approved July 28, 2010 report regarding the
Santa Ana River Interceptor Line Loan (SARI) and Repayment Agreement No.
D07-042 with the Orange County Flood Control District (OCFCD) to allow for the
release of funds OCFCD in three installments as funds are expended.
ACTION ITEMS:
3. Recommend to the Board of Directors to:
Issue a Remedial Plan to the Santa Ana Watershed Project Authority (SAWPA)
to correct significant deficiencies in their pretreatment program.
4. Recommend to the Board of Directors to:
Direct staff to prepare and mail Proposition 218 notifications outlining an eight
year Regional and Local sewer service fee schedule reflecting an eight year rate
schedule with an increase of 4.8 percent for 2013-14 and an increase of 2.4
percent annually for the next seven years.
12/19/12 Steering Committee Agenda Page 2 of 3
5. Recommend to the Board of Directors to:
Adopt Resolution No. OCSD XX-XX, Setting Forth Terms and Conditions of
Orange County Employees Retirement System (OCERS) Benefits in Compliance
with the Requirements of the California Public Employees Pension Reform Act of 2013 (PEPRA).
INFORMATION ITEMS:
None
CLOSED SESSION:
During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate
negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted.
Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation;
(c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted
closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information.
Convene in closed session.
(1) CONFERENCE WITH LEGAL COUNSEL RE. EXISTING LITIGATION (Government Code Section 54956.9)
Case: Mladen Buntich v. OCSD, Riverside County Superior Court, Case No. RIC 1201005
(2) CONFERENCE WITH LEGAL COUNSEL RE. INITIATION OF LITIGATION
(Government Code Section 54956.9(c))
Number of Potential Cases: 1
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:
12/19/12 Steering Committee Agenda Page 3 of 3
ADJOURNMENT:
The next Steering Committee meeting is scheduled for Wednesday, January 23, 2013, 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 For any questions on the agenda, Committee members may contact staff at:
General Manager Jim Ruth (714) 593-7110 jruth@ocsd.com Assistant General Manager Bob Ghirelli (714) 593-7400 rghirelli@ocsd.com Assistant General Manager Jim Herberg (714) 593-7300 jherberg@ocsd.com
Director of Facility Support Services Nick Arhontes (714) 593-7210 narhontes@ocsd.com Director of Finance and Administrative Services Lorenzo Tyner (714) 593-7550 ltyner@ocsd.com
Director of Human Resources Jeff Reed (714) 593-7144 jreed@ocsd.com Director of Operations & Maintenance Ed Torres (714) 593-7080 etorres@ocsd.com
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARB California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA U.S. Environmental Protection Agency
FOG Fats, Oils, and Grease
FSSD Facilities Support Services Department
gpd Gallons per day
GWR System Groundwater Replenishment System (also called GWRS)
LOS Level of Service
MGD Million gallons per day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O&M Operations and Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
OOBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
POTW Publicly Owned Treatment Works
ppm Parts per million
RFP Request For Proposal
RWQCB Regional Water Quality Control Board
SARFPA Santa Ana River Flood Protection Agency
SARI Santa Ana River Inceptor
SARWQCB Santa Ana Regional Water Quality Control Board
Glossary of Terms and Abbreviations
SAWPA Santa Ana Watershed Project Authority
SCADA Supervisory Control and Data Acquisition system
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SSMP Sanitary Sewer Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
WERF Water Environment Research Foundation
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.
Capital Improvement Program (CIP) – Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities.
Coliform bacteria – A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common
bacteria in wastewater.
Collections system – In wastewater, it is the system of typically underground pipes that receive and
convey sanitary wastewater or storm water.
Certificate of Participation (COP) – A type of financing where an investor purchases a share of the
lease revenues of a program rather than the bond being secured by those revenues.
Contaminants of Potential Concern (CPC) – Pharmaceuticals, hormones, and other organic
wastewater contaminants.
Dilution to Threshold (D/T) – the dilution at which the majority of the people detect the odor
becomes the D/T for that air sample.
Glossary of Terms and Abbreviations
Greenhouse gases – In the order of relative abundance water vapor, carbon dioxide, methane,
nitrous oxide, and ozone gases that are considered the cause of global warming (“greenhouse
effect”).
Groundwater Replenishment (GWR) System – A joint water reclamation project that proactively responds to Southern California’s current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a
day of drinking quality water to replenish the local groundwater supply.
Levels of Service (LOS) – Goals to support environmental and public expectations for performance. NDMA – N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been
found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide
with extra ultra-violet treatment.
National Biosolids Partnership (NBP) – An alliance of the National Association of Clean Water
Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S.
Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory
compliance and promote public participation in order to enhance the credibility of local agency
biosolids programs and improved communications that lead to public acceptance.
Plume – A visible or measurable concentration of discharge from a stationary source or fixed facility.
Publicly-owned Treatment Works (POTW) – Municipal wastewater treatment plant.
Santa Ana River Interceptor (SARI) Line – A regional brine line designed to convey 30 million
gallons per day (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.
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.
Page 1
STEERING COMMITTEE Meeting Date
12/19/12
To Bd. of Dir.
12/19/12
AGENDA REPORT Item Number 2 Item Number
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
GENERAL MANAGER'S RECOMMENDATION
Revise the recommendation of the approved July 28, 2010 report regarding the Santa Ana River Interceptor Line Loan (SARI) and Repayment Agreement No. D07-042 with
the Orange County Flood Control District (OCFCD) to allow for the release of funds
OCFCD in three installments as funds are expended.
SUMMARY
On May 26, 2010, the OCSD Board approved the Santa Ana River Interceptor Line
Loan (SARI) and Repayment Agreement No. D07-042 with the Orange County Flood
Control District (OCFCD) and revised the agreement on July 28, 2010.
As a result in delays in the construction, it is necessary to revise the agreement. This
new agreement still includes for OCSD to loan OCFCD 60% of the estimate total cost,
approximately $59 million. In now includes three new installment dates specifying when
those payments are to be made:
1. The first installment Net $30,852,290 was paid by April 28, 2011
2. The second installment of $10,000,000 is due on January 31, 2013 or within
30 days of written notification from OCFCD to OCSD that all of the first OCSD installment toward Project Costs has been disbursed for the SARI Line
Project, whichever date is earlier
3. and the third installment of $10,483,710 is due on March 1, 2013 or within 30
days of written notification from OCFCD to OCSD that all of the second OCSD installment toward Project Costs has been disbursed for the SARI Line
Project, whichever date is earlier.
