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Home My WebLink About1999-11-10Draft MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Orange County Sanitation District Wednesday, November 10, 1999, 5:30 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on November 10, 1999 at 5:50 p.m., in the District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: FAHR COMMITTEE MEMBERS: Directors Present: Thomas Saltarelli, Chair Mark Leyes, Vice Chair John M. Gullixson Shirley McCracken Jan Debay, Board Chair Peer Swan, Board Vice Chair John J. Collins, Past Board Chair OTHERS PRESENT: Tom Nixon, Assistant General Counsel Director Russell Patterson Director Pat McGuigan Director Don Bankhead Don Hughes Toby Weissert Iry Pickler Paul Watkins Jeff Bower John Coan Greg Harrington Michael Moreland David Olson Ryal Wheeler Chuck Acocello Basin Panis Perry Shokori (2) APPOINTMENT OF CHAIR PRO TE No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. FILED Directors Absent: IN THE OFFICE OF THE SECRETARY ORANGE COUNTY SANITATION DISTRICT Shawn Boyd NO V 7 1999 Mark A. Murphy James W. Silva n� STAFF PRESENT: Don McIntyre, General Manager Blake Anderson, Assistant General Manager Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Robert Ghirelli, Director of Technical Services Patrick Miles, Director of Information Technology David A. Ludwin, Director of Engineering John Linder, Construction Manager Mike White, Controller Steve Kozak, Financial Manager Greg Mathews, Assistant to General Manager Marc Dubois, Purchasing Manager Penny Kyle, Committee Secretary Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 November 10, 1999 (4) RECEIVE FILE AND APPROVE MINUTES OF PREVIOUS MEETING It was moved, seconded and duly carried to approve the minutes of the October 13, 1999 Finance, Administration and Human Resources Committee meeting, as corrected. Director Jan Debay abstained. (5) REPORT OF THE COMMITTEE CHAIR The Committee Chair had no report. (6) REPORT OF THE GENERAL MANAGER The General Manager had no report. (7) REPORT OF ASSISTANT GENERAL MANAGER The Assistant General Manager had no report. (8) REPORT OF DIRECTOR OF FINANCE Director of Finance Gary Streed briefly discussed the sale of PIMCO to Allianz. PIMCO is the District's investment manager for both long term and short term investments. Mr. Streed also referred to a revised proposed Ordinance No. OCSD-11 re: Capital Facilities Capacity Charges, that was handed out to the Directors that evening. (9) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources had no report. (10) REPORT OF DIRECTOR OF COMMUNICATIONS The Director of Communications had no report. (11) REPORT OF GENERAL COUNSEL General Counsel had no report. (12) CONSENT CALENDAR ITEMS (Items a-d) a. FAHR99-82: Receive and file Treasurer's Report for the month of October 1999: 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. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 November 10, 1999 b. FAHR99-83: Receive and file the First Quarter Financial and Operational Report for the period ending September 30, 1999. C. FAHR99-84: Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR99-85: Adopt Resolution No. OCSD 99-22, Amending Policies Numbers B30.00, C10.00, C20.00, C30.00, C150.00, D50.00, D60.00, D90.00 and F80.00 of Exhibit A of Resolution No. OCSD 98-33; Adding Policies Numbers C20.10 and C170.00 to Exhibit A of Resolution No. 98-33; Ratifying any Additional Amendments to Exhibit A of Resolution No. OCSD 98-33; and Ratifying that All Future Amendments to Exhibit A of Resolution No. OCSD 98-33 be Made by Resolution re Human Resources Policies and Procedures Manual Providing for Classification, Compensation and Other Terms, Conditions, Policies and Procedures Governing District Employment. END OF CONSENT CALENDAR Motion: Moved, seconded and duly carried to approve the recommended actions for items specified as 12(a) through (d) under Consent Calendar. (13) ACTION ITEMS (Items a-e) a. FAHR99-86: 1) Approve plan to restructure and modernize the District's existing Certificates of Participation long term borrowings; and 2) Authorize the General Manager to execute professional service agreements with PaineWebber, Inc. and Orrick, Herrington & Sutcliffe to implement the COP restructuring plan. Steve Kozak, Finance Manager, gave a brief report. Motion: Moved, seconded and duly carried to approve staffs recommendation. b. FAHR99-87: Receive and file the District's Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 1999, prepared by staff and audited by Moreland and Associates, Certified Public Accountants. Motion: Moved, seconded and duly carried to amend motion to receive, file and accept staffs recommendation. d. FAHR99-89: Adopt Resolution No. OCSD 99-23, Establishing Policies and Procedures for the Award of Purchase Orders and Contracts; Award of Public Works Project Contracts; Award of Professional Services Contracts; Delegation of Authority to Implement Said Policies and Procedures; and Repealing Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-22, and OCSD 98-43. Motion: Moved, seconded and duly carried to approve staffs recommendation, as amended, to reflect no change in Professional Services Agreements authority levels. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 4 November 10, 1999 e. FAHR99-90: Approve Ordinance No. OCSD-11, Adopting Capital Facilities Capacity Charges and Repealing Ordinance No. OCSD-09. Paul Watkins, Attorney representing Alstyle Apparel/A&G, Inc., located in Anaheim spoke to the Directors regarding concerns with the proposed ordinance and the capital facilities connection charges. However, the revisions in the revised ordinance handed out to the Directors that evening gave the clarification he and his client were seeking. Directors entered into a discussion regarding the equity issue of the capital facilities connection charges. Motion: Moved, seconded and duly carried to approve staffs recommendation, with staff to provide to the Directors at the November 17th Board meeting a listing of categories of firms that will be affected by this ordinance. Director Peer Swan opposed. (14) INFORMATION PRESENTATIONS There were no informational presentations. (15) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS. IF ANY There were no supplemental agenda items. (16) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (17) CONSIDERATION OF UPCOMING MEETINGS The next FAHR Committee meeting is scheduled for December 8, 1999 at 5 p.m. (18) CLOSED SESSION The Chair reported to the Committee the need for a Closed Session, as authorized by Government Code Section 54956.9, to discuss and consider the items that are specified as Item 18(A)(1) on the published Agenda. The Committee convened in closed session at 8:08 p.m. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 5 November 10, 1999 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 reportable action was taken re Agenda Item No. 18(a)(1). The Committee did not consider Agenda Item No. 18(a)(2), and no report was given. At 8:20 p.m., the Committee reconvened in regular session. (20) ADJOURNMENT The Chair declared the meeting adjourned at approximately 8:20 p.m. Submit ed by: Penny Kyle ` FAHR Committe ecretary H.Iwp.dialagendalFAHRIFahi99199mins1101399 FAHR MIN.doc 4'e� � 2�,z 41i��tt-eq I I /� PL&&�- ORDINANCE NO. OCSD-11 AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING CAPITAL FACILITIES CAPACITY CHARGES AND REPEALING ORDINANCE NO. OCSD-09 WHEREAS, the Board of Directors of the District has received a management report, including financial and system facilities needs of the District, and wishes to reaffirm the policy of the District of imposing Capital Facilities Capacity Charges when properties, either newly connect to the District's system or expand the use of the property previously connected to the District, and to adopt findings supporting the amount of the fees adopted pursuant to this Ordinance. The Board of Directors of Orange County Sanitation District does hereby FIND: A. That a comprehensive 30-year Master Plan of Capital Facilities entitled, "Collection, Treatment and Disposal Facilities Master Plan - 1989", hereinafter the "Master Plan", which includes detailed financial and engineering reports, has been prepared, approved, and adopted by the Boards of Directors of the Predecessor Districts in 1989, identifying the required future development of District facilities, including the financial projections for providing sewer service to all properties within the District's service areas; and, B. That the District has undertaken, commencing in 1997, a comprehensive update and revision of the Master Plan, which was adopted October 27, 1999, to hereafter be known as the "Strategic Plan"; and, C. That the District, in 1997, as part of its Strategic Plan studies, undertook a comprehensive evaluation and study of its operational and financial needs for the next 20 years, including a detailed assessment of all types and categories of users; the demands on the system and capacity needs of the system to provide necessary service to the multiple categories of users; the total costs of the existing and future facilities in the system; and alternate methodologies for establishing fair and equitable charges to connect to and gain access to the system; and, D. That the Board of Directors has previously, by duly adopted Ordinances, commencing in 1969, established Capital Facilities Capacity Charges, formerly known commonly as "connection charges" or "fees" to be paid by all persons obtaining a permit to connect to the District's system as a financial TFN:pj:#112779:11/10/99 - REDLINE payment to have access to and use of the District's wastewater collection, treatment and disposal facilities in existence at the time of connecting to the system, and for future facilities to be constructed; and, E. That the District's connection charge ordinances, included authority for the District to levy an excess capacity charge upon commercial and industrial users who discharge large quantities or high strength wastewater; and, F. That the District(s) adopted a revised, comprehensive excess capacity charge by ordinance, effective July 1, 1995, which ordinance(s) was subsequently repealed November 15, 1995 pending completion of the Financial Rates and Charges Report; and, G. That the District on February 22, 1996 adopted a moratorium on the collection of excess capacity charges until the Financial Rates and Charges Report was completed and a revised Capital Facilities Charge was adopted; and, it- _ IL 4 H. That a final report (the "Determination of Financial Rates and Charges Report"), based upon studies and reports of District's engineering and financial advisors, and an extensive evaluation by an Advisory Committee of industrial, commercial, and residential users of the system (the "Rate Advisory Committee"), was prepared and submitted to the Board of Directors to assist and guide it in its considerations for the adoption of Ordinance No. OCSD-09; and, J- I. That the Report has been made available to the public and has been subject to noticed public hearings, all in accordance with the provisions of law; and, 4- J. That following adoption of Ordinance No. OCSD-09 on July 21, 1999, certain ambiguities and uncertainties were discovered, relating to the implementation of the Ordinance. It is now appropriate, to insure ease of administration and clarity of understanding by those persons and entities governed by the Ordinance, that the provisions of Ordinance No. OCSD-09 be revised; and, L— K. That the revenues derived under the provisions of this Ordinance will be used for the acquisition, construction, reconstruction, maintenance, and operation of the wastewater collection, treatment and disposal facilities of the TFN:pj:#112779:11/10/99 - REDLINE 2 District; to repay principal and interest on debt instruments; or to repay federal or state loans for the construction and reconstruction of said sewerage facilities, together with costs of administration and provisions for necessary reserves; and, Ali- L. That the properties upon which the fees established by this Ordinance are levied, will discharge wastewater to the District's collection, treatment and disposal system facilities; that the costs of owning, operating, and maintaining said facilities has constantly increased due in part to increased regulatory requirements to upgrade the treatment process; and that said costs will exceed the amounts of any ad valorem tax revenues derived from said property; and, M- M. That the Capital Facilities Capacity Charges imposed by authority of this Ordinance do not exceed the estimated amount required to provide access to the sewer system facilities and service for which the fee is levied, as provided in California Constitution Article XIIID; and, a N. That the fees adopted by this Ordinance are non-discriminatory, as applied to all users of the system, and are established upon a rational basis between the fees charged each category of property that is connecting, and the service and facilities provided to each connected property by the District; and, O. That the adoption of this Ordinance is statutorily exempt under the California Environmental Quality Act from further environmental assessment pursuant to the provisions of California Public Resources Code Section 21080(b)(8), and 14 California Code of Regulations Section 15273(a). NOW, THEREFORE, the Board of Directors of Orange County Sanitation District does hereby ORDAIN: Section 1: Definitions 1.1 "Actual construction costs" include the cost of all activities necessary or incidental to the construction of a District facility, such as financing, planning, designing, acquisition of the property or interests in the property, construction, reconstruction, rehabilitation, and repair. 1.2 "Capital Facilities Capacity Charge" means a one-time, non- discriminatory charge imposed at the time a property is connected to the District's system, directly or indirectly, or an existing structure or category of use is expanded or increased. Said charge is to pay for District facilities in existence at the time the charge is imposed, or to pay for new facilities to be constructed in the future, that are of benefit to the property being charged. The Supplemental Capital Facilities Capacity Charge, as provided for in Sections 6, 7, and 8 of this Ordinance, is an annual charge payable to the District on a quarterly or annual basis as determined by the District. TFN:pj:#112779:11/10/99 - REDLINE 3 1.3 "Connection fee" means a fee equal to the cost necessary to physically connect a property to the District's system, including, but not limited to installation of meters, meter boxes, pipelines and appurtenances to make the connection, that does not exceed the actual cost of labor, materials, and overhead for the installation of those facilities. 1.4 "Nondiscriminatory" means that the Capital Facilities Capacity Charge does not exceed an amount determined on the basis of the same objective criteria and methodology applicable to comparable public or non-public users, and is not in excess of the proportionate share of the cost of the District's facilities of benefit to the person or property being charged, based upon the proportionate share of use of those facilities. 1.5 "Predecessor Districts" means former County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, which jointly owned and administered the property and sewerage system facilities of the District, which consolidated into the Orange County Sanitation District, as a single entity, effective July 1, 1998. 1.6 "Public agency" means the United States or any of its agencies, the State or any of its agencies, the Regents of the University of California, a county, city, district, school district, local or regional public authority, or any other political entity, subdivision or public corporation of this State. Section 2: Connection Permits: Required. A. Connection permits are required of all dwelling units, buildings and structures connecting directly or indirectly to the District's sewerage system facilities. Included are the connections of laterals to local municipal sewerage facilities, and the connection of local municipal sewerage facilities and laterals to the District's facilities. B. Except as authorized by the issuance of a Special Purpose Discharge Permit under sections 305-305.6 of Ordinance No. OCSD-01 or as amended, or as authorized pursuant to a special extra territorial service agreement approved by the Board of Directors, no permit shall be valid unless the real property to be served by use of the permit is included within the boundaries of the District and within the boundaries of a local sewering agency authorized to maintain public sewering facilities. However, a permit as authorized above may be issued for property to be served outside the boundaries of a local sewering agency if a local sewering agency makes application for the issuance of such permit. TFN:pj:#11277.9:11/10/99 - REDLINE 4 There will be a nondiscriminatory Capital Facilities Capacity Charge assessed to public agencies for connecting directly or indirectly to the District's sewerage system facilities, and a connection permit must be obtained. Section 3: Capital Facilities Capacity Charge: Payment Required. No application for a permit for a connection to a District sewerage facility, or to any sewerage facility which discharges into a District sewerage facility, shall be approved, nor a permit issued, until a District Capital Facilities Capacity Charge is paid by the applicant. No connection permit shall be issued unless there is an established category of use of the property to be served or a valid building permit issued which establishes the category of use of said property. Section 4: Capital Facilities Capacity Charge: Time of Payment. 4.1 Payment of the Capital Facilities Capacity Charge established by this Ordinance for connection to the District's sewerage system facilities shall be required at the time of issuance of the building permit for all construction within the District, excepting in the case of a building legally exempt from the requirement of obtaining a building permit. The payment of the Capital Facilities Capacity Charge for such exempt buildings will be required at the time of and prior to the issuing of a plumbing connection permit for any construction within the territorial limits of the District. 4.2 Upon application of any property seeking to connect to the District's system, the Board of Directors of District, in its sole and absolute discretion and upon a finding of compelling need, may, pursuant to the authority of California Health & Safety Code Section 5474, approve of an agreement with the property owner for the payment of the applicable connection charge in installments over a period of not to exceed five (5) years, bearing an interest rate on the unpaid balance of not to exceed ten (10%) percent per annum, and that the charges and interest shall constitute a lien on the property. Section 5: Capital Facilities Capacity Charge: Schedule of Amounts. Every person or entity newly connecting any property to the District's system facilities shall pay a Capital Facilities Capacity Charge in the amount for the applicable category of use set forth in Table 1. H TFN:pj:#112779:11/10/99 - REDLINE 5 TABLE 1 CAPITAL FACILITIES CAPACITY CHARGE Use Category Rate Basis Base Charge Commercial — Industrial Per 1,000 square feet Low Demand Per 1,000 square feet $ 1101 Average Demand Per 1,000 square feet $ 6751 High Demand Per 1,000 square feet $1,6001,2 Single Family Residential Per Unit 5+ Bedrooms Per Unit $2,530 4 Bedrooms Per Unit $2,165 3 Bedrooms Per Unit $1,820 2 Bedrooms Per Unit $1,475 1 Bedroom Per Unit $1,130 Multi -Family Residential Per Unit 4+ Bedrooms Per Unit $1,965 3 Bedrooms Per Unit $1,620 2 Bedrooms Per Unit $1,275 1 Bedroom Per Unit $ 910 Studio Per Unit $ 580 1 Provided that the minimum Capital Facilities Capacity Charge for such new construction shall be $1,820; and all calculations shall be on a per square foot basis. 2The Base Capital Facilities Capacity Charge is established at $1,600 per 1,000 square feet, but shall be incrementally increased from the present amount at five (5) levels, and five (5) time periods as follows: Effective September 1, 1999 $ 675 per 1,000 sq. ft. Effective January 1, 2000 $ 900 per 1,000 sq. ft. Effective July 1, 2000 $1,130 per 1,000 sq. ft. Effective January 1, 2001 $1,360 per 1,000 sq ft. Effective July 1, 2001 $1,600 per 1,000 sq. ft. A schedule of the Capital Facilities Capacity Charges specified herein will be on file in the Office of the Board Secretary of the District, and in the Building Department of each City within the District. *Low Demand connections are the following categories of users: Nurseries; Warehouses; Parking Structures; RV Storage; Churches; Truck Terminals; RV Parks; Lumber/Construction Yards; and other dischargers whose flow is similar in volume to these listed categories. **High Demand connections are the following categories of users: Restaurants, Supermarkets; Car Washes; Coin Laundries; Amusement Parks; Shopping Centers with Restaurants; Food Processing Facilities; Textile Manufacturers; and other dischargers whose flow is similar in volume to these listed categories. ***All other connections are Average demand users. TFN:pj:#112779:11/10/99 - REDLINE 6 Section 6: Supplemental Capital Facilities Capacity Charge: Significant Commercial — Industrial Users — Definitions. A. A Significant Commercial — Industrial User ("SCIU") is any person or entity who discharges commercial or industrial process flow, but excluding domestic sewage flow, in an amount greater than 25,000 gallons per day ("gpd"), or Biochemical Oxygen Demand ("BOD") greater than 150 pounds per day, or Suspended Solids ("SS") greater than 150 pounds per day, or who is required to obtain a Waste Discharge Permit, as prescribed by Ordinance No. OCSD-01, Article 3, due to having federally- or District -regulated or significant discharges. B. An Existing SCIU is any SCIU discharger connected and discharging to the District's system prior to jwly 1, 1995 January 1, 2000. 1 C. A New SCIU is any discharger who connects and discharges to the District's system pursuant to a Waste Discharge Permit issued on or aftep jwly 1'. 4QQS January_ 1, 2000; or if previously connected and not an SCIU, as defined in Subparagraph A above, but, subsequent to J 'ly 1, 49 January 1, 2000, increases flow, or BOD, or SS to a level as to constitute an SCIU. MIM ■ ■ M. RR R4• RM D. The maximum discharge allowed to a user, for which a base Capital Facilities Capacity Charge is paid, as per Section 5 Table 1 above, is 25,000 gallons per day ("gpd"), or 150 pounds each of BOD and SS (the "base use"). Discharge of flow, or BOD, or SS in amounts greater than allowed by this Subparagraph E, shall be subject to the provisions of Section 7 or Section 8 hereof. F- E. Each Existing SCIU shall have a baseline of allowed discharge of flow, and BOD, and SS established by the District as of jwly 4, 1999 January 1, 2000. The baseline shall be based upon the discharge for the fiscal year 1998-99 or upon such other discharge data which the District determines is representative of the user's actual annual discharge to the sewerage system. Dischargers who are deemed to be SCIUs solely because of the requirements to obtain a Waste Discharge Permit pursuant to Section 6 above, shall have a minimum baseline established as follows: Flow — 25,000 gallons per day; BOD —150 pounds per day; and SS — 150 pounds per day. The SCIU shall be authorized to discharge flow, and BOD, and SS up to the baseline amounts without payment of a Supplemental Capital Facilities Capacity Charge. TFN:pj:#112779:11/10/99 - REDLINE 7 a #- F. The Supplemental Capital Facilities Capacity Charge as prescribed by Sections 7 and 8 below, shall be payable commencing with the effective date of this Ordinance. a- G. Within two (2) years from the date of the District's written notice to the SCIU of its baseline amounts, the SCIU shall have a right to appeal the District's established baseline for the SCIU. The appeal shall be to the General Manager, or his delegated representative, who shall have discretion, based upon extraordinary circumstances, wherein the established baseline is not representative of the historical average daily discharge by the SCIU for a yearly period, to modify the baseline amounts for the current year, or on a permanent basis, subject to terms and conditions as prescribed by the General Manager. The decision of the General Manager shall be final. Section 7. Supplemental Capital Facilities Capacity Charge: New and ran----;-----l , 12a,-.,„ od Significant Commercial — Industrial Users. In addition to the base Capital Facilities Capacity Charge, as prescribed in Table 1 for commercial — industrial use category properties, all New SCIUs and all ate# Qd SQ1ls shall pay a Supplemental Capital Facilities Capacity Charge for each gallon of flow, or pound of BOD, or SS, exceeding the base use discharge maximums, in the following amounts: Daily Charge Flow Gallons Per Day $0.00057 BOD Pounds Per Day $0.14461 SS Pounds Per Day $0.16025 Section 8: Supplemental Capital Facilities Capacity Charge: Existing Significant Commercial — Industrial Users. A. All Existing Significant Commercial — Industrial Users connected to and discharging to the District's system shall be required to pay a Supplemental Capital Facilities Capacity Charge upon the occurrence of either (i) an increase of discharge flow of 25,000 gallons per day ("gpd"), or 25% per day over its established baseline authorization, whichever is lesser; or (ii) an increase of either BOD or SS discharge of 150 pounds each per day, or 25% each per day, whichever is lesser, over its established baseline authorization. B. The Supplemental Capital Facilities Capacity Charge shall be in the following amounts for each component that is increased as provided in Section 8A above: TFN:pj:#112779:11/10199 - REDLINE 8 Daily Charge Flow Gallons Per Day $0.00057 BOD Pounds Per Day $0.14461 SS Pounds Per Day $0.16025 C. The Supplemental Capital Facilities Capacity Charge shall be calculated on the basis of the average daily quantity of discharge in excess of the User's baseline. The daily averages will be based on the daily discharges for a year, utilizing discharge records and reports of the District. Section 9: Capital Facilities Capacity Charge: Replacement Structures. For new construction replacing former structures, the Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Table 1, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Table 1 that would be for the prior category of use which was terminated and removed. Section 10: Capital Facilities Capacity Charge: Remodeled Structures. In the case of existing structures connected to the District's system facilities, to which new construction or alteration is made to change or increase the category of use, a Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Table 1, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Table 1 for the prior category of use. Section 11: Payment of Capital Facilities Capacity Charge: Off -Site Sewers Not Part of Master Plan Relative to Reimbursement Agreements. A charge for connection to off -site sewers which are not included as part of the District Master Plan and for which a Non -Master Plan Reimbursement Agreement has been entered into between the District and the property owner, shall be paid in the amount provided for in said Agreement, to be known as a Non -Master Plan Capital Facilities Capacity Charge. The amount set forth in said Agreement shall be the amount due, whether the original Agreement is still in force, has been extended, or has expired. The Non -Master Plan Capital Facilities Capacity Charge shall be in addition to the other Capital Facilities Capacity Charges provided for in Sections 3 and 4 hereinabove, established for property connecting to said facilities. Section 12: No Refund or Transfer. A Capital Facilities Capacity Charge is paid for the connection of a specific parcel of property. No refund of any charge shall be made because of non-use or change of use, or any other reason. The connection permit is non -transferable to any other property. TFN:pj:#112779:11/10/99 - REDLINE 9 Section 13: Baseline Transferability. The baseline of allowed discharge of flow, BOD and SS used to calculate a Supplemental Capital Facilities Capacity Charge shall not be transferable, nor shall a credit for such previously existing baseline be provided to another SCIU concurrently or subsequently occupying the same property. Each such SCIU shall pay Supplemental Capital Facilities Capacity Charges in accordance with Section 7 above. Section 14 : Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, including those properties otherwise deemed exempt from payment of taxes or assessments by provisions of the State Constitution or statute, including properties owned by other public agencies or tax-exempt organizations. Section 15: Severability. If any provision of this Ordinance or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. Section 16 : Effective Date. This Ordinance shall take effect January 1, 2000. Section 17: Repeal. Ordinance No. OCSD-09 is hereby repealed as of the effective date of this Ordinance. Section 18 : Certification and Publication. The Secretary of the Board shall certify to the adoption of this Ordinance and shall cause a summary to be published in a newspaper of general circulation as required by law. PASSED AND ADOPTED by the affirmative vote of not less than two- thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held Chair, Board of Directors Orange County Sanitation District ATTEST: Secretary of the Board of Directors Thomas L. Woodruff, District Counsel TFN:pj:#112779:11/10/99 - REDLINE 10 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: TREASURER'S REPORT FOR THE MONTH OF OCTOBER 1999 GENERAL MANAGER'S RECOMMENDATION Receive and file Treasurer's Report for the month of October 1999. SUMMARY Meeting Date To J. Bds. 11/10/99 11/17/99 Item Number Item Number Pacific Investment Management Co. (PIMCO), serves as the District's professional external money manager, and Mellon Trust serves as the District's third -party custodian bank for the investment program. The District's Investment Policy, adopted by the Board, includes reporting requirements as listed down the left most column of the attached PIMCO Monthly Report for the "Liquid Operating Monies" and for the "Long -Term Operating Monies." The District's external money manager is operating in compliance with the requirements of the District's Investment Policy. The District's portfolio contains no reverse repurchase agreements. Historical cost and current market values are shown as estimated by both PIMCO and Mellon Trust. The District's portfolios are priced to market ("mark -to - market") as of the last day of each reporting period. The slight differences in value are related to minor variations in pricing assumptions by the valuation sources at the estimate date. PROJECT/CONTRACT COST SUMMARY None. BUDGET IMPACT ❑ This item has been budgeted. ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) NradonldatalWvp.dtalfin%210%crane%FAHR%Fahr98WovATreasurees Report-0cidac Revised: 10/17/97 Page 1 ADDITIONAL INFORMATION Schedules are attached summarizing the detail for both the short-term and long-term investment portfolios for the reporting period. In addition, a consolidated report of posted investment portfolio transactions for the month is attached. The attached yield analysis report is presented as a monitoring and reporting enhancement. In this report, yield calculations based on book values and market values are shown for individual holdings, as well as for each portfolio. Mellon Trust, the District's custodian bank, is the source for these reports. Transactions that were pending settlement at month end may not be reflected. These reports accurately reflect all District investments and are in compliance with California Government Code Section 53646 and the District's Investment Policy. Sufficient liquidity and anticipated revenues are available to meet budgeted expenditures for the next six months. The table below details the book balances of the District's funds at month -end. A graphical representation of month -end balances is shown by the attached bar chart. Funds/Accounts $cok Balances Oct. 31, 1999 Estimated Yield 4°by State of Calif. LAIF $ 12,755,013 5.4 Union Bank Checking Account 345,903 — Union Bank Overnight Repurchase Agreement 2,276,000 4.6 P I MCO — Short-term Portfolio 19,140, 980 4.8 PIMCO - Long-term Portfolio 268,351,588 4.7 District 11 GO Bond Fund 921 1,907 5.1 Debt Service Reserves @ Trustees 32,157,314 6.1 Petty Cash 4,400 — TOTAL $335, 033,105 ALTERNATIVES None. CEQA FINDINGS None. ATTACHMENTS 1. Monthly Investment Reports 2. 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E. e Zx C7 = C7W C7Qo C7�=� C7,�� C7aU C7Wv, O x R O qW Q O z O w o O w O x W p 5 en F PO .a w �6 .a u, .a u, `O .� -- .a x w .a vn z .a q c 00 00 F O EM- � O w l O "�� 3 C "' q N U oo x p O U Oq Opp 00 Nx O OM O N O M O M M r O V1 O Meq O� N NM M M p eq ON a1 0 0. 000 (=00 J rn oN rn U o, N ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Meeting Date: November 10. 1999 Time: 5:30 p.m. Adjourn: COMMITTEE MEMBERS THOMAS R. SALTARELLI (Chair) ................................................. MARK LEYES (Vice Chair)............................................................ L' SHAWN BOYD............................................................................... Q/ JOHN M. GULLIXSON................................................................... SHIRLEY MC CRACKEN............................................................... MARK A. MURPHY........................................................................ JAMES W. SILVA........................................................................... 6� JAN DEBAY (Board Chair)............................................................ PEER SWAN (Board Vice Chair) ................................................... ✓ JOHN J. COLLINS (Past Board Chair) .......................................... OTHERS � � �� 1 � 4w f TOM WOODRUFF, General Counsel ............................................... r/ TOBY�..fEIS/SfERT, ��C}jarolb Eeer 11 ngi y............................................... �W�� STAFF DON MCINTYRE, General Manager ................................................ BLAKE ANDERSON, Assistant General Manager .......................... 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 ..................... PATRICK MILES, Director of Information Technology ................... ✓ ROBERT GHIRELLI, Director of Technical Services ...................... STEVE KOZAK, Financial Manager ................................................ MIKE WHITE, Controller.................................................................. _LG GREG MATHEWS, Assistant to the General Manager .................... LISA TOMKO, Human Resources Manager .................................... _ DAWN MCKINLEY, Sr. Human Resources Analyst ........................ — PENNY KYLE, Committee Secretary ............................................... C: Lenora Crane Corrected FILED RINUTES OF FINANCE ADMINISTRATQNj�ANvG7EvOF THT;,SECRETARYTION DISTRICT HUMAN RESOURCES C011J NI MITTEE f(NG Orange County Sanitation District UCT 27 1999 Wednesday, October 13, 1999, 5 p.m. By ! ' k A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on October 13, 1999 at 5 p.m., in the District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: (2) FAHR COMMITTEE MEMBERS: Directors Present: Thomas Saltarelli, Chair Mark Leyes, Vice Chair Shawn Boyd John M. Gullixson Shirley McCracken Peer Swan, Board Vice Chair John J. Collins, Past Board Chair Directors Absent: Jan Debay, Board Chair Mark A. Murphy APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. OTHERS PRESENT: Thomas Woodruff, Don Hughes Toby Weissert Dan Cassidy Gerald Nichols John Newham Dave Briney STAFF PRESENT: General Counsel Blake Anderson, Assistant General Manager Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Robert Ghirelli, Director of Technical Services Mike White, Controller Steve Kozak, Financial Manager Lisa Tomko, Human Resources Manager Dawn McKinley, Sr. Human Resources Analyst Greg Mathews, Assistant to General Manager Marc Dubois, Purchasing Manager Laurie Bluestein, Communications Action Team Penny Kyle, Committee Secretary Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 October 13, 1999 (4) RECEIVE, FILE AND APPROVE MINUTES OF PREVIOUS MEETING It was moved, seconded and duly carried to approve the minutes of the September 8, 1999 Finance, Administration and Human Resources Committee meeting, as drafted. (5) REPORT OF THE COMMITTEE CHAIR The Committee Chair had no report. (6) REPORT OF THE GENERAL MANAGER The General Manager was not present. (7) REPORT OF ASSISTANT GENERAL MANAGER Blake Anderson updated the members on the actions taken by the Kern County Board of Supervisors on the Biosolids Ordinance. The Supervisors voted 5-0 to proceed with the biosolids ordinance, which bans Class B biosolids in three years on agricultural land in the unincorporated portions of Kern County imposes road fees and provides for setbacks from groundwater, neighbors and schools. They also filed a negative declaration in accordance with the California Environmental Quality Act with respect to any environmental impacts of the ordinance adoption Staff and General Counsel are preparing to file a challenge to the CEQA action and to the ordinance itself. The Board of Directors will be asked to authorize the filings at its next meeting (8) REPORT OF DIRECTOR OF FINANCE Director of Finance Gary Streed referred to the handouts for the Directors that evening. A revised table was provided for Item 13(a) — Delegation of Authority, a redlined copy of proposed Ordinance No. OCSD-11, Item 13(b), and copies of letters from the Yorba Linda Water District regarding Item 13(d). (9) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources had no report. (10) REPORT OF DIRECTOR OF COMMUNICATIONS The Director of Communications reported that the District's Orange County Fair Program was the recipient of the City -County Communications and Marketing Association's (3CMA) Silver Circle Award for "Most Creative Public Outreach Program With Least Dollars Spent". (11) REPORT OF GENERAL COUNSEL General Counsel gave the Directors an update on the OCIP's response to the request for additional legal fees from attorneys representing the County on the bankruptcy issue. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 October 13, 1999 (11-1) REPORT OF DIRECTOR OF TECHNICAL SERVICES Director of Technical Services Bob Ghirelli gave an update to the Directors regarding various options to manage Class A and B biosolids and possibility of purchasing land in Kings County and Kern County. (12) CONSENT CALENDAR ITEMS (Items a-e) a. FAHR99-71: Receive and file Treasurer's Report for the month of September 1999: 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. b FAHR99-72: Receive and file Employment Status Report as of September 21, 1999. C. FAHR99-73: Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR99-74: Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with District's purchasing policies. e. FAHR99-75: Receive and file information related to District costs incurred for Huntington Beach Closure Project, Subledger #09810318. END OF CONSENT CALENDAR Motion: Moved, seconded and duly carried to approve the recommended actions for items specified as 12(a) through 12(e) under Consent Calendar. (13) ACTION ITEMS (Items a-e) a. FAHR99-76: Adopt Resolution No. OCSD 99-_, Establishing Policies and Procedures for the Award of Purchase Orders and Contracts; Award of Public Works Project Contracts; Award of Professional Services Contracts; Delegation of Authority to Implement Said Policies and Procedures; and Repealing Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-22, and OCSD 98-43. The Directors entered into a lengthy discussion and asked questions of staff. Motion: Moved, seconded and duly carried to continue this item to the November 1 Ai=AF HR meeting and request staff to report on internal control process as it relates to the issuance of professional services agreements. