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1998-07-15
FILED IN THE OFFICE OF THE SECRETARY ORANGE COUNTY SANITATION DISTRICT JUL 2 9 1998 ev _f~-K...__. ---- MINUTES OF FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Wednesday, July 15. 1998. 5:30 P.M. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on Wednesday, July 15, 1998, at 5:30 p.m., at the District's Administrative Offices. ROLL CALL The roll was called and a quorum declared present, as follows: Committee Directors Present: George Brown, Chair John J. Collins, Past Board Chair Barry Denes Burnie Dunlap, Board Chair Norman Z. Eckenrode John M. Gullixson Mark Leyes Mark A. Murphy William G. Steiner Committee Directors Absent: Thomas R. Saltarelli Peer Swan, Board Vice Chair Other Directors Present: None APPOINTMENT OF A CHAIR PRO TEM No appointment was necessary. Staff Present: Don McIntyre, General Manager Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Doug Cook, Chief Operator Mark Esquer, Engineering Supervisor Tom Flanagan, Training Supervisor Terri Josway, Safety & Emergency Response Manager Jerry Jones, O&M Maintenance Manager Steve Kozak, Financial Manager Greg Mathews, Principal Administrative Analyst Rich Spencer, Human Resources Training Assistant Lisa Tomko, Human Resources Manager Simon Watson, Maintenance Supervisor Ryal Wheeler, Foreman Mike White, Controller Lenora Crane, Committee Secretary Others Present: Tom Woodruff, General Counsel Craig Hoshijima, Public Financial Management, Inc. Enrique Melcer, Public Financial Management, Inc. Mark Conway, FHI Insurance Minutes of Finance, Admin. and Human Resources Committee Page 2 July 15, 1998 PUBLIC COMMENTS No comments were made. APPROVAL OF MINUTES The minutes of the June 10, 1998, meeting of the Finance, Administration and Human Resources Committee were approved as drafted. REPORT OF THE COMMITTEE CHAIR • Committee Chair George Brown announced that Director Jan Debay has left the FAHR Committee and will be the new Chair of the Planning, Design and Construction Committee (PDC). • There will be a Planning Advisory Committee meeting (PAC) tomorrow morning from 9:00 a.m. to 12:30 p.m., with lunch. • The regularly scheduled PDC Committee meeting for August has been cancelled. REPORT OF THE GENERAL MANAGER • General Manager Don McIntyre updated the Committee on the situation in Kern County regarding biosolids. Their Board of Supervisors are expected to pass an Ordinance restricting application of biosolids to Class A only, which we do not provide. Processing of biosolids from Class B to Class A will require additional treatment. This will necessitate a change of equipment or perhaps stockpiling biosolids so they organically heat themselves. Blake Anderson has met with Judy Wilson of the City of Los Angeles and Jim Stahl of the Los Angeles County Sanitation District. All three agencies are committed to applying biosolids in Kern County. Blake and Jim Stahl are going to Bakersfield tomorrow to talk to their Board of Supervisors about this issue. The District may have to make small economic concessions to them, or we may end up spending a lot more money to haul biosolids. A full report will be made to the Board on July 29th. REPORT OF THE ASSISTANT GENERAL MANAGER The Assistant General Manager had no report. REPORT OF THE DIRECTOR OF FINANCE • Director of Finance Gary Streed reminded the Committee that two weeks from tonight is the Board meeting and the public hearing on the proposed rate structure. • New phone calls and correspondence regarding the rate changes have decreased significantly. We are having continued dialogue with some property owners who have more involved questions, however, most people are satisfied and understand the reasons for the increases and are mostly concerned about the amount of the changes. Staff is reviewing the user fee data and will be proposing a few decreases in a couple of the rates. No increases are proposed. Minutes of Finance, Admin. and Human Resources Committee Page 3 July 15, 1998 REPORT OF THE DIRECTOR OF HUMAN RESOURCES The Director of Human Resources Mike Peterman introduced Mark Conway, our benefits broker. REPORT OF THE DIRECTOR OF COMMUNICATIONS Michelle Tuchman updated the Committee on the Toilet Exchange Program to be held on August 1 and 2 in the District's parking lot. We are working with the Metropolitan Water District and CTSI, the unit manufacturers. CTSI will provide the product and the staff for the exchange program, and the District and MWD will be underwriting the cost of the low-flush units. Each of the products will be for sale for $20, with an additional $15 refundable deposit when they bring back their old product. The Unit exchange will take place on August 15 and 16. Ms. Tuchman updated the Committee regarding the District's exhibit at the Orange County Fair. She reviewed some of the questions people who have stopped by the District's booth have asked. Posters with pictures of the District's display and mascot, "Clean Water Willie," were circulated to the Directors. Ms. Tuchman invited those Directors interested in attending the Fair to pick up free passes in her office. REPORT OF GENERAL COUNSEL Tom Woodruff reported on a situation that is turning into a fairly significant dispute concerning connection fees. The attorneys for Trammell-Crow, owners of the commercial property known as Park Place One which is adjacent to the 405 Freeway at Jamboree and Michelson Street , are requesting a refund of approximately $600,000-$800,000 in connection fees they paid in 1990 for connection to the District's Michelson Street Pump Station. The Pump Station, which was almost at maximum capacity in 1990, was redesigned and moved to an underground parcel of land deeded to the District through agreements with Trammell-Crow to accommodate the expected increased flow from their proposed new development. The District paid the $1.5+ million reengineering costs for the pump station, and Trammell-Crow deeded the land the pump station was built on to the District and paid for the landscaping. Though the agreements signed by Trammell-Crow in 1990 indicated that they were required to pay connection fees, they are now disputing the fact and threaten to attend the user fee hearing on July 29th and call into question the conduct of the District. CONSENT CALENDAR ITEMS 1. FAHR98-52: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF JUNE 1998, AND FORWARD TO THE JOINT BOARDS: The Treasurer's Report was handed out at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. 2. FAHR98-53: Receive and file Certificates Of Participation (COP) Report. 3. FAHR98-54: Receive and file Employment Status Report Minutes of Finance, Admin. and Human Resources Committee Page 4 July 15, 1998 MOTION: ACTION ITEMS 4. FAHR98-55: END OF CONSENT CALENDAR Moved, seconded and duly carried to approve the recommended actions for items specified as 1 through 3 under Consent Calendar. Series "C" Certificates of Participation: A. Authorize staff to proceed with competitively bidding, selection, and execution of a debt service reserve fund Investment Agreement for the Series "C" COP. B. Authorize staff to execute agreements with Public Financial Management, investment advisor, in an amount not to exceed $25,000, and Orrick, Herrington & Sutcliffe, bond counsel, in an amount not to exceed $7,500, for professional services in connection with a debt service reserve fund Investment Agreement for the Series "C" COP. Motion: It was moved, seconded and duly carried to approve staffs recommendation to proceed with competitively bidding, selection and execution of a debt service reserve fund Investment Agreement for the Series "C" COP. It was moved seconded and duly carried, with Director Gullixson abstaining, to authorize staff to execute agreements with Public Financial Management, investment advisor, in an amount not to exceed $25,000, and Orrick, Herrington & Sutcliffe, bond counsel, in an amount not to exceed $7,500, for professional services in connection with a debt service reserve fund Investment Agreement for the Series "C" COP. 5. FAHR98-56: Annual Renewal of Investment Policy: A. Review and approve the District's Investment Policy Statement for 1998-99. B. Renew the delegation of investment authority to the District's Director of Finance/Treasurer for 1998-99; and C. Recommend that the Board of Directors adopt Resolution No. OCSD- 98-XX for adoption of the District's Investment Policy Statement, and renewal of investment authority for 1998-99. The Committee determined from Mr. Kozak that no changes have been made to the Policy since their review of the Policy in September 1997. The changes requested by the Committee at that time have been incorporated into the Policy. Director Leyes expressed his opposition to including Section 8.13 regarding reverse repurchase agreements in the Policy. Minutes of Finance, Admin. and Human Resources Committee Page 5 July 15, 1998 Motion: It was moved, seconded and duly carried, with one no vote, to approve staffs recommendation. 6. FAHR98-57: Receive and file this information-only report re Retiree Health Insurance. During discussion on this item, Director Gullixson requested staff to investigate the possibility of Board Members paying into and joining the insurance plan. Motion: It was moved, seconded and duly carried to receive and file this information-only report. 7. FAHR98-58: Recommend approval to Broadband Executive Management and Division Manager classifications and pay ranges, and flat rate Assistant General Manager's Salary. Action: The Directors expressed their opinions about the proposed salary ranges for Executive Management and Managers, and requested that this item be sent back to staff and the Consultant, Barry Newton, for rework and brought back to the Committee at a future meeting. A few of the Directors advised they have never reviewed Mr. Newton's original study on broad banding and would like to be able to do so prior to making a decision. 8. FAHR98-59: Recommend approval of Resolution No. OCSD-98-XX, authorizing the General Manager to enter into separation agreements with District employees in specified circumstances. Motion: It was moved, seconded and duly carried to approve staffs recommendation. 9. FAHR98-60: Recommend approval to establish a Defined Contribution (401a) Pension Plan for the General Manager only, and direct the General Counsel to prepare such a plan and an amendment to his contract of employment with the General Manager. During discussion, Mr. McIntyre advised the Committee that payments to the Pension Plan, if he decides to use it, would come out of his salary with no additional cost to the District. Mr. Woodruff clarified that the Defined Pension Plan would not be an additional benefit, but an amendment to Mr. McIntyre's employment contract. Mr. McIntyre and the other department heads who have signed "at will" contracts are considered regular, full-time employees. Minutes of Finance, Admin. and Human Resources Committee Page 6 July 15, 1998 Their contracts serve as their MOUs to determine what their benefits are and to give them some latitude to change their compensation, but do not make them "contract employees." Motion: It was moved, seconded and duly carried to approve staffs recommendation. INFORMATIONAL PRESENTATIONS 10. FAHR98-61: DART Reinvention Report and Implementation Plan Mark Esquer, Engineering Supervisor, sitting in for O&M Director Bob Ooten, introduced the DART team members who were in attendance to give verbal reports and a slide presentation on the results of Phase Ill of the District's reinvention process. The DART report has focused on the maintenance management and adaptive work force elements of the Operations and Maintenance reinvention. Simon Watson, Maintenance Supervisor, reviewed the Reinvention and Implementation Plan and Work and Business Practices; Rich Spencer, H. R. Training Assistant and Adaptive Work Force Leader, reviewed Reinvention Tools; and Jerry Jones, O&M Maintenance Manager, reviewed the Cost Benefit Analysis. The total cost of implementation of the DART recommendations are estimated to be $3,219,400. The reinvention cost/benefit payback shows that reinvention cost will be offset by reinvention savings early in the fourth year of the five-year reinvention implementation plan. The total savings during the five-year implementation period will be $3,290,600. The savings generated during the implementation period will offset the DART to-date reinvention development cost of $550,000 which consisted of labor, overhead and consultant services. 11. CLOSED SESSION The Chair reported to the Committee the need for a Closed Session, as authorized by Government Code Sections 54957.6, to discuss and consider the item that is specified as Item 11 (a) on the published Agenda. The Committee convened in closed session at 7:45 p.m. Confidential Minutes of the Closed Session held by the Finance, Administration and Human Resources Committee have been prepared in accordance with California Government Code Section 54957.2, and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No action was taken re Agenda Item 11 (a). At 8:00 p.m., the Committee reconvened in regular session. MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING None. Minutes of Finance, Admin. and Human Resources Committee Page 7 July 15, 1998 MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT None. FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for Wednesday, September 9, 1998, at 5:30 p.m. ADJOURNMENT The meeting was adjourned at 8:01 p.m. Submitted by: ~ ~ Finance, Administration and Human Resources Committee Secretary H:\WP .OTA \FIN\21 O\CRANE\FAHR\FAHR98\JUL Y\7-98MIN.DOC STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, I hereby certify that the Notice and the Agenda for the Finance, Administration and Human Resources meeting held on July 15, 1998, was duly posted for public inspection in the main lobby of the District's offices on July 8, 1998. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of July 1998. Posted:~~~-~ , 1998,~/P.M. By:~~ ignature llradon\data 1 \wp.dta\fin\21 0\crane\FAH R\FAH R9 8\J uly\C ERTPO 7-98 .doc DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE Full Agenda Package 50 Committee 16 & Mailing List Donald F. McIntyre 1 Blake P. Anderson 1 (3-hole punched) Dan Dillon 1 Marc Dubois 1 JeffEsber 1 Ed Hodges 1 Steve Kozak 1 Penny Kyle 2 David Ludwin 1 Greg Mathews 1 Partick Miles 1 Bob Ooten 1 Mike Peterman 1 Gary Streed 1 Michelle Tuchman 1 (3-hole punched) Terri Josway 1 Dan Tunnicliff (H.R.) 1 Mike Moore 1 Mike White 1 (3-hole punched) Ed Torres 1 Cagle, Brad 1 Lisa Tomko 1 Nick Arhontes 1 Gail Cain 1 Bob Geggie 1 Jim Herberg 1 Lenora Crane 1 File 1 Extras 4 Notices and Agenda 12 Posting 1 Jean Tappan (include Mins) 1 Anna Ubaldini 1 Frankie Woodside 1 Patricia Magnante 1 Janet Gray 1 Fawn Elizondo 1 Debra Lecuna 1 Guard Shack (Ed Hodges) 1 Extras 3 Ron Zenk, Dist. 14 Treasurer's Report Only le H:\WP.DTA\FIN\210\CRANE\FAHR\DISTRIBUTIONLISTFAHR.DOC phone: (714) 962-2411 malling address: PO Box8127 Fountain Valle.y, C'A 92728-8127 stre11t address: 1 0944 ~fls Avenue t=o~ntaln Valley, CA 92708-7018 Member Agencies • Cities Anaheim Brea Buena Park Cypress Fo1:mt:a1rr Valley Fullerton Garden Grove Huntington Bt1ach ff'\lfne La Habra La Palma Las Ah,1mit;0s Newport Beach Orange P/acentfe Ssnte Ana Sea/ Beac;h Stanton Tustin Ville Park Yorba Linda County of Orange Sl!nltary Districts Costa Niese Midway City Water Districts fr·vine Ranah •RANGE COUNTY SANITATION DISTRICT July 8, 1998 NOTICE OF MEETING FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, JULY 15, 1998 -5:30 P.M. DISTRICT ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 A regular meeting of the Finance, Administration and Human Resources Committee of the Board of Directors of the Orange County Sanitation District, will be held at the above location, time and date. "To Protect the Public Health and the Environment through Excellence in Wastewater Systems" FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING-DATES FAHR Committee Month Meetings Board Meetings August None Scheduled August 26, 1998 September September 9, 1998 September 23, 1998 October October 14, 1998 October 28, 1998 November None Scheduled November 18, 1998 December December 9, 1998 December16,1998 January None Scheduled January 27, 1999 February February 10, 1999 February 24, 1999 March March 10, 1999 March 24, 1999 April April 14, 1999 April 28, 1999 May May 12, 1999 May 26, 1999 June June 9, 1999 June 23, 1999 July July 13, 1999 July 28, 1999 ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE: July 15, 1998 TIME: 5:30 P.M. ADJOURN: P.M. COMMITTEE MEMBERS GEORGE BROWN (CHAIR) .......................................................... . JOHN J. COLLINS (PBC) .............................................................. . BARRY DENES ............................................................................. . BURNIE DUNLAP (BC) ................................................................. . NORMAN ECKENRODE •••••••••••••••••••••.•••••••.•••....•.•..•.•.••.•.••••• ·-····· JOHN M. GULLIXSON .................................................................. . MARK LEYES ............................................................................... . MARK MURPHY .......................................................................... .. THOMAS SAL TARELU ................................................................ . WILLIAM STEINER ....................................................................... . PEER SWAN (BVC) ...................................................................... . STAFF DON MCINTYRE, General Manager ............................................... . BLAKE ANDERSON, Assistant General Manager ......................... . PATRICK MILES, Director of Information Technology ................... __ ED HODGES, Director of General Services Administration ......... .. DAVID LUDWIN, Director of Engineering ...................................... . BOB OOTEN, Director of Operations & Maintenance .................... . MIKE PETERMAN, Director of Human Resources ........................ .. GARY STREED, Director of Finance ............................................. .. MICHELLE TUCHMAN, Director of Communications .................... . MIKE MOORE, Acting Director of Tech_nical Services .................... __ STEVE KOZAK, Financial Manager ............................................... . MIKE WHITE, Controller ................................................................. . BRAD CAGLE, Accounting Manager ............................................. . GREG MATHEWS, Principal Administrative Analyst ..................... . TERRI JOSWAY, Safety & Emergency Response Manager ........... __ LISA TOMKO, Human Resources Manager ................................... . LENORA CRANE, Committee Secretary ......................................... __ OTHERS TOM WOODRUFF, General Counsel ............................................... __ TOBY WEISSERT, Carollo Engineers ............................................. __ c: Debra Lecuna . ' AGENDA REGULAR MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ROLL CALL ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, JULY 15, 1998, AT, 5:30 P.M. ADMINISTRATIVE OFFICES 10844 Ellis Avenue Fountain Valley, California 92708 APPOINTMENT OF CHAIR PRO TEM, IF NECESSARY AGENDA In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the District's Administrative Offices not less than 72 hours prior to the meeting date and time above. All written materials relating to each agenda item are available for public inspection in the Office of the Board Secretary. In the event any matter not listed on this agenda is proposed to be submitted to the Committee for discussion and/or action, it will be done in compliance with Section 54954.2(b) as an emergency item or that there is a need to take immediate action which need came to the attention of the Committee subsequent to the posting of the agenda, or as set forth on a supplemental agenda posted in the manner as above, not less than 72 hours prior to the meeting date. PUBLIC COMMENTS All persons wishing to address the Finance, Administration and Human Resources Committee on specific agenda items or matters of general interest should do so at this time. As determined by the Chair, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five minutes. Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by the Committee except as authorized by Section 54954.2(b). July 15, 1998 RECEIVE, FILE AND APPROVE MINUTES OF PREVIOUS MEETING Recommended Action: Consideration of motion to receive, file and approve draft minutes of the June 10, 1998, Finance, Administration and Human Resources Committee meeting. REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF ASSISTANT GENERAL MANAGER REPORT OF DIRECTOR OF FINANCE REPORT OF DIRECTOR OF HUMAN RESOURCES REPORT OF DIRECTOR OF COMMUNICATIONS REPORT OF GENERAL COUNSEL CONSENT CALENDAR ITEMS All matters placed on the consent calendar are considered as not requiring· discussion or further explanation and unless any particular item is requested to be removed from the consent calendar by a Director, staff member or member of the public in attendance, there will be no separate discussion of these items. All items on the consent calendar will be enacted by one action approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar. All items removed from the consent calendar shall be considered in the regular order of business. Members of the public who wish to remove an item from the consent calendar shall, upon recognition by the chair, state their name, address and designate by number the item to be removed from the consent calendar. The Chair will determine if any items are to be deleted from the consent calendar. Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: 1. FAHR98-52: Receive and file Treasurer's Report for the month of June 1998: The Treasurer's Report will be handed out at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. -2- . ' , July 15, 1998 2. FAHR98-53: Receive and file Certificates of Participation (COP) Monthly Report. 3. FAHR98-54: Receive and file Employment Status Report. END OF CONSENT CALENDAR Consideration of items deleted from Consent Calendar, if any. ACTION ITEMS 4. FAHR98-55: 5. FAHR98-56: 6. FAHR98-57: Series "C" Certificates of Participation: 1. Authorize staff to proceed with competitively bidding, selection, and execution of a debt service reserve fund Investment Agreement for the Series "C" COP. 2. Authorize staff to execute agreements with Public Financial Management, investment advisor, in an amount not to exceed $25,000, and Orrick, Herrington & Sutcliffe, bond counsel, in an amount not to exceed $7,500, for professional services in connection with a debt service reserve fund Investment Agreement for the Series "C" COP. (Steve Kozak -5 minutes) Annual Renewal of Investment Policy: 1. Review and approve the District's Investment Policy Statement for 1998-99; 2. Renew the delegation of investment authority to the District's Director of Finance/Treasurer for 1998-99; and 3. Recommend that the Board of Directors adopt Resolution No. OCSD-98-XX for adoption of the District's Investment Policy Statement, and renewal of investment authority for 1998-99. (Steve Kozak-10 minutes) Receive and file this information-only report re Retiree Health Insurance. (Mike Peterman\Lisa Tomko -5 minutes) -3- July 15, 1998 7. FAHR98-58: 8. FAHR98-59: 9. FAHR98-60: Recommend approval to Broadband Executive Management and Division Manager classifications and pay ranges, and flat rate Assistant General Manager's Salary. (Mike Peterman/Dawn McKinley-10 minutes) Recommend approval of Resolution No. OCSD-98-XX, authorizing the General Manager to enter into separation agreements with District employees in specified circumstances. (Mike Peterman/Tom Woodruff-5 minutes) Recommend approval to establish a Defined Contribution (401a) Pension Plan for the General Manager only, and direct the General Counsel to prepare such a plan and an amendment to the contract of employment with the General Manager. (Mike Peterman/Tom Woodruff -5 minutes) INFORMATIONAL PRESENTATIONS 10. FAHR 98-61: DART Reinvention Report and Implementation Plan (Gerald Jones -30 minutes) CLOSED SESSION During the course of conducting the business set forth on this agenda as a regular meeting of the Committee, the Chair may convene the Committee 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) • employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of thes~ subjects, the minutes will reflect all required disclosures of information. 11. Convene in closed session. a. Confer with District's Negotiator re Pending MOU Labor Negotiations with Supervisory and Professional Employees (Government Code Section 54957.6). b. Reconvene in regular session. c. Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY -4- , July 15, 1998 MATTERS WHICH ~A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for September 9, 1998. NOTICE TO COMMITTEE MEMBERS If you have any questions on the agenda or wish to place any items on the agenda, Committee members should contact the Committee Chair or Secretary ten days in advance of the Committee meeting. Committee Chair: Committee Secretary: le George Brown Lenora Crane (562) 431-2185 (714) 593-7551 (714) 962-3954 (FAX) \\RADON\DATA 1\WP .DTA\FIN\21 0\CRANE\FAHR\FAHR98\JUL Y\7-98AGENDA.DOC -5- DRAFT MINUTES OF FINANCE, County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday, June 10, 1998, 5:30 P.M. A meeting of the Finance, Administration and Human Resources Committee of the County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California was held on Wednesday, June 10, 1998, at 5:30 p.m., at the Districts' Administrative Offices. ROLL CALL The roll was called and a quorum declared present, as follows: Committee Directors Present: John J. Collins, Joint Chair Jan Debay Barry Denes Norman Z. Eckenrode Mark Leyes Mark A. Murphy William G. Steiner Peer Swan, Vice Joint Chair Committee Directors Absent : George Brown, Chair John M. Gullixson Thomas R. Saltarelli Other Directors Present: Burnie Dunlap APPOINTMENT OF A CHAIR PRO TEM Staff Present: Don McIntyre, General Manager Gary Streed, Director of Finance Mike Peterman, Director of Human Resources Michelle Tuchman, Director of Communications Greg Mathews, Principal Administrative Analyst Mike White, Controller Brad Cagle, Accounting Manager Steve Kozak, Financial Manager Terri Josway, Safety & Emergency Response Manager Ryal Wheeler, Foreman Lisa Tomko, Human Resources Manager Lenora Crane, Committee Secretary Others Present: Toby Weissert, Carollo Engineers Chip Prather, Fire Chief, Orange County Fire Authority Nancy Swanson, Orange County Fire Authority Director Jan Debay was appointed as Chair Pro Tern in Director Brown's absence. PUBLIC COMMENTS No comments were made. Minutes of Finance, Admin. and Human Resources Committee Page2 June 10, 1998 APPROVAL OF MINUTES The minutes of the May 13, 1998, meeting of the Finance, Administration and Human Resources Committee were approved as drafted. REPORT OF THE COMMITTEE CHAIR Director Debay welcomed representatives from the Orange County Fire Authority who were present to observe the meeting. REPORT OF THE GENERAL MANAGER • At Don McIntyre's request, Terri Josway, Safety and Emergency Response Manager, briefed the Committee regarding yesterday's Integrated Emergency Response Plan {IERP) exercises. She advised the Committee that District employees have been trained in various areas of emergency response such as HAZMAT, search and rescue, damage assessment and medical. These areas were activated yesterday by simulating an earthquake which caused fictitious damage at both Plants. Events included two HAZMA T incidents at Plant 2, and fire and medical incidents at Plant 1. The Fountain Valley and Costa Mesa Fire Departments responded to Plant 1, and Newport Beach and Huntington Beach Fire Departments responded to Plant 2. Overall, the response went very well. The fire agencies were very surprised that this was our first full-scale exercise, and they said we did extremely well. The fire agencies would like the District to participate in emergency exercises on an annual basis. Ms. Josway advised that the Evacuation Phase of the IERP will be activated at a later date. • Communications Director Michelle Tuchman advised the Committee that during these exercises a call was received from a Times reporter. Reporters monitor radio frequencies of emergency response vehicles routinely. She explained to the reporter that the District was participating in an emergency drill, and also that we had participated in an emergency response drill prior to the El Nino season which turned out to be very beneficial to us. REPORT OF THE ASSIST ANT GENERAL MANAGER Director Debay advised the Committee that Assistant General Manager Blake Anderson was not present because he is attending school at Harvard. REPORT OF THE DIRECTOR OF FINANCE • Finance Director Gary Streed reminded the Committee that the July meeting is scheduled for July 15 at 5:30 p.m. It falls on the third Wednesday of the month, a week later that we normally meet. He advised them to expect to receive their Agenda materials a little later than normal. • Mr. Streed advised that he has received some questions about the impact of the recently announced Merrill Lynch settlement on the Districts. The table contained in the Register yesterday seemed to be essentially accurate. The gross amount expected to be received by the District is approximately $27 Million, which will bring us to 90% of what we had in the bank on December 6, 1994. We have not received the money yet, since it is still subject to approval by the bankruptcy judge. When received, the money will be placed in the bank where it was, and will be used to either offset rate increases or future borrowing. Minutes of Finance, Admin. and Human Resources Committee Page 3 June 10, 1998 • Mr. Streed reported that a final quote has been received concerning Consent Calendar item No. 5 regarding renewal of the District's All-Risk Property and Earthquake Insurance. The final quote is $10,000 less than stated in the Agenda Report. Coverage has been increased at the same time, with a $300 million limit for General Property Damage, a $200 million limit for Flood, and a $40 million limit for Earthquake. • Mr. Streed advised that he and Michelle Tuchman prepared a memo to the Directors concerning the notice that has been sent out regarding the rate structure change for non- residential and multi-family units. As of today we have received no phone calls from anyone affected. The RAC Committee members were sent the same notice and, as of today, we have received three calls from them and one consultant call. • In response to a questions from Director Leyes, Mr. Streed advised that the bankruptcy funds were not included in the recent Reserves Study, since the bankruptcy amount is carried as a receivable. When the money is collected, it will go back into the different Districts (Zones) they came out of, and at the same percents that they were at the time of the bankruptcy. Some of the account names may have changed by now. REPORT OF THE DIRECTOR OF HUMAN RESOURCES The Director of Human Resources Mike Peterman advised that there would be no Closed Session tonight, and he briefly reported on the status of the Supervisory and Professional MOU negotiations. REPORT OF THE DIRECTOR OF COMMUNICATIONS The Director of Communications had no report. REPORT OF GENERAL COUNSEL General Counsel was not present. CONSENT CALENDAR ITEMS (1 -5) 1. FAHR98-45: 3. FAHR98-47: 4. FAHR98-48: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF MAY 1998, AND FORWARD TO THE JOINT BOARDS: The Treasurer's Report was handed out at the F AHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. Receive and file Employment Status Report Receive and file the Third Quarter Workers' Compensation and Accident Report for FY 1997-98. Minutes of Finance, Admin. and Human Resources Committee Page 4 June 10, 1998 5. FAHR98-49: MOTION: Renew the District's All-Risk Property and Earthquake Insurance Program for the period June 25, 1998 to June 25, 1999, in an amount not to exceed $1,020,000. END OF CONSENT CALENDAR Moved, seconded and duly carried to approve the recommended actions for items specified as 1, 3, 4 and 5 under Consent Calendar. Item No. 2 was removed from the Consent Calendar for individual discussion. 2. FAHR98-46: MOTION: Receive and file Certificates Of Participation (COP) Report. During discussion, on this item, Director Swan questioned why J.P. Morgan is charging $40,000 more in their remarketing rate than the Distric's other remarketing agents. Overall for the year, they are 4 basis points higher than the others. Action: Staff will contact J.P. Morgan regarding bringing their rates down and will continue to monitor these rates closely. It was moved, seconded and duly carried to receive and file this report. ACTION ITEMS (Nos. 6 -7) 6. FAHR98-50: That the Joint Boards of Directors recommend approval of the proposed Operating, Capital, Debt/COP Service and Self-Insurance Budgets for 1998-99 to the consolidated Board of Directors on July 1, 1998, as follows: Joint Works Operating/Working Capital Worker's Compensation Self Insurance Public Liability Self-Insurance Joint Works Capital Outlay Revolving Collection System Zone Operating Collection System Zone Capital Improvements Debt/COP Service $45,200,000 $565,000 $335,000 $49,284,000 $10,180,000 $22,904,000 $36,459,000 Gary Streed reviewed the 10 sections of the budget document and pointed out some of the new information contained in it. The term "zones" replaces the District designations in order to retain previously established individual rate schedules. The new District logo is on the front of the document, and the District's new name is used throughout the document. Mr. Streed and Don McIntyre answered specific budgeting questions from the Directors regarding Cash Reserves, Capital Improvement Projects, Debt Service, Water Management Projects associated with the District's Strategic ·Plan, and the Capital Outlay Revolving Fund. The Directors determined from staff that though capital projects are included in the budget, approving the Budget does not give staff blanket authority to spend the money. Before any money can be spent, approval must be obtained through the Standing Committee Minutes of Finance, Admin. and Human Resources Committee Page 5 June 10, 1998 MOTION: 7. FAHR98-51: MOTION: oversight process. CIP Project Detail Sheets are also provided in the Budget in Section 8. Discussion took place on some of the line item projects. Mike White gave a slide presentation and brief overview of the major budget areas, proposed budget amounts and briefly reviewed the major projects included in those budgets and the phases those projects are in. It was moved, seconded and duly carried to approve staff's recommendation. Receive and file 1998-99 Strategic Goals Workplan. -Greg Mathews gave a slide presentation and briefly reviewed the District's 1998-99 Critical Goals, the Workplan Purpose and the Major Development Steps. Mr. Mathews answered questions from the Committee regarding the time expended by FTEs working on different work types. The Committee agreed that the Workplan document was well done and should be forwarded to the Joint Boards. It was moved, seconded and duly carried to forward this report to the Board for their information .. Director John Collins (JC) and the Committee expressed their congratulations and appreciation to staff for producing a clear, comprehensive budget document. Don McIntyre advised the Committee that there is an Ad Hoc Committee Meeting Re the Strategic Plan scheduled for June 17, 1998, at 5:30 p.m. He especially requested that Director Eckenrode attend the meeting. INFORMATIONAL PRESENTATIONS There were none. 8. CLOSED SESSION There was no Closed Session. MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING None. MATTERS WHICH A DIRECTOR MAY WlSH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT None. Minutes of Finance, Admin. and Human Resources Committee Page 6 June 10, 1998 FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for Wednesday, July 15, 1998, at 5:30 p.m. ADJOURNMENT The meeting was adjourned at 7:42 p.m. Submitted by: ~t~ e ora Crane :=:::nistration and Human Resources Committee Secretary H:\WP.DTA\FIN\210\CRANE\FAHR\FAHR98UUNE\6-98MIN.DOC FAHR COMMITTEE Meeting Date ToBd. 07/15/98 AGENDA REPORT Item Number Item Number 2 Orange County sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: CERTIFICATES OF PARTICIPATION (COP} MONTHLY REPORT (FAHR98-53} GENERAL MANAGER'S RECOMMENDATION Receive and file Certificates of Participation (COP) Monthly Report SUMMARY Since June 1995, the daily rate COP program remarketing agents have been PaineWebber for the Series "A" and the 1993 Refunding COPs, and J.P. Morgan for the Series "C" COPs. Most fixed rate Series "8" COPs have been refunded and the 1992 Refunding COPs have always been remarketed by PaineWebber in a weekly mode. PROJECT/CONTRACT COST SUMMARY None. BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. ~ Not applicable (information item} ADDITIONAL INFORMATION Two graphical, and one tabular, reports are attached. The first graph entitled, "CSDOC COP Rate History Report," shows the variable interest rates on each of the daily rate COPs since the last report, and the effective fixed rate for the two refunding issues which are covered by an interest rate exchange agreement commonly called a "swap." \\radon\data1\Np.dla\lin\2101crane\FAHR\FAHR98\July\FAHR~.doc R811iMd: 115198 Page 1 The second bar chart entitled, "Comparative Daily COP Rate History Report," shows the performance of the Districts' Daily Rate COPs as compared to a composite index rate, which represents the average rate of six similar variable rate daily reset borrowings. The table entitled, "Daily COP Rate Comparisons," shows the monthly variable interest rate performance of the Districts' Daily Rate COPs as compared to the composite index. Estimated annual interest payments calculated for a standard $100 million par amount, are also shown. Variable rates historically rise at the end of each calendar quarter, and especially at year-end, because of business taxes and statements. The rates decline to prior levels immediately in the following month. Staff will maintain our continuous rate monitoring and ongoing dialog with the remarketing agents and rating agencies to keep the Committee fully informed about developments in the program as they occur and at each meeting. In follow-up to a discussion at the June FAHR Committee meeting about the comparatively higher rate performance of the Series "C" COPs (approximately 4 basis points), staff contacted J.P. Morgan, the remarketing agent, and informed them of the Committee's comments, and advised them to take all appropriate steps to improve the rate performance of the Series "C" COPs. Discussions with J.P. Morgan are continuing, and a meeting to discuss their action plan is pending. ALTERNATIVES None. CEQA FINDINGS None. ATTACHMENTS 1. Graph -Comparative Daily COP Rate History Report 2. Graph -CSDOC COP Daily Rate History Report 3. Tabular -Daily COP Rate Comparison GGS:SK:lc \lradonldata1wvp.dtallin\211krane\FAHR\FAHR98\July\FAHR98-53.doc R......:I: 115198 Page2 Gl . ---. -. ---· ----. "ti C ;;; f -0 )> QI 0 ;;; !!. -4 RATE(%) a. i::i. m C" iii '< =ii 0 """' N (.» ~ u, a, -n ::::, :i 1G' QI ~ 02-Jul-97 ::::, 0 0 _ID <6 ~ ID 16-Jul-97 (0 (0 ;::, co :!1 -::::, 30-Jul-97 <0 QI iv ::, w 0 )> ~ :::0 13-Aug-97 s: )> -I rn :I: I 27-Aug-97 en -I 10-Sep-97 f I I "' I * I + I I 0 i.o -.I en 24-Sep-97 t I I I fi =f • I I C 0 08-Oct-97 + I I « I * I • I I 0 22-Oct-97 + ~ * I • I I 0 0 05-Nov-97 ""CJ Tt 19-Nov-97 CJ )>""CJ )> -m -G>-· 03-Dec-97 t-r ::::, (/)C1> =E :§: C -< Ell (1) 17-Dec-97 "'O C' ~ $? C' (1) ... 31-Dec-97 --" --1 14-Jan-98 + I I ~I I * I • I I u, m ++ 28-Jan-98 U) :I: 00 -en (l)C.... 11-Feb-98 --1 0~ o . 0 G>s; 25-Feb-98 (1)0 ::;tJ ::::, -, cng 11-Mar-98 -< i::::i 1-0 ::;tJ 25-Mar-98 m 08-Apr-98 t I I ~ I f I • I I ""CJ 0 22-Apr-98 t I I I Jl I ; I I ::;tJ -f 06-May-98 20-May-98 03-Jun-98 17-Jun-98 ' -+· Prepared by Finance, 7/2/98, 3:39 PM 1COMPARATIVE DAILY COP RATE HISTORY REPORT I JUNE 1998 6.00 -r-------------------------------------------, 5.00 -t------------------------------------------1 4.00 -~ 0 -~ 3.00 ~ 2.00 1.00 0.00 DATE ..... ..... ..... ..... ..... ..... C)C) C)C) C)C) C)C) C)C) C)C) a, a, a, a, a, a, a, a, a, a, a, a, :i ci a. 'tf >-ci c ~ ..: ..: >-c ::::, a, 0 a, ('O a, ('O C. ('O ::::, -, <( en 0 z 0 -, LL ~ <( ~ -, 13CSDOC • COMPOSITE INDEX G :\excel .dte\fin\2220\geggi\Finence\deilycopi ntrete .xis Prepared by Finance, 7/2/98, 3:41 PM Jul-97 Aug-97 Sep-97 Oct-97 Nov-97 Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98 AVERAGE DAILY COP RATE COMPARISONS(%) JUL, 1997 -JUNE, 1998 CSDOC $100M $98.SM $46M Series"A" Series"C" Series 93 Ref Paine Webber J.P. Morgan PaineWebber 3.17 3.12 3.17 3.17 3.20 3.17 3.53 3.63 3.53 3.46 3.51 3.46 3.68 3.69 3.68 3.29 3.35 3.29 3.09 3.09 3.09 2.50 2.60 2.50 2.77 2.80 2.77 3.52 3.59 3.52 3.56 3.60 3.56 3.28 3.30 3.28 3.25% 3.29% 3.25% ESTIMATED ANNUAL INTEREST PAYMENTS PER $100M PAR AMOUNT $ 3,251,667 $ 3,290,000 $ 3,251,667 "FOOTNOTE Composite index consists of the following COP transactions: . IRWD, Series 86, $60M, Smith Barney . IRWD, Series 93 "A" Refunding, $87.6M, Bankers Trust . IRWD, Series 93 "B" Refunding, $41.8M, J.P. Morgan . IRWD, Series 95 Refunding, $117.8M, PaineWebber Composite Index" 3.10 3.05 3.60 3.38 3.68 3.33 3.10 2.53 2.80 3.55 3.57 3.27 3.25% $ 3,246,667 . Western Riverside Co. Reg. Wastewater Auth., Series 96, $25.4M, PaineWebber . Orange Co., Irvine Coast Asst. Dist. 88-1, $94.SM, J.P. Morgan G:\excel.dta\fin\2220\geggi\Finance\COPdaily$rate comparison FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Patty Steeves, Human Resources Analyst SUBJECT: EMPLOYMENT STATUS REPORT (FAHR98-54} GENERAL MANAGER'S RECOMMENDATION Receive and file the Employment Status Report. SUMMARY Total FTE headcount at the District as of June 17, 1998 is 533. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. D ' This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [gj Not applicable (tnformation item} ADDITIONAL INFORMATION Meeting Date ToJt. Bds. 7/15/98 Item Number Item Number 3 The District has a full-time equivalent (FTE} headcount of 533 as of June 17, 1998. The actual number of employees is 542. The current FTE count is equivalent to a 4.8% reduction from the budgeted 559.75 positions. There were no external hires for the month of June. There were two reassignments for the following positions: • From: To: • From: To: Lab Analyst (Environmental Sciences Laboratory} Information Technology Technician II (End User Support} Plant Operator (Plant 1 Operations) Senior Plant Operator (Plant 1 Operations) \lradonldata1'wp.dlalfin\210\cnane\FAHR\FAHR98\Julylfahr98-54.doc R8\llsed: 1151118 Page 1 ALTERNATIVES None. CEQA FINDINGS None. ATTACHMENTS 1. June 17, 1998 Employment Status Report. 2. Performance to 5-Year Staffing Plan. \lnldon\dllbl1M,p.dta\lin\210\crane\FAHRIFAHR98\Julyltahr98-54.doc RMed: 1151118 Page2 1 \ I Employment Status Report Run Date· 17.Jun-98 • Regular Regular Total Vacant Positions } Regular Part-time Part-time FTE Positions FTE FTE FTE FTE' FTE wnn 6yrp/an Full-time 20 houA. 30 hounr: Contract In/em LOA Count FY97-98 97-98 98-99 99-00 00--01 01--02 fFY99--0III 11 0 -General Management Ad min 4.00 0.00 0.00 0.00 0.00 0.00 4.00 2.00 6.00 5.50 5.50 5.50 5.50 1.50 Total General Management 4.00 0.00 0.00 0.00 0.00 0.00 4.00 2.00 6.00 5.50 5.50 5.50 5.50 1.50 21 0 -Finance Administration 4.00 0.00 0.00 0.00 0.00 0.00 4.00 0.00 4.00 4.00 4.00 4.00 4.00 0.00 220 -Accounting 19.00 o.oo 0.00 0.00 o.oo o.oo 19.00 0.00 19.00 18.00 17.50 16,00 14.50 -1 .50 230 -Purchasing & Warehousing 14.00 0,50 0.00 0.00 0.00 0.00 14.50 1.50 16.00 16.00 15.00 15.00 15.00 0,50 Total Finance 37.00 0.50 0.00 0.00 0.00 0.00 37.50 1.50 39.00 38.00 36.50 35.00 33.50 -1.00 310 -Communications 9.00 0.00 0.00 0.00 0,00 0.75 9.75 0.00 9.75 9.75 9.75 9.75 9.75 0.00 Total Communications 9.00 0.00 0.00 0.00 0.00 0.75 9.76 0 9.75 9.75 9.75 9.75 9.75 0.00 410 -General Services Admin 5.00 0.00 0.00 0.00 0.00 1.00 6.00 0.00 6.00 6.00 6.00 6.00 6.00 0.00 420 -Collection Facilities Mice 16,50 0.00 0.00 0.00 o.oo 0.00 16.50 2.00 18.50 18.50 18.50 18.50 18.50 2.00 430 -Plant Maintenance 36.50 0.00 0,00 0.00 o.oo 0.00 36.50 3.00 39.50 38,50 28.50 28.50 27.50 -8,00 Total General Services 58.00 0.00 0.00 0.00 0.00 1.00 69.QO _ 6.00,_ 64.00 63.00 53.00 53.00 52.00 -6.00 460 -End Users Support 9.00 0.00 0.00 0.00 0,00 0,00 9.00 0.00 9.00 11 .00 12.00 12.00 12.00 3.00 470 -Program, Data Base & Comm 10.00 0.00 0.00 0.00 0.00 0.00 10.00 0.00 10.00 11 .00 13.00 13.00 13.00 3.00 490 -Plant Automation 8.00 0.00 o.oo o.oo 0.00 0.00 8.00 0.00 8.00 8.00 8.00 8.00 8.00 o.oo Total Information Technology 27.00 0.00 0.00 0.00 0.00 0.00 27.00 0.00 27.00 30.00 33.00 33.00 33.00 6.00 51 0 -Human Resources Admin 5.00 0.00 1.50 0.00 0.00 0.00 6.50 0.25 6.75 6.75 6.75 6.75 6.50 0.25 520 -Education & Training 3.00 0.00 0.75 0.00 0.00 0.00 3.75 0.25 4.00 4.00 4.00 4.00 3.00 0.25 530 -Safety & Emergency Response 4.00 0.00 0,00 0.00 0.50 1.00 5.50 0.00 5.50 5.50 5.50 5,00 5.00 0.00 Total Human Resources 12.00 0.00 2.25 0.00 0.50 1.00 16.76 0.50 16.26 16.25 16.25 15.75 14.5 0.50 610 -Technical Services Admin 1.00 0.00 0.75 0.00 0.00 0.00 1.75 2.25 4.00 6.00 5.00 5.00 5.00 3.25 620 -Environmental Compliance & Mo 17.00 0.00 0.00 0.50 0.50 1.00 19.00 2.25 21.25 21.50 18.50 18.50 18.50 -0.50 630 -Environmental Laboratory 30.00 1.50 0.00 0.00 0.50 1.00 33.00 2.00 35.00 30.00 29.00 29.00 28.00 -4.00 640 -Source Control 36.00 0.00 0,75 0.00 0.00 0,00 36.75 2.00 38.75 36.75 35.75 34.75 33.75 -1.00 Total Technical Services 84.00 1.50 1.50 0.50 1.00 2.00 90.60 8.60 99.00 94.25 88.25 87.25 85.25 -2.26 710 -Engineering Administration 3.00 0.00 o.oo 0.00 0.00 0.00 3.00 o.od 3.00 3.00 3.00 3.00 3.00 0.00 720 -Planning & Design Engineering 28,00 0.00 0.75 0.00 0.50 0.00 29.25 2.25 31.50 31.50 31.50 31.50 31.50 2.25 730 -Construction Management 35.00 0.00 o.oo o.oo 0.00 0.00 35.00 2.00 37.00 37.50 36.50 36.50 36.50 1.50 Total Engineering 66.00 0.00 0.75 0.00 0.50 0.00 67.26 4.25 71.50 72.00 71.00 71.00 71.00 3.75 810 -0 & M Administration 2.00 0.00 0.00 0.00 0.00 0.00 2.00 0.00 2.00 2.00 2.00 2.00 2.00 0.00 820 -0 & M Process Support 8.00 0.00 0.00 0.25 1.00 0.00 9.25 2.00 11.25 10.25 9.25 8.25 8.25 0.00 830 -Plant 1 Operations 37.00 0.00 0.00 0.00 0.00 o.oo 37.00 0.00 37.00 37.00 35.00 35.00 35.00 -2.00 840 -Plant 2 Operations 42.00 0,00 0.00 o.oo 0.00 1.00 43.00 0.00 43.00 41.00 37.00 37.00 37.00 -6.00 850 -Mechanical Mtce 52.50 0.00 0.00 0.00 0.00 0.00 52.50 2.00 54.50 50.50 47.50 46.50 44.50 -5.00 860 -Electrical & Instrumentation Mice 58.50 0.00 0.00 o.oo 0,00 0.00 58.50 0.00 58.50 58.50 57.50 56.50 56.50 -1 .00 870 -Cogeneration 10.00 0.00 0.00 0.00 0.00 1.00 11.00 2.00 13.00 13.00 13.00 13.00 13.00 2.00 880 -Air Quality & Special Projects 8.00 0.00 0.00 0.00 1.00 0.00 9.00 -1.00 8.00 8.00 7.00 7.00 7.00 -2.00 Total Operations & Maintenance 218.00 0.00 0.00 0.25 2.00 2.00 222.25 6.00 227.26 220.25 208.25 205.25 203.25 -14.00 Total StafflnQ 615.00[ 2.001 4.601 0.761 4.001 6.76 533 26.76 669.76" 649.00 621.50 515.60 607.76 , -11.50 g:\excel.dta\hr\510\steeves\EMPDIV98 Performance to 5-Y ear Staff mg Plan 570 ~-----------------------------~ 560 550 ··-·-· ----·----·--~---.. • . ... . .... . 540 I ~ .-::::::"" ~ -. ·-• , • -.. • I .... ... • 530 ,,., -'• • ... • -520 '4 510 ..,_ FIE Headcount --•--5 YearStaffmg Plan 500 -1--........,......-----,--..----~-----r------.---.-----.-------r------.---.----+------r------.---.------.-----..----,..--~~~-~~-----1 J A S O N D J F M A M J J A S O N D J F M A M J I FY 97-98 I FY 98-99 FAHR COt-l)MITTEE Meeting Date To Jt. Bds. 07/15/98 AGENDA REPORT Item Number Item Number 4 Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: PROPOSAL TO SECURE A COMPETITIVELY BID DEBT SERVICE RESERVE FUND INVESTMENT AGREEMENT FOR THE DISTRICT'S SERIES "C" CERTIFICATES OF PARTICIPATION (FAHR98-55) GENERAL MANAGER'S RECOMMENDATION That the Gommittee: 1. Authorize staff to proceed with competitively bidding, selection, and execution of a debt service reserve fund Investment Agreement for the Series "C" COP. 2. Authorize staff to execute agreements with Public Financial Management, investment advisor, in an amount not to exceed $25,000, and Orrick, Herrington & Sutcliffe, bond counsel, in an amount not to exceed $7,500, for professional services in connection with a debt service reserve fund Investment Agreement for the Series "C"COP. SUMMARY A review of arbitrage management strategies and investment alternatives has been completed for the Debt Service Reserve Funds associated with the District's Certificates of Participation (COP) borrowings. It is recommended that the District retain professional advisors and special counsel and competitively bid for an Investment Agreement for the Series "C" Debt Service Reserve Fund. This would enable the District to recoup approximately $503,000 in additional arbitrage earnings over a five- year period for the Series "C" Debt Service Reserve Fund. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. ~. Not applicable (information item) \lnldonldata1~.dlalfin\2101crane\FAHR\FAHR98Ully\FAHR98-55.doc Page 1 ADDITIONAL INFORMATION Background Last year, with the objective of minimizing the District's "positive arbitrage rebate" payments to the federal government, staff reviewed the positive and negative arbitrage positions of the District's Certificates of Participation (COP} long-term borrowings. Working with boncl counsel, and the District's arbitrage rebate calculation consultant (Orrick, Herrington & Sutcliffe), we successfully reduced the District's arbitrage payment to the U.S. Treasury for the Series "B" COP, by $15,000 (from $25,000 to $10,000}. With assistance from the investment advisory group at Public Financial Management (PFM), we completed a more detailed analysis of arbitrage management strategies and investment alternatives that could be used to manage the District's arbitrage exposure in connection with the Debt Service Reserve Funds for the District's COPs. A copy of the report prepared by PFM is included as Attachment 1. The analysis showed that the District's Series 11C" debt service reserve fund has accrued approximately $503,000 of "negative arbitrage" as of April 7, 1998, the most recent arbitrage rebate computation date. The "negative arbitrage" resulted from the collapse of the Orange County Investment Pool (OCIP}, and the loss of earnings to the Series "C" debt service reserve fund because the reserve fund was invested in the OCIP. This amount represents the additional earnings that the District could realize without needing to make a "positive arbitrage rebate" payment to the U.S. Treasury. PFM recommended an Investment Agreement for the Series "C" debt service reserve fund for the purpose of recouping the "negative arbitrage" that has accumulated to date. The bond coven-ants for the Series "C" COP include Investment Agreements as an authorized investment for the debt service reserve fund. In today's interest rate environment, the Series "C" debt service reserve fund could be invested in an Investment Agreement that would "lock in" a variable interest rate at a spread of at least 125 basis points above the interest rate, or arbitrage yield of the COP, which would generate sufficient earnings to recoup the $503,000 of "negative arbitrage" for the Series "C" debt service reserve fund, by approximately January 1, 2003. At current rates, the estimated interest earnings from the Investment Agreement would approximate $2.2 million over its five-year term:. Investment Agreement An Investment Agreement is recommended for the Series "C" debt service reserve fund for several reasons. One advantage of this strategy over the current money market investment fund currently held by the Trustee Bank, is that an Investment Agreement can guarantee that the District will recoup all negative arbitrage. \lradon\data1~.dla\fin\210'crane\FAHR\FAHR98\July\FAHR98-55.doc Page2 While the money market fund is presently earning a higher interest rate (approximately 5%) than the COPs' arbitrage yield (averaging 3.3%}, there is no guarantee that the fund will continue its past performance, especially if interest rates fall to lower levels in the future. It is possible that future yield spreads between money market rates and the COPs' arbitrage yield would be low enough that all "negative arbitrage" amounts would not be recouped even if invested to the final maturity of the Series "C" COP in August, 2017. Another advantage of the Investment Agreement is that it would avoid the risk of market price losses because it could be redeemed at par in the event that the District chooses to refund the COPs, or to accelerate the retirement of the COPs, or in the event funds are required to pay debt service. The Investment Agreement would be structured to require the provider to maintain a minimum "AA" rating; to accrue interest daily at a positive spread to the arbitrage yield of the Series "C" COPs; and to make monthly interest payments on behalf of the District to the Trustee Bank for the five-year period of the Agreement. When the Investment Agreement matures, there are several investment options available which would allow the principal amount of the Series "C" debt service reserve fund to be invested so that its future arbitrage yield would be approximately matched to the COP's arbitrage yield, thus avoiding future earnings greater than the arbitrage yield which would result in a "positive arbitrage rebate" payment to the federal government. Examples of these investment options include tax-exempt municipal securities, or State & Local Government Series securities, which are issued by the U.S. Treasury. Alternatively, another Investment Agreement could be structured to pay the District exactly the COP's arbitrage yield, but include flexible termination provisions for the District. It should be noted that if the District receives a repayment of funds from a future Orange County Investment Pool bankruptcy settlement for the Series "C" debt service reserve fund, the Series "C" COP could be subject to an off-setting positive arbitrage payment to the U.S. Treasury. However, it is anticipated that more complete information will become available on this issue prior to the maturity of the proposed five-year Investment Agreement, and would be fully considered in analyzing and selecting a follow-on investment vehicle for the Series "C" debt service reserve fund. Competitive Bid Process Bidding specifications and documents have been drafted and reviewed by staff, PFM, Orrick, Herrington & Sutcliffe, FGIC, the insurance provider for the Series "C" COPs, and State Street Bank and Trust Company, the Trustee. These bidding specifications are included as Appendix 2. The process of competitive bidding, selection of a provider, and settlement of the Investment Agreement would require approximately thirty days following authorization from the Board of Directors to proceed. \\radonldala1\wp.dlallin\210'uane\FAHRIFAHR98Uuly\FAHR98-55.doc Page3 Transaction Costs Certain costs would be incurred in securing an Investment Agreement for the Series "C" debt service reserve fund. First, the bidding agent fee, not to exceed $25,000, would be paid to PFM by the Investment Agreement provider on behalf of the District. Legal costs related to document preparation and review by Orrick, Herrington & Sutcliffe are estimated not to exceed $7,500. Costs related to the Trustee Bank, such as set-up fees, transaction and collateral valuation costs, will be the responsibility of the Investment Agreement provider. Letter agreements will be executed with PFM and Orrick, Herington & Sutcliffe, upon review and approval of General Counsel. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. Report entitled "Review of Investment Options for Bond Reserves, Arbitrage Management Program" 2. Investment Agreement Bid Documents \lradonldata1wvp.dta\finl210'.crane\FAHRIFAHR98\July\FAHR98-55.doc Page4 ORANGE COUNTY SANITATION DISTRICT Review of Investment Options for Bond Reserves Arbitrage Management Program July 15, 1998 Public Financial Management, Inc. Atlanta • Austin • Boston • Cleveland • Dallas • Fort Myers • Harrisburg • Memphis • Minneapolis Newport Beach• New York• Orlando• Philadelphia• Pittsburgh• San Francisco• Trenton• Washington D. C. Table of Contents Review of Investment Options for Bond Reserves Arbitrage Management Program I. Executive Summary ................................................................................................................................. 3 A. Purpose of Study ................................................................................................................................................... 3 B. Scope of Study and Issues Addressed ................................................................................................................... 3 C. Results of Study ..................................................................................................................................................... 3 D. Arbitrage Compliance Statement/Investment Status and Summary ...................................................................... 4 E. Conclusions and Recommendations .................................................................................................................... 4 II. Investment Options Review .................................................................................................................... 5 A. Reserve Fund Investment Introduction .................................................................................................................. 5 B. Investment Strategies ............................................................................................................................................ 7 I. Open Market Investment Securities ................................................................................................................. 10 (a) Intermediate-Term and Long-Term Government Securities ....................................................................... 10 (b) Callable Federal Agency Securities .................................... : ....................................................................... 12 2. State and Local Government Series Securities (SLGS) ................................................................................... 13 3. Investment Agreements .................................................................................................................................... 14 (a) Discussion .................................................................................................................................................. 14 i. Collateralized Versus Uncollateralized Agreements ................................................................................. 14 ii. Investment Agreements (GICs) ................................................................................................................ 15 iii. Variable Rate Agreements ...................................................................................................................... 16 (b) Types of In vestment Agreements ............................................................................................................... 17 i. Collateralized Investment Agreements or Repurchase Agreements (Repos) ............................................ 17 ii. Government Obligation Put Agreements (Puts) ....................................................................................... 18 iii. Forward Rate Agreements (FRAs) .......................................................................................................... 18 iv. Interest Rate Collars ................................................................................................................................ 20 v. Interest Rate Caps (Caps) ......................................................................................................................... 21 vi. Interest Rate Swaps (Swaps) ................................................................................................................... 22 vii. Tax-Exempt Options or Tax-Exempt Forward Delivery Agreements .................................................... 24 4. SEC Registered or Non-Registered Funds ................................ : ...................................................................... 27 (a) SEC Registered Funds ................................................................................................................................ 28 (b) Non-Registered Funds ................................................................................................................................ 30 III. Conclusions .......................................................................................................................................... 32 IV. Recommendations ............................................................................................................................... 34 A. Series 1993 Refunding COPs .............................................................................................................................. 34 B. Series "B" and Series 1992 COPs ...................................................................................................................... 34 C. Series "C" COPs .................................................................................................................................................. 34 I. Background ............................................ : ........................................................................................................ 35 2. Objectives ........................................................................................................................................................ 35 3. Earnings Comparison ...................................................................................................................................... 35 4. GIC Structure ................................................................................................................................................... 36 5. Process ............................................................................................................................................................ 36 V. Appendices ........................................................................................................................................... 39 A. Appendix: Investment Agreement Provider Matrix ............................................................................................ 39 B. Appendix: Draft Pre-Qualification Request for Proposal .................................................................................. .40 Draft Bid Specification for Series "C" COPs Investment Agreement... ............................................ .40 Public Financial Management, Inc. 2 Orange County Sanitation District Executive Summary I. Executive Summary A. Purpose of Study The Orange County Sanitation District (the "District") engaged Public Financial Management, Inc. ("PFM") to review the current arbitrage and investment status of Bond Reserve Funds related to outstanding Certificates of Participation ("COPs") issued by the District between 1990 and 1993, and to evaluate alternative investment strategies that will minimize n~gative arbitrage accrued to date and maximize investment return while providing the required safety and liquidity. B. Scope of Study and Issues Addressed This study covers PFM's Investment Options Review and our Conclusions and Recommendations regarding the District's Bond Reserve Funds. The Investment Options Review covers: • The Reserve Fund Investment Introduction, which discusses both the general principles of investing Reserve Funds and a specific review of the District's Reserve Funds. • The Investment Strategies section provides detailed descriptions of twelve specific types of Reserve Fund investments grouped into four broad categories: 1) Intermediate-Term and Long-Term Government Securities 2) State and Local Government Series (SLGS) Securities 3) Investment Agreements 4) Securities and Exchange Commission (SEC) Registered and Non-Registered Funds. C. Results of Study This Study reveals that two of the COPs Debt Service Reserve Funds (1990-92 Series "C" and Series 1993 Refunding COPs) have accrued substantial negative arbitrage and are thus candidates for any one of several possible investment strategies aimed at maximizing yield and recouping the accrued negative arbitrage over the remaining life of the respective COPs issues. However, we recommend Investment Agreements as the most appropriate investment for these funds. Public Financial Management, Inc. 3 Orange County Sanitation District Executive Summary D. Arbitrage Compliance Statement/Investment Status and Summary PFM has reviewed the arbitrage calculations and related opinions prepared by Orrick, Herrington and Sutcliffe LLP ("OH&S"). Our investment analysis is based in part c:in the amounts of negative arbitrage calculated to date for various COPs. The OH&S reports indicate that the District are in compliance with all requirements of U.S Treasury arbitrage regulations. The summary matrix below lists current assets, accrued rebate liabilities and yield limitations for each of the District's COPs. , ...... ,,.. ·-Dated Date Issue Date Par Amount FixedNariable Rate Bond Yield Refunded -Yes/No Final Redemption or Mat. Date a--" v--• Bond Year Election-Yes/No Next Bond Year Next Rebate Payment Bond Year "---··•·••·· at o ........ Last Computation Date Last Rebate Liability Last Payment Amount Allocable GroH Proceed• ... ,,, '--· -,., .... Reserve Fund Escrow Fund Total: ,, ____ ,,_ r:: ..... ,,, ........... Type Approximate Yield Al•f•• Table I Orange County Sanitation District Arbitrage Rebate Compliance Summary 1990·92 Serles A 41612-STT 12/05/90 12/05/90 $100,000,000 Variable Not Calculated No 08/01/15 Yes 11/01/96 11/01/00 Not Applicable Not Applicable Not Applicable Not Funded Not Applicable 0.00 Not Applicable Not Applicable Elected penalty. Met all ' spend down requirements. If converted to fixed rate, reserve will be subject to rebate. 1990-92 SerlH B 4Hl12-~7A 05/01/91 05/07/91 $117,555,000 Fixed 6.903266% Yes 08/01/04 Yes 05/06/97 05/06/00 05/06/96 $28,723.66 $25,800.00 4,576,651.64 2,850,144.04 7,426,795.68 Invest Agmt 8.000% Elected penalty. Met all spend down requirements. 1990-92 · SeriH C 41B12-~7!1 09/01/92 09/01/92 $98,500,000 Variable 3.280873% No 08/01/17 Yes 08/01/98 08/01/02 04/07/98 ($502,899.50) Not Applicable 9,850,000.03 Not Applicable 9,850,000.03 State Street Money Market Prepared by: Orrick, Harrington & ·Sutcliffe, LLP. -Financial Services Group E. Conclusions anl Recommendations Serie• 1992 Serie• 1993 411i12-741 411i12.,~~g 12/03/92 09/21/93 12/03/92 09/21/93 $160,600,000 $46,000,000 Synthetic Fixed Synthetic Fixed 5.880541% 4.903786% No No 08/01/13 08/01/16 Yes Yes 07/01/97 09/21/98 07/01/97 09/21/98 07/01/96 09/01/97 $47,958.42 ($1,306,708.82) Not Applicable Not Applicable 15,056,455.09 4,549,621.56 144,476,002.14 39,546,260.19 159,532,457.23 44,096,081.75 lnvestAgmt Fidelity 7.050% Money Market 04/07/98 Based on the findings of this Study regarding the District's accrued negative arbitrage, and on the advantages and disadvantages of various types of investment strategies which we evaluated, we conclude that the District should consider Investment Agreements to provide maximum return in conjunction with safety, liquidity and upfront payments. The Conclusions from this Study are enumerated in Section ill, and our specific Recommendations are detailed in Section IV. Public Financial Management, Inc. 4 Orange County Sanitation District Investment Options Review II. Investment Options Review A. Reserve Fund Investment Introduction General objectives for Debt Service-Reserve Funds are: 1) Maximize returns on a cumulative basis at least equal to the arbitrage yield of the COPs while limiting risk of principal loss. 2) Provide liquidity for debt service payments. Accordingly, there are several factors which guide the formulation of Debt Service Reserve Fund investment strategies: The arbitrage yield of If a Debt Service Reserve Fund is subject to the Arbitrage Rebate the bonds Requirements of the U.S. Treasury, the basic goal of the investment strategy will be to maximize the cumulative yield on the investments in all funds, of which the DSRF proceeds may only be one part, up to the bond yield while maintaining a portfolio of secure permitted investments. The mark-to-market requirements Earnings transfers , Often, Reserve Fund investments must be "marked-to-market" at some specific time interval in order to ensure that enough cash would be available from the sale of these securities to cover the required debt service payments, usually for a 1 year period. Since these funds may be used to pay debt service, the securities must not be so volatile as to be subject to excessive market risk. Market value deficiencies will impact cash flow negatively if additional funds must be added to the reserves to make up any shortfalls. The dates of any required earnings transfers are important in order to place investment maturities as close to that date as possible to minimize reinvestment at very short-term rates. Public Financial Management, Inc. 5 Orange County Sanitation District The likelihood that the fund may be · necessary to cover debt service Maturity limitations Investment Options Review If it is likely that a portion of a Reserve Fund will need to be liquidated to pay debt service, the duration of that portfolio should be slightly less in order to minimize the potential market risk, as described above. Debt Service Reserve Funds may have maximum maturity limitations imposed by bond indentures or bond insurers. The maximum maturity is an important factor in determining the correct balance of short-and long-term investments to produce the desired average maturity and duration, as well as the overall portfolio yield. Permitted investments Differentiating the characteristics of various permitted investments will enable an issuer to optimize reserve investments in consideration of cash flow, liquidity, issuer preferences and other very specific requirements. With these guiding factors to Debt Service Reserve Fund investment strategies in mind, we have prepared a brief narrative on each of the County Sanitation District's COPs issues: Series ''A" Certificates of Participtltion Series "B" Certificates of Participation The District's Series "A" COPs were issued in December 1990 in a variable rate mode. The District elected the penalty in lieu of rebate and successfully met all spend down requirements. There are no remaining proceeds allocable to the Series "A". The District's Series "B" COPs were issued in May 1991 in a fixed rate mode with an arbitrage yield of 6.90%. The District elected the penalty in lieu of rebate and successfully met all spend down requirements. As of October 1997, there were remaining proceeds in the Debt Service Reserve Fund of $4.6 million invested at 8.0% in an Investment Agreement with Bayerische Landesbank (BLB), a "AAA" rated German Bank, and additional proceeds in an Escrow Fund of $2.8 million. Public Financial Management, Inc. 6 Orange County Sanitation District 1990-92 Series "C" Certificates o.f Participation Series 1992 Certificates of Participation Series 1993 Certificates of Pa_rticipation Investment Options Review The District's Series "C" COPs were issued in September 1992 in a variable rate mode which has averaged 3.28% as of April 7, 1998, the most recent rebate computation date. Although the Bond Yield is currently just over 3.28%, the District has incurred substantial negative arbitrage due to losses related to investment in the Orange Investment County Pool. The Reserve Fund of $9.85 million is currently invested in an insured money market fund at State Street Bank, the Trustee. The District's Series 1992 Refunding COPs were issued in December 1992 in a variable rate mode which was synthetically fixed to a Bond Yield of 5.88%. As of July 1996, there were remaining proceeds in the Debt Service Reserve Fund of $15 million invested at 7.05% in an Investment Agreement with AIG Matched Funding Corporation (AIG), a "AAA" rated insurance concern, and additional proceeds in an Escrow Fund of $144 million. The District's Series 1993 Refunding COPs were issued in September 1993 in a variable rate mode which was synthetically fixed to a Bond Yield of 4.9%. Although the Bond Yield is relatively low, the District has incurred substantial negative arbitrage due to losses related to the Orange County Investment Pool. The Reserve Fund of $4.6 million is invested in a Fidelity money market fund at Texas Commerce Bank, the Trustee, with additional proceeds in an Escrow Fund of $40 million. B. Investment Strategies In this section, we analyze various investment options to enhance yields and reduce interest rate risk, including liquidity, market value and volatility risk for the Debt Service Reserve Funds. Our discussion of investment optimization strategies will focus on the Reserve Funds associated with the Series C and 1993 Refunding COPs, which have accrued negative arbitrage. Over time, these funds have the greatest effect on the cumulative arbitrage rebate position, cash flows and market value sufficiency. Below is an expanded discussion of some general principles applicable to Debt Service Reserve Fund investments, which are subject to arbitrage rebate. Public Financial Management, Inc. 7 Orange County Sanitation District Investment Options Review First, the District's Reserve Funds should be invested in a manner that protects them from credit risk, provides liquidity to make necessary payments and, within these constraints, maximizes investment return. This will mean maximizing returns in order to reach a point where there is no negative arbitrage. Beyond this point, yield maximization may not be as important if excess earnings must be rebated to the United States Treasury. In these cases, it may be desirable to invest in shorter-term securities which have lower valuation risk, or in tax-exempt securities which may have a lower yield than comparable-maturity taxable investments, but have income that is not subject to rebate. Once in a positive arbitrage situation for any issue, the goal becomes to maximize retainable earnings, or earnings that will not have to be rebated to the U.S. Treasury. A second general factor to be considered is the trade-off between market value risk and return. Generally, longer-maturity investments produce higher returns, but they also have more volatility. The greater a security's volatility, the larger the increase or decrease in its price if interest rates fall or rise, respectively. Marking securities to market will produce unrealized gains and losses which, although they do not affect yield to maturity, can have a significant effect on interim cash flows. This is demonstrated in the table on the following page, using a 10-year Treasury Note having a duration of about 7 .5 years and a yield of about 5.38%. For every 100 basis point change in interest rates, the value of the security will change by about 7.5%; such a move upward over one year will more than wipe out the earnings on this security for that year. Because of increasing volatility at longer durations, where Reserve Funds must be marked-to-market, we consider direct investment in securities with durations in excess of five years to carry moderate to high risk. Therefore, the District should be cautious about direct investments in securities with extended maturities without fully analyzing and planning for unanticipated changes in interest rates and their consequent effect on fund value. Public Financial Management, Inc. 8 Orange County Sanitation District Purchased Investment Interest Rate 2 Year Security 5.41% 3 Year Security 5.40% 5 Year Security 5.41% IO Year Security 5.38% Investment Options Review Market V aloe Risk vs Return Investment Scenarios for $10 Million Debt Service Reserve Fund Market Value After One Year lncludine: Interest Earnine:s Market Value at Interest Rates Increase Interest Rates Increase Interest Rates Increase Purchase 100 Basis Points 200 Basis Points 300 Basis Points $10,000,000 $ I 0,444,000 $10,3 I 6,000 $10,200,000 $10,000,000 $10,296,000 $10,139,000 $10,007,000 $10,000,000 $10,184,000 $9,788,000 $9,543,000 $10,000,000 $9,969,000 $9,372,000 $8,746,000 RESERVE REQUIREMENT = $10 000,000 Third, there are a number of investment strategies and produ·cts that have been designed to avoid the volatility of mark-to-market requirements, but although these products may have accomplished this end in the past, there is no guarantee that they will continue to achieve this end in the future. This is particularly true of Investment Agreements and Contracts ("GICs") in light of new financial reporting requirements, however, we do not believe these requirements preclude investment in a Debt Service Reserve Fund GIC for these reasons we cite below. As the District is aware, new reporting requirements for certain investments, including Investment Agreements, have become effective for reporting periods beginning after June 15, 1997. These reporting requirements were included in Statement No. 31 of the Governmental Accounting Standards Board ("GASB"). Previously, governmental entities were not required to report the fair market value of Investment Agreements for reporting purposes. Under GASB 31, certain types of Investment Agreements must be reported at fair market value. The rule states that only "participating GICs" are covered by this rule. "Participating GICs" are contracts whose market value is affected by market (interest rate) changes. If a GIC is negotiable or transferable, or its redemption value considers market rates, then GASB 31 says the GIC should be considered participating. GASB 31 must be considered when evaluating the use of GICs. While GASB 31 affects financial reporting requirements for GICs, it should not affect the treatment of GICs for the purposes of complying with bond covenants. For example, .a GIC Public Financial Management, Inc. 9 Orange County Sanitation District Investment Options Review for a Debt Service Reserve Fund may not be subject to a market valuation for purposes of maintaining the appropriate reserve requirement, but could be subject to a market valuation requirement for financial reporting purposes. Different conclusions could be reached regarding the value of a GIC depending on whether the valuation is for reporting purposes or for other reasons. In general, there are several approaches for investing Reserve Fund proceeds subject to relatively low arbitrage yields: 1. Invest in intermediate-term or longer-term Open Market Securities which will yield up to 200 basis points higher than the arbitrage yields for the Series "C" or 1993 COPs, but could expose the District to substantial market risks if interest rates rise and funds are required to cover a Debt Service Fund shortfall. 2. Similar to investing in Open Market Securities, the District could invest in State and Local Government Series ("SLGS") Securities which would yield slightly less than open markets but would face similar exposure to interest rate increases 1• 3. Enter into a form of Investment Agreement, which will lock in arbitrage earnings and provide liquidity provisions for any potential debt service shortfalls, but may expose the District to a counterparty's credit risk. 4. Invest in Securities and Exchange Commission (SEC) registered or non- registered funds. Brief discussions and indicative yields for a variety of investment alternatives follow. J. Open Market Investment Securities (a) Intermediate-Term and Long-Term Government Securities The District could buy intermediate-term or longer-term Open Market Government Securities in order to improve the earnings on the Reserve Funds for the Series "C" and Series 1993 COPs, which are currently invested in money market funds and have accrued significant negative rebate liabilities to date. However, the arbi!fage yields on the Series "C" and Series 1993 COPs are relatively low, on average just over 3% in a variable rate mode 1 Since October 28, 1996, SLGS can be redeemed on a full marked-to-market basis. Refer to Treasury Regulations CFR Part 344, Section 344.5 regarding Redemption in the appendix. Public Financial Management, Inc. 10 Orange County Sanitation District Investment Options Review and under 5% synthetically fixed, respectively. Therefore, longer term investments may potentially recoup negative arbitrage accrued to date and lock in positive arbitrage. The District could buy securities with yields ranging from 5.41 % for 5 years to 5.62% for 20 years. In general, issuers often elect to invest in securities with maturities coinciding with related call dates to provide flexibility to caq issues or replace Reserve Funds in the future. Specifically, because the District's Series "C" COPs are callable with minimal notice, and the Series 1993 Refunding COPs are in a synthetically fixed swap and do not provide a call feature, investment to call is not an appropriate strategy. However, the District would accept some level of market exposure by investment in intermediate or longer-term securities because of mark-to-market requirements and if: 1) Reserve Funds are needed for debt service shortfalls; 2) The amount of debt service shortfall is in excess of investment cash flow or immediately available funds; or 3) The interest rate environment is substantially higher at the time of the shortfall. Specifically for the District's Series "C" COPs, which are in a variable mode, a fixed rate investment will expose the District to substantial risks of incurring negative arbitrage in a higher interest rate environment. Any intermediate or longer-term investment will reduce the District's financial flexibility to release the Series "C" Reserve Fund. The following table illustrates the effect of interest rate changes on the market value of a security purchased for the Series 1993 Reserve Fund with maturities of 5, 7 and 10 years, versus a security purchased for the Series 1993 Reserve Fund with a maturity equal to the final maturity of the COPs. Public Financial Management, Inc. 11 Orange County Sanitation District Investment Maturity Interest Rate 5 Years to 2003 5.49% 7 Years to 2005 5.52% 10 Years 10 2008 5.44% To Final Maturity 5.72% in 2016 Investment Options Review Market Value Risk Versus Return Scenarios for Series 1993 COPs Debst Service Reserve Fund Market Value After One Year lncludin& Interest F.aminl!S Market Value at Interest Rate Increases by Interest Rate lncruse:s by Interest Rate Increases by Purchase 100 Basis Points 200 Basis Points JOO Basis Points 4,493,000.00 4,633,000.00 4,457,000.00 4,214.000.00 4,493,000.00 4,601,000.00 4,355,000.00 4,147,000.00 4,493,000.00 4,425,000.00 4,163,000.00 3,887,000.00 4,493,000.00 4,361,000.00 3,981,000.00 3,675,000.00 Reserve Reauirement = $4,493,540 Clearly, strategies to improve returns by investing in longer-term securities would expose the District to market value risk. (b) Callable Federal Agency Securines When initially purchased, the investor of a callable investment is able to lock in an attractive, above market yield either to the maturity date or, if the issue is called, the call date. However, should interest rates fall, the investor may not be able to benefit from price appreciation because the issuer may redeem the securities, exposing the investor to reinvestment risk since the investor must now reinvest proceeds at lower interest rates. At purchase, the investor is compensated for the additional risk by getting the bond at a higher yield relative to comparable maturity securities. Many callable securities perform poorly when rates increase. Investors purchasing callable securities with a coupon that is higher than current market rates will generally assume that the obligation will be called on the first available call date. Therefore, the price and yield are calculated to the call date instead of the final maturity date. When the yield curve is upwardly sloped, these callable securities will pay a return that is lower than other securities with a comparable final maturity. If interest rates rise, it becomes less likely that the security will be called. The security is then priced to the final maturity date instead of the call date. When this happens, the market price of the security can fall dramatically. Public Financial Management, Inc. 12 Orange County Sanitation District Investment Options Review One means of maximizing earnings in the next several years is to invest in a higher yielding Federal Agency security which would be callable before its maturity. These investments are U.S. Government obligations and hence have minimal principal risk. Because they are callable they pay a higher rate than non-callable investments with a similar maturity. Because the Series "C" and 1993 Series Refunding COPs have immediate call features or no call features, respectively, investing in callable Federal Agencies is not an applicable strategy. 2. State and Local Government Series Securities (SLGS) As an alternative to investing in the Open Market Securities above, the District could buy State and Local Government Series Securities (SLGS) securities which are similar to U.S. Treasury bills, notes, and bonds, but possess differences in pricing features and do not trade in the open market. The pricing features of SLGS result in pricing about 0.05% below the equivalent maturity U.S. Treasury securities. Thus, the District could buy SLGS securities with yields ranging from 5.36% for 5 years to 5.57% for 20 years. If the District was to invest in SLGS, the same guidelines for determining the maturity of investments could be used as with Open Market Securities. As with Open Market Securities, the District would accept some level of market exposure by investment in intermediate or longer-term securities because of mark-to-market requirements or if: 1) Reserve Funds are needed for debt service shortfalls, 2) the amount of debt service shortfall is in excess of investment cash flow or immediately available funds, or 3) the interest ~ate environment is substantially higher at the time of the shortfall. Additional drawbacks to the District in purchasing SLGS for Reserve Fund proceeds is the requirement that SLGS securities be redeemed with 10 days advance notice at a market- based formula. Therefore, the use of SLGS as Reserve Fund investments would not be advantageous to the District because SLGS would expose the District to market risk similar to that of open markets. Moreover, SLGS yield less than Ope~ Market Securities and have more restrictive subscription and redemption requirements. Public Financial Management, Inc. 13 Orange County Sanitation District Investment Options Review 3. Investment Agreements (a) Discusswn i. Collateralized Versus Uncollateralized Agreements The following investment strategies employ the use of various forms of Investment Agreements or Guaranteed Investment Contracts ("GICs"). Historically, these investment strategies and products have been designed to avoid the volatility of mark-to-market requirements. In general, the bond insurers' investment restrictions allow issuers to enter into two types of Investment Agreements for Reserve Fund proceeds. • An Uncollateralized Agreement, providing collateral or termination options with downgrade below "AA" and requiring termination at downgrade below "A," is permitted with counterparties rated "AA" or better. Representative counterparties in this category are highly rated banks such as JP Morgan or Republic, or highly rated insurance companies such as AMBAC or MBIA. • A Collateralized Agreement or Repurchase Agreement, providing termination options with downgrade below "A," is permitted with counterparties rated "A" or better. Representative counterparties in this category are "A" rated banks such as Chase Manhattan or Morgan Stanley. A matrix summarizing investment providers' credit ratings is included as supplemental information in the Appendix. It is our experience that Collateralized Investment Agreements are sometimes preferred over Uncollateralized Investment Agreements by issuers for general preference or perception as opposed to actual bankruptcy protection. For example, in a Repurchase Agreement the securities are purchased as collateral. However, termination provisions should be built in if the counterparty's credit drops below "A." There are some bankruptcy provisions for Repurchase Agreement with maturities under one year that provide greater security for the investor. However, few agreements have a final maturity under one year. Therefore, since most agreements extend longer than one year, there is not an advantage for issuers to enter into Repurchase Agreements versus Uncollateralized Investment Agreements. An Uncollateralized Agreement with a more highly rated counterparty provides greater security Public Financial Management, Inc. 14 Orange County Sanitation District Investment Options Review than a Repurchase Agreement with a lower rated counterparty. Uncollateralized Agreements offer higher yields. Moreover, the The 1994 Orange County bankruptcy created concern in · the Investment Agreement marketplace which focused on two issues. The first issue was the apparent inability of the rating agencies to detect or provide ample or effective warning of overnight bankruptcies caused by investment portfolio losses. The defaults in the insurance industry, and to a lesser extent the b_anking indl!-stry, have been caused by investment portfolios in junk bonds and real estate. Second, collateral on Investment Agreements only protects issuers to the extent it is not frozen in bankruptcy proceedings. In the Executive Life default, it took municipal issuers over a year to sue for repayment of approximately 90% of the invested assets. Despite some initial concerns, the Orange County proceedings have not changed the general perception of collateral rights in the marketplace. One positive result is that there has been heightened scrutiny of institutions providing these types of agreements. In general, we recommend that issuers include optional termination provisions at downgrade and bid the agreement among "AA" and "AAA" rated firms to limit credit exposure to the Investment Agreement counterparty. ii. Investment Agreements (G/Cs) The District may enter ·into an Uncollateralized Investment Agreement or "GIC" to receive a guaranteed rate of return with a bank, broker/dealer or insurance company. Typically, Investment Agreement yields approximate yields for U.S. Government securities with similar maturities. GICs have several attributes which make them attractive options for Reserve Funds. First, if properly structured and the provider is a strong creditor, GICs are very safe investments. Second, GICs could be utilized to lock in positive arbitrage on both the Series "C" and Series 1993 COPs. Third, a GIC could be structured to provide the liquidity for the Reserve Funds as needed. We recommend competitively bidding these types of Agreements among "AA" and "AAA" rated banks or insurance companies, and including optional termination provisions and Public Financial Management, Inc. 15 Orange County Sanitation District Investment Options Review collateral requirements in the event of a downgrade of the counterparty. GICs will provide the highest yield except for agreements with embedded option structures. All forms of GI Cs can be customized to an investor's specific requirements. For example, an up-front payment option may allow the District to recoup losses to the Series "C" and 1993 Refunding Reserve Funds resulting from the Orange County Investment Pool's bankruptcy. These funds could be transferred or repaid to the District's General Fund and would be deemed spent for arbitrage purposes and therefore would no longer be subject to rebate requirements. Another GIC customization option would be an agreement which would offer a variable rate of return, as discussed below. iii. Variable Rate Agreements The District's Series "C" COPs are in a variable rate mode with an arbitrage yield averaging approximately 3.28%. In general, there are several approaches for investing variable-rate proceeds. The first is the District's current investment approach, which is to invest in Taxable Money Market Funds. Typically, this approach ensures that positive arbitrage is earned unless: (1) there are investment losses in the fund itself, or (2) unusual negative spreads between taxable and tax-exempt investments occur. The possibility of these situations underscores the fact that investing in Taxable Money Market Funds does NOT guarantee the District will earn positive arbitrage. A second. alternative is to peg the return of the investment to a variable-rate tax-exempt index, allowing the District to lock in a spread over the arbitrage yield. As long as the variable-rate index tracks the actual COPs rates closely, this spread will not be eroded by fluctuating market yields. In the current market, an Investment Agreement would yield from 100 to 150 basis points above the TBMA Index for a 5-year agreement. The TBMA, or ];3ond Market Association Index, formerly known as the PSA (or "Public Securities Association") Index, is a variable tax-exempt weekly index that is reset on a weekly basis. This index is a widely-used reference in the municipal bond market. It may be possible to set the agreement yield at a spread to the District's actual Series "C" yield and potentially lock in a spread for 10 years or Public Financial Management, Inc. 16 Orange County Sanitation District Investment Options Review even to the maturity date of the COPs in 2017. If credit approval can be obtained by the potential GIC providers, which is very likely for a 5 or 10 year agreement, these options will have pricing premiums built in of 15 to 20 basis points to compensate the provider for additional risk. The willingness of most providers to enter into long-term agreements based on a tax-exempt index is vety sensitive to any talk of tax reform. (b) Types of Investment Agreements i. Collateralized Investment Agreements or Repurchase Agreements (Repos) The District may enter into a collateralized Investment Agreement or Repurchase Agreement ("Repo") to receive a guaranteed rate of return and collateral ( or purchased securities for a Repo) from a bank, broker/dealer or insurance company. The structure of a Repurchase Agreement is shown in the chart below: Repurchase Agreement Structure Districts Repo Provider ,, I Debt Service Reserve Fund Securities 3 Cash 5 , , ~r 2 Districts' Securities 4 Account • Provider's era the bmdi.1 or lbc ____. Account Sll'litalion Dililricb) Cash 4 Trustee (seauilie& safelcept by T~ or Cusllldian Bank) I. Districts wire Debt Service Reserve Fund balance to Trustee. 2. Trustee establishes account for Districts and an account for Repo Provider. 3 Repo Provider delivers securities to the Provider's account with Trustee. 4. Trustee transfers securities to Districts' llllstee account and cash to Provider's account as payment for purchase of the securities. S. Trustee sends cash 10 Repo Provider. • Typically, collateral costs range from 10 to 25 basis points depending on the eligible securities requirements. For example, Treasuries are more expensive as collateral than are Agencies. Also, there are premiums for maturity limitations on collateral. Again, we recommend competitively bidding these types of agreements among "AA" and "AAA" rated Public Financial Management, Inc. 17 Orange County Sanitation District Investment Options Review banks or insurance companies and including optional termination provisions and additional collateral requirements in the event of a downgrade of the counterparty. ii. Government Obligation Put Agreements (Puts) A Put Agreement is an option to sell securities at a specified price under specific conditions. The District could buy long-term government obligations and enter into Put Agreements to protect against market value fluctuations of the government securities. A "Put" would allow the District to own long-term government securities and have the option to Put, or sell back, the securities to the counterparty at cost or par if it becomes necessary to draw on the Reserve Funds. The Put eliminates market value risk and the Put fees are deductible for rebate purposes. Essentially, the District would own a longer-term security without being exposed to market value risk. The trade-off is that the yield on a Put is lower than the yield available from just purchasing the same government securities without a Put, since Put fees are deducted from the security yield. However, if the yield on a Put Agreement is above the arbitrage yield, the fees are essentially paid by the Positive Arbitrage. Fees on Put Agreements typically run in the 40 to 70 basis point (0.40% -0.70%) range per year. To meet legal requirements and rating Agency guidelines, the District would be required to competitively bid this type of agreement among "AA" and "AAA" rated banks or insurance companies and include optional termination provisions in the agreement to protect against a downgrade of the counterparty. There are two common Put structures sold to municipal issuers. In the original structure, Put fees are paid from the semi-annual cash flow produced by the government obligations under the Put Agreement. This structure does not provide a "clean" bankruptcy opinion, because the Put Provider has a contractual interest, the future Put fees, in the government obligations. Technically, this constitutes partial ownership of the government obligations. A second structure in which the Put fees are paid up front alleviates the bankruptcy issue. In today's market Put Agreement yields would range from 5.00% for 10 years to 5.20% for 20 years. Public Financial Management, Inc. 18 Orange County Sanitation District Investment Options Review iii. Forward Rate Agreements (FRAs) The District could enter into intermediate and long-term Forward Rate Agreements ("FRAs"), also commonly called Forward (Delivery/Purchase/freasury) Agreements, for the Debt Service Reserve Funds. In a FRA, a counterparty would offer the District a fixed rate over the term of the agreement and agree to sell government obligations which mature prior to the next debt service payment date with a maturity value at least equal to the reserve requirement. Thus, these agreements are also referred to as "Rolling Treasury Agreements." From a credit standpoint, the District would directly own securities as opposed to holding securities as collateral. Therefore, the District would not be exposed to the provider's credit for the investment principal. The only exposure to the provider is for the guaranteed interest rate on the agreement. If the counterparty defaults, the District has modest reinvestment risk since it would be forced to invest at then-current short-term rates that could be lower than the rate on the agreement. In such a case, the District would then only be in the same position as if the agreement was never entered into in the first place. To meet legal requirements and rating Agency guidelines, the District would be required to competitively bid these Agreements among "BBB" and higher rated banks or insurance companies and include optional termination at downgrade provisions and other language to protect the District's interests due to the complexity of these Agreements. The basic structure of an FRA is illustrated in the chart below: Debt Service Reserve Fund Forward Rate Agreement Structure Provider U -Front Pa men1 or Periodic Payment al a Fixed Rate Zero-Coupon Debt Service Reserve Treasuries (i) Cash Deposit Trustee Debt Service Payment © Bondholders <D Debt Service Reserve Funding Districts I . The Districts makes deposit of Reserve Fund amount. Provider has the right to receive this amount periodically in exchange for zero-coupon bonds. · 2. The Treasuries, held by the Trustee, mature as debt service payments are due in case of debt service short-fall. Typically, these types of agreements price about 25 basis points lower than the yield of a government security with a similar maturity depending on the specific agreement criteria. Public Financial Management, Inc. 19 Orange County Sanitation District Investment Options Review iv. Interest Rate Collars An Interest Rate Collar is the combination of a Cap and a Floor to create a "band," or range of possible interest rates between a maximum (set by the Cap) and a minimum (set by the Floor). The use of Variable Rate debt, while allowing the District to take advantage of typically lower short-term interest rates, implicitly means accepting two unattractive features: ( l) variable rates can rise, and (2) variable rates make planning and budgeting for debt service difficult to predict. Moreover, rating agencies and bond insurers may become concerned about the level of variable rate exposure at certain thresholds for certain types of issuers. Interest Rate Caps and Swaps can limit the District's exposure to higher rates or to lock in sp·ecific synthetically-fixed rates. If the District prefers a fixed rate, then Swaps are usually the most efficient tool. Otherwise, if the issuer is comfortable with a range or "band" of potential rates, then hedging products such as Caps or Collars may be preferable. Finally, with Interest Rate Collars issuers may be able to achieve their desired level of rate protection for free. Using a Collar, the District would buy an Interest Rate Cap from a counterparty. The counterparty agrees to absorb the District's interest rate costs above a certain fixed rate. Simultaneously, the District sells an Interest Rate Floor to a counterparty, and agrees to pay the counterparty each time interest rates fall below a certain fixed rate. In practice, this simply means the District's cost of borrowing v.:'ill not fall below this fixed rate. The cost of the Cap and benefit from the Floor may be netted together in one contract to produce a free, "Costless" Collar. Finally, as with GICs, the bidding agent's fees can be paid by the counterparties. We have recently seen Costless Cap proposals for a 6.00% Cap in exchange for a 3.22% Floor, for a three-year term, with the TBMA Index as the reference interest rate. This translates into a no-cost hedge in which the District never pays more than what '!-l"e historically low long-term rates, in exchange for never paying below what are very attractive rates. Public Financial Management, Inc. 20 Orange County Sanitation District Investment Options Review v. Interest Rate Caps (Caps) Another approach for the District's Series "C" Reserve Fund is to invest in intermediate or longer-term securities which will initially yield approximately 250 basis points higher than the variable mode COPs, but will expose the District to substantial risks of incurring negative arbitrage if short-term interest rates rise above the fixed investment rate. This risk can be mitigated by purchasing an interest rate cap on a variable-rate tax-exempt index. The effectiveness of a strategy involving an interest rate cap depends on several factors, including the steepness of the yield curve, the relationship between taxable and tax-exempt rates and overall market volatility. A steeper yield curve and wider spread between taxable and tax- exempt securities would make this approach more effective, as would lower market volatility since an interest rate cap is less expensive when volatilities are low. Additionally, the_ costs of a Cap will be treated as a qualified hedge and will result in a higher arbitrage yield. However, only the remaining proceeds will be subject to the new, higher arbitrage yield; thus only a portion of the cost of the Cap will be recouped from arbitrage profits. The following chart depicts the use of a Cap as an investment hedge: 2.00 Fixed Rate Investment with Interest Rate Cap Current Market Cap Strike Price Variable Tax-Exempt Rates (Series "C"' COPs) I. The Districts earn positive arbitrage. 2. The Districts receive cap payments to offset higher interest due on COPs. O,QO..__ ___ _._ ______________________ __, Public Financial Management, Inc. 21 Orange County Sanitation District Investment Options Review vi. Interest Rate Swaps (Swaps) In general, Interest Rate Swap prdducts provide a means of locking in longer-term investment rates for funds typically invested in short-term vehicles. An Interest Rate Swap would allow the District to lock in a rate of return above current short-term rates without actually changing the current practice of investing short-term. The benefit comes from the fact that an interest rate Swap would enable the District to access the forward yield curve, which is higher than the current yield curve in a positively-sloped yield curve environment. However, ~s illustrated in the following chart, the current yield curve has flattened substantially and thus the value of a forward swap depends greatly on where in the yield curve one seeks to invest. Coupon-Implied Forward Yield Curve 5.90 5.80 5.70 5.60 5.50 5.40 5.30 0 5 10 IS 20 25 30 Years to Maturity Currently, the Districts' Reserve Funds are invested in the short-term, but are not expected to be required to be liquid to cover any debt service shortfalls. By using a Swap strategy, the investment yield would be more comparable to the higher rate of the term of the Swap while the Districts' funds remain in short-term investment vehicles. In a floating-to-fixed interest rate Swap the District would become a receiver of a fixed rate and a payer of a variable rate for a fixed length of time based on a predetermined notional amount equal to the reserve requirement. The notional amount related to a Swap is that amount which is used to calculate the payments that will be exchanged for the term of the Swap. The notional amount itself is never exchanged, just the floating and fixed payments. Interest rate Swaps generally consist of a fixed rate and a floating index. Taxable Swaps are generally based on the three or six-month London Interbank Offered Rate ("LIBOR") index. Note that it is also possible to base the floating leg of a Swap on other LIBOR rates, such as Public Financial Management, Inc. 22 Orange County Sanitation District Investment Options Review one-month LIBOR, or other taxable indices, such as Commercial Paper and Treasury Bill rates. The District may pay a slight premium for a Swap based on an index such as Commercial Paper that is not used as frequently as LIBOR. In order to mitigate interest rate risk in a taxable Swap, the Issuer selects the appropriate variable rate index based on the type of short-term securities that' the funds underlying the Swap will be invested in. By offsetting the variable payment requirements with investment earnings from the underlying funds, the Issuer effectively hedges the variable payment requirements and is left with the fixed rate it receives. A mismatch between the underlying investments and the floating Swap index creates "basis risk", _or the risk that the investment rate will not track the floating Swap index. The fixed rate on the Swap will vary in direct relation to the variable index used. For example, in the current market, the fixed rate on a Swap versus six-month LIBOR will be a few basis points higher than a Swap versus three- month LIBOR, which in tum will be 40 to 50 basis points higher than a Swap versus three- month Treasury Bill rates. In the current market, a five-year or ten-year Swap would yield 5.90% and 5.98% versus three-month LIBOR, respectively. Debt Service Reserve Fund Swap Agreement Structure Reserve Funds Earn Districts Counterparty Receive Fixed Rate Public Financial Mafltlgement, Inc. 23 Orange County Sanitation District Investment Options Review Interest rate Swaps are obtainable from a variety of financial institutions, and since they do not trade on a central exchange, rates and terms vary considerably. The District would be well-served to structure the arrangement independently and competitively bid it to a number of highly-rated financial institutions to get the best terms. For a Swap, the use of standard documentation (the International Swap Dealers Association, "ISDA'') that is generally accepted by financial institutions is desirable so that the agreement could be sold in the secondary market should restructuring become necessary. We note that the District has executed several Interest Rate Swaps (with similar documentation) as part of debt structuring. vii. Tax-Exempt Options or Tax-Exempt Forward Dellvery Agreements The District may be able to implement strategies to retain arbitrage e~ings for the Series "B" and the Series 1992 COPs, both which have small accrued positive arbitrage rebate liabilities as of the latest calculations in August and September of 1997, respectively. These COPs have existing reserve agreements locking in rates well in excess of the arbitrage yield, and the District may be able to break current investments which will otherwise only continue to accrue additional positive arbitrage earnings. Moreover, any breakage fees or penalties are allowable deductions from the arbitrage liabilities. However, in today's market tax- exempt yields are not high enough to earn arbitrage, since the arbitrage yields on these COPs are relatively high at 6.90% and 5.88%, respectively. If rates continue to trend higher, this strategy may enable the District to retain arbitrage earnings, since earnings on tax-exempt investments are not subject to the arbitrage rebate requirements. If rates trended high enough, there are several approaches for receiving tax-exempt earnings on the Districts' Debt Service Reserves: 1) invest directly in tax-exempt securities; 2) invest directly in tax-exempt securities and purchase Put Agreements; or 3) invest in a form of Forward Rate Agreement providing for the delivery of tax-exempt securities and providing tax-exempt income. The various tax-exempt strategies are discussed below. Public Financial Management, Inc. 24 Orange County Sanitation District Investment Options Review Several Investment Agreement providers have created a class of products referred to as Tax- Exempt Options or Tax-Exempt Forward Delivery Agreements, which allows issuers of tax- exempt bonds with Reserve Funds and lower arbitrage yields to realize higher Reserve Fund earnings. In general, issuers receive an upfront option payment from the counterparty in exchange for the right to sell short-term tax-exempt securities to the issuer's Reserve Fund on each bond payment date over a multi-year period. The maxim~m maturity of the underlying securities would be six months or one year in order to ensure an adequate supply of deliverable securities. All sales of tax-exempt securities under the arrangement must be at a guaranteed yield, normally set equal to the issuer's arbitrage yield. This arrangement allows the issuer's trustee to draw on reserves without triggering an early termination. However, from a security perspective, to meet legal requirements and rating Agency guidelines the District should include optional termination at downgrade provisions and other language to protect the Districts' interests due to the complexity of these agreements. - Similar to the taxable Forward Rate Agreement structure, the benefits of this structure include limited valuation risk and limited provider risk. The primary benefit is yield enhancement on an "after arbitrage basis" when tax-exempt returns could be locked in above the arbitrage yield. Given that it involves the sale of tax-exempt securities, this arrangement allows the issuer to earn tax-exempt income in excess of its arbitrage yield that is not subject to rebate. The arrangement does involve some risk, including delivery risk/reinvestment risk and default risk for the eligible securities to be delivered under the agreement. In structuring the arrangement, the District could reduce the default risk for the eligible securities, already limited to California tax-exempt paper, by imposing stringent credit criteria or requiring eligible securities to be insured. However, the District will be subject to delivery risk, because the counterparty will have the option, but not the obligation, to deliver tax-exempt securities at the guaranteed rate on each bond payment date. Unlike a taxable Forward Rate Agreement where the provider can deliver at any time, the option to deliver tax-exempt securities would only be available once a year. Public Financial Management, Inc. 25 Orange County Sanitation District Investment Options Review If the counterparty does not exercise their option, the District must provide for the investment of the funds for the one year period. The District may reinvest the idle funds in government obligations maturing prior to the next delivery date one year forward. There are two possible consequences of this. One is that the taxable investments could result in some positive arbitrage earnings that must be rebated. A second possibility is that one-year taxable rates are below the Districts' arbitrage yield. However, there is little risk that the District would earn less in total earnings over the life of the agreement by entering into this arrangement rather than another taxable arrangement. The District would have received the upfront option payment on a tax-exempt basis which would compensate for any temporary taxable investment below the bond yield. Additionally, the risk that the taxable reinvestment rate would be significantly below the arbitrage yield is modest.