PRIOR COMMITTEE/BOARD ACTIONS
July 2010 – Board approved an amendment to the Santa Ana River Interceptor Line
Loan (SARI) and Repayment Agreement No. D07-042 with the Orange County Flood
Control District (OCFCD), providing for the release of $36,000,000 to OCFCD to allow
for the release of funds 30 days prior to the scheduled OCFCD Board hearing on contract award, and to allow the remaining balance to be released 12 months later.
Page 2
May 2010 – Board approved the Santa Ana River Interceptor Line Loan (SARI) and
Repayment Agreement No. D07-042 with the Orange County Flood Control District (OCFCD), providing for:
1. A loan of up to 60% of the successful bid amount for improvements to the
SARI Line not to exceed $72,000,000;
2. No interest accruing until June 30, 2018;
3. A 3% interest on any unpaid balance through July 2022 and the complete
repayment by July 1, 2022; and,
4. Authorize the release of $36,000,000 to OCFCD immediately after the award of the contract, and to allow the remaining balance to be released 12 months
later.
June 2007 – Board approved Santa Ana River Interceptor Line Loan and Repayment Agreement No. D07-42 with the Orange County Flood Control District (OCFCD) to provide a no-interest loan until 2018 (revised from 2016), of 60% of the total bid amount.
April 2007 – Board approved Santa Ana River Interceptor Line Loan and Repayment
Agreement No. D07-42 with the Orange County Flood Control District (OCFCD) to provide a no interest loan until 2016, of 60% of the total bid amount.
ADDITIONAL INFORMATION
None
CEQA
N/A BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
N/A
ATTACHMENT The following attachment(s) are included and may also be viewed on-line at the OCSD website
(www.ocsd.com) with the complete agenda package and attachments:
· Santa Ana Regional Interceptor (SARI) Line Loan and Repayment Agreement (8 pages)
891554.1
SANTA ANA REGIONAL INTERCEPTOR (SARI) LINE LOAN AND REPAYMENT AGREEMENT NO. D12-031.
This Santa Ana Regional Interceptor (SARI) Line Loan and Repayment Agreement
(“AGREEMENT”), which supersedes in its entirety the previous Santa Ana Regional Interceptor (SARI) Line Loan and Repayment Agreement entered into on June 29, 2010, between the Parties and labeled for identification purposes as Agreement No. D10-022 is made and entered into this
___ of ___, 2012, by and between the Orange County Sanitation District (“OCSD”) and the
Orange County Flood Control District (“OCFCD”). In this AGREEMENT, OCSD and OCFCD
are sometimes individually referred to as “Party” and collectively referred to as the “Parties.” RECITALS
WHEREAS, OCSD is a County Sanitation District pursuant to California Health &
Safety Code § 4700 et seq.;
WHEREAS, the OCFCD is governed by the Orange County Board of Supervisors and is established under authorization of the Orange County Flood Control Act, Chapter 723 of the
State of California Statutes of 1927 to provide: control of flood and storm waters within the
boundary of the County of Orange and of streams flowing into the County, such as the Santa Ana
River or San Juan Creek; mitigation of the effects of tides and waves; and protection the harbors, waterways, public highways, and property in the County of Orange from such waters;
WHEREAS, OCSD owns and operates the Santa Ana Regional Interceptor (“SARI”)
Line, a regional sewer pipeline along the Santa Ana River from the Orange County line to the
OCSD sewage treatment plant in Huntington Beach, and the SARI Line was constructed as a joint project of OCSD and the Santa Ana Watershed Project Authority (SAWPA).
WHEREAS, OCSD requests that OCFCD advance the protection and/or relocation of the
SARI Line, which includes the Yorba Linda Spur and SARI Main Line Projects (collectively, the
“SARI Line Project”) in response to existing conditions and the raising of the Prado Dam by the U.S. Army Corps of Engineers (the “Corps”) and OCFCD;
WHEREAS, protection and/or relocation of the SARI Line is an element of the Santa
Ana River Mainstem Project with related expenses being eligible for up to seventy percent (70%)
reimbursement from the State Flood Control Subvention Program;
WHEREAS, as of the date of this AGREEMENT, based on actual expenditures to date
and the bid submitted for the construction of the SARI LINE, the estimate for the total amount of
construction, design, environmental and project administration costs (“Project Costs”) is Eighty
Five Million Five Hundred Sixty Thousand Dollars ($85,560,000). To allow for unanticipated increases, a fifteen percent (15%) contingency fund (“Contingency”) in the amount of Twelve
Million Eight Hundred Thirty-Four Thousand Dollars ($12,834,000) is needed. The Project
Costs plus Contingency ("Total Costs") equals Ninety Eight Million Three Hundred Ninety-Four
Thousand Dollars ($98,394,000).
891554.1
WHEREAS, the Parties propose allocating the cost of the SARI Line Project with OCSD responsible for loaning sixty percent (60%) of the SARI Line Project cost to OCFCD, SAWPA
responsible for loaning ten percent (10%), and OCFCD responsible for paying thirty percent
(30%) of the project cost;
WHEREAS, OCSD desires to loan funds to OCFCD under terms and conditions set forth herein to finance a portion of the costs of the SARI Line Project so that OCFCD can construct
the SARI Line Project consistent with the schedule of the Santa Ana River Mainstem Project,
representing a great benefit to OCSD because OCSD will have the benefit of the continued,
uninterrupted use of the SARI Line; WHEREAS, OCFCD intends to reimburse OCSD for the loan funds from funds it
receives from the State Flood Control Subventions Program for the SARI Line Project;
WHEREAS, the Parties agree that as a condition of OCSD loaning funds to OCFCD, OCFCD shall publicly bid, award, and administer the SARI Line Project construction contracts;
WHEREAS, the Parties agree that as a condition of OCFCD causing the construction of
the SARI Line Project in a manner consistent with construction plans approved by OCSD,
OCSD shall continue its ownership and maintenance responsibility of the SARI Line Project after its completed construction and the acceptance by OCSD; and
WHEREAS, the Parties agree that some features of the SARI Line Project including a
protection wall near Coal Canyon may need to be implemented by the U.S. Army Corps of
Engineers (“Corps Relocations”) in advance of SARI construction to take advantage of more favorable conditions, more efficient construction, and cost-savings.