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 4 October 13, 1999 b. FAHR99-77: Ratify the decision of the General Manager and authorize him to waive the Capital Facilities Capacity Charge (CFCC), pursuant to District's Ordinance No. OCSD99-01, Section 305.6, regarding issuance of the Special Purpose Discharge Permits to the City of Huntington Beach and the County of Orange to allow urban runoff to be discharged to the District's wastewater system for a one-year period effective November 1, 1999. Motion: Moved, seconded and duly carried to approve staffs recommendation. C. FAHR99-78: Adopt Resolution No. OCSD 99-_, Amending Human Resources Policies and Procedures, Resolution No. OCSD 98-33 Relating tot) Adjust the Assistant General Manager's pay range (E20) maximum from $136,680 to $148,836; 2) Move the Director of Information Technology classification from pay range E17 ($75,876-$119,784) to pay range E18 ($85,992-$139,464); 3) Move the Warehouse Supervisor classification from pay range E4 ($43,248-$61,236) to pay range E9 ($55,212-$78,156); 4) Move the Contracts & Purchasing Supervisor classification from pay range E9 ($55,212-$78,156) to pay range El ($60,828- $86,064); 5) Create Contracts Specialist classification at pay range E2 ($39,252- $55,488); 6) Create Contracts Administrator classification at pay range E7 ($50,064-$70,848); 7) Reinstate the Safety and Emergency Response Specialist classification at pay range E8 ($52,500-$74,292); and 8) Create Information Technology Strategic Implementation Leader classification at pay range El ($60,828-$86,064). Motion: Moved, seconded and duly carried to approve staffs recommendation. Director Gullixson also requested that staff provide a listing of all employees wages and benefits. d. FAHR99-79: Director's request to reconsider District's Policy regarding Refund and Credit for Sanitary Sewer Service Charges. The Directors entered into a discussion regarding the legality of extending the time frame in which property owners could request a refund of user fees erroneously paid in previous years. Director Gullixson referred the Directors to copies of letters from Yorba Linda Water District that were provided that evening. Motion: Moved, seconded and duly carried to form an Ad Hoc Committee to do further study on the District's current policy of refund of user fees and the legality of extending the time frame in which property owners could be granted a refund of those user fees paid erroneously. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 5 October 13, 1999 e. FAHR99-80: Proposed Ordinance Revisions for Capital Facilities Capacity Charges General Counsel gave a brief report regarding the need to incorporate the revisions to Ordinance No. OCSD99-09. The intent of the ordinance when adopted was to have existing dischargers only pay an additional capital facilities capacity charge (CFCC) at that time when they expanded their use or facility and increased their discharge of flow, BOD or suspended solids. A revision of the ordinance is deemed necessary to clarify certain ambiguities. Motion: Moved, seconded and duly carried to include proposed ordinance revisions for capital facilities capacity charges in proposed Ordinance No. OCSD99-11. (14) INFORMATION PRESENTATIONS a. FAHR99-81: State of the District — Employee Audit Director of Communications Michelle Tuchman gave a brief report on a survey of employees completed each year to track changes in employee morale, attitude and perceptions, and to determine the effectiveness of the District's existing communications programs. Directors requested that in the future the title of the report not use the word audit. (15) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were no supplemental agenda items. (16) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (17) CONSIDERATION OF UPCOMING MEETINGS The next FAHR Committee meeting is scheduled for November 10, 1999 at 5 p.m (18) CLOSED SESSION The Chair reported to the Committee the need for a Closed Session, as authorized by Government Code Section 54957.6, to discuss and consider the items that are specified as Item 18(A)(1) on the published Agenda. The Committee convened in closed session at 7:02 p.m. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 6 October 13, 1999 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 reportable action was taken re Agenda Item No. 18(a)(1). At 7:29 p.m., the Committee reconvened in regular session. (20) ADJOURNMENT The Chair declared the meeting adjourned at approximately 8:00 p.m. Submitted by: Penny Kyle/ FAHR Comrnitt Secretary H:lwp.dtalagendalFAHRIFahr99199mins1101399 FAHR MIN.doc STATE OF CALIFORNIA) ) SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, 1 hereby certify that the Notice and the Agenda for the Finance, Administration, and Human Resources Committee meeting to be held on 4t[ ZU hf �t Al , 1992, was duly posted for public inspection in the main lobby of the District's offices onA!7��z 199�. IN WITNESS WHEREOF, I have hereunto set my hand this/ 6f day of A:8; Penny M. Kyle, &e&etary Board of Directors Orange County Sanitation District H:\wP.DTA\ADMIN\BS\FORMS\AGENDA CERTIFICATION-FAHR COMMITTEE.DOC November 3, 1999 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE Full Agenda Packaue 45 Committee 13 & Mailing List Donald F. McIntyre 1 Blake P. Anderson 1 (3-hole punched) Dan Dillon 1 Marc Dubois 1 Jeff Esber 1 Steve Kozak 1 Penny Kyle 2 David Ludwin 1 Greg Mathews 1 Patrick Miles 1 (3-hole punched) Bob Ooten 1 Mike Peterman 1 Gary Streed 1 Michelle Tuchman 1 (3-hole punched) Robert Ghirelli 1 Mike White 1 (3-hole punched) Cagle, Brad 1 Lisa Tomko 1 Bob Geggie 1 Patricia Jonk 1 Lenora Crane 1 File 1 Extras 5 (for meeting hand-out, if necessary) Notices and Agenda Only 12 Posting 1 Jean Tappan 1 Anna Ubaldini 1 Frankie Woodside 1 Patricia Magnante 1 Janet Gray 1 Security 1 Extras 5 (for meeting hand-out, if necessary) Ron Zenk, Dist. 14 Treasurer's Re ort Only c \\RADON\DATA7 \WP.DTAW DMIN\BS\FAHR\DISTRIBUTIONLISTFAHR.DOC ouNS SAHIrA] Og ORANGE COUNTY SANITATION DISTRICT November 4, 1999 phone: 1714) 962-2411 mailing address: *****NOTE CHANGE OF MEETING TIME**** P.O. Box 8127 Fountain Valley, CA 92728-8127 street address: NOTICE OF MEETING 10844 Ellis Avenue Fountain Valley, CA 9270E-7018 FINANCE ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Member Agencies ORANGE COUNTY SANITATION DISTRICT Cities Anaheim Brea WEDNESDAY, NOVEMBER 10, 1999 - 5:30 P.M.**** Buena Pak Cypress Fountain Valley Fullerton DISTRICT'S ADMINISTRATIVE OFFICES Garden Grove 10844 ELLIS AVENUE Huntington Beach Irvine FOUNTAIN VALLEY, CALIFORNIA 92708 La Habra La Palma Los Alamitos Newport Beach Orange Placentia A regular meeting of the Finance, Administration and Human Santa Ana Resources Committee of the Board of Directors of the Orange SealB Stanton County Sanitation District, will be held at the above location, date Tustin and time. Villa Park Yorba Linda County of Orange Sanitary Districts Costa Mesa Midway City Water Districts Irvine Ranch "To Protect the Public Health and the Environment through Excellence in Wastewater Systems" FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATES FAHR Committee Meeting Dates November 10, 1999 December 8, 1999 None Scheduled February 9, 2000 March 8, 2000 April 12, 2000 June 14, 2000 July 12, 2000 No Meeting Scheduled September 13, 2000 October 11, 2000 November 8, 2000 Board Meetina Dates November 17, 1999 December 15, 1999 January 26, 2000 February 23, 2000 March 22, 2000 April 26, 2000 June 28, 2000 July 26, 2000 August 23, 2000 September 27, 2000 October 25, 2000 November 15, 2000 ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Meeting Date: November 10, 1999 Time: 5:30p.m. Adjourn: COMMITTEE MEMBERS THOMAS R. SALTARELLI (Chair) ................................................. MARK LEYES (Vice Chair)............................................................ SHAWNBOYD............................................................................... JOHN M. GULLIXSON................................................................... SHIRLEY MC CRACKEN............................................................... MARK A. MURPHY........................................................................ JAMES W. SILVA........................................................................... JAN DEBAY (Board Chair)............................................................ PEER SWAN (Board Vice Chair) ................................................... JOHN J. COLLINS (Past Board Chair) .......................................... OTHERS TOM WOODRUFF, General Counsel ............................................... TOBY WEISSERT, Carollo Engineers ............................................. STAFF DON MCINTYRE, General Manager ................................................ BLAKE ANDERSON, Assistant General Manager .......................... 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 ..................... PATRICK MILES, Director of Information Technology ................... ROBERT GHIRELLI, Director of Technical Services ...................... STEVE KOZAK, Financial Manager ................................................ MIKE WHITE, Controller.................................................................. GREG MATHEWS, Assistant to the General Manager .................... LISA TOMKO, Human Resources Manager .................................... DAWN MCKINLEY, Sr. Human Resources Analyst ........................ PENNY KYLE, Committee Secretary ............................................... c: Lenora Crane AGENDA REGULAR MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, NOVEMBER 10, 19991 AT 5:30 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 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. (1) ROLL CALL (2) APPOINTMENT OF CHAIR PRO TEM 1F NECESSARY (3) 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). November 10, 1999 (4) APPROVE MINUTES OF PREVIOUS MEETING Approve minutes of the October 13, 1999, Finance, Administration and Human Resources Committee meeting. (5) REPORT OF COMMITTEE CHAIR (6) REPORT OF GENERAL MANAGER (7) REPORT OF ASSISTANT GENERAL MANAGER (8) REPORT OF DIRECTOR OF FINANCE (9) REPORT OF DIRECTOR OF HUMAN RESOURCES (10) REPORT OF DIRECTOR OF COMMUNICATIONS (11) REPORT OF GENERAL COUNSEL (12) CONSENT CALENDAR ITEMS (a-d) Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: ............... - .._..__......-................... - ._.......... . ---.-.......-.......� An ma ers placed on a consentcalendar are considered as not requiring di.s.cussion or further explanation and unless any particular item is requested to be removed from the consent calendar by a Director, staff member or I member of the public in attendance, there will be no separate discussion of these items. All items on the consent Icalendar 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. a. FAHR99-82: Receive and file Treasurer's Report for the month of October 1999. The Treasurer's Report will be distributed 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 November 10, 1999 b. FAHR99-83: Receive and file the First Quarter Financial and Operational Report for the period ending September 30, 1999. C. FAHR99-84: Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR99-85: Adopt Resolution No. OCSD 99-_, Amending Policies Numbers B30.00, C10.00, C20.00, C30.00, C150.00, D50.00, D60.00, D90.00 and F80.00 of Exhibit A of Resolution No. OCSD 98-33; Adding Policies Numbers C20.10 and C170.00 to Exhibit A of Resolution No. 98-33; Ratifying any Additional Amendments to Exhibit A of Resolution No. OCSD 98-33; and Ratifying that All Future Amendments to Exhibit A of Resolution No. OCSD 98-33 be Made by Resolution re Human Resources Policies and Procedures Manual Providing for Classification, Compensation and Other Terms, Conditions, Policies and Procedures Governing District Employment Consideration of items deleted from Consent Calendar, if any. (13) ACTION ITEMS (a-e) a. FAHR99-86: 1) Approve plan to restructure and modernize the District's existing Certificates of Participation long term borrowings; and 2) Authorize the General Manager to execute professional service agreements with PaineWebber, Inc. and Orrick, Herrington & Sutcliffe to implement the COP restructuring plan. (Steve Kozak —10 minutes) b. FAHR99-87: Receive and file the District's Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 1999, prepared by staff and audited by Moreland and Associates, Certified Public Accountants. (Mike White and Mike Moreland - 15 minutes) C. FAHR99-88: Review of Internal Controls over Payroll, Cash Receipts, Cash Disbursements, and Treasury Management (Mike White —10 minutes) d. FAHR99-89: Adopt Resolution No. OCSD 99-_, Establishing Policies and Procedures for the Award of Purchase Orders and Contracts; Award of Public Works Project Contracts; Award of Professional Services Contracts; Delegation of Authority to Implement Said Policies and Procedures; and Repealing Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-22, and OCSD 98-43. (Gary Streed, David Ludwin and Marc Dubois — 20 minutes) 3 November 10, 1999 e. FAHR99-90: Approve Ordinance No. OCSD-11, Adopting Capital Facilities Capacity Charges and Repealing Ordinance No. OCSD-09. (Tom Woodruff —15 minutes) (14) INFORMATIONAL PRESENTATIONS (15) OTHER BUSINESS COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY (16) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT (17) FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for December 8, 1999, at 5 p.m. (18) CLOSED SESSION uuring ine course or 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 these subjects, the minutes will reflect all required disclosures of information. A. Convene in closed session. 1. Confer with General Counsel re Colich Brothers, Inc. v. OCSD, Orange County Superior Court Case No. 806799 (Government Code Section 54956.9). 2. Confer with District's Labor Negotiator (Government Code Section 54957.6). B. Reconvene in regular session. C. Consideration of action, if any, on matters considered in closed session. (19) ADJOURNMENT November 10, 1999 Notice To Committee Members: For any questions on the agenda or 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: Thomas Saltarelli (949) 833-9200 Committee Secretary: Penny Kyle (714) 593-7130 k, November 3, 1999 ... AHR. COM IIIITTE&.. 1�IQ i 9 item: Actiol i December Quarterly Investment Program Report Information December 2000-01 Budget Assumptions and Fiscal Policies Action December Initiate Selection of Financial Auditors Action January No meeting anticipated February 1999-00 Mid -Year Operational and Financial Report Action February 2000-01 CIP Budget Status Report Information February General Manager's Approved Purchases Report Action February Quarterly Investment Program Report Information February Update of Human Resources Policies & Procedures Action March 2000-01 Budget Status Report Information March 2000-01 User Fee and Connection Fee Report Action March Initiate Selection of Finance Team for COPs Action CSDOC • P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 (714) 962-2411 MINUTES OF FINANCE ADMINISTRATION AND HUMAN RESOURCES C MMITTEE MEETING Orange County Sanitation District Wednesday, October 13, 1999, 5 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on October 13, 1999 at 5 p.m., in the District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: FAHR COMMITTEE MEMBERS: Directors Present: Thomas Saltarelli, Chair Mark Leyes, Vice Chair Shawn Boyd John M. Gullixson Shirley McCracken Peer Swan, Board Vice Chair John J. Collins, Past Board Chair Directors Absent: Jan Debay, Board Chair Mark A. Murphy (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. OTHERS PRESENT: Thomas Woodruff, General Counsel Don Hughes Toby Weissert Dan Cassidy Gerald Nichols John Newham Dave Briney STAFF PRESENT: Blake Anderson, Assistant General Manager Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Robert Ghirelli, Director of Technical Services Mike White, Controller Steve Kozak, Financial Manager Lisa Tomko, Human Resources Manager Dawn McKinley, Sr. Human Resources Analyst Greg Mathews, Assistant to General Manager Marc Dubois, Purchasing Manager Laurie Bluestein, Communications Action Team Penny Kyle, Committee Secretary Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 October 13, 1999 (4) RECEIVE FILE AND APPROVE MINUTES OF PREVIOUS MEETING It was moved, seconded and duly carried to approve the minutes of the September 8, 1999 Finance, Administration and Human Resources Committee meeting, as drafted. (5) REPORT OF THE COMMITTEE CHAIR The Committee Chair had no report. (6) REPORT OF THE GENERAL MANAGER The General Manager was not present. (7) REPORT OF ASSISTANT GENERAL MANAGER Blake Anderson updated the members on the actions taken by the Kern County Board of Supervisors on the Biosolids Ordinance. The Supervisors voted 5-0 to proceed with the biosolids ordinance, which bans Class B biosolids in three years on agricultural land in the unincorporated portions of Kern County imposes road fees and provides for setbacks from groundwater, neighbors and schools. They also filed a negative declaration in accordance with the California Environmental Quality Act with respect to any environmental impacts of the ordinance adoption Staff and General Counsel are preparing to file a challenge to the CEQA action and to the ordinance itself. The Board of Directors will be asked to authorize the filings at its next meeting (8) REPORT OF DIRECTOR OF FINANCE Director of Finance Gary Streed referred to the handouts for the Directors that evening. A revised table was provided for Item 13(a) — Delegation of Authority, a redlined copy of proposed Ordinance No. OCSD-11, Item 13(b), and copies of letters from the Yorba Linda Water District regarding Item 13(d). (9) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources had no report. (10) REPORT OF DIRECTOR OF COMMUNICATIONS The Director of Communications reported that the District's Orange County Fair Program was the recipient of the City -County Communications and Marketing Association's (3CMA) Silver Circle Award for "Most Creative Public Outreach Program With Least Dollars Spent". (11) REPORT OF GENERAL COUNSEL General Counsel gave the Directors an update on the OCIP's response to the request for additional legal fees from attorneys representing the County on the bankruptcy issue. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 October 13, 1999 (11-1) REPORT OF DIRECTOR OF TECHNICAL SERVICES Director of Technical Services Bob Ghirelli gave an update to the Directors regarding various options to manage Class A and B biosolids and possibility of purchasing land in Kings County and Kern County. (12) CONSENT CALENDAR ITEMS (Items a-e) a. FAHR99-71: Receive and file Treasurer's Report for the month of September 1999: 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. b. FAHR99-72: Receive and file Employment Status Report as of September21, 1999. C. FAHR99-73: Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR99-74: Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with District's purchasing policies. e. FAHR99-75: Receive and file information related to District costs incurred for Huntington Beach Closure Project, Subledger #09810318. END OF CONSENT CALENDAR Motion: Moved, seconded and duly carried to approve the recommended actions for items specified as 12(a) through 12(e) under Consent Calendar. (13) ACTION ITEMS (Items a-e) a. FAHR99-76: Adopt Resolution No. OCSD 99-_, Establishing Policies and Procedures for the Award of Purchase Orders and Contracts; Award of Public Works Project Contracts; Award of Professional Services Contracts; Delegation of Authority to Implement Said Policies and Procedures; and Repealing Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-22, and OCSD 98-43. The Directors entered into a lengthy discussion and asked questions of staff. Motion: Moved, seconded and duly carried to continue this item to the November 10 AFAF HR meeting and request staff to report on internal control process as it relates to the issuance of professional services agreements. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 4 October 13, 1999 b. FAHR99-77: Ratify the decision of the General Manager and authorize him to waive the Capital Facilities Capacity Charge (CFCC), pursuant to District's Ordinance No. OCSD99-01, Section 305.6, regarding issuance of the Special Purpose Discharge Permits to the City of Huntington Beach and the County of Orange to allow urban runoff to be discharged to the District's wastewater system for a one-year period effective November 1, 1999. Motion: Moved, seconded and duly carried to approve staffs recommendation. C. FAHR99-78: Adopt Resolution No. OCSD 99-_, Amending Human Resources Policies and Procedures, Resolution No. OCSD 98-33 Relating tot) Adjust the Assistant General Managers pay range (E20) maximum from $136,680 to $148,836; 2) Move the Director of Information Technology classification from pay range E17 ($75,876-$119,784) to pay range E18 ($85,992-$139,464); 3) Move the Warehouse Supervisor classification from pay range E4 ($43,248-$61,236) to pay range E9 ($55,212-$78,156); 4) Move the Contracts & Purchasing Supervisor classification from pay range E9 ($55,212-$78,156) to pay range E11 ($60,828- $86,064); 5) Create Contracts Specialist classification at pay range E2 ($39,252- $55,488); 6) Create Contracts Administrator classification at pay range E7 ($50,064-$70,848); 7) Reinstate the Safety and Emergency Response Specialist classification at pay range E8 ($52,500-$74,292); and 8) Create Information Technology Strategic Implementation Leader classification at pay range El ($60,828-$86,064). Motion: Moved, seconded and duly carried to approve staffs recommendation. Director Gullixson also requested that staff provide a listing of all employees wages and benefits. d. FAHR99-79: Director's request to reconsider District's Policy regarding Refund and Credit for Sanitary Sewer Service Charges. The Directors entered into a discussion regarding the legality of extending the time frame in which property owners could request a refund of user fees erroneously paid in previous years. Director Gullixson referred the Directors to copies of letters from Yorba Linda Water District that were provided that evening. Motion: Moved, seconded and duly carried to form an Ad Hoc Committee to do further study on the District's current policy of refund of user fees and the legality of extending the time frame in which property owners could request a refund of those user fees paid erroneously Minutes of the Finance, Administration and Human Resources Committee Meeting Page 5 October 13, 1999 e. FAHR99-80: Proposed Ordinance Revisions for Capital Facilities Capacity Charges General Counsel gave a brief report regarding the need to incorporate the revisions to Ordinance No. OCSD99-09. The intent of the ordinance when adopted was to have existing dischargers only pay an additional capital facilities capacity charge (CFCC) at that time when they expanded their use or facility and increased their discharge of flow, BOD or suspended solids. A revision of the ordinance is deemed necessary to clarify certain ambiguities. Motion: Moved, seconded and duly carried to include proposed ordinance revisions for capital facilities capacity charges in proposed Ordinance No. OCSD99-11. (14) INFORMATION PRESENTATIONS a. FAHR99-81: State of the District — Employee Audit Director of Communications Michelle Tuchman gave a brief report on a survey of employees completed each year to track changes in employee morale, attitude and perceptions, and to determine the effectiveness of the District's existing communications programs. Directors requested that in the future the title of the report not use the word audit. (15) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were no supplemental agenda items. (16) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (17) CONSIDERATION OF UPCOMING MEETINGS The next FAHR Committee meeting is scheduled for November 10, 1999 at 5 p.m. (18) CLOSED SESSION The Chair reported to the Committee the need for a Closed Session, as authorized by Government Code Section 54957.6, to discuss and consider the items that are specified as Item 18(A)(1) on the published Agenda. The Committee convened in closed session at 7:02 p.m. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 6 October 13, 1999 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 reportable action was taken re Agenda Item No. 18(a)(1). At 7:29 p.m., the Committee reconvened in regular session. (20) ADJOURNMENT The Chair declared the meeting adjourned at approximately 8:00 p.m Submitted by: , Penny Kyle FAHR Committe ecretary H.Iwp.dta%agenda%FAHRIFahr99199mins1101399 FAHR MKdoc FAHR COMMITTEE AGENDA REPORT Meeting Date 11/10/98 To Dir. 11/1/17/99 Item Number Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: FINANCIAL AND OPERATIONAL REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 1999 GENERAL MANAGER'S RECOMMENDATION Receive and file the 1999-00 Financial and Operational Report for the First Quarter ended September 30, 1999. SUMMARY Attached in a separately bound document is the District's First Quarter Financial and Operational Report for the period ended September 30, 1999. This report is a consolidation of both the financial and operational accomplishments of the District through the first quarter of the 1999-00 fiscal year. Contained within the First Quarter Financial Report and Operational Report are budget summary reviews of the Joint Operating & Working Capital Funds, the Capital Outlay Revolving Fund, individual Revenue Areas, and the self-insurance funds. Also contained within this report is the status of the divisional performance objectives and workplan milestones identified in the 1999-00 Approved Budget and Strategic Goals Workplan. As indicated within the Overview Section of this report, 27.29 percent, or $12,009,000 of the 1999-00 net joint operating budget of $44.0 million has been expended. Net costs have increased 14.94 percent in comparison with the same period last year primarily due to the unexpected cost of the Huntington Beach Closure totaling $750,800. Excluding the Huntington Beach Closure cost, net joint operating expenses would be at 25.6 percent of budget. The total cost per million gallons at September 30, 1999 is $544.26 based on flows of 23,236.07 million gallons. This is $62.02, or 12.9 percent above the budgeted cost per million gallons of $482.24. This overage is due in part to expenditures being slightly high at 27.29 percent, but mostly due to the shortfall in flows which are 4.06 percent below the budgeted amount of 250 million gallons per day. Excluding the Huntington Beach Closure cost would reduce the cost per million gallons to $510.23, or 5.8 percent above budget. H:\wp.dta\fin\220\white\FAHR\99-001 QTRrptAIT.doc Revised: 8120/98 Page 1 PROJECT/CONTRACT COST SUMMARY N/A BUDGETIMPACT ❑ This item has been budgeted. ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ❑ Not applicable (information item) ADDITIONAL INFORMATION None. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. 1999-00 Financial and Operational Report for the Quarter Ended September 30, 1999 %VadonWatal lwp.dtalfinU201white%FAHR\99-001 QTRrptAlT.doc Revised: 8120198 Page 2 FAHR COMMITTEE AGENDA REPORT Meeting Date 11/10/99 To Bd. ofDir. N/A Item Number. Al Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: CERTIFICATES OF PARTICIPATION (COP) MONTHLY REPORT — OCTOBER 1999 GENERAL MANAGER'S RECOMMENDATION Receive and file Certificates of Participation (COP) Monthly Report for the month of October 1999. 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 "B" COPs have been refunded and the 1992 Refunding COPs have always been remarketed by PaineWebber in a weekly mode. PROJECT/CONTRACT COST SUMMARY None. BUDGETIMPACT ❑ This item has been budgeted. ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ADDITIONAL INFORMATION For the month of October 1999, graphical and tabular reports are attached. The first graph entitled, "OCSD 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." H:\wp dial iin1210%cranelFAHR%Fahr991NrnACOPRII-9g.doc Revised: 1/5/98 Page 1 The second bar chart entitled, "Comparative Daily COP Rate History Report," shows the performance of the District's Daily Rate COPs as compared to a composite index rate, which represents the average rate of six similar variable rate daily reset borrowings. The third bar chart entitled, "COP Rate History, Comparison of Highest & Lowest Rates," compares the performance (monthly average interest rate) of the District's Daily Rate COPs with the highest and lowest monthly average rates from among six similar variable rate daily reset COPs. The table entitled, "COP Rate History, Comparison of Monthly Averages," shows the monthly variable interest rate performance of the District's 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 liquidity requirements. The rates decline to prior levels immediately in the following month. Staff maintains continuous rate monitoring and ongoing dialog with the remarketing agents to keep the Committee fully informed about developments in the program as they occur and at each meeting. ALTERNATIVES None. CEQA FINDINGS None. ATTACHMENTS 1. Graph - OCSD COP Daily Rate History Report 2. Graph — Comparative Daily COP Rate History Report 3. Graph - COP Rate History, Comparison of Highest & Lowest Rates 4. Tabular - COP Rate History, Comparison of Monthly Averages GGS:SK:lc H:\wp dfa\ in\21ftrane\FAHR\Fahr98\Nov\COPR11-99 doc Revised: 1/5W Page 2 66-100-OZ 66-430-90 66-deS-ZZ 66-deS-80 66-6nH-SZ 66-6nV-4 � 66-Inr-8Z a 66-Inr-n `0 66-unr-0g �o 66-unr-n 66-unr-ZO 66-AL'W-6� 66-ABW-S0 6s jdd-6Z �Q 66 jdV-10 c� aQ 66 JBW-VZ { 66-J8W-06 66-gazl-VZ 66-gad-0 b 66-U8r-LZ 66-uL,r-u 86-Oaa-OE 86-080-9 6 86-Daa-ZO 86-AO N-8 6 86-AON-VO 0 O 0 W I-- Q a 2 a O O O O O O (O LO et 66 '130 66 'deg 66 '6ny 66 'Inf x w 0 66'unr w CD O a 2 O 66 'ABIN 0 66 'jdy 0 co U 66 'JeW 66 'qa4 66'uer 86 'Oaa 86 'AON O O O O O O O O W m N r O 1.- W 31va p z m c c a 0 U T W v m U C co C LL CD m 0 N N N C w io v m U X m a 1 0 z n � � I ......................................... 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EL Y a) LO m M M O U m d O j 0) m� 0 1n y — ti � 00 W M M w) w N )- — c M t co ` d a) 0 a) m 'm d 0) O 00 N (O 00 Kl N Ci 00 O O N Cl) N N N N c+) M N N N M O N co N (p 00 Co 0J Co eis m ' NCD 0�0 6e- 64 r- N y b9 ,o a) m 07 0 L C7 0 � 0O Q N O O w't O to o o M O y v7 N N C y y sF N N co O 0) •- 00 M 1� 0o M M M 00 CA O Go C _ w O O C N M N N N N M M N N N N 69 Q m E N cl 0 a) a) X a) (O M M to C y co 0) o) 0) v7 'E J W 'C O m y v7 y N .� .� .O C- C2 > O N co co CD m W CD M cn CD cn cn m W H O O O O O O O O m 01 0) O i i i i i' i i i i > 0 �. �•• >. Z w Z(a 0 0 0 0 0) W CO 0 C-0 C— O) a 1� q Z D LL Q �' Q Co O O a C— 0000 , 0) UA N Q U. 0 M U Q ; U � � � � � o w 0 � aa � 92 J C Z 0: as oN �~ aZ �w ) a wa C O V7 m a E 0 0 u t-*i FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Mike Peterman, Director of Human Resources Originator: Lisa Tomko, Manager, Human Resources Meeting Date To A. Bds. 11/10/99 11/17/99 A em Number Item Number 4-5 SUBJECT: CHANGES AND ADDITIONS TO HUMAN RESOURCES POLICIES AND PROCEDURES AS AUTHORIZED BY RESOLUTION 98-33 GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 99-XX implementing the attached changes and additions to the existing Human Resources policies and procedures manual. SUMMARY Human Resources policies and procedures are amended two times each calendar year. The attached policies are routine updates to maintain consistent language with the Memorandums of Understanding (MOU) or to explain procedures more clearly. Copies of all policies affected are attached. Additional language is highlighted in gray; deleted language is lined through. PROJECT/CONTRACT COST SUMMARY None BUDGET IMPACT ❑ This item has been budgeted. ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) HAwp.dta\hrbpen\lomkoMR - P&P Update OcW.doc Page 1 ADDITIONAL INFORMATION Policy Number And Subject C10.00 —Classifications, Positions, Policy changed to reflect Salary Ranges and Wages Pay for Performance Merit Matrix for Exempt Employees. C20.00 — Compensation C30.00 — Appraisal of Performance D50.00 - Insurance Policy From To Revision of "Exhibit A — Salary Ranges" and clarification of pay for performance per the SPMT Policy remains the Change in wording to same. Sections 5.6.3.2 and 5.6.4.3 4.3 Professional, 4.3 Professional, Supervisory, Supervisory, Management Management and EMT and EMT employees will employees will receive a receive a performance performance appraisal appraisal prior to any prior to any salary salary adjustment. adjustment or merit bonus. Reason For Change Changes per the SPMT Negotiations. i Clarification of salary adjustments for Drobationary emDlovees. Remove the words "or merit bonus". Policy remains the Additional language under To clarify that the District same. 5.5 Dental and 6.1 provides insurance for its Exceptions to exclude non- employees only and does employees. not include independent Professional employees contractors. 1560.00 — Benefits Option Plan (BOP) 5.1 Professional Provision negotiated in the employees will receive $750 annually. will receive $1, 000 annually. SPMT contract. Clarify the past practice for 6.1 Add language probationary employees. regarding employees on nrnho4inn D90-00 — Tuition Reimbursement i —Tuition Assistance Program F80.00 — Workplace Violence and Workplace Violence Weapons Policy Policy. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS Tuition Reimbursement Replaces Tuition Program II Assistance Policv Workplace Violence and Include the MOU language Weapons Policy. regarding weapons in the policy. 1. Policy C10.00 Classifications, Positions, Salary Ranges and Wages 2. Policy C20.00 Compensation 3. Policy C30.00 Appraisal of Performance 4. Policy D50.00 Insurance 5. Policy D60.00 Benefits Option Plan 6. Policy D90.00 Tuition Reimbursement Program 7. Policy F80.00 Workplace Violence and Weapons Policy H:\wp.dta\hr\open\tomkol\AR - P&P Update NovMdoc Page 2 Orange County Policy Number: C10.00 Effective Date: November 17,1999 Sanitation District Subject: CLASSIFICATIONS, Supersedes: December 9, 1998 POSITIONS, SALARY RANGES AND WAGES Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for use in the administration of the Districts' compensation programs. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 All Districts' employees. 3.0 DEFINITIONS Classifications are groups of positions, regardless of location, which are alike enough in duties and responsibilities to be called by the same descriptive title, to be given the same pay scale under similar conditions, and to require substantially the same qualifications. Salary Ranges are the range of pay rates, from minimum to maximum, set for a pay grade or class. 4.0 POLICY 4.1 The Districts' Compensation Program provides for the establishment of a wage and benefit structure through the Meet and Confer process that a'�ews4D'D4sMcts� Fga-Fg-r+t employees to effectively compete in the labor market and to retain present employees through an internally consistent measure of relative job worth and personal merit. Every position is assigned to a salary grade based upon the duties and responsibilities of that position and the comparative market value of that job function. Comparisons are most generally made with organizations of similar size and engaged in similar occupational pursuits within the geographic area of potential recruitment. The basic salary ranges are set forth on Exhibit A. NOW � i ET.ET�T.TT1� t e .� L. .+. _ Page 1 Fi4rt-he,-a-.ssig•nq;epA_e�-} iv ia ari b�fR the top quahl1a of ' e pt--mngss isA_ i � �'n%_nernen Z,�,f e3 the employees ;t,Executive Ma r.� 4.3 Employees are awarded merit increases based upon their performance, as determined by the performance evaluation program, and the position of their salary within the pay range. The Merit Matrix is the tool used to determine the actual amount of merit increase. In addition, employees in the Supervisory and Professional Group who at least meet expectations receive annual Cost of Living Adjustments (COLA) to keep employees' salaries at market. The amount of the COLA is based on the Consumer Price Index (CPI, All -Urban Consumers -LA, Riverside, Orange County) for the month of May and is distributed as a base - building increase. 4.4 Employees in the Executive Management and Management Groups are awarded merit increases based upon their performance, as determined by the performance evaluation program, and the position of their salary relative to the external market. External market rates are determined through the use of salary surreys. The merit increase may be distributed as base building or non -base building. 4.5 The General Manager is authorized to employ and assign persons as needed to occupy budgeted positions and to exercise supervision over all persons in accordance with the provisions of this policy and to terminate, for cause, the employment of any regular full time employee employed under these provisions. All other employees, e.g., probationary, part-time, and limited term/temporary and contract may be terminated at the Districts' sole discretion. 4.6 The General Manager is also authorized to employ Executive Management employees on an "at -will" basis. Such status shall be memorialized by a written agreement signed by the General Manager and the Executive Manager, acknowledging that the Executive Manager shall serve at the pleasure of the General Manager. Any Executive Management employee so employed on the date of adoption of this policy, who has not signed an "at -will" agreement may voluntarily elect to do so, but may not be required to do so. 4.7 Notwithstanding any other provisions of this policy or any prior Board action, the General Manager is authorized to periodically adjust the rate of compensation of Executive Management employees who have signed "at -will" agreements so long as no adjustment exceeds the compensation permitted by the applicable salary range established by the Joint Boards of Directors. 4.8 Employees who believe their position is not properly classified may request a classification study of their position through their Department Head. Classification studies shall only be conducted twice a year in November and May. 4.8.1 Classification study requests should be submitted to Human Resources no later than October 1& for the November cycle and no later than April 101h for the May cycle. 4.8.2 All classification study findings regarding existing classifications are subject to approval by the General Manager; findings recommending new job classification titles or the reclassification of an existing classification to a different pay range are subject to approval by the Districts' Boards of Directors. Page 2 4.9 The D'stfists aFe-goveFRBd by the provisions of the Federal F:aiF Labor Stand ar4s_A'_L "wI.SA", and r witl�rr the Ex utjnd AA•sSups i msa and-P+�Ytt ;y fBRov^rr c t the F- F9ifFS �« r-L&A. 4.10 The District shall provide an investment incentive salary to the employees within the classifications and in the amounts, as set forth in Section 4.8.1, which amounts are based on a percentage of salary equal to the amount previously paid to designated employees pursuant to District Policy No. C150.00, Section 7.1, effective October 22, 1997, and repealed April 22, 1998. 4.10.1 The percentage of base salary amounts are as follows: Executive management — 6% (up to a maximum IRS amount) Division management and supervisor — 4% Professional and confidential — 3% 5.0 PROCEDURE 5.1 Employees on the Five -Step Pay Plan 5.1.1 New Employees. Employees who successfully complete their Initial Probationary Period and are recommended for continued employment are eligible for consideration of a salary adjustment of up to one step (5.5%) effective on the first day of the pay period following completion of the Initial Probationary Period. The Salary Review date for subsequent annual reviews is established on the first day of a pay period following 26 weeks of continuous service and satisfactory completion of probation. 5.1.2 Annual Merit Increase. Employees who are not at the top of the salary range for their classification are eligible for consideration of an annual salary adjustment of up to one step (5.5%) on their Salary Review date, provided their performance fully meets expectations. 5.1.3 Promotional Increase. Employees who earn a promotion are entitled to a promotional increase of 5.5%, or to the base of the new range, whichever is greater, upon the effective date of the promotion. If an employee has not successfully completed their Promotional Probationary Period on their Salary Review date, any adjustment resulting from that annual review will be delayed until such time as the probationary period is completed. 5.2 Executive Management, Management, Supervisory and Professional Group Employees 5.2.1 New Employees. Employees who are hired into Executive Management, Management, Supervisory and Professional Group positions with "exempt" salary ranges shall be offered a salary at or near the minimum of the range unless their level of background, expertise or prior earnings result in a requirement for a salary greater than the minimum. The determination of an appropriate salary should also consider relationships to other employees in the same classification and to employees supervised, if any. Page 3 5.2.1.1 Employees in "exempt" range classifications serve a Probationary Period of six months and receive a comprehensive performance evaluation at the end of that period. Employees who successfully conclude their probation are eligible for a salary adjustment the subsequent July in accordance with the provisions of the Management Performance Review Program established by separate action of the Boards of Directors as amended from time to time. 5.2.2 Annual Manactement Performance Review Program. An annual performance review is completed for all employees in "exempt" range classifications in accordance with the provisions of the performance evaluation Program. Performance based salary adjustments occur on the first day of the first pay period in July, and n4ay will be prorated based upon the date of hire or promotion, OF las! iReFease in those inSt.,RGO where the-�,ai has not GGncludeei pmbatien as of july . If the employee's probation period has not concluded as of July 1, the performance based salary adjustment is deferred until the following July and will be prorated based on date of hire or promotion. 