-The yield on the one-year Treasury bill has averag~d 5.52% o_yer !he past three years as shown on the chart below. One Year Treasury Bill Yield May 1995 to May 1998 ,------,----,----,,-----,----,-----,----,----,,----,----,---,.----,---,----,.---,-----. 6. 20 I I I I I I I ----~-----r----~-----r----,---•-r-•--~-----~----~--____ ~ ____ -!-___ -; _ ----!-----~ --6 .00 ' I I I I I I I I --• --• -_,_ ----• ----_._ ----.. --~. 80 5.60 1--~ ...... ---~i----;,---~~..;..-...;, ..... --;~-.-~---;--i.-.i~.-~ .... ,....-.;...._..,......+s52 I I I I O I ----J-----~----~-- ' I 0 I I I I I I I I I 1• • • • I • I I '"'• •1 0 I I I I I I t I I f I I I r----,-----~----~-----1-----,-----,-----,-----,-----,--• I I I I I ,--------~------, I I I BQI/HY-'CLOSE/l'IJI) : ' I ' YIELD Last :5.416 High 6.069 Av• :5.:522 Low 4.817 on 02/09/96 ----•-----~----•-----~----•-----~----•--• I I I I I I I I I I I ----~-----~----~-----~----~-----L----~--1 I I I I I I I I I I I I I I I I ' :5.20 5.00 4.80 11AUG9:5 200CT 290EC 8ttAR96 1711AV 26JlA.. 40CT 130EC 21FES517 2NAV llJlL 19SEP 28HOV 6FEB98 17APR Copyri<!ht 1998 81.00l'IIERI: L.P. Fr-anl<f<rt •69--920410 Hong Kong•2-2977-6000 London ' 171-330-7:500 M.w Vor-1<•212-318-2000 Pr-ince{on,609-279-3000 SiNJCIPOl"••226-3000 ~•2-9777-8666 Tol<~o,3-3201-8900 Soc Paulo•ll-3048-4500 6188-76-13 16-J..ro-98 18•10•43 Public Financial Management, Inc. 26 Orange County Sanitation District Investment Options Review Option premiums on this product are estimated at about 5% of the face amount of the reserves for arrangements of approximately 20 years for a delivery yield approximating 5.00%. Since the Districts' Series "B" and Series 1992 COPs have arbitrage yields in excess of 5.5%, it is unlikely that a tax-exempt strategy could lock in earnings in excess of the arbitrage yields. Nonetheless, one option may be for the District to elect to allocate only a portion of a reserve to a tax-exempt Option arrangement, and invest the remainder in a taxable investment to guarantee that the District locks in the arbitrage yield. Similar to our discussion of their taxable equivalents, there are various tax-exempt forms of the investment options ranging from tax-exempt securities to Tax-Exempt Forward Delivery Agreements or Tax-Exempt Put Agreements. 4. SEC Registered or Non-Registered Funds The District has the option of investing all or a portion of available funds in SEC registered or non-registered funds. SEC registered and non-registered funds would provide both the liquidity required by the District and would reduce exposure to market risk. Traditionally, SEC registered funds have been considered more secure than non-registered funds because they provide investors with regulation, information, supervision and investor involvement; these tools significantly impact the funds' management. By comparison, non-registered funds may have limited provisions in each of these four areas and are not heavily regulated. However, as we discuss below, there are features of non-registered funds that make them almost as attractive, and in many cases more desirable, than SEC registered funds. PFM manages both SEC regulated and non-regulated funds, and has considerable experience with both the positive and negative aspects of both types of fund. The following is a description of SEC registered funds accompanied by a discussion · of non-registered funds designed for public funds deposits which are rated by Standard & Poor' s Corporation ("S&P"). Public Financial Management, Inc. 27 Orange County Sanitation District Investment Options Review (a) SEC Registered Funds SEC registered funds are heavily regulated to ensure that the primary investment objectives of preserving principal and providing liquidity are met. SEC registered funds are subject to four federal statutes: 1) The Securities Act of 1933, which mandates specific disclosure to shareholders; 2) The Securities Exchange Act of 1934, which sets anti-fraud rules regarding purchase and redemption of fund shares; 3) The Investment Advisor Act of 1940, which regulates mutual fund advisors; 4) SEC regulation, which mandates that certain operating standards be met and mair..tained. Collectively, these laws require SEC registered funds to maintain sufficient liquidity and to ensure a higher degree of protection against market volatility. Federal laws require SEC registered funds to have daily liquidity to redeem any or all of their shares on any given business day, and to report the market value of assets on a daily basis. Conversely, non-registered funds are typically not required by law to provide daily liquidity or market valuation, and in some cases this increases the risk of insolvency if a substantial cash withdrawal is requested. The SEC requires managers of registered funds to provide shareholders with daily access to information regarding holdings, performance, management and general investment policy. Non-registered funds typically distribute the same information on an annual basis. SEC registered funds are subject to standards that govern the manner in which performance may be reported to the public, providing investors with the ability to consistently evaluate earnings potential. For instance, SEC registered funds must report performance net of fees, allowing investors to determine the actual earnings available to investors. Also, registered funds are required to refer to the SEC yield when publishing performance. The SEC yield is more conservative than the standard distribution yield often reported by non-registered funds and provides investors with a more conservative reflection of potential earnings. Public Financial Management, Inc. 28 Orange County Sanitation District Investment Options Review In addition to these regulations, registered funds are supervised by an independent board of trustees, consisting of a board with at least 40 percent of its members non-affiliated with the administrator of the fund. A background description on each board member must be provided to potential investors in the fund's prospectus, and an annual audit, performed by an independent accounting firm, is required to ensure compliance with all federal statutes and SEC regulations. Non-registered funds are not required to be as strictly supervised or to have an independent accounting firm conduct an annual audit, which creates a higher probability of investment practices .going unnoticed. SEC.,registered funds allow for investor participation when determining issues such as changes in investment policy or selecting members for the board of trustees. Generally, the by-laws of registered funds require shareholder approval prior to any changes in investment policy. Additionally, the members _of the board_ Qf trµstees o( -~_EC-registered funds are elected by shareholders, providing participants with some influence over the investment direction of the fund. Neither process is required for non-registered funds , thus limiting shareholder influence over the fund's management or supervision. Finally, information regulations require registered funds to report performance net of fees and mark assets to market daily, assuring shareholders that the net asset value of the fund is approximately $1.00 per share. Non-registered funds are not required to value assets on a daily basis, and their published yield may not include operating costs. In summary, SEC registered funds are subject to heavier regulation, more extensive information and supervision requirements, and greater shareholder participation in administrative decisions than are non-registered funds. As such, they often provide more safety, liquidity, access to information, and investor supervision and participation. The following is a representative list of California SEC Registered Funds: . ../ Public Financial Management, Inc. 29 Orange County Sanitation District Investment Options Review Fund Name Investment Manager Diversified Money Market Fund HighMark U.S. Government Money Market Fund 100% U.S. Treasury Money Market Fund California Tax-Free Money Market Fund Government Obligation First Bank National Association Prime Obligation Treasury Obligation Automated Government Money Trust Federated Management Short-Tenn U.S. Government Income Fund FGIC Advisors U.S. Treasury Money Market Fund Pacific American Fund Money Market Portfolio First Interstate Investment Services Pacific American Fund U.S. Treasury Portfolio Franklin U.S. Government Securities Franklin Advisers, Inc. Monev Market Fund AIM Liquid Assets Portfolio AIM Advisors, Inc. AIM Prime Portfolio (b) Non-Registered Funds Notwithstanding the merits of generic registered funds over generic non-registered funds, non-registered funds designed specifically for local government investment may provide greater oversight from rating agencies, such as Standard & Poor' s Corporation, and allow more investor participation than registered funds. Most important, high quality non- registered funds are not burdened by extensive Federal regulations, and can provide higher returns because they have lower operating costs. The following is a list of representative SEC Non-Registered Funds available to the Districts: Fund Name Investment Manager California Asset Management Program (CAMP) PFM Local Agency Investment Fund (LAIF) California State Treasurer's Office Orange County Investment Pool (OCIP) Orange County Treasurer's Office MBIA CLASS MBIA As mentioned above, PFM has extensive experience with and currently manages both registered funds and non-registered funds. In fact, one of the government investment pools managed by PFM was the first local government investment pool to receive a fund rating from Standard & Poor's Corporation in 1989. To insure that the investment pools were accepted by issuers and bond insurers for the proceeds of issues that they were insuring, we worked with Standard & Poor's to obtain a pool rating. Prior to our work with the rating Public Financial Management, Inc. 30 Orange County Sanitation District Investment Options Review agency, only SEC registered mutual funds had been rated. PFM worked with the rating agency to develop specific investment parameters that apply to public agency commingled funds. Our success in winning rating agency and creditor support for non-registered funds speaks for itself; since 1989, four other investment pools managed by PFM have received a rating. It is our opinion that non-registered funds are suitable investment vehicles, provided that the investor is provided with information and is confident in the oversight mechanism (rating agency or investor committee). Although SEC registered funds provide greater assurance against risks and fraud when compared to generic non-registered funds, they may not be investments of choice for the Districts' reserve funds proceeds, if the District is searching for an investment vehicle that will lock in excess yield to guarantee the mitigation of negative arbitrage. As mentioned above, non-registered funds tend to have lower expense ratios. The historical performance of a given fund versus the variable rate arbitrage yield for the Districts' Series "C" COPs may indicate that a registered or non-registered fund will offer a. high enough rate of return to augment investment earnings and virtually eliminate negative arbitrage. However, since these funds face different market characteristics than the District's bonds (taxable versus tax- exempt), there is no guarantee that this result will persist over time. As shown in the following chart, the spread between the TBMA Index, the Donoghue Index, the S&P Rated Local Government Investment Pool Index and the yields for the California Asset Management Program have varied significantly over the past year. The TBMA Index is indicative of the Districts' Series "C" COPs and Donoghue, S&P and CAMP returns are representative of fund yields available to the Districts. 4.80 Comparison of Yields May 1997 -May 1998 CAMP ~S&P Rated LGIP -• • -Donoghue Index -::«i-TBMA Index ::5! .!! 4.30 > 3.80 3.30 -~--·X-x._. ...A .. c.x·X·xt'·X~~ ~-A· y ··-x:t:~.~---~ ,,._ ~-X· 2. 80 +-+-+-t-+--+-+--+-+-1-Jt-+-I +I +I -+I -11--t-+-+-IH -...+-+-I l-+-1 I I I I I I I • 1-!-t-t-+-.... ~ .... t i .... .... I .... "' "' ., g1 I ~ ., 0, l 8 ~ i 't 0, 0, 't s t ~ .,_ ;z ~ ~ § 0 0 0 I 0 ~ < :z 7 'I-:::. ~ ab ~ 0, 0 N ~ ,;, ~ N "' .., N N Date Public Financial Management, Inc. 31 Orange County Sanitation District Conclusions and Recommendations III. Conclusions Our investment options review has covered a plethora of alternatives for the District to consider for the investment optimization of the Districts' Debt Service Reserve Funds. Our understanding of the Districts' investment optimization objectives is to develop and implement investment strategies that recoup negative arbitrage accrued to date for the Series "C" and Series 1993 COPs and maximize investment return while providing safety and liquidity. The matrix below summaries our review of the various investment options. - Orange County Sanitatim Dstrict s...m.uy mRmne Fund InWlitnBlt Opdom Eidt -GASB31 !Jm,i,11tv Strattmes OCIPLlms Coslsl31 Yoeld[51 No Yes Yes No Yes Yes St.GS No Yes Yes Mxlesl No llll:reSIRar.eCollar Mxlesl No PoteniaUy lm:icsl Rare C.ap TaxExelllJl~m Mxlesl No soc Registeml funds { I] JO days udvance ncrice required for rede"fllion.<. lJxemmalc.. and lonilo"-tmnsearirs CxplSe 1h, Dislricts 10 ll1ldcet vahlation risk. ~ m,r1cet valuation rislc. am polmially lirrited liqlidity. ~ ITll'km v.iluation ri.sJc a,; go\milffl ~lies. Yields are lower than eq.livalcll open IIBllcfts am ,_---:...:._ High low[IJ• Yes Yes Yes NIA Yes High High SeD SeD Redeem[(] Ttmimlion Provision,; [2] Temim!ion Prowion; [2] Tmrirelion Provi.oom [2] Teminllion Prowiom; [2] Tmrimlion Provision,; [2] Tcminllion Pro~l21 Yes[4] Yes[4] Yes[4] Yei[4] Yes[4] Yes[4] Yes[4] Yesf4] Yes[4] Yes[4] Withdra\WI Yes [4] Withdrawal Yes [41 {2] Subject 10 cerTain provisions. For exmrJ}le, remilkllion due /0 counlerpurty dnMngrode rray be u/ no ca<t, buJ Districts' ~ruauring rray be nrulret dependenJ. {JJ TronstJction cnir., include biddingfuand legal opinion (estirmtefor $15K) if required {4} Based on the ta.wble )ields and sprr:adsus ofrY/5198 the Districts Kill upproxirrrae/y n:roup the ua:rued negativearl,itruge. {5} A<sumes JO )WU ilM.slmtnls. Q,//able ago,ci,s are ad/able in 5 ye=. Maturities rray be atended /0 rm,up all negutive arlJitruge. 2b.p. 5.50 2b.p. 6.30 5.45 5 b.p. + $15K 5.50 5 b.p. + $15K 5.40 5 b.p. +$15K 5.00 5 b.p. +SISK 5.25 5b.p.+$15K NA 5 b.p. +Sl5K 5.75 5 b.p. + $15K NA 5.15 5.15 Public Financial Management, Inc. 32 Orange County Sanitation District Conclusions and Recommendations We recommend that the District considers Investment Agreements to provide a stable investment approach to maximize allowable yield and limit risk such as market value fluctuations. Specifically, GI Cs: • Will recoup negative arbitrage • May be structured to provide upfront payments • Can be customized to meet the Districts' specific needs • Are very well-known, standardized and safe products • Are uncomplicated compared to other investment alternatives • Provide the highest yield Finally, Investment Agreements can be structured in accordance with the Districts' Permitted Investments as defined under the Trust Agreement for the Series "C" and Series 1993 COPs. Under these terms, the District could purchase a GIC issued by a provider whose long-term corporate debt is rated "Aa3" by Moody's or "AA-" by S&P. If the providers are not rated at least "Aa3" or "AA-," the GIC could be structured to meet the following provisions: • The market value of the collateral is maintained at levels acceptable to the Rating Agencies • The Trustee or a third party has possession of the collateral • The Trustee has a perfected first priority security interest in the collateral • Collateral is free and clear of third-party liens • Failure to maintain the requisite collateral level will require the Trustee to liquidate collateral Public Financial Management, Inc. 33 Orange County Sanitation District Conclusions and Recommendations IV. Recommendations A. Series 1993 Refunding COPs We do not recommend executing a GIC for the Series 1993 Refufl(iing COPs at this time because interest rates are not high enough to recoup all negative arbitrage earned to date. However, if the District was to receive a settlement for all or a portion of the $1,065,695.67 or approximately 20% loss of principal that remained in August -199.5, then-a GIC could be structured to recoup any remaining negative arbitrage. If the District was to receive ,the remaining $1,065,695.67 on January 1, 1999, then the negative arbitrage of the COPs would become approximately $326,000 versus the most recently computed $1,306,708.82. In this scenario, at current interest rates; a fixed-rate GIC earning a very conservative estimate of 5.50% could recoup all remaining negative arbitrage by the COPs' final ma~urity date of August 1, 2016. B. Series "B" and Series 1992 COPs If interest rates move substantially higher, the Series "B" and Series 1992 COPs may become a candidate for a strategy that entails breaking the current Investment Agreement and entering into Tax-Exempt Investment Agreements. C. Series "C" COPs We recommend entering into a GIC to provide variable rate interest, and thus lock in a positive spread to the Districts' bond yield. This GIC would be structured with a final maturity of approximately January 2003, the estimated time required to earn back all negative arbitrage accrued to date. We note that this approach does not account for any payments that may be realized from resolution of one or several ongoing legal actions related to the 1994 Orange County bankruptcy. If the District receives any settlement payments fron:i legal actions, and these settlements are later deemed to be included as proceeds of the COPs, then the District may be subject to rebate liability. For example, if on January 1, 1999, the District was to receive a settlement for the full amount of the 20% loss of principal that remained in August 1995, or $2,004,949.74, then the COPs rebate liability would become positive in the amount of Public Financial Management, Inc. 34 Orange County Sanitation District Conclusions and Recommendations approximately $1,575,000. However, to the extent the District does not receive a settlement, then the strategy of using a GIC to lock in investment returns guarantees the District is not left in a negative arbitrage position. In summary, we recommend that the District lock in the ability to recoup negative arbitrage by utilizing a very safe, relatively short-term Investment Agreement. We recommend that the District execute this strategy regardless of future settlements or interest earnings. If a settlement distribution occurs in the future, we recommend that the District simply rebate any future positive arbitrage to the U.S. Treasury Department. This protects the District from earning less than your maximum allowable earnings. 1. Background The Districts' Series "C" was issued in September 1992 in a variable rate mode which has averaged slightly above 3.28% including adjustments for insurance premiums as of April 7, 1998. Although the Series "C" arbitrage yield is relatively low, the District has incurred substantial negative arbitrage ($503,000) due to losses related to investment in the Orange County Investment Pool. Currently, the Series "C" Reserve Fund has $9.85 million invested in a money market fund at State Street Bank, the Trustee. 2. Objectives The District's investment objectives should be to recoup all negative arbitrage accrued to date on the Series "C" COPs. The District should avoid reinvestment risk by locking in a spread to the COPs' variable arbitrage yield, and should avoid market risk by utilizing an investment that can be liquidated at par in the event the COPs are redeemed, accelerated or in the event of a permitted draw. Finally, an investment must comply with the terms of the COPs Trust Indenture. 3. Earnings Comparison The table that follows provides an estimate of Reserve Fund investment earnings assuming fixed interest rates and constant spreads to the arbitrage yield for Series "C". Given these assumptions, over a 5 year period coinciding with the ·next fifth year anniversary required rebate computation date of August 1, 2002, the maximum earnings the District could retain Public Financial Management, Inc. 35 Orange County Sanitation District Conclusions and Recommendations from the Reserve Fund investment is $1,644,904. If the District invest below the arbitrage yield by 50 basis points (Option 1), the District will forego nearly $225,000 of investment income which could be retained. If the District invest above the arbitrage yield by 50 basis points (Option 3), the District will earn roughly $225,000 of investment income which would be required to be rebated. However, the District would maximize retainable earnings of $1,644,904 in both Option 2 and Qpti.en-3. Option 1: Option 2: Option 3: Invest SO b.p. Below Invest At Invest SO b.p. Above Arbitrae:e Yield Arbitra2e Yield Arbitrae:e Yield Net Earnings 1,422,439 1,644,904 1,867,368 Rebate Amount --:222.465 Retainable Earnings 1,422,439 1,644,904 1,644,904 4. GIC Structure In the current market, a GIC would yield from 115 to 150 basis points above the TMBA Index for a five (5) to ten (10) year agreement. Assuming a spread of 125 basis points, the District would be able to recoup the accumulated negative arbitrage to date by approximately January of 2003. The basis for award of the Investment Agreement would be the highest yield spread to the COPs' arbitrage yield. Interest could be structured to accrue daily and be paid monthly depending on the District requirements. 5. Process This section outlines the necessary steps to procure a Reserve Fund Guaranteed Investment Contract (GIC), identifies the project team members who would be involved with the competitive bid process, and estimates the cost associated with the transaction. We have also provided a tentative schedule outline for this project. Public Financial Management, Inc. 36 Orange County Sanitation District Conclusions and Recommendations Steps: We have outlined the major tasks to be accomplished in order to complete the GIC procurement below: 1. Inform Appropriate Parties. 2. Model Cash Flows and Benefits. 3. Draft Request (RFP) for GIC Offers. 4. BidGIC. 5. Review of Agreement. 6. Settlement of Agreement. The District and PFM will inform counsel, trustee, and bond insurer. PFM will supply schedules to Orrick for verification. Refer to Draft Report for discussion of alternative structures. To be completed by PFM -To be reviewed by the project team. Receipt of GIC Offers by PFM and coordination with the District to award agreement. Review of Agreement by project team including review of legality of transaction by counsel (i.e. Legal Opinion). PFM will coordinate closing of Agreement with GIC provider and trustee. Project Team: The firms and their roles in the project are listed below: • Orange County Sanitation District (OCSD): Issuer • Public Financial Management, Inc. (PFM): Financial Advisor & Bidding Agent • Orrick, Herrington & Sutcliffe (Orrick): Counsel and Rebate Calculation Agent • State Street Bank and Trust of California, N.A. (State Street): Trustee • Financial Guaranty Insurance Company (FGIC): Bond Insurer • Agreement Provider: To be determined. (See attached list of "AA" or better rated providers). Public Financial Management, Inc. 37 Orange County Sanitation District Conclusions and Recommendations Project Costs: We have estimated a range of costs to the District for each of the project team members as summarized as follows: Role Est. Costs Ranee Notes Bidding Agent NA Costs paid by Provider Counsel $10,000 to $20,000 Legal Opinion Trustee NA Cost paid by Provider Insurer NA Consent for Al!I'eement TOTAL $12 500 to $25,000 At the direction of the Districts, the agreement provider will pay PFM a "bidding agent" fee on behalf of the Districts. This fee will be the only compensation that PFM receives, will be disclosed as part of the bidding documents, and would be limited to the lesser of $25,000 or 0.05% (5 basis points). This estimated fee is a "qualified administrative cost" for guaranteed investment contracts under Section l.148(5)(e)(3) of the Treasury Department's arbitrage regulations. Therefore, the fees are paid directly by the provider of the agreement and at no cost to the District because the yield on the agreement will be in excess of the arbitrage yield. In other words, these fees will come out of the investment earnings that would have otherwise been rebated to the Federal government. Project Schedule: The following tentative schedule highlights the major tasks to be completed. Time Frame Event Notes · Week 1 Project Team Call #1 and By Bond Counsel (OHS), FGIC Approval of Draft Bid Specs and Trustee (State Street) Week2 Review and Approval of By OHS, General Counsel, and Report to F AHR Committee Finance Department Week4 FAHR Agenda Mailing Report and Bid Specs Finalized Week5 FAHR Committee Meeting Approve Draft Bid Specs Week6 BidGIC Circulate Draft Agreement Week7 Project Team Call #2 Review Agreement Issues Week8 Settlement Public Financial Management, Inc. 38 Orange County Sanitation District Appendix V. Appendices A. Appendix: Investment Agreement Provider Matrix Lmg'linn Slilli'Iinn Lmg'Iinn 9utTa:m A'IMlllr ~ Riamu: Qamu-~ ~ AIGMrdm~ Clrpcr.iim AANAm N'A AlmiC31 lmmti<ml ~ AANm A-1-+IP-l Mti.OCQpUll Mnlgaim. In:. N'A N'A />M3/'C.In:brrity Grp. AANAm N'A lbicdM?rica M1Aa3 A-1-+IP-l Ba}lm:reummic AANAm A-1-+IP-1 Bea-~ NKl. A-1/P-1 Bemtire IUhiwly, In: AANAal N'A Omiill lm;ainl B.ntd Cl:nmm: (CIOC) Ml!>ru A-1-+IP-I OX:fuDll!Qrp. N'A N'A Ciw,e~ D:im ~ Onsil!fHicn; AANAm N'A CJneSeruities A+//>& A-1/P-l Omt&m:Rnn:ial lmim M+I/>& A-1-+IP-l RiCQptal Mml Se:vices N'A N'A CEQptal AANAm fir.;tBCS!JI ANAl A-1-+IP-I lmtllim A+l!>ru A-1/P-l Gmal Re AANAal No\ UJ>~&Ch AANAal A-1/P-l ~OmltyTrust AANAm Al-+IPI l..etnm &alas. In: A+IA3 A-1/P-2 M31AIJMSJn:n ~ClJJ:,nim AANAm flR/IIR Mmll L}tlll &Ch Ml!>ru A-1-+IP-1 M:r!1;:rl9.lriey A+IAl A-1-+IP-1 Nn!Illl 'MsnirHfl' B;ric AN!>& A-1-+IP-l Rt;iliic Nnmal lbic dN:w Yaic ANAal A-1-it'P-I Sakira A/A3 A-'l/P-2 Salcmn~Ch AANAm A-1-it'P-l Srrithlurey A+/Al A-1/P-I Sa:icte Gmale AN!>& A-1-it'P-l ~tam NA1 A-1/P-l rrr.nmmcnLife hsr.n'e n!Amity(h M+ll>ru A-lfl\R Wsdmte l..tn:isuK Gra!rnmle. l'lel,\, Yale &inn M+IAal A-1-it'P-l Public Financial Management, Inc. 39 Orange County Sanitation District Appendix B. Appendix: Draft Pre-Qualification Request for Proposal Draft Bid Specification for Series "C" COPs Investment Agreement Public Financial Management, Inc. 40 Orange County Sanitation District Draft as of July 15, 1998 Potential Provider: Re: Potential Provider Pre-Qualification Certification County Sanitation Districts of Orange County 1990-92 Series "C" COPs Debt Service Reserve Fund Investment Agreement Public Financial Management, Inc. (PPM), acting as Financial Advisor to the County Sanitation Districts of Orange County (the "Issuer") for this transaction, is seeking to pre-qualify a limited group of potential providers to receive bid specifications for an Investment Agreement (the "Agreement") for the proceeds of the Issuer's 1990-92 Series "C" COPs (the "COPs"). The Agreement will cover the Debt Service Reserve Fund, which has a requirement of $9,850,000 and a final maturity of August 1, 2017. We are therefore writing to invite your institution to submit a pre-qualification certification by answering the questions listed in Exhibit I. The County Sanitation Districts of Orange County, incorporated in 1954, encompasses the Northern section of Orange County. The third-largest water district west of the Mississippi River, the Districts provide wastewater treatment for an area of the County covering 471 square miles and serving a population of 2,289,500, or approximately 87% of the County's population. The Districts wastewater system includes approximately 630 miles of sewers that convey wastewater to two wastewater treatment plants, with primary treatment capacities of 108 and 186 million gallons per day (mgd), respectively. Both plants are master-planned for a future primary and secondary treatment capacity of 240 mgd for a combined total of 480 mgd. If you have any questions or would like more information, please call Michael Harris or Steve Wisloski, at (717) 232-2723. The Issuer reserves the right to modify or revoke this request, and to accept or reject this certification in whole or in part as necessary to serve the best interests of the Issuer. This request does not constitute an expressed or implied contract. The Districts will not reimburse any provider for costs incurred to prepare and submit a certification. We look forward to your response. Attachment Sincerely, PUBLIC FINANCIAL MANAGEMENT, INC. Michael W. Harris Managing Director Draft as of July 15, 1998 EXHIBIT I PRE-QUALIFICATION CERTIFICATION Provider: Your Long Term Ratingsu1: (Moody's/S&P) Page 1 We hereby certify that we have not been sued by any governmental unit located within the County of Orange, California in the past ten years. We are not under any disciplinary action, censure, arbitration or inquiry involving your organization or any employee of your organization in the past ten years with respect to procuring investments, making payments to third parties, fee splitting arrangements or similar activities including those involving the Securities Exchange Commission, National Association of Securities Dealers, MSRB, or similar regulatory or enforcement entity. Signed: Name: Title: Phone Number: Fax Number: Date: PLEASE FAX YOUR CERTIFICATION to Michael Harris of PFM no later than [ _:00 p.m. EDT on __ _ , August_, 1998] telephone: (717) 232-2723, fax: (717) 233-6073. [1] Indicate if any rating is on credit watch or credit review. Draft as of July 15, 1998 Potential Provider: Re: Request for Bids Specifications County Sanitation Districts of Orange County 1990-92 Series "C" COPs Debt Service Reserve Fund Investment Agreement Public Financial Management, Inc. (PFM), acting as Financial Advisor to the County Sanitation Districts of Orange County (the "Issuer") for this transaction, is seeking bids from qualified providers for an Investment Agreement (the "Agreement") for the proceeds of the Issuer's 1990-92 Series "C" COPs (the "COPs"). The Agreement will cover the Debt Service Reserve Fund. Information regarding the nature of the funds and the amounts to be held under the Agreement can be found in the bid specifications included with this letter for your information. The selection of the winning provider for the Agreement will be made on the basis of the selection requirements set forth herein. The winning provider must be acceptable to the Issuer. Final bids will be accepted until [ _:00 p.m. Eastern Time on ___ , August_, 1998]. Bids should be telecopied to Michael Harris at PFM, Fax: (717) 233-6073, phone: (717) 232-2723. See Exhibit II for the Bid Sheet. The County Sanitation Districts of Orange County, incorporated in 1954, encompasses the Northern section of Orange County. The third-largest water district west of the Mississippi River, the Districts provide wastewater treatment for an area of the County covering 471 square miles and serving a population of 2,289,500, or approximately 87% of the County's population. The Districts wastewater system includes approximately 630 miles of sewers that convey wastewater to two wastewater treatment plants, with primary treatment capacities of 108 and 186 million gallons per day (mgd), respectively. Both plants are master-planned for a future primary and secondary treatment capacity of 240 mgd for a combined total of 480 mgd. Your bids should be based on the information provided in this package. Any bids modifying or amending any specification or requirement contained herein should be discussed and agreed to in advance of the bid. If you have any questions or would like more information, please call Michael Harris or Steve Wisloski, at (717) 232- 2723. Additionally, the Districts use Bloomberg for disclosure. The Issuer reserves the right to modify or revoke this request for bids, and to accept or reject bids in whole or in part as necessary to serve the best interests of the Issuer. This request for bids does not constitute an expressed or implied contract. The Districts will not reimburse any provider for costs incurred to prepare and submit a bid. We look forward to your response. Attachments Sincerely, PUBLIC FINANCIAL MANAGEMENT, INC. Michael W. Harris Managing Director COUNTY SANITATION DISTRICTS OF ORANGE COUNTY CERTIFICATES OF PARTICIPATION. 1990-92 SERIES C DEBT SERVICE RESERVE FUND INVESTMENT AGREEMENT ENCLOSURES • Request for Bids Specifications • Exhibit I: Historical COPs Interest Rates • Exhibit II: Bid Sheet Draft as of July 15, 1998 Pagel 1. Deposit: (Subject to Change) 2. Type of Agreement: 3. Purpose: 4. Anticipated Funding Date: 5. Final Maturity: 6. Bidding Date/l'ime: 7. Basis of Award: 8. Interest Payments: BIDDING SPECIFICATIONS IN BRIEF DEBT SERVICE RESERVE FUND INVESTMENT AGREEMENT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY CERTIFICATES OF PARTICIPATION 1990-92 SERIES C [$9,850,000] Investment Agreement (the "Agreement") will accept the deposit of the required Debt Service Reserve Flll_lq (the "Reserve Fund"). The proceeds of the COPs were used (i) to finance the costs of the acquisition and construction of wastewater treatment and disposal facilities, (ii) to reimburse the costs of trunk wastewater lines and wastewater treatment and disposal facilities, and (iii) to establish a Debt Service Reserve Fund. These projects have been completed and remain in operation. [August_, 1998] August 1, 2003 Bids must be faxed to Michael Harris or Steve Wisloski at (717) 233-6073 no later than [_:00 p.m. Eastern Time on ___ , August_, 1998). Bids should be faxed using the Bid Sheet attached as Exhibit II hereto. The Agreement will be awarded to the provider offering the highest variable- rate yield as a fixed spread to COPs arbitrage yield. The award shall be made as soon as practical after the tabulation of the bids. The Issuer reserves the right to reject any and all bids that are not submitted in strict accordance with the terms herein. The Issuer also reserves the right, in its sole discretion, to waive any irregularity in any bid and to select the winning provider among providers submitting identical bids. The Agreement will provide for a single variable rate of interest above the COPs arbitrage yield, reset daily and payable upon the fifth business day of each calendar month commencing September 8, 1998. Historical interest . rates for the COPs are included in Exhibit I. Please note there are gaps in the currently-available data between 1/19/95 through 1/31/95, 2/16/95 through 2/28/95, and 3/30/95 through 5/29/95. However, we believe this will not substantially affect analysis of the COPs historical rate levels. Draft as of July 15, 1998 9. Withdrawals: fo'. Legal Opinion: 11. Rating Requirement: 12. Rating Downgrade Provisions: 13. Bid Subject to Closing: , 14. Monthly Statements: Page2 Withdrawals of principal at par from the Agreement will be permitted to pay debt service or for any other use of the Reserve Funds set forth in the Trust Agreement. An opinion of counsel regarding the validity, legality and enforceability of the Agreement will be required in form acceptable to Issuer's bond counsel. If applicable, both domestic and foreign counsel opinions will be required as specified below. The Provider must be subject to jurisdiction for an action for enforcement of obligations under the Agreement in a state or federal court of the United States of America. A judgment in a state or federal court with respect to the Agreement must be recognized as enforceable in the country of the foreign or off-shore bank. Foreign providers must consent to U.S. jurisdiction and the appointment of an agent for service of process. The Provider must be capable of supporting a long-term rating of at least AA and Aaby S&P and Moody's, respectively. The provider must be acceptable to the Issuer and the COPs Insurer, FGIC. Collateral -In the event that the Provider's long-term rating from S&P or Moody's is withdrawn, suspended or downgraded below AA-or Aa3, respectively, the Provider must provide collateral as follows: U.S. Treasuries at 104% of the principal and accrued but unpaid interest obligations, or senior debt or pass-through mortgage-backed securities ( or participation certificates) of GNMA, FNMA or FHLMC at 105% of principal and accrued but unpaid interest obligations. For all collateral, the Provider must grant the Trustee or third-party custodian a first perfected security interest, and a legal opinion satisfactory to FGIC as to the perfection of such security interest. Collateral must be free and clear of all third party liens and claims and must be registered in the name of the Trustee or custodian. The Provider is required to notify the Trustee immediately and to take actions to satisfy the Issuer within 10 business days of such downgrade. Termination -In the event that the Provider's long-term rating from S&P or Moody's is withdrawn, suspended or downgraded below A-or A3, respectively, the Trustee shall terminate the Agreement and receive invested amounts including accrued interest but without penalty. The Provider is required to notify the Trustee immediately and to take actions to satisfy the Issuer within 10 business days of such downgrade. In the event that the transaction does not close for whatever reason, neither the Issuer nor any of the Issuer's advisors will be liable for any costs incurred by the Provider. - The Provider must provide statements to the Issuer and to the Trustee each month showing withdrawals, interest accrued and the balance invested in the Agreement. Draft as of July 15, 1998 15. Expenses: 16. Tax Certificate: 17. Trustee: 18. Additional Information: Page3 All expenses associated with the Provider's performance of the Agreement, including but not Jimited to the Provider's legal fees, brokers' fees and electronic funds transfer charges, are the sole responsibility of the Provider. The provider will be responsible for providing an acceptable tri-party custodian. Alternatively, the provider will be responsible for paying all custodial expenses, including set-up costs not to exceed $1,000, legal opinion not to exceed $2,000, annual fees not to exceed $200, transaction fees of $65 per collateral security deposited or withdrawn, and any other costs related to the Agreement to the Trustee. The Provider will be required to pay an up front fee equal to the present value factor of 0.05% or 5 basis points on the assets reasonable expected to be annually invested under the Agreement to PFM at settlement of the Agreement. The p~sent value factor will be based on the taxable rate. The Provider will be expected to sign a tax compliance certificate assuring that the Agreement is entered into at a fair market rate and disclosing any brokerage fees paid. State Street Bank and Trust Company of California, N.A. Providers requesting additional information may contact Michael Harris or Steve Wisloski at PFM, phone: (717) 232-2723. Draft as of July 15, 1998 EXHIBIT I HISTORICAL INTEREST RA TES County Sanitation Districts Nos. 1, 2, 3, 6, 7 and 11 of Orange County $98,500,000 Certificates of Participation (Capital Improvement Program, 1990-92 Series C) For the period: 9/1/92 -_/_/98 Page4 Rate History Report Securit:y #: rssue: 68•4.285BK4 CUsip: 58428SBK4 ORANGE OlTY SANITATION DISTRICT# 1,2,3,S,6,7 & l ~ate Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ **OTC••) First Rate: 09/01/1992 Effective: Rate: Effective: Rate: Effective: Rate: ---------------------------------------G -----------·-------------------- 09/0l -09/01/92 2.7000 ll/12 -ll/12/92 2.0000 01/27 • 01/27/93 2.7500 09/02 09/02/92 2.6000 11/13 -ll/lS/92 l.9000 Ol/28 -Ol/28/93 2 .7000 09/03 09/03/92 2.7500 11/16 -ll/16/92 l.8000 01/29 • 01/31/93 2.5500 09/0' 09 /07 /9-2 2.9000 ll/17 -ll/17/92 l.SOOO 02/0l -02/01/93 2.0000 09/08 09/08/92 2.9000 ll/18 -ll/18/92 1.7000 02/02 -02/02/93 1.7500 09/09 09/09/92 2.7000 11/19 • ll/19/92 1.7000 02/03 • 02/03/93 l.6000 09/10 09/10/92 2.6000 ll/20 -11/22/92 2.0000 02/04 -02/04/93 l.6000 ·09/11 -09/13/92 2.4500 ll/23 -ll/23/92 l.SSOO 02/0S -02/07/93 2.0000 09/14 -09/14/92 2.7000 ll/24 -11/24/92 2.0000 02/08 -02/0S/93 1.8000 09/1S • 09/15/92 3.0000 l1/2S -ll/26/92 2.,000 02/09 -02/09/93 1.6500 09/16 -09/16/92 3.0000 il/27 • ll/29/92 2.1500 02/10 • 02/10/93 l.5000 09/17 -09/17/92 3.0000 ll/30 -11/30/92 2.0000 02/11 -02/ll./93 l.6000 09/18 -09/20/32 2.9S00 12/0l -12/01/92 l.8500 02/12 -02/15/93 · l.8000 09/21 • 09/23./92 2.8500 12/02 • 12/02/92 l.7500 .. 02/16 • 02/16/93 l.6500 09/22 -09/22/92 3.0500 12/03 -12/03/92 l.3SOO 02/17 -02/17/93 1.6500 09/23 -09/23/92 3.1S00 12/04 -12/06/92 1.3500 02/18 -02/18/93 1.4000 09/24 -09/24/92 3.lSOO 12/07 -12/07/92 l.3S00 02/l.9 -02/21/93 1.2000 09/25 -09/27/92 3.4500 12/08 • 12/08/92 l.3500 02/22 • 02/22/93 1.2500 09/28 • 09/28/92 2.7000 1210, -12/09/92 l.4S00 Oi/23 • 02/23/93 l.2000 09/29 -09/29/92 3.0000 12/10 • 12/10/92 l.7000 02/24 • 02/24/93 1.2000 09/30 • 09/30/92 3.0000 12/ll. -12/13/92 2.0000 02/2S -02/25/93 1.6000 10/01 -10/01/92 2.7000 12/14 -12/14/92 2.0000 02/26 -02/28/93 2.1500 10/02 -l0/04/92 2.4000 12/lS -12/15/92 2.3500 03/01 -03/01/93 l.7000 l0/05 -10/05/92 2.2s00 12/16 • 12/16/92 2.7000 03/02 • 03/02/93 1.7000 10/06 • 10/06/92 2.0000 12/17 -12/17/92 2.3500 03/03 -03/03/93 l.6000 10/07 • 'l.0/07/92 l.9000 12/18 -12/20/92 2.3500 03/04 -03/04/93 l.5000 l.0/08 -l0/08/92 2.2500 12/21 -12/21/92 2.4000 03/05 -03/07/93 l.7OOO 10/09 -10/11/92 2.3500 12/22 -12/22/92 2.7S00 03/08 -03/08/93 l.6000 10/12 -10/12/92 2.3500 12/23 -12/23/92 3.4000 03/09 -03/09/93 l.S000 10/13 • 10/13/92 2.2500 l.2/24 -12/27/92 4.0000 03/10 -03/10/93 l.7000 10/14 -10/l.4/92 2.1000 12/28 -12/28/92 3.8000 03/ll. -03/11/93 2.0000 10/15 -10/15/92 2.1000 12/29 -12/29/92 3.1500 03/12 • 03/14/93 2.1500 10/16 -10/18/92 2.1500 12/30 • 12/30/92 3.1500 03/lS -03/15/93 2.1S00 10/19 -10/19/92 2.1500 12/31 -Ol/03/93 3.S000 03/16 -03/l~/93 2.1s00 10/20 -10/20/92 2.2S00 01/04 -01/04/93 l.2S00 03/~7 -03/17/93 2.1500 10/21 -10/21/92 2.2500 Ol./05 -01/05/93 l.1S00 03/18 -03/18/93 2.1500 10/22 -10/22/92 2.3000 01/06 • 01/06/93 l.0000 03/19 -03/21/93 2.2500 10/23 -10/25/92 2.6500 Ol/07 -Ol/07/j3 1.0000 03/22 -03/22/93 2.3500 l0/26 -10/26/92 2.8000 01/08 • 01/10/93 1.1000 03/23 -03/23/93 2.3S00 10/27 -10/27/92 2.7000 Ol/ll -01/11/93 l.0000 03/24 -03/24/~J 2.3500 10/28 -10/28/92 2.7000 01/12 -01/12/93 l.0000 03/2S -03/2S/93 2.4000 10/29 -10/29/92 3.0000 Ol/13 -01/13/93 l.0000 03/26 • 03/28/93 2.3000 10/30 • ll/01/92 3.0000 01/14 -Ol/14/93 1.1000 03/29 -03/29/93 2.1500 ll/02 -11./02/92 2.7S00 01/1S -01/17/93 l.4S00 03/30 • 03/30/93 2.1500 11/03 -ll/03/92 2.4000 01/18 -01/18/93 l.4SO0 03/31 -03/31/93 2.0500 ll/04 -ll/04/92 2.1s00 01/19 -01/19/93 l.6500 04/0l -04./01/93 l.9500 ll/0S -ll/OS/92 2.1s00 01/20 -Ol/20/93 l.6500 04/02 -04/04/93 l.S500 11/06 • l°l/08/92 2.2s00 01/21 -01/21/93 2.2500 04/05 -04/0S/93 l.7000 ll/09 -ll./09/92 2.1000 01/22 -01/24/93 2.S000 04/06 -04/06/93 l.6000 ll/lO -ll/10/92 2.0000 Ol/2S -Ol/25/93 ,2. 5000 04/07 -04/07/93 1.4500 ll/ll. -ll/ll/92 2.0000 01/26 -Ol/26/93 2.7500 04/08 -04/08/93 l.5500 Rate His~ory Report Security#: Issue: 684285BK4 C:Usip: 684285BK4 ORANGE CNTY SANITATION DISTRICT# l,2,3,5,6,7 &: l Race Period: DAILY ORANGE OITY SR 1992 C (FGIC/FGIC LIQ ••OTC**) First Rate: 09/01/1992 Effective: Rate: Effective: Rate: Effec::eive: Rate: --------·--------------· -·---·------------------------------------------ 04/09 04/11/93 l.5500 06/22 -06/22/93 2.1000 09/02 • 09/02/93 2.2000 04/12 04/12/93 1.4000 06/23 -06/23/93 2.1000 09/03 -09/06/93 2.0500 04/13 04/13/9~ 1.6500 06/24 • 06/24/93 2.5000 09/07 -09/07/93 l.9500 04/14 04/14/93 1.6000 06/25 -06/27/93 3.0000 09/08 • 09/08/93 1.9000 04/.1S 04/lS/93 l.7500 06/28 -06/28/93 2.5000 09/09 -09/09/93 l.7500 04/16 04/18/93 2.1s00 06/29 -06/29/93 2.3000 09/10 -09/12/93 l.9000 04/19 -04/19/93 2.1500 06/30 -06/30/93 2.3000 09/13 -09/13/93 2.1000 04/20 • 04/20/93 2.1500 07/01 -07/01/93 l.S000 09/14 -09/14/93 2.1000 04/21 -04/21/93 2.1S00 07/02 • 07/05/93 l.7500 09/1S • 09/15/93 2.2S00 04/22 -04/22/93 2.2500 07/06 -07/06/93 l.S000 09/16 • 09/16/93 2.3500 04/23 -04/2S/93 2.2500 07/07 -07/07/93 l.3000 09/17 -09/19/93 2.S500 04/26 -04/26/93 2.1500 07/08 -07/08/93 l.2000 09/20 -09/20/93 2.4000 04/27 • 04/27/93 2.0000 07/09 -07/11/93 l.5000 09/21 -09/21/93 2.5500 04/28 -04/28/93 2.0000 07/12 • 07/12/93 1.7500 _09/22 • 09/22/93 3.0000 04/29 -04/29/93 2.1.000 07/13 -07/l.l/93 l.7500 09/23 -09/23/93 3.1000 04/30 -05/02/93 2.2000 07/14 -07/14/93 l.9000 09/24 -09/26/93 3.4000 05/03 -05/03/93 2.2000 07/15 • 07/15/93 2.1000 09/27 -09/27/93 3.2000 OS/04 -05/04/93 2.0S00 07/16 -07/lS/93 2.1500 09/28 -09/28/93 3.1000 OS/OS -05/05/93 1.9S00 07/19 -07/19/93 2.1500 09/29 -09/29/93 3.2500 OS/06 -05/06/93 2.0000 07/20 -07/20/93 2.1s00 ·09/30 -09/30/93 3.3500 05/07 -05/09/93 2.1000 07/21 -07/21/93 2.3000 10/01 -l0/03/93 2.9500 05/10 -05/10/93 2.2500 07/22 -07/22/93 2.3000 10/04 -l0/04/93 2.5000 05/ll -05/11/93 2.5000 07/23 -07/2S/93 2.5000 10/0S • l.0/05/93 2.3500 OS/12 • 05/12/93 2.S000 07/26 -07/26/93 2.S000 10/06 -10/06/93 2.2500 05/13 -05/13/93 2.4000 07/27 -07/27/93 2.5000 10/07 -10/07/93 2.1.500 05/14 -05/16/93 2.5000 07/28 • 07/29/93 2.7500 10/08 -lO/ll/93 2.1500 OS/17 -05/17/93 2.5000 07/29 -07/29/93 2.7000 10/12 -10/12/93 2.1500 05/18 • 05/18/93 2.7000 07/30 -08/01/93 2.5500 10/13 -10/13/93 2.0000 05/19 -05/19/93 2.7000 08/02 • 08/02/93 2.5500 10/14 • l0/14/93 l . .9500 05/20 -05/20/93 2.7000 08/03 • 08/03/93 2.4500 10/1S -10/17/93 2.0000 OS/21 -OS/23/.93 2.8000 08/04 -08/04/93 2.3000 10/18 -10/18/93 2.0000 05/24 -OS/24/.93 2.7500 08/0S -08/05/93 2.1500 l.0/l.9 -l.0/19/93 l.9000 OS/2S -OS/25/93 2.7000 08/06 -08/08/93 2.0500 10/20 -l0/20/93 1.9500 05/26 • 05/26/93 2.7S00 08/09 -08/09/93 2.0000 l.0/21 • 10/21/93 2.0000 05/27 -OS/27/93 2.,s00 08/10 -08/10/93 l.9000 10/22 -10/24/93 2.2000 OS/2S -OS/31/93 2.7500 08/11 -08/11/93 2.0000 10/25 -10/2S/93 2.1000 06/01 -06/01/93 2.2000 08/12 -08/12/93 2.0000 10/26 -l0/26/93 2.1500 06/02 -06/02/93 2.l.000 08/13 -08/15/93 2 .. 15.00 10/27 -10/27/.93 2.0500 06/03 • 06/03/93 1.3000 08/16 -08/16/93 2.2000 10/28 • 10/28/93 2.2000 06/04 • 06/06/93 l.8000 08/17 -08/17/93 2.2500 10/29 -10/31/93 2.4500 06/07 • 06/07/93 1.8000 08/18 -08/18/93 2.1500 ll/01 -l.l/01/93 2.3000 06/08 -06/08/93 1.6000 08/19 .. 08/19/93 2.1500 11/02 -11/02/93 2.3000 06/09 -06/09/93 1.4000 08/20 -08/22/93 2.0S00 ll/03 -ll/03/93 2.1000 06/10 -06/10/93 l.2S00 08/23 -08/23/93 2.0500 ll/04 -l.l/04/93 2.0500 06/ll • 06/13/93 1.1000 08/24 • 08/24/93 2.1000 ll/.0S -ll/07/93 2.1500 06/14 -06/14/93 1.2000 08/25 • OS/25/93 2.1500 11/08 -ll./08/93 2.0000 06/15 -06/15/93 1.2500 08/2& • OS/26/93 2.2000 ll/09 -ll./09/93 2.0000 06/16 -06/l~/93 l.2500 08/27 • 08/29/93 2.3S00 11/10 -11/11/93 2.0000 06/17 -06/17/93 l.0000 OS/30 -OS/30/93 2.2500 11/12 -ll/14/93 2.1000 06/18 -06/20/93 l.2000 08/31 -08/31/93 2.4.000 ll/15 -ll/15/93 2.1000 06/21 -06/21/93 2.1000 09/01 -09/01/93 2.3000 11/16 • ll./16/93 2.0000 Rate His~ory Report Security#: Issue: 684285BK4 Cusip: 684285BK4 oAANGE CNTY SANITATION DISTRICT# 1,2,3,5,6,7 ~ l Rate Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ **OTC**) First Rate: 09/01/1992 Effective: Rate: Effective: Rate: !ffective: Rate: --·--·--·----------------·----·---------·------------------·------------ ll/17 11/17/93 1.9000 01/31 -Ol/31/94 2.1000 04/13 -04/13/94 l.0000 ll/18 ll/18/93 1.8000 02/01 • 02/01/94 l .9500 04/14 • 04/14/94 l.4500 11/19 ll/21/~3 l.8000 02/02 -02/02/94 l.8000 04/15 -04/17/94 2.2000 ll/22 ll/22/93 l.8000 02/03 -02/03/34 l.8000 04/18 -04/18/94 2.2000 ll/23 ll/23/93 1.9000 oi/04 -02/06/94 1.8000 04/19 -04/19/94 2.3000 ll/24 • ll/25/93 l.9000 0'2/07 -02/07/94 2.1000 04/20 -04/20/94 2.7500 11/26 • ll/28/93 l,9000 02/08 -02/08/94 2.2500 04/21 -04/21/94 2.9000 11/29 ll/29/93 l.8000 02/09 -02/09/94 2.2500 04/22 -04/24/94 3.1000 ll/30 -ll/30/93 l.7000 02/10 -02/10/94 2.2S00 04/2S -04/25/94 3.0000 12/0l -12/01/93 1.7000 02/ll -02/13/94 2.3500 04/26 -04/26/94 2.6500 12/02 -12/02/93 l.2000 02/14 -02/14/94 2.2500 04/27 -04/27/94 3.2000 12/03 -12/05/93 l.l.000 02/1S -02/15/94 2.3500 04/28 • 04/28/94 3.0S00 12/06 -12/06/93 1.1000 02/16 -02/16/94 2.4S00 04/29 -03/0l/94 2.9500 12/07 -12/07/93 1.1000 02/17 -02/17/94 2.4500 05/02 -OS/02/94 2.9500 12/08 -12/08/93 1.1000 02/l.8 -02/21/94 2.3S00 ··os/03 -05/03/94 2.7S00 l2/Q9 -12/09/93 l.1000 02/22 -02/22/94 2.2000 05/04 -03/04/~4 2.3500 12/10 -12/12/93 l.2500 02/23 -02/23/94 2.3000 05/05 -OS/05/94 2.3500 12/13 -12/13/93 l.2500 02/24 -02/24/94 2.1500 05/06 -05/08/94 2.7500 12/14 -12/14/93 l.6500 02/25 -02/27/94 2.0s00 05/09 • 05/09/94 2.5500 12/l.5 -12/15/93 2.0500 02/28 • 02/28/94 2.2000 OS/10 -OS/10/94 2.S000 12/16 -12/16/93 2.0500 03/01 -03/01/94 2.1000 OS/ll -OS/ll/94 2 .. 9000 12/17 -12/19/93 2.5000 03/02 -03/02/94 2.2000 05/12 -OS/12/94 3.1000 12/20 -12/20/93 .2. 6000 03/03 -03/03/94 2.0000 OS/13 -05/15/94 3.1000 12/21 -l.2/21/93 2.7000 03/04 -03/06/94 2.0000 0S/16 -OS/16/94 3.0000 12/22 • 12/22/93 2.7000 03/07 • 03/07/94 l.9000 OS/17 -05/17/94 2.9000 12/23 -12/23/.93 2.8000 03/08 -03/08/94 l.7000 05/18 -05/18/94 2.6000 12/24 -12/26/.93 2.8000 03/0.9 -03/09/94 l.6500 05/19 .. 05/19/94 2.6000 12/27 • 12/27/93 2.8000 03/10 • 03/10/94 l.SSOO 05/20 -OS/22/.94 2.7000 12/28 -12/28/93 3.0000 03/l.l -03/13/94 l.5500 OS/23 -OS/23/94 2.5S00 12/2.9 -12/29/93 3.2500 03/14 -03/14/94 1.4S00 05/24, -05/24/94 2.6500 12/30 -12/30/93 3.4500 03/1S -03/1S/94 l.4500 05/2S -05/25/94 2.6500 12/31 -01/02/94 4.2500 03/l.' -03/16/94 l.3500 05/26 • 0S/26/.94 2.7500 01/03 -Ol./03/94 l.8000 03/17 -03/17/94 l.2500 05/27 -OS/30/94 3.2500 01/04 -01/04/.94 l.2000 03/18 -03/20/94 l.4000 05/31 -05/31/94 2.8000 Ol/0S -Ol/05/94 1.0000 03/21 -03/21/94. 1.2000 06/01 -Oo/01/94 2.6000 01/06 -01/06/94 1.0000 03/22 • 03/22/94 l.2000 06/02 -06/02/94 2.4500 01/07 -Ol/09/94 l.8000 03/23 -03/23/94 1.1000 05/03 -06/05/94 2.2000 Ol/10 -Ol/l0/94 1.,soo 03/24 -03/24/94 1.2500 06/06 -06/06/94 l.9000 01/11 -Ol./11/94 l.4500 03/25 -03/27/94 1.6500 06/07 • 06/07/94 l.7500 01/12 -01/12/94 l.4S00 03/28 -03/28/94 l.7500 06/08 -06/08/94 1.6500 01/13 -01/13/94 2.0000 03/29 -03/29/94 2.3000 06/09 -06/09/94 1.6500 01/14 -01/17/94 2.0000 03/30 -03/30/94 2.6000 06/10 -06/12/94 1. 6500 Ol/18 -01/18/94 2.0000 03/31 -03/31/94 3.0000 06/13 -06/13/94 l.SSOO Ol/19 -01/19/94 2.0000 04/01 -04/03/94 3.0000 06/14 -06/14/94 2.0000 01/20 -01/20/94 2.0500 04/04 -04/04/.94 2.1000 06/15 -06/15/94 2.4000 01/21 -01/23/94 2.0500 04/0S -04/05/94 1.7000 06/16 -06/16/94 2.4000 Ol/24 -01/24/34 1.9000 04/06 -04/06/94 l.6000 p6/l7 -06/19/94 2.7500 01/25 • 01/25/94 2.0000 04/07 -04/07/94 1.2000 06/20 -06/20/94 2.6000 01/26 -01/26/94 2.0000 04/08 -04/10/94 l. 05.00 06/21 -06/21/94 2.7000 01/27 • Ol/27/94 2.0000 04/11 • 04/11/94 l. 0000 06/22 -06/22/94 2.7000 Ol/2S -01./30/94 2.1000 04/12 -04/12/94 0.9000 06/23 -06/23/.94 2.8500 Race History Reper~ Security#: Issue: 68428S:BK4 CUsip: 684285BK4 ORANGE CNTY SANITATION OISTRICT# l,2,3,S,6,7 & l Rate Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ **OTC••) First Rate: 09/01/l.992 Effective: Rate: Effeceive: Rate: Effective: Rate: ---·-··-----------·-----·-·----·---------------------------------------- 06/24 .. 06/26/94 3.4000 08/26 -08/28/94 3.3000 10/31 -l0/31/94 3.4500 06/27 06/27/94 3.3000 08/29 -08/29/94 3.2500 11/01 -ll/01/94. 3.1500 06/28 06/28/94 3.3000 08/30 • 08/30/94 3.1000 11/02 • ll/02/.94 2.9500 06/29 06/29/94 3.,000 08/31 -08/31/94 2.8000 ll/03 -ll/03/94 2.8500 06/30 • 06/30/94 3.0000 09/01 -09/01/94 2.9000 11/04 -11/06/94 3.1000 07/01 • 07/04:/94 2.4000 09/02 • 09/05/94 2.8000 ll/07 -ll/07/94 3.2500 07/0S -07/05/94 l.6000 09/06 -09/06/94 2.6500 11/08 -ll/08/94 3.2500 01/0(, -07/06/94 l.3500 09/07 -09/07/94 2.7000 ll/09 -11/09/94 3.1500 . 07/07 -07/07/94 l.1500 09/08 -09/08/94 2.3500 ll/10 -11/13/94 3.2000 07/08 -07/10/94 1.2S00 09/09 -09/ll/94 2.S000 11/14 -ll/14/94 3.1000 07/11 -07/ll/94 l.2500 09/12 -09/12/94 2.SSOO ll/1S -ll/lS/94 3.2000 07/12 • 07/12/94 l.5500 09/13 • 09/13/94: 2.7000 11/16 • ll/16/94 3.5000 07/13 -07/13/94 1.7000 09/14 -09/14/94 2.9000 ll/17 -ll/17/94 -3.5000 07/14 • 07/14/94 2.1000 09/15 • 09/15/94 3.2000 11/lS -11/20/94 3.5000 07/1S -07/17/94 2.8000 09/16 -09/18/14 3.4500 ·ll/21 -ll/21/94 3.5000 07/18 -07/18/94 2.8000 09/19 -09/19/94 3.4000 11/22 -ll/22/94 3.5000 07/19 -07/19/94 2.8000 09/20 • 09/20/94 3.3S00 ll/23 -11/24/.94 3.6000 07/20 -07/20/94 2.8000 09/21 -09/21/94 3.3500 11/25 -l.l/27/94 3.6000 07/21 -07 /21/94 2.7000 09/22 -09/22/94 3.S000 11/28 -ll/28/94 3.6000 07/22 -07/24/94 2.7000 09/23 -09/25/94 3.4S00 ll/29 -ll/29/94 3.S000 07/25 -07/2S/94. 2.7000 09/26 -09/26/94 3.S500 11/30 -ll/30/94 3.3500 07/26 -07/26/94 2 .. 7000 09/27 • 09/27/94 3.6500 12/01 -12/01/94 3.2SOO 07/27 • 07/27/94 2.6000 09/28 • 09/28/94 3.7S00 12/02 • 12/04/94 3.2000 07/28 • 07/28/94 2.6000 09/29 • 09/29/94 3.7S00 12/05 • 12/05/94 2.9000 07/29 • 07/31/94 2.6SOO 09/30· • 10/02/94 3.4500 l.2/06 -12/06/94 2.6500 06/01 -08/01/94 2.5500 10/03 -l.0/03/94 3.0000 12/07 -12/07/94 4.5000 08/02 -08/02/94 2.4500 10/04 • 10/04/94 2.8000 12/08 -12/08/94 5.0000 08/03 -08/03/94 2.3000 10/05 • 10/05/94 2.ssoo 1.2/09 -12/11/94 5.5000 08/04 -08/04/94 2.,s00 10/06 -10/06/94 2.4000 12/12 -12/12/94 6.0000 08/05 • 08/07/94 2.4500 10/07 -10/10/94 2.1000 12/13 -12/13/94 6.5000 08/08 -06/08/94 2.3500 10/ll -lO/ll./94 l.9S00 12/14 -12/14/94 6.5000 0S/09 -08/09/94 2.2s00 10/12 -10/12/94 1.7000 12/l.5 • 12/15/94 6.5000 08/10 -08/1.0/94 2.3000 10/13 • 10/13/94 2.0000 12/16 -12/19/94 6.5000 08/ll -08/11/94 2.3000 10/14 • 10/16/94 .2. 3000 12/19 • l.2/19/94 6.5000 08/12 -08/14/94 2.S000 10/17 -10/17/94 2.3000 12/20 -12/20/94 6.5000 08/1S -08/15/94 2.5500 10/18 -l.0/1.8/94 2.asoo 12/21 -12/21./94 6.5000 08/1.6 -08/16/94 2.5S00 10/19 -10/19/94 2.8S00 12/22 -12/22/94 6.5000 08/17 -08/17/94 2.6000 10/20 • 10/20/94 2. 950.0 12/23 •-12/26/,4 6.5000 08/18 -08/18/94 2.6000 10/21 -l0/23/94 3.1500 12/27 -12/27/94 6.5000 0S/19 • 08/21/94 2.7S00 10/24 -10/24/94 3.1S00 12/28 -12/28/94 6.5000 08/22 • OS/22/94 2.7500 10/25 -10/25/94 3.2000 12/29 -12/29/94 6.5000 08/23 • 08/23/94 2.7500 10/26 -10/26/94 3.3000 12/30 • 12/31/94 6.6250 08/24 -OS/24/94 2.9000 10/27 • 10/.27/94 3.4S00 08/25 • OS/25/94 3.0500 10/28 -10/30/94 3.4500 Weighced Average for 09/01/1992 eo 12/31/1994 . 2.425~1 . l\.4~t;. •••••--,1 •"'-r--- I -~~ue: 68428S8~4 ·oRANGE CNTY SANITATION DISTRICT# 1,2,3,S,6,7 & 1 ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ ••OTC**) . Effeceive: Raee: Effeccive: Rate: Ol/03 Ol/03/95 01/04 -01/04/95 Ol/05 ~ 01/0S/95 6.S000 6.0000 s.sooo ------------------------01/06 -Ol/08/95 5.5000 01/09 • 01/09/95 5.0000 01/10 -Ol/10/95 4.2SOO CUsip: 6842BSBK4 Race Period: DAILY First Rate: 09/01/1992 Effeecive: Rate: ---------------------·--01/ll ... 