NOW THEREFORE, in consideration of the mutual covenants and conditions herein
contained, the Parties hereby agree as follows:
1. Incorporation of Recitals. The intentions of the PARTIES as described in the above recitals
are fully incorporated into this AGREEMENT.
2. Purpose. The purpose of this AGREEMENT is to memorialize the loan of funds to OCFCD
by OCSD in furtherance of the SARI Line Project as more fully set forth in Section 3, and to provide for repayment thereof by the OCFCD as more fully set forth in Section 4.
3. OCSD Funds Loaned to the OCFCD. OCSD agrees to loan to the OCFCD an amount not to
exceed sixty percent (60%) of the Total Costs which equals fifty-nine million thirty six
thousand four hundred dollars ($59,036,400). The OCSD loan for the Project Costs will be paid in three (3) installments as follows: the first installment Net $30,852,290 was paid by April 28, 2011, the second installment of $10,000,000 is due on January 31, 2013 or within
30 days of written notification from OCFCD to OCSD that all of the first OCSD installment
toward Project Costs has been disbursed for the SARI Line Project, whichever date is earlier,
and the third installment of $10,483,710 is due on March 1, 2013 or within 30 days of written notification from OCFCD to OCSD that all of the second OCSD installment toward Project
891554.1
Costs has been disbursed for the SARI Line Project, whichever date is earlier. The portion of the loan covering the Contingency will be invoiced to OCSD if OCFCD determines that the
actual cost to complete the construction of the SARI Line will exceed the Project Costs.
OCFCD will submit one or more invoices to OCSD for up to sixty percent (60%) of the
Contingency, which will be based on OCFCD's estimated cost to complete construction of the SARI Line in excess of the Project Costs. The total amount of all invoices for the Contingency will be the lesser of (1) $7,700,400 or (2) 60% of the actual costs to complete
the construction of the SARI Lines in excess of the Project Costs. OCFCD will not invoice
OCSD for the Contingency until it provides written notification to OCSD that all cash
previously paid by OCSD on the invoices for the Project Costs has been disbursed for purposes of the SARI Line Project. OCSD shall remit payment on the invoice(s) for the Contingency within thirty (30) days of receipt of such invoice(s).
Should the actual cost exceed the estimated Total Cost of $98,394,000, OCFCD and OCSD
shall meet and confer to determine the timing of the OCSD’s sixty percent (60%) share of the additional installment above $59,036,400, if applicable.
4. OCFCD Repayment of Funds Loaned by OCSD. OCFCD agrees to pay OCSD all funds
loaned by OCSD to OCFCD in the amount of fifty-nine million thirty six thousand four
hundred dollars ($59,036,400), or the amended amount as provided in Paragraph 3, as soon as subvention funding is received for the SARI Line Project with the total balance repaid no later than July 1, 2022, regardless of whether OCFCD received any subvention funds for the
SARI Line Project. Interest shall accrue on the unpaid balance starting July 1, 2018 at an
annual interest rate of two percent (2%), until the unpaid balance has been repaid. In the
event OCFCD receives subvention funding in installments, OCFCD shall repay OCSD in installments within 30 days of OCFCD's receipt of SARI Line Project subvention funding in an amount no less than sixty percent (60%) of the SARI Line subvention funds received.
5. CEQA and NEPA Compliance by the OCFCD, the Corps, and OCSD. OCFCD and OCSD
shall comply with the California Environmental Quality Act, Public Resources Code section 21000 et seq (“CEQA”) and with the National Environmental Policy Act (“NEPA”) to the
extent required by law. OCFCD shall be the lead agency and OCSD shall be a responsible
agency with respect to the SARI Line Project.
6. Alteration of Terms. This AGREEMENT contains the entire agreement between OCFCD and OCSD with respect to the subject matter of this AGREEMENT, and shall constitute the
entire agreement between the Parties for these purposes. No addition to, or alteration of, the
terms of this AGREEMENT, whether written or verbal, shall be valid unless made in writing
and formally approved and executed by the Parties.
7. Notices. Unless otherwise specified, all notices, claims, correspondence, and/or reports
authorized or required by this AGREEMENT shall be effective when written and deposited
in the United States mail, first class postage prepaid and addressed as follows:
891554.1
OCSD: General Manager Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, CA 92708-7018
OCFCD: Ignacio Ochoa, Interim Director OC Public Works
300 N. Flower Street, 8th Floor
Santa Ana, CA 92703
8. Severability. If a court of competent jurisdiction declares any provision of this AGREEMENT or application thereof to any person or circumstances to be invalid or if any
provision of this AGREEMENT contravenes any Federal, State, or County statute,
ordinance, or regulation, the remaining provisions of this AGREEMENT or the application
thereof shall remain valid, in full force and effect, and to that extent the provisions of this AGREEMENT are severable.
9. Term of Agreement. This AGREEMENT shall be in full force and effect for a period
beginning as of the date established above and continue until all obligations of the OCFCD
and OCSD to each other are satisfied in full accordance with the terms of this AGREEMENT.
10. Waiver of Default or Breach. Waiver of any default by either Party shall not be considered a
waiver of any subsequent default. Waiver of any breach by either Party of any provision of
this AGREEMENT shall not be considered a waiver of any subsequent breach. Waiver of any default or any breach by either party shall not be considered a modification of the terms of this AGREEMENT.
11. Successors and Assigns. The terms and provisions of this AGREEMENT shall be binding
upon and inure to the benefit of the parties hereto and their successors and assigns.
12. No Third-Party Beneficiaries. Nothing in this AGREEMENT is intended to create any third-
party beneficiaries to the AGREEMENT, and no person or entity other than OCSD and
OCFCD, and the permitted successors and assigns of either of them, shall be authorized to
enforce the provisions of this AGREEMENT.
13. Assignment. Neither Party may assign its interest in this AGREEMENT without the prior
written consent of the other Party, which consent will not be unreasonably withheld.
14. Further Assurances. OCSD and OCFCD agree to execute, acknowledge, and deliver any and all additional papers, documents, and other assurances and shall perform any and all acts and
things reasonably necessary in connection with the performance of the obligations hereunder
and to carry out the intent of the Parties.
891554.1
15. Agreement Negotiated. The text of this AGREEMENT is the product of negotiation among the Parties and their counsel and is not to be construed as having been prepared by one Party
or the other.