5.2.3 Promotional Increases. Employees in "exempt" range classifications who earn promotions to a new "exempt" range classification will normally be offered a salary below the midpoint of the range that is commensurate with their level of training and expertise, prior earnings, and in an appropriate relationship to other employees in the same classification and to employees supervised. The new salary will normally represent an increase of at least 5.5 percent. Employees in "exempt" range classifications are not entitled to a salary adjustment at the conclusion of the Promotional Probationary Period. If the employee's probation period has not concluded as of July 1, the performance based salary adjustment is deferred eaflsluded until the following July and will be prorated based on date of promotion. 6.0 EXCEPTIONS 6.1 Sections 5.2.1, 5.2.2 and 5.2.3 do not apply to "at -will" Executive Management Employees. 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 8.1 Exhibit A 8.2 Fair Labor Standards Act Page 4 ATTACHMENT "A" clsmnge 11/17/99 Pay Orange County Sanitation District Classifications By Employee Group Operations and Maintenance (501) Range Minimum Maximum Classifications FLSA Status 2015 44,571 55,504 Lead Electrical Technician Non -Exempt 2015 44,571 55,504 Lead Instrumentation Technician Non -Exempt 2014 42,207 52,549 Electrical Technician II Non -Exempt 2014 42,207 52,549 Instrumentation Technician II Non -Exempt 2013 40,775 50,776 Lead Mechanic Non -Exempt 2013 40,775 50,776 Pump Power Operator Non -Exempt 2013 40,775 50,776 Senior Plant Operator Non -Exempt 2012 41,812 52,060 Lead Collection Facilities Worker Non -Exempt 2012 41,812 52,060 Lead Worker Non -Exempt 2012 41,812 52,060 Machinist Non -Exempt 2011 39,304 48,949 Senior Mechanic Non -Exempt 2011 39,304 48,949 Welder Non -Exempt 2010 39,040 48,612 Equipment Operator Non -Exempt 2009 37,979 47,285 Builder Non -Exempt 2009 37,979 47,285 Electrical Technician I Non -Exempt 2009 37,979 47,285 Instrumentation Technician I Non -Exempt 2008 37,737 46,973 Plant Operator Non -Exempt 2007 34,505 42,969 Electrical Maintenance Worker Non -Exempt 2007 34,505 42,969 Instrumentation Maintenance Worker Non -Exempt 2007 34,505 42,969 Painter Non -Exempt 2007 34,505 42,969 Senior Maintenance Worker Non -Exempt 2007 34,505 42,969 Senior Collection Facilities Worker Non -Exempt 2006 33,590 41,812 Mechanic Non -Exempt 2005 31,348 39,040 Collection Facilities Worker 11 Non -Exempt 2005 31,348 39,040 Maintenance Worker Non -Exempt 2004 30,938 38,509 Operator In Training Non -Exempt 2003 29,875 37,207 Groundskeeper Non -Exempt 2002 29,490 36,700 Control Center Clerk Non -Exempt 2001 24,184 30,093 Collection Facilities Worker I Non -Exempt 2000 22,882 28,502 Helper Non -Exempt Pay Orange County Sanitation District Classifications By Employee Group Administrative and Clerical Exhibit A iange Minimum Maximum Classifications FLSA Status 1019 44,680 55,628 Information Services Technician III Non -Exempt 1017 41,714 51,940 Financial Technician Non -Exempt 1015 40,606 50,540 Graphics Coordinator Non -Exempt 1013 38,436 47,840 Senior Storeskeeper Non -Exempt 1012 38,933 48,476 Administrative Assistant Non -Exempt 1011 37,906 47,189 Graphics Services Assistant Non -Exempt 1011 37,906 47,189 Information Services Technician II Non -Exempt 1008 34,382 42,800 Information Services Technician I Non -Exempt 1007 33,444 41,644 Secretary Non -Exempt 1004 31,878 39,691 Senior Accounting Clerk Non -Exempt 1004 31,878 39,691 Senior Office Aide Non -Exempt 1003 31,660 39,424 Storeskeeper Non -Exempt 1002 29,370 36,556 Accounting Clerk Non -Exempt 1002 29,370 36,556 Office Aide Non -Exempt 1002 29,370 36,556 Office Specialist Non -Exempt 1001 26,308 32,770 Office Technician Non -Exempt 904 14,468 30,164 Storeskeeper Assistant Non -Exempt 903 14,468 24,812 Technical Services Assistant Non -Exempt derange 11/17/99 Pay Range Minimum 1027 42,551 1012 38,933 1012 38,933 Orange County Sanitation District Classifications By Employee Group Confidential Maximum Classifications FLSA Status 52,978 Executive Assistant II Non -Exempt 48,476 Executive Assistant I Non -Exempt 48,476 Human Resources Assistant Non -Exempt clsrenge 11/17/99 Orange County Sanitation District Classifications By Employee Group Executive Management Pay ange I Minimum Maximum Classifications FLSA Status E27 $154,596 $154,596 General Manager Exempt E20 $95,676 $148,836 Assistant General Manager Exempt E19 $87,180 $139,980 Director of Engineering Exempt E19 $87,180 $139,980 Director of Operations & Maintenance Exempt E19 $87,180 $139,980 Director of General Services Administration Exempt E19 $87,180 $139,980 Director of Technical Services Exempt E18 $85,992 $139,464 Director of Finance Exempt E18 $85,992 $139,464 Director of Information Technology Exempt E17 $75,876 $119,784 Director of Human Resources Exempt E13 $67,128 $94,932 Director of Communications Exempt clsrange 11/17/99 Orange County Sanitation District Classifications By Employee Group Engineering Pay lange I Minimum Maximum Classifications FLSA Status 1025 49,866 62,090 Senior Construction Inspector Non -Exempt 1023 47,526 59,174 Engineering Associate Non -Exempt 1020 45,621 56,786 Construction Inspector Non -Exempt 1015 40,606 50,540 Engineer Aide III Non -Exempt 1009 36,893 45,935 Engineering Aide II Non -Exempt 1006 33,228 41,355 Engineering Aide I Non -Exempt clsrange 11117/99 Orange County Sanitation District Classifications By Employee Group Management Pay Range Minimum Maximum Classifications FLSA Status E16 $77,688 $109,812 Construction Manager Exempt E16 $77,688 $109,812 Engineering Manager Exempt E16 $77,688 $109,812 Environmental Compliance & Monitoring Manager Exempt E16 $77,688 $109,812 Laboratory Manager Exempt E16 $77,688 $109,812 Source Control Manager Exempt E15 $73,956 $104,616 Controller Exempt E15 $73,956 $104,616 Financial Manager Exempt E15 $73,956 $104,616 Plant Automation Manager Exempt E15 $73,956 $104,616 Contracts & Purchasing Manager Exempt E13 $67,128 $94,932 Accounting Manager Exempt E13 $67,128 $94,932 Safety/Emergency Response Manager Exempt E13 $67,128 $94,932 Maintenance Manager Exempt E13 $67,128 $94,932 Human Resources Manager Exempt E13 $67,128 $94,932 Operations Manager Exempt E13 $67,128 $94,932 Information Technology Manager Exempt dsmnge 11/17/99 Orange County Sanitation District Classifications By Employee Group Professional Pay an a Minimum Maximum Classifications FLSA Status E14 $70,380 $99,600 Chief Scientist Exempt E13 $67,128 $94,932 Assistant to the General Manager Exempt E13 $67,128 $94,932 Senior Engineer Exempt E12 $63,948 $90,468 Senior Scientist Exempt E12 $63,948 $90,468 Senior Regulatory Specialist Exempt E11 $60,828 $86,064 Engineer Exempt Ell $60,828 $86,064 IT Strategic Implementation Leader Exempt E10 $57,852 $81,948 Secretary to the Board of Directors Exempt E9 $55,212 $78,156 Principal Administrative Analyst Exempt E9 $55,212 $78,156 Principal Engineering Associate Exempt E9 $55,212 $78,156 Project Specialist Exempt E9 $55,212 $78,156 Regulatory Specialist Exempt E9 $55,212 $78,156 Scientist Exempt E9 $55,212 $78,156 Principal Accountant Exempt E9 $55,212 $78,156 Principal Financial Analyst Exempt E9 $55,212 $78,156 Senior Human Resources Analyst Exempt E8 $52,500 $74,292 Associate Engineer III Exempt E8 $52,500 $74,292 Principal Environmental Specialist Exempt E8 $52,500 $74,292 Safety & Emergency Response Specialist Exempt E7 $50,064 $70,848 Programmer Analyst Exempt E7 $50,064 $70,848 Computer Hardware Specialist Non -Exempt E7 $50,064 $70,848 Telecommunications Specialist Non -Exempt E7 $50.064 $70,848 Maintenance Planner Exempt E7 $50,064 $70,848 Contracts Administrator Exempt E6 $47,640 $67,392 Principal Laboratory & Research Analyst Exempt E6 $47,640 $67,392 Senior Administrative Analyst Exempt E5 $45,396 $64,212 Associate Engineer II Exempt E5 $45,396 $64,212 Senior Accountant Exempt E5 $45,396 $64,212 Senior Financial Analyst Exempt E5 $45,396 $64,212 Human Resources Analyst Exempt E5 $45,396 $64,212 Senior Environmental Specialist Exempt E4 $43,248 $61,236 Safety Representative Exempt E4 $43,248 $61,236 Programmer Exempt E4 $43,248 $61,236 Senior Buyer Exempt E3 $41,136 $58,260 Associate Engineer I Exempt E2 $39,252 $55,488 Contracts Specialist Exempt E1 $37,284 $52,908 Accountant Exempt E1 $37,284 $52,908 Buyer Exempt El $37,284 $52,908 Financial Analyst Exempt El $37,284 $52,908 Management Analyst Exempt clsmnge 11/17/99 Orange County Sanitation District Classifications By Employee Group Supervisory Pay Range Minimum Maximum Classifications FLSA Status E14 $70,380 $99,600 Engineering Supervisor Exempt E13 $67,128 $94,932 Environmental Management Supervisor Exempt E12 $63,948 $90,468 Laboratory Supervisor Exempt E11 $60,828 $86,064 Senior Operations Supervisor Exempt Ell $60,828 $86,064 Senior Maintenance Supervisor Exempt E11 $60,828 $86,064 Information Technology Supervisor Exempt E11 $60,828 $86,064 Contracts & Purchasing Supervisor Exempt E9 $55,212 $78,156 Maintenance Supervisor Exempt E9 $55,212 $78,156 Operations Supervisor Exempt E9 $55,212 $78,156 Source Control Supervisor Exempt E9 $55,212 $78,156 Supervising Construction Inspector Exempt E9 $55,212 $78,156 Warehouse Supervisor Exempt clsrange 11/17/99 Pay Orange County Sanitation District Classifications By Employee Group Technical Services Lange I Minimum Maximum Classifications FLSA Status 1018 43,476 54,134 Environmental Specialist II Non -Exempt 1018 43,476 54,134 Source Control Inspector II Non -Exempt 1018 43,476 54,134 Senior Laboratory Analyst Non -Exempt 1010 37,134 46,249 Environmental Specialist I Non -Exempt 1010 37,134 46,249 Laboratory Analyst Non -Exempt 1010 37,134 46,249 Source Control Inspector I Non -Exempt 1005 32,552 40,533 Source Control Technician Non -Exempt clamnge 11/17/99 Orange County Sanitation District Classifications By Employee Group "Non -Regular" Part Time Pay ange Minimum Maximum Classifications I FLSA Status 905 18,720 33,280 Intern Non -Exempt Orange County Sanitation District Policy Number: C20.00 Effective Date: November 17, 1999 Subject: COMPENSATION Supersedes: October 22, 1997 Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish and maintain uniform compensation standards for all Districts' employees. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all Districts' employees, as specified herein. 3.0 DEFINITIONS 4.0 POLICY 4.1 It is the policy of the Districts to apply uniform compensation standards. The Districts' Compensation Program provides for the establishment of a wage and benefit structure through the Meet and Confer process that allows Districts' management to effectively compete in the labor market and to retain present employees through an internally consistent measure of relative job worth and personal merit. 5.0 PROCEDURE 5.1 Exempt Employees 5.1.1 Exempt employees shall be compensated at a monthly rate within the salary range authorized for the classification in which they are employed. 5.2 Non-exempt Employees 5.2.1 Non-exempt employees shall be compensated at an hourly rate within the salary range authorized for the classification in which they are employed. Page 1 5.3 New Employees 5.3.1 New employees in classifications within employee bargaining units other than the Professional, Supervisory, Executive Management and Management Groups who successfully complete their Probationary Period and are recommended for continued employment as regular employees, are eligible for consideration of a salary adjustment of up to one step (5.5%). 5.3.1.1 This adjustment is effective on the first day of the pay period that follows the date of completion of the Probationary Period (normally 26 weeks). The salary review date for subsequent annual reviews is the first day of the first pay period following 26 weeks of continuous service and satisfactory completion of probation. 5.3.1.2 The Salary Review date for subsequent annual reviews is the first day of that pay period following the date when probation was successfully completed. 5.4 Reviews 5.4.1 An employee in a group other than Professional, Supervisory and Executive Management and Management who is not at the top of the salary range for their position is eligible for consideration of an annual salary adjustment of up to one step (5.5%) on their Salary Review date, provided their performance satisfactorily meets expectations. 5.4.1.1 Annual performance reviews shall be completed on a form provided by the Director of Human Resources. 5.5 Promotions 5.5.1 An employee who earns a promotion is entitled to a promotional increase of at least 5.5%, or to the base of the new range, which ever is greater, upon the effective date of the promotion. 5.5.1.1 If an employee has not successfully completed the promotional probationary period on their salary review date, any adjustment resulting from that annual review will be delayed until such time as the probationary period is completed. 5.5.1.2 A new salary review date is established for any promotion to a classification not in the Professional, Supervisory, Executive Management and Management Group. 5.6 E-Range Classifications 5.6.1 An employee hired into Professional, Supervisory, Executive Management and Management Group positions with "exempt" salary ranges shalt be offered a salary at or near the minimum of the range unless their level of background, expertise or prior earnings indicates a need far a salary greater than the minimum. Page 2 5.6.1.1 The determination of an appropriate salary should also consider the relationship of the employee's proposed salary to that of other employees in the same classification and to employees supervised, if any. 5.6.2 Except for "at -will" Executive Management employees, employees in "exempt" range classifications serve a Probationary Period of six months and receive a comprehensive performance evaluation at the end of that period unless otherwise provided in an individual, written employment agreement. 5.6.2.1 An employee who successfully completes probation is eligible for a salary adjustment according to the provisions of the Management Performance Review Program which is in force at the time of the review. 5.6.3 An annual performance review is completed for all employees in "exempt" range classifications according to the provisions of the Management Performance Review Program. 5.6.3.1 Performance -based salary adjustments for these employees occur on the first day of the first pay period in July. 5.6.3.2 Such ,7,ents-m' �a ed based on the date e# dire- .,tfOR1 ^ . t saiapr ig e R th E)So .. � sIaRGeS heFe the .inrlkfid4inl hac. Pat If the employee's probation period has not concluded as of July 1, the performance based salary adjustment is deferred until the following July and will be prorated based on date of hire or promotion. 5.6.4 An employee in "exempt" range classifications who is promoted to a new "exempt" range classification will normally be offered a salary below the midpoint of the range that is commensurate with their level of training and expertise, prior earnings. 5.6.4.1 The promoted employee's salary should be in an appropriate relationship to other employees in the same classification and to employees supervised. 5.6.4.2 The new salary will normally represent an increase of least 5.5 percent, butnot evneed the third quartile of the range fnr the new Glassif irat ion. 5.6.4.3 if theemployee's probation period has ROt .-lrvr ed as 9f� ee6h tifne If the employee's probation period has not concluded as of July 1, the performance based salary adjustment is deferred until the following July and will be prorated based on date of promotion. 5.6.4.4 This section does not apply to "at -will" Executive Management employees. Page 3 5.7 Y-Rating 5.7.1 If the duties and responsibilities of a position are allocated to a lower paid classification as a result of a classification study, the salary of the of the employee in that position shall remain unchanged (Y-rated) according to the following table: Years of Service Term of Y-rate 0-3 One Year 4-5 Two Years 6 - 10 Three Years 11 - 20 Four Years 21 or More Five Years 5.7.2 The Y-rate remains in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary, or until the term of the Y-rate expires. 5.7.2.1 If the Y-rate expires before the employee's salary falls within the range of the new classification, the employee shall be placed on the step of the new range nearest but not more than the Y-rated salary. 5.7.2.2 Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. 5.7.2.3 An employee who requests a voluntary reduction is not entitled to a Y-rate. 5.7.2.4 This section does not apply to "at -will" Executive Management employees. 6.0 EXCEPTIONS 6.1 The General Manager is authorized to offer up to three (3) weeks of annual paid vacation to any prospective Executive Management employee if, in the judgment of the General Manager, such offer is necessary to attract the most qualified candidate. 6.1.1 The General Manager shall annually report all such appointments to the Board Subcommittee having responsibility for personnel matters. 6.1.2 Salary offers beyond the midpoint of a range require prior approval by the General Manager. 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS (Attach salary range exhibits when available) Page 4 Orange County t Sanitation District Policy Number: C30.00 Effective Date: November 17, 1999 Subject: APPRAISAL OF PERFORMANCE Supersedes: October 22, 1997 Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for the appraisal of employee performance. 2.0 ORGANIZATIONAL UNITS AFFECTED 1.1 This policy applies to all current employees regardless of their organizational unit. 2.0 DEFINITIONS 3.0 POLICY 3.1 It is the Districts' policy and the Districts' management philosophy that establishing an effective level of communication that offers consistent and continuing feedback on performance expectations and achievements will provide an environment in which our employees can perform to the best of their abilities. A performance appraisal program has been developed to provide a structure that will support the accomplishment of that goal. Important principles of the program include: 3.1.1 The Districts' overall mission is enhanced by establishing a connection between that mission and individual employees' responsibilities and objectives. 3.1.2 Recognizing employee strengths and identifying areas that may represent opportunities for improvement will affect current performance as well as enhance career potential. 3.1.3 Every individual has primary responsibility for their own performance and development. 3.1.4 The key role of the supervisor is to support an employee's efforts to maximize their own contribution and potential. Page 1 4.0 PROCEDURE 4.1 New employees will receive a performance appraisal at the close of their initial probationary period to determine their suitability for continued employment with the Districts. An evaluation should also occur midway through the probationary period to ensure that performance expectations have been properfy communicated and established. This will also offer an opportunity for both the employee and the supervisor to more effectively evaluate the desirability of continuing the employment relationship. 4.2 Employees who earn promotions should similarly receive a performance appraisal at the conclusion of the promotional probationary period. 4.3 An annual performance appraisal will be completed with each employee prior to their anniversary date. Professional, Supervisory, Management and Executive Management employees will receive a performance appraisal prior to any salary adjustment OF rnerq F.OR 5.0 EXCEPTIONS 6.0 PROVISIONS AND CONDITIONS 6.1 Supervisors and managers will be notified by the Human Resources Department of all evaluations that must be completed at least 45 days in advance of the due date. 7.0 RELATED DOCUMENTS Page 2 Orange County - Sanitation District Policy Number: D50.00 Effective Date: October 27, 1999 Subject: INSURANCE Supersedes: May 13, 1998 Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for use in the administration of the District's insurance benefits program. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 All District employees. 3.0 DEFINITIONS 4.0 POLICY 4.1 The District shall provide medical -health insurance coverage through both health maintenance organizations and an indemnity type group health plan, life insurance, and disability insurance for the benefit of full-time employees. 4.2 All insurance coverage shall become effective on the first day of the month following one full month of employment. An open enrollment period shall be held annually in the month of June. 5.0 PLANS - PROGRAMS 5.1 Medical. The District shall contribute 100% of employee only premiums for the medical health plans and shall contribute 80% of the employee +1 dependent and full family premiums. Any change in insurance rates shall be shared equally in same ratio as premiums are currently paid by the District and employees. Before the renewal of any District's sponsored health insurance plan, the parties agree to meet and confer as to the plan. 5.1.1 Any change in insurance rates caused by a carrier after 11-25-96 are subject to the applicable provisions of the various Memoranda of Understanding approved by the Boards of Directors. Page 1 5.2 Life. The District provides term life insurance coverage for most employees. The District shall pay the full premium for term life insurance as established for each employee covered under a Memorandum of Understanding or as otherwise agreed upon. 5.3 Short Term Disability. The District shall provide a non -work related, short-term disability indemnity plan that pays up to a maximum of $336 per week for up to 26 weeks following a fourteen calendar day waiting period. Employees may request to receive prorated sick leave, personal leave or vacation pay to supplement their short term disability payments in an amount such that the sum of both is equal to the employee's regular base pay. 5.4 Long -Term Disabifity. The District offers, at the employee's expense, a non -work related, long-term disability indemnity plan that pays two-thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month, following a 90-day waiting period of continuous disability. The District provides this coverage at the District's expense after five years of employment. 5.5 Dental. The District provides a dental plan for regular, full-time employees and their eligible dependents at no cost for employee -only coverage and $9.00 per month for full family coverage. The bflaRre of the p-��rFcR�Q1- s paid by the lDis##met + 5.5 Vision. The District shall provide a vision insurance plan for regular, full-time employees and their eligible dependents. 5.6 Retiring Employees. The District shall pay, for employees hired prior to July 1, 1988, two and one-half months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District's medical plan. 5.6.1 The District shall enter into an agreement with the Orange County Employee Retirement System (OCERS) to implement the retiree medical health premium offset program established by the County of Orange wherein the cost of health premiums are offset by $10 per month for every year of service up to a maximum of 25 years or $250 per month. 5.7 Workers Compensation Insurance. The District's Workers Compensation program is self -funded and administered by a third party administrator. Workers' Compensation insurance provides coverage for injuries arising out of employment with the District and occurring in the course of employment. 5.8 Reimbursement Account. Section 125 of the Internal Revenue Code permits employees to use pretax dollars to pay for their portion of the cost of benefits under the plan through salary redirection arrangements. The available options are summarized below. For complete information regarding Flexible Spending Accounts employees must refer to the plan booklet available in the Human Resources Department. Participation in this Program does not affect the District's contribution to the Orange County Employees Retirement System. The amount deducted shall then be repaid to the employee through the District's provided Reimbursement Program. Page 2 5.8.1 Group Insurance Premium. Group insurance premiums that are paid by salary redirection can be made on a pretax basis. 5.8.2 Medical Care Reimbursement Account. The purpose of this account is to provide a method through which an employee can accumulate pretax funds in a Medical Care Reimbursement Account for the purposes of reimbursing the employee for payment of health care costs not otherwise covered by the health and medical insurance. 5.8.3 Dependent Care Assistance Account. The purpose of this account is to provide a method through which an employee can accumulate pretax funds in a Dependent Care Assistance Account for the purposes of reimbursing the employee for child care expenses or day care for a disabled dependent. 6.0 EXCEPTIONS 6.1 Contract workers are not entitled to and are ineligible to join or participate in any benefit plans offered to those individuals listed on OCSD's payroll as regular employees. 7.0 PROVISIONS AND CONDITIONS 7.1 No combination of disability or sick leave pay shall result in more than an employee's regular rate of pay. Employees may not receive short-term and long- term disability benefits at the same time. An employee who is otherwise not eligible for District paid long-term disability may purchase such coverage at their own expense. 7.2 In the event the District adds additional optional insurance plans, the District's share of the premium shall be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium shall be the same as for existing insurance plans as set forth above. 8.0 RELATED DOCUMENTS Page 3 Orange County �.p Sanitation District Policy Number: D60.00 Effective Date: October 27, 1999 Subject: BENEFITS OPTION PLAN (BOP) Supersedes: October 22, 1997 Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for administering the Benefits Option Plans (BOP). 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to employees in the Professional, Supervisory, Management and Executive Management Groups. 3.0 DEFINITIONS The Benefits Option Plan is a provision in the District's policies that provides employees in the Professional, Supervisory, Management and Executive Management groups with supplemental income that can be used for a variety of purposes as specified herein. 4.0 POLICY 4.1 It is the District's policy to allow employees in the Professional, Supervisory, Management and Executive Management groups to participate in the BOP in accordance with this policy. 5.0 PROCEDURE 5.1 Employees in the Professional, Supervisory, Management and Executive Management group who have successfully completed their probationary period are entitled to participate in the BOP. Under the provisions of the BOP, Professional employees will receive $750 $1,000 annually, and Supervisors, Management and Executive Management employees will receive $1250 annually to offset the cost of professional licenses, memberships, subscriptions, tuition reimbursement and medical expenses. The Benefits Option Plan will be distributed semi-annually in January and July of each year. 6.0 EXCEPTIONS 6.1 Employees who are within their initial six-month probationary period are not eligible for BOP.. 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 0��,�v 5ANITRrrO� Policy Number: D90.00 G � Q Effective Date: October 22, 1997 _ Orange County n Sanitation District THE 01 Subject: TUITION REIMBURSEMENT Supersedes: Tuition Assistance PROGRAM Approved by: 1.0 PURPOSE This program is designed to encourage self -development of District employees by providing qualifying employees with tuition reimbursement for job -related educational courses at accredited colleges, universities, or other approved institutions provided that such courses are primarily for the purpose of: Increasing capabilities in their present positions within the District Preparing for positions to which the employee could be reasonably expected to advance within the District Updating professional and/or technical capabilities that are pertinent and beneficial to the District 2.0 ORGANIZATIONAL UNITS AFFECTED This policy applies to all District's regular, full-time employees. 3.0 DEFINITIONS 3.1 Qualifying Employees: regular, full-time employees who have completed their initial probationary period. 3.2 Regular Full-time Employees: qualifying employees who regularly work an 80- hour, biweekly pay period. 3.3 Tuition Reimbursement: a reimbursement program of eligible expense for qualifying employees who attend, on their own time, District -approved courses at accredited colleges, universities, or other approved institutions of the employees' choosing. 4.0 POLICY The District will reimburse employees who successfully complete education courses that serve the mission and goals of the District at accredited institutions in compliance with Section 1.0 "PURPOSE," provided that the reimbursement is within the individual maximum and overall limits of the authorized tuition reimbursement budget. 5.0 REQUIREMENTS 5.1 Employees can be reimbursed for the following: • Specific, job -related associate, baccalaureate, and graduate degree programs Page 1 • Specific, job -related courses through accredited colleges or universities • Specific, job -related courses offered through an approved institution of study 5.2 When an employee has completed each pre -approved course with a grade of "C" or better for undergraduate or "B° or better for graduate work, the District will reimburse the employee the cost of tuition, books, and required fees not to exceed $5,250 per calendar year. Examples of eligible and ineligible expenses are: Eligible Expenses • Tuition • Registration fees • Laboratory fees • Parking fees • Required textbook costs • Health fees 6.0 PROCEDURE 6.1 Pre -Approval Process Ineligible Expenses • Application fees Material fees • Travel • Optional student fees • Doctoral dissertation fees Masters thesis fees 6.1.1 Employee seeking tuition reimbursement: 6.1.1.1 Prior to the start of a course or degree program, submits to the Education and Training Division for the semester or quarter, a Tuition Reimbursement Pre -Approval Applicaik:m with Sections 1, 2 and 3 (Manager's Review and Pre -Approval) completed. Note: Although not required, it is advisable to submit the completed application prior to registering for the course or program so that approval can be determined before the employee incurs any expenses. 6.1.1.2 If seeking pre -approval for courses in a degree program, submit a list of approved courses prepared by the school and signed by the employee's advisor at the beginning of the program, Submit this list with the initial Tuition Reimbursement Pre - Approval Application. 6.1.2 The Education and Training Division Manager: 6.1.2.1 Reviews the Tuition Reimbursement Pre -Approval Application. 6.1.2.2 If incomplete, returns the application to the employee with a Status form indicating the date that the employee must correct and return the application to the Education and Training Division. 6.1.2.3 If approved, signs the Tuition Reimbursement Pre -Approval Application and forwards a ropy of the application and a Tuition Reimbursement Application to the employee. 6.1.2.4 If the application is not approved, returns the application to the employee with a Status form indicating the reason(s) for non -approval. Page 2 6.2 Reimbursement Process 6.2.1 Within 60 calendar days following the end of the course(s), the employee submits the Tuition Reimbursement Application with Section 1 completed to the Education and Training Division with the following documents attached: • Official record of final grade • Receipts for tuition and eligible fees paid Receipts for books 6.2.2 The Education and Training Division Manager: 6.2.2.1 Reviews the Tuition Reimbursement Application and attached documentation. 6.2.2.2 If incomplete, returns the application to the employee with a Status form indicating the date that the employee must correct and return the application to the Education and Training Division. 6.2.2.3 If approved, signs the application and forwards the approved application to the Accounting Division and a copy to the employee indicating reimbursement status. 6.2.2.4 If the application is not approved, returns the application to the employee with a Status form indicating the reason(s) for non -approval. 7.0 EXCEPTIONS 7.1 If an employee terminates employment or gives notice of termination prior to the completion of a course, no reimbursement will be made. 7.2 Employees will not be reimbursed for tuition costs covered under Veterans Administration Programs or other government sponsored programs. 7.3 Reimbursement may be authorized whenever the employee's manager and Education and Training Division Manager determine that there is substantial benefit to be derived by the District when an employee takes a course or program that does not meet the requirements of Section 6.1, for example, courses for impacted or transitional employees and/or non-credit courses. 8.0 PROVISIONS AND CONDITIONS 8.1 An employee who receives payments for formal course work through the Tuition Reimbursement Program will be required to reimburse the District if the employee voluntarily leaves the District's employment within two years of completing the course work. The General Manager, under unusual circumstances or on an individual basis, may waive the repayment requirement. 8.2 Reimbursement will be at the discretion of the District provided the employee meets the criteria specified in this policy. Page 3 9.0 RELATED DOCUMENTS 9.1 Fair Labor Standards Act, as amended. 9.2 Sections 127 and 132-J8 of the Internal Revenue Code. Page 4 Orange County Policy Number: F80.00 ` Sanitation District Effective Date: October 27, 1999 Subject: WORKPLACE VIOLENCE AND WEAPONS POLICY 1.0 2.0 3.0 4.0 PURPOSE Supersedes: December 9, 1998 Approved by: 1.1 To promote a safe work environment for all employees. 1.2 To establish and maintain a workplace that is free from violence, threats of violence, harassment, intimidation, and other disruptive behavior. 1.3 To encourage and foster a workplace that is characterized by respect and the use of acceptable conflict resolution techniques. ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all District employees, regardless of their organizational unit, on District property or off site with a District employee. Additionally, all persons who perform any services for the District, regardless of their employment status, are covered by this policy. DEFINITIONS 3.1 Workplace violence includes threats, violent behavior, harassment, intimidation and other disruptive behavior, direct, indirect, implied or actual from any person, and directed toward any person, occurring at a District facility or in connection with the conduct of District business without regard to location. POLICY 4.1 It is the District's policy to provide a safe work environment for its employees. The District is committed to working with its employees to maintain a workplace free from violence, threats of violence, harassment, intimidation, and other disruptive behavior. All employees are responsible for maintaining a safe work environment. 4.1.1 Violence, threats, harassment, intimidation, and other disruptive behavior in the District's workplace will not be tolerated; furthermore, all reports of these types of incidents will be seriously reviewed and will be appropriately resolved. 4.1.2 This policy applies to all incidents involving District employees while they are on duty, on or off plant sites, and incidents involving non -employees perpetrating violence against District employees while they are on duty. 4.2 Available conflict resolution techniques, such as problem solving, grievance procedures and appeals processes, will be used to appropriately resolve conflicts that arise in our workplace. 4.3 The District strictly prohibits persons from possessing weapons including, but not limited to, firearms, explosives, and knives, clubs and incendiary devices on District premises, in District vehicles, in private vehicles parked on District property, and in the possession of District employees while on duty performing District related business assignments. 5.0 PROCEDURE 5.1 Prohibited Conduct 5.1.1 The commission or threat of an act of workplace violence, harassment, intimidation, or other disruptive behavior is prohibited. The following examples of such conduct, while not all-inclusive, provide an indication of the types of behaviors that are considered unacceptable. An employee who displays/exhibits prohibited conduct under this policy with regard to one or more of the [allowing may be subject to disciplinary action, up to and including termination, after consideration of the employee's past performance, prior discipline, length of service and work history: 5.1.1.1 Causing physical injury to another person; 5.1.1.2 Making threatening remarks, whether with intent to harm or in jest; 5.1.1.3 Aggressive, hostile or harassing behavior that creates a reasonable fear of injury to another person or subjects another individual to emotional distress; 5.1.1.4 Intentionally damaging employer property or property of another individual; 5.1.1.5 Possession of a weapon while on District property or while on District business; or, 5.1.1.6 Committing acts motivated by, or related to, sexual harassment or domestic violence. 5.1.1.7 Other acts or threats of violence as determined by the District. 5.1.2 Persons who engage in prohibited conduct may also be subject to legal action by law enforcement authorities. 5.2 Reporting 5.2.1 If the incident involves an emergency and requires the direct intervention of public safety personnel (i.e., law enforcement or emergency medical services), immediately CALL extension 222. 5.2.1.1 Control Center personnel will contact emergency services via 911 and will coordinate the response of public safety personnel. 5.2.2 Any situation involving the commission or threat of violence, harassment, intimidation, other disruptive behavior, possession of a weapon or any other potentially dangerous situation must be promptly reported to a supervisor or the Human Resources Department. 5.3 Risk Reduction Measures 5.3.1 Employees at Risk 5.3.1.1 Employees are expected to exercise good judgement and to notify their supervisor or the Human Resources Department if a co-worker, or other person on District property or business, exhibits behavior that could be a sign of potentially dangerous situations. Such behavior includes, but is not limited to, the following: 5.3.1.1.1 Discussing the use of weapons as a means to perpetrate violence against another or bringing them to the workplace; 5.3.1.1.2 Displaying overt signs of extreme stress, resentment, hostility or anger; 5.3.1.1.3 Making threatening statements or remarks; 5.3.1.1.4 Sudden or significant deterioration in performance; 5.3.1.1.5 Displaying irrational or inappropriate behavior. 5.3.2 Hiring 5.3.2.1 The Human Resources Department takes reasonable measures to conduct background investigations in order to review candidates' backgrounds and to reduce the risk of hiring individuals with a history of violent behavior. 5.3.3 Enforcement 5.3.3.1 Threats, threatening conduct, harassment, or any other act of aggression or violence within the District's work environments will not be tolerated. All reports of these types of incidents will be promptly investigated and will be appropriately resolved. 5.3.3.1.1 Any employee determined to have committed such acts will be subject to disciplinary action, up to and including termination. 5.3.3.1.2 Non -employees engaged in violent acts on District premises will be reported to the proper authorities and fully prosecuted. 6.0 EXCEPTIONS 6.1 Knives traditionally used as tools and having a blade length of three and one-half (31/2) inches or less are only considered weapons when used or displayed in a threatening manner. 7.0 PROVISIONS AND CONDITIONS 7.1 Post in offices. 7.2 Place in the Human Resources Policies and Procedures Manual and on the Intranet. 8.0 RELATED DOCUMENTS 8.1 Policy F10.00, Rules of Conduct 8.2 Policy B30.00, Harassment 8,3- FiFearms n nl the r Pel" 8.4 Memorandum of Understanding for: 8.4.1 SPMT Bargaining Unit 8.4.2 Local 501 Bargaining Unit 8.4.3 OCEA Bargaining Units 8.4.3.1 Administrative and Clerical 8.4.3.2 Engineering 8.4.3.3 Technical Services 8.5 Integrated Emergency Response Plan FAH R COMMITTEE AGENDA REPORT Meeting Date 11/10/99 To Bd. of Dir. 11/17/99 Item Number yxw xl- Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Steve Kozak, Financial Manager SUBJECT: PROPOSAL FOR RESTRUCTURING THE DISTRICT'S EXISTING CERTIFICATES OF PARTICIPATION GENERAL MANAGER'S RECOMMENDATION 1. Approve plan to restructure and modernize the District's existing Certificates of Participation long-term borrowings. 