01/11/95 3.2500 weighted Average for 01/03/199S to 01/11/1995: s.22222 Rate History Report .ssue: 68428SBK4 ORANGE arrY SANITATION DISTRICT# 1,2,3,5,6,7 & l ORANGS CNTY SR 1992 C (FGIC/FGIC LIQ **DTC**) Effeetive: Rate: Effective: Rate: Security#: CUsip: 684285BK4 Rate Period: DAILY First Rate: 09/0l/1992 Effective: Rate: --------------------------------·------·-··-----------------------------01/03 -01/03/95 01/04 -01/04/95 ~l/05 -Ol/05/95 Ol/06 -01/08/95 6.S000 6.0000 5.5000 5.5000 01/09 -Ol/09/95 Ol/10 -01/10/95 Ol/11 -01/11/95 01/12 -01/12/95 5.0000 4.2500 3.2500 2.5000 01/13 -01/16/95 01/17 -01/17/95 01/18 -Ol/18/95 Neighted Average for 01/03/1995 to 01/18/1995: 4.15625 2.7500 3.0000 3.0000 . : / Rate Hiacory Report. ·Issue: 68428SBK4 oAANGE CNTY SANITATION DISTRICT# l,2,3,S,6,7 & 1 ol<ANGZ. CNT'{ SR 1992 C (FGIC/FGIC LIQ **OTC••) ·p;ffec1:ive: Raee: £ffec:eive: Raee: ~CC:U:t .i.. '-1 Jt; CUsip: 68428SBX4 Rate Period: DAILY Firse Rate: 09/01/1992 Effec:eive: Rate: ---------·-------------· -----·-------------------------·----------------02/01 • 02/01/95 02/02 02/02/95 02/03 -02/0S/95 02/06 -02/06/95 4.6250 4.5000 4.2S00 4.5000 02/07 -02/07/95 02/08 -02/08/95 02/09 • 02/09/95 02/10 • 02/12/95 4.5000 4.2S00 4.2S00 4.3750 02/13 -02/13/95 4.3000 02/14 -02/14/95 4.2000 02/15 -02/lS/9s · 4.2000 Weigheed Average for 02/01/1995 eo 02/15/199S: 4.34661 Raee Hiscory Report Issue: 68428SBK4 ORANGE CNTY SANITATION DISTRICT# 1,2,3,S,6,7 & 1 ORANGE CNT't SR 1992 C (FGIC/FGIC LIQ *•OTC**) Effect:ive: Rate: Etfeeeive: Rate: ·---·-·--------------··--·----------------·----- 03/01 -03/01/95 4.0000 03/10 -03/12/95 2.3500 03/02 --03/02/95 3.7500 03/13 -03/13/9S 2.9500 03/03 -03/0S/9S 3.4S00 03/14 -03/14/9S 3.1000 03/06 • 03/06/9'$ 3.1500 03/15 -03/15/9S 3.2500 03/07 -03/07/9S 3.1000 03/16 -03/16/95 3.$000 03/08 -03/08/95 2.S000 03/17 • 03/19/95 3.S000 03/09 -03/09/95 2.s000 03/20 • 03/20/95 3.8000 Security#: Cusip: 68428SBK4 Rate Period: DAILY First Rate: 09/0l/1992 Effec~ive: Rate: 03/21 -03/21/95 03/22 -03/22/9S 03/23 -03/23/9S 03/24 -03/26/95 03/27 -03/27/9S 03/28 -03/28/95 03/29 • 03/29/95 4.1500 4.3000 4.4500 4.S000 4.6000 4.6000 4.6000 Weighced Average for 03/01/199S co 03/29/199S : 3.S7586 103/07/9502:41 PM Sheet1 ) DATE SERIES .. A. SERIES .. C. SERIES •93 REP 30-May-95 4.70 4.70 4.70 31-May-95 4.50 4.50 4.50 OSaJun-95 d:§5 3.20 3.00 07-Jun-95 1.60 2.50 2.50 12-Jun-95 4.05 ~ 4.50 14-Jun-95 4.20 4.50 4.90 tS.Jun-95 4.20 4.25 c:g-§) 21-Jun-95 4.30 4.25 4.30 26-Jun-95 4.50 4.75 4.50 28-Jun-95 4.30 4.75 4.30 3 .:TU<.. 3-2~ ~-ZS-3. 'LS'° S'".J"U'-2.,G.O z., i:;-o .• 2, e:.o ,,, J"l,I ,._ :z_,oo 2,1.0 -z.,oo t?..~'--z.,oo ,.,o 2..00 Page 1 R•t• History Report Issu,: 61C28SBIC4 ~GE CNTY SANITATION DISTRICT# 1,2,3,5,6,7 & 1 ORANGE CNTY SR 1992 C (~GIC/FGIC LIO ••ore••, Effective: Rat,: Effective: Rate: Sec: I: Cusip: 68428SBK4 Mode: DAII.Y First Rate: 06/01/1995 Effective: Rate: ·-------················ ·········----------------·---······-··--·-··--·· 0~/01 -05/01/95 4.1500 08/11 • 08/13/96 4.0000 1012• -10/24/95 3.8500 06/02 • 06/04/95 3.7500 08/14 • 08/14/95 3.8500 10/25 • 10/25/95 3.8500 09/05 • 05/05/95 3.2000 08/15 • OS/15/95 3.7500 10/28 • 10/26/95 3.8500 06/06 • 06/06/95 2.7500 08/18 • 08/18/95 3.7500 10/27 • 10/29/95 4.0000 06/07 -05/07/95 2.5000 08/17 • 08/17/95 3.5500 10/30 • 10/30/95 ,.0000 06/08 -05/08/95 2.7500 08/18 • 08/20/95 3.7000 10/31 • 10/31/95 4.0000 06/09. 01/11/95 3.7500 08/21 • 08/21/95 3.6000 11/01 • 11/01/95 3.7500 08/12 • OS/12/95 4.0000 08/22 • 06/22/95 3.4000 11/02 • 11/02/95 3.6000 06/13 -05/13/95 4.2000 08/23 • 08/23/95 3.2500 11/03 -11/05/95 3.7500 06/14 -06/14/95 4.5000 08/24 • 08/24/95 3.4500 11/06 • 11/01/95 3.7500 06/15 • 06/15/96 •.1000 OS/25 -08/27/95 3.8000 11/07 • 11/07/95 3.8500 08/15 • OS/18/95 4.5000 08/21 • 08/21/95 3.6000 11/08 -11/08/95 3.7500 08/19 -01/19/95 4.2500 08/29 • 08/29/95 3.6000 11/09 ~.11/09/95 3.9500 06/20. OS/20/9$ 4.2500 08/30 • 01/30/95 3.5000 11/10 • 11/12/95 4,0500 08/21 • OS/21/95 4.2500 08/31 • 08/31/95 3.3500 11/13 • 11/13/95 4.0000 06/22 • 05/22/95 4.5000 09/01 • 09/04/95 3.5500 11/14 • 11/14/95 4,0000 06/23 • 06/25/95 4.8000 09/05 • 09/05/95 3.5000 11/15 • 11/15/95 3.8500 05/28 -OS/28/95 4,7500 09/09 • 09/06/95 3.2500 11/18 • 11/15/95 3.6500 06/27 -05/27/95 4.7500 09/07 · 09/0.7/95 3.1500 11/17 • 11/19/95 3.8500 06/28 • 06/28/95 4.7500 09/08 • 09/10/~ 3.4000 11/20 • 11/20/95 3.7500 08/29 • 09/29/95 4,2500 09/11 • 09/11/95 3.9000 11/21 • 11/21/95 3.SSOO 06/30 • 07/02/95 4.S000 09/12 • 09/12/95 3.9000 11/22 • 11/23/9$ 3.S500 07/03 • 07/04/95 3.2500 09/13 • 09/13/95 3.SOOO 11/24 • 11/29/95 4.0000 07/05 -07/05/95 2.5000 09/14 • 09/14/95 3.8000 11/27 • 11/27/95 3.9000 07/06 • 07/06/95 1.9000 09/15 • 09/17/95 4.1500 11/28 • 11/28/95 3.9000 07/07 • 07/09/95 2.1500 09/18 • 09/18/95 4.1500 11/29 -11/29/95 3.7500 07/10 • 07/10/95 2.1000 09/19 • 09/19/95 4.0500 11/30 • 11/30/95 3.8000 07/11 • 07/11/95 2.1000 09/20 • 09/20/95 C.0500 12/01 • 12/03/95 3.8500 07/12 • "07/12/95 2.1000 09/21 • 09/21/95 4.2500 12/04 • 1210,195 3.5000 07/13 -07/13/95 2.3000 09/22 • 09/24/95 4.5000 12/05 • 12/05/95 3.3000 07/14. 07/16/95 3.2500 09/25 • 09/25/95 4.S000 12/01 -12/05/95 3,2000 07/17 -07/17/95 3.7500 09/29 • 09/29/95 4.5000 12/07 • 12/07/95 3.5000 011,a. 01118195 3.9500 09121. 09/27/95 4.sooo ,z,oa. 1211019s 4.1soo 07/19 -07/19/95 3.8500 09/28 • 09/21/95 4.U0O 12/11 • 12/11/iS 4.1500 07/20 • 07/20/95 3.8500 09/29 • 10/01/95 4.8500 12/12 • 12/12/95 4.2500 07/21 • 07/23/95 4.0000 10/02 • 10/02/95 3,7500 12/13 • 12/13/95 4.2500 07/24 -07/24/95 3.9000 10/03 • 10/03/9S 3.4000 12/14 • 12/14/95 4.2500 07/25 -07/25/95 3.7500 10/04 • 10/04/95 3.0000 12/15 • 12/17/95 4.3500 07/26 -07/26/9S 3.7000 10/05 • 10/05/95 3.1000 12/1S · 12/18/95 -..3500 07/27. 07/27/95 3.9000 10/01 • 10/09/95 3.5000 12/19 • 12/19/95 4.3500 07/2S -07/30/15 4,0000 10/10. 10/10/95 3.S000 12/20 • 12/20°J95 4.3500 07/31 • 07/31/95 4.3000 10/11 • 10/11/95 3.5000 12/21 • 12/21/95 4.3500 08/01 • OS/01/95 3.7500 10/12 • 10/12/95 3.5000 12/22 · 12/25/95 4.7500 08/02 -08/02/95 3.3500 10/13 • 10/15/95 3.7000 12/26 • 12/26/95 4.7500 08/03. 08/03/95 3.1500 10/16 • 10/16/95 3.1000 12/27 · 12i27/95 4.1500 08/04 -08/06/95 3.4000 10/17 • 10/17/95 3.SOOO 12/28 · 12/28/95 5.0000 08101. oe,01195 3.esoo 1011s. 10;1a1gs 3.eooo 12129 -011011$6 s.0000 OS/08 -08/08/95 4.0000 10/19 • 10/19/95 3.8000 01/02 • 01/02/96 3.5000 01/09 • 08/09/95 4.0000 10/20 • 10/22/95 3.9000 01/03 · 01/03/96 3.2000 08/10 -08/10/95 4.0000 10/23 • 10/23/95 3.7500 01/04 • 01/04/96 3.0000 Rate Histo~ Report Sec#: Issue: 68-4285BK4 Cusip: 5&428SBK4 ORANGE CNTY SANITATION OISTRICTI 1,2,3,5,6,1 & 1 Mode: DAILY ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ v•orc••) First Rate: 06/01/1995 Effective: Ratt: Effective: Ratt: Efhc:t1v1: Rate: ·--------·--·-----·-------·····-·············----·------·····----··-·-·· 01/05 • 01/07/98 3.0000 03/19 • 03/19/99 3.3500 05/29 · 05/29/96 3.8000 01/08 • 01/08/95 3.2500 03/20 • 03/20/M 3.3500 05/30 • 05/30/99 3.7000 01 /09 • ·0·1 /09/95 3.0000 03/21 • 03/21/95 3.2500 05/31 · 09/02/96 3.5000 01I10 • 01/10/96 3 .0000 03/22 • 03/24/91 3.2500 OS/03 • 06/03/99 3.1500 01 / 11 · 01/11/9& 2 .8500 03/25 • 03/25/91 3.2500 08/04 • 06/0•tH 2.9000 01/12 • 01/15/98 2.8500 03/21 • 03/21/98 3.1000 OS/05 • 01/05/99 2.6500 01 /18 • 01/18/9& 2.1500 03/27 • 03/27/9'& 3.0500 08/01 • 06/08/516 2.8000 01 / 17 • o, /17/91 2.6000 03/21 • 03/28/98 3.3000 06/07 • 08/09/98 2.8000 01/18 • 01/18/98 2.5000 03/29 • 03/31/N 3.6000 05/10 • 06/10/95 2.8000 01 /19 • 01/21/98 2.5000 04/01 · 04/01/91 3.1000 06/11 • 08/11/96 3.2000 01/22 • 01/22/96 2.4000 04/02 • 04/02/98 2.1000 05/12 • 06/12/98 3.1000 01/23 · 01 /'Z:J/98 2.5000 04/03 • o•/03/N a.5000 05/13 • 06/13/95 3.2000 01/24 -01/24/98 3. 1000 04/04 • 04/04/91 2.8000 05/14 ---08/16/91 3.4000 01 /25 • 01/2S/'iS 3.SOOO 04/05 • 04/07/98 2.8000 06/17 -05/17/98 3.4000 01/26 • 01/28/99 3.8000 04/01 • 04/01/N 3.0000 05/18 • OS/18/N 3.2500 01/29 01/29/91 3.8000 04/09 • 04/09/98 2.9000 06/19 05/19/98 3.2500 01/30 • 01/30/N 3.8000 04/10 • 04/10/98 3.2000 05/20 • 06/20/N 3.5000 01 /31 · 01 /31/98 3.5500 04/11 • 04/11/96 3.1000 06/21 ° 05/23/N 3.5000 02/01 02/01/95 3.4000 04/12 • 04/14/99 3.1000 06/24 05/%4/98' S'.5000' 02/02 • 02/04/96 3.3000 04/15 • 04/15/96 3.1000 05/25 • 08/25/98 3.4000 02/05 • 02/05/99 3.1500 04/15 • 04/16/96 3.1000 06/25 • 08/25/96 3.5000 02/06 -02/06/96 · 3.1500 04/17 • 04/17/98 3.4000 06/27 -06/27/98 3.5000 02/07 • 02/07/96 3.2500 04/11 • 04/18/98 3.4000 05/28 • 06/30/98 3.4000 02/08 • 02/08/95 3.2500 04/19 • 04/21/96 3.7500 07/01 -07/01/516 2.5500 02/09 · 02/11/95 3.4000 04/22 • 04/22/91 3.6500 07/02 -07/02/96 2.1500 02/12 • 02/12/95 3.3500 04/23 • 04/23/98 3.5500 07/03 • 07/04/98 1 .9500 02/13 • 02/13/95 3 .3500 04/24 • 04/24/96 3.6500 07/05 • 07/07/96 1 .8000 02/14 • 02/14/96 3.2500 04/25 • 04/25/98 3.5000 07/08 -07/08/98 1. 7000 02/15 • 02/15/98 3.2000 04/26 • 04/21/98 3.5000 01/01 • 07/09/98 1.5000 02/15 • 02/19/98 3.3500 04/29 • 04/29/96 3.6000 07/10 · 07/10/96 1.7000 02/20 • 02/20/N 3.3000 04/30 -04/30/98 3.5000 07/11 • 07/11/95 2.4000 02/21 -02/21/96 3.3000 05/01 • 05/01/96 3.3000 01/12 • 07/14/H 3.0000 02/22 • 02/22/95 3.2000 05/02 • 05/02/91 3.3000 07/15 -07/15/H 3.4500 02/23 • 02/25/96 3.2000 05/03 • 05/05/96 3.0000 07/18 -07/16/98 3.4000 02/21 • 02/25/91 3 .2000 05/01 -05/08/91 2.aoo·0 07/17 • 07/17/98 3.3000 02/27 -02/27/98 3.2500 05/07 • 05/07/98 2.asoo 07/11 · 07/18/96 3.2500 02/21 • 02/28/N 3.2500 05/01 • 05/0S/96 3.2500 07/19 • 07/21/96 3.4000 02/29 • 02/29/96 3.3500 05/09 • 05/09/98 3.S000 07/22 -07/22/96 3.2500 03/01 -03/03/91 3.3500 05/10 • 05/12/98 3.5000 07/23 -01/23/96 3.3500 03/04 · 03/04/N 3.0500 05/13 • 05/13/98 3.6000 07/24 • 07/24/99 3.3500 03/05 • 03/05/99 2.9000 05/14 • 05/14/98 3.5000 07/25 · 07/25/96 3.4500 03/05 -03/05/98 2.7000 05/15 • 05/15/H 3.3000 07/26 • 07/28/95 3.5500 03/07 • 03/01/98 2.6000 05/16 • 05/16/96 3.2500 07/29 • 07/29/96 3.4500 03/08 · 03/10/95 2.7500 05/17 -05/19/H 3. 1500 07/30 -07/30/95 3.4500 03/ 11 • 03/11/96 2.1500 05/20 • 05/20/96 3.0500 01/31 • 07/31/96 3.5500 03/12 • 03/12/95 2.7500 05/21 -05/21/H 3.0500 08/01 • 08/01 /H 3. 0500 03/13 · 03/13/95 2.7500 05/22 • OS/22/96 3.0500 08/02 · 08/04(96 2.9S00 03/ 14 • 03/14/96 2.7500 05/23 · 05/23/95 3.4000 08/05 • 08105/;& 2.1000 03/ 15 • 03/17/95 3.4500 05/24 · 05/27/96 3.8000 OS/06 · 08/05/98 3.2000 03/18 • 03/18/96 3.4500 05/21 • 05/28/95 3,8000 08/07 • 08/07/96 3.2000 Rate History Aepor1 Issue: 68'285BK4 ORANGE CNTY SANITATION DISTRICT# 1,2,3,S,6,7 & 1 ORANGE CNTY SIi 1992 C (FGIC/FGIC LIQ ••ore••) Efftctive: Rate: Effec,:ivt: Rate: Sec#: Cudp: 58428S8K4 P1ode: DAILY First Ra~•= 08/01/1995 Effective: Rate: •••••••••••••••••••••••• •••••••••••••••••••••••• ••••••••••••••••a••••••• 08i08 • 08/08191 3.3000 10/21 • 10/21 /98 3.3000 01 /03 • 01 /05/97 2.S500 08/09. 08/11/98 3.4000 10/22 • 10/22/98 3.3500 01/08 • 01/08/97 2.5500 08/12. 08/12/91 3.5000 10/23 • 10/23/98 3.450D 01/07 • 01/07/97 3.0500 08/13. OS/13/H 3 .6000 10/24 10/24/N 3.5000 01/01 • D1/08/97 3.3500 08/14. 08/14/91 3.8000 10/25 • 10/27/91 3.5000 01/01 • 01/09/97 3.5000 08/15. 01/15/91 3.8000 10/21 • 10/21/91 3.5000 01/10 • 01/12/97 3.S000 08/16. 08/18/N 3.6000 10/29 • 10/29/98 3.5000 01/13 • 01/13/97 3.4000 08/19 • 08/19/91 3.3500 10/30 • 10/30/91 3.SOOO 01/14 • 01/14/97 3.3000 08/20. 08/20/91 '3,2000 10/31 • 10/31/N 3.5000 01/15 • 01/15/97 ~.2000 08/21 • 01/21/N 3.2000 11/01 • 11/03/91 3.4000 01/11 • 01/11/97 3.2000 08/22. 01/22/N 3.2000 11/04 • 11/04/N 2.8000 01/17 • 01/20/97 3.3000 08/23. 08/25/96 3.3000 11/05 • 11/05/98 2.7000 01/21 • 01/21/W 3.2000 08/21 • 08/21/91 3.2500 11/08 • 11/08/N 2.7000 01/22 .•. 01/22/97 3.2000 08/27 • O8/27/N 3.2500 11/07 • 11/07/91 3.1500 01/23 • 01/23/97 3.3000 08/28 • 08/21/N 3.2500 11/08 • 11/11/98 3.50D0 01/2' • 01/29/97 3.5000 08/29 • 08/29/98 3.4500 11/12 • 11/12/98 3.4000 01/'l:7 • 01/27/97 3.5500 08/30 • 09/02/N 3.8500 11/13 • 11/13/N 3.5500 01/21 • 01/U/97 3.8000 09/03 • 09/03/N 3.3000 11/14 • 11/14/H 3.5000 01/29 • 01/29/97 3.6000 09/04 • 09/04/96 3.0000 11/15 • 11/17/98 3.5500 01/30 • 01/30/97 3.SOOO 09/05 • 09/05/H 2.8000 11/18 • 11/18/98 3.4000 01/31 • 02/C2/97 3.SOOO 09/08 • 09/08/98 2.9500 11/19 • 11/19/98 3.2000 02/03 • 02/03/97 3.1500 09/09 -09/09/91 2.9000 11/20 • 11/20/N 3.2000 02/04 ~ 02/04/97 2.8500 09/10. 09/10/N 2.8500 11/21 -11/21/H 3.4000 02/05 • 02/05/97 2.S500 09111 • ov111198 2.1Soo 11122 -11124/N 3.sooo 02108 • 0210&/97 2.a500 09/12. 09/12/98 3.0500 11/25 • 11/25/N 3.7500 02/07 • 02/09/97 2.9500 09/13 -09/15/98 3.2500 11/25 • 11/21/N 3.8000 02/10 • 02/10/97 3.0000 09/16 • 09/18/98 3.4500 11/27 • 11/28/91 4.0500 02/11 • 02/11/97 3.1000 09/17 -09/17/H 3.4500 11/29 • 12/01/N 4.0500 02/12 • 02/12/97 3.1500 09/18 • '09/11/96 3.4000 12/02 -12/02/91 3.1000 02/13 • 02/13/97 3.0500 09/19. 09/19/96 3.5000 12/03 • 12/03/98 2.5000 02/14 • 02/17/97 3.2000 09/20. 09/22./N 3.5000 12/04 • 12/04/N 2.3500 02/18 • 02/18/97 3.2000 09/23 • 09/23/96 3.7500 12/05 • 12/05/98 2.3500 02/11 • 02/19/97 3.1000 09/24 • 09/24/99 3.8000 12/08 • 12/08/91 2.9500 02/20 • 02/20/97 3.0000 09/25 • 09/25/N 3.8000 12/09 • 12/09/96 2.9500 02/21 • 02/23/97 3.1500 09/25 • 09/26/98 3.8000 12/10 • 12/10/91 2.9500 02/24 • 02/24/9'1 3.2500 09/27. 09/.29/91 3.9000 12/11 • 12/11/N 3.1000 02/25 • 02/25/97 3.2500 09/30. 01/30/H 3.9000 12/12 • 12/12/H 3.1000 02/25 • 02/21/97 3.3500 10/01 • 10/01/98 3.0500 12/13 • 12/15/98 3.3500 02/27 • 02/27/97 3.4000 10/02. 10/02/SS 2.7000 12/11 -12/15/N 3.3500 02/21 • 03/02/97 3.4000 10/03. 10/03/N 2.4500 12/17 • 12/17/98 3.5500 03/03 • 03/03/97 3.0000 10/04. 10/08/H 2.4500 12/11 • 12/18/N 3.5500 03/04 • 03/04/97 2.1000 10/07 • 10/07/tfJ 2.5000 12/19 • 12/19/98 3.5500 03/05 • 03/05/97 2.,000 10/0S. 10/08/98 2.6000 12/20 • 12/22/98 3.7000 03/08 • 03/05/97 2.2500 10/09. 10/09/91 3.3500 12/23 • 12/23/96 3.7000 03/07 • 03/09/97 2.2500 10/10 -10/10/91 3.7000 12/24 • 12/25/98 3.8000 03/10 • 03/10/97 2.10D0 10/11 10/14/98 3.7000 12/2S • 12/26/H 3.8000 03/11 03/11/97 1.9500 10/15. 10/1$/98 3.4000 12/27 • 12/29/98 3.9000 03/12 • 03/~2/97 1.ssoo 1011s . ,o,1s19s 3_,3000 12130 -12130/98 4.1000 03113 -03/13/97 , .asoo 10/17 • 10/17/H 3.4000 12/31 • 01/01/97 4.8500 03/14 • 03/18/97 2.0000 10/11 -10/20/95 3.4000 01/02 • 01/02/97 2.3000 03/17 • 03/17/97 2.2000 Rate History Report Sec#: Issue: 68428S8K4 Cusip: 68428!BK4 ORANGE CNTY SANITATION DISTRICTI 1,2,3,5,S,7 & 1 Hodt: DAIIY ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ ••ore••) First Rate: 06/01/1995 Effective: Rate: Effective: Ratt: Effective: Rate: ····-··--·--·--··--·-··· ·······------···--······ ····------··-······----- 03/18 • 03/19/97 2.8500 05/28 • 0S/28197 3.9000 08/07 • 01/07 /97 2.7500 03/19 -03/19/97 2.9000 05/29 -05/29/97 3.9000 OS/08 • 08/10/97 3.2000 03/20 · 03/20/97 3.0500 05/30 -01/01 /97 3.9000 08/11 • 08/11/97 3 . 1500 03/2t -03/23/97 3.3500 OS/02 -OS/02/97 3.2500 08/12 • 08/1Z/9T 3.0500 03/2• • 03/24/97 3.3000 06/03 • 05/03/97 3.0000 08/13 • 08/13/97 3.0500 03/25 • 03/25/9'1 3.3000 OS/04 • OIJ/04/~ 2.8000 0111• -01114/97 3.0500 03/28 • 03/25/97 3.3500 06/05 • 06/05/97 3.3500 01/15 -08/17/97 3.2000 03/27 • 03/21/97 3,4500 OS/OS • 06/01/97 3.7500 08/18 • 08/18/97 3.0500 03/28 • 03/30/97 3.'500 08/09 • OS/09/97 3.6500 08/19 • 08/19/97 2.9000 03/31 • 03/31/97 3.8000 06/10 -OS/10/97 3.5500 08/20 • 08/20/97 2.7500 04/01 -04/01/97 3.0500 06/11 • 06/11/97 3.5500 08/21 • 08/21/97 2.5500 04/02 • 04/02/97 2.8500 OS/12 • Ol/12/97 3.6500 08/22 • 0112,,11 3.0500 04/.03 -04/03/97 2.5500 08/13 • 01/15/17 3.'1500 08/25 ~-08/25/97 3.0500 04/04 • 04/06/97 3.0500 01/11 • 08/18/97 3.7500 08/21 -08/29/f/7 3.1500 04/07 -04/07/97 2.9500 06/17 • 06/17/91 3.7000 08/27 • OS/27/97 3.2500 04/08 • 04/08/97 2.8500 05/18 • 06/18/97 3.7000 08/28 • 08/28/97 3.4000 04/09 -04/09/97 2.7000 06/19 -08/19/97 3.ss·oo 011a -o·g,-01191 3.5500 04/10 • 04/10/97 2.9500 08/20 • 06/22/97 3.8000 09/02 • 09/02/97 3.3500 04/11 • 04/13/97 3 .2000 08/23 • 08/23/97 3.aooo 09/03 • 09/03/97 ~.35ao 04/14 04/14/97 3.2000 06/2,1 • 08/24/97 3.9000 09/04 • 09/04/97 3.2000 04/15 • 04/15/9'1 3.5000 08/25 -08/25/97 4.0500 09/05 • 09/07197 3.1500 04/15 • 04/15/97 3.6000 06/28 • 05/28/97 4.8000 09/01 • 09/08/97 3.1000 04/17 -04/17/97 3.8000 OS/27 • 08/29/97 5.4000 09/09 • 09/09/97 3.5500 04/18 • 04/20/97 4.1000 08/30 -05/30/97 3.9000 09/10 • 09/10/97 3.5500 04/21 • 04/21/97 4.1000 07/01 ·• 07/01/91 3.3500 09/11 • 09/11/97 3.6000 04/22 • 04/22/97 4.2000 07/02 • 07/02/97 2.7000 09/12 • 09/14/97 3.6500 04/23 -04/23/97 4.2500 07/03 -07/05/97 2.6500 09/15 • 09/15/97 3.7000 04/24 • 04/24/97 4.4500 07/07 • 07/07/97 2.4000 09/18 • 09/16/97 3.7000 04/25 • ·04/27/97 5.1500 07/08 • 07/08197 Z.1000 09/17 • 09/17/97 3.7500 04/2B • 04/28/97 4.8500 07/09 -07/09/97 ·2.1000 09/18 -09/18/97 3.8000 04/29 • 04/29/97 4.2500 07/10 • 07/10/97 3.0000 09/19 • 09/21/97 3.9500 04/30 • 04/30/97 3.7500 0'1/11 • 07/13/97 3.3000 09/22 • 09/22/97 4.0000 05/01 -05/01/97 3.7500 07/1' • 07/14/97 3.3000 09/23 -09/23/97 4.0000 05/02 • o510,1e1 3.8000 07/15 • 07/15/97 3.3000 09/24 • 09/24/97 4,0000 05/05 • 05/05/97 3.2000 07/15 • 07/18/97 3.2500 09/25 • 09/25/87 4.0000 05/05 • 05/0$/97 3.2000 07/17 • 01/17/97 3.3800 09/29 • 09/28/97 4.0000 05/07 • 05/07/97 3.5000 07/18 • 07/20/97 3.3000 09/29 • 09/29/97 4.0000 05/08 • 05/08/97 3.9500 07/21 -07/21/97 3.3000 09/30 • 09/30/97 3·.8500 05/09 • 05/11/97 4.3000 07/22 -07/22/97 3.2500 10/01 · 10/01/97 3.4500 05/12 • 05/12/97 4.0000 07/23 • 07/23/97 3.3500 10/02 • 10/02/97 3.2500 OS/13 -05/13/97 3.8500 07/24 • 07/24/97 3.4500 10/03 • 10/05/97 3.2000 05/14 • 05/14/97 3.7500 07/25 • 07/27/97 3.5000 10/05 • 10/0$/97 3.1500 05/15 • 05/15/97 3.8000 07/28. 07/21/97 3,4500 10/07 • 10/07/97 3.0500 05/15 -05/18/97 3.7000 07/29 -07/29/97 3.4000 10/0S -10/08/97 3.0500 05/ 19 -05/19/97 3.5000 07/30 • 07/30/97 3.4000 10/09 • 10/09/97 3.2000 05/20 • OS/20/97 3.3000 07/31 -07/31/97 3.S000 10/10 -10/13/97 3.4000 05/21 • 05/21/97 3.5000 08/01 -08/03/97 3.5000 10/14 -10/14/97 3.4500 05/22 -05/22/97 3.6000 08/04 • 08/04/97 3.2000 10/15 • 10/15/97 3.4500 05/23 · 05/26/97 4. 0500 08/05 • 08/05/97 3.0000 10/18 • l~/16/91 3.5000 05/27 • 05/27/97 4.0000 08/06 • 08/06/97 2.7500 10/17 • 10/19/97 3.5S00 Rate History Report Sec#: Issue: 6M2858K4 Culip: 86428581c. ORANG! CNTY SANITATION DISTAICTf 1,21315,8,7 & 1 Mode: DAILY ORANGE CNTY SR 1992 C (FG1C/FGIC LIQ ••OTC••) Fi~st Rate: OS/01/1995 Effective: A1t1: Effective: Rate: Effective: Rate: -·--····--···-·-···-···· ···-···--------········· ------·····---··---····- 10/20 • 10/20/97 3.5000 12/16 • 12/16/97 3.4000 02/12 · 02/12/98 1 .2000 10 /21 • 10/21197 3.4500 12/17 • 12/17/97 3.4000 02/13 • 02/18/98 3.2500 10/22 • 1~/22/97 3.5500 12/18 • 12/11/97 3.4500 02/17 • 02/17/91 3.0000 10/23 • 10/23/97 3.5500 12/11 • 12/21/97 3.4500 02/11 • 02/18/98 2.8000 10/24 • 10/26/97 3.7000 12/22 • 12/22/97 3.45'00 02/19 • 02/19/98 2.4000 10/27 • 10/27/97 3.7000 12/23 • 12/23/97 3.4500 02/20 • 02/22/91 3.0000 10/21 • 10/28/97 3.S000 12/24 • 12/25/97 3.7500 02/23 • 02/23/91 3.2000 10/29 • 10/29/97 3.4$00 12/28 • 12/21/91 3.8500 02/24 • 02/24/91 3.2500 10/30 • 10/30/97 3.8000 12/29 • 12/%1/17 3.UOO 02/25 • 02/25/98 3.3000 10/31 • 11/02/97 3.9500 12/30 • 12/30/97 4.1000 02/29 • 02/ZS/91 3.6000 11/03 • 11/03/97 3.7000 12/31 • 01/01/98 4.7500 02/21 • 03/01/98 3.8000 11/04 • 11/04/97 3.5500 01/02 • 01/04/91 3.5500 03/02 • 03/02/91 2.9000 11/05 • 11/05/97 3.&000 01/05 • 01/05/H 2.;500 03/03 • 03/03/91 1.6S00 11/01 • 11/0S/97 3.9000 01/08 • 01/01/98 2.3500 03/04 •· 003/04(91 1 .2500 11/07 • 11/09/97 3.9000 01/07 • 01/01/98 2.1000 03/05 • 03/05/91 1.0000 11/10 • 1_1/11/97 3.7500 01/08 • 01/08/98 2.2500 03/0S • 03/08/98 2.0000 11/12 · 11/12/97 3.8000 01/09 • 01/11/98 2.8500 03/09 • 03/09/98 1.6500 11/13 • 11/13/97 3.7500 01/12 • 01/12/98 2.5000 03/10 • 03/10/98 1.S500 11/14 • 11/18/97 3. 7500 01/13 • 01/13/98 2.5500 03/11 • 03/11/H·· 1".ffGO 11/17 • 11/17/97 3.5000 01/14 • 01/14/91 2.5500 03/12 • 03/12/98 1.1500 11/18 • 11/18/97 3.SS00 01/15 • 01/15/98 2,5500 03/13 • 03/15/98 3.0000 11/19 • 11/19/97 3.$500 01/16 • 01/19/98 2.9500 03/18 • 03/19/91 3.0000 11/ZO • 11/20/97 3.5500 01(20 • 01/20/98 2.9500 03/17 • 03/17/91 3.0000 11/21 • 11/23/97 3.6000 01/21 • 01/21/98 3,1000 03/18 • 03/18/98 3.1000 11/24 • 11/24/97 3.5000 01/22 ~ 01/22/98 3.1500 03/19 -03/19/98 3.3000 11/25 • 11/25/97 3.5000 01/23 • 01/25/98 3.4500 03/20 • 03/22/91 3.SSOO 11/29 • 11/27/97 3.5500 01/21 -01/28/98 3.4500 03/23 • 03/23/91 3.6000 11/28 • 11/30/97 3.5000 01/27 • 01(27/91 3.5000 03/24 • 03/24/91 3.6000 12/01 • ·12/01 /97 3.3000 01/21 • 01/28/98 3.5000 03/25 • 03/25/98 3.6000 12/02 -12/02/97 2.9000 01/29 • 01/21/91 .3.5000 03/28 • 03/28/98 3.6000 12/03 • 12/03/97 2.5000 01/30 • 02/01/98 3.6000 03/27" • 03/29/N 3.SDOO 12/04 • 12/04/97 2.3000 02/02 • 02/02/98 3.0000 03/30 • 03/30/91 3.5000 12/05 • 12/07/97 2,$000 02/03 • 02/03/98 2.5000 03/31 • 03/31/98 3.7000 12/08 • 12/08/97 2.S000 02/04 • 02/04/91 , • 7500 04/01 -04/01/M 3.3000 12/09 • 12/09/97 2.5500 02/05 • 02/05/98 1.5000 04/02 • 0,102191 3.0000 12/10 • 12/10/97 3.3500 02/01 • 02/08/91 1.5000 04/03 • 04/05/91 3.0000 12/11 • 12/11/97 3.5000 02/01 • 02/09/91 1,4000 04/08 • 04/08/98 2.9000 12/12 • 12/14/97 3.5000 02/10 • 02/10/98 t.3000 04/07 • 04/07/H 2.8000 12/15 • 12/15/97 3.5000 02/11 • 02/11 /98 t .2000 04/01 -04/08/98 2.8000 Weighted Average for 06/01/1995 to 04/08/1998: 3.40298 NEW ISSUE BOOK-E~RY ONLY RA TINGS: Standard & Poor's Corporation: AAA / A-1 + Moody's Investors Senice: Aaa/V~IG 1 (See "RATINGS" herein) In tlrt opinion of Co-Special Counsel. under e:cilting law. the Interest Component of Installment Payments received by tire Owners of the Cerrijicates is e.umpt from pen(Jna/ income taxes of the Srare of Ca/,fornia and. assuming compliance whir rlre ta:c covenant described herein. is uclu_ded from gross income for Federal income ta:c purposes and is nor o specific preference irem for purposes of rhe Federal o/rernative minimum ta:c. See. however. "'L£G"4 l J{A TTERS-Ta:c Jfatrers ·· herein regarding certain other tax considerations. $98,500,000 CERTIFICATES OF PARTICIPATION (CAPITAL IMPROVEMENT PROGRAM, 1990-92 SERIES C) evidencinr direct and proportionate interest& in the rirht to receive Installment Payments; to be made by COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 6, 7 AND 11 OF ORANGE COUNTY, CALIFORNIA Pursuant to an Agreement for Acquiaition and Conatruction Dated: Date of Original Delivery Price! 100% Due: August 1, 2017 This cover page contains cenain information for quick referenc.e only. II is not a summary of this i~ue. Investors must read the entire official statement to obtain informa1ion essential 10 the malting of an informed investment decision. The Cenificates evidence di.rect and proponionate interests in the right to receive Installment Paymencs to be made by the Panicipating Dmncts pursuant to the Acquisition Agreemenc. Each Panicipating Discrict is obligated to make its Installment Payments solely rrom tht: Net Enterprise Revenues of such Panicipating District's sanitary sewerage system. F.ach Panicipating District is responsible for its own Installment Paymen'IS only and is not obligated for any other Participating District's Installment Payments. The Certificates are deliverable in fully registered. book-en~ry form only and the registered Owner of the Cenificates will be Cede & Co., as nominee for The Depository Trust Company. New York, New York ("OTC"), which will act as securities depository for the Cenificaces. Purchasers, as Be.nefi.ctal Owners, will r.ot receive physical cenificates representing their interests in the Cenificates purchased. Payments wuh respect 10 the Certificates are 10 be made by State Street Bank and Trust Company of California. N.A .. as .trustee (the "Trustee"), or its agent. to the regmered Owner of the Certificates. So long as the Certificates ase subject to the OTC book-entry system. such payments are to be made 10 OTC or 11s nominee. Cede & Co. The disbursement of such paymentS 10 OTC Parucipants is the responsibility of OTC and disbursement of such payments to the Beneiic1al Owners of the Cenuicates tS the responsibility of the OTC Panicipants and Indirect Panicipants. See "BOOK-E~TR Y SYSTEM"' herein. The Cenific.ates will initially be executed and delivered i.n the Daily Mode and in denominations of S 100.000 or any integral mulnple thereof. While in 1he D~e. the mterest rate with respect to the Cenificates will be detennined by Merrill Lynch. Pierce. Fenner & Smith Incorporated. as Remarketing Agc.nt. on each Business Day on the basis of market conditions. as described herein. In the Daily Mode. [merest Componen1s are payable on the fifth Busmess Day of each calendar month commencing October 7. 1-992. The Certificates are subject to optional &l\d mandatory prepayment prior to maturity ud to mandatory l)urcllase u more fully described berein. The payment of pnnc1paJ and interest when due with respect to the Cenificaces will be insured by a muruc1pal bond insurance: policy co be 1ss1.1ed ·t,~ Fin3.11c1al Guaranty Insurance Company simultaneously w11h the delivery of the Cemfi.cates --FGIC .. Financial Guarantv Insurance • Company s.niff IMft 1-.d ~ finanrial G~ lneunnce Company.• pri•ue n,mpany noe •fflli•wd trilh any l:.S. ~ .,,_,.. Paym,mt of the Purchase Price equal to the Principal Component and up ro SO days accrued Interest Component at a maxim rn rate of 12':'c per annum on the C.:mficates tendered for purchase as described herein and not rema,rketed will be made pursuant and subject 10 rhc o 1andby Bond Purchase Agreement (the .. Initial Liquidity Facility") among the Panicipating Districts and FGIC SECURITIES PURCHASE, INC. '. Delivery of this Official Statement in conjunction with the offering of the Cenificares may only be made in conjuncuon wi h delivery of the prospecrus and 1hc: a.ccompanymg prospectus supplement relating to the lait.ial Liquidity Facility. The Initial Liquiduy Facility wiH e ire on the fifth anniversary of the delivery of-!he Cenificates unless tenninated sooner or extended as set fonh herein. The obligauon of each Panic1paung District to make its Installment Payments does r:ot constitute an obligation oisucb P ·cipail,ng~for llihich it 1s obligated to levy or pledge any form of taxauon or for which the Participating District has levied or pledged any fo f'tax~uon. The obhgauon of each Pan1c1patmg Dmnct 10 make its lnstallment Payments does not constitute a debt or indebtedness of such Pan.ic1paung istnct. the State of Califomia or any of its political subdivisions· within the meaning of any consututional or statutory debt !imitation or restriction. The Cenifi.cates are otTered when. as and if delivered and recetved by the Underwriter. subject to the approval of Mudge Rose Guthrie Ale:iander & Ferdon. Los Angeles. California and Rourke & Woodruff. a professional corporation. Orange. Californ~. Co-Special Counsel. and cena1n other .:ondinons. Certain legal matters will be pa.ued upon for the Underwriter by Orrick. Hemngton & Sutcliffe. Los Angeles. California. and ior 1he Dmncts by Rourke & Woodruff. a proiess1onaJ corporation. Orange. Califom111. It is an11c1pa1ed 1hat the Cenifica1es m book-entry form will be "l•atlable for delivery 10 OTC in New York. Sew York on or ahout September I. 1992. Merrill Lynch & Co. Draft as of July 15, 1998 PageS EXHIBIT II BID SHEET We have received and read the Request for Bids dated [August _, 1998], for an Investment Agreement concerning the investment of certain funds in connection with the County Sanitation Districts of Orange County, 1990-92 Series "C" COPs. Our offer is as follows: Agreement Net Yield: (Spread to COPs Arbitrage Yield) Provider: Your Long Term Ratings111: (Moody's/S&P) We hereby certify that we are a Qualified Provider under the requirements set forth in the Requests for Bids dated [August_, 1998], with respect to the bid on the Agreement. Signed: Name: Title: Phone Number: Fax Number: Date: Conditions, if any ? PLEASE FAX YOUR OFFER to Michael Harris of PPM no later than [ _:00 p.m. Eastern Time on __ _ August_, 1998] telephone: (717) 232-2723, fax: (717) 233-6073. Should the timing of the pricing of the Agreement be changed, the new time will be announced via telephone or facsimile. [1] Indicate if any rating is on credit watch or credit review. Fiscal Year 1998-99 Orange County Sanitation District, California ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT Reviewed and Approved by Finance, Administration and Human Resources Committee on July 15, 1998 Adopted by Board of Directors on July 29, 1998 (Resolution No. 98-XX} ,~ 00 MUNICIPAL TREASURERS' ASSOCIATION UNITED STATE'S & CANADA · December 10, 1996 Gary G. Streed Director of Finance /Treasurer County Sanitation Districts of Orange County, California P.O. Box 8127 Fountain Valley, CA 92728-8127 Dear Mr. Streed: The Municipal Treasurers' Association is pleased to present the County Sanitation Districts of Orange County, California with the Association's Investment Policy Certification. Members of the Association's Investment Policy Certification Committee congratulate the County Sanitation Districts of Orange County, California for its success in developing a comprehensiv~ written investment policy which meets the criteria set forth by the Association's Investment Policy Certification Program. Our reView of your investment policy is limited to the docarne!ltation submitted. The Certification is not a guarantee against loss due tc., economic and market conditions or human behavior. The Association's Investment Policy Certification Committee Chairman, Rod Rich, will be presenting the Investment Policy Certification plaque to all recipients at the Association's 1997 Annual Conference in Sacramento, California. The County Sanitation Districts will be recognized during the Awards Luncheon on Wednesday, August 20. We hope that you will be able to attend this luncheon, however, if your schedule does not permit you to attend, please call me at (202) 833-1017. TJ;ie County Sanitation Districts of Orange County, California is to be commended for enhancing its fiscal responsibility in the management of fiscal funds. Sincerely, /✓ ~if.t4(d~ ExecJti~~ ~!rector 1229 Nineteenth Street, N. w_ Washington, DC 20036 PHONE 202-833-1017 FAX 202-833-0375 Section 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 Appendix A. B. C. D. TABLE OF CONTENTS Topic Policy ........................................ 1 Scope ........................................ 1 Standard of Prudence . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Investment Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Ethics and Conflicts of Interest.. . . . . . . . . . . . . . . . . . . . 4 Authorized Financial Dealers and Institutions . . . . . . . . . 4 Authorized and Suitable Investments . . . . . . . . . . . . . . . . 5 Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Safekeeping and Custody . . . . . . . . . . . . . . . . . . . . . . . . 9 Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Maximum Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Performance Objectives and Benchmarks . . . . . . . . . . . . 11 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Investment Policy Adoption and Revision . . . . . . . . . . . . 13 Summary of Investment Authorization Board Resolution No. 98-:XX, Authorizing the District's Treasurer to Invest and/or Reinvest District Funds, and Adopting Investment Policy and Performance Benchmarks Sections of the California Government Code Pertinent to Investing Public Funds Glossary of Investment Terms ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT 1.0 Policy: It is the policy of the Orange County Sanitation District (OCSD) to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. 1.1. This Investment Policy is set forth by OCSD for the following purposes: 1.1.1. To establish a clear understanding for the Board of Directors, OCSD management, responsible employees and third parties of the objectives, policies and guidelines for the investment of the OCSD's idle and surplus funds. 1. 1.2. To offer guidance to investment staff and any external investment advisors on the investment of OCSD funds (see Appendix "A"). 1.1.3. To establish a basis for evaluating investment results. 1.2. OCSD establishes investment policies which meet its current investment goals. OCSD shall review this policy annually, and may change its policies as its investment objectives change. 2.0 Scope: This Investment Policy applies to all financial assets of OCSD, except for the funds of the Deferred Compensation Plan, which are managed externally; proceeds of OCSD's capital projects financing program, which are invested in accordance with provisions of their specific bond indentures; and such funds excluded by law or other Board-approved covenant or agreement. These funds are accounted for by OCSD as represented in OCSD's Comprehensive Annual Financial Report and include: • General Fund • Special Reserve Funds • Debt Service Funds (unless prohibited by bond indentures) • Capital Project Funds • Enterprise Funds • Internal Service Funds • Trust and Agency Funds • Any new Fund established by the Board of Directors (unless exempted by the Board) Page 1 of 13 3.0 Standard of Prudence: 3.1 The standard of prudence to be used by OCSD internal staff shall be the "prudent investor' standard defined below in Section 3.1. 1, and shall be applied in the context of managing an overall portfolio. Investment staff acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 3.1.1 The Prudent Investor Standard: Investments shall be made with judgment and care-under circumstances then prevailing- which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. 4.0 Investment Objectives: The primary objectives, in priority order, of OCSD's investment activities shall be: 4.1 Safety: The safety and preservation of principal is the foremost objective of the investment program of OCSD. Investments shall be selected in a manner that seeks to ensure the preservation of capital in OCSD's overall portfolio. This will be accomplished through a program of diversification, more fully described in Section 11.0, and maturity limitations, more fully described in Section 12.0, in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The investment program will be administered in a manner that will ensure that sufficient funds are available for OCSD to meet its reasonably anticipated operating expenditure needs. 4.3 Return on Investments: The OCSD investment portfolio will be structured and managed with the objective of achieving a rate of return throughout budgetary and economic cycles, commensurate with legal, safety, and liquidity considerations. Page 2 of 13 5.0 Delegation of Authority: 5.1 Authority to manage OCSD's investment program is derived from the California Government Code Sections 53600 et seq. and Sections 53635 et seq. The Board of Directors hereby delegates management responsibility for the OCSD investment program to it's Director of Finance / Treasurer, who shall establish written procedures for the operation of the investment program, consistent with this Policy. The Financial Manager/Assistant Treasurer shall be responsible for day-to-day administration, monitoring, and the development of written administrative procedures for the operation of the investment program, consistent with this Policy. No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by OCSD internal staff, and shall establish a system of controls to regulate the activities of internal staff and external investment advisors engaged in accordance with Section 5.3. 5.2 The administrative procedures for the operation of OCSD's investment program will provide for, but not be limited to, the following: 5.2.1 Formats for monthly and quarterly reports to the Finance, Administration and Human Resources Committee, and the Board of Directors. 5.2.2 Compliance with generally accepted accounting principles of the Government Accounting Standards Board. 5.2.3 Establishment of benchmarks for performance measurement. 5.2.4 Establishment of a system of written internal controls. 5.2.5 Establishment of written procedures for competitive bids and offerings of securities that may be purchased or sold by internal OCSD staff. 5.2.6 Establishment of a Desk Procedures Manual for treasury operations and management. 5.3 The Board of Directors of OCSD may, in its discretion, engage the services of one or more registered investment advisors to assist in the management of OCSD's investment portfolio in a manner consistent with OCSD's objectives. Such external investment advisors, which shall be selected through a competitive process, shall be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or be exempt from such registration. Page 3 of 13 6.0 Ethics and Conflicts of Interest: 6.1 Officers and employees of OCSD involved in the investment process shall refrain from personal business activities that could conflict with proper execution of OCSD's investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions that conduct business within OCSD's boundaries, and they shall further disclose any large personal financial/investment positions, the performance of which could be related to the performance of positions in OCSD's portfolio. 7.0 Authorized Financial Dealers and Institutions: 7.1 For investment transactions conducted by OCSD internal staff, the Treasurer will maintain a list of financial institutions authorized to provide investment services to OCSD, including "primary" or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule), and Federal or State of California chartered banks. No public deposit shall be made except in a qualified public depository as established by State law. All financial institutions which desire to become qualified bidders for investment transactions with OCSD must supply the following for evaluation by the Treasurer: 7.1.1. Audited financial statements for the institution's three (3) most recent fiscal years. 7.1.2. A statement, in the format prescribed by the Government Finance Officers Association (GFOA), certifying that the institution has reviewed OCSD's Investment Policy and that all securities offered to the Districts shall comply fully and in every instance with all provisions of the California Government Code and with this Investment Policy. 7.1.3. A statement describing the regulatory status of the dealer, and the background and expertise of the dealer's representatives. Selection of financial institutions, broker/dealers, and banks authorized to engage in transactions with OCSD shall be made through a competitive process. An annual review of the financial condition of qualified institutions will be conducted by the Treasurer. Page 4 of 13 7.2 Selection of broker/dealers used by external investment advisors retained by OCSD, shall be in compliance with contract provisions between OCSD and any external investment advisors, and shall be in substantially the following form: Use of Securiti.es Brokers: Neither the Investment Advisor nor any parent, subsidiary or related firm shall act as a securities broker with respect to any purchases or sales of securities which may be made on behalf of OCSD, provided that this limitation shall not prevent the Investment Advisor from utilizing the services of a securities broker which is a parent, subsidiary or related firm, provided such broker effects transactions on a "cost only" or "nonprofit" basis to itself and provides competitive execution. The Investment Advisor shall provide the Districts with a list of suitable independent brokerage firms (including names and addresses) meeting the requirements of Government Code Section 53601.5, and, unless otherwise directed by OCSD, the Investment Advisor may utilize the service of any of such independent securities brokerage firms it deems appropriate to the extent that such firms are competitive with respect to price of services and execution. 8.0 Authorized and Suitable Investments: All investments shall be made in accordance with the California Government Code including Sections 16429.1 et seq., 53600 et seq., and 53684, and as described within this Investment Policy. Permitted investments under this Policy shall include: 8.1 Securities issued by the US Government or an agency of the US Government and fully guaranteed as to payment by the US Government or agency of the US Government. Investment in mortgage-backed bonds and CMOs is not governed by this Section 8.1, even if such bonds are issued by agencies of the US Government. See Section 8.2 for conditions of purchase of mortgage-backed securities. See Section 8.11 for conditions of purchase of CMOs. 8.2 Mortgage-backed securities issued by an agency of the US Government, which are backed by pools of mortgages guaranteed by the full faith and credit of the U.S. Government, or an agency thereof. Selection of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage Investment Conduits), is hereby prohibited. 8.3 Commercial paper of "prime" quality and rated "P1" by Moody's Investor Services (Moody's), a.asJ. rated "A1" by Standard & Poor's Corporation (S&P), and issued by a domestic corporation organized and operating in the United States with assets in excess of $500 million and having a rating of "A" or better on its long-term debt as provided by Moody's or S&P. Purchases of eligible commercial paper may not exceed 180 days to maturity from the Page 5 of 13 date of purchase. Purchases of commercial paper shall not exceed 15% of the market value of the portfolio, except that a maximum of 30% of the market value of the portfolio may be invested in commercial paper, so long as the average maturity of all commercial paper in the portfolio does not exceed 31 days. No more than 5% of the market value of the portfolio, or 10% of the issuer's outstanding paper, may be invested in commercial paper issued by any one (1) eligible corporation. 8.4 Banker's acceptances issued by institutions, the short-term obligations of which are rated a minimum of "P1" by Moody's, or "A1" by S&P provided that: (a) the acceptance is eligible for purchase by the Federal Reserve System; (b) the maturity does not exceed 270 days; (c) no more than 40% of the total portfolio may be invested in banker's acceptances; and (d) no more than 30% of the total portfolio may be invested in the banker's acceptances of any one (1) commercial bank. 8.5 Medium term (or corporate) notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States, the long-term obligations of which are rated at least "A3" by Moody's, or "A-" by S&P. No more than 30% of the portfolio may be invested in eligible medium term or corporate notes. 8.6 Shares of mutual funds investing in securities permitted under this policy and under California Government Code Section 53601. Such funds must either: (1) attain the highest ranking, or the highest letter and numerical rating, provided by not less than two of the three largest nationally recognized rating services; or (2) have an investment Advisor registered with the Securities and Exchange Commission with not less than five (5) years of experience investing in the securities and obligations authorized under this Policy and under California Government Code Section 53601, and with assets under management in excess of $500 million. The purchase price of such shares may not include any commissions. Investment in mutual funds may not exceed 15% of the total portfolio. 8. 7 Certificates of deposit: 8.7.1 Secured·(collateralized) time deposits issued by a nationally or state-chartered bank or state or federal savings and loan association, as defined by Section 5102 of the California Financial Code, aD!!. having a net operating profit in the two (2) most recently completed fiscal years. Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500 et seq., and Chapter 4.5, Savings and Loan Association and Credit Union Deposit Law, Section 16600 et seq., of the California Government Code. 8.7.2 Negotiable certificates of deposit (NCDs) issued by a nationally or state-chartered bank or state of federal savings and loan Page 6 of 13 association, as defined by Section 5102 of the California Financial Code; gfilj_ which shall have a rating of "A" or better on its long-term debt as provided by Moody's or S&P; or which shall have the following minimum short-term ratings by at least two (2) rating services: "P1" for deposits by Moody's, "A1" for deposits by S&P, or comparably rated by a nationally recognized rating agency which rates such securities; or as otherwise approved by the District's Board of Directors. 8.8 Taxable or tax-exempt municipal bonds issued by the State of California or its subdivisions. Such securities must be rated "A3" or higher by Moody's, or "A-" or higher by S&P; or as otherwise approved by the Districts' Board of Directors. 8.9 The State of California Local Agency Investment Fund (LAIF). 8.10 The Orange County Investment Pool. 8.11 Collateralized mortgage obligations (CMOs) issued by agencies of the US Government which are backed by pools of mortgages guaranteed by the full faith and credit of the U.S. Government, or an agency thereof, and asset- backed securities rated "Aaa" by Moody's and "AAA" by S&P. Selection of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICS (Real Estate Mortgage Investment Conduits), is hereby prohibited. Securities eligible for purchase under this Section 8.11 shall be issued by an issuer having a rating on its unsecured long-term debt of" A" or higher. Combined purchases of mortgage-backed securities, CMOs and asset-backed securities as authorized under this Section 8.11, may not exceed 20% of the total Long-Term Operating Monies portfolio. 8.12 Repurchase agreements provided that: 8.12.1 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy, and are maintained at a level of at least 102% of the market value of the repurchase agreements. Collateral securities shall be delivered to a third-party safekeeping agent or to OCSD · s custodian bank. 8. 12.2 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy. In order to anticipate market changes and to provide a level of security for all repurchase agreement transactions, collateralization shall be maintained at a level of at least 102% of market value of the principal and accrued interest, and shall be adjusted no less than weekly. 8.13 Reverse repurchase agreements provided that: Page 7 of 13 8.13.1 No more than five percent (5%) of OCSD's portfolio shall be invested in reverse repurchase agreements, and there shall be no long-term reverse repurchase agreements unless otherwise authorized by the Districts' Board of Directors. 8.13.2 The maximum maturity of reverse repurchase agreements shall be ninety (90) days. 8.13.3 Reverse repurchase agreements shall mature on the exact date of a known cash flow which will be unconditionally available to repay the maturing reverse repurchase. 8. 13.4 Proceeds of reverse repurchase agreements shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not be used to speculate on market movements. 8.13.5 All reverse repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the reverse repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by the Public Securities Association. 8.14 Sales of OCSD-owned securities in the secondary market may incur losses in order to improve the risk or return characteristics of the portfolio, to prevent anticipated further erosion of principal, or when trading for securities that result in an expected net economic gain to OCSD. 8.15 If securities owned by the OCSD are downgraded by either Moody's or S&P to a level below the quality required by this Investment Policy, it shall be OCSD's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a decision is made to retain the downgraded securities in the portfolio, their presence in the portfolio will be monitored and reported monthly to the OCSD General Manager, the Finance, Administration and Human Resources Committee and Board of Directors. 9.0 Collateralization: Generally, the value to secure deposits under this Policy shall comply with Section 53652 of the California Government Code. Collateralization will be required for secured time deposits, as more fully described in Section 8.7.1; and repurchase agreements, as more fully described in Section 8.12.1. Collateral will always be held by an independent third- party, as more fully described in Section 10.1. The right of collateral substitution is granted. Page 8 of 13 10.0 Safekeeping and Custody: 10.1 All securities transactions, including collateral for repurchase agreements, entered into by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by OCSD's third-party custodian bank, which shall be selected through a competitive process, or that agent's representative, or in the agent's account at the Federal Reserve Bank, and evidenced by safekeeping receipts. 11.0 Diversification: OCSD will diversify its investments by security type, issuer, and financial institution in accordance with the following: 11.1 There is no limit on investment in securities issued by or guaranteed by the full faith and credit of the U.S. government. 11.2 No more than 20% of the portfolio may be invested in securities of a single agency of the U.S. government, which does not provide the full faith and credit of the U.S. government. 11.3 No more than 5% of the portfolio may be invested in securities of any one issuer, other than the U.S. government or its agencies. 11.4 No individual holding shall constitute more than 5% of the total debt outstanding of any issuer. 11.5 No more than 40% of the portfolio may be invested in banker's acceptances. 11.6 No more than 15% of the portfolio may be invested in commercial paper, except that 30% of the portfolio may be so invested so long as the average maturity of all commercial paper in the portfolio does not exceed 31 days. 11. 7 No more than 30% of the portfolio may be invested in medium-term (corporate) notes. 11.8 No more than 15% of the portfolio may be invested in mutual funds. 11.9 No more than 30% of the portfolio may be invested in negotiable certificates of deposit. 11.1 O No more than 10% of the portfolio may be invested in eligible municipal bonds. Page 9 of 13 11.11 No more than 20% of the Long Term Operating Monies portfolio may be invested in a combination of mortgage-backed securities, CMOs and asset- backed securities. Mortgage-backed securities, CMOs and asset-backed securities may only be purchased by the Districts' external money managers with prior Board approval, and may not be purchased by the District's staff. 11.12 No more than the lesser of 15% of the portfolio or the statutory maximum may be invested in LAIF. 11.13 No more than 15% of the portfolio may be invested in the Orange County Investment Pool. 11.14 No more than 20% of the portfolio may be invested in repurchase agreements. 11.15 No more than 5% of the portfolio may be invested in reverse repurchase agreements. 12.0 Maximum Maturities: To the extent possible, OCSD will attempt to match its investments with reasonably anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall designate, from time-to-time, the amounts to be allocated to the investment portfolio. OCSD monies invested in accordance with this Policy are divided into two (2) categories: 12.1 Liquid Operating Monies. Funds needed for current operating and capital expenditures are known as Liquid Operating Monies. 12.1.1 The maximum final stated maturity of individual securities in the Liquid Operating Monies account portfolio shall be one (1) year from the date of purchase. 12.1.2 The average duration of the Liquid Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' cash flow requirements, but may never exceed 180 days, and shall be reviewed and approved by the Finance, Administration and Human Resources Committee, and shall be updated as needed. 12.2 Long Tenn Operating Monies. Funds needed for longer term purposes are known as the Long Term Operating Monies. 12.2.1 The maximum final stated maturity of individual securities in the Long Term Operating Monies account portfolio shall be five (5) years from the date of purchase, unless otherwise authorized by the Districts' Board of Directors. Page 10 of 12 12.2.2 The duration of the Long Term Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' five- year cash flow forecast, shall be reviewed and approved by the Finance, Administration and Human Services Committee, and shall be updated as needed. 12.2.3 The duration of the Long Term Operating Monies account portfolio shall never exceed 120% of the duration as established in accordance with Section 12.2.2. 12.2.4 The duration of the Long Term Operating Monies account portfolio shall never be less than 80% of the duration as established in accordance with Section 12.2.2 13.0 Internal Controls: 13.1 The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. 14.0 Performance Objectives and Benchmarks: 14. 1 Overall objective. The investment portfolio of OCSD shall be designed with the overall objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and reasonably anticipated cash flow needs. 14.2 The Liquid Operating Monies. The investment performance objective for the Liquid Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index approved by the Finance, Administration and Human Resources Committee, and by the District's Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. 97-32 ( see Appendix "B"). 14.3 The Long Tenn Operating Monies. The investment performance objective for the Long Term Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index selected by the Finance, Administration and Human Resources Committee and approved by the Districts' Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. 96-32 (See Appendix "B"). Page 11 of 12 15.0 Reporting: 15. 1 Monthly and quarterly investment reports shall be submitted by the Treasurer to the Finance, Administration and Human Resources Committee which shall forward the reports to the District's Board of Directors. The monthly reports shall be submitted to the Finance, Administration and Human Resources Committee within 30 days of the end of the month. These reports shall disclose, at a minimum, the following information about the risk characteristics of OCSD's portfolio: 15.1.1 15.1.2 Cost and accurate and complete market value of the portfolio. Modified duration of the portfolio compared to Benchmark. 15.1.3 Dollar change in value of the portfolio for a one-percent (1 %) change in interest rates. 15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.1.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. 15.1.6 Average portfolio credit quality. 15. 1. 7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. 15.1.8 State that all investments are in compliance with this policy and the California Government Code, or provide a listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 15.1. 9 Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods. 15.1.1 O State that sufficient funds are available for OCSD to meet its operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. Page 12 of 13 15.2 OCSD's Treasurer shall meet quarterly with the Finance, Administration and Human Resources Committee to review investment performance, proposed strategies and compliance with this investment policy. External investment advisors may be required to attend said meetings at the discretion of the Chairman of the Finance, Administration and Human Resources Committee. 16.0 Investment Policy Adoption and Revision: 16.1 The Investment Policy of OCSD shall be reviewed by the Finance, Administration and Human Resources Committee and shall be adopted by resolution of the Board of Directors of OCSD. The Policy shall be reviewed on an annual basis by the Finance, Administration and Human Resources Committee, which shall recommend revisions, as appropriate, to the Board of Directors. Any modifications made thereto shall be approved by the Board of Directors. 