16. Binding Obligation. The Parties to this AGREEMENT represent and warrant that this AGREEMENT has been duly authorized and executed and constitutes the legally binding obligation of their respective organization or entity enforceable in accordance with its terms.
17. Governing Law and Venue
a) This AGREEMENT has been negotiated and executed in the State of California and shall be governed by and construed under the laws of the State of California. In the event of any legal action to enforce or interpret this AGREEMENT, the sole and
exclusive venue shall be a court of competent jurisdiction located in Orange County,
California, and the Parties hereto agree to and do hereby submit to the jurisdiction of
such court, notwithstanding Code of Civil Procedure, Section 394. b) The Parties specifically agree that by entering into and performing their respective obligations under this AGREEMENT, each Party shall be deemed to constitute doing
business within Orange County from the time of entering into this AGREEMENT,
through the period when all obligations under this AGREEMENT are completed, and
continuing until the expiration of any applicable limitations period. 18. Attorney's Fees. In any action or proceeding to enforce or interpret any provision of this
AGREEMENT, or where any provision hereof is validly asserted as a defense, each Party
shall bear its own attorney’s fees, costs and expenses.
19. Interpretation a) This AGREEMENT has been negotiated at arm's length and between persons
sophisticated and knowledgeable in the matters dealt with in this AGREEMENT.
b) In addition, each Party has been represented by experienced and knowledgeable
independent legal counsel of their own choosing, or has knowingly declined to seek such counsel despite having the opportunity to do so.
c) Each Party further acknowledges that they have not been influenced to any extent
whatsoever in executing this AGREEMENT by any other Party hereto or by any person
representing them, or both.
d) Accordingly, any rule of law (including California Civil Code Section 1654) or legal decision that would require interpretation of any ambiguities in this AGREEMENT
against the Party that has drafted it is not applicable and is waived.
e) The provisions of this AGREEMENT shall be interpreted in a reasonable manner to
affect the purpose of the Parties and this AGREEMENT
20. Headings. The various headings and numbers herein, the grouping of provisions of this
AGREEMENT into separate clauses and paragraphs, and the organization hereof are for the
purpose of convenience only and shall not limit or otherwise affect the meaning hereof.
21. Calendar Days. Any reference to the word “day” or “days” herein means calendar day or calendar days, respectively, unless otherwise expressly provided.
891554.1
22. Contract Construction. The Parties acknowledge that each Party and its counsel have
reviewed this AGREEMENT and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this AGREEMENT or any amendment or exhibits hereto. 23. Waiver of Jury Trial. Each Party acknowledges that it is aware of and has had the
opportunity to seek advice of counsel of its choice with respect to its rights to trial by jury,
and each Party, for itself and its successors, creditors, and assigns, does hereby expressly and
knowingly waive and release all such rights to trial by jury in any action, proceeding or counterclaim brought by any Party hereto against the other (and/or against its officers, directors, employees, agents, or subsidiary or affiliated entities) on or with regard to any
matters whatsoever arising out of or in any way connected with this AGREEMENT and/or
any other claim of injury or damage.
[Signatures on the following page.]
891554.1
IN WITNESS WHEREOF, the PARTIES hereto have executed this AGREEMENT in counterparts on the dates opposite their respective signatures and each such counterpart shall be
deemed an original:
Orange County Sanitation District
Date: ___________________ By_______________________________________
Troy Edgar
Chair, Board of Directors
Date: ____________________ By_______________________________________
Maria Ayala
Clerk of the Board APPROVED AS TO FORM
_______________________ Bradley R. Hogin General Counsel
891554.1
IN WITNESS WHEREOF, the PARTIES hereto have executed this AGREEMENT in counterparts on the dates opposite their respective signatures and each such counterpart shall be
deemed an original:
Orange County Flood Control District, a body corporate and politic
Date: ___________ By____________________________________
Chair of the Board of Supervisors Orange County, CA
Signed and certified that a copy of this document
has been delivered to the Chair of the Board per G.C. Sec 25103, Reso 79-1535 Attest
Date: ___________ ____________________________________
Susan Novak Clerk of the Board of Supervisors County of Orange, California
Date: ___________
APPROVED AS TO FORM Office of the County Counsel Orange County, California
By:_________________________
Page 1 of 1
STEERING COMMITTEE Meeting Date
12/19/12
To Bd. of Dir.
12/19/12
AGENDA REPORT Item Number 3 Item Number
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Assistant General Manager
SUBJECT: SAWPA Audit Response: Remedial Plan
GENERAL MANAGER'S RECOMMENDATION
Issue a Remedial Plan to the Santa Ana Watershed Project Authority (SAWPA) to
correct significant deficiencies in their pretreatment program.
SUMMARY On November 28, 2012, the Steering Committee reviewed an independent audit,
completed by Environmental Engineering & Contracting, Inc., which detailed numerous
significant deficiencies in SAWPA’s pretreatment program. This included deficiencies under the federal pretreatment program requirements; OCSD’s Wastewater Discharge
Regulations, Ordinance No. OCSD-39; the 1991 Memorandum of Understanding (1991
MOU); and the 1996 Wastewater Treatment and Disposal Agreement.
Pursuant to the 1991 MOU, staff recommends issuing SAWPA a Remedial Plan with schedule milestones to correct its pretreatment program deficiencies (including that of SAWPA’s member agencies) and to take all actions necessary to remain in long-term
compliance with the above-mentioned regulatory and contractual requirements. Staff
will provide copies of the Remedial Plan at the Steering Committee meeting.
PRIOR COMMITTEE/BOARD ACTIONS
November 2012 - The Steering Committee reviewed the SAWPA Audit and directed
staff to prepare the attached Remedial Plan for issuance to SAWPA.
ADDITIONAL INFORMATION
N/A
CEQA N/A
BUDGET/DELEGATION OF AUTHORITY COMPLIANCE
N/A
Page 1
STEERING COMMITTEE Meeting Date
12/19/12
To Bd. of Dir.
12/19/12
AGENDA REPORT Item Number 4 Item Number
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
GENERAL MANAGER'S RECOMMENDATION
Direct staff to prepare and mail Proposition 218 notifications outlining an eight year
Regional and Local sewer service fee schedule reflecting an eight year rate schedule
with an increase of 4.8 percent for 2013-14 and an increase of 2.4 percent annually for
the next seven years.