2. Authorize the General Manager to execute professional service agreements with PaineWebber, Inc. and Orrick, Herrington & Sutcliffe to implement the COP restructuring plan. SUMMARY This agenda item reports on the findings of additional efforts to develop and implement improvements to the District's existing variable rate Certificates of Participation (COP) financing program, and prepare for future borrowings in support of the District's Strategic Plan capital improvement program. Adoption of the recommended actions will approve a restructuring plan for the District's existing COP debt issues, and will authorize staff to retain the investment banking firm of PaineWebber, and the bond counsel firm of Orrick, Herrington & Sutcliffe to implement the restructuring plan. PROJECT/CONTRACT COST SUMMARY An estimated $1.4 million in long-term cost savings would be generated by the proposed COP restructuring plan. BUDGETIMPACT ❑ This item has been budgeted. ❑ This item has been budgeted, but there are insufficient funds. ® This item has not been budgeted. However, professional services fees would be reimbursed by cost savings. ❑ Not applicable (information item) ADDITIONAL INFORMATION The District has five series of Certificates of Participation (COPs) comprising a total outstanding par amount of approximately $361 million. The following table describes each COP in detail. H:\wp. dtaVinQ10\crane%FAHR\Fah rMNoACOPRestructudng. doc Revised: &20/9e Page 1 EXISTING COP FINANCING PROGRAM Outstanding R Par Amount " ;::. :: Participating .- i ` DiStCSCts Debt .<: " ;;::. Structure.:.: Interest Rate Mode' Series A $ 83,300,00 1,2,3,5,6,7,11,13,14 Junior Daily Variable Rate Series B 18,695,00 1,2,3,5,6,7,11 Closed Senior Fixed Rate Series C 86,200,00 1,2,3,6,7,11 Junior Daily Variable Rate Series 1992 (Refunding (1) 129,110,00 1,2,3,5,6,7,11 Open Senior Synthetic Fixed Rate (2) Series 1993 Refunding (1) 43,950,00 1,2,3,5,6,7,11 Open Senior Synthetic Fixed Rate (2) Total $361,255,04 'As of November 1, 1999. (1) Series 1992 and 1993 COPs refunded the Series 1986 and a portion of the Series "B" COPs. (2) Variable rate debt swapped to a fixed rate through maturity. The Series 'A" "B," and "C" COPS were issued between 1990 and 1992 to fund a portion of the "2020 VISION" Master Plan capital improvement program. The Series 1992 Refunding COPS refunded the 1986 COPs ($107 million) issued on behalf of District Nos. 1, 2, and 3. The 1992 Refunding COPs also refunded approximately $38.4 million of the Series "B" COPS, issued in 1991. Another $39.7 million of the Series "B" COPS was refunded by the 1993 Refunding COPS. The District's five outstanding COPs are organized into a three-tier lien structure; meaning that there are three different claims on the revenues pledged to fund debt service payments on the COPs. The following table displays the combined debt service cash flows for the District's five COPS through final maturity in FY 2017-18. 40 — 35 — 30 — h 25 c 20 15 10 5 0 DEBT SERVICE STRUCTURE ❑ Closed Sr. Lien (Series B) M Open Sr. Lien (Series'92 &'93) ■ Junior Lien (Series A & C) Fiscal Year End H:\wp.dtaVinQlO%crone%FAHR%Fahr99WoNCOPResbuduring doc Rem: &z0/98 Page 2 With the Strategic Plan capital improvement program requiring approximately $1 billion through FY 2009-10, of which one-half the cost, or $500 million, would be financed through long-term borrowings, the District's existing COP financing program should be restructured to prepare for future "new money" debt issues. The need for modernizing the District's existing debt was highlighted during recent staff efforts to solicit banks for substitution of the Letter of Credit (LOC) for the Series "A" COPs. Discussions with potential providers were complicated by the existing legal documents which date back to 1986, with minor refinements included between 1990 and 1993. In short, Letter of Credit banks expressed limited interest in providing a replacement LOC due to the "several" nature of the Series "A" multi -district credit structure, and the resulting legal complexities contained in the existing COP covenants. Strategy The modernization of the District's existing COP program can be accomplished through a comprehensive refunding and restructuring approach that would re -align the COP legal documents to match the District's consolidated organization structure as one Sanitation District. Under this approach, the rating agencies would view the District as a single credit structure. At the same time, this would not necessarily impact the individual revenue areas within the consolidated District. The plan would include a two-step process: 1) Refund the Series "A," "B," and "C" COPs through a single Refunding COP offering; and 2) Substitute modernized bond documents with the swap providers for the 1992 and 1993 Refunding COPs. The potential benefits to the District from modernizing the existing bond financing documents to correspond with District consolidation include: Strengthen District's credit for request of formal "Aa" category ratings Eliminate or modify need for Letter of Credit replacement in the future * Simplify the multiple lien levels of the COP issues Simplify administration of multiple COP issues Reduce overall borrowing costs Establish foundation for future borrowings to support Strategic Plan improvements Series "A," "B," and "C" COPs The outstanding Series "A" and "C" variable rate COPs, and the Series "B" fixed rate COP would be refunded through a single (approximately $190 million) Variable Rate COP backed by a "Aa" category credit rating of the District. The Series "A" and "C" variable rate COPs represent a junior, or subordinate, lien on pledged debt service revenues, whereas the Series "B" fixed rate COP is a closed senior, or prior, claim on pledged revenues. H:\wp.dtaVinX210tcrane%FAHR%Fah rMN(YACOPRestructuring. doc Revised: 8/20/98 Page 3 The advantages of combining the Series "A," "B," and "C" into a single refunding COP include: Only one disclosure document (Official Statement) would be needed; ■ Annual debt service payments would be levelized; • Reducing borrowing costs by eliminating the Series "A" Letter of Credit; and Simplify lien structure on pledged revenues by eliminating junior and closed senior liens, and issuing new Refunding COPs as senior lien, on parity with the senior lien 1992 and 1993 Refunding COPs. As a senior lien obligation, the proposed Refunding COP should receive a stand-alone "Aa" category credit rating, and therefore not require bond insurance or a Letter of Credit. As with all variable rate debt obligations, a liquidity facility would continue to be required. Overall, it is estimated that present value cost savings of more than $1.4 million would be generated over the life of the Refunding COPs from a combination of a lower cost liquidity facility, elimination of Letter of Credit fees, and debt service savings. Importantly, approximately $470,000 of these savings would accrue during the first three years following COP issuance, thereby providing recovery of costs associated with issuing the Refunding COPs, including legal services and underwriting fees. Costs of issuance are estimated to range from $150,000 to $225,000. A summary of the estimated cost savings is presented in Attachment "A." Series 1992 and 1993 Refunding COPs The District's two existing Refunding COPs are variable rate obligations, which include fixed interest rate swap agreements. Called "synthetic fixed rate" financings, referring to the fixed interest rate swaps, these two Refundings represent an open senior lien on pledged debt service revenues. The existing legal documents with the swap providers, AIG for the 1992 COPs, and SocGen for the 1993 COPs, and with the bond insurer (AMBAC for both COPs), would be substituted with documents that would replicate those associated with the proposed new Refunding COP issue. Based on initial contacts, the swap providers have indicated their openness to consider a documents substitution. Staff will keep the Committee informed about the status of further discussions as they take place. Although no direct savings would be generated, the modernization of the bond documents for the 1992 and 1993 Refunding COPS would further streamline the overall debt structure for the District's existing COPs. Costs associated with preparing the legal documents would be reimbursed from the savings discussed earlier in this report. Finance Team and Timeline It is proposed that investment banking and bond counsel services be retained to more fully develop and implement the restructuring proposals discussed above. It is requested that the Finance, Administration and Human Resources Committee authorize staff to engage PaineWebber and Orrick, Herrington & Sutcliffe for this project. Both H:%wp dblfinVlO1cranoXFAHRTahrMNoMCOPResMxWring doc ReAwa: WOMB Page 4 firms have developed an extensive knowledge base about the financial and legal structures of the District's existing COP issues; together with a working knowledge of completing similar restructurings. In recent months, PaineWebber has demonstrated their expertise in developing and analyzing opportunities to modernize the District's existing COP financing program. They have been instrumental in developing the proposals discussed in this report. PaineWebber currently serves as the remarketing agent for the District's Series "A" variable rate COPS, and the 1992 and 1993 Refunding COPS. Compensation for PaineWebber would be negotiated and contingent upon successful completion of the plan through underwriting fees. Orrick, Herrington & Sutcliffe has provided legal services on various matters related to the District's existing COP financing program, and is therefore, intimately familiar with the legal documents and structures of the District's COP issues. Most recently, they have assisted staff efforts related to substitution of the Series "A" Letter of Credit. Costs for legal services would be reimbursed through cost savings upon successful completion of the plan. Given the knowledge and experience that both firms can contribute to the proposed restructuring plan, it is estimated that the plan can be accomplished in approximately 120 days, as illustrated by the following timeline. Staff would negotiate professional services agreements with PaineWebber and Orrick, Herrington & Sutciffe, for execution by the General Manager. The restructuring would be completed in advance of any future new money debt financings. Plans for future long-term borrowings will be addressed by separate reports to the Committee. ➢ Finalize debt service and cash flow modeling December ➢ Initiate formal discussions with swap providers and insurer ➢ Develop legal documents January ➢ Develop rating agency presentation ➢ Develop disclosure documents (Official Statement) ➢ Conduct rating agency presentations February ➢ Conduct institutional investor presentations ➢ Finalize legal and disclosure documents March ➢ Execute Refunding COP issue for Series "A," "B," and "C" ➢ Substitute documents for Series 92 and 93 Refundinq COPs ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS A. Estimated Cost Savings H:\wp.dtaVint210�mne%FAHRWahr99W ov%COPResbuctuOng.doc Revised: W0198 Page 5 ATTACHMENT A Estimated Cost Savings Refunding COPS Outstanding Cost Reduction Estimated Present Par Amount Strategy Value savings* Series A $83,300,000 Eliminate need for high cost credit $1,042,000 Matures 8/1/15 enhancement Series B $18,695,000 Refinance fixed rate COPS with $50,000 Matures 8/1/04 lower cost variable rate debt Series C $86,200, 000 Replace current liquidity facility with $390,000 Matures 8/1/17 lower cost facility $1,482,000 Totals $188,195,000 * Discounted st5O% FAHR COMMITTEE AGENDA REPORT Meefing oate 1r/10�ia/9s To 8d. of Sir. i1/1i�i7/s9 Item Number Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: COUNTY SANITATION DISTRICT OF ORANGE COUNTY COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR ENDED JUNE 30, 1999 (FAHR 98-XX) GENERAL MANAGER'S RECOMMENDATION Receive, file and approve the District's Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 1999, prepared by staff and audited by Moreland and Associates, Certified Public Accountants. SUMMARY The District's independent auditors, Moreland & Associates, have completed their examination of the District's financial statements for the year ended June 30, 1999 and have again issued an unqualified opinion. Each year, the FAHR Committee reviews the results of the audit and the corresponding Auditor's report to the Committee. Michael Moreland, Partner, will attend the meeting to respond to any questions of Directors. This year, staff has again prepared the Comprehensive Annual Financial Report that incorporates the audited financial statements in-house. For the last five years, the District has earned the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA). This year's report will again be submitted to GFOA for their review in anticipation of another award. The Comprehensive Annual Financial Report, including the Auditor's opinion letter, the Auditor's Report to the Committee, the Auditor's Report on Compliance and on Internal Control Over Financial Reporting, and the Auditor's Appropriations Limit Report are attached. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT H:%wp.dtalfin'220%whRe%FAHR\CAFR99AIT.doc Revised: 8/20/98 Page 1 ❑ This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ADDITIONAL INFORMATION None. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. Comprehensive Annual Financial Report for the year ended June 30, 1999 2. Auditor's Report on Compliance and on Internal Control Over Financial Reporting 3. Auditor's Report to the FAHR Committee 4. Appropriations Limit Report H:\wp.dta\fin\220\white\FAH R\CAFR99AIT. doc Revised: 8120/98 Page 2 1201 DOVE STREET, SUITE 680 _,J NEWPORT BEACH, CALIFORNIA 92660 oreland &,cl �icL'Ll ku, eror/. (949) 221-0025 CERTIFIED PUBLIC ACCOUNTANTS September 10, 1999 The Finance, Administration and Human Resources Committee of the Orange County Sanitation District 570 RANCHEROS DRIVE, SUITE 260 SAN MARCOS, CA 92069 (760) 752-3390 We have audited the combined financial statements of the Orange County Sanitation District (District) for the year ended June 30, 1999, and have issued our report thereon dated September 10, 1999. Under generally accepted auditing standards, we are providing you the attached information related to our audit. Our responsibility under generally accepted auditing standards is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting principles. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud and defalcations, may exist and not be detected by us. In addition, we considered the internal control over financial reporting of the District. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control over financial reporting. Significant Accounting Policies The significant accounting policies of the District are described in Note 1 to the combined financial statements. During the year, no new accounting policies were adopted and the application of existing policies was not changed. However, as explained in Note 1, the financial statements reflect certain eliminations relating to the consolidation of the Districts. There was not a material effect on the District's equity as a result of implementing these changes. We noted no significant, unusual transactions during the year, nor transactions for which there is a lack of authoritative guidance or consensus. Mang ement JudgMents and Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based upon management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. The judgments and estimates which may significantly affect the District's combined financial statements include the Orange County Investment Pool receivable and establishing appropriate The Finance, Administration and Human Resources Committee of the Orange County Sanitation District September 10, 1999 Page 2 liabilities associated with general liability and workers' compensation claims. During our audit of the combined financial statements, we performed procedures to determine the reasonableness of the estimates used by management. These procedures included, but were not limited to, inquiry of the District's attorney and review of a third party administrator's report which summarized the estimated liability needed for claims against the District. Based on these and other procedures performed, we were able to conclude that the estimates mentioned above as recorded by management, were reasonable. S larnlf lcant Audit Adf ustments As a result of our audit related testwork, we proposed no corrections to the financial statements that, in our judgment, either individually or in the aggregate, had a significant effect on the District's financial reporting process. For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction to the financial statements that, in our judgment, may not have been detected except through our auditing procedures. Other information in Documents Containinv,.Audited Financial Statements Our responsibility for other information in documents containing the District's combined financial statements and our report thereon does not extend beyond financial information identified in our report, and we have no obligation to perform any procedures to corroborate other information contained in these documents. We have, however, read the other information included in the District's comprehensive annual financial report; and no matters came to our attention that cause us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or its manner of presentation, appearing in the financial statements. Disagreements With Management There were no disagreements with management on financial accounting and reporting matters that, if not satisfactorily resolved, would have caused a modification to our report on the District's 1999 financial statements. Consultation With Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the District's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. The Finance, Administration and Human Resources Committee of the Orange County Sanitation District September 10, 1999 Page 3 Ma or Issues Discussed With Management Prior to Retention We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. These discussions occurred in the normal course of our professional relationship, and our responses were not a condition of our retention. This information is intended solely for the use of the Finance, Administration and Human Resources Committee and should not be used for any other purpose. However, we understand that this document may be public information, and its distribution is not limited. orelandJnrl- CERTIFIED PUBLIC ACCOUNTANTS September 10, 1999 The Board of Directors of the Orange County Sanitation District 1201 DOVE STREET, SUITE 660 NEWPORT BEACH, CALIFORNIA 92660 (949) 221-0025 570 RANCHEROS DRIVE, SUITE 260 SAN MARCOS, CA 92069 (760) 752-3390 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit ofFinancial Statements Performed in Accordance With Government Auditing Standards We have audited the combined financial statements of the Orange County Sanitation District, California (District) as of and for the year ended June 30, 1999, and have issued our report thereon dated September 10, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the District's combined financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations and contracts, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Aud iti ng Standards. Internal Control Over Financial Re ortin In planning and performing our audit, we considered the District's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the combined financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the Board of Directors and management of the District and is not intended to be and should not be used by anyone other than these specified parties. 1 4 4l S v 1201 DOVE STREET, SUITE 680 &C4�_ ��j NEWPORT BEACH, CALIFORNIA 92660 f (949) 221-0025 CERTIFIED PUBLIC ACCOUNTANTS September 10, 1999 The Finance, Administration and Human Resources Committee of the Orange County Sanitation District 570 RANCHEROS DRIVE, SUITE 260 SAN MARCOS, CA 92069 (760) 752-3390 Independent Accountants' Report on A reed -LT ❑n Procedures Applied to Appropriations Limit Worksheets We have applied the procedures enumerated below to the accompanying Appropriations Limit worksheet No. 6 (or other alternative computation) for the Orange County Sanitation District (District) for the year ended June 30, 1999. These procedures, which were agreed to by the District and the League of California Cities (as presented in the League publication entitled Article N11B Appropriations Limitation Uniform Guidelines), were performed solely to assist the District in meeting the requirements of Section 1.5 of Article N= of the California Constitution. This engagement to apply agreed -upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: We obtained the completed worksheets No. 1 through No. 7 (or other alternative computations) and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the Board of Directors. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the Board of Directors. Finding: No exceptions were noted as a result of these procedures. 2. For the accompanying Appropriations Limit worksheet No. 6, we added line A, last year's limit, to line E, total adjustments, and compared the resulting amount to line F, this year's limit. Finding: No exceptions were noted as a result of these procedures. The Finance, Administration and Human Resources Committee of the Orange County Sanitation District September 10, 1999 Page 2 3. We compared the current year information presented in the accompanying Appropriations Limit worksheet No. 6 to the other worksheets described in No. 1 above. Finding: No exceptions were noted as a result of this procedure. 4. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit worksheet No. 6 to the prior year appropriations limit adopted by the Board of Directors during the prior year. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article MIIB Appropriations Limitation Uniform Guidelines. Finding: No exceptions were noted as a result of this procedure. We were not engaged to, and did not, perform an audit, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit worksheet No. 6 (or other alternative computation). Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the use of the District and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. However, this report may be a matter of public record and its distribution is not limited. ORANGE COUNTY SANITATION DISTRICT APPROPRIATIONS LIMIT WORKSHEET #6 FY 1998-99 BUDGET A. LAST YEAR'S LIMIT 1 $44,577,000 B. ADJUSTMENT FACTORS 1. Population % (average) 1.55% 2. Inflation % 4.15% Total Adjustment % 1 5.77% C. ANNUAL ADJUSTMENT $ 1 $2,574,000 D. OTHER ADJUSTMENTS: Assumed Responsibility (Lost Responsibility) (Transfer to Private) (Transfer to Fees) Sub -total - E. TOTAL ADJUSTMENTS $2,574,000 F. CURRENT YEAR LIMIT 1 $47,151,000 FAHR COMMITTEE REPORT Meeting Date 11/11/99 To Dir. 11/1/17/99 Item Number- Item Number _AGENDA Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: Review of Internal Controls over Payroll, Cash Receipts, Cash Disbursements, and Treasury Management GENERAL MANAGER'S RECOMMENDATION: Information item only. SUMMARY A request was made at the Committee meeting in October for staff to provide a report on the Internal Controls of the District. Attached to this report are the internal accounting control procedures that were last updated as of June 1999, as follows: -Payroll -Cash Receipts/Revenues -Cash Disbursements -Treasury Management Also attached to this report is a letter from KPMG Peat Marwick dated January 18, 1995 responding to our request to have them review our internal controls, and staffs report to the Committee dated March 15, 1995 responding to KPMG Peat Marwick's letter and to suggestions provided by the staff from the City of Brea. Staff believes that our current updated procedures still comply with the recommenda- tions provided by KPMG Peat Marwick and the City of Brea. In developing these procedures, staff recognizes that it is our responsibility for establishing and maintaining a system of internal control. In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting prinicples. With these objectives in mind, staff believes that the attached internal control procedures provide for the maximum practical safeguards over cash and that all conflicting duties have been segregated. Staff also believes that the proper checks and balances are in place to ensure that transactions are properly performed and recorded. H:\wp.dta\fin\220\whke\FAHR\Inlemel Controls'! 1-99.doc.dot Revised: MO/98 Page 1 PROJECT/CONTRACT COST SUMMARY N/A BUDGETIMPACT ❑ This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ATTACHMENTS • Internal Control Procedures Over Payroll Internal Control Procedures Over Revenues/Cash Receipts • Internal Control Procedures Over Disbursements ® Internal Control Procedures Over Treasury Management • Letter from KPMG Peat Marwick dated January 18, 1999 Staff Report dated March 15, 1999 H:%wp.dte\fin%2201whkeWAHR%Intemal Controlsll-99.doc.dot Revised: MO/98 Page 2 Revised June 1999 Orange County Sanitation District Internal Accounting Controls Over Payroll Hiring of New Employees - Purpose: To ensure only authorized personnel are included within the payroll system and can be paid from approved timesheets. Procedure: A "Status Change Form" is completed by the Human Resources (HR) Recruiter that includes the new employee's name, department and division, employee number, social security number, position, pay grade, and salary. This form is signed by the Department Head assigned the employee and either the Director of HR or the HR Manager. 2. The above information, along with all employee benefits such as medical insurance, accident insurance, disability insurance, retirement, and deferred compensation, and other personal information about the employee, such as home address, phone number, and emergency contact is input into the financial information system (FIS) by the HR Assistant. 3. A copy of the "Status Change Form" is forwarded to the Accounting Division's Payroll Section who matches this against the employee's very first completed timesheet. 2. Pay and Employee Benefit Changes - Purpose: To ensure that all pay and employee benefit changes are properly inserted into the FIS system and that there is a segregation of duties between those who employees who update the FIS system with pay and employee benefit changes from those employees who enter time worked into the system. Procedure: Pay Rate Changes- Pay rates are changed in HR Department based on changes generated by: A. Movement within the step system. These changes are input into the FIS system by the HR Assistant off of a tickler file. B. Per changes as outlined by the memorandum of understanding. Again these changes are input into the FIS system by the HR Assistant off of a tickler file. OCSD • P.O. Box 8127 9 Fountain Valley, CA 92728-8127 • (714) 962-2411 C. Per classification studies performed in April and/or November. i. These studies are performed by the HR Analyst either at the request of the various departments or through HR's own benchmarking efforts. ii. Upon completion of these studies, the HR analyst will generate an equity adjustment recommendation that is approved by the Department Head of the affected employee, the Director of HR, and the General Manager. iii. Once approved, a status change form is completed by the HR analyst, approved by the HR Director, and input into the FIS system by the HR Assistant. D. Per equity adjustments done through the budget process or in November of each year at the request of a Department Head and approval by the General Manager. i. Again, the HR Analyst prepares the Status Change Form for the employee. ii. Upon approval by the HR Director, the HR Assistant inputs it into the FIS system. 2 Changing Benefits- Benefits are changed by the HR Department based on changes generated by: A. Changes as outlined by the memorandum of understanding. These changes are input into the FIS system by the HR Assistant off of a tickler file. B. When an employee moves to a different benefit group (i.e., non-exempt to exempt). i. A recruitment search is conducted by the HR Recruiter. ii. Once the recruitment search is completed and an exiting employee is awarded the position, the HR Recruiter prepares a Status Change Form outlining the new pay rates and benefits. iii. This Status Change Form is then entered into the FIS System by the HR Assistant. C. Semi -Annual Benefit Option Payout Distribution. These changes are input into the FIS system by the HR Assistant off of a tickler file. 3. Timekeeping - Purpose: To ensure that employees are paid for either hours worked or for the appropriate leave benefits accrued by them. Procedure: The time sheets are filled out and signed by employees, reviewed and signed by their supervisors and then turned into the Timekeeping Unit within the Payroll Section for processing. 2. The Timekeeping Unit accumulates employee time sheets for each pay period and; A. Reviews the time sheets for computations of payroll period hours, signatures of 2 employees and supervisors, and for possible unapproved erasures or alterations. B. Enters the reported hours by pay code into the financial information system. C. Reconciles each computer batch total against an adding machine total. D. Generates a labor distribution report that indicates total hours, which is reconciled to the individual batch totals, and total payroll dollar amount. Exceptions are noted for employees working more or less than 80 hours. Also, verification is made on shift differentials. 4. Payroll Processing - Purpose: To ensure that payroll is processed accurately and timely. Procedure: 1. The Payroll Processing Unit within the Payroll Section processes the bi-weekly payroll by: A. Obtaining the "Status Change Form's" processed by the Human Resources Department over the last payroll period for new hires, promotions, reclassifications, and terminations; and verifying the accuracy of the pay changes processed by the Human Resource Department into the financial information system. B. Making the appropriate adjustments to the individual employee benefit accounts within the financial information system due to changes occurring during the past payroll period, including deferred compensation, retirement, direct deposit, computer loans, and Federal and State withholdings. C. Manually preparing retroactive pays, compensation payoffs, and management option plan pay adjustments as directed by the Human Resources Department. D. Processing the payroll within the financial information system and generating the payroll register along with the payroll checks. 2. Payroll Verification: The Timekeeper reviews the final payroll register and pay checks generated by the financial information system. A. The total hours and dollar amounts per the payroll register is reconciled against the Labor Distribution Report generated by the Timekeeping Unit. B. Individual employee payroll information per the Payroll Register is spot checked against the Labor Distribution Report. C. The payroll register and pay checks are reviewed by the Controller who signs off on the payroll register. 3 D. The payroll register is reviewed and approved by the Director of Finance/Treasurer. E. Payroll is then posted to the General Ledger. Processing Accounts Payable Deduction Warrants: The Payroll Unit prepares vendor payment requisitions for the payroll deduction liability amounts per the payroll register and forwards them onto the Accounting Division's Accounts Payable Section. 4. Processing Interim Payroll Checks: If Payroll Checks need to be issued in between pay periods, such as terminations, the same procedures as outlined above are used to issue these interim payroll checks. No manual payroll checks are ever processed. 5. Annual Vacation/Sick Leave/Personal Leave Payout: A. Annual vacation, sick leave, and personal leave payout forms are distributed to all employees each December by the Payroll Unit. B. Employees complete the forms indicating as to whether they want to convert and leave hours banked to cash and sign the forms, and return them to the Payroll Unit. C. The Payroll Unit process an interim payroll for the conversion of leave hours to pay as outlined above based upon the payout forms received. 5. Safeguard Controls - Purpose: To ensure that adequate controls are in place for the safeguarding of the District's assets. Procedures: Signature Authority A. Authorized signers are limited to the General Manger, Director of Finance/Treasurer, and the Controller. B. All checks are stamped by a facsimile signature plate bearing the signature of the Treasurer. C. All checks over $25,000 require a second handwritten signature. 2. Safeguards Over Check Stock A. All automated checks are produced from blank paper safety stock bearing no check numbers or bank micr encodings. B. Blank paper safety stock is ordered, maintained, and provided to the Payroll Unit by 4 the Accounting Division and is kept locked up within the Accounting Division computer room. C. All payroll checks are issued the check numbers and bank micr encodings through the use of a computer program, with access only by the accounts payable and payroll clerks, and laser printer. Check numbers are generated in numerical sequence and accounted for within the financial information system. 3. Safeguard Over the Signature Plate and Payroll Checks A. The signature plate is kept in the Accounting Division safe. The combination to this safe is known only by two custodians, the Accounting Manager and the Finance Administration Principal Accountant. B. The fixed asset clerk will obtain the signature plate from one of the custodians and the printed checks from the timekeeper and run the checks through the check -signing machine. C. The fixed asset clerk will then return the signature stamp to the custodian and distribute the payroll checks to division secretaries throughout the District. A distribution log is maintain by the fixed asset clerk acknowledging the receipt of checks by each division secretary. The log includes a listing of the employee names for which checks have been released. The secretaries will then distribute the checks to the individual employees. 4. Positive Pay A. A computerized listing containing the check number and dollar amount of each check is transmitted to the bank prior to the mailing of checks. Therefore, the check number and dollar amount of each check presented to the bank for payment must match the electronic file previously submitted to the bank. Bank Reconciliations A. The General Ledger Principal Accountant, independent of the Payroll processing functions, performs the monthly bank reconciliation within one -week following receipt of the bank statement. 6. Back up Assignments Purpose: Backup personnel will be trained and used in the absence of key individuals. Procedures: Key individual- First Timekeeper Backup- Second Timekeeper 2. Key individual- Controller's review of payroll register and pay checks. Backup- Accounting Manager. 5 3. Key individual- Prinicipal Accountant who reconciles the bank statement. Backup- Accounting Manager. Internal Control Strengths 1. Time keeping - a. Time keeping is separated from payroll preparation. b. Formal time sheet attendance records are utilized. C. Time sheet signature approval by supervisors is required. d. Time sheets are scrutinized for appropriateness and reasonableness. 2. Payroll Preparation - a. Payroll preparation is segregated from employee and employee wage data input; and time keeping and check distribution duties. The Human Resources Department is solely responsible for inputting new employees and wage data into the financial information system. b. Overtime hours, rates, and computer computations are checked. C. The Payroll is subject to final approval before payment by someone independent of payroll preparation and time keeping. 3. Safeguard Controls- 4. 5. a. Controls are in place over the signature plates. b. Controls are in place over the blank check stock. C. Controls are in place over the check processing software. Positive Pay - a. Reduce the likelihood of check fraud. Bank Reconciliation - a. Performed monthly by someone other than persons who participate in the processing of payroll. b. Payroll checks are drawn on a separate account operated on an imprest basis. A Revised June 1999 Orange County Sanitation District Internal Accounting Controls Over Revenue/Cash Receipts Property Tax and User Fees Purpose: Both the Property Tax and User Fee Revenues are billed and collected by the County of Orange through the County's Property Tax Bill. The monies collected are remitted to the District by electronic wire transfers in accordance with the County's property tax apportionment schedule. The user fees are assessed in the following manner: Residential: Flat Rate Multi -Family Residential: Flat Rate/Unit Commercial: Based on square footage as provided by the County Assessor Procedure: The Accounting Division's Revenue Section obtains current property information from the County Assessors office and inputs the related fees into the computer program. 2. The information is then transmitted to the County's Property Tax Division for inclusion on the property tax bill. 3. The Revenue Accountant within the Revenue Section reconciles the Orange County Electronic Wire Transfer Notification for property tax and user fee proceeds from the County against the bank confirmation on incoming wires. He then posts the property tax and user fee receipts to the general ledger through the cash receipts journal which is subsequently approved by the Accounting Manager. 2. Industrial User Fees - Purpose: Companies must have a waste discharge permit if they discharge certain types of waste into the local sewer systems such as metals and oils. This type of discharge requires enhanced treatment and an additional fee is charged to recover the costs associated with this enhanced treatment. Companies discharging over 750,000 gallons of water per year are tested to see if their discharge requires additional treatment. Procedure. OCSD 9 P.O. Box 8127 9 Fountain Valley, CA 92728-8127 • (714) 962-2411 1. Each quarter, one-fourth of the prior year's actual usage is billed as an estimate for each company under permit by the Revenue Section. 2. At year-end, the actual current year's usage is compared against the four quarters of estimated payments, and any difference is either billed or refunded to the business. Cash Receipts Purpose: To ensure that the collection of cash receipts is secured and deposited into the bank on a timely basis. Procedure: 1. Over -The -Counter Cash Receipts for the Sale of Plans & Specifications: A. The receptionist in the front lobby maintains a receipt book and writes a receipt from a pre -numbered receipts book for all cash/check collections. The receipts collected are maintained in a locked box at the front desk. B. On a daily basis, the receptionist delivers the payments received along with copies of the cash receipts to a Revenue Clerk in the Revenue Section. C. The Revenue Clerk reconciles the cash/checks reconcile against the cash receipts. The Revenue Clerk also verifies the proper sequence, beginning number included, of cash receipts issued. D. Cash is kept in a safe and checks are kept in a locked cupboard overnight and deposited at the bank by armored courier the next day. 2. Cash Receipts Received by Mail: A. The mailroom opens the mail each day and prepares a Check Receipt Log on all checks received. B. The checks, along with any remittance advices, are delivered to a Revenue Clerk in the Revenue Section. The Revenue Clerk summarizes the cash receipts from both the mailroom and from the prior day collections from the receptionist by revenue account number and enters them into the financial information system (FIS). C. After entering the receipts into the FIS system, the Revenue Clerk prints out a cash receipts journal and prepares a deposit slip. D. The Revenue Clerk then prepares a batch control sheet summarizing the cash receipt journal, the deposit slip, and the check receipt log. The Revenue Clerk then initials the batch control sheet indicating that the batch has been entered into the FIS system and forwards this package to the Accounting Manager. E. The Accounting Manager reviews the batch control package by comparing the deposit 2 slip against the check receipt log, approves the deposit slip, and signs the batch control sheet to authorize the posting of the batch to the general ledger. F. The batch package is then returned to the Revenue Clerk for posting. After posting, the Revenue Clerk initials the batch control sheet indicating that the batch was posted, and files the batch package. G. An armored carrier transports the deposit to the bank every afternoon. 4. Safeguard Controls - Purpose: To ensure that adequate controls are in place for the safeguarding of the District's assets. Procedures: 1. Safeguards Over Cash Receipts A. All cash is locked up overnight in a safe. All checks are kept overnight in a locked cupboard. B. Deposits are made to the bank each day by armored carrier. 2. Bank Reconciliations A. The General Ledger Principal Accountant, independent of the Cash Receipt processing functions, performs the monthly bank reconciliation within one -week following receipt of the bank statement. 5. Backup Assignments - Purpose: To ensure duties are still carried out in the absence of key employees. Procedures: 1. In the absence of the Revenue Accountant, the duties assigned to this position will be performed by either the Revenue Supervisor or the Revenue Clerk. 