16.2 The Finance, Administration and Human Resources Committee shall serve as the oversight committee for the District's Investment program and shall adopt guidelines for the ongoing review of duration, quality and liquidity of the District's portfolio. Page 13 of 13 .. ATTACHMENT 2 Investment Agreement Bid Documents t • Draft as of July 15, 1998 Potential Provider: Re: Potential Provider Pre-Qualification Certification County Sanitation Districts of Orange County 1990-92 Series "C" COPs Debt Service Reserve Fund Investment Agreement Public Financial Management, Inc. (PFM), acting as Financial Advisor to the County Sanitation Districts of Orange County (the "Issuer") for this transaction, is seeking to pre-qualify a limited group of potential providers to receive bid specifications for an Investment Agreement (the "Agreement") for the proceeds of the Issuer's 1990-92 Series "C" COPs (the "COPs"). The Agreement will cover the Debt Service Reserve Fund, which has a requirement of $9,850,000 and a final maturity of August 1, 2017. We are therefore writing to invite your institution to submit a pre-qualification certification by answering the questions listed in Exhibit I. The County Sanitation Districts of Orange County, incorporated in 1954, encompasses the Northern section of Orange County. The third-largest water district west of the Mississippi River, the Districts provide wastewater treatment for an area of the County covering 471 square miles and serving a population of 2,289,500, or approximately 87% of the ·county's population. The Districts wastewater system includes approximately 630 miles of sewers that convey wastewater to two wastewater treatment plants, with primary treatment capacities of 108 and 186 million gallons per day (mgd), respectively. Both plants are master-planned for a future primary and secondary treatment capacity of 240 mgd for a combined total of 480 mgd. ff you have any questions or would like more information, please call Michael Harris or Steve Wisloski, at (717) 232-2723. The Issuer reserves the right to modify or revoke this request, and to accept or reject this certification in whole or in part as necessary to serve the best interests of the Issuer. This request does not constitute an expressed or-implied contract. The Districts will not reimburse any provider for costs incurred to prepare and submit a certification. We look forward to your response. Attachment Sincerely, PUBLIC FINANCIAL MANAGEMENT, INC. Michael W. Harris Managing Director Draft as of July 15, 1998 EXHIBIT I PRE-QUALIFICATION CERTIFICATION Provider: Your Long Term RatingsU1: (Moody's/S&P) Page 1 We hereby certify that we have not been sued by any governmental unit located within the County of Orange, California in the past ten years. We are not under any disciplinary action, censure, arbitration or inquiry involving your organization or any employee of your organization in the past ten years with respect to procuring investments, making payments to third parties, fee splitting arrangements or similar activities including those involving the Securities Exchange Commission, National Association of Securities Dealers, MSRB, or similar regulatory or enforcement entity. Signed: Name: Title: Phone Number: Fax Number: Date: PLEASE FAX YOUR CERTIFICATION to Michael Harris of PFM no later than [ _:00 p.m. EDT on __ _ , August_, 1998] telephone: (717) 232-2723, fax: (717) 233-6073. [1] Indicate if any rating is on credit watch or credit review. Draft as of July 15, 1998 Potential Provider: Re: Request for Bids Specifications County Sanitation Districts of Orange County 1990-92 Series "C" COPs Debt Service Reserve Fund Investment Agreement Public Financial Management, Inc. (PFM}, acting as Financial Advisor to the County Sanitation Districts of Orange County (the "Issuer") for this transaction, is seeking bids from qualified providers for an Investment Agreement (the "Agreement") for the proceeds of the Issuer's 1990-92 Series "C" COPs (the "COPs"). The Agreement will cover the Debt Service Reserve Fund. Information regarding the nature of the funds and the amounts to be held under the Agreement can be found in the bid specifications included with this letter for your information. The selection of the winning provider for the Agreement will be made on the basis of the selection requirements set forth herein. The winning provider must be acceptable to the Issuer. Final bids will be accepted until [ _:00 p.m. Eastern Time on ___ , August _, 1998]. Bids should be telecopied to Michael Harris at PFM, Fax: (717) 233-6073, phone: (717) 232-2723. See Exhibit II for the Bid Sheet. The County Sanitation Districts of Orange County; incorporated in 1954, encompasses the Northern section of Orange County. The third-largest water district west of the Mississippi River, the Districts provide wastewater treatment for an area of the County covering 471 square miles and serving a population of 2,289,500, or approximately 87% of the County's population. The Districts wastewater system includes approximately 630 miles of sewers that convey wastewater to two wastewater treatment plants, with primary treatment capacities of 108 and 186 million gallons per day (mgd), respectively. Both plants are master-planned for a future primary and secondary treatment capacity of 240 mgd for a combined total of 480 mgd. Your bids should be b~ed on the information provided in this package. Any bids modifying or amending any specification or requirement contained herein should be discussed and agreed to in advance of the bid. If you have any questions or would like more information, please call Michael Harris or Steve Wisloski, at (717) 232- 2723. Additionally, the Districts use Bloomberg for disclosure. The Issuer reserves the right to modify or revoke this request for bids, and to accept or reject bids in whole or in part as necessary to serve the best interests of the Issuer. This request for bids does not constitute an expressed or implied contract. The Districts will not reimburse any provider for costs incurred to prepare and submit a bid. We look forward to your response. Attachmen~ Sincerely, PUBLIC FINANCIAL MANAGEMENT, INC. Michael W. Harris Managing Director COUNTY SANITATION DISTRICTS OF ORANGE COUNTY CERTIFICATES OF PARTICIPATION. 1990-92 SERIES C DEBT SERVICE RESERVE FUND INVESTMENT AGREEMENT ENCLOSURES • Request for Bids Specifications • Exhibit I: Historical COPs Interest Rates • Exhibit Il: Bid Sheet Draft as of July 15, 1998 Pagel 1. Deposit: (Subject to Change) 2. Type of Agreement: 3. Purpose: 4. Anticipated Funding Date: 5. Final Maturity: 6. Bidding Date/rime: 7. Basis of Award: 8. Interest Payments: BIDDING SPECIFICATIONS IN BRIEF DEBT SERVICE RESERVE FUND INVESTMENT AGREEMENT COUNTYSANITATIOND~TRICTSOFORANGECOUNTY CERTIFICATES OF PARTICIPATION 1990-92 SERIES C [$9,850,000] Investment Agreement (the "Agreement") will accept the deposit of the required Debt Service Reserve Fund (the "Reserve Fund"). The proceeds of the COPs were used (i) to finance the costs of the acquisition and construction of wastewater treatment and disposal facilities, (ii) to reimburse the costs of trunk wastewater lines and wastewater treatment and disposal facilities, and (iii) to establish a Debt Service Reserve Fund. These projects have been completed and remain in operation: [August_, 1998] August 1, 2003 Bids must be faxed to Michael Harris or Steve Wisloski at (717) 233-6073 no later than L:00 p.m. Eastern Time on ___ , August_, 1998]. Bids should be faxed using the Bid Sheet attached as Exhibit II hereto. The Agreement will be awarded to the provider offering the highest variable- rate yield as a fixed spread to COPs arbitrage yield. The award shall be made as soon as practical after the tabulation of the bids. The Issuer reserves the right to reject any and all bids that are not submitted in strict accordance with the terms herein. The Issuer also reserves ·the right. in its sole discretion, to waive any irregularity in any bid and to select the winning provider among providers submitting identical bids. The Agreement will provide for a single variable rate of interest above the COPs arbitrage yield, reset daily and payable upon the fifth business day of each calendar month commencing September 8, 1998. Historical interest rates for the COPs are included in Exhibit I. Please note there are gaps in the currently-available data between 1/19/95 through 1/31/95, 'l116/95 through 2128/95, and 3/30/95 through 5/29/95. However, we believe this will not substantially affect analysis of the COPs historical rate levels. Draft as of July 15, 1998 9. Withdrawals: 10. Legal Opinion: 11. Rating Requirement: 12. Rating Downgrade Provisions: 13. Bid Subject to Closing: 14. Monthly Statements: Page2 Withdrawals of principal at par from the Agreement will be permitted to pay debt service or for any other use of the Reserve Funds set forth in the Trust Agreement. An opinion of counsel regarding the validity. legality and enforceability of the Agreement will be required in form acceptable to Issuer's bond counsel. If applicable, both domestic and foreign counsel opinions will be required as specified below. The Provider must be subject to jurisdiction for an action for enforcement of obligations under the Agreement in a state or federal court of the United States of America. A judgment in a state or federal court with respect to the Agreement must be recognized as enforceable in the country of the foreign or off-shore bank. Foreign providers must consent to U.S. jurisdiction and the-appointment of an agent for service of process. The Provider must be capable of supporting a long-term rating of at least AA and Aaby S&P and Moody's, respectively. The provider must be acceptable to the_ !ssuer and the COPs Insurer, FGIC. Collateral -In the event that the Provider's long-tenn rating from S&P or Moody's is withdrawn, suspended or downgraded below AA-or Aa3, respectively. the Provider must provide collateral as follows: U.S. Treasuries at 104% of the principal and accrued but unpaid interest obligations. or senior debt or pass-through mortgage-backed securities (or participation certificates) of GNMA. FNMA or FHLMC at 105% of principal and accrued but unpaid interest obligations. For all collateral, the Provider must grant the Trustee or third-party custodian a first perfected security interest, and a legal opinion satisfactory to FGIC as to the perfection of such security interest. Collateral must be free and clear of all third party liens and claims and must be registered in the name of the Trustee or custodian. The Provider is required to notify the Trustee immediately and to take actions to satisfy the Issuer within 10 business days of such downgrade. Termination -In the event that the Provider's long-tenn rating from S&P or Moody's is withdrawn, suspended or downgraded below A-or A3, respectively, the Trustee shall terminate the Agreement and receive invested amounts including accrued interest but without penalty. The Provider is required to notify the Trustee immediately and to take actions to satisfy the Issuer within 10 business days of such downgrade. In the event that the transaction does not close for whatever reason, neither the Issuer nor any of the Issuer's advisors will be liable for any costs incurred by the Provider. The Provider must provide statements to the Issuer and to the Trustee each month showing withdrawals, interest accrued and the balance invested in the Agreement. Draft as of July 15, 1998 15. Expenses: 16. Tax Certificate: 17. Trustee: 18. Additional lnfonnation: Page3 All expenses associated with the Provider's perfonnance of the Agreement, including but not limited to the Provider's legal fees, brokers' fees and electronic funds transfer charges, are the sole responsibility of the Provider. The provider will be responsible for providing an acceptable tri-party custodian. Alternatively, the provider will be responsible for paying all custodial expenses. including set-up costs not to exceed $1,000, legal opinion not to exceed $2,000, annual fees not to exceed $200, transaction fees of $65 per collateral security deposited or withdrawn, and any other costs related to the Agreement to the Trustee. The Provider will be required to pay an up front fee equal to the present value factor of 0.05% or 5 basis points on the assets reasonable expected to be annually invested under the Agreement to PFM at settlement of the Agreement. The present value factor will be based on the taxable rate. The Provider will be expected to sign a tax compliance certificate assuring that the Agreement is entered into at a fair market rate and disclosing any brokerage fees paid. State Street Bank and Trust Company of California, N.A. Providers requesting additional information may contact Michael Harris or Steve Wisloski at PFM, phone: (717) 232-2723. Draft~ of July 15, 1998 EXHIBIT I HISTORICAL INTEREST RATES County Sanitation Districts Nos. I, 2, 3, 6, 7 and 11 of Orange County $98,500,000 Certificates of Participation (Capital Improvement Program, 1990-92 Series C) For the period: 9/1/92 -_l_l98 Page4 Rate History Reporc Securicy #: Issue: 684285BI<4 CUsip: 58428SBK4 oRANG! CNTY SANITATION DISTRICT# l,2,3,S,6,7 & l Raee Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ ••OTC**) Firsc Race: 09/01/1992 Effective: Raee: Effective: Race: Effective: Rate: ------·-------------~------------···--------------------··-------------- 09/01 --09/01/92 2.7000 ll/12 -ll/12/92 2.0000 01/27 -01/27/93 2.7500 09/02 09/02/92 2.6000 ll/13 -ll/lS/92 1.9000 01/28 -Ol/28/93 2.7000 09/03 09/03/92 2.7500 ll/16 -ll/i6/92 l.8000 01/29 -01/31/93 2.SSOO 09/04 -09/07/9-2 2.9000 ll/17 -11/17/92 1.8000 02/01 -02/01/93 2.0000 09/08 . 09/0S/92 2.9000 ll/18 -11/18/92 1.7000 02/02 -02/02/93 l.7500 09/09 -09/09/92 2.7000 ll/19 • ll/19/92 1.7000 02/03 • 02/03/93 1.sooo 09/10 -09/10/92 2.6000 ll/20 -ll/22/92 2.0000 02/04 • 02/04/93 1.6000 .. "09/ll -09/13/92 2.4500 11/23 -11/23/92 1.S500 02/0S -02/07/93 2.0000 09/14 . 09/16/92 2.7000 11/24 -ll/24/92 2.0000 02/08 -02/08/93 1.8000 09/15 • 09/15/92 3.0000 11/25 -11/26/92 2.2000 02/09 -02/09/93 1.6500 09/16 -09/16/92 3.0000 ll/27 • 11/29/92 2.1500 02/10 -02/l0/93 l.5000 09/17 -09/17/92 3.0000 11/30 -11/30/92 2.0000 02/11 -02/11/93 1.6000 09/18 -09/20/.32 2.9S00 12/01 -12/01/92 1.8500 02/12 -02/15/93 · 1.8000 09/21 -09/21/92 2.8500 12/02 -12/02/92 1.7500 .. 02/16 • 02/16/93 1.ssoo 09/22 -09/22/92 3.0500 12/03 -12/03/92 l.3500 02/17 -02/17/93 l.6500 09/23 -09/23/92 3.1S00 12/04 -12/06/92 l.3500 02/18 -02/18/93 l.4000 09/24 -09/2,/92 3.1S00 12/07 -12/07/92 l.3S00 02/19 -02/21/93 1.2000 09/25 -09/27/92 3.4500 12/08 • 12/08/92 l.3500 02/22 -02/22/93 l.2500 09/28 -09/28/92 2.7000 12/09 -12/09/92 1.4S00 02"/23 • 02/23/93 l.2000 09/29 -09/29/92 3.0000 12/10 -12/10/92 1.7000 02/24 -02/24/93 1.2000 09/30 • 09/30/92 3.0000 12/ll -12/13/92 2.0000 02/2S -02/25/93 l.GOOO 10/01 -lO/Ol/92 2.7000 12/14 -12/14/92 2.0000 02/26 -02/28/93 2.1500 10/02 -10/04/92 2.4000 12/15 -12/15/92 2.3500 03/0l -03/01/93 l.7000 10/0S -10/05/92 2.2500 12/16 • 12/16/92 2.7000 03/02 • 03/02/93 l.7000 l0/06 • 10/06/92 2.0000 12/17 -12/17/92 2.3S00 03/03 -03/03/93 1.6000 10/07 -10/07/92 l.9000 12/18 -12/20/92 2.3500 03/04: -03/04/93 1.5000 l.0/08 -10/08/92 2.2500 12/21 -12/21/92 2.4000 03/05 -03/07/93 1.7000 10/09 -10/11/92 2.3500 12/22 -12/22/92 2.7500 03/08 .. 03/08/93 1.6000 10/12 -10/12/92 2.3S00 12/23 -12/23/92 3.4000 03/09 -03/09/93 l.5000 10/13 -10/13/92 2.2500 12/24 -12/27/92 4.0000 03/10 -03/10/93 1.7000 10/14 -10/l.4/92 2.1000 12/28 -12/28/92 3.8000 03/l.l -03/11/93 2.0000 10/15 -lO/lS/92 2.1000 12/29 • 12/29/92 3.1500 03/12 -03/14/93 2.1500 10/1~ -10/18/92 2.1500 12/30 -12/30/92 3.1S00 03/1S -Ol/lS/93 2.1s00 10/19 -10/19/92 2.1S00 12/31 -01/03/93 3.5000 03/16 -03/16/93 2.1500 10/20 -10/20/92 2.2500 01/04 -01/04/93 l.2S00 03/17 -03/17/93 2.1500 10/21 • 10/21/92 2.2500 Ol./05 -Ol/OS/93 l.1500 oJ/is -03/18/93 2.1500 10/22 -10/22/92 2.3000 01/06 -01/06/93 1.0000 03/19 -03/21/93 2.2500 l0/23 -10/25/92 2.6500 01/07 • 01/07/,3 l.0000 03/22 -03/22/93 2.3500 l0./26 -10/26/92 2.8000 01/08 • 01/10/93 1.1000 03/23 -03/23/93 2.3500 10/27 -10/27/92 2.7000 Ol/11 -01/11/93 l. 0000 03/24 -03/24/93 2.3500 10/28 -10/28/92 2.7000 01/12 -01/12/93 l.0000 03/2S • 03/25/93 2.4000 10/29 -10/29/92 3.0000 Ol/13 -01/13/93 1.0000 03/26 -03/28/93 2.3000 l0/30 • ll/01/92 3.0000 01/14 -Ol/14/93 l.1000 03/29 -03/29/93 2.lSOO ll./02 -ll/02/92 2.7S00 01/1S -Ol/17/93 l.4S00 03/30 -03/30/93 2.1500 11/03 -11/03/92 2.4000 Ol/18 -01/18/93 l.4500 03/31 -03/31./93 2.0500 ll./04 • ll./04/92 2.lSOO Ol/l9 -01./19/93 l.6500 04/01 -04/01/93 l.9500 ll/0S -ll/OS/92 2.1500 01/20 -01/20/93 l.6500 04/02 -04/04/93 l.S500 ll/06 -ll/08/92 2.2S00 Ol/21 -01/21/93 2.2500 04/0S -04/05/93 1.7000 ll/09 • ll/09/92 2-.1000 01/22 -Ol/24/93 2.5000 04/06 -04/06/93 1.6000 ll/10 -ll/10/92 2.0000 01/25 -01/25/93 .2. 5000 04/07 -04./07/93 l..4S00 11/ll -ll/ll/92 2.0000 01/26 -01/26/93 2.7500 04/08 -04/08/93 l.5500 Rate His~ory Repor~ security#: Issue: 684285BK4 . CUsip: 68428SBIC4 ORANGE CNTY SANITATION DISTRICT# l,2,3,5,6,7 • l Race Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ ••OTC**) First Rate: 09/01/1992 Effective: Rate: Effective: Rate: Effeccive: Rate: -------··------------------------------------------------·-------------- 04/09 04/11/93 1.5500 06/22 -06/22/93 2.1000 09/02 • 09/02/93 2.2000 04/12 04/12/93 1.4000 0&/23 -06/23/93 2.1000 09/03 -09/06/93 2.0500 04/13 04/13/9~ 1.6500 06/24 -06/24/93 2.S000 09/07 -09/07/93 1.9S00 04/14 04/14/93 1.6000 06/25 -06/27/93 3.0000 09/oa -09/0S/93 l.9000 04/15 -04/lS/93 l.7500 06/28 -06/28/93 ·2.sooo 09/09 -09/09/93 l.7S00 04/16 -04/18/93 2.1500 06/29 -06/29/93 2.3000 09/10 -09/12/93 l.9000 . 04/19 -04/19/93 2.lSOO 06/30 -06/30/93 2.3000 09/ll -09/13/93 2.1.000 04/20 -04/20/93 2.1500 07/0l -07/01/93 1.5000 09/14 -09/14/93 2.1000 04/21 -04/21/93 2.1500 07/02 • 07/05/93 l.7500 09/15 • 09/15/93 2.2S00 04/22 -04/22/93 2.2500 07/06 -07/06/93 1.5000 09/16 -09/16/93 2.3500 04/23 -04/25/93 2.2500 07/07 -07/07/93 l.3000 09/17 -09/19/93 2.S500 04/26 -04/26/93 2.1500 07/08 -07/08/93 l.2000 09/20 -09/20/93 2.4000 04/27 -04/27/93 2.0000 07/09 • 07/11/93 1.5000 09/21 -09/21/93 2.5s00 04/28 -04/28/93 2.0000 07/12 • 07/12/93 1.7500 09/22 • 09/22/93 3.0000 04/29 -04/29/93 2.l.000 0'7/13 -07/13/93 1.7500 ··o,;23 -09/23/93 3.1000 04/30 -05/02/93 2.2000 07/14 -07/14/93 l.9000 09/24 -09/26/93 3.4000 05/03 .-05/03/93 2.2000 07/15 • 07/15/93 2.1000 09/27 -09/27/93 3.2000 OS/04 -OS/04/93 2.0S00 07/16 -07/18/93 2.1s00 09/28 -09/28/93 3.1000 OS/OS -05/05/93 1.9S00 07/19 -07/19/93 2.1s00 09/29 -09/29/93 3.2500 OS/06 -OS/06/93 2.0000 07/20 -07/20/93 2.1500 ·09/30 -09/30/93 3.3500 05/07 -05/09/93 2.1000 07/21 -07/21/93 2.3000 10/01 -10/03/93 2.9500 05/10 -05/10/93 2.2500 07/22 • 07/22/93 2.3000 10/04 -10/04/93 2.sooo 05/11 -05/11/93 2.5000 07/23 -07/25/93 2.5000 10/05 .. 10/05/93 2.3500 05/12 • OS/12/93 2.5000 07/26 -07/,6/93 2.S000 10/0S -10/06/93 2.2500 05/13 -05/13/93 2.4000 07/27 -07/27/93 2.5000 10/07 • l0/07/93 2.!500 05/14 • 05/16/93 2.5000 07/28 • 07/28/93 2.7500 10/08 • 10/11/93 2.1500 05/17 • 05/17/93 2.S000 07/29 -07/,9/93 2.7000 10/12 -10/1,/93 2.1500 05/18 -OS/l.8/93 2.7000 07/30 -08/01/93 2.S500 10/13 -10/13/93 2.0000 05/19 -0S/19/.93 2.7000 08/02 • 08/02/93 :z.ssoo 10/14 • 10/14/93 l.9500 OS/20 -05/20/93 2.7000 08/03 • 08/03/93 2.4500 10/15 -10/17/93 2.0000 OS/21 -OS/23/93 2.8000 08/04 -oa/o,/93 2.3000 10/18 -10/18/93 2.0000 05/24 -05/24/93 2.7500 08/05 -08/05/93 2.1500 l.0/19 -10/19/93 1.9000 05/2S -0S/25/93 2.7000 08/06 -08/08/93 2.0500 10/20 -10/20/93 1.9500 05/26 -05/26/93 2.7500 08/09 • 08/09/93 2.0000 10/21 • 10/21/93 2.0000 OS/27 -05/27/93 2 .. ,soo 08/10 -08/10/93 l.9000 10/22 -10/24/93 2.2000 OS/28 -0S/31/93 2.7500 08/.li -08/11/93 2.0000 10/:ZS -10/25/93 2.1000 06/0l -06/01/93 2.2000 08/12 -08/12/93 2.0000 10/26 -10/26/93 2.1500 06/02 -06/02/93 2.1000 08/13 -08/15/93 2 .• 15.00 10/27 -10/27/93 2.0500 06/03 • 06/03/93 1.1000 08/16 -08/16/93 2.2000 10/28 • 10/28/93 2.2000 06/04 -06/06/93 1.8000 08/17 -08/17/93 2.2500 10/29 • 10/31/93 2.4500 06/07 • 06/07/93 1.8000 08/18 -08/18/93 2.1500 11/01 -ll/Ol/93 2.3000 06/08 -06/08/93 1.6000 08/19 • 08/19/93 2.1500 11/02 -ll/02/93 2.3000 06/09 -06/09/93 1.4000 08/20 -08/22/93 2.0500 ll/03 -ll/03/93 2.1000 06/10 -06/10/93 l.2S00 08/23 -08/23/93 2.0500 ll/04 -l.l/04./93 2.0500 06/ll • 06/13/93 1.1000 08/24 • 08/24/93 2.1000 l.l./.O5 -1.l./07/93 2.1500 06/14 -06/14/93 l.2000 08/2S .. 08/25/93 2.1s00 11/08 -ll/08/93 2.0000 06/15 -06/15/93 1.2500 08/2& • OS/26/93 2.2000 11/09 -11/09/93 2.0000 06/16 --06/16/93 1.2s00 08/27 • 08/29/93 2.3500 11/10 -11/11/93 2.0000 06/17 -06/17/93 1 .. 0000-OS/30 -08/30/93 2.2500 11/12 -11/14/93 2.1000 06/18 -06/20/93 1.2000 08/31 -08/31/93 2.4000 11/1S • 11/15/93 2.1000 06/21 -06/21/93 2.1000 09/01 -09/01/93 2.3000 11/16 • lJ./16/93 2.0000 .. ,"-'-'-Ji:...J..::Jltt.-.1•~ ., .... t'"'..,_ -_._,_...,_~ ...... 1 '19 • Issue: 68428SBK4 _ CUsip: 68428SBI<i oR.ANGE CNTY SANITATION DISTRICT# l,2,3,5,6,7 ~ l Rate Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ **OTC**) First Rate: 09/01/1992 ~ffective: Rate: Effective: Rate: £ffective: Rate: -------------------------•--------------·-------------------·----------- 11/17 ll/17/93 1.9000 01/31 -01/31/94 2.1000 04/13 -04/13/94 l.0000 ll/18 11/18/93 1.8000 02/01 • 02/01/94 l.~500 04/14 • 04/14/94 1.4500 11/lSI 11/21/S,3 1.8000 02/02 • 02/02/~4 l.8000 04/15 • 04/17/94 2.2000 ll/22 ll/22/93 1.sooo 02/03 • 02/03/34 1.8000 04/18 -04/18/94 2.2000 ll/23 ll/23/93 l.9000 02/04 -02/06/94 1.aooo 04/19 -04/19/94 2.3000 ll/24 • 11/25/93 1.9000 02/07 -02/07/94 2.1000 04/20 -04/20/94 2.7500 ll/26 . ll/28/93 1.9000 02/08 -02/08/94 2.2S00 04/.21 -04/21/94 2.9000 ll/29 -11/29/93 1.aooo 02/09 -02/09/94 2.2500 04/22 -04/24/94 3.1000 ll/30 -11/30/93 1.7000 02/10 • 02/10/94 2.2500 04/25 -04/2S/94 3.0000 l2/0l -12/01/93 1.7000 02/ll -02/13/94 2.3500 04/26 -04/2,/94 2.6500 12/02 • 12/02/.93 1.2000 02/14 -02/l4/94 2.2500 04/27 -04/27/94 3.2000 12/03 -12/05/93 1.1000 02/15 -02/15/94 2.3500 04/28 • 04/28/94 3.0S00 12/06 -12/06/93 1.1000 02/16 • 02/16/94 2.4S00 04/29 -05/01/94 2.9500 12/07 -12/07/93 1 .• 1000 02/17 -02/17/94 2.4500 05/02 -OS/02/94 2.9500 12/08 • 12/08/93 1.1000 02/18 -02/21/94 2.3S00 ··os/03 -05/03/94 2.7500 l2/Q9 • 12/09/93 1.1000 02/22 • 02/22/94 2.2000 05/04 • OS/04/94 2.3500 12/10 -12/12/93 1.2500 02/23 -02/23/94 2.3000 OS/OS -0S/05/94 2.3500 12/13 -12/13/93 1.2500 02/24 -02/24/94 2.1500 05/06 -05/08/94 2.7500 12/14 • 12/14/93 1.6500 02/25 -02/27/94 2.0s00 05/09 • 05/09/94 2.5500 12/l.5 -12/15/93 2.0s00 02/28 • 02/.28/94 2.2000 05/10 -OS/10/94 2.SOOO 12/16 -12/16/93 2.0500 03/01 -03/01/94 2.1000 OS/ll -0S/11/94 2.9000 12/17 -12/1.9/93 2.5000 03/02 -03/02/94 2.2000 05/12 -05/12/94 3.1000 l.2/20 -12/20/93 .2. 6000 03/03 -03/03/94 2.0000 05/13 • 05/15/94 3.1000 12/21 • l.2/21/93 2.7000 03/04 -03/06/94 2.0000 OS/16 -0S/16/.94. 3.0000 12/22 • 12/22/93 2.7000 03/07 -03/07/94 l.9000 05/17 -05/17/94 2.9000 12/23 -12/23/93 2. 8_000 03/08 -03/08/94 1.7000 05/18 -05/18/94 2 .~000 12/24 -12/26/93 2.8000 03/09 -03/09/94 l.6S00 05/19 -OS/19/94 2.6000 12/27 • 12/27/93 2.8000 03/10 • 03/10/94 l.5500 05/20 -05/22/.94, 2,7000 12/28 -12/28/93 3.0000 03/11 -03/13/94 l.S500 05/23 -05/23/94 2.5S00 l.2/29 -12/29/93 3.2500 03/l.4 -03/14/94 l..4500 05/24 • 05/24/94 2.5500 12/30 -12/30/93 3.4S00 03/15 -03/15/94 1.4500 05/25 • 0S/25/94 2.6500 12/31 -01/02/94 4.2500 03/1' -03/16/94 l.3500 OS/26 • 05/26/94 2.7500 01/03 -01/03/94 l.8000 03/17 -03/17/94 1.2500 05/27 -OS/30/.94 3.2500 01/04 -01/04/94 1.2000 03/18 -03/20/94 _ 1.4000 05/31 • 05/31/94 2.8000 Ol./05 -01/05/94 1.,. 0000 03/21 -03/21/94. 1.2000 06/01 -06/01/94 2.6000 01/06 -01/06/94 1.0000 03/22 -03/22/94 l.2000 06/02 -06/02/94 2.4500 Ol/07 • 01/09/.94: 1.acoo 03/23 -03/23/94 1.1000 06/-03 -06/05/94 2.2000 Ol/10 -01/1.0/94 1.4500 03/24 -03/24/94 l.2500 06/015 -015/06/94 l.9000 01/11 -Ol./ll/94 1.4500 03/25 -03/27/94 1.6S00 06/07 • 06/07/94 l.7500 Ol/12 -01/12/94. 1.4S00 03/28 -03/28/~4 l.7500 06/08 -OS/08/94 l.6500 01/13 -Ol/ll/94 2.0000 03/29 -03/29/94 2.3000 OS/09 -06/09/94 1.6500 01/14 -01/17/94 2.0000 03/30 -03/30/94 2.6000 06/1.0 -06/12/94 l. 6500 Ol/18 -01/18/94 2.0000 03/31 -03/31/94 3.0000 06/13 -06/1.3/94 l.8500 Ol/19 -01/19/94 2.0000 04/01 -04/03/94 3.0000 06/14 -06/14/94 2.0000 Ol/20 -Ol/20/94 2.050G 04/04 -04/04/94 2.1000 06/lS -06/15/94 2.4000 01/21 -01/23/94 2.0500 04/05 -04/05/94 l.7000 06/16 -06/l6/94 2.4000 01/24 -01/24/~4 l.9000 04/06 -04/06/94 l.5000 _06/l 7 -06/19/94 2.7500 01/25 -01/2.5/94 2.0000 04/07 -04/07/94 l.2000 06/20 -06/20/94 2.6000 01/26 • 01/26/94 2.ooao 04/08 -04/10/94 l. 05.00 06/21 -06/21/94 2.7000 01/27 • 01/27/94, 2.0000 04/11 -04/ll/94 1.0000 06/22 -06/22/94 2.7000 01/28 -01./30/94 2.1000 04/12 -04/12/94 0.9000 06/23 -06/23/94 2.8500 .~--··-----J ··-i.--· ------~,4 Issue: 684.28SBK4 CUsip: 68428SBK4 ORANGE cNTY SANITATION OISTR.ICT# l,2,3,S,6,7 ,. l Rate Period: DAILY ORANGE CNTY SR 1992 C (FGIC/FGI~ LIQ **OTC**) First Rate: 09/01/1992 Effective: Rate: Effective: Rate: Effective: Raee: ·-----------------------·---------. -----·-----------------·--------·-··--10/31 -06/24 • 06/26/94 3.4000 08/26 -08/28/94 3.3000 10/31/94 3.4500 06/27 06/27/94 3.3000 08/29 -08/29/94 3.2S00 11/01 -ll/01/94 3.1500 06/28 06/28/94 3.3000 08/30 • 08/30/94 3.1000 11/02 • ll/02/9, 2.9500 06/29 06/29/94 3.,000 08/31 -08/31/94 2.8000 ll/03 -ll/03/94 2.8500 06/30 • OEii/30/94 3.0000 09/0l -09/01/94 2.9000 ll/04 -11/06/94 J.1000 07/01 • 07/04/94 2.4000 09/02 • 09/05/94 2.8000 11/07 .. ll/07/94 3.2S00 07/05 -07/05/94 1.6000 09/06 -09/06/94 ·2. 6500 ll/08 -ll/08/94 3.2500 07/06 -07/06/94 1.3500 09/07 -09/07/94 2.7000 ll/09 -11/09/94 3.1S00 . 07/07 -07/07/94 l.1500 09/08 -09/08/94 2.3500 11/10 -11/13/94 3.2000 07/0S -07/10/94 1.2s00 09/09 -0,111/94 2.S000 ll/14 -ll/14/94 3.1000 07/11 -07/11/94 1.2s00 09/12 -09/12/94 2.6S00 11/1S • 11/1S/94 3.2000 07/12 • 07/12/94 1.ssoo 09/13 -09/13/94 2.7000 11/16 • 11/16/94 J.S000 07/13 -07/13/94 1.7000 09/14 -09/14/94 2.9000 11/17 -11/17/94 -3.5000 07/14 • 07/14/94 2 .. 1000 09/15 • 09/15/94 3.2000 ll/18 • 11/20/94 3.5000 07/1S -07/17/94 2.8000 09/16 -09/18/94 3.4500 ·ll/21 -ll/21/94 3.5000 07/18 -07/18/94 2.8000 09/19 -09/19/94 3.4000 11/22 -11/22/94 3.5000 07/19 -07/19/94 2.8000 09/20 • 09/20/94 3.3S00 11/23 • ll/24/.94 3.6000 07/20 -07/20/94 2.8000 09/21 09/21/94 3.3500 11/25 ll/27/94 3.6000 07/21 -07/21/94 2.7000 09/22 -09/22/94 3.5000 11/28 -11/28/94 3.6000 07/22 -07/24/'j4 2.7000 09/23 -09/25/94 3.4500 ll/29 -11/29/94 J.5000 07/25 -07/25/94 2.7000 09/26 -09/26/94 3.5500 ll/30 -ll/30/9~ J.3S00 07/26 -07/26/94 2 ._7000 09/27 • 09/27/94 3.6500 12/01 -12/01/94 3.2500 07/27 • 07/27/94 2.6'000 09/28 • 09/28/94 3.7500 1·2/02 • 12/04/94 3.2000 07/28 -07/28/94 ·2. 6000 09/29 • 09/29/94 3.7S00 12/05 • 12/05/94 2.9000 07/29 • 07/31/94 :2.6500 09/JO· -10/02/94 3.4500 12/06 -12/06/94 2.6500 08/01 -08/01/94 2.5500 10/03 -10/03/94 3.0000 12/07 -12/07/94 4,.5000 08/02 -08/02/94 2.4500 10/04 • 10/04/94 2.8000 12/08 • 12/08/94 5.0000 08/03 -08/03/94 2.3000 10/05 • 10/05/94 2.s500 12/09 -12/11/94 5.5000 os;o, -08/04/94 2.4S00 10/06 -10/06/94 2.4000 12/12 -12/12/94 6.0000 08/05 • 08/07/94 2.4500 10/07 -10/10/94 2.1000 12/13 -12/13/94 6.5000 08/08 -08/08/94 2.3500 10/ll -10/11/94 1 . .9S00 12/14 -12/14/.94 6.S000 08/09 -08/09/94 2.2S00 10/12 -10/12/94 1.7000 12/l.5 • 12/l.5/94 6.5000 08/10 -08/10/94 2.3000 10/l.3 • 10/13/94 2.0000 12/16 -12/18/94 6.5000 08/11 -08/11/94 2.3000 10/14 • 10/16/94 .2. 3000 12/19 • 12/19/94 6.5000 08/12 -08/14/94 2.5000 10/17 -10/17/94 2.3000 12/20 -12/20/94 6.5000 08/1S -08/15/94 2 .·sso0 10/18 -10/18/94 2.asoo l.2/21 -12/21/94 6.5000 08/16 -08/16/94 2.5S00 10/19 -10/19/94 2.8500 12/22 -12/22/94 6.5000 08/17 -OS/17/94 2.6000 10/20 • 10/20/94 2. 950.0 12/23 • 12/26/94 6.5000 08/16 -08/18/94 2.6000 10/21 -10/23/94 3.1S00 12/27 -12/27/94 6.5000 OS/l9 • 08/21/94 2.7500 10/24 -10/24/94 3.1500 12/28 -l.2/28/94 6.5000 08/22 -OS/22/94 2.7500 10/25 -l0/25/94 3.2000 12/2.9 • 12/29/94 S.5000 08/23 • OS/23/94 2.7500 10/26 .. 10/26/94 3.3000 12/30 • 12/31/94 6.b250 08/24 -OS/24/94 2.9000 10/27 • 10/27/94 3.4500 08/25 -OS/25/94 3.0500 10/28 -10/30/94 3.4500 Weigheed Average tor 09/01/1992 eo l.2/:31/1994 . 2.425~1 . ~~ue: 6B4~&~o~~ -~~~~~; gg~.Q~c~, oRANGE crTY SANITATION_DISTRICT# 1,2,3,S,6,7 & 1 Rate Period: DAILY ORANGE~ SR 1992 C (FGIC/FGIC LIQ ••OTC**) .First Rate: 09/01/1992 Effective: Rate: Effec~ive: Rate: Effee~ive: Rate: 01/03 -01/03/95 01/04 -01/04/9S Ol/0S ~ Ol/OS/95 ,.sooo 6.0000 s.sooo 01/06 -01/08/95 S.S000 01/09 • Ol/09/95 S.0000 01/10 -01/10/95 4.2S00 01/11 • 01/11/95 weighted Average for 01/03/1995 to 01/11/1995: 5.22222 3.2500 -·----------,l .,-,:,--- .ssue: 68428SBIC4 ORANGE CNTY SANITATION DISTRICT# 1,2,3,5,6,7 &·1 ORANGS CNTY SR 1992 C (FGIC/FGIC LIQ **DTC**) Effective: Rate: Effective: Rate: .... '-'"'-"-•-'-'-·,I fl'~ CU.Sip: 68428SBK4· Rate Period: DAILY First Rate: 09/01/1992 · Effective: Rate: ------------·-·----------------------------------------------------·----01/03 -01/03/95 01/04 • 01/04/95 ~l/05 -0l/05/95 Ol/06 -01/08/95 &.5000 6.0000 5.5000 5.5000 01/09 -Ol/09/95 01/10 -01/10/95 Ol/11 -01/11/.95 01/12 -Ol/12/95 5.0000 4.2500 3.2S00 2.5000 0l/13 -Ol/16/95 Ol/17 -01/17/9S Ol/18 • 01/18/95 ~eighted Average for 01/03/199S to 01/18/1995: 4.15&25 2.7500 3.0000 3.0000 ' Issue: 684285BK4 oRANGE cqTY S1\NITATION DISTRICT# 1,2,3,S,6,7 &-1 oRANGS CNTY SR 1992 C (FGIC/FGIC LIQ **OTC**) p;ffec~ive: Raee: E·ffecT:ive: Raee: -cusip: 68428SSK4 Rate Period: DAILY Firse Rate: 09/01/1992 Effeceive: Rate: ------·---------~-----·---~----·------·----·---------·~-----------------02/01 • 02/01/95 02/02 -02/02/95 02/03 -02/0S/95 02/05 -02/06/9S 4.6250 4.5000 4.2500 4.5000 02/07 -02/07/95 4.5000 02/08 -02/08/95 4.2500 02/09 • 02/09/95 4.2S00 02/lO • 02/12/9S 4.3750 02/13 • 02/ll/95 4.3000 02/14 • 02/14/95 4.2000 02/15 -02/15/95 4.2000 weigheed Average for 02/01/1995 c0 02/15/199S: 4.34667 Raee Hiseory Report Issue: 68428SBK4 ORANGE CNTY' SANITATION DISTRICT# l,2,l,S,6,7 • 1 ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ **OTC**) !ffeceive: Race: Efteecive: Rate: ·----------------------------------------------- 03/01 -03/01/95 4.0000 03/10 • 03/12/95 2.3500 03/02 -03/02/9S 3.7500 03/13 -03/13/9S 2.9S00 03/03 .. 03/0S/9S 3.4S00 03/14 • 03/14/9S 3.1000 03/06 -03/06/9'$ 3.1500 03/15 -03/1S/95 3.2500 03/07 -03/07/9S 3.1000 03/15 -03/16/95 3.5000 03/08 -03/08/95 2.S000 03/17 • 03/lJ/9S 3.5000 03/09 -03/0.9/95 2.s000 03/20 • 03/20/95 3.8000 sec:uricy #: CUsip: 68428SBK4 Race Period: DAILY First Rate: 09/01/1992 Effective: Rate: ----------·--·----------03/21 -03/21/95 4.1500 03/22 -03/22/9S 4.3000 03/23 -Ol/23/95 4.4500 03/24 -03/26/95 4.S000 03/27 -03/27/95 4.6000 03/28 -03/28/95 4.6000 03/29 -03/29/95 4.6000 Weighced Average for 03/01/199S to 03/29/199S : 3.57Sa, 103/07/9502:41 PM Sheet1 ) DATE SERIES •A• SERIES •c• SERIES •93 REP 30-May-95 4.70 4.70 4.70 31-May-95 4.50 4.50 4.50 05..Jun-95 d:3§.) 3.20 3.00 07-Jun-95 1.60 2.50 2.50 12-Jun-95 4.05 (@} 4.50 14-Jun-95 4.20 4.50 4.90 19-Jun-95 4.20 4.25 ~ 21-Jun-95 4.30 4.25 4.30 26-Jun-95 4.50 4.75 4.50 28-Jun-95 4.30 4.75 4.30 3 J'(l(.. 3. 2."" '3. ZS-3,z.S-5'".:,-t,,I I... '2.-"0 Z,S'Q .. 2,bO /0 ,J"\I c.. :::z_,oo 2.,,0 . ~.oo I 't..,;z,,u .. z.,oo ~-'" z..oo Page 1 Rat, History Rtport Issue: 68C28$8K4 ORMGE CNTY ~ITATlON DISTRICT# 1,2,3,5,6,7 l 1 ORANGE CNTY SR 1992 C (FGIC/FGlC ~IQ ••ore•·, Ef'ftetivt: Rate: £1'ftetive: Rate: Sec 1: Cusip: 68'2858K4 Modt: ~LY First Rate: 06/01/1995 Effective: Rate: ··---·--················ ···············----·--·--···-········-···-···---06/01 • 0!/01/95 ,.1500 08/11 • 08/13/95 ,.0000 1012• -10/24/95 3.8500 06/02. 06/0,/95 3.7500 08/14 • 08/14/95 3.8500 10125 • 10/25/95 3.8500 05(05. 06/05/95 3.2000 08/15 • 01/15/95 3.7500 10/28 • 10/26/95 3.8500 06/06. 06/06/95 2.7500 Ol/1S • 08/18/95 3.7500 1D/27 • 10/29/95 4.0000 06/07. 06/07/95 2.5000 08/17 • 08/17/iS 3.5500 10/30 • 10/30/95 4.0000 06/08. 05/08/95 2.7500 08/18 • 08/20/9S 3.7000 10/31 • 10/31/95 4.0000 06/09. 0&/11/95 3.7500 OS/21 • 08/21/95 3.6000 11/01 • 11/01/95 3,7500 OS/12. 05/12/95 4.0000 08/22 • 06/22/95 3.4000 11/02 • 11/02/95 3.6000 0&/13. OS/13/95 4.2000 08/23 • 08/23/!)5 3.2500 11/03 -11/05/95 3.7500 06/14. 06/14/95 4.5000 08124 • 08/24/95 3.4500 11/06 • 11/06/95 3.7500 06/15. 06115/96 ,.1000 OS/25 • 08/27/95 3.8000 11/07 • 11/07/95 3.8500 05/15 • 08/18/9$ 4.5000 08/28 • 08/21/95 3.6000 11/08 -11/08/95 3.7500 0&111. 01119195 4.2500 oa,29. 011za195 3.sooo 11101 ~.11101195 3.;soo 06/20 • 05/20/95 4.2500 08/30 • 08/30/91 3.5000 11/10 • 11/12/96 4,0500 OS/21 • 08/21/95 4.2500 08/31 • 08/31/95 3.3500 11/13 • 11/13/95 4.0000 06/22 • 06/22/95 4.5000 09/01 • 09/04/95 3.8500 11/14 • 11/14/95 4.0000 06/23 •·06/25/95 4.8000 09/05 • 09/05/95 3.5000 11/15 • 11/15/9S 3.8500 OS/29 • 08/28/95 4.7500 09/09 • 09/06/95 3.2500 11/18 -11/19/95 3.8500 05/27 -OS/%7/95 4.7500 09/07 • 09/0,7/95 3.1500 11/17 • 11/19/95 3.8500 06/28. 06/21/95 4.7500 09/01 • 09/10/N 3.4000 11/20 • 11120,ss 3.1500 08/29 • 09/29/95 4.2500 09/11 • 09/11/95 3.9000 11/21 • 11/21/95 3.8500 06/30 • 07/02/95 4,5000 09/12 • 09/12/95 3,9000 11/22 • 11/23/95 3.5600 07/03 • 07/04/95 3.2500 08/13 • 09/13/95 3.SOOO 11/24 • 11/29/95 4.0000 07/05. 07/05/95 2.5000 09/1' • 09(14/95 3.8000 11/27 • 11/27/95 3,9000 07/06. 07/06/95 1.9000 01/1S -09/17/95 4.1500 11/28 -11/28/95 3.9000 07/07. 07/09/95 2~1500 01/11 -09/11/95 ,.,soo 11/29 -11/29/9S 3.7500 07/10 • 07/10/95 2.1000 09/19 • 09/19/95 4.0500 11/30 • 11/30/95 3,8000 07/11 • 07/11/9S 2.1000 Ci/20 • 09/20/95 4.0500 12/01 • 12/03/9S 3.8500 07/12 • '07/12/95 2.1000 09/21 • 09/21/95 4.2500 12/04 • 12/04/95 3.5000 07/13 • 07/13/95 2.3000 09/22 • 09/24/95 4.SOOO 12/05 • 12/05/95 3.3000 07/14. 07/16/95 3.2500 09/25 • 09/25/95 4.5000 12/05 · 12/09/95 3.2000 07/17 -07/17/95 3.7500 09/29 • 09/29/95 4.5000 12/07 • 12/07/95 3.5000 07/18 • 07/18/95 3.9500 09/27 • 01/27/H 4.SOOQ 12/09 -12/10/95 4.1500 01111. 01119195 3.esoo 09/21. 09/28/95 •~ssoo 12111 • 121111a 4.1soo 07/20 • 07/20/95 3.8500 09/29 • 10/01/95 4.1500 12/12 • 12/12/95 4.2500 07/21 • 07/23/95, 4.0000 10/02 • 10/02/95 3.7500 12/13 • 12/13/95 4.2500 07/24 -07/24/95 3.9000 10/03 -10/03/95 3.4000 12/14 • 12/14/9S 4,2500 07/25 • 07/25/96 3,7500 10/04 • 10/04/95 3.0000 12/15 -12/17195 ,.3500 07/26. 07/26/95 3.7000 10/05 • 10/05/95 3.1000 12/18 • 12/78/95 ·4.3500 07/27. 07/27/95 3.9000 10/08 • 10/09/SS 3.5000 12/1i. 12/19/95 4.3500 07/2S -07/30/95 4,0000 10/10 • 10/10/iS 3.5000 12/20 • 12/20)95 4.3500 07/31 • 07/31/95 4.3000 10/11 • 10/11/95 3.5000 12/21 • 12/21/95 4,3500 oa,o, . 01101 /95 3.7soo 10112 • u112195 3.sooo 12122 • 1212s19s "· 1soo 08/02 -08/02/95 3.3500 10/13 · 10/15/95 3.7000 12/26 • 12/26/95 4.7500 08/03 · 08/03/95 3.1500 10/16 • 10/16/95 3.1000 12/27 -12i27/95 4.1500 os,04 -oa,05/95 3.4000 10111. 10111195 3.aooo 1212e. 1212B195 5.oooo oa,01. os101195 3.ssoo 1011s -10;1s1gs 3.eooo 12129 -01101196 6.0000 OS/08 • 08/08/95 4,0000 10/19 • 10/19/95 3.8000 01/02 • 01/02/9& 3.$000 08/09 -08/09/95 4.0000 10/20 • 10/22/95 3.9000 01/03 · 01/03/96 3.2000 08/10 • 08/10/95 4.0000 10/23 -10/23/95 3.7500 01/04 • 01/04/96 3.0000 Rate History Aepor-t Issue: 6&4285BK4 ORANGE CNT'Y SANITATION OISTRICTI 1,2,3,$,5,'T & 1 ORANG! CNTY SR 1992 C (FGIC/FGIC LIQ ••ore•·) effec~ive: Rate: Efftctive: Rate: Sec fl: cusip: 88428SBK4 Hode: DAILY First Rate: 06/01/1995 Efhct1v1: Rate: -----------------~-------···················-----···········-·----------01/05. 01/07/98 3.0000 03/19 • 03/19/98 3.3500 05/29 • 05/29/98 3.8000 01/08 -01/08/98 3.2500 03/ZO • 03/20/H 3.3500 05/30 • 05/30/98 3.7000 01./09 -·0·1 /09/95 3.0000 03/21 • 03/21 /98 3.2500 0$/31 • 05/02/SIS 3.5000 01/10. 01/10/96 3.0000 03/22 • 03/24/91 3.2500 09/03 • 01/03/91 3.1500 01/11 -01/11/94 2.8500 03/25 • 03/25/N 3.2500 01/04 • 06/0C/N 2.9000 01/12 • 01/15/91 2.8500 03/25 • 03/21/91 3.1000 08/05 • 01/05/91 2.6500 0111s -011111H 2.asoo 03/27 -031211• 3.osoo os,oe -08/0S/N 2.sooo 01/17. 01/17IN 2.6000 03/21 -03/28/91 3.3000 01/07 • 01/09/98 2.8000 0111a -0111a1N 2.sooo 03/29. 03/31/N 3.sooo 01110. 08/10/91 2.aooo 01/19 -01/21/N 2.5000 0,101 -04/01/91 3.1000 08/11 -09/11/96 3.2000 01/22. 01/22/98 2.4000 04/02 -04/02/N 2.7000 01/12 • 05112/91 3.1000 01/23 -01/231H 2.5000 04/03 • OC/03/N 2.5000 01/13 • 01/13196 3.2000 01/24 -01 /Z4IH. 3.1000 04/04 • 04/04198 2.1000 05/14 • 08/16/N 3.•SG00 01/25 • 01/25/N 3-1000 OC/05 • OC/07/98 2.8000 08117 :·os1,11• 3.4000 01128. 01121,se 3.aooo 04/oa • 04101/N ,.0000 01111 • 011111N 3.asoo 01/29 -01/29/M 3.8000 04109 • 04/09198 2.9000 05/19 -08/19/95 3.2500 01/30. 01/30/N 3,8000 04/10 -04/10/91 3.2000 05/20 • 01/20/H 3.5000 01/31 -01/31/98 3.5500 04111 • 04/11/91 3.1000 01/21 • 01/23IN 3.5000 02101 -021011H 3.4000 04112 -04/14/91 3.1000 0112, -011a199· s-.si,oo· 02/02. 02/04/H 3.3000 04115 • 04/15/91 3.1000 08/25 • 01/25/98 3.4000 02/05 -02/05/91 3.1500 04/11 • D4/11/91 3.1000 06/21 • O#S/B/N 3.5000 02/06 -02/01/98 · 3.1500 04/17 • 04117/98 3.4000 06/27 • 06/27/98 3.5000 02/07. 02/07/N 3.2500 04/18 -04/18/91 3.4000 01/28 • 06/30198 3.4000 02/08 -02/08/91 3.2500 04/19 • 04/21/N 3.7500 07/01 -07/01198 2.5500 02/09. 02/11/H 3.4000 04/22. -04/22/95 3.6500 07/02 • 07/02/98 2.1500 02/12. 02/121H 3.3500 04/23 -04/23/98 3.5500 07103 • 07/04/H t.9500 02/13 -02/13/91 3.3500 04/24 • 04/24/N 3.6500 07/05 • 07/07198 1.SOOO 02114. 02/14/98 3.2500 04/25 -04/25/H 3.5000 07108 -07/08/91 1.7000 02/15 -02/15/98 3.2000 04/21 • OC/28191 3.1000 07/01 • 07/09/N 1.6000 02/11 -02/19/H 3.350D 04/29 • 04/29/91 3.8000 07/10 • 07/10/N 1.'TOOO 02/20 • 02/20/H 3.3000 04130 -O•l30/N 3.5000 07111 -07/11/H 2.4000 02/21 • 02/21/96 3.3000 05/01 • 05/01/N 3.3000 07/12 • 0111,1H 3.0000 02/22 -02/22/95 3.2000 05/02 -05/02/98 3.3000 07/15 -07/15/98 3.4500 02/23. 02/25/91 3.2000 05/03 • 05/05191 3.0000 07/18 • 07/11/91 3.4000 02/21 -02/26/N 3.2000 05/01 • 01/01/91 Z.8000 07/17 • 07/1?/H 3.3000 02121 -02121198 3.2500 05101. os,01199 z.asoo 0111s -01111198 ,.2&00 02/29 • 02/21/H . 3.2500 05/01 • 05/01191 3.2500 07119 • 07/21/91 3.4000 02/29 •. 02/29/H 3.3500 05/09 • 05/09/91 3.5000 07/'l2 -07/22/96 3.2500 03/01 -03/03/H 3.3500 05/10 -05112/98 3.8000 07/2'3 -07123/9' -3.3500 03/06. 03/04/H 3.0500 05/13 -05/13/N 3.5000 07/24 • 07/24/91 3.3500 03/05 • 03/05/N 2.9D00 05/14 • 05/14/91 3.5000 07/25 • 07/25/98 3.4500 0!/05. 03/05/98 2.7000 OS/15 • 05/15/91 3.3000 07/26 • 07/28/99 3.5500 03/07. 03/07/94 2.6000 05/16 -05/16/96 3.2500 07/29 -07/29/N 3.4500 03/08 -03/10/98 2.7500 05/17 • 05/19/98 3.1500 07/30 • 07/30/98 3.4500 03/11 • 03/11/N 2.1500 05/20 -05/20/98 3.0500 07/31 • 07/31/91 3.5500 03/12 · 03/12/98 2.7500 05/21 • 05/21/91 3.0500 08/01 • 08/01/98 3.0500 03/13. 03/13/95 2.7500 05/22 • 05/22/96 3.0S00 08/02 • 08/04-,95 2.9500 03/14 -03/14/96 2.7500 05/23 • 05/23/98 3.4D00 08/05 • 08/05/5)6 2.7000 03/15 -03/17/9' 3.4500 05/24 • 05/27/96 3.8000 08/06 • 08/01/98 3.2000 03/18 • 03/18/96 3.'500 05/21 -D5/28/9fJ 3.8000 08/07 • 08/07/N 3.2000 Rate History R1pol"'t Sec#: Issue: 68'285BK4 Cusip: 6842858K4 ORANGE CN'TY SANITATION OISTRICTf 1,2,3,5,5,7 l 1 l'fode: DAILY ORANGE CNTY SR 1992 C (FGIC/FGIC LIQ ••DTC••) First Rate: 0&/01/1995 Ef1tctive: Rau: Effective: Rate: Ef1'tct1ve: Rate: ·······················-----------·······--····· ····-·······--·--·----·· 08/08 • 08/08/M 3.3000 10/21 • 10/21 /N 3.3000 01/03 • 01/05/97 2.S500 08/09 • 08/11/98 3.4000 10/22 • 10/22/98 3.3500 01/0S • 01 /06/97 2.5500 08;/ 12 • 08/12/91 3.5000 10/23 • 10/23/N 3.4500 01/07 • 01/07/97 3.0500 08/13 • 08113/98 3.6000 10/24 • 10/24/M 3.5000 01 /0I • 01 /01/97 3.3500 08/14 • 08/14/M 3.9000 10/25 • 10/27/91 3.5000 01/01 • 01/09117 3.5000 08/15 • 0811$/91 3.1000 10/21 • 10/21/91 3.5000 01/10 • 01/12/97 3.5000 08/16 • 08/18/91 3.6000 10/29 • 10/29/91 3.5000 01 /13 • 01 /13/97 3.4000 08/19 • 08/19/98 3.3500 10/30 • 10/30/91 3.SOOO 01/14 • 01/14/97 3.3000 08/20 • 08/20/91 . 3.2000 10/31 • 10/31/M 3,1000 01/15 • 01/15/97 3.2000 08/21 • Ol/21/N 3.2000 11/01 -11/03/91 3.4000 01/11 -01/19/97 3.2000 08/22 • 08/22/91 ,.2000 11/04 • 11/04/N 2.1000 01/17 • 01/20/97 3.3000 08/23 • 08/25/N 3.3000 11/05 -11/0S/91 2.7000 01 /21 -01 /21 /W 3.2000 08/28 • 08/28/98 3.2500 11/08 • ,,,0,191 a.1000 01 /.22 .•. 01 /22/97 3.2000 08/27 • 01/21/N 3.2500 11/01 -11/07/N 3. 1500 01/23 • 01/23/81 3.3000 08/29 • 08/28/N 3.2500 11/08 • 11/11/91 3.8000 0112, -01/29/97 3.5000 08/29 • 08/29/N 3.4500 11/12 • 11/12/91 3.4000 01 /27 • 01/27/97 3.5500 08/30 • 09/02/91 3.8500 11/13 • 11113/91 3.5500 01/21 • 01/28/97 3.5000 09/03 • 09/03/N 3.3000 11/14 -11/14198 3.5000 01/29 • 01/29/97 3.6000 09/04 -09/04/96 3.0000 11115 • 11/17/98 3.5500 01/30 • 01/30/97 3.8000 09/05 -09/05/91 2.8000 11/18 • 11/11/91 3.4000 01/31 • 02/CZ/97 3.8000 09/08 • 09/01/98 2.9500 11/19 -11/19/91 3.2000 02/03 • 02/0S/97 3.1500 09/09 -09/09/N 2.9000 11/20 • 11/20/98 3.2000 02/04 -. 02/04/97 2.8S00 09/10 • 09/10/N 2.8500 11 /21 • 11/21 /91 3.4000 02/05 • 02/05/97 2.SSOO 09/11 • 09/11198 2.8500 11/22 -11/24/91 3.5000 02/08 • 02/01/97 2.asoo 09/12 • 09/12/98 3.0500 11/25 • 11/25/91 3.7500 02/07 • 02/09/97 2.9500 09/13 -09/15/99 3.2500 11/25 • 11/26/91 3.8000 02/10 -02/10/97 3.0000 09/18 • 09/11/98 3.4500 11/27 -11/21/98 4,0500 02/11 • 02/11/97 3.1000 09/17 • 09/17/H 3.4500 11/29 • 12/01/91 4.0500 02/12 • 02/12/97 3.1500 09/18 • ·09/18/N s.,ooo 12/02 -12/02/98 3.1000 02/13 • 02/13/97 3.0500 09/19 • 09/19/99 3.5000 12/03 • 12/03/91 2.8000 02/14 • 02/17/97 3.2000 09/20 -09/22/98 3.8000 12/04 • 12/04/N 2.3500 02111 -0211a1g1 3.2000 09/23 • 09/2'/H 3.7500 12/05 • 12/05/91 2.3500 02/11 • 02/19/97 3.1000 09/24 • 09/24/99 3.8000 12/01 • 12/01/91 2.9500 02/20 • 02/20/17 3.0000 09/25 -09/25/H 3.1000 12/01 • 12/09/98 2.9500 02/21 • 02/23197 3.1500 09/25 • 09/29/91 3.8000 12/10 -12/10/91 2.9500 02/24 • 02/24/ff 3.2500 09/27 -09/29/98 3.9000 12/11 • 12/11191 3. 1000 02/25 -02/25197 3.2500 09/30 -01/30/H 3.9000 12/12 -12112/M 3,1000 02/29 • 02/21/97 3.3500 10/01 • 10/01 /91 3.0500 12/13 • 12/15/N 3.3500 02/27 • 02/27/97 3.4000 10/02 -10/02/91 2.7000 12/11 • 12/1S/91 3.3500 02128 • 03/02/97 3.4000 10/03 • 10/03/H 2.4500 12/17 • 12/17/98 3.5500 03/03 -03/03/97 3.0000 10/04. 10/01/H 2.4500 12/11 • 12/11/N 3.5$00 03/04 • 03/0~/97 2. 7000 10/07 • 10/07/N 2.5000 12/19 • tZ/19/98 S.5500 03/05 • 03/05/91' 2.4000 10/0S -10/08/N Z.6000 12/20 • 12/22/N 3.7000 03/06 • 03/01/97 2.2500 10/09 • 10/09/91 3.3500 12/23 • 12/23/98 3.7000 03/07 • 03/09/97 2.2500 10/10 • 10/10/98 3.1000 12/24 • 12/25/98 3.8000 03/10 • 03/10/97 2.1000 10/11 • 10/14/98 3.7000 12/28 12/26/98 3.8000 03/11 • 03/11/97 t.9500 ,o,,s • 10/15/99 3.4000 12/27 • 12/29/98 3.9000 03/12 • 03/~2/97 1.ssoo 10/15 • 10/15/95 3 .• 3000 12/30 • 12/30/9& 4.1000 03/13 • 03/13197 1 .asoo 10/17 • 10/17/96 3.4000 12/31 • 01 / 01 /97 4.8500 03/14 • 03/16/97 2.0000 10/11 • 10/20/H 3 • .&000 01/02 • 01/02/97 2.3000 03/17 -03/17/97 2.2000 Rate History Report Sec;#: Issue: e8428S8K4 Cusip: 684WBM ORANGE CNTY SANITATION OISTRICTI 1,2,3,S,S,7 & t Hodt: DAILY ORANGE CNTV SA 1992 C (FGlC/FGIC LIQ ••ore••) ·First Rate: 08/01/1995 Effective: Ratt: Effec-tive: Rate: Effective: Rate: ··-------·--·-·····--·-· ·····-------··-·-----··· •••••••••o•••••••••••••• 03/18 • 03/19/97 2.8500 05/28 • 05/28/97 3.9000 08/07 • 08/07/97 2.7500 03/19 • 03/19/97 2.9000 05/29 -05/29/97 3.90~0 08/08 • 08/10/97 3.2000 03/20 • 03/20/97 3.0SOO 05/30 • 01/01/91 3.9000 08/11 • 08/11/97 3.1500 03/21 • 03/23/97 3.3500 01/02 • 01/02/97 3.2500 08/12 • 08/12/97 3.0500 03/2• • 03/24/97 3.3000 05/03 -01/03/17 i.0000 08/ 13 • 08/13/97 3.0500 03/25 • 03/25/97 3.3000 08/04 • 08/04/ff 2.1000 01/14 • 08/14/97 3.0500 03/28 • 03/21/97 3.3500 08/05 • 01/05/ff 3.3500 08/15 • 08/17/97 3.2000 03/27 • 03/21/97 3.4500 01/01 • 01/01/97 3.7500 01/11 • 01/18/97 3.0500 03/28 • 03/30/97 3.4$00 01/01 • 01/09/97 3.8500 oa,,1. 01111197 2.9000 03/31 • 03/31/97 3.8000 06/10 •. 01/10/9'7 3.1500 08/20 • 08/20/97 2.7500 04/01 • 04/01/97 3.0500 08/11 • 01/11/91 3.8500 01/21 • 01/21/17 2.5500 04/02 • 04/02/17 2.8500 08/12 • 08/12/17 3.&500 08/22 • 08/2'/9'1 3.0500 04/.03 • 04/03/97 2.5500 08/13 • 01/15/11 S.7500 08/ZS ~.08/25/97 3.0500 04/04 · 04/08/97 3,0500 01/11 -08/11/97 3.7500 01/21 -08/29/ff 3.1500 04/07 • 04/07/97 2.9500 08/17 • 05/17/97 3.7000 08/'Z'T • 08/27/97 3.2500 04/08 • 04/08/97 2.8500 01/18 • 08/18/97 3.7000 08/28 • 08/21/97 3.4000 04/09 • 04/09/97 2.7000 01/19 • 01/19/97 3.5500 01/29 • 09/01/17 3.5500 04/10 • 04/10/97 2.8500 08/20 • 08/22/97 3.8000 09/02 • 09/02/97 3.3500 04/11 • 04/13(97 3.2000 08/23 · 01/23/17 3.1000 01/03 -09/03/97 3'.3ff0 o,,,. · 04/14/97 3.2000 06/24 -08/-24('97 3.9000 09/04 • 09/04/97 3.2000 04/15 • 04(15/97 3.5000 08/25 • 09/25/97 4.0500 09/05 · 09/07/97 S.1500 04/18 -04/16/97 3.6000 08/21 • 01/21/97 4.8000 09101 -01101,rn 3.1000 04/17 -04/17/97 3.8000 06/27 • Ol/'l!l/97 5.4000 09/01 • 09/09/97 3.5500 04/18 • 04/20/97 4.1000 08/30 -01/30/97 3.9000 09/10 • 09/10/97 3.5500 04/21 • 04/21/97 4.1000 07(01 ·• 07/01/97 3.3500 01,,, • 01/11/97 3.1000 04/22 • 04/22/97 ,.2000 07/02 • 07/02/97 2.7000 01/12 • 09/14/97 3.6500 04/23 • 04/23/97 4,2500 07/03 -07/01/97 Z.8500 09/15 • 09/15/97 3.7000 04/24 -04/24/97 4.4500 07/07 • 07/07/97 2.4000 09/19 • 09/18/97 3.7000 04/25 • ·04/27 /97 5. 1500 07/01 • 07/01/W 2.1000 09/17 • 01/17/91 3.7500 04/28 • 04/28/97 4.8500 07/09 • 07/09/97 ·2.1000 09/18 • 01/11/97 3.8000 04/29 · 04/29/97 4.2500 07/10 • 07/10/97 3.0000 09/19 • 09/21/97 3.9500 04/30 • 0'/30/97 3.7500 07/11 • 07/13/97 3.3000 09/22 • 09/22/97 4.0000 05/ 01 -05/01 /97 3.7500 0111, • 07/14/97 3.3000 09/23 • 09/23/97 4.0000 05/02 • 05/04/97 3.5000 07/15 • 07/15/97 3.3000 09/24 • 09/24/97 4.0000 05/05 • 05/05/97 3.2000 07/18 • 07/11/91 3.2500 09/25 -09/2!,/87 4.0000 05/0S -05/08/97 3.2000 07/17 • 07/17/9'7 3.3800 09/29 -09/21/97 4.0000 05/07 • 05/07/97 3.5000 07/11 • 07/20/97 3.3000 09/29 • 09/29/97 4.0000 05/08 • 05/08/97 3.9500 07/21 • 01/21/97 3.3000 09/30 -09/30/97 3~8500 05/09 • 05/ 11 /97 4.3000 07/D • 07/22/97 3.2500 10/01 · 10/01/97 3,4500 05/12 • 05/12/97 4.0000 07/23 • 07/23/97 3.3500 10/02 • 10/02/97 3.2500 05/13 -05/13/97 3.8500 07/24 • 07/24/97 3.4500 10/03 -10/05/97 3.2000 05/14 • 05/14/97 3.7500 07/25 • 07/27/97 3.5000 10/09 -10/08/97 3.1500 05/15 -05/15/97 3.5000 0713. 07/28/97 3,4500 10/07 • 10/07(97 3.0500 05/15 • 05118/97 3.7000 07/29 • 07/29/'¥7 3.4000 10/0S • 10/08/97 3. 0500 05/19 -05/19/97 3.5000 07/30 • 07/30/iT 3.4000 10/09 • 10/09/97 3.2000 05/20 • 05/20/97 3.SOOO 07'/31 • 07/31/97 3.S000 10/10 -10/13/97 3.4000 05/21 • 05/21/97 3.5000 08/01 • 01/03/97 3.5000 1011, · 10/14/97 3.4500 05/22 -05/22/97 3.6000 08/04 · 08/04/97 3.2000 10/tS • 10/15/97 3.4S00 05/23 · OS/26/i7 4.0500 08/05 · 08/05/97 3.0000 10/18 • 10/18/97 3.5000 05/27 • 05/27/97 4.0000 08/06 • 08/08/97 2.7500 10/17 • 10/19/97 3.5500 Rat, Hinory Report Sec I: issue: 6M215BK4 Cudp: 8842&5B.U ORANG! CNTY SANITATION DISTRICTf 1,2,315,617 & 1 Mode: DAILY ORANGE CNTY SR t992 C (FGlC/FGIC LIQ ••OTC••) First Rate: 08/01/1995 Effective: Aatt: Effective: Rate: Ef1'eet1v1: .Rate: --·-··-----······-·-···· ···-······-·--·········· ------············--···· 10/20 • 10/20197 3.!000 12/16 • 12/16/97 3.4000 02/12 · 02/12/98 1 .2000 10/21 • 10/21/97 3.4500 12/17 • 12/17/97 3.•ooo 02/13 • 02/18/98 3.2500 10/22 • 1-0/22/97 3.S500 ,2,11 • 12/11/97 3.4500 02/17 -02/17/91 3.0000 10/23 • 10/23/97 3.5500 12/11 • 12/21/91 3.4$00 02/18 • 02/18/98 2.8000 10/24 • 10/25/97 3.7000 12/22 • 12/22/17 3.,s-00 02/19 • 02/19/98 2.4000 10/27 -10/27/97 3.7000 12/23 • 12/23/97 3~4500 02/20 -02/22/11 3.0000 10/21 • 10/28/97 3.5000 12/24 • 12/25/17 3.7500 02/23 • 02/23/91 3.2000 10/29 -10/29/17 3.4500 12/28 • 12/28/17 3.8$00 02/24 -02,2,191 3.2500 10/30 -10/30/97 3.8000 12/29 • 12/21/97 3.1500 02/25 • 02/25/91 3.3000 10/31 • 11/02/97 3.9500 12/30 • 12/30/97 4.1000 02/28 • 02/ZS/91 3.8000 11 /03 -11 /03/97 3.7000 12/31 • 01/01/98 4.7500 02/27 -03/01/91 3.8000 11 /04 -11/04/97 3.5500 01/02 • 0110,191 3.5500 03/02 • 03/0t/91 2.sooo 11/05 • 11/05/97 3.6000 01/05 • 01/05/N 2.9500 03/03 • 03/03/91 1.5500 11 /01 • 11 /01/97 3.8000 01/01 -01/01/91 2.3500 03/04 -· 003/04/N 1.2500 11/07 -11/09/97 3.9000 01/07 • 01/07/91 2.1000 03/05 • 03/05/91 1.0000 11/10 • 11/11/97 3.1500 01/08 • 01/08/98 2.2500 03/01 • 03/01/98 2.0000 11/12 -11112/07 3.8000 01/01 • 01/11/91 2.1500 03/09 -03/09/91 1.6500 11/13. 11/13/97 3.1500 01/12 • 01/12/N 2.5000 03/10 • 03/10/91 t .ssoo 11/14 • 11/16/97 3.7500 01/13 -01/13/98 Z.5500 0,111 • 03111111·· r.noo 11/17 • 11/17/97 3.8000 01/14 • 01/.14/N 2.5500 03/12 • 03/12/98 1. 1500 11/18 • 11/11/97 3.$500 01/15 -01/15/98 2.ssoo 03/13 -03/15191 3.0000 11/19 • 11/19/97 3.5500 01/15 • 01/19/98 2.9500 03/18 • 03/11/91 3.0000 11 /20 -11 /20/97 3.5500 01/20 • 01/20/91 Z.9500 03/17 • OS/11/91 3.0000 11 /21 -11 /23/97 3.5000 01/21 • 01/21/98 3.1000 03/18 -03/18/98 3.1000 11/24 • 11/24/97 3.5000 01/22 -,. 01/'12/91 3.1500 03/19 • 03/19/98 3.3000 11/25 • 11/25/97 3.5000 01/23 • 01/25/98 3.4500 03/20 • 03/22/98 3.SSOO 11/21 • 11/27/97 3.5500 01/21 • 01/28/98 3.4500 03/23 -03/23/98 3.6000 11/21 -11/30/97 3.8000 01/27 • 01/27/91 3.5000 03/24 • 03/24/91 3.6000 12/01 • ·12/01/97 3.3000 01/ZS • 01/28/98 3.5000 03/2$ • 03/25/91 3.6000 12/02 -12/02/97 2.9000 01/29 • 01/29/91 -3.5000 03/28 • 03/25/91 3.6000 12/03 -12/03/97 2.5000 01/30 • 02/01/91 3.6000 03/21' • 03/29/N 3.5000 12/04 • 12/04/97 2.3000 02/02 -02/02/98 3.0000 03/30 -03/30/91 3.5000 12/05 • 12/07/97 2.5000 02/03 • 02/03/91 z.sooo 03/31 • 03/31/91 3.7000 12/08 • 12/08/97 2.5000 02/04 • 02/04/91 1. 7500 04/01 • 04/01/91 3.3000 t2/09 -12/09/97 2.5500 02/05 • 02/05/91 ,.sooo 04/02 • 04/02/91 3.0000 12/10 • 12/10/87 3.3500 02/01 -02/01/98 1.5000 04/03 • 04/05/91 3.0000 12/11 • 12/11 /97 3.6000 02/01 ·• 02/09/91 1.4000 04/08 • 04/08/91 2.9000 12/12 -12/14/97 3.5000 02/10 • 02/10/H 1.3000 04/07 -04/07/91 2.8000 12/15 -12/15/97 3.5000 02/11 • 02/11/98 1.2000 04/08 • 04/08/91 2.8000 Weighted Average for 06/01/1995 to 04/01/1998: 3.40258 NEW ISSUE BOOK-ESTRY ONLY RA TINGS: Standard & Poor's Corporation: AAA I A• l + Moody's Investors SeMice: Aaa/VMIG 1 (See "RATINGS" herein) /n the opinion of Co-Special Counsel. under e:cisring law. rite Interest Component of Installment Payments rer:eivtd by rite Owtters oftlte Cerr,fir:ares is e.tempt Jrom personal income taxes of rite State of Cahfornia and. assuming compliance with rite tax covtnanr described hertin. is ~xc/uded from gross income for Federal income ra.x purposes and is not a specific preference /rem for purposes of rhe Federal alternative minimum ta.x. See. hoiwur. "LEGA L ."fA ITERS-Ta.t .\,fallers .. herein regarding certain other tax cansiderations. $98,500,000 CERTIFICATES OF PARTICIPATION (CAPITAL IMPROVEMENT PROGRAM, 1990-92 SERIES C) eYidencin1 direct and proportionate intereab in the ri1ht to receive lnatallment Payments: to be made by COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 6, 7 AND 11 OF ORANGE COUNTY, CALIFORNIA Punuant to an Asreement for Acquiaition and Construction Dated: Date of Original Delivery Price: 100% Due: August 1, 2017 This cover page contains cenain information for quick reference only. It is not a summary of this iS$ue. Investon must read the entire official statement to obtain information essential to the making of an informed investment decision. The Cenificates evidence direct and proponionate interests in the right to receive Installment Payments to be made by the Participating Distncts pursuant 10 the Acquisition Agreement. Each Participating District is obligated to make its Installment Payments solely from the Net Entefl)rise Revenues of such Participating District's sanitary sewerage system. F.ach Panicipating District is responsible for its own Installment Payments only and is not obligated for any other Participating District's Installment Payments. The Certificates are deliverable in fully registered, book-entry form only and the registered Owner of the Cenificates will be Cede&: Co .. as nominee ror The Depository Trust Company, New York, New York ("OTC'"), which will act as securities depository for the Certificates. Purchasers. as Beneficial Owners, will r.ot receive physical cenificates representing their interests in the Cenificates purchased. Payments with respect to the Cenificates are to be made by State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee'"), or its agent, 10 the registered Owner of the Certificates. So long as the Cenificates are subject to the OTC book-entry system, such payments are to be made to OTC or its nominee. Cede & Co. The disbursement or such payments 10 OTC Participants is the responsibility or OTC and disbursement of such payments 10 the Beneficial Owners of the Ceniticates is the responsibility or the OTC Participants and Indirect Panicipants. See "BOOK-E?-.'TR Y SYSTEM'" herein. The Cenificates will initially be executed and delivered in the Daily Mode and in denominations of SI00.000 or any integral mulnple thereof. Wlule in the D~e. the interest rate with respect to the Cenificates ·11m be determined by Merrill Lynch, Pierce. Fenner &. Smith Incorporated. as Remarketing Agent. on each Business Day on the basis of mar.ket conditions. as described herein. In the Daily Mode. Interest Components are payable on the fifth Business Day of each calendar month commenctng October 7, 1-992. ne Certificates are subject to opdoul ud mudatory prepaymeat prior to mahlrity ud to mudatory purdlue u more fully described berein. The payment or pnnc1pal and interest when due with respect to the Cenificates will be insured by a mun1etpal bond insurance policy to be issued t,~-Firwicial Guaranty Insurance Company simultaneously with the delivery or the Cenificates --FGIC. Financial Guarantv Insurance Company · Mfflft'-ti UMd b! finanrial C-.nry I-Campany.• pri••M """PU'!' IIDI •ffllialtd wilh 1111!' l.S. ,,.,, •• e.aUM ~- Paym,mt ::,f the Purchase Price equal to the Principal Component and up ro SO days accrued Interest Component at a maxim annum on 1he Ceniticates tendered for purchase as described herein and not remarketed will be made pursuant and subject 10 rhe ·-'--S':T"'- Bond Purchase Agreement (the '"Initial Liquidity Facility") among the Participating Districts and FGIC SECURITIES PURCHASE, INC. Delivery of 1h1s Official Statement in conjunction with the offering of the Certificates may only be made in conjunction wi -h delivery of the pruspectus and the accompanying prospectus supplement relating to the Initial Liquidity Facility. The Initial Liquidity Facility will e ire on the fifth annt\·ersary of the delivery of-!he Certificates unless terminated sooner or extended as set fonh herein. The obligation of each P3nicipating District to nuke its Installment Payments does r:ot constitute an obligation oi such P 1cipat g ~1~r which it 1s obligated to levy or pledge any form of taxation or for which the Participaung District has levied or pledged .any fo ~11on. The obhgatton of eiu:b Panic1paung District to nuke its Installment Payments does not constitute a debt or indebtedness of such Panic1pating isuict. the State of C.alifom1a. or any of its political subdivisions within the meaning of any constitutional or statutory debt !imitauon or restriction. The Certificates are otl'ered whe:n. as and if delivered and received by the Underwriter. subject to the approval of Mudge Rose Guthrie Ale.under ck Ferdon. Los Angeles. California• and Rourke & W oodrulf. a professional co'l)O~tion. Orange, California. Co-Special Counsel. wd cert.a.in other .:ond1t1ons. Ceri.ain leg.al m.aners will be passed upon for the Underwnter by Orrick. Hemrtgton & Su1.clilfe. Los Angeles. CaJ1fom1a. and for rhe Omncts b)' Rourke &. Woodru11' . .a profess1onal CO'l)Oration. Orange, CaJifomia. It is anttctpated that the Certificates in boolr.-entl')' ionn -..·111 be naalable for delivery to OTC in Sew York. Sew York on or ahout September I. 1992. Merrill Lynch & Co. Draft as of July 15, 1998 Pages EXHIBIT II BID SHEET We have received and read the Request for Bids dated [August _, 1998], for an Investment Agreement concerning the investment of certain funds in connection with the County Sanitation Districts of Orange County, 1990-92 Series "C" COPs. Our offer is as follows: Agreement Net Yield: (Spread to COPs Arbitrage Yield) Provider: Your Long Term Ratingsl11: (Moody's/S&P) We hereby certify that we are a Qualified Provider under the requirements set forth in the Requests for Bids dated [August_, 1998], with respect to the bid on the Agreement. Signed: Name: Title: Phone Number: Fax Number: Date: Conditions, if any ? PLEASE FAX YOUR OFFER to Michael Harris of PFM no later than [ _:00 p.m. Eastern Time on __ _ August_, 1998] telephone: (717) 232-2723, fax: (717) 233-6073. Should the timing of the pricing of the Agreement be changed, the new time will be announced via telephone or facsimile. [1] Indicate if any rating is on credit watch or credit review. FAHR COMMITTEE Meeting Date To. Bd. 07/15/98 07/29/98 AGENDA REPORT Item Number Item Number 5 Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: ANNUAL REVIEW OF THE DISTRICT'S INVESTMENT POLICY STATEMENT AND DELEGATION OF INVESTMENT AUTHORITY TO THE DIRECTOR OF FINANCEfTREASURER (FAHR98-56) GENERAL MANAGER'S RECOMMENDATION That the FAHR Committee: 1. Review and approve the District's Investment Policy Statement for 1998-99; 2. Renew the delegation of investment authority to the District's Director of FinancefTreasurer for 1998-99; and 3. Recommend that the Board of Directors adopt Resolution No. OCSD-98-XX for adoption of the District's Investment Policy Statement, and renewal of investment authority for 1998-99. SUMMARY This agenda item presents the annual review of the District's Investment Policy Statement to the FAHR Committee for consideration in the Committee's capacity as the oversight committee for the Investment Policy (Section 16.2). With adoption of the attached Resolution, the Board of Directors would readopt the District's current Investment Policy Statement, portfolio performance benchmarks, and monitoring and reporting requirements. The District's Investment Policy Statement is recommended for adoption for 1998-99, with no .changes or revisions from 1997-98. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. ~ Not applicable (information ·item) \lradonldata1wp.dla\fin\210lcrane\FAHR\FAHR98\JUly\FAHR98-56.doc Re¥iud: 115198 Page 1 ADDITIONAL INFORMATION Background The District's current Investment Policy Statement was reviewed and approved by the Finance, Administration and Human Resources Committee (FAHR) on September 10, 1997, and adopted by the Joint Boards on September 24, 1997 (Resolution No. 97-32). These approvals followed thorough review and comment by both the FAHR Committee and the Board during July and August 1997. The Investment Policy governs the investment activities of Pacific Investment Management Company (PIMCO), the District's external money manager, on behalf of the District. The District's Investment Policy Statement has received the Investment Policy Certification of Excellence Award from the Municipal Treasurer's Association of the United States and Canada. The attached Investment Policy document consists of the Policy Statement itself, and the following four appendices: A. Summary of Investment Authorization; B. Board Resolution No. OCSD-98-XX; C. Sections of the California Government Code Pertinent to Investing Public Funds; and D. Glossary of Terms. Annual Review ,of Investment Policy The Investment Policy includes the requirement that the District shall review its Investment Policy annually (Sections 1.2 and 16.1 ). Likewise, Section 53646 of the California Government Code (the "Code") requires local agencies to review their investment policy annually, and readopt their policy at a public meeting. This staff report presents the annual review of the District's Investment Policy Statement to the FAHR Committee for consideration in the Committee's capacity as the oversight committee for the Investment Policy (Section 16.2). With adoption of the attached Resolution, the Board of Directors would readopt the District's current Investment Policy Statement, portfolio performance benchmarks, and monitoring and reporting requirements. Annual Delegation of Investment Authority Effective January 1, 1997, Section 53607 of the Code states that governing boards of local agencies may only delegate authority to invest and/or reinvest agency funds to the agency's Treasurer for a one-year period. \lradonldata1V1p.dtallin\21Ckrane\FAHRIFAHR98\July\FAHR98-56.doc RIMMCI: 1151118 Page2 With adoption of the attached Resolution, the Board of Directors would renew its delegation of investment authority to the Director of Finance/freasurer for a one-year period in compliance with the requirements of Section 53607. Each year, the Board of Directors will consider similar actions along with the annual reconsideration of the District's Investment Policy. ALTERNATIVES None. CEQA FINDINGS N/A ATTACHMENTS 1. Orange County Sanitation District's 1998-99 Investment Policy Statement 2. Resolution No. OCDS-98-XX \lnldon\da1a1wp.dta\fin\210'crane\FAHRIFAHR98'July\FAHR98-56.doc Revised: 115198 Page3 RESOLUTION NO. OCSD-98-XX AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS, AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS, AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS ••••••••••••••• WHEREAS, on September 24, 1997, the Board of Directors adopted Resolution No. 97-32, readopting the District's Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and, WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest District's funds to the Treasurer for a one-year period; and, WHEREAS, pursuant to California Government Code Section 53646, the District is required to review its Investment Policy annually and readopt its Policy at a public meeting, which Policy will establish specific performance benchmarks and objectives, and specific monitoring and reports. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the authority of the Board of Directors to invest or reinvest District's surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the District's Treasurer for a one-year period commencing oil the date this Resolution is adopted, as authorized by California Government Code Section 53607. Section 2: That the Board of Directors hereby adopt the Investment Policy Statement of the Orange County Sanitation District, as set forth in Exhibit "A," attached hereto and incorporated herein by reference. Section 3: That the Board of Directors hereby adopt the following specific performance benchmarks for their two investment funds in accordance with Section 14.0 of the District's Investment Policy: LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared to the three month T-Bill rate, and the Callan Active Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 4: That the Board of Directors hereby adopt a performance monitoring and reporting schedule, as required by Section 15.0 of the District's Investment Policy, which schedule is attached hereto as Exhibit "8," and incorporated herein by reference. PASSED AND ADOPTED at regular meeting held July 29, 1998. \\RADON\OATA1\WP.DTA\FIN\210\CRANEIFAHRIFAHR981JULY\INVESTPOLICYRESO.OOC -§ 53639. Expense of transporting money Except as otherwise provided in Section 53682, the depository shall bear the expenses of transportation of money to and from the depository. § 53640. Checks, drafts, and other exchange Except as otherwise provided in Section 53682, the depository shall handle, collect, and pay all checks, drafts, and other exchange without cost to the local agency. § 53641. Receipt or other evidence of deposit When money is deposited in a depository, the treasurer or other authorized official shall take and preserve a receipt, certificate of deposit, or other evidence of the deposit as he or she requires. § 53642. Withdrawals; check or order The money deposited may be drawn out by check or order of the treasurer or other official authorized to make such deposit. § 53643. Deposit by treasurer The treasurer may deposit any part of the money as agreed upon between the treasurer and the depository. § 53644. Withdrawals on demand; penalties; notice If an agreement is not made: (a) Active deposits and interest thereon are subject to withdrawal upon the demand of the treasurer or other authorized official, subject to any penalties which may be prescribed by federal law or regulation. (b) Inactive deposits are subject to notice of at least thirty days before withdrawal. § 53645. Interest; computation; payment Interest shall be computed and paid by the depository, as follows: (a) For active deposits upon which interest is payable, interest shall be computed on the average daily balance for the calendar quarter, and shall be paid quarterly. (b) For inactive deposits, interest shall be computed on a 360-day basis, and shall be paid quarterly. § 53646. Investment policy statement; review and approval; legislative body or oversight committee; reports Page 19 of 40 (a)(l) In the case of county government, the treasurer shall annually render to the board of supervisors and any oversight committee a statement of investment policy, which the board shall review and approve at a public meeting. Any change in the policy shall also be reviewed and approved by the board at a public meeting. (2) In the case of any other local agency, the treasurer or chief fiscal officer of the local agency shall annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy, which the legislative body of the local agency shall consider at a public meeting. Any change in the policy shall also be considered by the legislative body of the local agency at a public meeting. (b)(l) The treasurer or chief fiscal officer shall render a quarterly report to the chief executive officer, the internal auditor, and the legislative body of the local agency. The quarterly report shall be so submitted within 30 days following the end of the quarter covered by the report. Except as provided in subdivision (e), this report shall include the type of investment, issuer, date of maturity par and dollar amount invested on all securities, investments and moneys held by the local agency, and shall additionally include a description of any of the local agency's funds, investments, or programs, that are under the management of contracted parties, including lending programs. With respect to all securities held by the local agency, and under management of any outside party that is not also a local agency or the State of California Local Agency Investment Fund, the report shall also include a current market value as of the date of the report, and shall include the source of this same valuation. (2) The quarterly report shall state compliance of the portfolio to the statement of investment policy, or manner in which the portfolio is not in compliance. (3) The quarterly report shall include a statement denoting the ability of the local agency to meet its pool's expenditure requirements for the next six months, or provide an explanation as to why sufficient money shall, or may, not be available. (4) In the quarterly report, a subsidiary ledger of investments may be used in accordance with accepted accounting practices. ( c) Pursuant to subdivision (b ), the treasurer or chief fiscal officer shall report whatever additional information or data may be required by the legislative body of the local agency. ( d) The legislative body of a local agency may elect to require the report specified in subdivision (b) to be made on a monthly basis instead of quarterly. ( e) For local agency investments that have been placed in the Local Agency Investment Fund, created by Section 16429.1, in Federal Deposit Insurance Corporation-insured accounts in a bank or savings and loan association, in a county investment pool, or any combination of these, the treasurer or chief fiscal officer may supply to the governing body, chief executive officer, and the auditor of the local agency the most recent statement or statements received by the local agency from these institutions in lieu of the information required by paragraph (1) of subdivision (b) regarding investments in these institutions. Page20 of40 § 53647. Interest; payment into fund (a) Interest on all money deposited belongs to, and shall be paid quarterly into the general fund of, the local agency represented by the officer making the deposit, unless otherwise directed by law. (b) Notwithstanding the provisions of subdivision (a), and except as otherwise directed by law, if the governing body of the local agency represented by the officer making the deposit so directs, such interest shall be paid to the fund which contains the principal on which the interest accrued. § 53647.5. Interest on bail money on deposit Notwithstanding any other provision of law, interest earned on any bail money deposited in a bank account pursuant to Section 1463.l of the Penal Code and Section 53679 of this code shall, if the board of supervisors so directs, be allocated for the support of the courts in that county. § 53648. Deposits and contracts pursuant to federal law or rule Notwithstanding this article, the treasurer may deposit moneys in, and enter into contracts with, a state or national bank, savings association or federal association, federal or state credit union, or federally insured industrial loan company, pursuant to a federal law or a rule of a federal department or agency adopted pursuant to the law if the law or rule conflicts with this article in regulating the payment of interest on deposits of public moneys by any of the following: (a) Banks which are Federal Reserve System members or whose deposits are insured by the Federal Deposit Insurance Corporation. (b) Savings associations or federal associations which are federal home loan bank members or whose deposits are insured by the Federal Savings and Loan Insurance Corporation. (c) State or federal credit unions whose accounts are insured by the National Credit Union Share Insurance Fund or guaranteed by the California Credit Union Share Guaranty Corporation or insured or guaranteed pursuant to Section 14858 of the Financial Code, unless a member of the legislative body of a local agency, or an employee of the administrative office, manager's office, budget office, auditor-controller's office, or treasurer's office of the local agency, also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or supervisory committee, of the state or federal credit union. (d) A federally insured industrial loan company. § 53648.5. Termination of agreement with depository Upon the removal by federal law of the conflicting federal law or rule the agreement between the treasurer or other authorized official and a depository may be terminated by either party. § 53649. Contracts with depositories; contents; filing The treasurer is responsible for the safekeeping of money in his or her custody and shall enter into any contract with a depository relating to any deposit which in his or her judgment is to the public advantage. The depository, and the agent of depository to the extent the agent of depository has been notified of deposits and the amount thereof, are responsible for securing Page 21 of 40 moneys deposited pursuant to such a contract in accordance with Section 53652. One copy of each contract shall be filed with the auditor, controller, secretary, or corresponding officer of the local agency. The contract shall: (a) Fix the duration of deposits, if appropriate. (b) Fix the interest rate, if any. ( c) Provide conditions for withdrawal and repayment. ( d) Provide for placement of pooled securities in a named agent of depository in accordance with Section 53656. ( e) Grant authority for agent of depository to place securities for safekeeping in accordance with Section 53659. (f) Set forth in accordance with Section 53665 the conditions upon which the administrator shall order pooled securities converted into money for the benefit of the local agency, and the procedure therefor. (g) Provide for compliance in all respects with the provisions of this article and other applicable provisions of law. (h) Provide, upon notice to the treasurer from the administrator, that a treasurer may withdraw deposits in the event a depository fails to pay the assessments, fines, or penalties assessed by the administrator or may withdraw authorization for the placement of pooled securities in an agent of depository in the event that the agent of depository fails to pay the fines or penalties assessed by the administrator. § 53651. Eligible securities Eligible securities are any of the following: (a) United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest. (b) Notes or bonds or any obligations of a local public agency (as defined in the United States Housing Act of 1949) or any obligations of a public housing agency (as defined in the United States Housing Act of 1937) [FNl] for which the faith and credit of the United States are pledged for the payment of principal and interest. ( c) Bonds of this state or of any local agency or district of the State of California having the power, without limit as to rate or amount, to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district, and in addition, limited obligation bonds pursuant to Article 4 ( commencing with Section 50665) of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5 (commencing with Section 53387) of Chapter 2.7, and revenue bonds and other Page 22 of 40 obligations payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state, local agency or district or by a department, board, agency or authority thereof. (d) Bonds of any public housing agency (as defined in the United States Housing Act of 1937, as amended) [FN2] as are secured by a pledge of annual contributions under an annual contribution contract between the public housing agency and the Public Housing Administration if such contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 193 7, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to that subsection 22(b) shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations. ( e) Registered warrants of this state. (f) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by the United States Postal Service, federal land banks [FN3] or federal intermediate credit banks [FN4] established under the Federal Farm Loan Act, as amended, [FN5] debentures and consolidated debentures issued by the Central Bank for Cooperatives [FN6] and banks for cooperatives established under the Farm Credit Act of 1933, [FN7] as amended, consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act, [FN8] bonds, debentures and other obligations of the Federal National Mortgage Association [FN9] or of the Government National Mortgage Association [FNl0] established under the National Housing Act, as amended, [FN 11] bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970, [FN12] and obligations of the Tennessee Valley Authority. [FN13] (g) Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section 53820), Article 7.5 (commencing with Section 53840) or Article 7.6 (commencing with Section 53850) of this Chapter 4. (h) State of California notes. (i) Bonds, notes, certificates of indebtedness, warrants or other obligations issued by: (1) any state of the United States ( except this state), or the Commonwealth of Puerto Rico, or any local agency thereof having the power to levy taxes, without limit as to rate or amount, to pay the principal and interest of such obligations, or (2) any state of the United States ( except this state), or the Commonwealth of Puerto Rico, or a department, board, agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the department, board, agency or authority but which does not constitute a valid and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged, which are payable solely out of the revenues from a revenue-producing source owned, controlled or operated thereby; provided the obligations issued by an entity described in (1), above, are rated in one of the three highest grades, and such obligations issued by an entity described in (2), above, are rated in one of the two highest grades by a nationally recognized investment service organization that has been engaged regularly in rating state and municipal issues for a period of not less than five years. Page 23 of 40 G) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, Inter-American Development Bank, the Government Development Bank of Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank. (k) Participation certificates of the Export-Import Bank of the United States. (1) Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 (commencing with Section 51350) of Part 3 of Division 31 of the Health and Safety Code. (m) Promissory notes secured by first mortgages and first trust deeds which comply with Section 53651.2. (n) Any bonds, notes, warrants, or other evidences of indebtedness of a nonprofit corporation issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 or 81345 of the Education Code, and also any bonds, notes, warrants or other evidences of indebtedness issued to refinance those bonds, notes, warrants, or other evidences of indebtedness as specified in Section 3 9317 of the Education Code. (o) Any municipal securities, as defined by Section 3(a)(29) of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78, as amended), which are issued by this state or any local agency thereof. (p) With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San Francisco which comply with Section 53651.6. § 53651.2. Eligible security; promissory note (a) To be an eligible security under subdivision (m) of Section 53651, a promissory note placed in a securities pool on or after January 1, 1987, shall comply with all of the following provisions: ( 1) Each promissory note shall be secured by a first mortgage or first trust deed on improved 1 to 4 unit residential real property located in California, shall be fully amortized over the term of the note, and shall have a term of no more than 30 years. Any first mortgage or first trust deed which secures a promissory note providing for negative amortization shall be removed from the securities pool and replaced with an eligible security under subdivision (m) of Section 53651 if the loan to value ratio exceeds 85 percent of the original appraised value of the security property as a consequence of negative amortization. · (2) Each promissory note shall be eligible for sale to the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; provided, however, that up to 25 percent of the total dollar amount of any promissory note securities pool established pursuant to Section 53658 may consist of promissory notes with loan amounts which exceed the maximum amounts eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, but which do not exceed: (i) five hundred thousand dollars ($500,000) in the case of a single family dwelling; (ii) one million dollars ($1,000,000) in the case of a 2, 3, or 4 unit dwelling. Page 24 of 40 (b) The following shall not constitute eligible securities under subdivision (m) of Section 5 3 651 : (1) Any promissory note on which any payment is more than 60 days past due. (2) Any promissory note secured by a mortgage or deed of trust as to which there is a lien prior to the mortgage or deed of trust. For the purposes of this paragraph, no lien specified in Section 766 of the Financial Code shall be considered a prior encumbrance unless any installment or payment thereunder ( other than a rental or royalty under a lease) is due and delinquent. (3) Any promissory note secured by a mortgage or deed of trust as to which a notice of default has been recorded pursuant to Section 2924 of the Civil Code or an action has been commenced pursuant to Section 725a of the Code of Civil Procedure. ( c) The depository may exercise, enforce, or waive any right granted to it by the promissory note, mortgage, or deed of trust. (d) For purposes of this article, the market value of a promissory note which is an eligible security under subdivision (m) of Section 53651, shall be determined in accordance with the regulations adopted by the Treasurer under paragraph (2) of subdivision (m) of Section 53651, as the regulations and statute were in effect on December 31, 1986. However, if and when regulations on the subject are adopted by the administrator, the market value shall be determined in accordance with those regulations of the administrator. § 53651.4. Report of independent certified public accountant; depository usmg eligible securities; state bank; national bank; fee (a) A depository which uses eligible securities of the class described in subdivision (m) of Section 53651 shall, within 90 days after the close of each calendar year or within a longer period as the administrator may specify, file with the administrator a report of an independent certified public accountant regarding compliance with this article and with regulations and orders issued by the administrator under this article with respect to eligible securities of that class. The report shall be based upon the audit, shall contain the information, and shall be in the form the administrator may prescribe. The depository shall provide a copy of the report to the treasurer on request. (b) If a depository which is a state bank files with the administrator, not less than 90 days before the beginning of the calendar year, a notice that it elects to be examined by the administrator instead of filing a report of an independent certified public accountant under subdivision (a) for that calendar year, the depository shall be exempt from subdivision (a) for that calendar year and shall for that calendar year be subject to examination by the administrator regarding compliance with this article and with regulations and orders under this article with respect to eligible securities of the class described in subdivision (m) of Section 53651. The administrator shall provide a report to a treasurer with deposits in the examined state bank upon request of the treasurer. (c) A national bank may apply to the administrator to be examined, and the administrator, in his or her discretion, may examine a national bank for the purposes of satisfying the requirements of subdivision (a). The administrator shall provide a report to a treasurer with deposits in the examined national bank upon request of the treasurer. Page 25 of 40 . ( d) Whenever the administrator examines a depository pursuant to subdivision (b) or ( c ), the depository shall pay, within 30 days after receipt of a statement from the administrator, a fee of two hundred dollars ($200) per day for each examiner engaged in the examination. § 53651.6. Letter of credit; terms (a) To be an eligible security under subdivision (p) of Section 5 3 651, a letter of credit shall be in such form and shall contain such provisions as the administrator may prescribe, and shall include all of the following terms: (1) The administrator shall be the beneficiary of the letter of credit. (2) The letter of credit shall be clean and irrevocable and shall provide that the administrator may draw upon it up to the total amount in the event of the failure of the depository savings association or federal association or if the depository savings association or federal association refuses to permit the withdrawal of funds by a treasurer. § 53652. Value required to secure active or inactive deposits; market value To secure active or inactive deposits a depository shall at all times maintain with the agent of depository eligible securities in securities pools, pursuant to Sections 53656 and 53658, in the amounts specified in this section. Uncollected funds shall be excluded from the amount deposited in the depository when determining the security requirements for the deposits. (a) Eligible securities, except eligible securities of the classes described in subdivisions (m) and (p) of Section 53651, shall have a market value of at least 10 percent in excess of the total amount of all deposits of a depository secured by the eligible securities. (b) Eligible securities of the class described in subdivision (m) of Section 53651 shall have a market value at least 50 percent in excess of the total amount of all deposits of a depository secured by those eligible securities. (c) Eligible securities of the class described in subdivision (p) of Section 53651 shall have a market value of at least 5 percent in excess of the total amount of all deposits of a depository secured by those eligible securities. For purposes of this article, the market value of a letter of credit which is an eligible security under subdivision (p) of Section 53651 shall be the amount of credit stated in the letter of credit. § 53653. Waiver of security; federally insured deposits; interest When in his or her discretion local conditions so warrant, the treasurer may waive security for the portion of any deposits as is insured pursuant to federal law, notwithstanding this article. For deposits equivalent to and not less than the maximum amount insured pursuant to federal law for which a treasurer has waived security under this section, a treasurer at his or her discretion may also waive security for the interest accrued on the deposits which, when added to the deposits, would cause the sum of the interest and deposits to exceed the maximum amount insured pursuant to federal law, provided that the interest is computed by the depository on the average daily balance of the deposits, paid monthly and computed on a 360-day basis. Page 26 of40 § 53654. Addition or substitution of securities; withdrawal or release of securities (a) The depository may add securities to the pool or substitute securities of equal value for those in the pool at any time, but shall not interchange classes of security, as defined in Section 53632.5, without prior approval of the treasurer. (b) Withdrawal of securities from the pool without replacement at equal value may be ordered only by two duly authorized officers or employees of the depository who satisfy the requirements as may be set by the administrator. ( c) The agent of depository is responsible for the safekeeping and• disbursement of securities placed in its custody by a depository. It shall release securities only upon presentation by the depository of the most reasonably current statement of the total deposits subject to this article held by the depository, such statement to be verified and countersigned by two duly authorized officers, other than those who ordered the withdrawal of securities. A copy of this statement shall be forwarded to the administrator concurrently by the agent of depository. § 53655. Perfection of security interest in favor oflocal agencies A placement of securities by a depository with an agent of depository pursuant to this article shall have the effect of perfecting a security interest in those securities in the local agencies having deposits in that depository notwithstanding provisions of the Uniform Commercial Code to the contrary and notwithstanding that the agent of depository may be the trust department of the depository. § 53656. Authorization for holding of security by agent of depository; agents of depository; securities subject to order of depository; exception (a) At the time the treasurer enters into a contract with the depository pursuant to Section 53649, he or she shall authorize the agent of depository designated by the depository, but including the trust department of the depository only when acceptable to both the treasurer and the depository, to hold securities of the depository in accordance with this article to secure the deposit of the local agency. (b) Only those trust companies and trust departments, or the Federal Home Loan Bank of San Francisco, which have been authorized by the administrator pursuant to Section 53657 shall be authorized by treasurers to act as agents of depository. ( c) The securities are subject to order of the depository in accordance with Section 53654 except when the provisions of subdivision (i) of Section 53661 and Section 53665 are in effect. § 53657. Authorization to act as agent of depository; application; form; fee; approval or denial (a) No person shall act as an agent of depository unless that person is a trust company located in this state, the trust department of a bank located in this state, or the Federal Home Loan Bank of San Francisco, and is authorized by the administrator to act as an agent of depository. (b )(1) An application for authorization shall be in such form, shall contain such information, shall be signed in such manner, and shall (if the administrator so requires) be verified in such manner, as the administrator may prescribe. Page 27 of40 (2) The fee for filing an application for authorization with the administrator shall be five hundred dollars ($500). (3) If the administrator finds, with respect to an application for authorization, that the applicant is competent to act as an agent of depository and that it is reasonable to believe the applicant will comply with all applicable provisions of this article and of any regulation or order issued under this article, the administrator shall approve the application. If the administrator finds otherwise, the administrator shall deny the application. (4) When an application for authorization has been approved, the applicant shall file with the administrator an agreement to comply with all applicable provisions of this article and of any regulation or order issued under this article. The agreement shall be in such form, shall contain such provisions, and shall be signed in such manner as the administrator may prescribe. ( 5) When an application for authorization has been approved, the applicant has complied with paragraph ( 4 ), and all conditions precedent to authorizing the applicant to act as agent of depository have been fulfilled, the administrator shall authorize the applicant to act as agent of depository·. § 53658. Maintenance of separate pool for each depository; security interest oflocal agency An agent of a depository may hold and pool securities to secure deposits for one or more depositories pursuant to Section 53656, but shall maintain a separate pool for each said depository. Each local agency shall have an undivided security interest in the pooled securities in the proportion that the amount of its deposits bears to the total amount of deposits secured by the pooled securities. § 53659. Placement of securities with federal reserve or other approved bank; authority by contract Whenever an agent of depository accepts securities pursuant to Section 53656 it may, with the authorization of the depository, place such securities for safekeeping with a Federal Reserve Bank or branch thereof or with any bank located in a city designated as a reserve city by the Board of Governors of the Federal Reserve System or with the Federal Home Loan Bank of San Francisco or with a trust company located in this state. Authority for such placement together with the names of the banks or, including the Federal Home Loan Bank of San Francisco, trust companies to be so used, shall be contained in the contract between the treasurer and the depository required in Section 53649. , § 53660. Certification and report by agent of depository When deposits of a local agency are secured by pooled securities pursuant to Section 53656, the agent of depository shall make available to the treasurer for review at a mutually agreed upon time and location all of the following information which may be in the form of a copy of the report required in subdivision (e) of Section 53661: (a) A certification that there are securities in the pool in the amounts required by Section 53652 to secure deposits. Page 28 of40 -(b) A certified report of the individual securities then on deposit in the pool with the location and total market value thereof. ( c) The total amount of deposits then reported by the depository to be secured by the pool. § 53661. Administrator (a) The Superintendent of Banks shall act as Administrator of Local Agency Security and shall be responsible for the administration of Sections 53638, 53651, 53651.2, 53651.4, 53651.6, 53652,53654,53655,53656,53657,53658,53659,53660,53661,53663,53664,53665,53666, and 53667. (b) The administrator shall have the powers necessary or convenient to administer and enforce the sections specified in subdivision (a). ( c )(1) The administrator shall issue regulations consistent with law as the administrator may deem necessary or advisable in executing the powers, duties, and responsibilities assigned by this article. The regulations may include regulations prescribing standards for the valuation, marketability, and liquidity of the eligible securities of the class described in subdivision (m) of Section 53651, regulations prescribing procedures and documentation for adding, withdrawing, substituting, and holding pooled securities, and regulations prescribing the form, content, and execution of any application, report, or other document called for in any of the sections specified in subdivision (a) or in any regulation or order issued under any of those sections. (2) The administrator, for good cause, may waive any provision of any regulation adopted pursuant to paragraph (1) or any order issued under this article, where the provision is not necessary in the public interest. (d) The administrator may enter into any contracts or agreements as may be necessary, including joint underwriting agreements, to sell or liquidate eligible securities securing local agency deposits in the event of the failure of the depository or if the depository fails to pay all or part of the deposits of a local agency. ( e) The administrator shall require from every depository a report certified by the agent of depository listing all securities, and the market value thereof, which are securing local agency deposits together with the total deposits then secured by the pool, to determine whether there is compliance with Section 53652. These reports may be required whenever deemed necessary by the administrator, but shall be required at least four times each year at the times designated by the Comptroller of the Currency for reports from national banking associations. These reports shall be filed in the office of the administrator by the depository within 20 business days of the date the administrator calls for the report. (f) The administrator may have access to reports of examination made by the Comptroller of the Currency insofar as the reports relate to national banking association trust department activities which are subject to this article. (g)(l) The administrator shall require the immediate substitution of an eligible security, where the substitution is necessary for compliance with Section 53652, if (i) the administrator determines that a security listed in Section 53651 is not qualified to secure public deposits, or (ii) a treasurer, who has deposits secured by the securities pool, provides written notice to the Page 29 of40 administrator and the administrator confirms that a security in the pool is not qualified to secure public deposits. (2) The failure of a depository to substitute securities, where the administrator has required the substitution, shall be reported by the administrator promptly to those treasurers having money on deposit in that depository and, in addition, shall be reported as follows: (A) When that depository is a national bank, to the Comptroller of the Currency of the United States. (B) When that depository is a state bank, to the Superintendent of Banks. (C) When that depository is a federal association, to the Federal Home Loan Bank Board. (D) When that depository is a savings association, to the Savings and Loan Commissioner. (E) When that depository is a federal credit union, to the National Credit Union Administration. (F) When that depository is a state credit union or a federally insured industrial loan company, to the Commissioner of Corporations. (h) The administrator may require from each treasurer a registration report and at appropriate times a report stating the amount and location of each deposit together with other information deemed necessary by the administrator for effective operation of this article. The facts recited in any report from a treasurer to the administrator are conclusively presumed to be true for the single purpose of the administrator fulfilling responsibilities assigned to him or her by this article and for no other purpose. (i)(l) If, after notice and opportunity for hearing, the administrator finds that any depository or agent of depository has violated or is violating, or that there is reasonable cause to believe that any depository or agent of depository is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued under any of those sections, the administrator may order the depository or agent of depository to cease and desist from the violation or may by order suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation. (2)(A) If the administrator makes any of the findings set forth in paragraph (1) with respect to any depository or agent of depository and, in addition, finds that the violation or the continuation of the violation is likely to seriously prejudice the interests of treasurers, the administrator may order the depository or agent of depository to cease and desist from the violation or may suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation. (B) Within five business days after an order is issued under subparagraph (A), the depository or agent of depository may file with the administrator an application for a hearing on the order. The administrator shall schedule a hearing at least 30 days, but not more than 40 days, after receipt of an application for a hearing or within a shorter or longer period of time agreed to by a depository or an agent of depository. If the administrator fails to schedule the hearing within the specified Page 30 of40 or agreed to time period, the order shall be deemed rescinded. Within 30 days after the hearing, the administrator shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded. The right of a depository or agent of depository to which an order is issued under subparagraph (A) to petition for judicial review of the order shall not be affected by the failure of the depository or agent of depository to apply to the administrator for a hearing on the order pursuant to this subparagraph. (3) Whenever the administrator issues a cease and desist order under paragraph (I) or (2), the administrator may in the order restrict the right of the depository to withdraw securities from a security pool; and, in that event, both the depository to which the order is directed and the agent of depository which holds the security pool shall comply with the restriction. (4) In case the administrator issues an order under paragraph (1) or (2) suspending or revoking the authorization of an agent of depository, the administrator may order the agent of depository at its own expense to transfer all pooled securities held by it to such agent of depository as the administrator may designate in the order. The agent of depository designated in the order shall accept and hold the pooled securities in accordance with this article and regulations and orders issued under this article. (j) In the discretion of the administrator, whenever it appears to the administrator that any person has violated or is violating, or that there is reasonable cause to believe that any person is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued thereunder, the administrator may bring an action in the name of the people of the State of California in the superior court to enjoin the violation or to enforce compliance with those sections or any regulation or order issued thereunder. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and the court may not require the administrator to post a bond. (k) In addition to other remedies, the administrator shall have the power and authority to impose the following sanctions for noncompliance with the sections specified in subdivision (a) after a hearing if requested by the party deemed in noncompliance. Any fine assessed pursuant to this subdivision shall be paid within 30 days after receipt of the assessment. (1) Assess against and collect from a depository a fine not to exceed two hundred fifty dollars ($250) for each day the depository fails to maintain with the agent of depository securities as required by Section 53652. (2) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision (b) of Section 53663 the depository negligently or willfully fails to file in the office of the administrator a written report required by that section. (3) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision ( e) that a depository negligently or willfully fails to file in the office of the administrator a written report required by that subdivision. (4) Assess and collect from an agent of depository a fine not to exceed one hundred dollars ($100) for each day the agent of depository fails to comply with any of the applicable sections specified in subdivision (a) or any applicable regulation or order issued thereunder. Page 31 of 40 (1 )(1) In the event that a depository or agent of depository fails to pay a fine assessed by the administrator pursuant to subdivision (k) within 30 days of receipt of the assessment, the administrator may assess and collect an additional penalty of 5 percent of the fine for each month or part thereof that the payment is delinquent. (2) If a depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers with deposits in the depository. (3) If an agent of depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers who have authorized the agent of depository as provided in Sections 53649 and 53656, and may by order revoke the authorization of the agent of depository as provided in subdivision (i). § 53661. Administrator (a) The Commissioner of Financial Institutions shall act as Administrator of Local Agency Security and shall be responsible for the administration of Sections 53638, 53651, 53651.2, 53651.4, 53651.6, 53652, 53654, 53655, 53656, 53657, 53658, 53659, 53660, 53661, 53663, 53664, 53665, 53666, and 53667. (b) The administrator shall have the powers necessary or convenient to administer and enforce the sections specified in subdivision (a). (c)(l) The administrator shall issue regulations consistent with law as the administrator may deem necessary or advisable in executing the powers, duties, and responsibilities assigned by this article. The regulations may include regulations prescribing standards for the valuation, marketability, and liquidity of the eligible securities of the class described in subdivision (m) of Section 53651, regulations prescribing procedures and documentation for adding, withdrawing, substituting, and holding pooled securities, and regulations prescribing the form, content, and execution of any application, report, or other document called for in any of the sections specified in subdivision (a) or in any regulation or order issued under any of those sections. (2) The administrator, for good cause, may waive any provision of any regulation adopted pursuant to paragraph (1) or any order issued under this article, where the provision is not necessary in the public interest. (d) The administrator may enter into any contracts or agreements as may be necessary, including joint underwriting agreements, to sell or liquidate eligible securities securing local agency deposits in the event of the failure of the depository or if the depository fails to pay all or part of the deposits of a local agency. ( e) The administrator shall require from every depository a report certified by the agent of depository listing all securities, and the market value thereof, which are securing local agency deposits together with the total deposits then secured by the pool, to determine whether there is compliance with Section 53652. These reports may be required whenever deemed necessary by the administrator, but shall be required at least four times each year at the times designated by the Comptroller of the Currency for reports from national banking associations. These reports shall be filed in the office of the administrator by the depository within 20 business days of the date the administrator calls for the report. Page 32 of40 (f) The administrator may have access to reports of examination made by the Comptroller of the Currency insofar as the reports relate to national banking association trust department activities which are subject to this article. (g)(l) The administrator shall require the immediate substitution of an eligible security, where the substitution is necessary for compliance with Section 53652, if (i) the administrator determines that a security listed in Section 53651 is not qualified to secure public deposits, or (ii) a treasurer, who has deposits secured by the securities pool, provides written notice to the administrator and the administrator confirms that a security in the pool is not qualified to secure public deposits. (2) The failure of a depository to substitute securities, where the administrator has required the substitution, shall be reported by the administrator promptly to those treasurers having money on deposit in that depository and, in addition, shall be reported as follows: (A) When that depository is a national bank, to the Comptroller of the Currency of the United States. (B) When that depository is a state bank, to the Commissioner of Financial Institutions. (C) When that depository is a federal association, to the Office of Thrift Supervision. (D) When that depository is a savings association, to the Commissioner of Financial Institutions. (E) When that depository is a federal credit union, to the National Credit Union Administration. (F) When that depository is a state credit union or a federally insured industrial loan company, to the Commissioner of Financial Institutions. (h) The administrator may require from each treasurer a registration report and at appropriate times a report stating the amount and location of each deposit together with other information deemed necessary by the administrator for effective operation of this article. The facts recited in any report from a treasurer to the administrator are conclusively presumed to be true for the single purpose of the administrator fulfilling responsibilities assigned to him or her by this article and for no other purpose. (i)(l) If, after notice and opportunity for hearing, the administrator finds that any depository or agent of depository has violated or is violating, or that there is reasonable cause to believe that any depository or agent of depository is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued under any of those sections, the administrator may order the depository or agent of depository to cease and desist from the violation or may by order suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation. Page 33 of40 (2)(A) If the administrator makes any of the findings set forth in paragraph (1) with respect to any depository or agent of depository and, in addition, finds that the violation or the continuation of the violation is likely to seriously prejudice the interests of treasurers, the administrator may order the depository or agent of depository to cease and desist from the violation or may suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation. (B) Within five business days after an order is issued under subparagraph (A), the depository or agent of depository may file with the administrator an application for a hearing on the order. The administrator shall schedule a hearing at least 30 days, but not more than 40 days, after receipt of an application for a hearing or within a shorter or longer period of time agreed to by a depository or an agent of depository. If the administrator fails to schedule the hearing within the specified or agreed to time period, the order shall be deemed rescinded. Within 30 days after the hearing, the administrator shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded. The right of a depository or agent of depository to which an order is issued under subparagraph (A) to petition for judicial review of the order shall not be affected by the failure of the depository or agent of depository to apply to the administrator for a hearing on the order pursuant to this subparagraph. (3) Whenever the administrator issues a cease and desist order under paragraph (1) or (2), the administrator may in the order restrict the right of the depository to withdraw securities from a security pool; and, in that event, both the depository to which the order is directed and the agent of depository which holds the security pool shall comply with the restriction. (4) In case the administrator issues an order under paragraph (1) or (2) suspending or revoking the authorization of an agent of depository, the administrator may order the agent of depository at its own expense to transfer all pooled securities held by it to such agent of depository as the administrator may designate in the order. The agent of depository designated in the order shall accept and hold the pooled securities in accordance with this article and regulations and orders issued under this article. G) In the discretion of the administrator, whenever it appears to the administrator that any person has violated or is violating, or that there is reasonable cause to believe that any person is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued thereunder, the administrator may bring an action in the name of the people of the State of California in the superior court to enjoin the violation or to enforce compliance with those sections or any regulation or order issued thereunder. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and the court may not require the administrator to post a bond. (k) In addition to other remedies, the administrator shall have the power and authority to impose the following sanctions for noncompliance with the sections specified in subdivision (a) after a hearing if requested by the party deemed in noncompliance. Any fine assessed pursuant to this subdivision shall be paid within 30 days after receipt of the assessment. (1) Assess against and collect from a depository a fine not to exceed two hundred fifty dollars ($250) for each day the depository fails to maintain with the agent of depository securities as required by Section 53652. Page 34 of40 (2) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision (b) of Section 53663 the depository negligently or willfully fails to file in the office of the administrator a written report required by that section. (3) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision ( e) that a depository negligently or willfully fails to file in the office of the administrator a written report required by that subdivision. (4) Assess and collect from an agent of depository a fine not to exceed one hundred dollars ($100) for each day the agent of depository fails to comply with any of the applicable sections specified in subdivision (a) or any applicable regulation or order issued thereunder. (1)(1) In the event that a depository or agent of depository fails to pay a fine assessed by the administrator pursuant to subdivision (k) within 30 days of receipt of the assessment, the administrator may assess and collect an additional penalty of 5 percent of the fine for each month or part thereof that the payment is delinquent. (2) If a depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers with deposits in the depository. (3) If an agent of depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers who have authorized the agent of depository as provided in Sections 53649 and 53656, and may by order revoke the authorization of the agent of depository as provided in subdivision (i). § 53663. Determination of amounts to be deposited as inactive and active deposits (a) Each agent of depository shall report in writing to the administrator within two business days after any withdrawal, substitution or addition of pooled securities and shall state the name and market value of the securities withdrawn, substituted or added together with the total deposits then secured by the pool. This information shall be available from the administrator to the treasurer upon request. (b) Each depository shall report in writing to the administrator weekly, giving the total amount of all deposits held by such depository pursuant to this article. Such report shall be as of close of business on Wednesday of each week and shall be delivered to the office of the administrator or deposited in the United States mail, postage prepaid, addressed to the office of the administrator, within five business days. Where there has occurred no change in the deposits required to be held by the depository pursuant to this article, the report required by this subdivision need only state that fact. § 53664. Individual reports; privileged status The individual reports specified in Sections 53654, 53660, 53661, and 53663 are not public documents and are not open to inspection by the public. § 53665. Default by depository; payment by agent of depository; excess funds; drawing on letter of credit Page 35 of40 If a depository fails to pay all or part of the deposits of a local agency secured by pooled securities in accordance with the contract provided for in Section 53649, and on demand of its treasurer or other authorized official and the treasurer files a report with the administrator, or if the depository fails: (a) In case the pooled securities consist of securities other than securities of the class described in subdivision (p) of Section 53651, the administrator shall order the agent of depository holding the pooled securities to convert into money that portion of the pooled securities necessary to produce an amount equal to the sum of (i) the deposits of the local agency, (ii) any accrued interest due on the deposits, and (iii) the reasonable expenses of the agent of depository in complying with the order of the administrator and to pay the sum of items (i) and (ii) to the treasurer in satisfaction of the deposits. The agent of depository shall be reimbursed out of the proceeds of the conversion for its reasonable expenses in complying with the order of the administrator, as approved by the administrator. Any excess moneys resulting from the conversion shall be retained by the agent of depository as part of the securities pool until the depository substitutes for the excess moneys securities having a market value sufficient to bring the total of pooled securities up to the amount required by Section 53652. (b) In case the pooled securities consist of a security of the class described in subdivision (p) of Section 53651, the administrator shall draw on the letter of credit an amount equal to the sum of (i) the deposits of the local agency, (ii) any accrued interest on the deposits, and (iii) the reasonable expenses of the administrator in paying the deposits and pay the sum of items (i) and (ii) to the treasurer in satisfaction of the deposits. § 53666. Liability of administrator The only liability that shall attach to the administrator as the result of the operation of this article is that which would attach as a result of other laws of this state. § 53667. Expenses of administrator; levy of assessment on depositories; payments; penalty (a) Expenses incurred by the administrator in carrying out the duties and responsibilities assigned to the administrator by the sections specified in subdivision (a) of Section 53661, shall be borne by the Local Agency Deposit Security Fund, which is hereby created and continuously appropriated to the administrator for the administration of the sections specified in subdivision (a) of Section 53661. This fund shall consist of fines levied pursuant to Section 53661, fees collected pursuant to the sections specified in subdivision (a) of Section 53661, and assessments levied pursuant to this section. (b) Each fiscal year the administrator shall levy an assessment on a pro rata basis on those depositories which at any time during the preceding fiscal year held local agency deposits. The total assessment levied on all of those depositories shall be in an amount which, when added to the amount of fines and fees that the administrator estimates will be collected during the fiscal year when the assessment is levied, is sufficient in the judgment of the administrator to meet the expenses of the administrator in administering the sections specified in subdivision (a) of Section 53661 and to provide a reasonable reserve for contingencies. The basis of the apportionment of the assessment among the depositories assessed shall be the proportion that the average amount of local agency deposits held by each of those depositories bears to the average total amount of local agency deposits held by all of those depositories as shown by the reports of depositories to the administrator for the preceding fiscal year, as required in subdivision (e) of Section 53661; Page 36 of40 provided, however, that the amount of the assessment levied on each of those depositories shall be not less than twenty-five dollars ($25). ( c) The administrator shall notify each depository by mail of the amount levied against it. The depository shall pay the amount levied within 20 days after such notice into the Local Agency Deposit Security Fund for the administration of the sections specified in subdivision (a) of Section 53661. If payment is not made to the administrator within such time, the administrator shall assess and collect, in addition to the annual assessment, a penalty of 5 percent of the assessment for each month or part thereof that the payment is delinquent. If a depository fails to pay the assessment or penalties assessed by the administrator, the administrator may notify local agency treasurers with deposits in the depository. § 53669. Responsibility for money on deposit The treasurer or other authorized official is not responsible for money while it is deposited pursuant to this article. § 53676. Treasurer's responsibility for securities The treasurer is not responsible for securities delivered to and receipted for by any bank, savings and loan association, credit union, federally insured industrial loan company, or trust company. § 53678. Charges for handling and safekeeping of securities The charges for the handling and safekeeping of any such securities are not a charge against the treasurer but shall be paid by the depository owning the securities. § 53679. Money under control or coming into possession of officers and employees other than treasurer So far as possible all money belonging to a local agency under the control of any of its officers or employees other than the treasurer or a judge or officer of a justice or municipal court shall, and all money coming into the possession of a judge or officer of a justice or municipal court may, be deposited as active deposits in the state or national bank, inactive deposits in the state or national bank or state or federal association, federal or state credit union, or federally insured industrial loan company in this state selected by the officer, employee, or judge of the court. For purposes of this section, an officer or employee of a local agency and a judge or officer of a justice or municipal court are prohibited from depositing local agency funds or money coming into their possession into a state or federal credit union if an officer or employee of the local agency, or a judge or officer of a justice or municipal court, also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or supervisory committee, of the particular state or federal credit union. Such money is subject to this article except: (a) Deposits in an amount less than that insured pursuant to federal law are not subject to this article. For deposits in excess of the amount insured under any federal law a contract in accordance with Section 53649 is required and the provisions of this article shall apply. Page 37 of40 (b) Interest is not required on money deposited in an active deposit by a judge or officer of a justice or municipal court. ( c) Interest is not required on money deposited in an active deposit by an officer having control of a revolving fund created pursuant to Chapter 2 ( commencing with Section 29300) of Division 3 of Title 3. ( d) Interest is not required on money deposited in an active deposit by an officer having control of a special fund established pursuant to Articles 5 ( commencing with Section 29400) or 6 (commencing with Section 29430) of Chapter 2 of Division 3 of Title 3. § 53679 .1. Accounting practices; declaration of existing law Notwithstanding any other provision of law, the accounting practices of each county utilized prior to the effective date of this section relating to interest on trust funds shall be deemed appropriate and to have been made under the direction of the board of supervisors of that county. This section is declaratory of the law in existence prior to the enactment of this section. § 53680. Money under control of tax collectors A tax collector of a local agency shall immediately deposit with the treasurer all money under his control, unless he deposits the money in a depositary pursuant to this article under permission and instructions of the treasurer having authority to make such deposit. § 53681. Deposit in other than prescribed manner; forfeiture of office An officer or employee of a local agency who deposits money belonging to, or in the custody of, the local agency in any other manner than that prescribed in this article is subject to forfeiture of his office or employment. § 53682. Contracts for services by depository; requirements Notwithstanding any other provision in this article except Section 53652, the treasurer may deposit moneys in and enter into contracts with any depository, as defined in subdivision (c) of Section 53630, for services to be rendered by that depository that in the treasurer's judgment are to the public advantage. One copy of each contract entered into under this section shall be filed with the auditor or corresponding officer of the local agency. The contract shall: (a) Fix the duration of compensating deposits, if any. (b) Fix the interest rate of that compensating deposit, if any. ( c) Specify the services to be rendered by the depository. ( d) Indicate whether the depository shall bear the expenses of transportation of the money to and from the depository. ( e) Fix the consideration payable by the agency for such services. Page 38 of 40 Introduction Appendix "C" Sections of the California Government Code• Pertinent to Investing Public Funds A requirement of Section 8, Authorized and Suitable Investments, of the Districts' Investment Policy Statement, is that all investments shall be made in accordance with the California Government Code, including Sections 16429.1 et seq., and 53600 et seq., and 53684. This appendix presents a copy of these sections for the reader's reference. § 16429.1. Creation of fund; investments; proceeds of bonds, etc.; distributions; report of investments. There is in the State Treasury the Local Agency Investment Fund, which fund is hereby created. Notwithstanding Section 13340, all money in the fund is hereby appropriated without regard to fiscal years to carry out the purpose of this section. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. Notwithstanding any other provisions of law, a local governmental official, with the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provisions of law, an officer of any nonprofit corporation whose membership is confined to public agencies or public officials, or an officer of a qualified quasi governmental agency, with the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provision of law or of this section, a local agency, with the approval of its governing body, may deposit in the Local Agency Investment Fund proceeds of the issuance of bonds, notes, certificates of participation, or other evidences of indebtedness of the agency pending expenditure of the proceeds for the authorized purpose of their issuance. In connection with these deposits of proceeds, the Local Agency Investment Fund is authorized to receive and disburse moneys, and to provide information, directly with or to an authorized officer of a trustee or fiscal agent engaged by the local agency, the Local Agency Investment Fund is authorized to hold investments in the name and for the account of that trustee or fiscal agent, and the Controller shall maintain a separate account for each deposit of proceeds. The local governmental unit, the nonprofit corporation, or the quasi-governmental agency has the exclusive determination of the length of time its money will be on deposit with the Treasurer. The trustee or fiscal agent of the local governmental unit has the exclusive determination of the length of time proceeds from the issuance of bonds will be on deposit with the Treasurer. Page 1 of40 -The Local Investment Advisory Board shall determine those quasi-governmental agencies which qualify to participate in the Local Agency Investment Fund. The Treasurer may refuse to accept deposits into the fund if, in the judgment of the Treasurer, the deposit would adversely affect the state's portfolio. The Treasurer may invest the money of the fund in securities prescribed in Section 16430. The Treasurer may elect to have the money of the fund invested through the Surplus Money Investment Fund as provided in Article 4 ( commencing with Section 164 70) of Chapter 3 of Part 2 of Division 4 of Title 2. Money in the fund shall be invested to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management. All instruments of title of all investments of the fund shall remain in the Treasurer's vault or be held in safekeeping under control of the Treasurer in any federal reserve bank, or any branch thereof, or the Federal Home Loan Bank of San Francisco, with any trust company, or the trust department of any state or national bank. Immediately at the conclusion of each calendar quarter, all interest earned and other increment derived from investments shall be distributed by the Controller to the contributing governmental units or trustees or fiscal agents, nonprofit corporations, and quasi governmental agencies in amounts directly proportionate to the respective amounts deposited in the Local Agency Investment Fund and the length of time the amounts remained therein. An amount equal to the reasonable costs incurred in carrying out the provisions of this section, not to exceed a maximum of one half of 1 percent of the earnings of this fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be credited as reimbursements to the state agencies having incurred costs in carrying out the provisions of this section. The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. As used in this section, "local agency," "local governmental unit," and "local governmental official" includes a campus or other unit and an official, respectively, of the California State University who deposits moneys in funds described in Sections 89721, 89722, and 89725 of the Education Code. § 16429.2. Local investment advisory board There is created the Local Investment Advisory Board consisting of five members. The chairman shall be the State Treasurer or his or her designated representative. Two members who are qualified by training and experience in the field of investment or finance, shall be appointed by the State Treasurer. Two members who are treasurers, finance or fiscal officers or business managers, employed by any county, city or local district or municipal corporation of this state, shall be appointed by the Treasurer. Page2 of40 The term of office of each appointed member of the board is two years, but each appointed member serves at the pleasure of the appointing authority. A vacancy in the appointed membership, occurring other than by expiration of term, shall be filled in the same manner as the original appointment, but for the unexpired term only. Members of the board who are not state officers or employees shall not receive a salary, but shall be entitled to a per diem allowance of fifty dollars ($50) for each day's attendance at a meeting of the board, not to exceed three hundred dollars ($300) in any month. All members shall be entitled to reimbursement for expenses incurred in the performance of their duties under this part, including travel and other necessary expenses. The board's primary purpose shall be to advise and assist the State Treasurer in formulating the investment and reinvestment of moneys in the Local Agency Investment Fund, and the acquisition, retention, management, and disposition of investments of the fund. The board, from time to time, shall review those policies and advise therein as it considers necessary or desirable. The board shall advise the State Treasurer in the management of the fund and consult the State Treasurer on any matter relating to the investment and reinvestment of moneys in the fund. § 16429 .3. Deposits; prohibited transfers and loans; impoundment or seizure Moneys placed with the Treasurer for deposit in the Local Agency Investment Fund by cities, counties, special districts, nonprofit corporations, or qualified quasi governmental agencies shall not be subject to either of the following: (a) Transfer orloan pursuant to Sections 16310, 16312, or 16313. (b) Impoundment or seizure by any state official or state agency. § 53600. Local agency As used in this article, "local agency" means county, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation. § 53600.3. Prudent investor standard; investments on behalf oflocal agencies Except as provided in subdivision (a) of Section 27000.3, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. Page 3 of40 § 53600.5. Objectives; managing public funds When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its control. § 53600.6. Legislative findings and declarations; solvency and creditworthiness The Legislature hereby finds that the solvency and creditworthiness of each individual local agency can impact the solvency and creditworthiness of the state and other local agencies within the state. Therefore, to protect the solvency and creditworthiness of the state and all of its political subdivisions, the Legislature hereby declares that the deposit and investment of public funds by local officials and local agencies is an issue of statewide concern. § 53601. Authorized investments; circumstances The legislative body of a local agency having money in a sinking fund of, or surplus money in, its treasury not required for the immediate needs of the local agency may invest any portion of the money that it deems wise or expedient in those investments set forth below. A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisors, consultants, or managers using the agency's funds, by book entry, physical delivery, or by third party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book entry delivery. For purposes of this section "counterparty" means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment: (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. ( c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Page 4 of 40 ( d) Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. ( e) Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority, or in obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association; or in guaranteed portions of Small Business Administration notes; or in obligations, participations, or other instruments of, or issued by, a federal agency or a United States government-sponsored enterprise. (f) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 270 days maturity or 40 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any surplus money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 11501) of the Public Utilities Code). (g) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "A" or higher rating for the issuer's debt, other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Purchases of commercial paper may not exceed 15 percent of the agency's surplus money that may be invested pursuant to this section. An additional 15 percent, or a total of 30 percent of the agency's surplus money, may be invested pursuant to this subdivision. The additional 15 percent may be so invested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days. "Dollar-weighted average maturity" means the sum of the amount of each outstanding commercial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. (h) Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state or federal association (as defined by Section 5102 of the Financial Code) or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposits do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. (i)(l) Investments in repurchase agreements or reverse repurchase agreements of any securities authorized by this section, as long as the agreements are subject to this subdivision, including, the delivery requirements specified in this section. Page 5 of40 (2) Investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. (3) Reverse repurchase agreements may be utilized only when either of the following conditions are met: (A) The security was owned or specifically committed to purchase, by the local agency, prior to December 31, 1994, and was sold using a reverse repurchase agreement on December 31, 1994. (B) The security to be sold on reverse repurchase agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements on investments owned by the local agency not purchased or committed to purchase, prior to December 31 , 1994, does not exceed 20 percent of the base value of the portfolio; and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. (4) After December 31, 1994, a reverse repurchase agreement may not be entered into with securities not sold on a reverse repurchase agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the security sold on a reverse repurchase agreement, but may only be entered into with securities owned and previously paid for a minimum of 30 days prior to the settlement of the reverse repurchase agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the immediate payment of a local agency obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement, on securities originally purchased subsequent to December 31, 1994, shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement, unless the reverse repurchase agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. Reverse repurchase agreements specified in subparagraph (B) of paragraph (3) may not be entered into unless the percentage restrictions specified in that subparagraph are met, including the total of any reverse repurchase agreements specified in subparagraph (A) of paragraph (3). (5) Investments in reverse repurchase agreements or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security, may only be made upon prior approval of the governing body of the local agency and shall only be made with primary dealers of the Federal Reserve Bank of New York. (6)(A) "Repurchase agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. Page 6 of40 (B) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (C) "Reverse repurchase agreement" means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. (D) For purposes of this section, the base value of the local agency's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements or other similar borrowing methods. (E) For purposes of this section, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. G) Medium-term notes of a maximum of five years maturity issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of "A" or its equivalent or better by a nationally recognized rating service. Purchases of medium-term notes may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. (k)(l) Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to G), inclusive, or subdivisions (m) or (n) and that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company's board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement may be 100 percent of the sales price if the securities are marked to market daily. (2) Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-l, et seq.). (3) If investment is in shares issued pursuant to paragraph (1 ), the company shall have met either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by subdivisions (a) to G), inclusive, or subdivisions (m) or (n) and with assets under management in excess of five hundred million dollars ($500,000,000). (4) If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria: Page 7 of40 (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). (5) The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 10 percent of the agency's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1). (1) Notwithstanding anything to the contrary contained in this section, Section 53635, or any other provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance. (m) Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (n) Any mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. § 53601.1. Investment in financial futures or financial option contracts The authority of a local agency to invest funds pursuant to Section 53601 includes, in addition thereto, authority to invest in financial futures or financial option contracts in any of the investment categories enumerated in that section. Page 8 of40 § 53601.5. Investments; qualified purchase agent The purchase by a local agency of any investment authorized pursuant to Section 53601 or 53601.1, not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a broker-dealer, as defined in Section 25004 of the Corporations Code, or from a member of a federally regulated securities exchange, from a national or state-chartered bank, from a federal or state association (as defined by Section 5102 of the Financial Code) or from a brokerage firm designated as a primary government dealer by the Federal Reserve bank. § 53601.6. Prohibited investments (a) A local agency shall not invest any funds pursuant to this article in inverse floaters, range notes, or mortgage derived interest-only strips. (b) A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, and following) that are authorized for investment pursuant to subdivision (k) of Section 53601. § 53602. Investment in legal investments for savings banks; securities of public districts The legislative body shall invest only in notes, bonds, bills, certificates of indebtedness, warrants, or registered warrants which are legal investments for savings banks in the State, provided, that the board of supervisors of a county may, by a four-fifths vote thereof, invest in notes, warrants or other evidences of indebtedness of public districts wholly or partly within the county, whether or not such notes, warrants, or other evidences of indebtedness are legal investments for savings banks. § 53603. Direct purchase of securities The legislative body may make the investment by direct purchase of any issue of eligible securities at their original sale or after they have been issued. § 53604. Sale or exchange of securities; reinvestment of proceeds § 53605. Sale of securities; application of proceeds to original purposes From time to time, the legislative body shall sell the securities so that the proceeds may be applied to the purposes for which the original purchase money was placed in the sinking fund or the treasury of the local agency. § 53606. Cancellation of bonds issued by purchaser; resale The bonds purchased, which were issued by the purchaser, may be canceled either in satisfaction of sinking fund obligations or otherwise. When canceled, they are no longer outstanding, unless in its discretion, the legislative body holds them uncanceled. While held uncanceled, the bonds may be resold. Page 9 of40 § 53607. Delegation of duties to treasurer; monthly report The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires, and shall make a monthly report of those transactions to the legislative body. Subject to review, the legislative body may renew the delegation of authority pursuant to this section each year. § 53608. Deposit of securities; receipt; delegation of authority The legislative body of a local agency may deposit for safekeeping with a federal or state association (as defined by Section 5102 of the Financial Code), a trust company or a state or national bank located within this state or with the Federal Reserve Bank of San Francisco or any branch thereof within this state, or with any Federal Reserve bank or with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System, the bonds, notes, bills, debentures, obligations, certificates of indebtedness, warrants, or other evidences of indebtedness in which the money of the local agency is invested pursuant to this article or pursuant to other legislative authority. The local agency shall take from such financial institution a receipt for securities so deposited. The authority of the legislative body to deposit for safekeeping may be delegated by the legislative body to the treasurer of the local agency; the treasurer shall not be responsible for securities delivered to and receipted for by a financial institution until they are withdrawn from the financial institution by the treasurer. § 53609. Eligible securities for investment of funds held by local agency pursuant to deferred compensation plans Notwithstanding the provisions of this chapter or any other provisions of this code, funds held by a local agency pursuant to a written agreement between the agency and employees of the agency to defer a portion of the compensation otherwise receivable by the agency's employees and pursuant to a plan for such deferral as adopted by the governing body of the agency, may be invested in the types of investments set forth in Sections 53601 and 53602 of this code, and may additionally be invested in corporate stocks, bonds, and securities, mutual funds, savings and loan accounts, credit union accounts, life insurance policies, annuities, mortgages, deeds of trust, or other security interests in real or personal property. Nothing herein shall be construed to permit any type of investment prohibited by the Constitution. Deferred compensation funds are public pension or retirement funds for the purposes of Section 17 of Article XVI of the Constitution. § 53630. Definitions As used in this article: (a) "Local agency" means county, city, city and county, including a chartered city or county, a community college district, or other public agency or corporation in this state. (b) "Treasurer" means treasurer of the local agency. Page IO of40 ( c) "Depository" means a state or national bank, savings association or federal association, a state or federal credit union, or a federally insured industrial loan company, in this state in which the moneys of a local agency are deposited. (d) "Agent of depository" means a trust company or trust department of a state or national bank located in this state, including the trust department of a depository where authorized, and the Federal Home Loan Bank of San Francisco, which is authorized to act as an agent of depository for the purposes of this article pursuant to Section 53657. ( e) "Security" means any of the eligible securities or obligations listed in Section 53651. (f) "Pooled securities" means eligible securities held by an agent of depository for a depository and securing deposits of one or more local agencies. (g) "Administrator" means the Administrator of Local Agency Security of the State of California. (h) "Savings association or federal association" means a savings association, savings and loan association, or savings bank as defined by Section 5102 of the Financial Code. (i) "Federally insured industrial loan company" means an industrial loan company licensed under Division 7 ( commencing with Section 18000) of the Financial Code, the investment certificates of which are insured by the Federal Deposit Insurance Corporation. § 53630.1. Legislative findings and declarations; solvency and creditworthiness The Legislature hereby finds that the solvency and creditworthiness of each individual local agency can impact the solvency and creditworthiness of the state and other local agencies within the state. Therefore, to protect the solvency and creditworthiness of the state and all of its political subdivisions, the Legislature hereby declares that the deposit and investment of public funds by local officials and local agencies is an issue of statewide concern. § 53630.5. Additional definitions (a) The definitions in Section 1700 of, and Chapter 1 (commencing with Section 99) of Division 1 of, the Financial Code apply to this section. (b) In this article, for purposes of being a depository of moneys belonging to or being in the custody of a local agency, the phrases "state or national bank located in this state," "state or national bank," "state or national bank in this state," and "state or national banks in the state" include, without limitation, any of the following: (1) Any California branch office of a foreign (other state) state bank that the bank is authorized to maintain under the law of its domicile and federal law. (2) Any California branch office of a foreign ( other state) national bank that the bank is authorized to maintain under federal law. (3) Any California branch office of a foreign (other nation) bank that the bank is licensed to maintain under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1 of the Financial Code. Page 11 of 40 (4) Any California federal branch of a foreign (other nation) bank that the bank is authorized to maintain under federal law. § 53631. Deposits to pay principal and interest of bonds Under such conditions as the treasurer of a local agency fixes with the approval of the legislative body, he may deposit money necessary to pay the principal and interest of bonds in a bank within or without the State at the place where they are payable. This article does not apply to deposits for such purposes. § 53631.5. Prohibited investments (a) A local agency shall not invest any funds pursuant to this article in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages. (b) A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-l, and following) that are authorized for investment pursuant to subdivision (k) of Section 53601. § 53632. Classes of deposits There are three classes of deposits: (a) Inactive deposits. (b) Active deposits. (c) Interest-bearing active deposits. § 53632.5. Classes of security for deposits There are three classes of security for deposits: (a) Securities described in subdivision (m) of Section 53651. (b) Securities described in subdivision (p) of Section 53651. (c) Securities enumerated in Section 53651, except for those described in subdivisions (m) and (p) of that section. § 53633. Determination of amounts to be deposited in each class The treasurer shall determine the amounts of money to be deposited as inactive, active, and interest-bearing active deposits, except as otherwise provided in Section 53679. Page 12 of40 § 53634. Transfers from inactive to active deposits The treasurer may call in money from inactive deposits and place it in active deposits as current demands require. When there is money in his possession for which there is no demand as inactive deposits, he may place it as active deposits. § 53635. Funds oflocal agency; deposit or investment As far as possible, all money belonging to, or in the custody of, a local agency, including money paid to the treasurer or other official to pay the principal, interest, or penalties of bonds, shall be deposited for safekeeping in state or national banks, savings associations or federal associations, credit unions, or federally insured industrial loan companies in this state selected by the treasurer or other official having the legal custody of the money; or, unless otherwise directed by the legislative body pursuant to Section 53601, may be invested in the investments set forth below. A local agency purchasing or obtaining any securities described in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of all the securities to the local agency, including those purchased for the agency by financial advisors, consultants, or managers using the agency's funds, by book entry, physical delivery, or by third-party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book-entry delivery. For purposes of this section, "counterparty" means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. ( c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. ( d) Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. ( e) Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank, the Tennessee Valley Authority, or in obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association; or in guaranteed portions of Small Business Administration notes; or in obligations, participations, or other instruments of, or issued by, a federal agency or a United States government-sponsored enterprise. (f) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 270 days maturity or 40 percent of the agency's surplus funds which may be invested pursuant to this Page 13 of40 section. However, no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any surplus money in its treasury in any manner authorized by the Municipal Utility District Act, Division 6 ( commencing with Section 11501) of the Public Utilities Code. (g) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "A" or higher rating for the issuer's debt, other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Purchases of commercial paper may not exceed 15 percent of the agency's surplus money which may be invested pursuant to this section. An additional 15 percent, or a total of 30 percent of the agency's money or money in its custody, may be invested pursuant to this subdivision. The additional 15 percent may be so invested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days. "Dollar-weighted average maturity" means the sum of the amount of each outstanding commercial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. (h) Negotiable certificates of deposit issued by a nationally or state-chartered bank or a savings association or federal association or a state or federal credit union or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposit do not come within Article 2 ( commencing with Section 53630) of Chapter 4 of Part 1 of Division 2 of Title 5, except that the amount so invested shall be subject to the limitations of Section 53638. For purposes of this section, the legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the money are prohibited from depositing or investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or an employee of the administrative officer, manager's office, budget office, auditor-controller's office, or treasurer's office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. (i)(l) Investments in repurchase agreements or reverse repurchase agreements of any securities authorized by this section, so long as the agreements are subject to this subdivision, including the delivery requirements specified in this section. (2) Investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. (3) Reverse repurchase agreements may be utilized only when either of the following conditions are met: Page 14 of 40 (A) The security was owned or specifically committed to purchase, by the local agency, prior to repurchase agreement on December 31, 1994, and was sold using a reverse repurchase agreement on December 31, 1994. (B) The security to be sold on reverse repurchase agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale, the total of all reverse repurchase agreements on investments owned by the local agency not purchased or committed to purchase, prior to December 31, 1994, does not exceed 20 percent of the base value of the portfolio, and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. (4) After December 31, 1994, a reverse repurchase agreement may not be entered into with securities not sold on a reverse repurchase agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the security sold on a reverse repurchase agreement, but may only be entered into with securities owned and previously paid for, for a minimum of 30 days prior to the settlement of the reverse repurchase agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the immediate payment of a local agency obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement, on securities originally purchased subsequent to December 31, 1994, shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement, unless the reverse repurchase agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. Reverse repurchase agreements specified in subparagraph (B) of paragraph (3) may not be entered into unless the percentage restrictions specified in that subparagraph are met, including the total of any reverse repurchase agreements specified in subparagraph (A) of paragraph (3). ( 5) Investments in reverse repurchase agreements or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security, may only be made upon prior approval of the governing body of the local agency and shall only be made with primary dealers of the Federal Reserve Bank ofNew York. (6)(A) "Repurchase agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (B) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (C) "Reverse repurchase agreement" means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date, and includes other comparable agreements. Page 15 of 40 -(D) For purposes of this section, the base value of the local agency's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements or other similar borrowing methods. (E) For purposes of this section, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. G) Medium-term notes of a maximum of five years' maturity issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of "A" or its equivalent or better by a nationally recognized rating service. Purchases of medium-term notes may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. (k)(l) Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to G), inclusive, or subdivision (1) or (m) and that comply with the investment restrictions of this article and Article 1 (commencing with Section 53600). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company's board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement may be 100 percent of the sales price if the securities are marked to market daily. (2) Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.). (3) If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by subdivisions (a) to G), inclusive, or subdivision (1) or (m) and with assets under management in excess of five hundred million dollars ($500,000,000). (4) If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). Page 16 of 40 (5) The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 10 percent of the agency's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1 ). (I) Notes, bonds, or other obligations which are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (m) Any mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. § 53635.5. Investments; qualified purchase agent The purchase by a local agency of any investment authorized pursuant to Section 53635, not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a broker-dealer, as defined in Section 25004 of the Corporations Code, or from a member of a federally regulated securities exchange, from a national or state-chartered bank, from a savings association or a federal association, or from a brokerage firm designated as a primary government dealer by the Federal Reserve bank. § 53635.7. Borrowing funds; meetings; separate consideration In making any decision that involves borrowing in the amount of one hundred thousand dollars ($100,000) or more, the legislative body of the local agency shall discuss, consider, and deliberate each decision as a separate item of business on the agenda of its meeting as prescribed in Chapter 9 ( commencing with Section 54950). § 53636. Deposited money as in treasury oflocal agency Money so deposited is deemed to be in the treasury of the local agency. § 53637. Selection of depositary; interest The money shall be deposited in any bank, savings association or federal association, state or federal credit union, or federally insured industrial loan company with the objective of realizing maximum return, consistent with prudent financial management, except that money shall not be Page 17 of40 deposited in any state or federal credit union if a member of the legislative body of a local agency, or an employee of the administrative office, manager's office, budget office, auditor-controller's office, or treasurer's office of the local agency, also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or supervisory committee, of the state or federal credit union. § 53638. Maximum deposits (a) The deposit shall not exceed the shareholder's equity of any depository bank. For the purposes of this subdivision, shareholder's equity shall be determined in accordance with Section 118 of the Financial Code, but shall be deemed to include capital notes and debentures. (b) The deposit shall not exceed the total of the net worth of any depository savings association or federal association, except that deposits not exceeding a total of five hundred thousand dollars ($500,000) may be made to a savings association or federal association without regard to the net worth of that depository, if such deposits are insured or secured as required by law. ( c) The deposit to the share accounts of any regularly chartered credit union shall not exceed the total of the unimpaired capital and surplus of the credit union, as defined by rule of the Commissioner of Corporations, except that the deposit to any credit union share account in an amount not exceeding five hundred thousand dollars ($500,000) may be made if the share accounts of that credit union are insured or guaranteed pursuant to Section 14858 of the Financial Code or are secured as required by law. ( d) The deposit in investment certificates of a federally insured industrial loan company shall not exceed the total of the unimpaired capital and surplus of the insured industrial loan company. § 53638. Maximum deposits (a) The deposit shall not exceed the shareholder's equity of any depository bank. For the purposes of this subdivision, shareholder's equity shall be determined in accordance with Section 118 of the Financial Code, but shall be deemed to include capital notes and debentures. (b) The deposit shall not exceed the total of the net worth of any depository savings association or federal association, except that deposits not exceeding a total of five hundred thousand dollars ($500,000) may be made to a savings association or federal association without regard to the net worth of that depository, if such deposits are insured or secured as required by law. ( c) The deposit to the share accounts of any regularly chartered credit union shall not exceed the total of the unimpaired capital and surplus of the credit union, as defined by rule of the Commissioner of Financial Institutions, except that the deposit to any credit union share account in an amount not exceeding five hundred thousand dollars ($500,000) may be made if the share accounts of that credit union are insured or guaranteed pursuant to Section 14858 of the Financial Code or are secured as required by law. ( d) The deposit in investment certificates of a federally insured industrial loan company shall not exceed the total of the unimpaired capital and surplus of the insured industrial loan company. Page 18 of 40 (~--·- ! APPENDIX "A" APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS SHORT TERM OPERATING FUND INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Mortgage-backed NO NO Commercial paper OK OK Banker's Accept. OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only-Money Market Only Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* NO LAIF OK NO OCIP OK NO CMOs NO NO Asset-backed NO NO Repurchase Agree. OK OK Reverse Repos OK* OK LONG TERM OPERA TING PORTFOLIO INVESTMENT U.S. Treasuries Federal Agencies Mortgage-backed Mutual Funds Negotiable CDs Municipal Bonds LAIF OCIP CMOs Asset-backed Repurchase Agree. Reverse Repos INTERNAL OK Fixed coupon, fixed mat. NO Money Market Only- Fixed coupon, fixed mat.* OK* OK OK NO NO OK OK* EXTERNAL OK OK OK OK OK OK NO NO With Board Approval With Board Approval OK OK *with prior approval of the Finance, Administration and Human Resources Committee. -using financial institutions approved by the Finance, Administration and Human Resources Committee. H:\WP.OTAIAN\210\CRANEIINVEST.PL Y\981NVEST.PLY APPENDIX "B" RESOLUTION NO. 98-XX AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS, AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS, AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS *************** WHEREAS, on September 24, 1997, the Board of Directors adopted Resolution No. 97-32, readopting the District's Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and, WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest District's funds to the Treasurer for a one-year period; and, WHEREAS, pursuant to California Government Code Section 53646, the District is required to review its Investment Policy annually and readopt its Policy at a public meeting, which Policy will establish specific performance benchmarks and objectives, and specific monitoring and reports. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the authority of the Board of Directors to invest or reinvest District's surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the District's Treasurer for a one-year period commencing on the date this Resolution is adopted, as authorized by California Government Code Section 53607. Section 2: That the Board of Directors hereby adopt the Investment Policy Statement of the Orange County Sanitation District, as set forth in Exhibit "A," attached hereto and incorporated herein by reference. Section 3: That the Board of Directors hereby adopt the following specific performance benchmarks for their two investment funds in accordance with Section 14.0 of the District's Investment Policy: LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared to the three month T-Bill rate, and the Callan Active Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 4: That the Board of Directors hereby adopt a performance monitoring and reporting schedule, as required by Section 15.0 of the District's Investment Policy, which schedule is attached hereto as Exhibit "8," and incorporated herein by reference. PASSED AND ADOPTED at regular meeting held July 29, 1998. \\RADON\DATA1\WP.OTA\FIN\210\CRANE\FAHR\FAHR98\JULY\lNVESTPOUCYRESO.DOC POLICY REFERENCE 15.1.1 15.1.2 15.1.3 15.1.4 15.1.5 15.1.6 15.1.7 15.1.8 15.1.9 ADDL** ADDL** ADDL** ADDL•• EXHIBIT "B" COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE MONITORING & REPORTING FOR THE DISTRICTS' INVESTMENT PROGRAM PERFORMANCE CHARACTERISTIC Cost and market value of the portfolio (monthly mark-to-market). Modified duration of the portfolio compared to benchmark. Dollar change in value of the portfolio for a 1% change in interest rate. Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. Average portfolio credit quality. - Percent of portfolio with credit ratings below •A"by any rating agency, and a description of such securities. Listing of any transactions or holdings which do not comply with this policy or with the California Government Code. Time-weighted total rate of retum for the portfolio for the prior three months, twelve months, year- to-date, and since inception compared to the benchmark returns for the same periods. Comparison of portfolio performance to market Index benchmark. Comparison of Manager's performance to peer group benchmark. Monitoring of organizational and structural changes of investment management firm. Audit portfolios for compliance with investment policy guidelines. REPORTING PARTY" PIMCO MELLON ,CALLAN M,Q M,Q Q M,Q Q M,Q Q M,Q M,Q Q M,Q Q M,Q Q M,Q M,Q Q M,Q Q g Q Q 15.1.10 CSDOC will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. Notes *M = Monthly a= Quarterly ** ADDL = Monitoring of Additional Performance Characteristics H:IWP.DTAIFIN\2210\CRANEIINVEST.PLYIMONITOR.CHT 7 APPENDIX "C" J (f) Specify who may deposit moneys into the treasurer's active account and how those persons are to make those deposits. § 53683. Consideration as costs applied pro rata against earned interest Notwithstanding any other provision in this article, the consideration payable by the agency as specified in subdivision (e) of Section 53682 shall be paid by the treasurer by applying such consideration as costs applied on a pro rata basis against the interest earned by all the agencies for which the treasurer invests. § 53684. Local agencies; excess funds; investment by county treasurer (a) Unless otherwise provided by law, if the treasurer of any local agency, or other official responsible for the funds of the local agency, determines that the local agency has excess funds which are not required for immediate use, the treasurer or other official may, upon the adoption of a resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to this section and with the consent of the county treasurer, deposit the excess funds in the county treasury for the purpose of investment by the county treasurer pursuant to Section 53601 or 53635. (b) The county treasurer shall, quarterly, apportion any interest or other increment derived from the investment of funds pursuant to this section in an amount proportionate to the average daily balance of the amounts deposited by the local agency and district. Prior to distributing that interest or increment, the county treasurer may deduct the actual. costs incurred by the county in administering this section in proportion to the average daily balance of the amounts deposited by the local agency. ( c) The treasurer or other official responsible for the funds of the local agency may withdraw the funds of the local agency at any time but shall give the county treasurer 30 days' written notice of his or her intent to withdraw the funds. ( d) Any moneys deposited in the county treasury for investment pursuant to this section are not subject to impoundment or seizure by any county official or agency while the funds are so deposited. (e) This section is not operative in any county until the board of supervisors of the county, by majority vote, adopts a resolution making this section operative in the county. (f) It is the intent of the Legislature in enacting this section to provide an alternative procedure to Section 51301 for local agencies to deposit money in the county treasury for investment purposes. Nothing in this section shall, therefore, be construed as a limitation on the authority of a county and a city to contract for the county treasurer to perform treasury functions for a city pursuant to Section 51301. Page 39 of40 § 53686. Local agency fund audit reports (a) Any audit conducted relating to the investment of local agency funds and other funds by the county treasurer in the county fund maintained pursuant to Section 53684 shall be rendered to the depositary, the auditor, the controller, the secretary, or the corresponding officer of the local agency, the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the county treasury, and the presiding judge of any superior court that has ordered, pursuant to Section 3412, Section 3413, or Section 3611 of the Probate Code, that assets of an estate be deposited with the county treasurer for deposit or investment. (b) Any report rendered pursuant to Section 53646 shall be provided to the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the county treasury. • Source: West's Annotated California Codes, 1998 H:\wp.dta\fin\210\kozak\GOALS\GOVCODE3A.DOC Page 40 of40 APPENDIX "D" APPENDIX "D" GLOSSARY OF INVESTMENT TERMS ACCRUED INTEREST. The amount of interest that is earned but unpaid since the last interest payment date. ADJUSTABLE RATE NOTE. (See Floating Rate Note) AMORTIZED COST. Measure of the cost of a security whereby the cost value will change over time as the discount or premium paid for the security is gradually incorporated into the principal value as interest payments are received. ASKED PRICE. The price at which a seller offers to sell a security. ASSET-BACKED SECURITIES. Securities collateralized with consumer receivables, such as automobile loans, credit card receivables, or home equity loans, which are owned by the issuer, but placed with a trustee for the benefit of the investor. AVERAGE LIFE.· In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected. BANKER'S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank Which "accepts" the obligation to pay the investor. BASIS POINT. When a yield is expressed as 7.32%, the digits to the right of the decimal point are known as basis points. One basis point equals 1/100 of one percent. Basis points are used more often to describe changes in yields on bonds, notes and other fixed-income securities. BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index which reflects the mix of securities allowed under a specific investment policy. BID PRICE. The price at which a buyer offers to buy a security. BOOK ENTRY. The system, maintained by the Federal Reserve, by which most money market securities are "delivered" to an investor's custodian bank. The Federal Reserve maintains a computerized record of the ownership of these securities, and records any changes in ownership corresponding to payments made over the Federal Reserve wire (delivery versus payment). These securities do not receive physical certificates. Page 1 of 9 BOOK VALUE. The original cost of the investment, plus accrued interest and amortization of any premium or discount. BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position. BULLET STRUCTURE. A portfolio strategy in which a manager overweights both the short and long end of the yield curve, and underweights the middle part of the curve. CALLABLE BONDS. Bonds which may be redeemed by the issuing company prior to the maturity date. CAPITAL GAIN/LOSS. The profit or loss realized from the sale of a capital asset. CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public moneys. COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds which redistribute the cash flows of mortgage securities (and whole loans) to create securities which have different levels of prepayment risk, as compared to the underlying mortgage securities COMMERCIAL PAPER. The short-term unsecured debt of corporations. CONDITIONAL PREPAYMENT RATE (CPR). A measure of mortgage prepayment activity. It assumes that a constant fraction of the principal prepays each month and is based on the previous month's remaining balance. The rate is expressed as an annualized percentage. For instance, a CPR of 6% indicates that each month 6% of the remaining principal balance prepays on an annualized basis. CONSUMER RECEIVABLE-BACKED BONDS. (See Receivable-Backed Securities). CONVEXITY. The rate of change in a bond's price as duration changes. It is a particularly important component of price change for longer term bonds, or for large changes in interest rates. COST YIELD. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return. Page 2 of 9 COUPON. The rate at which a bond pays interest. CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. CURRENT YIELD. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor's cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. CUSTODIAN. A bank or other financial institution that keeps custody of stock certificates and other assets. DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position. DEBENTURE. A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT (DVP). Delivery of securities with a simultaneous exchange of money for the securities. DERIVATIVE. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components ("Stripped" coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate or index. DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as Tbills and banker's acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality. DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. DOLLAR-WEIGHTED AVERAGE MATURITY. A calculation that expresses the "average maturity" of an investment portfolio using each investment's maturity weighted by the size of that investment Page 3 of 9 DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration and effective duration). EFFECTIVE DURATION. Measures the price volatility of a fixed income security that contains embedded options. A more accurate measure of price volatility when the cash flow characteristics of the bond change when interest rates shift. FEDERAL FUNDS RATE. The rate of interest charged by banks for short term loans to other banks. It is established by the Federal Reserve Bank through open- market operations. FEDERAL OPEN MARKET COMMITTEE (FOMC). A committee of the Federal Reserve Board which establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. FEDERAL RESERVE SYSTEM. A U.S. centralized banking system which has supervisory powers over the 12 Federal Reserve banks and about 6,000 member banks. FIXED-INCOME SECURITIES. Securities which return a fixed income over a specified period. FLOATING RATE NOTE. A debt security whose interest rate is reset periodically (monthly, quarterly, annually) and is based on a market index (e.g. Treasury bills, LIBOR, etc.). INTEREST. The amount earned while owning a debt security, generally calculated as a percentage of the principal amount. LADDER STRUCTURE. A portfolio strategy in which a manager attempts to weight securities equally across the yield curve. LEVERAGE. Borrowing funds in order to invest in securities which have the potential to pay earnings at a rate higher than the cost of borrowing. LIQUIDITY. The speed and ease with which an asset can be converted to cash. LOCAL AGENCY. County, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation. MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. Page 4 of 9 MARK-TO-MARKET. The market valuation for every security in a portfolio used in determining Net Asset Value (NAV). MARKET VALUE. The price at which a security can be traded. MATURITY. The final date upon which the principal of a security becomes due and payable. MEDIUM TERM NOTES (MTN). Debt securities issued by a corporation or depository institution with a maturity ranging from nine months to five years. The term "medium-term notes" refers to the time it takes for an obligation to mature, and includes other corporate debt securities originally issued for maturities longer than five years, but which have now fallen within the five year maturity range. MTNs issued by banks are also called "bank notes." MODIFIED DURATION. Measures the percentage price volatility of a fixed income security or portfolio. Modified duration approximates the change in price for small changes in interest rates, assuming that the cash flow characteristics do not change when the yield curve shifts. MONEY MARKET. The market in which short term debt instruments (Tbills, discount notes, commercial paper and banker's acceptances) are issued and traded. MORTGAGE PASS THROUGH SECURITIES. Securities collateralized with residential mortgage loans, the principal and interest payments of which are distributed, or "passed-through" to the investor. Many of these securities are issued by agencies of the federal government, including GNMA and FHLMC. MONEY MARKET MUTUAL FUNDS. An investment company that pools money from investors and invest in a variety of short-term money market instruments. The Net Asset Value (NAV) of these funds should remain at $1.00; however, it is not guaranteed. MOODY'S INVESTORS SERVICE, INC. (See Nationally Recognized Rating Services) MUNICIPAL DEBT. Issued by public entities to meet capital needs. NATIONALLY RECOGNIZED RA TING SERVICES. Firms that review the creditworthiness of the issuers of debt securities, and express their opinion in the form of letter ratings (e.g. AAA, AA, A, BBB, etc.) The primary rating agencies include Standard & Poor's Corporation; Moody's Investor Services, Inc.; Fitch Investors Service; Duff & Phelps Investment Service; Thompson BankWatch and International Bank Credit Analyst. Page 5 of 9 NEGATIVE CONVEXITY. A phenomenon associated with bonds which have embedded call options, it measures the rate at which duration of a callable bond gets smaller as interest rates fall. Negative convexity is an undesirable characteristics in bonds. NEGOTIABLE CD. (See Certificates of Deposit) NET ASSET VALUE (NAV). A per-share valuation of a mutual fund based on total assets minus total liabilities. NON-CALLABLE. Bond that is exempt from any kind of redemption for a stated time period. OFFER PRICE. The price asked by a seller of securities. OPTION ADJUSTED SPREAD. A measure of the value of a bond relative to a benchmark security, which takes into account the value of the embedded option inherent in any bond that has uncertain cash flows (i.e., callable bonds). PAR VALUE. The amount of principal which must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond. PHYSICAL DELIVERY. The delivery of an investment to a custodian bank in the form of a certificate and/or supporting documents evidencing the investment (as opposed to "book-entry" delivery). PORTFOLIO. A group of securities held by an investor. PREMIUM. The difference between the par value of a bond and the market value of the bond, when the market value is above par. PRICE RISK. The risk that the price of a bond sold prior to maturity will be less than the price at which the bond was originally purchased. PRIMARY DEALER. A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York, and are subject to its informal oversight. PREMIUM. The difference between the par value of a bond and the market value of the bond, when the market value is above par. PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage securities. PREPAYMENT WINDOW. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. Page 6 of 9 • PRUDENT INVESTOR RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." PRIME RATE. The interest rate banks charge the biggest borrowers with the best credit ratings. PRINCIPAL. The face value or par value of an investment. PSA MASTER REPURCHASE AGREEMENT. A written contract covering all future transactions between the parties to repurchase agreements that establishes each party's rights in the transactions. PSA STANDARD PREPAYMENT MODEL (PSA). A measure of mortgage prepayment activity. The model is expressed as a monthly series of annual prepayment rates. The series begins at .2% per year in the first month, and increases by .2% per year in each successive month until month 30, where it levels out at 6% per year until maturity. This series is labeled 100 PSA. 200 PSA doubles this series, and 50 PSA would cut the series in half. REALIZED RETURN. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities which have not been sold from the portfolio. RECEIVABLE-BACKED SECURITIES. Securities collateralized with consumer receivables, such as automobile loans, credit card receivables, or home equity loans, which are owned by the issuer, but placed with a trustee for the benefit of the investor. RECEIVABLE PASS-THROUGH CERTIFICATE. A debt obligation that is backed by a portfolio of receivables, normally issued by a bank of financial institution. The interest and principal of the obligation is paid out of the cash flow generated by the receivables portfolio. REGISTERED STATE WARRANT. A short-term obligation of a state governmental body issued in anticipation of revenue. REINVESTMENT RISK. The risk that coupon payments (or other payments received) cannot be reinvested at the same rate as the initial investment. Page 7 of 9 REPURCHASE AGREEMENT (RP OR REPO). The purchase of securities, on a temporary basis, with the seller's simultaneous agreement to repurchase the securities at a later date at a specified price that includes interest for the buyer's holding period. In essence, this is a collateralized investment whereby the security "buyer" lends the "seller" money for the period of the agreement. REVERSE REPURCHASE AGREEMENT (REVERSE REPO). A short-term transaction in which an investor ( seller) sells a government security it owns to a bank or dealer (buyer) under an agreement in which the buyer agrees to sell the security back to the investor on a specified date, at an agreed-upon interest rate. RULE G-37 OF THE MUNICIPAL SECURITIES RULEMAKING BOARD. Federal regulations to sever any connection between the making of political contributions and the awarding of municipal securities business. SAFEKEEPING. A service to bank customers whereby securities are held by the bank In the customer's name. SCENARIO ANALYSIS. A portfolio management technique that measures the performance of the portfolio under varying scenarios including, but not limited to, interest rate movements, spread changes and nonparallel yield curve shifts. SECURITIES & EXCHANGE COMMISSION (SEC). The federal agency responsible for supervising and regulating the securities industry. STANDARD & POOR'S CORPORATION. (See Nationally Recognized Rating Services) STRUCTURED NOTE. A complex, fixed income instrument which pays interest based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates -for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. THIRD-PARTY CUSTODIAL AGREEMENT. (See Custodian) TOTAL RATE OF RETURN. A measure of a portfolio' performance over time. It is the internal rate of return which equates the beginning value of the portfolio with the ending value, and includes interest earnings and realized and unrealized gains and losses on the portfolio. TRADE DATE. The date and time corresponding to an investor's commitment to buy or sell a security. Page 8 of 9 • U. S. GOVERNMENT AGENCY SECURITIES. Debt securities issued by U.S. Government sponsored enterprises and federally related institutions. These government agencies include: Federal Home Loan Banks (FHLB); Federal Home Loan Mortgage Corporation (FHLMC, or "Freddie Mac"); Federal National Mortgage Association (FNMA, or "Fannie Mae"); Federal Farm Credit Banks (FFCB); Resolution Trust Corporation (RTC); and Tennessee Valley Authority (lVA). U.S. TREASURY SECURITIES. Securities issued by the U. S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the U.S. and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. Treasury Bills. Non-interest-bearing discount securities with maturities under one year issued by the U. S. Treasury to finance the national debt. Treasury Notes. Interest-bearing obligations of the U. S. Treasury with maturities ranging from two to ten years from date of issue. Treasury Bonds. Interest-bearing obligations issued by the U.S. Treasury with maturities that range from ten to thirty years from date of issue. VARIABLE RATE NOTE. (See Floating Rate Note) VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. YIELD TO MATURITY (YTM). The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. Yield to maturity (at market). The discount rate that equates the present value of the promised cash flow (interest payments and redemption value )to the market price, assuming that all cash flows are invested at the YTM rate. Yield to maturity (at purchase cost). The YTM that equates to the purchase price of the security. YIELD. The annual rate of return on a debt investment computed as though held to maturity expressed in %. ZERO-COUPON BONDS/U.S. TREASURY STRIPS. A bond which represents ownership of a single coupon or principal payment due on a U.S. Treasury bond. "Zeros" or "strips" mature at face value at a specified date in the future and make no payments until that date. They always sell at a discount from face value. Page 9 of 9 - FAHR COMMITTEE AGENDA REPOJtT Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Lisa Tomko, Manager of Human Resources SUBJECT: RETIREE HEAL TH INSURANCE (FAHR98-57) GENERAL MANAGER'S RECOMMENDATION This item is for information only. SUMMARY Meeting Date ,07/15/98 Item Number 6 This item is being presented to the FAHR Committee to make the Committee aware of a topic that could be brought to their attention in the future by the Districts' Management or a retiree. Retiree health insurance coverage has been a recurring issue over the past two years. As a benefit for employees hired before September, 1988, the District pays the medical premiums when they retire at the rate of 2 ½ months per year of service. For example, if a person is employed with the District for 20 years, he would, upon retirement, receive 50 months of paid medical insurance. When this benefit is exhausted we allow the retiree to stay on our group insurance with the retiree paying the full premium. Due to the number of complaints we have received from retirees, we conducted a benefits survey to try to address their issues. These issues are: • Costs are too high. • Some retirees are eligible for Medicare. Some are not eligible because they are early retirees. Some do not qualify because District employees have not always paid into Medicare. • There are limited providers out of state. • Some do not understand the insurance. What we are doing: • We have chosen not to change the plan. Retirees may continue on United Healthcare or move to Kaiser or Pacificare if they so choose. • We based this decision on two things. 1. Historically we have allowed retirees to stay on our group plans after their paid benefit has been exhausted. 2. We cannot find a suitable plan that will eliminate the issues and cut costs. \lradonldala1wvp.dta\fin\21D'c:rane\FAHRIFAHR981.July\FAHR98-57.doc Page 1 ToBd. Item Number PROJECT/CONTRACT COST SUMMARY None BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. ~ Not applicable (information item) ADDITIONAL INFORMATION Retiree Retiree+ Retiree+ Onlv Snouse Familv United Healthcare $232.09 $480.27 $767.96 #on plan 16 18 2 PacifiCare $155.38 $397.54 $474.27 #on plan 2 3 0 Kaiser $126.99 $253.97 $359.38 #on plan 2 2 1 ALTERNATIVES No cost-effective alternatives are available. CEQA FINDINGS N/A ATTACHMENTS None \'<adonldata 1 \wp.dtalfin\21 O\crane\F AHR\F AHR98'July\F AHR98-57.doc \\radon\data1wp.dtallin\210aanelFAHRIFAHR98\Jul'flFAHR98-57.doc Total Retiree Paid 36 8 5 1 5 1 District Paid 28 4 4 Page2 . ·' FAHR COMMITTEE Meeting Date ToJt. Bds. 07/15/98 07/29/98 AGENDA REPORT It.em Number It.em Number 7 Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Dawn McKinley, Senior Human Resources Analyst SUBJECT: BROADBAND DEPARTMENT HEAD AND DIVISION MANAGERS' CLASSIFICATIONS AND PAY RANGES AND FLAT RATE ASSISTANT GENERAL MANAGER'S SALARY (FAHR98-58) GENERAL MANAGER'S RECOMMENDATION Approve the attached changes to the existing Executive Management and Division Manager classification titles and pay ranges. SUMMARY On June 20, 1996, the Boards authorized a Request for Information and Qualifications for consultants to conduct a Broadbanding study. The study was conducted by Barry Newton from Creative Management Solutions and completed on May 12, 1997. The District began the study to implement changes to the compensation system that would be more in line with the salary administration goals of management. Management's goals are to develop a flexible workforce and to encourage meritorious performance by rewarding employees for individual performance. Broadbanding will allow our organization to flatten hierarchies, eliminate divisional boundaries, respond to change, and increase the skills of our workforce so that we can reach our goal of being "Best in Class," while effectively meeting our reduced staffing numbers. During the past year, Human Resources' staff has been working with Mr. Newton's recommendations, employee groups and bargaining units to develop a final Broadbanding program that will meet the District's specific compensation and classification needs. Management is in the process of negotiating the Broadbanding program with the bargaining units. Executive Management and Division Managers, however, are not part of any bargaining group. Through Broadbanding, four Department Head pay ranges would be collapsed into one pay band; sixteen Division Managers' classifications would be combined into eight broad classifications; and six Division Manager pay ranges would be collapsed into one pay band. The existing salaries of Executive Management and Division Managers fall within the proposed bands; therefore, no increases are necessary. There is no cost \lnldonldata1W1P.dlallin\210lcrane\FAHRIFAHR98\July\FAHR~.doc RIMMCI: 1151118 Page 1 associated with implementing Broadbanding for these classifications. Future increases, whether they be distributed as base building merit increases or non-base building merit bonuses, will be controlled by the merit fund recommended by the General Manager and implemented in the Board approved budget and all increases will be distributed based on performance. PROJECT/CONTRACT COST SUMMARY None BUDGET IMPACT ~ This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. D Not applicable (information item) ADDITIONAL INFORMATION Current Proposed Classification Classification Executive Management AGM AGM Director, Director, Engineering Engineering Director, O&M Director, O&M Director, GSA Director, GSA Director, Technical Director, Technical Services Services Director, Finance Director, Finance Director, Information Director, Information Technology Technoloav Director, Human Director, Human Resources Resources Director, Director, Communications Communications Division Managers Controller Finance Manager Accounting Finance Manager Manager Financial Manager Finance Manager Contracts & Finance Manager Purchasing Manager \lnldon\data1\wp.dta\fin\210'clane\FAHR\FAHR98U.ly\FAHR9&-58.doc Rellised: 11S'98 Current Pay Range (Min/Max) $7,500 -$10,600 $6,834 -$10,874 $6,834-$10,874 $6,834-$10,874 $6,834-$10,874 $6,741 -$10,831 $5,948 -$9,460 $5,948 -$9,460 $4,328 -$6,495 $5,798-$8,529 $5,262 -$7,740 ' $5,798-$8,529 $5,013 -$7,376 Proposed Pay Band (Min/Max) Flat Rate $5,866 -$12,671 $5,866 -$12,671 $5,866 -$12,671 $5,866-$12,671 $5,866 -$12,671 $5,866 -$12,671 $5,866 -$12,671 $5,866 -$12,671 $4,551 -$9,436 $4,551 -$9,436 $4,551 -$9,436 $4,551 -$9,436 Page2 ; Plant Automation Information $5,798-$8,529 $4,551 -$9,436 Manager Technology Manager Safety/Emergency Human Resources $5,262 -$7,740 $4,551 -$9,436 Response Manager Manager Human Resources Human Resources $4,328 -$6,495 $4,551 -$9,436 Manager Manager Chief Operator O&M Manager $5,262 -$7,740 $4,551 -$9,436 Maintenance O&M Manager $5,262 -$7,740 $4,551 -$9,436 Manager (O&M) Operations O&M Manager $5,013 -$7,376 $4,551 -$9,436 Manager Maintenance GSA Manager $5,262 -$7,740 $4,551 -$9,436 Manager (GSA) Environmental Technical Services $6,090-$8,953 $4,551 -$9,436 Compliance & Manager Monitoring Manager Laboratory Manager Technical Services $6,090 -$8,953 $4,551 -$9,436 Manager Source Control Technical Services $6,090 -$8,953 $4,551 -$9,436 Manager Manager Chief Scientist Chief Scientist $5,517 -$8,120 $4,551 -$9,436 Construction Engineering $6,090-$8,953 $4,551 -$9,436 Manager Manager Engineering Engineering $6,090-$8,953 $4,551 -$9,436 Manager Manager This table serves as a framework with which to compensate employees for their responsibilities, education, experience, knowledge, skills and abilities; however, Human Resources will conduct market salary surveys every two years to verify that the District is not outpacing the market. ALTERNATIVES NIA CEQA FINDINGS N/A ATTACHMENTS None \lradon\data1\Np.dla\fin\210'cranelFAHRIFAHR98\July\FAHR98-58.doc Rllllised: 115198 Page3 , FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Tom Woodruff, General Counsel Meeting Date 07/15/98 Item Number 8 SUBJECT: SEPARATION INCENTIVE AGREEMENTS (FAHR98-59) GENERAL MANAGER'S RECOMMENDATION Approve Resolution No. OCSD-98-XX authorizing the General Manager to enter into separation agreements with District employees in specified circumstances. SUMMARY Over the past few years, the District has been engaged in a staff reduction program. In each of the past four years, the Directors have authorized an Early Retirement Incentive Program and 32 employees have retired. There are other employees who may not be eligible to retire, but who might be encouraged to leave through a limited cash incentive. This resolution authorizes the General Manager to make such an offer in cases where the position of the separating employee may be deleted and savings will exceed the amount of the incentive. PROJECT/CONTRACT COST SUMMARY This program will result in cost reductions. BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. [8l This item has not been budgeted. D Not applicable (information item) ADDITIONAL INFORMATION None. H:\wp.dta'lin\210'crane\FAHR\FAHR98Uuly)FAHR98-59.doc RIWlsed; 6/30/98 Page 1 To Bel. of Dir. 07/29/98 Item Number ALTERNATIVES 1. Do not approve the program and reduce staff through other means. 2. Do not approve the program and increase staffing authorizations CEQA FINDINGS None. ATTACHMENTS 1. Draft Resolution No. OCSD-98-XX. H:\wp.dlaVin\210'aanelFAHRIFAHR98\luly\FAHR9&-59.doc: Revised: 8130196 Page2 / / \ . RESOLUTION NO. OCSD 98-_ AUTHORIZING THE GENERAL MANAGER TO ENTER INTO SEPARATION AGREEMENTS WITH DISTRICT EMPLOYEES IN SPECIFIED CIRCUMSTANCES A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE GENERAL MANAGER TO ENTER INTO SEPARATION AGREEMENTS WITH DISTRICT EMPLOYEES IN SPECIFIED CIRCUMSTANCES WHEREAS, the Board of Directors of Orange County Sanitation District has previously directed that the size of District's staff be significantly reduced; and WHEREAS, the Board of Directors of said District has previously adopted Resolutions and Ordinances approving Early Retirement Incentive Programs for all eligible District's employees as authorized by Government Code Section 31641.04; and WHEREAS, the General Manager has reported that the District has saved, or will save, $4.4 million through Fiscal Year 1999 as a result of the Early Retirement Incentive Programs previously adopted; and WHEREAS, many employees do not meet the standard of ten years of service and 50 years of age in order to be eligible for the Early Retirement Incentive Programs; and WHEREAS, District's management has reported to the Board the desirability of deleting some positions whose incumbents are not eligible for Early Retirement Incentive Programs in order to take advantage of changes in the manner of performing District's services and the opportunity to realize savings of money and other economic benefits that would flow to the District by the elimination of such positions; and WHEREAS, such employees may be encouraged to leave District's employment by means of limited economic incentives. NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, 2092-800 65122_1 DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: The General Manager is authorized to enter into Separation Incentive Agreements with District employees, regardless of eligibility for Early Retirement Incentive Programs pursuant to Government Code Section 31641.04, in cases where the separating employee's position may be deleted and the savings to the District will exceed the cost of the separation incentive. Section 2: The Separation Incentive Agreements may provide for a one-time lump sum payment not to exceed $50,000 and shall include a waiver of all contractual rights to employment, express or implied, and a settlement of any employment related claims, known or unknown to employee, against the District. Section 3: The authority delegated by this Resolution shall expire on ___ , 19_, or until the number of District's positions has been reduced to __ , whichever occurs first. PASSED AND ADOPTED at a Regular Meeting held __ , 1998. ATTEST: Board Secretary 2092-800 65122_1 Chair FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Tom Woodruff, General Counsel Meeting Date 07/15/98 Item Number 9 SUBJECT: ESTABLISHMENT OF DEFINED CONTRIBUTION PENSION PLAN FOR GENERAL MANAGER (FAHR98-60) GENERAL MANAGER'S RECOMMENDATION Approve the establishment of a defined Contribution ( 401 a) Pension Plan for the General Manager only, and direct the General Counsel to prepare such a plan and an amendment to the contract of employment with the General Manager. SUMMARY The General manager has asked if a portion of his annual salary could be deferred. General Counsel and staff have evaluated various alternatives and propose that a new Defined Contribution Pension Plan be established only for the General Manager. Such a plan, in conjunction with the existing Orange County Employees Retirement System and the existing 457 Deferred Compensation Plan, is allc;,wed by the Taxpayer Relief Act of 1997. Deposits into this Plan would be in lieu of other contractual salary payments to the General Manager, and will not increase salary expenses. PROJECT/CONTRACT COST SUMMARY None. BUDGET IMPACT ~ This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. D Not applicable (information item) \lradonldata1'tNp.dta\lin\210\cranelFAHRIFAHR98\July\FAHR98-60.doc Revised: 6/30/98 Page 1 To Bd. of Dir. 07/29/98 Item Number ADDITIONAL INFORMATION None. ALTERNATIVES Do not approve the Pension Plan and make current salary payments to the General Manager. CEQA FINDINGS None. ATTACHMENTS 1. Memorandum from General Counsel. \lradonldata1'<wp.dta\fin\211kranelFAHRIFAHR98\July\FAHR98-80.doc Reviled: 6/30l9tl Page2 LAW OFFICES OF WOODRUFF, SPRADLIN & SMART A PROFESSIONAL CoRPORATlON TO: MEMORANDUM Finance, Administration and Human Resources Committee Orange County Sanitation District FROM: General Counsel DATE: RE: July 7, 1998 Establishment of Defined Contribution Pension Plan for General Manager During the course of the past several months, when the District was required to evaluate its Deferred Compensation Plan and Program as a result of both Internal Revenue Code ("IRC") amendments, as well as the Supreme Court decision in Ventura County Deputy Sheriffs' Assn. v. Board of Retirement of Ventura County Employees Retirement Assn., your Management looked at other alternatives that have recently become available as a legal vehicle for supplementing retirement benefits. This Memorandum is submitted to provide guidance related to the request and recommendation of your General Manager to establish a Money Purchase Pension Plan (Defined Contribution Plan) under the provisions of IRC Section 401 (a), solely for the General Manager. It did not appear viable or desirable to extend a Section 401 (a) Plan to include the other Executive Management and Management employees that were initially considered for this Program. ISSUE: May the District separately establish a Money Purchase Pension Plan under IRC Section 401 (a), while at the same time have a Defined Benefit Plan (OCERS) for all of its employees? ANSWER: Yes. FAHR Committee Orange County Sanitation District July 7, 1998 Page2 ISSUE: May the Money Purchase Pension Plan under IRC Section 401 (a) be established solely for the benefit of the General Manager? ANSWER: Yes. DISCUSSION: Under the provisions of the federal tax laws, there are four basic programs relating to retirement benefits for employees-namely: 1. Defined Benefit Plan. This type of Plan calls for contributions by both the employer and employee, and based on actuarial studies and time of service, provides a schedule of benefits upon retirement. The District has such a Plan by participating in the Orange County Employees Retirement System ("OCERS"). 2. Defined Contribution Plan/Money Purchase Pensjon Plan. These two Plans are essentially similar, and the terminology is frequently used interchangeably, although in fact there are technical distinctions between the two. They are authorized by IRC Section 401 (a), and are based upon contributions made by the employer. The Plan is structured and restricted by the amount of contributions that are actually made during term of service of an employee, and the actual benefits received by the employee upon retirement are based upon the total amount that was able to be contributed, which is a factor of years of service and age. The District does not presently have such a Plan, but this is what is proposed. 3. IRC Section 401 (k) Plan. This is a Plan that has become very well known and utilized by both private and public employers alike, and is funded by contributions of the employee, as opposed to the employer. The District does not have such a Plan, and there are legal restrictions on having such a Plan concurrently with either type of Section 401 (a) Plan. , ' FAHR Committee Orange County Sanitation District July 7, 1998 Page 3 4. Deferred Compensation -IRC Section 457 Plan. This is not legally deemed to be a Pension Plan, although it is commonly thought of as being a significant retirement benefits program. This Plan is allowed for either public or other tax-exempt employers and their employees, concurrently with the existence and participation in either a Defined Benefit or Defined Contribution Plan. The District has had a 457 Plan for over 20 years. The District has obtained a tax counsel opinion as to the legal ability to have the proposed 401 (a) -Money Purchase Pension Plan, at the same time as having a 401 (a) - Defined Benefit Plan under OCERS. Tax counsel has opined that the District can in fact establish these Plans, particularly in light of the recently-enacted Taxpayer Relief Act of 1997 -(P .1.:. 105~34). Uf particufai importance in that Act were provisions adopted by Congress that local government Plans are exempt from the traditional non-discrimination and minimum participation rules that were previously applicable under the Internal Revenue Code. Therefore, the District can establish a tax-qualified Plan under IRC Section 401 (a), and may do so in a way that would be deemed discriminatory for non- governmental Plans-namely, in that the Plan is only available for the highly-compensated employees. There are certain limitations concerning the proposed Defined Contribution/Money Purchase Pension Plan--namely, that the amounts added to a Participant's account shall be the lesser of $30,000.00, or 25% of the Participant's compensation per year. Also, a calculation needs to be made as to the value of the Defined Benefit Plan benefits to be received, and the Defined Contribution Plan benefits to be received, with a schedule of maximum values established by the Internal Revenue Service. This maximum limitation, however, expires by act of Congress on January 1, 2000, and thus will only apply during Calendar Years 1998 and 1999. If this proposal is approved, we would do a simple amendment to the contract of employment with the General Manager to reflect new specified salary levels, as well as the amount of contribution by the District, as the Employer, into the 401 (a) Plan. TLW:pj THOMAS L. WOODRUFF GENERAL COUNSEL FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Bob Ooten, Director of Operations and Maintenance Originator: Gerald Jones, Maintenance Manager Meeting Date 07/15/98 Item Number 10 SUBJECT: DART REINVENTION REPORT AND IMPLEMENTATION PLAN (FAHR98-61) GENERAL MANAGER'S RECOMMENDATION ToJt. Bds. Item Number For Information Only. This report is also being presented to the OMTS Committee on July 8, 1998 and to the PDC Committee on July 9, 1998. SUMMARY In March of 1996, the District's staff commissioned an audit of District operations to assess opportunities to reduce costs. The audit was performed by an automation consulting firm that specialized in the water and wastewater industry. In summary, the study found that the District operating costs were higher than the model of a privately contracted operation, which will be referred to as a competitive gap. The audit identified approximately $6 million of potential savings in the Operations & Maintenance (O&M) and General Services Administration Departments. The portion of the $6 million attributed to the O&M Department was approximately $5.3 million. To evaluate the audit recommendations, the District's Operations and Maintenance Department decided to implement a reinvention process. The Districts Assessment and Reinvention Team [DART] was formed in October 1996. The mission of the DART reinvention process was to determine whether the District is using the best business practices and work practices, had the necessary tools to be a competitive wastewater treatment agency, and to find a means to reduce the competitive gap in the Operations & Maintenance Department. Since July 1, 1996, reinvention efforts resulting from staff downsizing and technology enhancements, in the Operations & Maintenance Department have already resulted in annual savings of $3.5 million. The DART reinvention process has evaluated business practices, work practices and reinvention tools to determine what changes and modifications are required to continue to reduce the competitive gap without an appreciable increase in risk to the plant facilities. \\radon\data1 \wp.dta\fin\21 0\crane\F AHR\F AHR98Uuly\FAHR98-61.doc Page 1 of3 The reinvention automation project (J-42) previously approved by the Board of Directors will optimize and automate the plant facilities allowing operations to implement cost savings measures. The DART report has focused on the maintenance management and adaptive work force elements of the Operations and Maintenance reinvention. This report contains the results of those findings. The implementation of the DART recommendations will result in additional annual savings of approximately $1.44 million. These additional savings will add to the total Operations and Maintenance Department reinvention savings and bring the department substantially closer to the goal of $5.3 million annually The total estimated cost of implementation of the DART recommendations will be $3,219,400. The reinvention cost/benefit payback shows that reinvention cost will be offset by reinvention saving early in the fourth year of the five-yearrernvention implementation plan. The total savings during the five-year implementation period will be $3,290,600. The savings generated during the implementation period will offset the DART to-date reinvention development cost of $550,000 which consisted of labor, overhead and consultant services. PROJECT/CONTRACT COST SUMMARY Training Direct Costs Consultant Direct Costs CMMS -Planning & Scheduling Module Integration of Financial Information System (FIS) to Computerized Maintenance Management System (CMMS) Data Warehouse Total Direct Costs Training Indirect Costs Data Warehouse Indirect Costs (Information Technology Support) Field Implementation Indirect Costs Total Indirect Costs Total Reinvention Costs BUDGET IMPACT $ 500,000 240,000 30,000 186,000 740,000 $ 647,400 300,000 576,000 $1,696,000 $1,523A00 $3,219,400 ~ This item has been budgeted. (Line item: First year implementation in various Joint Operating Expense Accounts) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. D Not applicable (information item) \v-adon\data 1 \wp.dta\fin\21 O\crane\F AHR\F AHR98'July\F AHR~1.doc Page2 of3 • . The direct costs for training, consultant services, planning & scheduling module development and implementation and all of the indirect costs have been budgeted in the fiscal year 1998-99 Joint Operating Budget. The funds for integration of the computerized Maintenance Management System and the Financial Information System and the implementation of the Data Warehouse have previously received Board of Director approval. ADDITIONAL INFORMATION The DART Reinvention Report containing the details of the recommendations and their implementation can be obtained by contacting one of the following: Rich Spencer -Adaptive Work Force Team Leader Tom Flanagan -DART Facilitator Doug Cook -Chief Operator Gerald Jones -O&M Maintenance Manager ALTERNATIVES NIA CEQA FINDINGS NIA ATTACHMENTS 1. DART Report Executive Summary \\radonldata 1 \wp.dta\fin\21 O\crane\F AHR\F AHR98Uuly\FAHR98-61.doc (714) 593-7164 (714) 593-7162 (714) 593-6000 (714) 593-7050 Page3 of3 Executive Summary Overview Executive Summary This report covers Phase III of the Orange County Sanitation District's (OCSD) reinvention process. Phase III has focused on developing reinvention recommendations and a Reinvention Implementation Plan for the Operations and Maintenance (O&M) Department, but the recommendations cut across all departments. This report focuses on three main areas: • Business practices, which are the philosophical tenets of the organization. Business practices describe "why" an organization performs functions in a specific manner. • Work practices, which are the policies and procedures (the "what" and "how'') developed by the organization to implement the business practices. • Tools, which are the support systems needed by the organization and employees to apply the business practices and work practices to their activities. Business Practices "\ . ' Business practices are the philosophical base for conducting business. The business practices discussed in Chapter 2 are based on world-class standards for improving operations and maintenance. Cost/benefits and payback are also discussed in this chapter. DART believes that adopting these business practices as the philosophical foundation for work performed by the Operations and s Maintenance (O&M) Department will help the District achieve its mission statement: ''The District's mission is to protect public health and environment through excellence in wastewater systems." All systems and resources must be focused on achieving this mission. The organizational structure and systems of the primary ( operations and O&M Department Reinvention Report 1 Executive Summary OCSD 2 maintenance) and support functions (warehouse and purchasing) must be based on sound business practices. The O&M Department has the largest potential to aid the District in achieving its mission. AD.y attempt to reengineer the operations and maintenance process must recognize the interdependency of key processes within O&M and the District as a whole. The rationale for using each business practices is described in Table 1. Table 1. Business Practices and Rationale Business Practice Rationale Asset Management Process • Identifies cost centers in a hierarchical structure allowing costs to be captured at any level. • Provides capability to track costs to the sub-assembly •.level of detail. • Defines work at the sub-assembly level and collects history. • Allows failure analysis at the lowest level of component. • Facilities life cycle replacement. • Improves and identities capital improvements . • Serves as the foundation for the other business practices. O&M Planning and • Allows for a proactive approach to operations and Scheduling Program maintenance, that is, moving from corrective to preventive and predictive maintenance. • Improves productivity by integrating operations and maintenance with support services such as the warehouse and purchasing. • Tracks all costs associated with the work . ( continued) \ DART Executive Summary Business Practice Rationale O&M Planning and • Allows for prioritizing and adjusting work as process Scheduling Program demands dictate. ( continued) • Provides information needed for failure analysis . • Schedules work according to resources available . • Tracks status of work at each stage of the work order process. • Improves employee morale by focusing job responsibility. Warehouse and Inventory • Improves productivity by ensuring that equipment, Control Process material, and supplies are available for the scheduled work. • Optimizes inventory levels and purchasing practices . • Holds total inventory costs to a minimum consistent with the level of services required. • Ensures effective planning and scheduling of work . Automated Purchasing • Ensures that personnel have the correct parts and in Process the correct quantities when they are needed. • Helps control total inventory costs . • Ensures effective planning and scheduling of work . O&M Process Performance • Provides management with a comprehensive reporting Management system that contains the information needed to analyze performance and make adjustments for improvement. • Allows for proactive management of assets and the process. Improvement and Integration • Provides decision-makers with comprehensive, of Information Systems accurate, and up-to-date information. • Ensures effective planning and scheduling of work . • Allows for accurate and efficient tracking of costs for ' operations and maintenance. ( continued) O&M Department Reinvention Report 3 Executive Summary OCSD Business Practice Rationale Treatment Plant Improvement • Improves automation to better control plant processes . Program • Increases the life span and reliability of the plant equipment. • Reduces operational and maintenance costs . • Improves decision-making process by providing O&M with appropriate data and information. • Optimizes plant processes . Adaptive Work Force • Provides flexibility in accomplishing work . • Improves quality of work life by developing and using employees' skills. O&M Organization • Supports the implementation of the business and work Restructuring .. practices. • Improves vertical and horizontal communication . Cost/Benefits and Payback .. ) 4 This section discusses costs, benefits, and payback associated with the DART reinvention recommendations. The following analyses and evaluations were performed: • Global analysis, which evaluated the overall O&M cost as a component of the District's total costs • Business practices analysis, which provided a critical look at the current business practices to identify the costs and benefits of implementing specific business practices changes and modifications • Identification of costs associated with reinvention implementation • Cost/benefit payback analysis, which looked at direct and indirect s costs as they would be incurred and benefits as they would be captured to determine the net savings or expense over a fixed period oftime and at what point savings would offset costs DART \ .. . . Executive Summary Both operations and maintenance activities would benefit greatly from formalized planning and scheduling, automated purchasing, teams, improved process optimization, and increased automation. Operations savings associated with the Plant Reinvention/ Automation Project (Project J-42) have not been included as part of the cost/benefit analyses in this report. Savings to offset costs associated with the reinvention implementation have been derived from the Maintenance component of the O&M budget. The implementation of the business practices and reinvention tools will reduce maintenance costs by approximately 17%. Since the maintenance costs for 1996-97 fiscal year were $8,538,865, the potential savings are $1,451,608. As shown in Table 2, these annual savings will be realized in the following areas: • Labor • Overtime • Maintenance Materials Labor savings will be realized with the attrition of ten maintenance positions from fiscal year 1998-99 through fiscal year 2001-2002. The staffing reductions from 111 to 101 field personnel will result in a cost reduction of approximately $660,000. After the first two years of implementation, the projected reduction of approximately $130,000 in overtime costs will be realized. There will be an overall reduction of materials usage by the maintenance divisions. These combined changes are projected to result in savings of approximately $650,000, which is a 29% reduction from 1996-97 budget levels. Consequently, there will be annual savings of $1.44 million beginning in fiscal year 2003-04 and will continue thereafter. In addition to the annual savings, eliminating the current material inventory excess in the warehouse (inventory levels over the max levels set by maintenance) will result in a one-time savings of approximately $1,750,000. O&M Department Reinvention Report 5 Executive Summary OCSD Table 2. Summary of Savings Business Practice Savings Labor $ 660,000 Overtime $ 130,000 Maintenance Materials $ 650,000 Excess Inventory $1,750,000 (one time) Costs and Benefits The direct plus indirect cost/benefits method takes into consideration on a Fiscal-Year not only the direct costs but also includes the labor redirected from core Basis business activities to support the reinvention implementation plan. .,. 6 These activities include modification in the existing CMMS, implementing asset management and planning and scheduling, and providing technical training support. The indirect costs also consider the time of staff to attend the reinvention workshops, team training and technical training provided during the reinvention implementation process. Figure 1 shows the costs, benefits, and the year they will be incurred for the five-year duration of the implementation plan and for the year immediately following implementation. The year immediately following the five-year implementation plan (fiscal year 2003-04) reflects an annual savings of $1,440,000. 2500000 2000000 1500000 . 1000000 · 500000 0 -500000 1 111cost , •savings -1000000 -1500000 -2000000 _;2500000 \ Year .. ' Figure 1. Costs and Benefits on an Annual Basis DART I I l I I Executive Summary Payback 6000000 5000000 4000000 3000000 2000000 -1000000 0 -1000000 -2000000 -3000000 As shown in Figure 2, using the direct plus indirect cost method, the reinvention process will begin to return benefits beginning in the fourth year and continuing through year five of the reinvention implementation process. The net savings for the five-year reinvention implementation period will be $3,290,600. The sixth year reflects the cumulative savings of the five-year reinvention implementation plus the annual savings of the sixth year. !•Savings Year Figure 2. Cost/Benefit Payback Work Practices \ t I .. The changes and modifications of the business practices discussed in Chapter 2 are the foundation for implementing the Operations and Maintenance (O&M) Department work practices explained in Chapter J. DART recognizes that the successful implementation of the work practices alone will not make the reinvention effort successful. The changes and modifications in business practices, work practices, and the reinvention tools (discussed in Chapter 4) are interdependent and required to make the reinvention effort successful. O&M Department Reinvention Report 7 Executive Summary . OCSD Work practices are the methods ("the how to") for implementing the business practices. The major work practices discussed in this chapter are to: • Modify the planning and scheduling process. • Implement O&M process performance measures. • Restructure the O&M organization. These work practices need to be implemented for the District to achieve the goals of the reinvention process, in particular a reduction in the O&M Department joint operating budget. Each re1:ommended work practice is explained further in this chapter. The third work practice, ''Restructure the O&M Organization," is followed by a detailed discussion of one of the aspects of restructuring, the team concept, since this concept will be a major culture change for O&M. These work practices are interrelated; that is, they must be looked at as a tqtal package. Failure to implement any one of the work practices will have a direct effect on the District's ability to implement the other work practices. DART recognizes that these work practices involve many other departments in the District's organization. Therefore, we have involved appropriate District personnel in developing these work practices. Chapter 5, Reinvention Implementation Plan, milestones and participants are identified for implementing these work practices. Reinvention Tools \ .. i 8 To realize the full benefits of the reinvention effort, the correct tool must be applied to the appropriate reinvention activity in the correct manner. To be used effectively, tools are applied in support of the changes that must be made to change business and work practices. Chapter 4 explains the following tools: s • Change management process. This tool involves all employees by communicating information and conducting training on the reinvention process. A Labor/Management Committee has also been formed to facilitate the changes in work culture that will be needed. DART Executive Summary • Technical training. To implement the Adaptive Work Force business practice, technical training is needed to expand the knowledge and skills of O&M employees. • Compensation. Simplifying job classifications, revising pay ranges to improve the opportunity for employee advancement, and improving the performance review system are tools to help support the Adaptive Work Force and restructw:e the O&M organization. • Gainsharing program. This proposed program will provide employee teams with the opportunity to share in the savings (gains) realized through their efforts and is a tool to help create an Adaptive Work Force and ensure the success of restructuring. • Improvement and integration of information systems. The CMMS is a tool critical to implementing the business practices of asset management and planning and scheduling. Enhancements are needed to ensure that CMMS supports the reinvention business and work practices. In addition, the District has several independent computerized information systems. Linkages among these systems are essential tools for asset management, planning and scheduling, warehouse and inventory control, automated purchasing, and performance management. • Plant process optimization through automation. Plant processes can be optimized through automation to increase process efficiency and effective use of human resources. Reinvention Implementation Plan \ To realize the full benefits of the reinvention recommendations developed by DART, a plan has been developed to guide Phase IV, Implementation, of the reinvention process. To successfully complete the reinvention process, implementation must be supported with the s necessary resources and structured to effectively integrate all facets of reinvention. Chapter 5 presents and explains the implementation plan for the reinvention components listed below. • Training. This reinvention tool will be applied throughout the implementation process. The training conducted will target all aspects of change required by reinvention. Training will include reinvention workshops, team training, policy and procedure training, O&M Department Reinvention Report 9 Executive Summary JO and technical training. All such training will be conducted at strategic points during the implementation phase. OCSD • O&M Restructuring. Reassignment of designated supervisory personnel to professional positions will occur in the first quarter of fiscal year 1998-99. This reassignment will provide the resources required to establish the Asset Management Program during the remainder of the fiscal year. The Operations field divisions- Central Generation Operations, Plant No. 1 Operations, and Plant No. 2 Operations-will be consolidated· into one division at the beginning of fiscal year 1999-2000. • Area and Utility Teams. Early implementation of the team concept will take advantage of improved efficiency with regard to human resources and communication and to promote the Adaptive Work Force business practice. • Asset Mana_gement Process. The Asset Management Process is the foundation of our new maintenance program. This effort will begin immediately and will be completed during the second year of the implementation phase. • Warehouse and Purchasing. Successful implementation of the Planning and Scheduling Program largely depends on the availability of financial and status information from the warehouse and purchasing processes of the Financial Information System (FIS). Integrating the FIS with the Computerized Maintenance Management System (CMMS) and developing the policies and procedures that surround these activities will be addressed during fiscal year 1998-99. • Planning and Scheduling. This business and work practice change depends on completing prerequisite tasks for successful implementation. As a result, staff assigned to these responsibilities will assist with implementation of asset management and the warehouse and inventory control program as well as planning and s scheduling. The planning and scheduling work practices changes will be implemented over the first two years of the five-year plan beginning with fiscal year 1998-99. \ • Integration of Information Systems. DART identified early on · · that accurate and timely data is critical to our decision-making processes and our ability to measure our performance. Successful integration of our process information, system documentation, DART , \ Executive Summary maintenance history, laboratory data, and financial systems is the key to our long-tenn success. The integration of information systems is currently in progress and will continue throughout the reinvention implementation process. • CMMS. The CMMS has been in service for three years and contains many of the features that are required to meet the intent of reinvention. However, an additional module must be added (Planning and Scheduling), coding must be modified, and database details must be added to make the system ready for implementation of the new business and work practices, A majority of these changes will be made in the first year, and the balance will be completed during the second and third years. • Process Performance Measurement and Reporting. The performance of the reinvention process will be measured during the implementation phase and beyond. Performance criteria and reporting requirements will _be established based on the business and work practices modifications and changes. This process will begin during the first year of implementation and will be expanded as the need arises to ensure that continuous improvement of the O&M Department is achieved. O&M Department Reinvention Report 11 July 15, 1998 None Scheduled 1997-98 Final Operational & Performance Report Quarterly Investment Management Report Adoption of DART Adaptive Workforce Compensation Program Connection Fees Permit User Fees General Manager's Quarterly Purchasing Report Finance Department & Clerical Operational Review Award General Liability Insurance Program Multi-Year Renewal Proposal Semi-Annual HR Policies & Procedures Review CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Information Information Action Action Action Information Action Action Information