SUMMARY
Staff is recommending an eight year rate schedule with an increase of 4.8 percent for
2013-14 and an increase of 2.4 percent annually for the next seven years.
Proposition 218 requires that OCSD to notify the affected property owners with the
OCSD service area of this proposed rate increase and to conduct a public hearing that
coincides with the second reading of the ordinance. Notices must be mailed to property
owners 45 days before the public hearing.
A notice of rate changes is mailed to every property owner whenever the rates are
proposed to increase. 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.
Additionally, to ensure the appropriate allocation of costs and fees, the Sanitation District has engaged an engineering consulting firm to provide an independent analysis
of the District’s cash flow modeling and a cost of service study. This study is in
progress and is scheduled to be completed later this month. However, as shown in the
attached letter, the initial findings show that the Sanitation District fees are appropriate.
The full study will be presented to the Board in January.
PRIOR COMMITTEE/BOARD ACTIONS
N/A ADDITIONAL INFORMATION
Sewer Service Fee Rate Adoption Schedule:
• January 2013 Board Meeting – Rate Structure presentation to Board
• February 2013 – Prop 218 45-day notice mailed for Sanitary Sewer Fees • February Board Meeting 2013 – 1st Reading of the Ordinance
• March 2013 Board Meeting – 2nd Reading of the Ordinance, Public Hearing & Adoption
• July 1, 2013 – New rates go into effect
Page 2
CEQA
N/A BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
N/A
ATTACHMENTS
The following attachment(s) are included in this package and may also be viewed on-line at the OCSD
website (www.ocsd.com) with the complete agenda package:
· Engineering Consultant Update (2 pages)
JDR:LT:MW:AB
9039A00 | TynerL_20121212.docx 10540 Talbert Avenue, Suite 200 East, Fountain Valley, California 92708 P. 714.593.5100 F. 714.593.5101
carollo.com
December 13, 2012
Mr. Lorenzo Tyner
Director of Finance and Administrative Services
Orange County Sanitation District 10844 Ellis Avenue
Fountain Valley, CA 92708
Subject: Orange County Sanitation District Rate Study
Dear Mr. Tyner:
Carollo Engineers, Inc. (Carollo) is currently in the process of completing the FY 2013/14 cost-of-service rate study. The study is intended to provide the Orange County Sanitation District (District) with an independent and objective review of the internal staff rate recommendations
from FY 2013/14 through FY 2020/21. The study specifically evaluated the following:
The revenue needs forecast from FY 2013/14 through FY 2020/21.
Cost-of-service allocation and equitable rate basis.
Independent review of select customer class rates based on estimated sewer discharge levels.
Based on Carollo’s draft study findings, we have preliminarily concluded that the staff rate
recommendations are reasonable based on industry practices. The District anticipates reducing reserve levels to fund major capital rehabilitative projects over the forecasted eight-year time
period, while maintaining sufficient bond coverage requirements to maintain legal bond
coverage obligations. During the forecast period, the District is projected to reduce reserves to its policy target levels and approximately $10 million below its targets during the middle of the
forecast period. The District is projected to replenish reserves in the latter years of the forecast
period. Slightly higher, inflationary rate increases would mitigate reserve reductions.
This analysis and the preliminary findings are premised on a set of cost and revenue escalation
factors. If cost escalation, operating expenditures, or capital needs exceed projected levels prior
to FY 2020/21, the District will be required to begin a new Proposition 218 process to increase rates above currently projected levels. The District would similarly be required to begin a new
Proposition 218 process if revenues do not materialize as projected. These increased revenues
include anticipated annual tax revenue increases based on improved economic conditions within western Orange County beginning FY 2014/15.
Carollo did not perform an in-depth engineering review of the District’s capital or operating as part of this study. Finally, while no major rate structure changes are currently anticipated,
Carollo is currently in the process of performing an independent review of some of the District’s
customer class rates.
Mr. Lorenzo Tyner Director of Finance and Administrative Services
Orange County Sanitation District
December 12, 2012 Page 2
9039A00 | TynerL_20121212.docx
carollo.com
If you have any questions, please do not hesitate to contact me.
Sincerely,
CAROLLO ENGINEERS, INC.
Robert S. Grantham
RSG:alh
Page 1 of 2
STEERING COMMITTEE Meeting Date 12/19/12 To Bd. of Dir. 12/19/12
AGENDA REPORT Item Number 5 Item Number
Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Jeff Reed, Director of Human Resources
SUBJECT: AB 340 – The California Public Employees Pension Reform Act of 2013
GENERAL MANAGER'S RECOMMENDATION
Adopt Resolution No. OCSD XX-XX, Setting Forth Terms and Conditions of Orange
County Employees Retirement System (OCERS) Benefits in Compliance with the
Requirements of the California Public Employees Pension Reform Act of 2013 (PEPRA).
SUMMARY
PEPRA, the statewide pension reform act passed by the Legislature and signed into law by the Governor in September 2012, mandates many changes to public retirement
systems in California, including the Orange County Employees Retirement System
(OCERS), of which the Orange County Sanitation District (OCSD) is a member agency.
OCSD is required to transition from its present "1.667%@57.5" (Tier II) formula for its employees to the maximum benefit allowable for new employees/new members first
hired on or after January 1, 2013, which is the "2.5%@67" (2.0%@62) formula for non-
safety members.
OCSD has no discretion in this matter. The statutory language of PEPRA requires that new employees/new members (as defined by statute) hired on or after January 1, 2013
will be subject to the new formula and other mandates. It is noteworthy that PEPRA
includes an exception for current employees/current members of reciprocal California
public retirement systems, providing that these employees, if hired by a new agency
within 180 days of leaving the current public employer, will come in at the hiring agency's pre-PEPRA retirement benefit formula, or "1.667%@57.5" (Tier II) for OCSD.
Despite PEPRA's mandates, other sections of the Government Code require the Board
to adopt by Resolution terms and conditions of employment, for which the attached
Resolution applying to OCSD unrepresented classification/positions complies.