2. In the absence of the Revenue Clerk, the duties assigned to this position will be performed by the Revenue Accountant. 3. In the absence of the Accounting Manager, the duties assigned to this position will be performed by the Revenue Supervisor. 6. Internal Control Strengths: 1. Safeguards are in place over cash and checks. 3 2. Receipt forms are prenumbered to ensure all receipts are posted in the receipt journal and deposited in the bank. 3. All cash and checks received are deposited within one day of its receipt. 4. The bank account is reconciled monthly by someone other than persons who participated in the receipt of cash. Backup assignments have been established during periods of employee absences and provide for appropriate segregation of duties. 4 Revised June 1999 Orange County Sanitation District Internal Accounting Controls Over Accounts Payable Disbursements Purpose: To ensure that individual documents verifying purchases and receipt of goods are brought together to assure valid payment. Numbers 1-3 illustrates the duties that clerk will be designated to do. Clerk 1: Sort and Distribute All Internal and External Mail Delivered to Accounts Payable & Perform Payment Request Voucher and Blanket Order Input into FIS System: 1) All mail received each day in Accounts Payable is date stamped. 2) For all invoices received, verify the following through inquiry within the financial information system (FIS): a) Vendor number; b) Vendor address; c) 1099 Tax Identification Number; d) Purchase Order (P.O.) type: i) Send out copies of service invoices (P.O. Type OS) for appropriate staff approvals. Upon receipt of signed approvals, input OS invoice into the FIS System. ii) Verify deliveries of goods (P.O. Type OP) through FIS and input invoices into FIS. 3) Distribute Blanket P.O.'s to Clerk 2. 4) Distribute Problem Invoices Requiring Research to Clerk 3. 5) Distribute Payment Request Vouchers completed by staff (purchases made by individual departments without the aid of purchase orders such as memberships, subscriptions, travel and training, and employee reimbursements) and associated invoices to Clerk 3. 6) Input invoices derived from Blanket P.O.'s (Type OX) processed by Clerk 2 (see Clerk 2, 3c below) into the FIS System. Clerk 2: Process Invoices Derived from Blanket P.O.'s 1) Chemicals: a) Match bill of lading and verify totals; b) Make copies of P.O. entry prior to release; c) Release to create OX's (individual P.O., reducing the total available from the original Blanket P.O.). OCSD • P.O. Box 8127 • Fountain Valley, CA 92728-8127 • (714) 962-2411 2) Utilities: a) Send out copies to Operations & Maintenance for approvals. b) Prepare Payment Request Voucher. c) Forward invoice and Payment Request Voucher to Clerk 3 for input into FIS system. d) Update Utility Log Spreadsheet for historical comparisons. 3) Regular Blankets: a) processing of Blanket P.O.'s by matching the Blanket P.O. Payment Request Form prepared by staff against the invoice, b) Make copies of P.O. entry prior to release; c) Release to create OX's (individual P.O., reducing the total available from the original Blanket P.O.), and then forward onto Clerk 1 for input into FIS system. Clerk 3: Research & Resolve Problems: 1) Problems Related to Invoices: a) Invoices that have not be approved or rejected for payment by staff. b) Invoices for goods or services not received or delivered. c) Price & Qty. discrepancies- resolve discrepancies between vendor and staff. d) Invoices w/o purchase orders- contact Purchasing to initiate a Purchase Order. e) Invoices w/o requisition numbers- contact field staff to initiate a Purchase Requisition. f) Insufficient funds on P.O.- contact Purchasing to review terms on the original purchase. g) Expired P.O.- contact Purchasing h) Conflicting Terms as indicated on P.O. versus Invoice- contact appropriate staff/vendor. i) Obtain Freight back-up when over $100.00. 2) Respond to all Accounts Payable Telephone Inquiry Calls from Vendors/Staff. 3) Process Invoices supported by Payment Request Vouchers. 4) Input Payment Request Vouchers for Utilities generated by Clerk 2 into FIS System. 5) Process checks to be voided. a) Indicates void across the face of the check. b) Voids the check out within the FIS system. c) Forwards the check onto the Principal Accountant who makes a notation within the blank check log, and files the voided check along with the rest of the checks cleared from the bank. All Clerks: Process Accounts Payable Check Runs: 1) The processing of all invoices, including blanket P.O.s., Service P.O.'s, Material P.O's, or payment request vouchers requires: a) Verifying that all of the following applicable documents have been received, are in order, K and that proper authorization for payment has been obtained and then batching them together into warrant packages: i) Original invoice from vendor. ii) Payment Request Voucher (if applicable). iii) Verification of Purchase Order within FIS (if applicable) iv) Verification of Goods Received within FIS (if applicable) b) Checking all invoice data against the electronic purchase order and receiving report within the FIS. c) Checking all extensions, footings, discounts, and freight terms for accuracy. d) Reviewing the general ledger account coding and work order number for accuracy. e) Entering the pay information into the computer system. 2) On a rotating basis, the three clerks divide the alphabet three ways and run a pre -check register. Each then reconciles their third of the alphabet against the pre -check register. 3) The Accounts Payable Clerks then generates the final check registers and warrants. Each file warrant copy is then reconciled and batched with the individual warrant packages which is then machine perforated to prevent reuse. 4) The Capital Project Principal Accountant performs an audit after the check run is completed but prior to the mailing of the checks. 5) The Final Check Register is reviewed and then signed off by the Controller. 6) The Final Check Register is then reviewed and signed off by the Director of Finance/Treasurer. 7) Accounts Payable Check runs are scheduled on Wednesday of every week, with Payroll Vouchers and Vendor checks processed separately on alternating Wednesdays. Interim checks are processed on an emergency basis and our processed exactly the same way as the normal Accounts Payable Check runs are done, as described above. Other Procedures: 1. Processing of Professional Service Agreement Payments 1. The Capital Project Principal Accountant matches the invoices with the agreement/ purchase order and creates a Payment Package to be sent out to the appropriate OCSD Project Manger for approval consisting of: a) a copy of the invoice; b) portions of the agreement pertaining to the work and payment term requirements; c) a copy of the payment summary schedule that shows the original agreement amount, payments that have been made and the dates the payments were paid, and the amount of the agreement that is still available for payment. The Capital Project Principal Accountant then records the date the Payment Package was forwarded to the OCSD Project Manager within the Agreement File Folder. 3. Upon receipt of the approved Payment Package, the Capital Project Principal Accountant a) verifies the approval signature of the OCSD Project Manager; b) audits the invoice calculations; c) verifies the supporting documentation against the agreement terms. d) initials the invoice indicating his approval. e) updates the payment summary schedule and returns it to the Agreement File Folder. f) inputs the approved invoice into the FIS system. 4. The payment is then processed by the "All Clerks: Process Accounts Payable Check Runs" procedures as listed above. 2. Processing Contractor Progress Payments The Capital Project Principal Accountant receives the preliminary contractor progress payment invoice from the Construction Management Division and verifies: a) the proper report number; b) days extended by change order; c) days elapsed to date; d) days remaining; e) calculations; f) retention; g) audits file for stop notices filed or released and any other data reported that may affect payment. After performing the verification procedures above, the Capital Project Principal Accountant performs the following tasks: a) initials invoice and makes copy of preliminary invoice for payment package and the contract file. b) forwards the original audited preliminary invoice to Construction Management Division for their files. c) Prepares a coding slip and attaches the audited invoice copy. d) Inputs into the FIS system. 3. The payment is then processed by the "All Clerks: Process Accounts Payable Check Runs" procedures as listed above. 4. After receiving two executed original construction progress payment invoices from the Construction Management Division, the Capital Project Principal Accountant: a) attaches one executed original construction progress payment invoice to the invoice package and forwards it to the Controller for review and signature approval on the check. The Controller then forwards the check directly to the Fixed Asset Clerk who distributes the check, along with any attachments received from the Capital Projects Principal Accountant, 4 b) Places the other executed original construction progress payment in the contract file. 3. Positive Pay A computerized listing containing the check number and dollar amount of each check is transmitted to the bank prior to the mailing of the checks. Therefore, the check number and dollar amount of each check presented to the bank for payment must match the electronic file previously submitted to the bank. 4. Signature Authority Authorized signers are limited to the General Manager, Director of Finance/Treasurer, and the Controller. 2. All checks under $25,000 will be stamped by a facsimile signature plate bearing the signature of the Treasurer. 3. All checks for $25,000 or over will require a second handwritten signature of either the General Manager, Director of Finance/Treasurer or Controller. Safeguards Over Check Stock All automated checks are produced from blank paper safety stock bearing no check numbers or bank micr encodings. 2. The blank paper safety stock is ordered, maintained, and provided to the Accounts Payable Unit by the Accounting Division and is kept locked up within the Accounting Division computer room. 3. All accounts payable checks are issued check numbers and bank micr encodings through the use of a computer program and laser printer. Check numbers are generated in numerical sequence and accounted for within the financial information system. 6. Safeguard Over the Signature Plate and Accounts Payable Checks The signature plate is kept in the Accounting Division safe. The combination to this safe is known only by two custodians, the Accounting Manager and the Finance Administration Principal Accountant. 2. The fixed asset clerk will obtain the signature plate from one of the custodians and the printed checks from one of the Accounts Payable Clerks and run the checks through the check - signing machine. 3. The fixed asset clerk will then return the signature stamp to the custodian, prepare the checks for mailing, and deliver the checks to the mail room for mailing. In no instance are checks returned to the Accounts Payable Clerks or other District personnel for distribution. 7. Bank Reconciliation The General Ledger Principal Accountant, independent of the Accounts Payable processing functions, performs the monthly bank reconciliation within one -week following receipt of the bank statement. Voided checks will be marked as such across the face of the check, presented to the General Ledger Principal Accountant for notation within the blank check log, and filing within the checks cleared from the bank. 8. Back up Assignments- Backup assignments are as follows: During the Absence of Clerk 1: Clerk 2 1. Date stamps, sorts and distributes all internal and external mail delivered to Accounts Payable. 2. Determine type of P.O. and indicate on invoice 3. Verify Vendor number & address Clerk 3 1. Process OP invoices. 2. Send out OS invoices for approval and, upon receipt of approval, input into FIS System. 3. Verification and input of 1099 information During the Absence of Clerk 2: Clerk 1 1. Prepare Payment Request vouchers for Utility invoices, send copy to Operations and Maintenance for approval, update Utility Log Spreadsheet for historical comparisons, and forward to Clerk 3 for FIS input. Clerk 3 1. Match and verify Blanket releases. During the Absence of Clerk 3: Clerk 1 1. Notify switchboard to distribute incoming calls to both Clerk 1 & 2. 2. Audit and Input Payment Request Vouchers. 3. Work on new and existing problems A-L. Clerk 2 1. Process voided checks. 2. Work on new and existing problems M-Z. Check runs: Will be performed by two remaining A/P clerks. Internal Control Strengths All invoice data is checked against the computerized purchase order and receiving report within the FIS system. All extensions and footings and other terms are checked for accuracy. The completion of these procedural steps are clearly marked on the face of the invoice. 0 2. Each individual payment over $25,000 is reviewed and approved by the Controller. 3. Check processing software is only accessible to the payroll clerks and accounts payable clerks. 4. Blank check stock is adequately secured against unauthorized use. 5. All supporting documents are properly canceled at time of signature to prevent duplicate payment. 6. Authorized check signers are independent of voucher preparation and approval for payment, check preparation, cash receiving, and petty cash, purchasing and receiving. 7. Custody of checks after signature and before mailing is handled by an employee independent of all payable, disbursing, cash, receiving, and general ledger functions. 8. The facsimile signature plates are adequately safeguarded against unauthorized use. 9. The bank account is reconciled monthly by someone other than persons who participated in the receipt or disbursement of cash. 10. The rotation assignments on the computer generation of accounts payable checks between the three Accounts Payable Clerks will reduce the potential of invoices being altered for amounts, items, or payees. 7 Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 1 of 7 Revised: June 1, 1999 Orange County Sanitation District Treasury Management Procedures 1.0 Purpose 1.1 The purpose of this policy is to establish uniform guidelines and procedures for use in the administration of the District's Treasury functions consistent with the California Government Code and the District's adopted Investment Policy Statement. 2.0 Authority to Investment and/or Reinvestment of District Funds: 2.1 Is delegated annually to the Director of Finance/Treasurer in accordance with California Government Code Section 53607. 3.0 Formal Investment Policy Statement: 3.1 Is prepared by the Treasurer. 3.2 Is reviewed by the District's Finance, Administration & Human Resources Committee (FAHR), in its role as the finance oversight committee. 3.3 Is submitted to and adopted by the District's Board of Directors annually at a public meeting in accordance with California Government Code Section 53646. 4.0 Delegation of some or all of the investment portfolio management to one or more registered investment advisors (external money managers): 4.1 Is authorized by the District's Investment Policy; 4.2 Applies to the District's entire investment portfolio except for: 4.2.1 A maximum of $30 million that is maintained within the State Local Agency Investment Fund (LAIF) for managing cash flows (i.e., deposits of large revenues, such as property tax and user fee proceeds, and the bi-weekly disbursements of payroll and accounts payable); 4.2.2 A peg amount of approximately $300,000 that is maintained within the District's checking account at Union Bank of California to serve as OCSD • P.O. Box 8127 • Fountain Valley, CA 92728-8127 • (714) 962-2411 Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 2 of 7 compensating balances to offset banking charges (note: the District's Board of Directors has selected Union Bank of California to serve as the District's commercial bank (the "Bank"); and 4.2.3 The checking account residual amounts that exceed the peg balance (as a result of outstanding accounts payable and payroll warrants) which are invested overnight under a repurchase agreement with the Bank. 5.0 Investment transactions involving the LAIF are approved by the Treasurer prior to their execution by the Controller. The approval function indicates that the transactions are in accordance with the District's Investment Policy. The Accounting Manager will serve as backup for the approval function upon the absence of any either of these two employees. 5.1 Specific Procedures involving LAIF include (note: all deposits and withdrawals of funds to/from LAIF may only be processed through the District's checking account with the Bank): 5.1.1 A "State Treasurer's Local Agency Investment Fund Authorization Form" (see Attachment "A") must be completed prior to the execution of the transaction indicating: 5.1.1.1 The effective date of the transaction; 5.1.1.2 The dollar amount to be withdrawn from or deposited into LAIF; 5.1.1.3 The date and signature approval by the Controller authorizing the transaction; and 5.1.1.4 The date and signature approval of the Treasurer approving the transaction. 5.1.2 The execution of the transaction will be done in accordance with the "State Treasurer's Local Agency Investment Fund Wire Transfer Instructions" (see Attachment "B"). Key internal control features include: 5.1.2.1 The requirement of the District's Personnel Identification Number (PIN) for either deposits or withdrawals, known only by the Treasurer and Controller. 5.1.2.2 Secondary confirmation requirement by the Bank for the Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 3 of 7 withdrawals/deposits from/to the Bank or LAIF. The confirmation can be made by the Controller or Treasurer (the person that didn't make the original request), the Accounting Manager, or the Principal Accountant. 5.1.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Principal Accountant and Controller. 6.0 Investment transactions involving the Districts' external investment program and performed by the independent investment firms are as follows: 6.1 The District's Board of Directors has selected Pacific Investment Management Company (PIMCO) to manage two portfolios: the Districts' Liquid Operating Monies Fund, and the Long -Term Operating Monies Fund. 6.1.1 PIMCO has authorization to purchase and sell investment securities in accordance with the strict investment guidelines set forth in the District's Investment Policy (Section 8.0). 6.1.2 Hard copy confirmation reporting to the District is required on all transactions. 6.2 The District's Board of Directors has selected Mellon/Boston Trust (the "Custodian") to serve as the District's master custodian and safekeeping bank. In their capacity as Custodian, Mellon/Boston Trust shalt perform the following duties to settle purchases and sales and engage in other transactions in the administration of the District's accounts: 6.2.1 Upon execution of any transaction by PIMCO, all investment securities are recorded in book entry by the Custodian through either the Depository Trust Company or the Federal Reserve Bank; 6.2.2 Hold the property in safekeeping facilities of the Custodian or of other custodian banks or clearing corporations in the U.S.; 6.2.3 Collect all income payable to and all distributions due to the District's account and sign on the District's behalf all declarations, affidavits, and certificates of ownership required to collect income and principal payments; 6.2.4 Collect all proceeds from securities, certificates of deposit or other investments which may mature or be called; Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 4 of 7 6.2.5 Submit or cause to be submitted to the District or the external monay manager, as designated by the District, on a best effort basis all information received by the Custodian regarding the ownership rights pertaining to property held in the account; 6.2.6 Attend to involuntary corporation actions; 6.2.7 Determine the fair market value of the District's account on a monthly basis as of such dates as the Districts and the Custodian may agree upon, in accordance with methods consistently followed and uniformly applied; 6.2.8 Render to District, with copies to the external money manager, monthly statements for securities held hereunder; and 6.2.9 Provide the District with copies of the Custodian's financial statements filed with the State of California, or any agency thereof, within thirty (30) days after such filing. 6.3 The District's Board of Directors has selected Callan Associates as the District's Independent Investment Advisor (the "Advisor"). In their capacity as Advisor, Callan shall perform the following duties on behalf of the District: 6.3.1 Monitor and report on PIMCO's compliance with the investment requirements of the Districts' Investment Policy, using data from transaction reports prepared by Mellon/Boston Trust, on a quarterly basis; 6.3.2 Review PIMCO's investment strategy quarterly; 6.3.3 Monitor and report on the performance of PIMCO against the performance benchmark standards established in the District's Investment Policy for both the Liquid Operating Monies Fund and the Long -Term Operating Monies Fund on a quarterly basis; and 6.3.4 Review both Liquid and Long -Term Operating Funds by asset allocation, asset flow, quarterly factors and cumulative results on a quarterly basis. 6.4 Specific procedures in depositing to or withdrawing funds from the investment portfolio managed by the District's external money manger include: (note: all deposits and withdrawals of funds from the District's investment portfolio managed by PIMCO and Mellon/Boston Trust may only be processed through Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 5 of 7 the District's checking account at the Bank): 6.4.1 A "Wire Transfer Form" (see Attachment" C") must be completed by the Financial Manager prior to the execution of the transaction indicating: 6.4.1.1 The dollar amount to be withdrawn/deposited from/to the Bank checking account to/from the PIMCO Liquid Operating or PIMCO Long -Term Operating Monies Funds; 6.4.1.2 The effective date of the transaction; 6.4.1.3 The date and signature review by the Controller; and 6.4.1.4 The date and signature approval of the Treasurer approving the transaction. 6.4.2 The execution of the transaction requires a verbal confirmation call from the Custodian to the Financial Manager at the time of the transaction, and a written confirmation the following day. 6.4.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Senior Accountant and Controller. 7.0 Recording of investment transactions: 7.1 For investment transactions conducted by District staff with the LAIF, and with the transfer/withdrawal of funds with the Custodian: 7.1.1 Is done by the Controller who maintains a file of all investment transactions. 7.1.2 Is done within the accounting records by the Principal Accountant, who receives a signed copy of all investment transactions from the Controller. 7.2 For investment transactions conducted by the external money manager: 7.2.1 Is done by the Custodian who posts all investment transactions daily within their record keeping system and provides the District with a monthly report that provides both a summary and detail listing of all investment transactions. Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 6 of 7 7.2.2 Is done on a monthly basis by the Accounting Manager within the accounting records at a summary level using Monthly Transaction Reports prepared by the Custodian. 8.0 Verification of external money manager transactions is performed by: 8.1 The Custodian within their record keeping system (i.e., matching broker confirmations to custodian records), and is reported to the District and PIMCO on a monthly basis. 8.2 PIMCO through their internal compliance office and reported monthly to the District as required by the District's Investment Policy. 8.3 The Financial Manager through reconciliation of PIMCO's investment transaction notifications, transaction confirmation slips from broker/dealers, and monthly transaction reports. 9.0 Safeguarding of Assets and Records: 9.1 Reconciliation of investment records to the accounting records is done by the Principal Accountant, or in his absence, the Accounting Manager on a monthly basis. 9.2 Reconciliation of investment records to bank statements is performed by the Principal Accountant (or in his absence, the Accounting Manager) within one week following the receipt of the bank statement. 9.3 Review of financial condition, safety, liquidity, and potential yields of investment instruments and reputation and financial condition of investment brokers is done by the District's external money manager, who is authorized to utilize the services of independent securities brokerage firms as deemed appropriate, and which meets the requirements of Government Code Section 53601.5. 10.0 The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated Investment Policy will be performed monthly by the Financial Manager, quarterly by the Advisor, and annually by the District's external independent auditors. 11.0 The District's Finance, Human Resources and Administration Committee (FAHR) will serve as the Oversight Investment Advisory Committee to assist the Board of Directors in monitoring treasury management activities. Orange County Sanitation District Treasury Management Procedures Revised: June 1, 1999 Page 7 of 7 11.1 The District's Treasurer submits a Monthly Treasurer's Report to the FAHR which includes, but is not limited to: a listing of the security transactions for the month, the monthly interest earnings and rates of return, the market value and purchase price for each type of investment security, and the bank account balances at month end. 11.2 The District's Treasurer submits a Quarterly Investment Program Performance Report which includes, but is not limited to, the following information: 11.2.1 Quarterly interest earnings and rates of return; 11.2.2 The market value of the portfolios; 11.2.3 The annualized earnings of the portfolios; 11.2.4 Market recap; 11.2.5 Comparisons with pre -determined benchmarks; 11.2.6 Market forest; and 11.2.7 Proposed investment strategy for the upcoming quarter. Internal Control Strengths 1. The specific responsibility for the performance of duties is assigned and lines of authority and reporting are clearly identified. 2. Responsibilities are commensurate with the capabilities of the personnel assigned. 3. Incompatible functions have been properly segregated to prevent errors or fraud. 4. All transactions are authorized by an appropriate responsible individual. 5. Safeguards over assets and records are in place to ensure that recorded assets exist and are properly recorded. 6. Management controls are in place to ensure that significant transactions are properly performed and recorded. CAWPDATA\CTYI N\ATREASMNGTP&P99 ATTACHMENT "A" Orange County Sanitation District State Treasurer's Local Agency Investment Fund Transaction Authorization Form Effective Date of Transaction Confirmation Number Wire transfer deposit from Union Bank of California Checking Account #2740013230 in the amount of Wire transfer (withdrawal) to Union Bank of California Checking Account #2740013230 in the amount of Wire transfer transaction authorized by: Wire transfer transaction approved by: Name Controller Position Date CAWPDATA\CTYI NV\LAI FAUTH 99 Name Director of Finance/Treasurer Position Date ATTACHMENT "B" State Treasurer's Local Agency Investment Fund Wiring Instructions Form Deposits or withdrawals that are to take place by the end of the banking day must be made between 7:30 a.m. and 9:30 a.m.. Deposits or withdrawals that are to take place on a future date can be made between 7:30 a.m. to 9:30 a.m. or 11:00 a.m. to 4:00 p.m. You must be sure to give the effective date of the future transaction. To Deposit Funds: Step 1: 1. Call LAIF at (916)-653-3001, and let them know: a. That you would like to make a wire transfer deposit. b. The Districts LAIF account #70-30-006. c. Your PIN number. d. The dollar amount of deposit. e. That the money will be coming from Union Bank Account No. 274- 0013-230. 2. LAIF will give you a confirmation number. Step 2: 1. Call Union Bank of California at 1-800-798-6466, and let them know: a. You're making a wire transfer from Account No. 274-0013-230. b. The dollar amount of the wire transfer. c. The transfer is going to the District's LAIF Account No. 70-30-006. d. The LAIF account ABA number at Union Bank is 121000496. Step 3: 2. The confirmation number of this transaction (see Step 1, Item 2 above). 1. Give the above information to the Principal Accountant who will confirm this transaction with Union Bank. To Withdraw Funds: Step 1: 1. Call LAIF at (916)-653-3001, and let them know: a. That you would like to make a wire transfer withdrawal. b. The Districts LAIF account #70-30-006. c. Your PIN number. d. The dollar amount of withdrawal. e. The Union Bank account receiving the funds is No. 274-0013-230. 2. LAIF will give you a confirmation number. C: \W P DATA\CT Y I N V \LA I F P RO C 99 FAX Orange County Sanitation District ATTACHMENT "C" Withdrawal TO: SEE DISTRIBUTION LIST FAX NO.:SEE DISTRIBUTION LIST FROM: Steve Kozak, Financial Manager FAX NO.: (714) 962-3954 DATE: November 1, 1999 TIME: Pacific Time SUBJECT: WIRE TRANSFER OF FUNDS, TUESDAY, xx JUNE 1999 PAGES: One (1) including this cover sheet. If you do not receive the number of pages indicated, please call Steve Kozak direct at (714) 593-7555, or (714) 962-2411, extension 7555. MESSAGE: You are instructed to wire transfer the exact sum of $xx million as follows: FROM: OCSF0752222 PIMCO - Long -Term Operating Portfolio TO: Union Bank of California ABA No: 122-000-496 Credit to: Orange County Sanitation District Account No: 2740013230 DATE: Tuesday, xx June 1999 NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO LATER THAN 9:30 A.M. ON xx JUNE 1999. Please confirm completion of transfer with Steve Kozak. Wire transfer instructions reviewed by: Michael White, Controller Wire transfer transaction approved by: Gary Streed, Director of Finance/Treasurer DISTRIBUTION LIST _ Patrick Ludden, Mellon/Boston Trust 617+382+2155 —Virginia Eggleston, Mellon/Boston Trust 415+438+5899 _ Rita Seymour, PIMCO 714+720+1376 Simone Barry, PIMCO 714+644+6486 Date Date HA XFINANCE%22101KOZAK\WPDOCS%PIM WIRE.TRN Orange County Sanitation District FAX ATTACHMENT "C" (Deposit) TO: SEE DISTRIBUTION LIST FAX NO.: SEE DISTRIBUTION LIST FROM: Steve Kozak, Financial Manager FAX NO.: (714) 962-3954 DATE: November 1, 1999 TIME: Pacific Time SUBJECT: RECEIPT AND INVESTMENT OF WIRE TRANSFER OF FUNDS, FRIDAY, xx JUNE 1999 PAGES: One (1) including this cover sheet. If you do not receive the number of pages indicated, please call Steve Kozak direct at (714) 593-7555, or (714) 962-2411, extension 7555. MESSAGE: On Frida , xx June 1999, you will receive a wire transfer of funds in the exact sum of $xx xx 000,000) million RoFolio, Monies for immediate investment in the District's Long -Term Operating follows: as FROM: Union Bank of California ABA No: 122-000-496 Debit to: Orange County Sanitation District Account No: 2740013230 TO: Boston Safe Deposit & Trust ABA No: 011001234 Credit to: Mellon Trust/PIMCO-Long-Term Operating Monies Account No: OCS F0752222 DDA No. 10-811-1 DATE: Friday, xx June 1999 NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO LATER THAN 10:00 A.M. ON xxJUNE 1999. Please confirm completion of transfer with Steve Kozak. Wire transfer instructions reviewed by: Michael White, Controller Wire transfer transaction approved by: Gary Streed, Director of Finance/Treasurer DISTRIBUTION LIST _ Patrick Ludden, Mellon/Boston Trust 617+382+2155 —Virginia Eggleston, Mellon/Boston Trust 415+438+5899 Rita Seymour or Gordon Hally, PIMCO 949+720+1376 Simone Barry, PIMCO 949+644+6486 Date 19-F--1{4 HA kFINANCEU210kKOZAKXWPDOCSkPIM_WIRE.TRN A M- IN" l~-a Peat Marwick LLP Orange County Office Telephone 714 850 4300 Telefax 714 850 4488 Center Tower 650 Town Center Drive Costa Mesa, CA 92626 January 18, 1995 Mr. Gary Streed Orange County Sanitation Districts 10844 Ellis Avenue Fountain Valley, CA 92728 Dear Gary: At your request, we have read the proposed procedures documenting internal accounting controls in functional areas relating to treasury management and the processing of cash receipts and disbursements within the County Sanitation Districts of Orange County. We recognize that the Districts are in the process of developing an investment policy which may address some of our recommendations. However, the comments noted below relate to the Internal Accounting Control document dated January 18, 1995. Overall Backup Assignments - It is important that backup assignments of responsibilities, as required during periods of employee absences, also be formalized and provide for appropriate segregation of duties. Reconciliations - It is essential that reconciliations be performed on a timely basis because they are a key control to detect defalcations and unauthorized investments. We suggest a target timeframe for completion of these reconciliations be included. Treasury Management Execution of Investment Transactions - We suggest that this area be expanded to discuss the procedures utilized to execute investment transactions, including such controls as review and confirmation of each investment transaction by the Treasurer and Financial Manager, restrictions on faxed transactions, and callback verifications of investment transactions instituted by fax. Reconciliations of Treasurer's Records - These reconciliations and the bank account reconciliations are probably the most important reconciliations performed. The timeframe for completing these reconciliations should be specified and adherence monitored each month. Review of Financial Institutions - It would be efficient and wise to also monitor the institutions' FDIC rating. Safekeeping of Securities - It may be useful to explore other practical arrangements for safekeeping securities and also to address the use of book entry securities. Men)tw Firm of K'""Id Pedl rnc-- GU•,ari.rr 7r. _" KPMMG Peat Marwick LLa Mr. Gary Streed Orange County Sanitation Districts January 18, 1995 Page 2 Investment Advisory Committee - It would seem prudent to establish an oversight investment advisory committee to assist the Board in monitoring treasury management activities_ Monthly Reporting - The preparation and distri-hution of a monthly report of treasury activities to the Board, Advisory Committee and appropriate management personnel is an internal control which should be considered. Accounts Pavable Disbursements Rotation of Assignments - An excellent control over accounts payable activities would be the periodic rotation of vendors ("A" through "L" and "M" through "Z") handled by the two clerks. Such a rotation would likely detect the unauthorized alterin,-7 ()f invoices regarding either amounts. items or payees. y Other Bank Accounts - These procedures address only the main bank account. The possibility of redirecting monies to other bank accounts and related controls over such bank accounts should also be addressed, if such accounts exist. Bank Reconciliations - We suggest bank reconciliations be targeted for completion within one week of receipt of bank statements. Payroll Safecruard Over Cheek Stock - It is important that neither of the two clerks who have the combination to the safe which contain check stock be the "timekeeper". It is unclear whether this is the case or not. Bank Reconciliations - We suggest bank reconciliations be targeted for completion within one week of receipt of bank statements. We hope the above comments will be useful to you in your establishment of appropriate procedures pertaining to treasury management and related activities. If we can be of further assistance in the drafting or review of your investment policy or in any other way, please do not hesitate to contact us. Very truly yours, KPMG Peat Marwick Margaret J. McBride, Partner cc: Blake Anderson LOUNTY SANITATION UISTRICTS of ORANGE COUNTY, CALIFORNIA March 15, 1995 STAFF REPORT 10844 ELLIS AVENUE P 0 BOX 8127 FOUNTAIN VALLEY, CALIFORNIA 92728-8127 (714) 962-241 1 FPC 95-05: Review of Internal Controls Over Accounts Payable, Payroll, and Treasury Management The Districts' Controller established new internal accounting controls over accounts payable, payroll, and treasury management as a result of the discontinuation of auditing, checks signing, bank reconciliation, and cash investment services by the County. These procedures have been reviewed by the Districts' external auditors, KPMG Peat Marwick, and by staff of the City of Brea. Following is a list of the comments by KPMG and the City of Brea along with staff responses: KPMG Peat Marwick Qveralf omments Comment #1 It is important that backup assignments of responsibilities, as required during periods of employee absences, also be formalized and provide for appropriate segregation of duties. Staff _Response Backup assignments that provide the appropriate segregation of duties have now been identified for all internal control procedures over accounts payable, payroll, and treasury management. Comment #2 It is essential that reconciliations be performed on a timely basis because they are a key control to detect defalcations and unauthorized investments. We suggest a target time frame for completion of these reconciliations be included. Review Over Internal Controls Page 2 March 15, 1995 taff Response The procedures now specify that all bank reconciliations be completed within one week following receipt of the bank statement (see KPMG Comment #11). Treasujy Managemen Comment #3 We suggest that the area of execution of investment transactions be expanded to discuss the procedures utilized to execute investment transactions, including such controls as review and confirmation of each investment transaction by the Treasurer and Financial Manager, restrictions on faxed transactions, and callback verifications of investment instituted by fax. Staff Response The procedures now clarify that each transaction must be competitively bid, that each transaction be confirmed by callback verification and followed up with written confirmation, and prohibit the processing of investment transactions by facsimile. Comment #4 The reconciliation of Treasurers records and the bank account reconciliations are probably the most important reconciliations performed. The time frame for completing these reconciliations should be specified and adherence monitored each month. Staff Response The procedures have been amended to indicate that the reconciliation of the Treasurer's records to bank statements and safekeeping records be completed within one week following receipt of the bank statement. Comment #5 It would be efficient and wise to also monitor the FDIC ratings of financial institutions. Staff Response The procedures now specify that the FDIC ratings of the participating financial institutions will be monitored by the Financial Manager. Review Over Internal Controls Page 3 March 15, 1995 Comment #6 It may be useful to explore other practical arrangements for safekeeping securities and also to address the use of book entry securities. Staff Response At this time, the procedures specify that the safekeeping of securities will be limited to having all investment securities held in safekeeping in the Trust Department of the Districts' bank. Other practical arrangements will be explored with Chandler Liquid Asset Management during their review of the Districts' Treasury Management operations. Comment #7 It would seem prudent to establish an oversight investment advisory committee to assist the Board in monitoring treasury management activities. Staff Res onse The procedures now identify the Districts' Finance and Personnel Committee as the oversight investment advisory committee to assist the Board of Directors in monitoring treasury management activities. Comment #8 The preparation and distribution of a monthly report of treasury activities to the Board, Advisory Committee and appropriate management personnel is an internal control which should be considered. Staff Response The procedures now specify that the Districts' Treasurer will submit a Monthly Treasurers Report to the Finance and Personnel Committee listing the treasury activities fro the month, the monthly interest earnings and rates of return, the market value (if available) and purchase price for each type of investment security, and the bank account balances at month end. Review Over Internal Controls Page 4 March 15, 1995 A=unts Payable Disbursemen omment #9 An excellent control over accounts payable activities would be the periodic rotation of vendors ("A" through "L" and "M" through 7") handled by the two clerks. Such a rotation would likely detect the unauthorized altering of invoices regarding either amounts, items or payees. Staff Res ❑nse The procedures now specify that the accounts payable clerks will rotate assignments every six months. Comment #10 These procedures address only the main bank account. The possibility of redirecting monies to other bank