Staff will return at a later date to adopt similar provisions for represented employees.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
Page 2 of 2
ADDITIONAL INFORMATION
N/A
CEQA
N/A
BUDGET / DELEGATION OF AUTHORITY COMPLIANCE
N/A
ATTACHMENTS
The following attachment(s) are included in this package and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:
· Resolution No. 12-XX: A Resolution of the Board of Directors of the Orange
County Sanitation District Adopting Requirements Set Forth by the Public
Employees Pension Reform Act (“PEPRA”) of 2013 for Unrepresented
Employees (2 pages)
· Public Employees Pension Reform Update. September 21, 2012 (3 pages)
· Pension Reform Conference Committee Legislative Language, August 30, 2012
(6 pages)
RESOLUTION NO. 12-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT ADOPTING REQUIREMENTS SET FORTH BY THE PUBLIC
EMPLOYEES PENSION REFORM ACT (“PEPRA”) OF 2013 FOR UNREPRESENTED
EMPLOYEES.
WHEREAS, for purposes of this resolution, unrepresented employees include
confidential, management and executive employees. Confidential employees consist of
employees who with authorized access, assist and act in a confidential capacity to and for
persons who formulate, determine, and effectuate management policies with respect to
carrying out the Board of Directors’ direction for labor relations. Management employees
serve as organizational leaders and oversee staff within particular divisions and/or
workgroups to align performance outcomes with the strategic goals of the agency.
Executive management employees provide executive leadership, strategic direction, and
department oversight for OCSD.
WHEREAS, on September 12, 2012, Governor Jerry Brown approved Assembly Bill
340 (“AB340”), The Public Employees’ Pension Reform Act (“PEPRA”), which amends the
County Employees Retirement Law (“CERL”) of 1937 that Orange County Sanitation
District’s pension plan administrator, Orange County Employees Retirement System
(OCERS), is governed by.
WHEREAS, PEPRA establishes a new retirement formula that cannot be exceeded
by a public employer offering a defined benefit pension plan, setting the maximum benefit
allowable for employees first hired on or after January 1, 2013, as a formula commonly
known as 2.5% at age 67 for non-safety members.
WHEREAS, PEPRA requires public employees who are first employed on and after
January 1, 2013, and who contribute to a defined benefit plan to contribute at least one-half
of the annual actuarially determined normal costs, and would prohibit a public employer from
contributing in any fiscal year, in combination with employee contributions, less than the
plan normal cost, except as specified.
WHEREAS, the amount of pensionable compensation upon which a defined benefit
for new members could be based would be limited to an amount determined under a
specified provision of federal law for an employee whose service is included in the federal
system (Social Security), which is $110,100 for 2012, and 120% of that amount for an
employee whose service is not included in the federal system. These amounts would be
adjusted annually, as specified.
WHEREAS PEPRA prohibits a variety of payments, including unscheduled overtime,
payments for unused vacation, sick leave, or compensatory time off, exceeding what may
be earned and payable in each 12-month period during the final average salary period, and
specified payments made at the termination of employment from being included in
compensation earnable. The bill would require the board to establish a procedure for
assessing and determining whether an element of compensation was paid to enhance a
member’s retirement benefit and would prohibit that compensation from being included in
compensation earnable.
WHEREAS, in addition to the previously noted mandates, PEPRA also establishes
other mandates regarding public sector pension plan benefits that apply to the Orange
County Sanitation District. NOW, THEREFORE, in consideration thereof, the Board of Directors of the Orange
County Sanitation District, does hereby resolve declare, determine and order as follows:
Section 1. The applicable aforementioned PEPRA legal requirements shall
apply to individuals who become unrepresented Orange County Sanitation District
employees as of January 1, 2013.
PASSED AND ADOPTED at a regular meeting held December 19, 2012.
_____________________________________
Troy Edgar, Chair
ATTEST:
___________________________________
Clerk of the Board
ORANGE CO U NTY
CIERS
EMPLOYEES RETIREMENT SYSTEM
PUBLIC EMPLOYEES PENSION REFORM ACT (PEPRA) UPDATE
Summary:
Prepared by Julie Wyne, OCERS' Assistant CEO,
External & Legal Operations
September 21, 2012
On September 12, 2012, Governor Brown signed Assembly Bill 340 (Furutani), creating
the Public Employees Pension Reform Act (PEPRA) and amending certain sections of
the 1937 Act that OCERS' operates under. The new law creates a new benefit tier for
new employees/members entering public agency employment and public retirement
system membership for the first time on or after January 1, 2013. The new tier has a
single general member benefit formula and three safety member benefit formulas that
must be implemented by all public agency employers unless the formula in existence on
December 31, 2012 has both a lower normal cost and a lower benefit factor at normal
retirement age. The new tier requires that all new employees/members, hired on or after
January 1, 2013, pay at least 50% of the normal cost contribution. The normal cost
contribution is the contribution set by the retirement system's actuary to cover the cost of
a current year of service. It does not include the unfunded liability portion of the
contribution. The employer can negotiate with cutTent and new employees/members for
the payment of additional contributions including the employer's portion of normal cost
and the unfunded liability. New employees/members have their compensation earnable,
which OCERS ' uses to calculate retirement benefits, limited to 120% of the Social
Security level ($132,120 for 2012), adjusted annually based on changes to the Consumer
Price Index for All Urban Consumers, and further limited to base pay. Current
employees will not see a change in their compensation earnable. Retired members, on
and after January 1, 2013, will have to wait at least 180 days before returning to work for
an OCERS' covered employer on a limited time basis (960 hours or less a fiscal year).
IMPORT ANT NOTE: IF YOU ARE CURRENTLY RETIRED, YOUR
BENEFITS WILL NOT CHANGE. IF YOU ARE ACTIVELY EMPLOYED ON
12-31-12, YOUR BENEFITS WILL NOT CHANGE.
1
ORANGE COUNTY
CI:ERS
EMPLOYEES RETIREMENT SYSTEM
PUBLIC EMPLOYEES PENSION REFORM ACT (PEPRA) UPDATE
Prepared by Julie Wyne, OCERS' Assistant CEO,
External & Legal Operations
September 21, 2012
Questions and Answers:
Question 1: Will my monthly retirement allowance amount be affected by the
Public Employees Pension Reform Act (PEPRA)?
Answer 1: No, your monthly retirement allowance will not be affected by the
provisions in the PEPRA. OCERS will NOT recalculate your benefit based
upon any benefit formula contained in the new law. Your allowance will
continue to be calculated in the same way it is calculated today.
Question 2: Will my Cost of Living Adjustment (COLA) be affected by the PEPRA
changes?
Answer 2: No, your COLA will not be affected by the provisions in the PEPRA.
OCERS will NOT recalculate your COLA benefit based upon any
provisions of the new law. Your COLA will continue to be calculated in
the same way it is calculated today.
Question 3: Will my Supplemental Targeted Adjustment for Retirees Cost of
Living Adjustment (STAR COLA) be affected by the PEPRA changes?
Answer 3: No, your STAR COLA (for those of you who receive one) will not be
affected by the provisions in the PEPRA. OCERS will NOT recalculate
your STAR COLA benefit based upon any provisions of the new law.
Your STAR COLA will continue to be calculated in the same way it is
calculated today, and eligibility for the STAR COLA will continue to be
determined by the OCERS' Board of Retirement each year.
2
ORANGE COUNTY
CCERS
EMPLOYEES RETIREMENT SYSTEM
PUBLIC EMPLOYEES PENSION REFORM ACT (PEPRA) UPDATE
Prepared by Julie Wyne, OCERS' Assistant CEO,
External & Legal Operations
September 21, 2012
Question 4: Can I return to work for an OCERS' covered employer for 960 hours
or less in a fiscal year, without becoming an active member of OCERS
and having my retirement allowance suspended?
Answer 4: Yes, you can return to work for an OCERS' covered employer for 960
hours or less in a fiscal year, without becoming an active member of
OCERS and having your retirement allowance suspended, but after 1-1-13,
you will have to wait at least 180 days from retirement before returning to
work, unless special circumstances apply.
3
Pension Reform Conference Committee Legislative Language
Sections affected:
August 30, 2012
Amending Education Code §24214 and §24214.5 and adding §22119.3,
§22164.5, §24202.7, and §24202.8. Amending Government Code
§9355.4, §9355.41, §9355.45, §20281.5, §20516, §21076, and §31461.
Amending and renumbering Government Code§ 1234 (New §7522.70).
Adding Government Code §20516.5, §20677.96, §20683.2, §20791 ,
§2 1 076.5, §31542, §31542.5, §3 1543, §3 1631 and §31631.5. Adding the
following to the Government Code, a heading to Articles I, 2 and 3 and a
new Article 4 to Chapter 21, Divi sion 7, Title I. Adding and repealing
Government Code §7522.66 and §2 1400 and repealing headings of
Chapter 21.4 and 21.5 of Division 7, Title I.
IMPACT ON OCERS:
CURRENT EMPLOYEES: The benefit formula s and limits on calculating compensation
earnable contained in the new Public Employees Pension Reform Act do NOT apply to current
employees, HOWEVER the clarification of what is excluded from compensation earnable and
the addition of a test the retirement system must perform and procedures it must adopt to ensure
there is no pension spiking do. Also, provisions requiring a county or district to identify the pay
period compensation was earned regardless of when it was reported and limiting the reporting of
compensation to the retirement system to only compensation earnable apply. Finally, the
retirement board is given the ability to audit a county or district and assess reasonable costs to
cover the cost of audit, adjustment or correction when the board determines that the county or
district knowingly fa iled to report compensation in accordance with the new provisions. In
addition, the governing bodies of employers can co llectively bargain with empl oyees to require
payment of all or part of the member and employer contributions as long as they are uniformly
applied and do not violate laws in place as of December 31, 2012.
WHAT IT CHANGES:
• Employers CANNOT adopt an enhanced benefit formula after 1-1-13 and apply
it to past service
• The retirement system must now determine whether compensation was paid to
enhance a member's retirement benefit, which could include:
o compensation that was previously paid in kind that was converted to cash
during the member's final average salary measuring period (like
furnishing a car, then converting that to an auto allowance),
Pension Reform Legislative Language (8-30-12) Page I
o one time or ad-hoc payments provided to a member but not all similarly
situated members in the grade or class, and
o payments made solely due to the termination of the member, with the
exception of unused vacation, leave or compensatory time that does not
exceed what the member could earn in each 12-month period during the
final average salary measuring period
• The member can challenge the board's determination that compensation was paid
for the sole purpose of enhancing the pension including judicial review by writ of
mandate
• A county or district must report only compensation earnable to the retirement
system, and must certify what pay period the compensation was earned regardless
of when it was paid
• If the county or district knowingly fail to report compensation correctly, the
retirement system can audit and assess fees to cover the cost of the audit,
correction or adjustment necessary and the county or district may not pass this
cost on to employees
• The retirement board may also audit the county or district to determine
correctness of retirement benefits, reportable compensation, and enrollment in or
reinstatement to the system
WHAT IT DOESN'T CHANGE:
• There wi ll be NO benefit formula reductions
• There will be NO changes in how OCERS calculates final average salary
UNLESS a current employee terminates employment and becomes a "new
employee" (defined below) under the new Act, OR a current employee receives
compensation determined by the OCERS' Board to be paid to enhance the
member's retirement benefit
WHAT IT MIGHT CHANGE:
• The Board of Supervisors or governing bodies of districts can negotiate with
employees under collective bargaining to require that employees pay all or part of
member and employer contributions (both normal cost and unfunded liability
cost), as long as it is uniformly app lied, agreed to in a memorandum of
understanding, and does not violate the law in place as of 12-3 1-1 2
• The Board of Supervisors or governing bodies of districts may require that
members pay 50 percent of normal cost of benefits, as long as it is no more than
14% above the normal rate established for general members, 33% of the normal
rate established for safety members who are local police officers, firefighters and
county peace officers and 37% above the normal rate established for safety
Pension Reform Legislative Language (8-30-12) Page 2
members other than local police officers, firefighters and county peace officers, as
long as it does not violate the law in place as of 12-31-12
CURRENT RETIREES: There is no change in a retiree's benefits. There are changes to the
ability to return to work after retirement but there is a question about whether this violates other
provisions ofthe '37 Act.
WHAT IT CHANGES: The Act restricts the ability of a retiree to return to work for
a public employer in the same retirement system without reinstatement to active service
and a suspension of the retirement benefit unless it is during an emergency to prevent
stoppage of public business or because the retired person has skills needed to perform
work of limited duration, as long as the retiree did not receive unemployment benefits
arising from the prior employment. In either case, the work shall not exceed 960 hours in
a calendar or fiscal year at a specific rate of pay and the retiree cannot come back to work
before 180 days after retirement unless the employer certifies that the nature of
employment and the appointment is necessary to fill a critically needed position sooner
than 180 days and the employer's governing body approves it in a public meeting, or the
retiree is a safety member. A retired member who received a retirement incentive must
wait at least 180 days to return to work.