accounts and related controls over such bank accounts should be f addressed, if such accounts exist. ` Staff Response There are no other checking accounts of the Districts except for the Districts' petty cash (checking) account. Procedures on this fund have been previously established and the cash disbursements process for these two accounts are fully segregated. In addition, a surprise audit is conducted on the Districts' petty cash (checking) account by the Districts' external auditors on an annual basis. Comment #11 We suggest bank reconciliations be targeted for completion within one week of receipt of bank statements. Staff Response Staff concurs and has incorporated this clarification within Comments #2 and #4. Review Over Internal Controls Page 5 March 15, 1995 Payroll Comment #12 It is important that neither of the two clerks who have the combination to the safe which contains check stock be the "timekeeper." It is unclear whether this is the case or not. Staff Response As previously stated within the procedures, the combination to the safe where the manual payroll check stock is stored is known only by the two clerks who work within the Payroll Unit. The Payroll Unit is within the Personnel Department. The Timekeeper is assigned to the Accounting Division and does not have access to Personnel's safe. Qijy of Brea Accounts -Payable Disbursement Comment #1 To ensure separation of duties, Accounting Supervisors need to make sure that the Accounts Payable Clerks have exchanged responsibilities as described in Section IA7, which should continue on through the reconciling and batching process. Staff Resi)anse Accounting Supervisors and accounts payable clerks have been thoroughly trained on these procedures and understand that a clerk other than the one preparing the warrant package has to batch and post the payment information into the computer system. Comment #2 The Districts' procedures require the additional handwritten signature of either the General Manager, Director of Finance/Treasurer, or Controller. Many agencies require two facsimile signatures over $10,000. Staff Response Because of the size and nature of transactions of the Sanitation Districts, numerous payments are made between $10,000 and $25,000 that are recurring and routine in nature (i.e., plant chemicals). Our procedures could be viewed as more stringent Review Over Internal Controls Page 6 March 15, 1995 because they require an actual handwritten signature for large checks as opposed to a second facsimile signature. Comment #3 The check log should be kept separate from the blank check stock. Staff Response Staff concurs and has revised the procedures so that the check log is kept locked up by a Principal Accountant who does not have access to the locked cabinet storing the blank check stock. Comment #4 It appears that the timekeeper, who prepares the accounts payable checks for mailing, also mails the checks. This should be clarified to insure that the checks are not returned to the accounts payable clerks who prepared the checks or to other Districts' personnel. Staff Response The procedures were written with the intention of having the timekeeper mail the checks as noted within the comment. This has now been revised so that it is more clear that signed checks will not be returned to the accounts payable staff or distributed to other personnel. Payroll Comment #5 Why were procedures written to cover payroll checks made in error? If there are a lot of errors, then payroll procedures need to be strengthened. Staff Response The word "error' was probably a poor choice to describe circumstances where staff must void a check and issue a replacement. The reason for including this procedure was to provide controls over the blank check stock used for manual checks. There is no blank check stock for computer generated payroll because ADP prints and delivers pay F. Review Over Internal Controls Page 7 March 15, 1995 checks from blank paper stock. The actual voiding of a computer generated check and subsequent reissue with a manual check probably occurs most often as a result of a lost check. Comment #6 Control over manual payroll check stock should be by someone other than one of the payroll clerks. Response Staff concurs and has assigned this function to another clerk located in the Personnel Department. Comment #7 The procedures currently indicate that Personnel distributes payroll checks to employees. The employee(s) actually distributing the checks should be someone who is not involved with inputting new employees into the Personnel Computer system or has the capability of adding new employees into the system. Staff Response Staff concurs. The procedures now specify the actual Personnel employees, independent of the payroll process, who are allowed to distribute the payroll checks. Treasury Management Comment #8 Procedures should clarify that at least two officials should be involved in every transaction, one to execute and one to approve. The approval process should be done prior to execution. All transactions should be in compliance with formal investment policy. The approving official should verify that the investment qualifies with the policy. Staff Response Staff concurs. The procedures now indicate that all transactions will be completed by either the Director of Finance/Treasurer, Controller or Financial Manager and approved by either of the two not executing the transaction, that the approval process takes place prior to execution, and that the approval is in accordance with the investment policy. Review Over Internal Controls Page 8 March 15, 1995 Comment #9 Whenever possible, bids and offers for any investment security should be taken from a minimum of two security dealers/brokers, banks, and/or savings and loans. Awards should be made to the highest bidder or best offer. taff Response Staff concurs and has revised the procedures to indicate that each transaction will be competitively bid. Comment #1 D The periodic review of the investment portfolio for conformity with the investment policy should be done monthly by the Controller. The periodic, or annual, review by the external independent auditors would effectively supplement the Controller's review. Staff Response Staff concurs and has amended the procedures to have the Controller review the investment portfolio for conformity with the investment policy on a monthly basis. J:%WPDOCIMNCPMEIFPC.MTGWPC9WTAFFRPT.FPCYCREVRPT.MDW FAHR COMMITTEE Meeting Date To Bd. of Dir. 11/10/99 11/17/99 AGENDA REPORT Item Number Orange County Sanitation District FROM: Donald F. McIntyre, General Manager Originator: Gary Streed, Director of Finance; David Ludwin, Director of Engineering SUBJECT: PURCHASING RESOLUTION AND DELEGATION OF AUTHORITY GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 99-XX, Establishing Policies and Procedures for the Award of Purchasing Orders and Contracts; Award of Public Works Project Contracts; Award of Professional Services Contracts; and Delegation of Authority to Implement said Policies and Procedures; and Repealing Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-21, and OCSD 98-43. This Resolution was approved by the PDC Committee on October 7, 1999, on a 7:1 vote. SUMMARY Discussion of revisions to the Purchasing Resolution and Delegation of Authority began shortly after the July 1998 consolidation. A cross -discipline and cross -department team was formed from representatives from Purchasing/Contracts, Engineering, O&M, Accounting and General Counsel to review, consolidate, standardize and update four Resolutions that governed the procurement process. The PDC Committee was assigned the first review by the Steering Committee because most of the proposed changes involve the public works process. This includes construction contracts and change orders for minor and major projects; professional service agreements (PSAs) and addenda for professional engineers, architectural, environmental, land surveying and construction management services. After three months of discussion, revision, and additional information, the PDC Committee approved the proposed Resolution last month on a 7:1 vote. The FAHR Committee is being asked to approve the PDC Committee recommendations, as well as certain other changes to the more routine procurement process and delegation of authority. At the last meeting, the FAHR Committee asked for some clarification of the PDC Committee action and a review of our internal controls. The enclosed Table 1" and Table "2" reflect the clarification, and internal controls are the subject of a separate informational report on tonight's agenda. PROJECT/CONTRACT COST SUMMARY N/A ltradon\datalhap.dtalfin%210\crane\FAHR%Fahr99\Nov\Delegation of Authority-0999.doc Revised; &20/98 Page 1 BUDGETIMPACT ❑ This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ADDITIONAL INFORMATION Routine Procurements In order to be effective, purchasing authority must be delegated into the organization. Prior attempts to delineate this authority were accomplished by the use of position classifications, i.e., foreman, manager, etc. However, the various departments and divisions are organized and structured differently, and the former classification delegations were not standard, efficient or practical throughout the entire agency. Allowing each Department Head the ability to establish separate authority levels for purchases under $10,000 will provide the organization with the ability to manage more efficiently in the future. This will be accomplished by assigning various employees to levels A, B or C, with maximum purchase authorities of $2,000/$5,000/$10,000. Division Managers would continue to be limited to $25,000, and Department Heads would continue to be limited to $50,000. All purchases over $5,000 would be subject to the bidding process and purchases below $5,000 would be bid at the Purchasing/Contract Manager's discretion. Currently, the Board of Directors is required to approve any training or meeting attendance outside of the United States and Canada. The proposed Resolution adds Mexico to the destinations that may be approved at a staff level. This change would treat meetings in all of North America in the same manner and would be consistent with the spirit of NAFTA. Professional Service Agreement (PSAs) PSAs are generally within the purview of the PDC Committee and the Engineering Department. PSAs are limited by definition to agreements with firms providing engineering, architectural, environmental, land surveying and construction management services. Currently, after a selection process, the General Manager may award a PSA for up to $25,000. He may subsequently authorize an additional $50,000 in addenda, providing no single addenda exceeds $25,000. This means that the General Manager has up to $75,000 of authority for PSAs and addenda provided certain conditions are met. NndonWata1Wvp.dta%fin121ftraneWAHR%Fahr9MoV%De1egabon of Auftrty-Om.doc Revised: mass Page 2 The proposal would increase the total authority of the General Manager to $100,000. This amount includes the original agreement and all addenda. Certain proposal and selection processes will continue to be required, and all PSAs and addenda approved by the General Manager will be reported to the PDC Committee each month. In the case where only one firm is qualified or can best perform a service, the General Manager's authority is reduced to $50,000. All PSAs for these "specialized services" exceeding $50,000 will be awarded by the Board of Directors. Small Cacital Proiects In December 1997, the PDC Committee and the Board authorized a small capital projects program. Eighteen task orders have been issued under this program, saving an average of 2.5 months on each task order, compared with obtaining Board approval of a separate contract for each project. This delegated authority has been key in alleviating a backlog of projects that had built up over several years. At the end of the contract period, each of the consultants was asked if they would extend this year's hourly rates for an additional year. All agreed to extend the contract terms for an additional year. The Director of Engineering can currently extend these agreements for one year. The proposed Resolution would allow the Director of Engineering to extend these agreements for two years, for a total of three years, with no increases in costs. Eliminating an annual RFP and consultant selection process would save staff about 350 hours per year, or 0.17 full time equivalent staffing effort, and allow the District to lock in favorable consulting rates for a three-year period. The PDC Committee has also recommended an addenda authority for the General Manager in an amount not to exceed $50,000 per task order. Public Works Projects Public Works Projects are subject to special provisions in the Government Code. Of course, the proposed Resolution complies with all of these special requirements. Currently, all Public Works Projects are awarded by the Board of Directors, and the General Manager and the PDC Committee have some change order authority. The proposed Resolution would allow the General Manager to award contracts up to $100,000 and the PDC Committee to award contracts up to $200,000. Change orders may be approved at each level, but the total contract and change order amount cannot exceed the original authority level. Cost Reduction Opportunities While one of the reasons for the proposed changes is to standardize procedures and authority levels, another is to reduce costs and save time by providing a faster, easier process to the Engineering staff. llndonldala1lwp.dta%fin121ftrane\FAHR1Fahr99\NovlDe1egadon of Auft*-0999 doc Revised: er20/9e Page 3 An analysis of the PSAs and Public Works Contracts that were approved by either the General Manager, the PDC Committee, or the Board from January 1998 to July 1999 was undertaken for the PDC Committee. The analysis compared the number of items that were approved by each group under the current DOA and the proposed DOA. The results are: Approved By: Approved By Number of Existing DOA) (Proposed DOA j Projects 1. Board PDC 10 2. Board General Manager 5 3. PDC General Mana er 2 1. For each item that is proposed to be approved by the PDC Committee level rather than the Board, there is a 3-week timesavings, resulting in 30-weeks of timesavings over the past 18 months. 2. For each item that is proposed to be approved by the General Manager rather than the Board, there is an 8-week timesavings, resulting in 10 months of timesavings over the past 18 months. 3. For each item that is proposed to be approved by the General Manager rather than the PDC Committee, there is a 5-week timesavings, resulting in 10 weeks of timesavings over the past 18 months. The total time that could have been saved over the past 18-month period that was reviewed with the proposed Delegation of Authority is 80 weeks. Along with the timesavings, project costs would have been reduced, since staff support and associated costs would have been reduced proportionally to the timesavings. For those items that are proposed to be approved by the General Manager, a substantial amount of staff effort will be reduced since formal Agenda Reports will not have to be prepared for presentation to the PDC Committee and Board of Directors. As the number of capital projects increase over the next four to six years, the number of items requiring Board action will also increase unless this proposal is approved. With the proposed delegated levels of authority, staff will be more efficient, projects will be completed on shorter schedules and project costs will be reduced. The following table summarizes the savings in time and staff effort that would be realized if the proposed Delegation of Authority is adopted. E)(ist—ing ' Proposed Man-hours DOA DOA Time Saved Per Saver Per Time Saved Man-hours Approval Approval No. of Approval Approval Total Saved Total Level Level Projects (Weeks) Hours(Weeks) Hours Board PDC 10 3 2 30 20 PDC GM 2 5 7-50 10 100 Board GM 5 8 9-52 40 260 Total 80 380 \\radon\data1\wp dtalfin\210\crane\FAHR\Fahr99\NrnADelegation of Authority-0999 doc Revised: MOW Page 4 Over the 18-month period reviewed, staff processed 17 approvals of either PSAs, PSA Addenda, or construction contracts that could have been processed faster under the proposed Delegation of Authority Resolution. A total of 80 weeks of additional project time could have been saved with the implementation of the proposed resolution, as well as up to 380 man-hours of staff effort. The three enclosed workflow charts were requested by the PDC Committee in order to better document how the proposed changes in authority levels would affect the approval process. These charts support the previous table and indicate a substantial savings in project schedules and staff effort. In most cases, projects that can be accelerated will be projects that have reduced costs. Internal Controls The FAHR Committee requested an update on the District's internal controls. A separate informational report is being prepared to address this request, but a summary may be appropriate here. In the spring and summer of 1994, KPMG Peat Marwick conducted a special comprehensive review of our internal control systems, operating policies and procedures, and accounting practices. This review, a supplement to the annual financial audit, included the following areas: 1. Safeguarding of cash and investments 2. Segregation of duties 3. Employee expense policies 4. Gift acceptance Practices 5. Procurement and job order processes 6. Cash collection security A final report was delivered to the Fiscal Policy Committee and the Board of Directors in September 1994. KPMG Peat Marwick noted as a "significant strength" that, "The Districts maintain effective policies and procedures over operations and maintenance procurement." In 1995, staff presented complete internal control, policies and procedures to the Fiscal Policy Committee in January, March and April. These were very detailed presentations, including accounts payable, payroll and treasury management. This special review was required so soon after the KPMG Peat Marwick audit because many functions were then being assumed by District staff that had been performed by County staff prior to the County bankruptcy. Each year a financial audit is prepared by an independent accounting firm. Financial audits are performed for the purpose of forming an opinion on the financial statements. They are conducted in accordance with generally accepted auditing standards and include certain test work. A separate requirement of Government Auditing Standards is a report on the auditor's consideration of internal controls over financial reporting. It should be noted that this review and report would not necessarily disclose all material \\radon\datalWvp dta\fin\2101crane\FAHR\Fahr99\Nov\Delegation of Authority-0999.doc Revised: MO/98 Page 5 weaknesses in the internal controls; their purpose is to help the auditors design a testing program. Another part of the financial audit is the "Management Letter." This letter from the auditor to the FAHR Committee discusses any weaknesses or areas of concern that were discovered, evaluates potential consequences, and proposes a solution. In addition, staff provides a summary of all PSAs and addenda approved by the General Manager to the PDC Committee on a quarterly basis. It is proposed that this would be done monthly upon adoption of the new Delegation of Authority. All task orders awarded to the small projects consultants are reported to the PDC Committee on a quarterly basis. Staff also provides, on a monthly basis, a summary of all change orders to construction contracts approved by the General Manager, and a "heads -up" to the Committee on all projects where change orders are projected to be greater than five -percent. These reports allow the PDC Committee to be fully, and continuously, informed as to how the staff is utilizing its delegated authority. To summarize, the Directors can be assured that management and staff have adequate policies, procedures, practices and reviews in place to safeguard the District's assets, and to avoid financial malfeasance. ALTERNATIVES None. CEQA FINDINGS N/A ATTACHMENTS 1. Current PDC Authorization vs. Proposed PDC Authorization 2. Current PDC Authorization vs. Proposed General Manager Authorization 3. Current Board Authorization vs. Proposed PDC Authorization 4. Revised Table 1" 5. Revised Table "2" GGS:lc \\radonldatal\wp.dta\fin\21ftrane\FAHR\Fahrgg\Nov\Delegation of Auftrty-OM.doc Revised Sf OM Page 6 Z _O _N Z � O O _N Q = cn 0 Q coce Q U W a > J H IX w Z w W Ix 0 D p U W U) a ON I.I CL as V� �m m IL Aa o ui o p N g p a d� cr T Q o` a o m a Q h it 0, CL U C W C E W ` O U D c 0 o na inC a o2 c �W U d d x U v � v U C 0 x a 0 0 d N O a 1„� g�� O c� �L A oc7 Q. �0 ttoto wpm ate. t 0- aaa H N as m s O x a> a o V w Q um IL d W °�. ` ad =EAE O Y E t `Qato 0s 2 a L a V U a co Y C1 Q !i Y LO Y m 1 1 N Y d rn a01i Y o m N U W Go 72 10 T pr O t d O 0 = w m y m m N N 4 a 77 Qi �+ Z a O E H 0 U d 3 0 0 Y x rn ` w CD TO Q R C O c ca0 — 2 C Q Z V¢ 7 Z u 7 3 N L 7 W C fA ar O x ea- u O O _ > J O O Q = > �a o c R m m as m H Z Z ~ _ CD o LL 0 ~ h O Y V W co a- O c cmU O CM� a Q w � O fAt � d 40) �-0 g> d h Cf c O x�� a2 a. ��2 — H o eQ F a OL d� 'off A�,Ld oc9 30g A. d Q CL Xa) 0 at W =�°' c Ew r t `' T 3 = 3 O x0a'ima o10 �L) Y V c d Q U� IL U °� ++ c Ul S!cl d a O CL mE"E O �qa� A� o m a U d �a VQ — Z Z O O O � = O D Q � Q U >a m w H U) Z O w a O v a I 00 O Ij W O U Nmina`ma C N W W W CL N 0 a Y U < N 0 0 =Sra d� CO 0 �a 'o 0 m < 0. a c U' o v aou ca C N � W W 2!! 2 0 U W C! a m N U < o N o m m ui .r a T ma v Qo m a aa N o. n y Cl) rn 0) W c c W d � °1 N c c W in ? 0 a c> '° x CL 0 con� o w ro a Or- =dm o 10 ° 3 U_ y d 3 a � U W � � U r W O < t� cc Y W ar to Y d 10 Y Y d 3 M Y d d Revised Table 1 Summary of Changes to Financial Approval Levels Delegated Area I Current Delegation I Proposed Delegation Up to $50,000 per Director of Engineering Up to $50,000 per authority for small project each task order, no each task order, no task orders. authority for addenda authority for addenda. General Manager authority No authority for Addenda not for small project task order addenda. exceeding $50,000 addenda. General Manager authority for PSAs and addenda. PSAs are limited to professional engineers, architectural, environmental, land surveying and construction management services. General Manager authority for Public Works Contract and Change Orders. board Committee's authority for PSAs and Addenda. Board Committee's authority for Public Works Contract and Change Orders. Board of Directors authority for non -Public Works Contracts, PSAs and Public Works Contracts. Up to $25,000 for original agreement and up to $25,000 additional for each addendum, NTE $50,000 total for all addenda. Total of contract and addenda NTE $75,000. Up to $50,000 (additions only) for each change order In no case may change order cumulative total exceed 5% of total contract or $100,000, whichever is less. All Public Works Contracts are awarded by the Board. Up to $50,000 per original agreement and up $50,000 per each addenda, NTE $100,000 total. Up to $100,000 (additions only) per each additional change order. In no case may cumulative change order total exceed 10% of total contract or $200,000, whichever is less. All PW Contracts are awarded by the Board Up to $100,000 total per PSA, including contract and all addenda. "Specialized Service" PSAs over $50,000 will be awarded by the Board of Directors. Up to $100,000 (additions only) for each change order. In no case may change order cumulative total exceed 5% of total contract or $100,000, whichever is less. Public Works Contracts less than $100,000 would be awarded by the General Manager. Up to $200,000 total per PSA, including contract and all addenda. Up to $200,000 (additions only) per each additional change order. In no case may cumulative change order total exceed 10% of total contract or $200,000, whichever is less. PDC awards contracts up to $200,000. Over $50,000 each for Over $200,000 on PSA and addenda. original contract and Over $100,000 on over $200,000 or 10% original PW contract of total contract, and over $100,000, or whichever is less, on 10% of total contract, . change orders. whichever is less, on I Over $50,000 for PSA change orders. for "Specialized Serv". aec[OOA table 1 10-25.doc Justification No change from existing authority. PDC Committee recommended that change order or addenda authority be granted only to General Manager. Maintain consistency with GM's current authority for services, equipment and materials. Non-PSA purchases between $50,000 and $100,000 are reported to the FAHR each quarter. PSA actions by the GM will be reported to the PDC monthly rather than quarterly. Maintain consistency with GM's current authority for services, equipment and materials. The proposal would allow the GM to begin to award Public Works Contracts between $35,000 and $100,000, and would increase the single change order authority. Consistency with Board Committee's current delegated authority of 2x the GM's authority. Primarily affects PDC Committee Consistency with Board Committee's current delegated authority of 2x the GM's authority. Allows PDC Committee to award Public Works Contracts up to $200,000 without further Board action Time savings due to the reduction in the volume of small projects that would have to be reviewed by the Board. Currently all PW Contracts are awarded by the Board. 5 •Q ai N _N Z C O O Cl) N rn 0 rn N ` Q O i O C.) cn O a O d) Z "a J N O Q O c > En ofCD C C= N o N CO m 0 D cu C C > Ef3 tf} ,U w- X -E H o N O C Q Q > O 7 cu 00 c o 0 0 o C) o �o a� cn 00 fn -6 O o L C) 0 o C)L T o o o +• cu U L O N �- 3 L N 3 O CV > > IL V J O J O O Cl) N U Q � O C p p p _U •� ) CD p o O o C pp O O` U U N vi c) o T o N p N a 0 o E» E» O L C" O O L N U ? 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OCSD 99- A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING POLICIES AND PROCEDURES FOR THE AWARD OF PURCHASING ORDERS AND CONTRACTS; AWARD OF PUBLIC WORKS PROJECT CONTRACTS; AWARD OF PROFESSIONAL SERVICES CONTRACTS; AND DELEGATION OF AUTHORITY TO IMPLEMENT SAID POLICIES AND PROCEDURES; AND REPEALING RESOLUTIONS NOS. OCSD 98-8, OCSD 98-12, OCSD 98- 21, AND OCSD 98-43 TABLE OF CONTENTS ARTICLE I: RECITAL OF FINDINGS Section 1.01 Findings - Declaration of Intent. ARTICLE II: DELEGATION OF AUTHORITY Section 2.01 Purpose and Scope. Section 2.02 Authorizing General Manager to Establish Rules and Guidelines. Section 2.03 Procedure for Delegation of Authority. ARTICLE III: PURCHASING SYSTEMS RE SUPPLIES, EQUIPMENT AND SERVICES Section 3.01 Purpose and Scope. Section 3.02 Purchasing System Adoption. Section 3.03 Purchasing Division Delegated Authority. Section 3.04 Requisitions. Section 3.05 Cooperative Procurement. Section 3.06 Purchases: Bidding Requirements. TLW Draft No. 14:10/21/99*103185 -CLEAN 1 Section 3.07 Purchases: Emergency. Section 3.08 Purchases: Standardized Prices and Specialized Services. Section 3.09 Purchase Orders. Section 3.10 Purchases: Encumbrances of Funds. Section 3.11 Blanket Purchase Orders. Section 3.12 Bidding Procedure: Purchases Greater Than $50,000.00. Section 3.13 Purchases Between $50,000.00 and $100,000.00. Section 3.14 Bidding Procedure: Purchases Less Than $50,000.00. Section 3.15 Bidding Procedure: Purchases Less Than $5,000.00. Section 3.16 Inspection and Testing. Section 3.17 Purchases: Negotiated Contracts. Section 3.18 Surplus Supplies, Materials, and Equipment. Section 3.19 Sale of Real Property. Section 3.20 Recordkeeping. ARTICLE IV: PROFESSIONAL SERVICES CONTRACTS Section 4.01 Purpose and Scope. Section 4.02 Retention of Professional Technical Consultants. Section 4.03 Small Capital Project — Defined. Section 4.04 Small Capital Project: Approval of Plans and Specifications. Section 4.05 Small Capital Project: Annual Budget Approval. TLW Draft No. 14:10/21/99*103185 -CLEAN 2 Section 4.06 Small Capital Project: Selection of Consultants — Procedure. Section 4.07 Major and Minor Capital Projects: Defined. Section 4.08 Major Capital Project: Scope of Work. Section 4.09 Major Capital Project: Selection of Consultants — Procedure. Section 4.10 Major Capital Project: Award of Professional Services Agreements. Section 4.11 Major Capital Project: Approval of Plans and Specifications. ARTICLE V PUBLIC WORKS CONTRACTS Section 5.01 Purpose and Scope. Section 5.02 Public Works: Bidding Required. Section 5.03 Bidding Procedure: Public Works Construction Greater Than $35,000.00. Section 5.04 Approval of Change Orders to Construction Agreements. ARTICLE VI: MEETINGS (AND RELATED TRAVEL) AND TRAINING (AND RELATED TRAVEL) EXPENDITURES Section 6.01 Purpose and Scope. Section 6.02 General. Section 6.03 Policies and Procedures. ARTICLE VII: MISCELLANEOUS Section 7.01 Noncompliance. Section 7.02 Severability. TLW Draft No. 14:10/21/991103185 -CLEAN 3 Section 7.03 Effective Date. Section 7.04 Repeal of Prior Resolutions_ ARTICLE I RECITAL OF FINDINGS Section 1.01'. Findinas - Declaration of Intent. A. California Government Code Section 54202 requires that every local agency shall adopt policies and procedures, including bidding regulations, governing purchases of supplies, services, and equipment, and that purchases of supplies, services, and equipment by the local agency shall be in accordance with said duly adopted policies. B. California Government Code Section 54204 requires that if the local agency is other than a city, county, or city and county, policies provided for in Section 54202 of said Code shall be adopted by means of a written rule or regulation, copies of which shall be available for public distribution. C. In order to establish efficient procedures for the purchase of supplies, services, and equipment, and the letting of public works contracts at the best possible cost commensurate with quality and delivery needs, together with other relevant factors, to exercise positive financial control over purchases, to clearly define authority for the purchasing function, and to establish bidding procedures, a purchasing system for the District, beyond what is required by said Sections of the Government Code, is desirable and in the best public interest. D. An effective, comprehensive organization needs an administrative structure with support procedures that are logical, efficient, well -documented, are understood by the organization's employees and members of the public, and that enable timely and responsive administrative acquisition of materials, supplies, and services. The organization should also appropriately delegate authority to those persons and units having responsibility for these activities. E. The Board of Directors has determined that a delegation of authority structure provides for better training of employees which will result in improved efficiency and effectiveness of the District's operations. ARTICLE II DELEGATION OF AUTHORITY TLW Draft No. 14:10/21/99:#103185 - CLEAN 4 Section 2.01 Purpose and Scope. In an effort to remove barriers that prevent District employees from performing their jobs at the highest level of efficiency, a delegation of authority structure will appropriately train the employees, and by providing increased responsibility and ownership, will contribute to the improved efficiency and effectiveness of the District. Section 2.02: Authorizing General Manager to Establish Rules and Guidelines. The General Manager of the District is hereby authorized to establish rules and guidelines to implement Board policies and to delegate to Staff signature authority to initiate and execute contracts or purchase orders to acquire services, including professional services, supplies, and materials, and public works project contracts, all as more particularly specified in Articles III through VI. Section 2.03: Procedure for Delegation of Authority. The following provisions establish delegated signature authority for contracts and purchase orders for the acquisition of supplies, services, materials, equipment, and professional services. The delegated authority for each functional management level will be established one level higher in the absence of specifically identified authority. The General Manager's authority is delegated to the Assistant General Manager ("AGM") in the General Manager's absence. These procedures establish the framework and boundaries within which a delegatee can operate, and also provide Management with a mechanism to evaluate implementation and hold the delegatee accountable for his/her actions. Upon delegation of authority by the General Manager, each Department shall be authorized to further delegate to respective employees within the Department. The delegation shall be effective upon the Department Head setting forth, in writing, the name of the delegated employee, his/her job position, and specific level of delegated authority designated as Level A, B, or C, respectively, and filing it with the Contracts/Purchasing Manager. The General Manager shall establish procedures to implement further delegated authority into the organization. For contracts and purchase orders for the acquisition of supplies, materials, equipment, and services (excluding public works contracts governed by State law and professional services agreements), the following signature authority is hereby established. The functional authority level listed describes the highest level of signature approval needed. Intermediate management approval between the initiator/requestor and listed approval level must also be obtained. A. Approval Levels All items above $100,000.00 are to be approved by the Board prior to TLW Draft No. 14:10/21/991103185 - CLEAN 5 purchase, with the exception of emergency items, pursuant to Section 3.13. All items between $50,000.00 and $100,000.00 are reviewed and approved by the General Manager prior to purchase, and reported to the Board of Directors on a quarterly basis. All items below $50,000.00 are approved pursuant to the following delegation of authority: Items exceeding $100,000 require Board of Directors approval, unless previously authorized by the Board for items identified in the annual District budget. 2. Items $50,000 to $99,999 require General Manager or Assistant General Manager approval. 3. Items $25,000 to $49,999 require Department Director approval. 4. Items $10,000 to $24,999 require Division Manager approval. 5. Items $5,000 to $9,999 require Level A approval. 6. Items $2,000 to $4,999 require Level B approval. 7. Items less than $2,000 require Level C approval. B. Co -Signatures. In addition to the signature of the Delegated Authority: To ensure that all policies and procedures governing purchase orders and contracts are followed, all contracts or purchase orders will be signed by the Contracts/Purchasing Manager, or his designee. 2. All purchases for computer hardware, software, and communication equipment will be pre -approved by the Information Technology Director, or his designee. C. Procedural Requirements. All policies and procedures adopted by the Board of Directors or promulgated by the General Manager governing the procurement of services, equipment, or supplies will apply, and shall be complied with. Budgeted funds must be available prior to the acquisition of goods or services. Upon the identification of goods or services needed that are not originally budgeted, either a budget transfer request form must be completed demonstrating that adequate funds are available to cover the acquisition, or the Board of Directors must authorize a budget amendment, at which time, the item being acquired would fall into TLW Draft No. 14:10/21/994103185 - CLEAN 6 the budgeted category. ARTICLE III PURCHASING SYSTEM RE SUPPLIES, SERVICES, EQUIPMENT, AND MATERIALS Section 3.01: Purpose and Scope. In order to establish efficient procedures for the purchase of supplies, services, materials and equipment, and the letting of public works contracts at the best possible cost commensurate with quality and delivery needs and other relevant factors; to exercise positive financial control over purchases; to clearly define authority for the purchasing function; to establish bidding procedures, pursuant to Section 54202 of the Government Code of the State of California, a purchasing system is deemed necessary. Section 3.02: Purchasing System Adoption. The procedures and authority set forth in this Resolution are intended to operate in concert with and supplemental to the delegation of authority granted by the governing Board of Directors in the adoption of this Resolution. Full compliance with the provisions of all Articles in this Resolution is required. Section 3.03: Purchasing Division Delegated Authority. There is hereby vested in the Purchasing Division (hereinafter referred to as "Purchasing"), under the general supervision and direction of the Director of Finance, the authority for the purchase of supplies, services, materials, and equipment, letting of public works contracts and establishment of rules, procedures and administrative policies relative thereto. The Director of Finance may delegate or assign any or all of the following duties to the Contracts/Purchasing Manager: A. To purchase or contract for supplies, services, materials, and equipment required by any Department or Division, in accordance with purchasing procedures prescribed by this Resolution; such administrative regulations as Purchasing shall adopt for the internal management and operation of Purchasing; and such other rules and regulations as shall be adopted by the Board of Directors. B. To negotiate and recommend execution of contracts for the purchase of supplies, services, materials, and equipment; for construction of public works projects; and for the disposition of surplus property and by-products of the sewage treatment process. TLW Draft No. 14:10/21 /99/103185 -CLEAN 7 C. To submit to General Counsel for review or approval, as necessary, all contracts, purchase orders, and other related documents, the original executed copies of which shall be delivered to the Board Secretary for custodianship. D. To prepare for the District, the needed standards and specifications of quality in supplies, services, materials, equipment, and construction at the best cost and under the most favorable conditions, with due consideration to delivery and other relevant factors. E. To discourage uniform bidding and endeavor to obtain as full and open competition as possible on all purchases and sales. F. To prepare rules, regulations, procedures, and administrative policies, and revisions thereto, governing the purchase of supplies, services, materials, and equipment; for the letting of public works construction contracts in accordance with the provisions of state law; and disposition of surplus property and by-products. G. To prepare rules, regulations, procedures, and administrative policies, and revisions thereto, governing the warehousing of inventories. H. To keep informed of current developments in the field of purchasing, including but not limited to prices, market conditions and new products. I. To prescribe and maintain such forms as reasonably necessary to the implementation of this Resolution and other rules and regulations of the District. J. To develop specifications to establish minimum standards for all purchases. K. To supervise the inspection of all supplies, services, materials, and equipment purchases to insure conformance with specifications. L. To provide for transfer of surplus or unused supplies and equipment between Departments, as needed. M. To have custodianship and control of all inventories and surplus property. N. To maintain a bidders' list, vendors' catalog file, and records needed for efficient operation of the Purchasing Division. TLW Draft No. 14:10/21/99:#103185 -CLEAN 8 O. To review, approve, and maintain active insurance documents for all District procurements. P. To undertake such other and future duties as, in the Director's discretion, are incidental and necessary to the conduct of the Division. Q. To revise all records to reflect the sale, transfer, or reorganization of a supplier's business, or a change in the supplier's name for doing business, so long as all other terms and conditions of the original agreement remain the same. In such event of an assignment of the purchase order or contract by the supplier, the District shall not be bound until it has given its consent in writing, which consent shall not be unreasonably withheld. An amendment to the original agreement shall be prepared authorizing and consenting to the assignment and shall be executed by the General Manager, or his designee, on the District's behalf. Section 3.04: Requisitions. All employees of the District who need or require supplies, services, materials, or equipment to carry out the defined duties of their positions, shall submit requisitions, in advance, for purchases or warehouse requisitions to Purchasing, in accordance with the adopted rules, regulations, procedures, and policies of the Purchasing Division. Usage of the District's procurement cards shall be exempt from this requirement. Section 3.05: Cooperative Procurement. A. The District, through Purchasing, may participate in or sponsor, conduct and/or administer a Cooperative Procurement Agreement for the acquisition of procured items or services with any other public agency purchasing