Returning to work as a member of a state board or commission is also limited depending
upon the circumstances of the appointment.
WHAT IT DOESN'T CHANGE: There is no change to a retiree's benefit formula or
final average salary used to calculate their retirement allowance, and no change to the
Cost of Living Adjustment (COLA) provisions and supplemental COLA (STAR COLA)
provisions.
NEW EMPLOYEES HIRED ON OR AFTER 1-1-13: A "new employee" is defined as an
employee who is first elected or appointed by any public employer on or after l-1-13 and who
was not employed by any other public agency prior to that date, unless they terminated from the
other public employer and did not establish reciprocity with the new employer's retirement
system. A "new member" of a retirement system is an employee who first becomes a member
of a public retirement system on or after 1-l-13 who was not a member of a public retirement
system prior to that date unless reciprocity is established or did not have a break in active
membership for more than six months.
WHAT IT CHANGES: For "new employees" who become "new members" of the
retirement system, an employer must adopt a new defined benefit formula for both
Pension Reform Legislative Language (8-30-12) Page 3
general and safety members unless that employer has a benefit formula in place (either
defined benefit or defined contribution) that is equal to or lower than the formul a
described in the new Act. An employer cannot offer a supplemental defined benefit plan
to new employees or new groups of employees not currently covered under an existing
plan.
• General member benefit formul a that allows retirement at age 52 with 5 years of
service at 1.0%, increasing to 2.5% at 67
• No disability retirement for general members contained in the legislative
language, but there is a questi on about whether current '37 Act sections would
apply
• Limiting compensation for both general and safety members used to calculate the
retirement benefit to I 00% of the Social Security leve l if covered by Social
Security or 120% of the Social Security level if not covered, adjusted by changes
in the Consumer Price Index for all Urban Consumers annually on January I 51
following the annual valuation. OCERS members are not covered by Social
Security
• Limiting "pensionable compensation" (what OCERS' calls "compensation
earnable") to the normal monthly rate of pay or base pay paid to similarly situated
members of the same group or class of employment for full-time services during
normal working hours
• Pensionable compensation does NOT include:
o Any compensation determined by the board to be paid so lely to enhance a
member's retirement benefit
o In kind benefits being converted to cash pay ments during the member's
measuring period
o One time or ad hoc payments
o Severance payments paid in connection with separation from employment
o All payments for unused vacation, annual leave, personal leave, sick leave,
or compensatory time off, regardless of when reported or paid
o Payment for services rendered outside of normal working hours
o Overtime, unless FLSA
o Employer provided allowances like housing, auto, or uniform
o Employer contribution to deferred compensation or defined contribution
plans
o Any bonuses paid in additional to base pay, and
o Any other compensation the retirement board determines is in excess of
the member's monthly rate of pay or base pay as paid to similarly situated
members of the same group or class for full-time services during normal
workin g hours
Pension Reform Legislative Language (8-30-12) Page4
o Any other compensation the retirement board determines should not be
pensionable compensation
• Employers cannot offer any defined benefit, including those offered by private
providers, on compensation in excess of the Social Security limit, but can offer
contributions to a defined contribution plan, subject to limitations, if it conforms
with federal law. This does not ~reate a vested right to continue to receive the
employer contribution
• No new supplemental defined benefit plans can be offered to new employees or
groups of employees not currently covered
• Employers and employees must equally share normal cost and employees must
pay at least 50% unless it is collectively bargained for the employee to pay more.
The normal cost rate is the annual actuarially determined normal cost of the
defined benefit plan expressed as a percentage of payroll
• The normal cost provisions apply unl ess there is a collective bargaining
agreement in place that applies on 1-1-13, until that agreement is renewed,
amended or extended
• Final average salary is measured over a three year period
• Three safety member benefit formulas to choose from that each allows retirement
at age 50 with 5 years of servi ce. The Basic Safety Plan provides 1.426% at 50,
increasing to 2% at 57 and over. The Safety Option One Plan provides 2% at 50,
increasing to 2.5% at 57 and over. The Safety Option Two Plan provides 2% at
50, increasing to 2.7% at 57 and over
• The safety employers choice between the three safety formulas is limited to the
formula that provides a lower benefit at 55 years of age than the formula provided
to safety members on December 31, 2012
• On or after 1-1-13 safety employer and employees can negotiate a change to a
lower safety benefit formula for new employees of that bargaining unit hired on
or after the effective date of the agreement if collectively bargained and agreed to
in a memorandum of understanding
• The safety employer who negotiates a lower benefit formula for new employees
shall not provide different defined benefits to nonrepresented, managerial or
supervisory employees than the employer provides for other employees in the
same membership classifications
• Safety members can receive a service con nected disability retirement equal to the
greater of 50% of final compensation attributable to the defined benefit plan plus
an annuity purchased with accumulated member contributions, or a service
retirement if qualified, or an actuarially reduced factor determined by the actuary
fo r each quarter year that his/her service age is less than 50 years of age,
Pension Reform Legislative Language (8-30-12) Page 5
multiplied by years of safety service. This section is repealed as of 1-1-18 unless
there is a later enacted statute extending its provisions
• Internal Revenue Code Section 40 I (a)( I?) limits apply to the compensation that
can be considered when calculating a retirement benefit, like they do now. An
employer cannot make contributions to any qualified retirement plan on
compensation in excess of the limit. The 2012 limit is $250,000
• An employer cannot establish a replacement benefit plan for benefits that are
limited by Internal Revenue Code Section 415. The 2012 limit is $200,000 for
age 62, adjusted downward the earlier a member retires, unless certain rules apply
• Officers elected or appointed to a city council or board of supervisors on or after
1-1-13 will have their retirement benefit based on highest average annual
pen sionable compensation earned by the member during the period of each
elective office
• Changes to felony conviction provisions requiring forfeiture of benefits
• Precludes the purchase of nonqualifed service credit under Section 415(n)(3)(C)
of the Internal Revenue Code unless the purchase began prior to 1-1-13. In
OCERS' this would be air-time, which is not approved in Orange County
presently
• Prohibits employers from contributing less than normal cost unless the plan is
funded above 120% per the system's actuary, the actuary determines that
continuing to accrue excess earnings could result in disqualification of the plan's
tax exempt status under the Internal Revenue Code, and the board determines that
receipt of any additional contributions would conflict with its state constitutional
fiduciary duties
Pension Reform Legislative Language (8-30-12) Page 6