unit, in accordance with an agreement between the District and the other public agency. B. The District, through Purchasing, may sell to, acquire from, or use any property belonging to another public agency, including the cooperative use of supplies or services. C. Participation in the County of Orange Cooperative Purchasing Program has been expressly authorized by adoption of Board of Directors Resolution No. OCSD 98-22. Section 3.06: Purchases: Bidding Requirements. Except as hereinafter provided, purchasing of supplies, services, materials, or equipment shall be by bid procedures as set forth in this Article III, when the purchase is estimated to have a value greater than Five Thousand ($5,000.00) Dollars; the commodities or services TLW Draft No. 14:10/21/99:#103185 -CLEAN 9 may be obtained from more than one vendor; or are not standardized as to price; and no emergency exists. Section 3.07: Purchases: Emergency. Whenever an emergency arises which is, or may be a threat to the continued required operations of the wastewater treatment plants and facilities owned by the Districts, or when purchases are immediately necessary for the preservation of life or property, or to avoid a threat to the public health or safety, the Division may purchase supplies, services, materials, or equipment required for immediate use, in an amount greater than One Hundred Thousand $100,000.00) Dollars without observing the procedures set forth in this Resolution. The General Manager or his designee shall advise the District Chair and/or Vice Chair, as appropriate, of the action taken, and such action shall be ratified by the Board of Directors at its next regular meeting. Section 3.08: Purchases: Standardized Prices and Specialized Services. In the purchases of supplies, services, materials, or equipment in which the items to be purchased have a demonstrated uniformity in price, or it is determined that there is a sole source, or the provider of services is determined to be uniquely qualified to perform specialized services, Purchasing may make such purchases without observing the bidding procedures of Section 3.12 below. Section 3.09: Purchase Orders. Purchases of all supplies, services, materials, or equipment shall be made by purchase order and may also require a formal written contract, when determined necessary or appropriate by the Contracts/Purchasing Manager. To ensure that all policies and procedures governing purchase orders and contracts are followed, all contracts or purchase orders will be executed by the Contracts/Purchasing Manager, or as delegated by the Contracts/Purchasing Manager. Purchasing and employees requisitioning supplies and equipment shall be responsible that purchase orders and requisitions are in conformity with the spirit and intent of this Resolution and that no purchase has been broken into smaller units to evade any requirement of this Resolution. Purchasing shall retain, in its files, one copy of all purchase orders issued during two (2) years preceding, on which copy of the purchase order, there shall be a list of bidders and prices bid for the materials or equipment purchased, or if no bids or quotations were taken or received, a full statement as to the reason therefor. Section 3.10: Purchases: Encumbrances of Funds. Except in cases of emergency, no purchase order shall be issued for any supplies, services, materials, or equipment, unless there exists an unencumbered appropriation balance in the fund against which said purchase is to be charged. Section 3.11: Blanket Purchase Orders. The Purchasing Division may issue annual blanket purchase orders for recurring purchases of miscellaneous supplies TLW Draft No. 14:10/21/99*103185 -CLEAN 10 that: A. Because of economic considerations, the items are not carried in stock in the District's warehouse; B. Are stock items that have been designated as appropriate sole source acquisitions; C. Purchasing determines it is in the best interests of the District to competitively bid a blanket order for inventory items; or D. Are for miscellaneous supplies, services, materials and equipment where such purchase of supplies, services, materials, and equipment may be procured from a single vendor during the budget year, without observing the procedures prescribed in Section 3.12 below, when, in its discretion, it is determined that such blanket purchase orders are at a cost favorable to the District and will result in more efficient procurement of such items. Blanket purchase orders shall be in conformity with the spirit and intent of this Resolution. The Purchasing Division shall, at the beginning of each budget year, file a list of such purchase orders and the estimated annual amount with the Director of Finance. Section 3.12: Bidding Procedure: Purchases Greater Than $50,000.00. A. Award to Lowest Bidder. Except as otherwise provided in this Article III, purchases of supplies, services, materials, and equipment of estimated value greater than Fifty Thousand ($50,000.00) Dollars shall be by written contract or purchase order with the lowest responsive and responsible bidder (unless a Request for Proposal ("RFP") solicitation instrument is utilized), pursuant to the procedures prescribed herein. B. Award Approval. Purchases of supplies, services, materials, and equipment that have appropriate budgetary approvals shall be bid and awarded directly by the Contracts/Purchasing Manager, or as delegated by the Contracts/Purchasing Manager. Supplies, services, materials, and equipment that exceed the budgeted amount, or effect policy recommendations or ratifications, or are sole source contracts exceeding $100,000.00, and all public works contracts, shall require Board of Directors' approval prior to issuance or award of a purchase order or contract. C. Notice Inviting Bids. The notice inviting bids shall include a general description of the articles or services to be purchased or sold, shall state where bid forms and specifications may be secured, and the time and place for opening bids. Published Notice. The notice inviting bids shall set a date TLW Draft No. 14:10/21 /99*103185 - CLEAN 11 for the opening of bids. The notice shall be published one (1) time at least ten (10) days before the date for the opening of the bids. Notice shall be published in a newspaper of general circulation, printed and published within the District's jurisdiction, or by electronic bulletin board procedures designed to reach the industry or market of supply. 2. Bidders List. Purchasing may also solicit sealed bids, or receive bids electronically, from all qualified, responsible prospective suppliers whose names are on the Bidders List maintained by the District, or who have requested their names to be added thereto. 3. Bulletin Boards. Purchasing may also advertise pending purchases or sales by a notice posted on a public bulletin board in the Purchasing Division Office, and by electronic bulletin board, as deemed appropriate by the Contracts/Purchasing Manager. D. Bidder's Security. When deemed necessary by Purchasing, bidder's security may be prescribed in the contract specifications or in the public notice inviting bids. Bidders shall be entitled to the return of bid security upon the full execution of an awarded contract or issuance of a purchase order, by the successful bidder. A successful bidder shall forfeit his bid security upon refusal or failure to execute the contract within the prescribed time after the notice of award of contract has been delivered to bidder, unless the District is responsible for a delay in the prescribed time. The Board of Directors may, on refusal or failure of the successful bidder to execute the contract, award it to the next lowest responsive, responsible bidder. If the Board of Directors awards the contract to the next lowest bidder, an amount of the lowest bidder's security equal to the difference between the low bid and the awarded bid, shall be forfeited to the District, and the surplus, if any, shall be returned to the lowest bidder. E. Bid Opening Procedure. Sealed or electronically received bids shall be submitted to the Contracts/Purchasing Manager and/or Secretary of the Board of Directors, and shall be identified as a bid on the envelope or the electronic bulletin board. Bids shall be opened in public by the Contracts/Purchasing Manager, or his designated representative, at the time and place stated in the public notices. A tabulation of all bids received shall be open for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening. In cases wherein the Request for Proposal ("RFP") instrument is utilized, all RFP's will be opened, and only the name of the Proposer shall be read aloud at the time and place set forth herein. F. Rejection of Bids. In its discretion, the Board of Directors may reject any and all bids presented and readvertise for bids. If all bids are rejected, the TLW Draft No. 14:10/21/99:#103185 -CLEAN 12 Board of Directors, by majority vote, may declare that the materials or supplies may be acquired at a lower cost by negotiation in the open market and authorize the purchase in that manner. G. Tie Bids. If two or more bids received are for the same total amount or unit price, (with quality and service being equal), and if the public interest will not be best served by a delay of readvertising for bids, the Board of Directors may accept the one it chooses or accept the lowest bid made by negotiation with the tie bidders at the time of the award. H. _Performance Bonds. Purchasing shall have authority to require a faithful performance bond, a labor and materials bond and/or a warranty bond, before entering into a contract in an amount as it shall find reasonably necessary to protect the best interests of the District. If the Purchasing Division requires any of these bonds, the form and amount of the bond shall be described in the notice inviting bids and in the contract specifications. Section 3.13: Purchases between $50,000.00 and $100,000.00. Notwithstanding the provisions of Subsections 3.12(A) through 3.12(H) above, Purchasing may award a contract to purchase supplies, services, materials, or equipment in an amount greater than Fifty Thousand ($50,000.00) and less than One Hundred Thousand ($100,000.00) Dollars, without obtaining bids and following the procedures set forth above when the Contracts/Purchasing Manager determines that: A. By purchasing immediately, it can avoid an imminent price increase or realize a substantial price discount that is available on a short term basis only; or B. It can obtain supply, services, materials, or equipment immediately that might not otherwise be available at such time as purchasing procedures could be completed; or C. Said contract for supplies, services, materials, or equipment has Board of Directors' approval for multiple one (1) year renewal periods. All such contract renewals shall require the Contracts Administrator/Purchasing Manager approval; or D. The supplies, services, materials, or equipment are only available from a sole source. E. Whenever an emergency arises which is, or may cause a threat to the continued required operations of the treatment plants, or when purchases are immediately necessary for preservation of life or property, or to avoid a threat to the TLW Draft No. 14:10/21/99:#103185 -CLEAN 13 public health or safety. All purchases between $50,000.00 and $100,000.00 shall be reviewed and pre - approved by the General Manager and reported to the Board of Directors on a quarterly basis. Section 3.14: Bidding Procedure: Purchases Less Than $50,000.00. Purchases of supplies, services, materials, or equipment, of an estimated value in the amount of Fifty Thousand ($50,000.00) Dollars or less on which bidding is not required by state law, may be made by Purchasing in the open market without observing the same procedures as prescribed by Section 3.12 above. The procedures to be used for these purchases are as follows: A. Minimum Number of Bids. Open market purchase shall, whenever possible, be based on at least three (3) bids and shall be awarded to the lowest responsive and responsible bidder, and shall be by written contract or purchase order. B. Solicitation of Bids. Bids shall be solicited by written requests to prospective vendors or purchasers and/or by telephone, facsimile transmission, electronic bulletin board, and/or by public notice posted on a public bulletin board in the Purchasing Division Offices. C. Receipt of Bids. Bids shall be submitted to Purchasing, which shall keep a public record of all open market orders and bids for a period of two (2) years after the submission of bids or the placing of orders. D. Exceptions. Purchasing may purchase supplies, services, materials, or equipment without observing the procedures prescribed in Subparagraphs A, B, and C above, if supplies, services, materials, or equipment are only available from a sole source. All such purchases shall be approved by the Director of Finance, the requesting Department Head, and the Contracts/ Purchasing Manager. Section 3.15. Bidding Procedure: Purchases Less Than $5,000.00. Purchasing may purchase supplies, services, materials, or equipment of a value in the amount of Five Thousand ($5,000.00) Dollars or less per purchase order, without observing the procedures prescribed in this Section when, in the Contracts/Purchasing Manager's discretion, it is determined that observing such procedures would not result in a lower overall cost to the District. Record of such decision shall be fully stated in the purchase order file as to the reason therefor. Section 3.16: Inspection and Testing. The supplies, services, materials, and equipment delivered, and contractual services performed, shall be inspected to determine their conformance with the specifications set forth in the purchase order or TLW Draft No. 14:10/21 /994103185 -CLEAN 14 contract. Purchasing shall have authority to request professional services, or to require chemical and physical tests of samples submitted with bids and samples of deliveries which are necessary to determine their quality and conformance with specifications. Section 3.17: Purchases: Negotiated Contracts. Notwithstanding other provisions of this Resolution, the Board of Directors may, when it appears in the best interests of the District, authorize the Staff to negotiate and award a contract for purchase of supplies, services, materials and equipment without observing the procedures prescribed in Sections 3.12 and 3.14 above. A. When such authorization has been granted for purchase of supplies, services, materials, and equipment of an estimated value in the amount of One Hundred Thousand ($100,000.00) Dollars or greater, the Staff shall obtain the concurrence of the District Chair and/or Vice Chair, as appropriate, prior to awarding such purchase. B. Whenever any contract for supplies, services, materials, or equipment has been entered into between the District and a person or entity providing such supplies, services, materials, or equipment, and Purchasing determines that it is in the best interest of the District to continue said contract with such person or entity, Purchasing may, in its discretion, negotiate an extension of such contract without observing the bidding procedures prescribed in Sections 3.12 and 3.14 above; provided, the contract contains provisions for subsequent extension periods; has been approved and awarded by the Board of Directors; and/or has prior budget approval, as provided in Section 3.12. C. This Section shall not apply to the letting of public works construction contracts in excess of Thirty -Five Thousand ($35,000.00) Dollars. Said contracts shall be governed by the provisions set forth in Article V of this Resolution. Section 3.18: Surplus Supplies, Materials, and E ui ment. All Departments and/or Divisions shall submit to Purchasing, at such times and in such form as Purchasing shall prescribe, reports showing all supplies, materials, and/or equipment which are no longer used or which have become obsolete or worn out. Purchasing shall have authority, as deemed appropriate by the Contracts/Purchasing Manager, to sell, exchange for, or trade in on new supplies, materials, and equipment, or dispose or, as deemed appropriate, all supplies, materials, and equipment which cannot be used by any other Department or Division, or which have become unsuitable for District's use. TLW Draft No. 14:10/21/994103185 - CLEAN 15 Section 3.19-- Sale of Real Property. No real property of the District may be sold, or any negotiations leading to such sale may be made, without prior approval of the Board of Directors. Section 3.20: Recordkee in : A record of all sales or surplus property and by-products shall also be maintained by Purchasing upon or in which is maintained the record of the bids received for the property or by-products sold, or if bids were not taken or received, a full explanation thereof. Such records shall be maintained for two (2) years after the sale. ARTICLE IV PROFESSIONAL SERVICES AGREEMENTS Section 4.01: Purpose and Scope. The Orange County Sanitation District, in the interest of uniformity, fairness and cost effectiveness desires to establish policies and procedures for the selection and procurement of professional engineering, architectural, environmental, land surveying and construction management services. Section 4.02: Retention of Professional Technical Consultants. This Resolution establishes a procedure to be followed in the selection and retention of Professional Technical Consultants in the areas of engineering, architecture, environmental, land surveying, construction management services and related services. Professional Technical Consultants are those individuals or firms providing engineering, architectural, environmental or land surveying services which are those professional services associated with research, development, design and construction, alteration, or repair of real property, as well as incidental services that members of these professions and those in their employ may logically or justifiably perform, including studies, investigations, surveys, evaluations, consultations, planning, programming, conceptual designs, plans and specifications, cost estimates, inspections, shop drawing reviews, sample recommendations, preparation of operation and maintenance manuals, and other related services. Services for product testing are excluded. It is recognized that no two individuals or firms have equal skills, training, or experience and that the qualities of such persons vary. Accordingly, Professional Technical Consultants shall be selected based upon the District's discretion and opinion TLW Draft No. 14:10/21/99:#103185 -CLEAN 16 as to which particular consultant is best qualified to perform the work (hereinafter referred to as "projects") in question. For purposes of this Resolution, "firm" shall mean any individual, firm, partnership, corporation, association, or other legal entity permitted by law to practice the profession of architecture, engineering, environmental services, land surveying, or construction project management. Evaluation and selection of a consultant firm will include but not be limited to the following: A. The firm shall be of high ethical and professional standing, its members being of good moral character, and it shall be prepared to submit references from persons of known repute. B. The principal and other responsible members of the firm must be registered in the State of California, as required by law. C. A principal member of the firm's staff must have at least ten years' recent experience in responsible charge of work of the type involved in the project. D. At least two additional members of the firm's staff must have at least five years' experience in responsible charge in the field, or fields, required by the project. E. The firm shall be capable of performing the work within the prescribed time limitations considering the current and planned work loads of the firm. F. If all other factors are equal, preference shall be given to a local based firm when more than one firm is being considered. G. If the project is funded, either in whole or in part, by federal funds that require, as a condition of establishing or maintaining eligibility for federal funds, that firms working on the project maintain an affirmative action employment program, then the firm selected for the project must certify to having such a program. The District also recognizes that the scope of services and the qualifications of consultants can differ significantly between major capital facilities projects and small capital projects. The criteria set forth in Paragraphs C and D above may be waived by District for small capital projects. The procedures set forth in this Resolution shall govern the retention of such professional consultants. Section 4.01 Small Capital Project: Defined. "Small capital project" is defined as a miscellaneous capital improvement or facility modification, replacement, or TLW Draft No. 14:10/21/99*103185 -CLEAN 17 repair project, related to plant safety, reliability and efficiency enhancements where professional consulting services are estimated to be in an amount not to exceed $50,000.00 for each project. Section 4.04: Small Capital Project: Approval of Plans and Specifications. The Board of Directors delegates to the Director of Engineering, as Professional Registered Engineer, the authority to approve the design, plans, and specifications for construction of new or modified District facilities that is deemed a small capital project, as defined in Section 4.03 above. Section 4.05: Small Capital Project: Annual Budget Approval. Upon approval by the Board of Directors of an annual budget, the District's Staff shall be authorized to solicit contract proposals from professional engineering, architectural, environmental, land surveying and construction management firms to perform the required services for the approved small capital projects, as defined and prescribed herein. Section 4.06: Small Capital Project: Selection of Consultants — Procedure. A. District's staff shall compile a master pre -approved list of 5-10 firms having the required expertise to perform the required professional service for a small project. The master list of firms will be selected based upon a solicitation, review of qualifications, and Board approval. The original term of the agreement shall be for one (1) year. Thereafter, the Department Director shall be authorized to recommend to the General Manager, an extension of the professional consulting services agreement for up to two (2) additional one (1)-year renewal periods, for a total of three (3) years, with each of the parties designated on the approved master list. The professional consulting services agreement for each party on the master list shall be forwarded to the purchasing office. The Engineering Department Staff shall prepare the appropriate requisition documentation to insure future payment to the consultant. B. As a need for an individual specific project arises, the District will implement the Agreement by issuing a task order identifying the specific project by name and number and including the approved scope of work required of the consultant for the project. The scope of work for any individual task order, shall not entail a cost in excess of $50,000.00. There is a maximum annual limitation of $200,000.00 for each individual consultant purchase order under the provisions of this Section 4.06. C. The Department Director shall first obtain at least two (2) price proposals from consultants before the task order is awarded to a consultant. This requirement may be waived at the discretion of the Department Director where a determination is made that the subject work is unique such that only one (1) consultant is available to perform the work, or where significant time constraints or emergency conditions dictate that one (1) consultant be solicited for a price proposal. The TLW Draft No. 14:10/21/99*103185 -CLEAN 18 Department Director, or his designee, shall review the proposals specifically addressing cost and ability to meet District schedule requirements. Based on the evaluations, the Department Director is authorized to award the task order. D. Once the consultant is selected for the award of a small capital project and the task order is executed by the District, the Department Director shall issue the notice to proceed. E. Addenda to a particular task order shall be approved by the General Manager. However, the amount for each addendum may not exceed $50,000.00, and the cumulative total for all addenda may not exceed $50,000.00. The Department Director shall issue the task order addendum in letter form. Section 4.07: Major and Minor Ca ital Projects: Defined. "Major capital project" means the construction, repair, modification, or rehabilitation of the District's Capital Facilities, including treatment plants, trunk sewers, pump stations, ocean outfall, administrative and support facilities, and other facilities related to District operations, where the cost of professional technical consulting services are estimated to be in an amount in excess of $50,000.00 for any project. These projects may require Selection Committee or Board approvals. Specialty -item capital projects are defined as projects other than Small Capital Projects, as defined in Sections 4.03 through 4.06, inclusive, where the cost of professional technical consulting services are estimated to be in an amount more than $50,000.00, and less than or equal to $100,000.00 and require only General Manager approval. Requirements for Scope of Work, Proposal, Procurement and Negotiation Agreement Continuation of Services, Agreement of Services, and Conflict of Interest apply for both Major Capital Projects and Specialty -Item Capital Projects, with difference only in authorization levels. Section 4.08: Major Capital Project: Scope of Work. A. For every project approved by the Board of Directors and for which outside services are required, the District staff shall develop a comprehensive scope of work. B. The scope shall define the extent of the services and the time required. Section 4.09: Major Capital Project: Selection of Consultants - Procedure. For the employment of any professional consulting services for major capital projects, the following procedures shall apply: TLW Draft No. 14:10/21/994103185 -CLEAN 19 A. Proposals - Notice Requesting. Staff shall prepare a Request for Proposal ("RFP") or a Request for Qualifications ("RFQ") for the scope of work which shall include a request for the firm's qualifications, personnel capability, demonstration of firm's capabilities, identification of personnel assigned to the project, estimate of number of hours for each aspect of the project, fee proposals and conflict of interest disclaimer. The Request for Qualifications' process may be used, at Staffs discretion, to narrow the field of firms submitting proposals on the project. District shall maintain a comprehensive list of professional consultants' demonstrated competence. Notice shall be mailed to all firms requesting notice of any RFP or RFQ issued by the District. Optionally, notice may be given by publication in professional journals or publications of general circulation. B. Staff Screening Committee. A screening committee of at least two (2) staff members as chosen by the Department Director shall review all submitted proposals and prepare a recommendation for selection of the best qualified consultant to the Selection Committee, as described in Paragraph D below. C. Proposals - Contents. Proposals submitted shall: 1. Acknowledge the scope of the project and extent of the services required. 2. Include a description of the firm's qualifications for performing the proposed work. 3. In the case of a proposal for construction management services, each firm shall provide evidence that its personnel that will carry out on -site responsibilities have expertise and experience in construction project design review and evaluation, construction mobilization and supervision, bid evaluation, project scheduling, cost -benefit analysis, claims review and negotiation, and general management and administration of a construction project. 4. Include past performance records of the firm. 5. Demonstrate the firm's capabilities to complete the work within the time allotted. 6. Identify the specific key personnel to be assigned to the project. TLW Draft No. 14:10/21/99:#103185 - CLEAN 20 7. Provide an estimate of the number of hours involved in each aspect of the scope of work for such personnel. 8. Be accompanied by a sealed fee proposal estimate which shall not be opened until the firm is selected as being qualified. Thereafter, it shall be the basis, for procurement negotiations. The form of the fee proposal shall be as described in Subsections F2 and F3 below. 9. Contain a conflict of interest disclaimer. 10. Provide any other information required to properly evaluate the firm's qualifications and familiarity with the types of problems applicable to the project. TLW Draft No. 14:10/21/991103185 -CLEAN 21 D. Selection Committee - Membership. 1. The members of the Board of Directors Standing Committee principally responsible for the project and contract under consideration for approval shall constitute the Selection Committee for District projects. 2. At the discretion of the District Chair, additional Directors may be appointed to the Committee to assist in the consideration of proposals for specific projects. E. Review of Proposals by Staff Committee and Selection Committee. 1. The Staff Committee shall review each proposal and the qualifications of each firm with due consideration of office location, reputation in the professional community, experience, both generally and specifically on similar -type projects, the project approach, understanding of the scope of work, financial standing, number of qualified personnel and their availability for the project, quality of references, work load and other factors relevant to the project being considered. 2. The Staff Committee, upon completion of their evaluation of all proposals, shall determine those firms deemed to be fully qualified to provide the services sought by the District based on their demonstrated competence and qualifications. 3. The Staff Committee, upon making a determination of the fully qualified firms, shall rank the firms considered, in order of preference, based upon the qualification of each, as described in Subparagraph E(1) above. Thereafter the Committee shall open the sealed fee proposal of the qualified firms. Based upon the fee proposal, the committee may recommend to the Selection Committee or the Board of Directors an individual or firm for award of the contract. The recommended individual or firm can be ranked lower than firms with higher fee proposals. 4. The Selection Committee shall receive and review the recommendation of the Staff Committee and either award or recommend to the Board of Directors, either the approval or disapproval of the Staff recommendation to award a contract, as authorized in Section 4.10 below. F. Procurement and Negotiation of Agreement. To determine the firm to be selected and the compensation for the services sought, the following procedures will be strictly adhered to: TLW Draft No. 14:10/21 /99:#103185 -CLEAN 22 1. The Staff Committee will, at its discretion, invite the firm that is considered to be the best qualified to appear before the Staff Committee. 2. The proposal for fees associated with the services as submitted by the selected firm shall be presented in sufficient detail to enable the Staff Committee to adequately ascertain the level of effort associated with the scope of work and to determine whether the firm has thoroughly identified the efforts associated with the services and thoroughly understands the work required. 3. The basis of the fee shall be: Cost plus a fixed fee with a maximum amount, a per diem rate(s) with a maximum amount, or a lump sum (fixed) fee. 4. If it is the decision of the Staff Committee to use methods for compensation other than the lump sum or cost plus a fixed fee with a maximum, or the per diem rates with a maximum, justifications for this decision shall be made by the Staff Committee in its recommendation to the Selection Committee and the Board of Directors. 5. The Staff Committee shall review the compensation requested by the firm which shall be compared with the maximum fee as previously established. 6. The final negotiated fee, as recommended to the Selection Committee and Board of Directors, shall be certified by the Staff Committee as reasonable for the services requested and not resulting in excessive profits for the firm. 7. If agreement is not reached, the negotiations should be terminated and similar interviews should then follow with the next -ranked firm. 8. All such negotiations shall be on a strictly confidential basis, and in no case shall the compensation discussed with one firm be discussed with another. G. Continuation of Services. 1. In some instances where a qualified firm has satisfactorily completed one phase in the development of a project and the Board determines that it is in the best interests of the District to retain the same firm for subsequent phases of related work, the Staff Committee or the Selection Committee may be TLW Draft No. 14:10/21 /99*103185 -CLEAN 23 authorized to proceed directly with negotiations with that firm for the additional work. 2. Continuation of services may arise when a firm has completed a feasibility report or a preliminary engineering report and the services for said work are satisfactory to the Board and the procedure of examining other firms for subsequent phases is not deemed necessary or cost effective. 3. In the event that satisfactory negotiations for price cannot be concluded under these circumstances, negotiations should be terminated and the provisions set forth hereinabove for selection of a firm would apply. H. Specialized Services. 1. In the event that specialized services are required where it is determined that only one qualified firm can best perform the services for a specific project for professional fees estimated to be in an amount greater than $50,000.00, the Staff Committee will report to the Selection Committee said findings and request authority to negotiate directly with the particular specialized firm. 2. The basis of selection of the specialized firm or individual under Subparagraph H(1) above, along with the negotiated fee, shall be presented to the Board of Directors for consideration. Agreement for Services. 1. Upon approval by the Board of a negotiated agreement for professional services, a contract shall be executed in a form approved by the General Counsel. 2. The contract shall include, but not be limited to the following terms: (a) A statement of the scope of the project. (b) The basis and individual elements of the fees. (c) The basis for payment to the firm. (d) The time limits in which the services must be performed. TLW Draft No. 14:10/21/99*103185 -CLEAN 24 (e) Provisions for fee adjustments should there be changes in the scope of work. (f) If it is determined by the Selection Committee that the District may be caused to incur a penalty or liability, or suffer a loss because of the failure of the firm to perform the work within specified time limits, the contract shall include a clause setting forth penalties for such nonperformance or delayed performance, in amounts to be determined by the Committee. (g) For projects exceeding $50,000.00 in fees or in other cases as determined by the District, errors and omissions insurance in an amount recommended by the General Counsel (based upon engineering data from the Department Director) shall be required, unless the Standing Committee or Board of Directors, as the case may be, waives said insurance. For projects that involve small engineering studies where a consultant is asked to provide a report not related or leading directly to a design project, the General Manager (based upon engineering data from the Department Director), in his discretion, may waive the requirement for the consultant to provide errors and omissions/professional liability insurance. J. Conflict of Interest. 1. The District maintains a Conflict of Interest Code, pursuant to California Government Code Section 87100 et seq., which governs the activities and performance of duties of its officers, employees, or agents in the conduct of project work for the District. 2. No Director, officer, employee or agent shall solicit or accept rebates, kickbacks, favors or other unlawful consideration from any individual or firm on behalf of any firm that may be potentially selected as a qualified firm to provide professional consulting services to the District. Acceptance of food and refreshments of nominal value on infrequent occasions and acceptance of gratuities or gifts shall not be deemed a violation of this provision, provided that if said items exceed $290.00, or the amount as fixed by Government Code Section 89503, or California Code of Regulations, Title 2, Section 18940.1, in a calendar year, the Director, officer, employee or agent may be disqualified from participating in the decision pursuant to Article III of the District's Conflict of Interest Code; and provided further, that any Director, officer, employee or agent, as a designated employee under the District's Conflict of Interest Code, shall TLW Draft No. 14:10/21 /994103185 -CLEAN 25 report any amount of gifts on his/her annual Statement of Economic Interest as required by said Code. 3. Any firm seeking selection under these procedures that violates the District's Conflict of Interest Code shall be automatically disqualified. Section 4.10: Major Capital Project: Award of Professional Services AAc reements. A. Primary Agreement. The award and execution of an agreement for professional consulting services on behalf of the District shall be made in accordance with the following delegations of authority. Authorizin Authori Authorized Action 1. Department Heads Solicitation of Requests for Qualifications ("RFQ") and Requests for Proposals (RIFF). 2. General Manager Authorization to evaluate proposals and to execute contracts up to $100,000. 3. OMTS, PDC, or FAHR Receive recommendations of Staff and Committee (or Standing General Manager, and approve Profes- (Committees) sional Services Agreements of over $100,000.00 up to $200,000.00. 4. Board of Directors Receive recommendations of Staff, General Manager and Committee, and approve Professional Services Agreements for over $200,000.00. B. Primary Agreement - Addenda. The award and execution of an addendum to an agreement for professional consulting services on behalf of the District shall be made in accordance with the following: Authorizing Authority Authorized Action 1. Department Head 2. General Manager TLW Draft No. 14:10/21/99*103185 -CLEAN 26 Authority to negotiate addenda and make recommendation to General Manager. Receive recommendation of Department Head and approve contract changes in an amount up to $100,000.00 per addendum. The total additive value of all addenda shall not exceed $100,000.00. 3. OMTS, PDC, or FAHR Receive recommendations of Staff and Committee (or Standing General Manager, and approve contract Committee) changes between $100,000.00 and $200,000.00. The total additive value of all addenda shall not exceed $200,000.00. 4. Board of Directors Receive recommendations of Staff, General Manager and Committee and approve contract changes in amounts over $200,000.00 for each change order and cumulatively for the agreement. Section 4.11: Major Capital Project: Approval of Plans and Specifications. The procedure and authority for the approval of the design plans and specifications for construction of new or modified District's major capital projects is as follows: A. For any project with approved budget authority, the Director of Engineering is authorized to advertise for construction bids, set a bid date, and receive all bids. B. For any project, if the engineer's estimate for the construction contract, as provided by the Director of Engineering or the District's consulting design engineer is equal to or less than the approved construction budget for the project, the Director of Engineering may advertise for bids, and upon receipt, the lowest responsive bid of a responsible bidder will be submitted to the Board of Directors for approval. C. For any project, if the engineer's estimate for the construction contract, as provided by the Director of Engineering or the District's consulting design engineer, is greater than the approved construction budget for the project, the Director of Engineering shall submit the project to the Standing Committee for recommendation, and based thereon, to the Board of Directors for approval. D. For any project, upon receipt of bids for the construction, if the lowest responsive bid of a responsible bidder is equal to or less than the approved construction budget for the project, the bid will be submitted to the Board of Directors. The Board of Directors, upon receipt of the bid, shall approve the plans and specifications of the project and may award a contract. TLW Draft No. 14:10/21/994103185 -CLEAN 27 E. For any project, upon receipt of bids for the construction, if the lowest responsive bid of a responsible bidder is greater than the approved construction budget for the project, Staff shall present the bid and a recommendation to the Standing Committee for review and recommendation to the Board of Directors. ARTICLE V PUBLIC WORKS CONSTRUCTION CONTRACTS Section 5.01_ Purpose and Scope. Public works contracts are herein defined as contracts with duly licensed contractors in the State of California for the furnishing of labor, materials, equipment and permits, as deemed necessary, for the erection, construction, alteration, repair, or improvement of wastewater collection, treatment and disposal facilities, and any other public building, structure or improvement necessary to the operation of the District, in an amount greater than Thirty -Five Thousand ($35,000.00) Dollars, as per California Public Contracts Code Sections 20783 et seq. Section 5.02: Public Works: Bidding Required. When the expenditure required for a public works construction project exceeds Thirty -Five Thousand ($35,000.00) Dollars, it shall be contracted for and let to the lowest responsible bidder, in accordance with the provisions of California Public Contracts Code Section 20783. Section 5.03: Bidding Procedure: Public Works Construction Greater Than $35,000.00. Procedures for soliciting bids and awarding contracts for public works projects for more than Thirty -Five Thousand ($35,000.00) Dollars, shall be by written contract with the lowest responsible bidder, pursuant to the procedures prescribed herein and in accordance with applicable provisions of California Public Contracts Code Section 20783. A. Notice Inviting Bids. The Notice Inviting Bids shall specifically describe the work to be performed, shall state where bid forms, Specifications, and General and Special Provisions may be secured, and the time and place for receiving and opening sealed bids. 1. Published Notice. The Notice Inviting Bids shall set a date for the opening of bids. The first publication or posting of the Notice shall be at least ten (10) calendar days before the date for the opening of the bids. The Notice shall be published at least two (2) times, not less than five (5) days apart, in a newspaper of general circulation, printed and published within the District. TLW Draft No. 14:10/21/99:#103185 -CLEAN 28 2. Mailed Notice. Unless the work to be done is proprietary, the Notice Inviting Bids shall be published in a public newspaper which carries Orange County public works bid notices, not less than twenty-one (21) calendar days before the date of opening of bids. TLW Draft No. 14:10121/991103185 - CLEAN 29 3. Bidders List. The Engineering Department may also solicit sealed bids from all qualified, responsible, prospective suppliers whose names are on a Bidders List that may be maintained by District. B. Bidder's Securit . When deemed necessary by the Purchasing Division, bidder's security may be prescribed in the contract Specifications and in the public Notice Inviting Bids. Bidders shall be entitled to return of bid security, upon full execution by the successful bidder of an awarded contract by the District. A successful bidder shall forfeit its bid security upon refusal or failure to execute the contract within the prescribed time after the Notice of Award of Contract has been delivered to the bidder, unless the District is responsible for the delay in the prescribed time. The Board of Directors may, on refusal or failure of the successful bidder to execute the contract, award it to the next lowest responsive, responsible bidder. If the Board of Directors awards the contract to the next lowest bidder, an amount of the lowest bidder's security equal to the difference in an amount between the low bid and the awarded bid, shall be forfeited to the District, and the surplus, if any, shall be returned to the lowest bidder. C. Bid Opening Procedure. Sealed bids shall be submitted to the Director of Engineering or Contracts/Purchasing Manager, or their designees, and Secretary of the Board of Directors, and shall be identified as a bid, on the envelope. Bids shall be opened by the Director of Engineering or Contracts/Purchasing Manager, or their designee, in public, at the time and place stated in the public notice. A tabulation of all bids received shall be open for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening. D. Rejection of Bids. In its discretion, the Board of Directors may reject any and all bids presented and readvertise for bids. If, after the opening of bids, all bids are rejected, the Board of Directors, on a Resolution adopted by a four -fifths (4/5) vote, may declare that the work can be performed more economically by force account, or the materials or supplies furnished at a lower price in the open market and may have the work done in a manner stated in the Resolution in order to take advantage of this lower cost. E. Tie Bids. If two or more bids received are for the same total amount or unit price (with quality and service being equal) and if the public interest will not be best served by a delay or readvertising for bids, the Board of Directors may accept the one it chooses, or accept the lowest bid made by negotiation with the tie bidders at the time of the award. F. No Bids. If no bids are received, the District may have the work done by force account; may readvertise for bids pursuant to the procedures herein; or may select a contractor by negotiation. TLW Draft No. 14:10/21/99:#103185 -CLEAN 30 G. Emergencies. Whenever an emergency arises which is, or may be, a threat to the continued operation of the wastewater facilities, support facilities and/or administrative facilities operated by the District, a contract for the repair or replacement of the public facility may be ordered by the General Manager without complying with the provisions of this Resolution or the California Public Contracts Code. This authority is hereby delegated to the General Manager, or his designee, by the Board of Directors pursuant to the authority of California Public Contracts Code Section 22050. In such event, the General Manager shall advise the District Chair and/or Vice Chair, as appropriate, of the action taken, and such action shall be confirmed by a four -fifths (4/5) vote of the Board of Directors at its next regular meeting. H. Surety Bonds. The Purchasing Division shall require a Faithful Performance Bond and a Labor and Materials Bond. A Warranty Bond may be required before entering into a contract in an amount up to one hundred (100%) percent of the amount of the contract, as it shall find reasonably necessary to protect the best interests of the District. The form and amount of the bond shall be described in the Notice Inviting Bids, or in the contract Specifications. I. Cost Records. Cost records shall be kept in the manner provided in Sections 4000 to 4007, inclusive, of the California Government Code. Section 5.04: Approval of Original Construction Contract Agreement and Change Orders to Construction Agreements. The procedure and authority for the approval of the original construction contract agreements and change orders to construction agreements is as follows: A. General Manager. The General Manager is authorized to approve an original construction contract agreement in an amount not to exceed $100,000.00, and any change order, with a total amount of the change order additions (not the net amount of the change order), not to exceed $100,000.00, and a total cumulative amount for all change order additions to the agreement not to exceed 5% of the original agreement amount, or $100,000.00, whichever is less. B. Planning, Design & Construction Committee. The Planning, Design & Construction Committee is authorized to approve an original construction contract agreement in an amount not to exceed $200,000.00, and any change order, with a total amount of the change order additions (not the net amount of the change order), not to exceed $200,000.00, and a total cumulative amount for all change order additions to the agreement not to exceed 10% of the original agreement amount, or $200,000.00. whichever is less. TLW Draft No. 14:10/21 /99:#103185 -CLEAN 31 C. Management and Staff. At such time as the Staff becomes aware of a fact or circumstance that will likely result in total additive change orders exceeding 5% percent of the original contract amount, it shall be presented to the Planning, Design & Construction Committee at its next regular meeting for review, consideration, and possible action. ARTICLE VI MEETINGS (AND RELATED TRAVEL) AND TRAINING (AND RELATED TRAVEL) EXPENDITURES Section 6.01: Purpose and Scope. This Article sets forth the procedures and scope of delegated authority by which District employees are authorized to incur expenses for budget -approved meetings and training in furtherance of District business. Section 6.02: General. A. Meetings or training exceeding $500.00 will be itemized, as well as possible, in the approved budget. It is recognized that some meetings and training cannot be preplanned. B. All out -of -country travel (excluding Canada and Mexico) requires approval by the Board of Directors. C. Meetings or training requests exceeding $2,000.00 will be approved by the Department Director. D. Meetings or training requests less than $2,000.00 will be approved by the Division Manager. E. Established approvals must be received prior to arrangements for meetings or training being made. Section 6.03: Policies and Procedures. All policies and procedures governing meetings and training, such as the use of District forms and justification, will be followed. TLW Draft No. 14:10/21 /99:#103185 - CLEAN 32 ARTICLE VII MISCELLANEOUS Section 7.01: Noncompliance. Any transaction failing to comply with this Resolution in any respect is voidable in the discretion of the Board of Directors, and any employee willfully and knowingly violating any provision of this Resolution may be subject to disciplinary action. Section 7.02: Severability. If any section, subsection, subdivision, sentence, clause or phrase of this Resolution is for any reason held to be unconstitutional or otherwise invalid, such invalidity shall not affect the validity of the entire Resolution or any of the remaining portions thereof. The Board of Directors hereby declares that it would have passed this Resolution, and each section, subsection, subdivision, sentence, clause and phrase thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses or phrases be declared unconstitutional or otherwise invalid. Section 7.03: Effective Date. This Resolution shall take effect immediately upon adoption by the Board of Directors. Section 7.04: Repeal of Prior Resolutions. Resolutions Nos. OCSD 98-8, OCSD 98-12, OCSD 98-21, and OCSD 98-43 are hereby repealed in their entirety. PASSED AND ADOPTED at a regular meeting of the Board of Directors held . 1999. Chair ATTEST: Board Secretary TLW Draft No. 14:10/21/991103185 -CLEAN 33 FAH R COMMITTEE Meeting Date To Bd. of Dir. 11/10/99 11/17/99 AGENDA REPORT Item Number Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Tom Woodruff, General Counsel SUBJECT: PROPOSED REVISIONS TO CAPITAL FACILITIES CAPACITY CHARGE ORDINANCE GENERAL MANAGER'S RECOMMENDATION Approve Ordinance No. OCSDA 1 Adopting Capital Facilities Capacity Charges and Repealing Ordinance No. OCSD-09. SUMMARY Last month the Committee considered and approved some clarification to Ordinance No. OCSD-09 which established the Capital Facilities Capacity Charge Program for 1999-2000. While General Counsel and staff were preparing those approved clarifications for Board consideration, we discovered additional issues. These are described in the attached memorandum from General Counsel and are highlighted in the proposed Ordinance through strikeout and bold typefaces. PROJECT/CONTRACT COST SUMMARY N/A BUDGETIMPACT ® This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ❑ Not applicable (information item) ADDITIONAL INFORMATION General Counsel will present an oral report at the meeting. ALTERNATIVES N/A Nra1onWata1%vp.df MnV101cmnekFAHR%Fahr99WoMevisions to CapFacCapChrg.doc Re„eed: WOO Page 1 CEQA FINDINGS N/A ATTACHMENTS 1. General Counsel Memo 2. Draft Ordinance %VadonWamllwp.dlalfin%2101erane%FAHRTFahr99Wov1Revisions to CapFaecapChrg dw Revised: &20W Page 2 LAW OFFICES OF WOODRUFF, SPRADLIN & SMART A PROFESSIONAL CORPORATION MEMORANDUM TO; Chair and Members of Finance, Administration and Human Resources Committee FROM: General Counsel DATE: November 2, 1999 RE: Proposed Ordinance Revisions re Capital Facilities Capacity Charges ("CFCC") As the Directors are aware, the Board adopted its new, comprehensive CFCC Ordinance at its meeting of July 21, 1999, following studies by Staff, Consultants, the Rate Advisory Committee, and hearings by your Board Committees. As is so often the case, the very best of efforts by all involved personnel often get tested, and minor errors are discovered once it is put into practical application. Exactly that fact situation has occurred relative to the implementation of this Ordinance, and specifically the imposition of Supplemental CFCC. There has been a certain degree of uncertainty as to the Board's intent relative to its application to all the existing connected dischargers, or whether it only applied to new connecting dischargers, or only those who would be expanding their facilities or usage. The Staff has determined, based upon a review of all the records, that the intent was to have existing dischargers only pay an additional CFCC at such time as they expanded their use or facility, and increased their discharge of either flow, BOD, or Suspended Solids ("SS"). Unfortunately, Ordinance No. OCSD-09, as presently drafted, is not expressly specific on that point, and in order to avoid any further confusion or disagreement in the implementation of the Ordinance, the Staff and my office have prepared the revisions of certain provisions to more specifically address the Board's intent, and to make it more equitable for the actual Commercial — Industrial Users. The proposed Ordinance provides, in summary: 1. That all new, Significant Commercial — Industrial Users ("SCIU's") will pay a Supplemental CFCC for any discharge of flow, BOD, or SS over the base charge maximums, to wit: 25,000 gallons per day, or 150 pounds each BOD and SS. 2. All SCIU's, when connecting to the system, will pay a base capital facilities charge calculated on one of three rates per 1,000 square feet of building area. This base rate charge will allow for a discharge of up to 25,000 gallons per day, or 150 pounds each BOD or SS. November 2, 1999 Page 2 3. Every existing SCIU (those connecting prior to July 1, 1995) will have a baseline of permissible discharge amounts of flow, BOD, and SS established for its facility as of July 1, 1999. This baseline will be the average daily flow for the 1998-99 Fiscal Year. 4. Every conditional permitted SCIU (those connecting from July 1, 1995 to September 1, 1999, including companies such as House Foods), will have a baseline of permissible discharge amounts of flow, BOD, and SS established for its facility as of the original date of issuance of its Waste Discharge Permit. 5. Any SCIU, based upon extraordinary circumstances, can appeal the baseline that is established for its use, to the General Manager. Examples would be when a user has low flow because its facilities were out -of -operation due to fire, or other cause, for a considerable portion of the year. This lack of operations would establish a low flow average, and thus would trigger the imposition of a Supplemental CFCC. 6. Existing SCIU's would be permitted to exceed their baseline number by up to 25,000 gallons per day, or 25% of their flow, whichever is lesser, or an increase of 150 pounds of BOD or SS each per day, or 25% each per day, whichever is lesser, without the payment of a Supplemental CFCC. At such time as they exceed the permissible growth over baseline, they would then pay the Supplemental CFCC, again based upon a daily average, using annual discharge amounts. 7. The Ordinance has also been revised to exclude Special Purpose Discharge Permit Holders as being re uired to pay a CFCC. Instead, the existing District Ordinance No. OCSD-01, Section 305.6, authorizes the General Manager to issue the Special Discharge Permit and to establish a fee which would include, in appropriate circumstances, a capital facilities component. In light of the recent beach closure and the need to temporarily connect the City of Huntington Beach Pump Stations, it was determined that Ordinance No. OCSD-01 made the imposition of a capital component CFCC discretionary; whereas, in Ordinance No. OCSD-09, the imposition of such component charge would be mandatory. It is recommended that only the discretionary provisions should be used. THOMAS L. WOODRUFF GENERAL COUNSEL By TFN:pj THOMAS F. NIXON ORDINANCE NO. OCSD-11 AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING CAPITAL FACILITIES CAPACITY CHARGES AND REPEALING ORDINANCE NO. OCSD-09 WHEREAS, the Board of Directors of the District has received a management report, including financial and system facilities needs of the District, and wishes to reaffirm the policy of the District of imposing Capital Facilities Capacity Charges when properties, either newly connect to the District's system or expand the use of the property previously connected to the District, and to adopt findings supporting the amount of the fees adopted pursuant to this Ordinance. The Board of Directors of Orange County Sanitation District does hereby FIND: A. That a comprehensive 30-year Master Plan of Capital Facilities entitled, "Collection, Treatment and Disposal Facilities Master Plan - 1989", hereinafter the "Master Plan", which includes detailed financial and engineering reports, has been prepared, approved, and adopted by the Boards of Directors of the Predecessor Districts in 1989, identifying the required future development of District facilities, including the financial projections for providing sewer service to all properties within the District's service areas; and, B. That the District has undertaken, commencing in 1997, a comprehensive update and revision of the Master Plan, which end, led fe- r-empl fir,. iR the ve;;r 2g00 to �eFL-a#eF) [was adopted October 27, 1999, to hereafter] be known as the "Strategic Plan"; and, C. That the District, in 1997, as part of its Strategic Plan studies, undertook a comprehensive evaluation and study of its operational and financial needs for the next 20 years, including a detailed assessment of all types and categories of users; the demands on the system and capacity needs of the system to provide necessary service to the multiple categories of users; the total costs of the existing and future facilities in the system; and alternate methodologies for establishing fair and equitable charges to connect to and gain access to the system; and, D. That the Board of Directors has previously, by duly adopted Ordinances, commencing in 1969, established Capital Facilities Capacity Charges, formerly known commonly as "connection charges" or "fees" to be paid TFN:smm/112344-11/2/1999- Red 1 by all persons obtaining a permit to connect to the District's system as a financial payment to have access to and use of the District's wastewater collection, treatment and disposal facilities in existence at the time of connecting to the system, and for future facilities to be constructed; and, E. That the District's connection charge ordinances, included authority for the District to levy an excess capacity charge upon commercial and industrial users who discharge large quantities or high strength wastewater; and, F. That the District(s) adopted a revised, comprehensive excess capacity charge by ordinance, effective July 1, 1995, which ordinance(s) was subsequently repealed November 15, 1995 pending completion of the Financial Rates and Charges Report; and, G. That the District on February 22, 1996 adopted a moratorium on the collection of excess capacity charges until the Financial Rates and Charges Report was completed and a revised Capital Facilities Charge was adopted; and, H. That all new commercial and industrial dischargers connecting to the District's system from July 1, 1995 to September 1, 1999 (the effective date of Ordinance No. OCSD-09) were deemed to be conditionally permitted Significant Commercial — Industrial Users, required to pay any Capital Facilities Capacity Charge adopted by the District at the same rates as new Significant Commercial — Industrial Users, provided the Charge was no greater than the excess capacity charge adopted to be effective July 1, 1995; and, I. That a final report (the "Determination of Financial Rates and Charges Report"), based upon studies and reports of District's engineering and financial advisors, and an extensive evaluation by an Advisory Committee of industrial, commercial, and residential users of the system (the "Rate Advisory Committee"), was prepared and submitted to the Board of Directors to assist and guide it in its considerations for the adoption of Ordinance No. OCSD-09; and, J. That the Report has been made available to the public and has been subject to noticed public hearings, all in accordance with the provisions of law; and, K. That following adoption of Ordinance No. OCSD-09 on July 21, 1999, certain ambiguities and uncertainties were discovered, relating to the implementation of the Ordinance. It is now appropriate, to insure ease of administration and clarity of understanding by those persons and entities governed by the Ordinance, that the provisions of Ordinance No. OCSD-09 be revised; and, L. That the revenues derived under the provisions of this Ordinance will be used for the acquisition, construction, reconstruction, maintenance, and TFN:smm/112344-11/2/1999- Red 2 operation of the wastewater collection, treatment and disposal facilities of the District; to repay principal and interest on debt instruments; or to repay federal or state loans for the construction and reconstruction of said sewerage facilities, together with costs of administration and provisions for necessary reserves; and, M. That the properties upon which the fees established by this Ordinance are levied, will discharge wastewater to the District's collection, treatment and disposal system facilities; that the costs of owning, operating, and maintaining said facilities has constantly increased due in part to increased regulatory requirements to upgrade the treatment process; and that said costs will exceed the amounts of any ad valorem tax revenues derived from said property; and, N. That the Capital Facilities Capacity Charges imposed by authority of this Ordinance do not exceed the estimated amount required to provide access to the sewer system facilities and service for which the fee is levied, as provided in California Constitution Article XIIID; and, O. That the fees adopted by this Ordinance are non-discriminatory, as applied to all users of the system, and are established upon a rational basis between the fees charged each category of property that is connecting, and the service and facilities provided to each connected property by the District; and, P. That the adoption of this Ordinance is statutorily exempt under the California Environmental Quality Act from further environmental assessment pursuant to the provisions of California Public Resources Code Section 21080(b)(8), and 14 California Code of Regulations Section 15273(a). NOW, THEREFORE, the Board of Directors of Orange County Sanitation District does hereby ORDAIN: Section 1: Definitions 1.1 "Actual construction costs" include the cost of all activities necessary or incidental to the construction of a District facility, such as financing, planning, designing, acquisition of the property or interests in the property, construction, reconstruction, rehabilitation, and repair. 1.2 "Capital Facilities Capacity Charge" means a one-time, non- discriminatory charge imposed at the time a property is connected to the District's system, directly or indirectly, or an existing structure or category of use is expanded or increased. Said charge is to pay for District facilities in existence at the time the charge is imposed, or to pay for new facilities to be constructed in the future, that are of benefit to the property being charged. The Supplemental Capital Facilities Capacity Charge, as provided for in Sections 6, 7, and 8 of this Ordinance, is TFN:smm/112344-11/2/1999- Red 3 time [an annual charge payable to the District on a quarterly or annual basis as determined by the District.] 1.3 "Connection fee" means a fee equal to the cost necessary to physically connect a property to the District's system, including, but not limited to installation of meters, meter boxes, pipelines and appurtenances to make the connection, that does not exceed the actual cost of labor, materials, and overhead for the installation of those facilities. 1.4 "Nondiscriminatory" means that the Capital Facilities Capacity Charge does not exceed an amount determined on the basis of the same objective criteria and methodology applicable to comparable public or non-public users, and is not in excess of the proportionate share of the cost of the District's facilities of benefit to the person or property being charged, based upon the proportionate share of use of those facilities. 1.5 "Predecessor Districts" means former County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, which jointly owned and administered the property and sewerage system facilities of the District, which consolidated into the Orange County Sanitation District, as a single entity, effective July 1, 1998. 1.6 "Public agency" means the United States or any of its agencies, the State or any of its agencies, the Regents of the University of California, a county, city, district, school district, local or regional public authority, or any other political entity, subdivision or public corporation of this State. Section 2: Connection Permits: Required. A. Connection permits are required of all dwelling units, buildings and structures connecting directly or indirectly to the District's sewerage system facilities. Included are the connections of laterals to local municipal sewerage facilities, and the connection of local municipal sewerage facilities and laterals to the District's facilities. B. Except as authorized by the issuance of a Special Purpose Discharge Permit under sections 305-305.6 of Ordinance No. OCSD-01 or as amended, or as authorized pursuant to a special extra territorial service agreement approved by the Board of Directors, no permit shall be valid unless the real property to be served by use of the permit is included within the boundaries of the District and within the boundaries of a local sewering agency authorized to maintain public sewering facilities. However, a permit as authorized above may be issued for property to be served outside the boundaries of a local sewering agency if a local sewering agency makes application for the issuance of such permit. TFN:smm/112344-11/2/1999- Red 4 There will be a nondiscriminatory Capital Facilities Capacity Charge assessed to public agencies for connecting directly or indirectly to the District's sewerage system facilities, and a connection permit must be obtained. Section 3: Capital Facilities Capacity Charge: Pavment Reauired. No application for a permit for a connection to a District sewerage facility, or to any sewerage facility which discharges into a District sewerage facility, shall be approved, nor a permit issued, until a District Capital Facilities Capacity Charge is paid by the applicant. No connection permit shall be issued unless there is an established category of use of the property to be served or a valid building permit issued which establishes the category of use of said property. Section 4. Capital Facilities Capacity Charge: Time of Pavment_ 4.1 Payment of the Capital Facilities Capacity Charge established by this Ordinance for connection to the District's sewerage system facilities shall be required at the time of issuance of the building permit for all construction within the District, excepting in the case of a building legally exempt from the requirement of obtaining a building permit. The payment of the Capital Facilities Capacity Charge for such exempt buildings will be required at the time of and prior to the issuing of a plumbing connection permit for any construction within the territorial limits of the District. 4.2 Upon application of any property seeking to connect to the District's system, the Board of Directors of District, in its sole and absolute discretion and upon a finding of compelling need, may, pursuant to the authority of California Health & Safety Code Section 5474, approve of an agreement with the property owner for the payment of the applicable connection charge in installments over a period of not to exceed five (5) years, bearing an interest rate on the unpaid balance of not to exceed ten (10%) percent per annum, and that the charges and interest shall constitute a lien on the property. Section 5: Capital Faciiities Capacity Charge: Schedule of Amounts. Every person or entity newly connecting (a ,.eFAF eFGial Of iRd61StFial 66e) [any] property to the District's system facilities shall pay a Capital Facilities Capacity Charge in the amount for the applicable category of use set forth in Table 1. TABLE 1 CAPITAL.. FACILITIES CAPACITY CHARGE Use Category Rate Basis Base Charge Commercial — Industrial Per 1,000 square feet' Low Demand Per 1,000 square feet $ 1101 1 Provided that the minimum Capital Facilities Capacity Charge for such new construction shall be $1,820; and all calculations shall be on a per square foot basis. TFN:smm/112344-11/2/1999- Red 5 Average Demand High Demand Single Family Residential 5+ Bedrooms 4 Bedrooms 3 Bedrooms 2 Bedrooms 1 Bedroom Multi -Family Residential 4+ Bedrooms 3 Bedrooms 2 Bedrooms 1 Bedroom Studio Per 1,000 square feet $ 6751 Per 1,000 square feet $1,6001.2 Per Unit Per Unit $2,530 Per Unit $2,165 Per Unit $1,820 Per Unit $1,475 Per Unit $1,130 Per Unit Per Unit $1,965 Per Unit $1,620 Per Unit $1,275 Per Unit $ 910 Per Unit $ 580 Section 6.- Supplemental Capital Facilities Capacity Charge: Significant Commercial — Industrial Users — Definitions. A. A Significant Commercial — Industrial User ("SCIU") is any person or entity who discharges commercial or industrial process flow, but excluding domestic sewage flow, in an amount greater than 25,000 gallons per day ("gpd"), 2The Base Capital Facilities Capacity Charge is established at $1,600 per 1,000 square feet, but shall be incrementally increased from the present amount at five (5) levels, and five (5) time periods as follows: Effective September 1, 1999 $ 675 per 1,000 sq. ft. Effective January 1, 2000 $ 900 per 1,000 sq. ft. Effective July 1, 2000 $1,130 per 1,000 sq. ft. Effective January 1, 2001 $1,360 per 1,000 sq. ft. Effective July 1, 2001 $1,600 per 1,000 sq. ft. A schedule of the Capital Facilities Capacity Charges specified herein will be on file in the Office of the Board Secretary of the District, and in the Building Department of each City within the District. *Low Demand connections are the following categories of users: Nurseries; Warehouses; Parking Structures; RV Storage; Churches; Truck Terminals; RV Parks; Lumber/Construction Yards; and other dischargers whose flow is similar in volume to these listed categories. **High Demand connections are the following categories of users: Restaurants, Supermarkets; Car Washes; Coin Laundries; Amusement Parks; Shopping Centers with Restaurants; Food Processing Facilities; Textile Manufacturers; and other dischargers whose flow is similar in volume to these listed categories. ***All other connections are Average demand users. TFN:smm/112344-11/2/1999- Red 6 or Biochemical Oxygen Demand ("BOY) greater than 150 pounds per day, or Suspended Solids ("SS") greater than 150 pounds per day, or who is required to obtain a Waste Discharge Permit, as prescribed by Ordinance No. OCSD-01, Article 3, due to having federally- or District -regulated or significant discharges. B. An Existing SCIU is any SCIU discharger connected and discharging to the District's system prior to July 1, 1995. C. A New SCIU is any discharger who connects and discharges to the District's system pursuant to a Waste Discharge Permit issued on or after July 1, 1999f--14[; or if] previously connected and not an SCIU, as defined in Subparagraph A above, but, subsequent to July 1, 1995, increases flow, or BOD, or SS to a level as to constitute an SCIU. D. A Conditionally Permitted SCIU is any SCIU discharger who connected to and discharges to the District's system pursuant to a Waste Discharge Permit issued on or after July 1, 1995 up to September 1, 1999. E. The maximum discharge allowed to a user, for which a base Capital Facilities Capacity Charge is paid, as per Section 5 Table 1 above, is 25,000 gallons per day ("gpd"), or 150 pounds each of BOD and SS [(the "base use")]. Discharge of flow, or BOD, or SS in amounts greater than allowed by this Subparagraph E, shall be subject to the provisions of Section 7 or Section 8 hereof. F. Each Existing SCIU shall have a baseline of allowed discharge of flow, and BOD, and SS established by the District as of July 1, 1999[. The baseline shall be] based upon the discharge for [the] fiscal year 1998-99 [or upon such other discharge data which the District determines is representative of the user's actual annual discharge to the sewerage system]. Dischargers who are deemed to be SCIUs solely because of the requirements to obtain a Waste Discharge Permit pursuant to Section 6 above, shall have a minimum baseline established as follows: Flow — 25,000 gallons per day; BOD —150 pounds per day; and SS — 150 pounds per day. The SCIU shall be authorized to discharge flow, and BOD, and SS up to the baseline amounts without payment of a Supplemental Capital Facilities Capacity Charge. G. Each Conditionally Permitted SCIU shall have a baseline of allowed discharge of flow, and BOD and SS established by the District as of the [original] date of issuance of J#ie} [its] Waste Discharge Permit (f9F Fefere.,no S eRiy, )[. H.] The Supplemental Capital Facilities Capacity Charge as prescribed by (SestiGR) [Sections] 7 [and 8] below, shall be payable commencing with the effective date of this Ordinance. TFN:smm/112344-11/2/1999- Red 7 {#} [I]. Within two (2) years from the date of the District's written notice to the SCIU of its baseline amounts, the SCIU shall have a right to appeal the District's established baseline for the SCIU. The appeal shall be to the General Manager, or his delegated representative, who shall have discretion, based upon extraordinary circumstances, wherein the established baseline is not representative of the historical average daily discharge by the SCIU for a yearly period, to modify the baseline amounts for the current year, or on a permanent basis, subject to terms and conditions as prescribed by the General Manager. The decision of the General Manager shall be final. Section 7. Supplemental Capital Facilities Capacity Charge: New and Conditionally Permitted Significant_ Commercial — Industrial Users. In addition to the base Capital Facilities Capacity Charge, as prescribed in Table 1 for commercial — industrial use category properties, all New SCIUs and all Conditionally Permitted SCIUs shall pay a Supplemental Capital Facilities Capacity Charge for each gallon of flow, or pound of BOD, or SS, exceeding the base use discharge maximums, in the following amounts: Daily Charge Flow Gallons Per Day $0.00057 BOD Pounds Per Day $0.14461 SS Pounds Per Day $0.16025 Section 8: Supplemental Capital Facilities Capacity Charge_ Existing Significant Commercial — Industrial Users. A. All Existing Significant Commercial — Industrial Users connected to and discharging to the District's system shall be required to pay a Supplemental Capital Facilities Capacity Charge upon the occurrence of either (i) an increase of discharge flow of 25,000 gallons per day ("gpd"), or 25% per day over its established baseline authorization, whichever is lesser; or (ii) an increase of [either] BOD or SS discharge of 150 pounds each per day, or 25% each per day, whichever is lesser, over its established baseline authorization. B. The Supplemental Capital Facilities Capacity Charge shall be in the following amounts for each component that is increased as provided in Section 8A above: Daily Charge Flow Gallons Per Day $0.00057 BOD Pounds Per Day $0.14461 SS Pounds Per Day $0.16025 C. The Supplemental Capital Facilities Capacity Charge shall be calculated on the basis of the average daily quantity of discharge in excess of the User's baseline. The daily averages will be based on the daily discharges for a year, utilizing discharge records and reports of the District. TFN:smm/112344-11/2/1999- Red 8 Section 9: Capital Facilities Capacity Charge: Replacement Structures. For new construction replacing former structures, the Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Table 1, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Table 1 that would be for the prior category of use which was terminated and removed. Section 10: Capital Facilities Capacity Charge: Remodeled Structures. In the case of existing structures connected to the District's system facilities, to which new construction or alteration is made to change or increase the category of use, a Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Table 1, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Table 1 for the prior category of use. Section 11: Payment of Capital Facilities Capacity Char__ e:c�Off--Site Sewers Not Part of Master Plan Relative to Reimbursement Agreements. A charge for connection to off -site sewers which are not included as part of the District Master Plan and for which a Non -Master Plan Reimbursement Agreement has been entered into between the District and the property owner, shall be paid in the amount provided for in said Agreement, to be known as a Non -Master Plan Capital Facilities Capacity Charge. The amount set forth in said Agreement shall be the amount due, whether the original Agreement is still in force, has been extended, or has expired. The Non -Master Plan Capital Facilities Capacity Charge shall be in addition to the other Capital Facilities Capacity Charges provided for in Sections 3 and 4 hereinabove, established for property connecting to said facilities. Section 12: No Refund or Transfer. A Capital Facilities Capacity Charge is paid for the connection of a specific parcel of property. No refund of any charge shall be made because of non-use or change of use, or any other reason. The connection permit is non -transferable to any other property. Section 13[: Baseline Transferabili . The baseline of allowed discharge of flow, BOD and SS used to calculate a Supplemental Capital Facilities Capacity Charge shall not be transferable, nor shall a credit for such previously existing baseline be provided, to another SCIU concurrently or subsequently occupying the same property. Section 141: Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, including those properties otherwise deemed exempt from payment of taxes or assessments by provisions of the TFN:smm/112344-11/2/1999- Red 9 State Constitution or statute, including properties owned by other public agencies or tax-exempt organizations. Section {�Al r15]: Severability. If any provision of this Ordinance or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. Section 4,51 fl6 : Effective Date. This Ordinance shall take effect [January 1, 2000]. Section 4} [171: Repeal. Ordinance No. OCSD-09 is hereby repealed as of the effective date of this Ordinance. Section jjR 18] : Certification and Publication. The Secretary of the Board shall certify to the adoption of this Ordinance and shall cause a summary to be published in a newspaper of general circulation as required by law. PASSED AND ADOPTED by the affirmative vote of not less than two- thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held Chair, Board of Directors Orange County Sanitation District ATTEST: Secretary of the Board of Directors Thomas L. Woodruff, District Counsel TFN:smm/112344-11/2/1999- Red 10 ---------------------- REVISION LIST The bracketed numbers refer to the Page and Paragraph for the start of the paragraph in both the old and the new documents. [1:6 1:6] Changed [3:8 3:8] Changed [5:6 5:6] Changed [7:2 7:2] Changed [7:5 7:5] Changed [7:5 7:5] Changed [7:5 7:5] Changed [7:6 7:6] Changed [7:6 7:6] Changed [7:6 7:6] Changed [7:6 7:7] Changed [7:6 7:7] Changed [7:6 7:7] Changed [7:7 7:8] Changed [8:7 8:7] Changed [9:4 9:4] Changed [9:4 9:5] Changed [9:5 10:1 ] Changed [9:6 10:2] Changed [9:6 10:2] Changed [9:7 10:3] Changed [10:1 10:4] Changed "revisions ... thereafter " to "was adopted ... hereafter " "a one-time ... period of time." to "an annual ... District." "a commercial or industrial use " to "any " ". If " to "; or if " "1999 based" to "1999. The ... shall be based" "for fiscal" to "for the fiscal" 111998-99." to "1998-99 or ... sewerage system." "the date" to "the original date" "of the Waste" to "of its Waste" "Permit for" to "Permit. " "for reference purposes only. " to "H. " "Section " to "Sections " "7 below," to "7 and 8 below," "H" to "I" "of BOD" to "of either BOD" "13 :" to "13: Baseline ... property." "13 :" to "Section 14 :" 1114" to 1115" 1115 "to 1116" 111611 to 111711 "17 " to 1118 " " to "January 1, 2000" TFN:smm/112344-11/2/1999- Red 11