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HomeMy WebLinkAbout2003-02-19 MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Orange County Sanitation District Wednesday, February 19, 2003, 4:30 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on February 19, 2003, at 4:30 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: Brian Brady, Chair Roy Moore, Vice Chair Alberta Christy Mike Duvall Mark Leyes Joy Neugebauer Shirley McCracken, Board Chair Steve Anderson, Vice Board Chair Directors Absent: James W. Silva STAFF PRESENT: Blake P. Anderson, General Manager Gary Streed, Director of Finance/Treasurer Lisa Tomko, Director of Human Resources Carol Beekman, Communications Services Manager Mike White, Controller Penny Kyle, Committee Secretary OTHERS PRESENT: Thomas L. Woodruff, General Counsel Steve Filarsky, Special Labor Counsel Don Hughes Toby Weissert John Bartel Bob Lockhart Randy Fuhrman Gerhardt Van Drie (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS Gerhardt Van Drie requested the Directors read his letter that he distributed that evening regarding various water issues. Randy Fuhrman requested he be allowed to speak prior to the consideration of Item 12(b). (4) CLOSED SESSION The Committee convened in Closed Session at 4:40 p.m. pursuant to Government Code Sections 54956.9 and 54957.6 to discuss and consider Agenda Item Nos. 4(a)(1), (2) and (3). Confidential Minutes of the Closed Session held by the Finance, Administration and Human Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 February 19, 2003 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. There were no reportable actions taken by the Committee re Agenda Item Nos. 4(a)(1), (2) and (3). RECONVENE IN REGULAR SESSION: At 6:02 p.m., the Committee reconvened in regular session. (5) REPORT OF THE COMMITTEE CHAIR The Chair had no report. (6) REPORT OF THE GENERAL MANAGER The General Manager had no report. (7) REPORT OF DIRECTOR OF FINANCE The Director of Finance had no report. (8) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources had no report. (9) REPORT OF COMMUNICATIONS SERVICES MANAGER Carol Beekman, Communications Services Manager, reported that the Directors’ Orientation immediately following the FAHR Committee meeting would be held in a game format and encouraged the Directors to attend. Ms. Beekman reported that the advertising program for the Groundwater Replenishment System project has been launched by release of a television commercial to be shown on various channels as well as flyers that were mailed to over 700,000 residences. An update on the community outreach for the Bushard Trunk Sewer Replacement project noted approximately 12,500 invitations were mailed for an open house held at Plant 2 in November. Additional letters will continue to be delivered to the directly impacted businesses and residents as the project progresses. Also noted was the Warner Avenue Relief Sewer Project outreach. Information and an invitation to attend an open house in March in the vicinity of the construction project were scheduled to be mailed by the end of the month. (10) REPORT OF GENERAL COUNSEL General Counsel had no report. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 February 19, 2003 (11) CONSENT CALENDAR ITEMS a. The Chair ordered that the December 11, 2002 minutes for the Finance, Administration and Human Resources Committee meeting be deemed approved, as mailed. b. FAHR03-01 Recommend to the Board of Directors to receive and file Treasurer’s Report for the month of January 2003. c. FAHR03-02 Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR03-03 Receive and file Employment Status Report as of January 29, 2003. e. FAHR03-04 Receive and file OSHA Incidence Rates and Workers’ Compensation Claims and Costs Report. f. FAHR03-05 Recommend to the Board of Directors to receive and file the Mid-Year Financial Report for the period ending December 31, 2002. g. FAHR03-06 Recommend to the Board of Directors to receive and file Quarterly Investment Management Program Report for the period October 1, 2002 through December 31, 2002. h. FAHR03-07 Recommend to the Board of Directors to adopt Resolution No. OCSD 03-__, Amending Resolution No. OCSD 98-33, Amending Human Resources and Policies Procedures Manual. i. FAHR03-08 Recommend to the Board of Directors to approve SAFETY-POL-205 – Electrical Safety Policy, as provided for in Resolution No. OCSD 02-5, regarding the District’s Injury and Illness Prevention Program Policy. MOTION: It was moved, seconded and duly carried to approve the recommended actions for items specified as 11(a) through (g) under Consent Calendar. END OF CONSENT CALENDAR (12) ACTION ITEMS a. FAHR03-09 1) Consider a policy regarding issues surrounding Sewer Service User Fee Database adjustments and fee collections; and, 2) Determine if staff will solicit competitive bids or award a sole source contract to Revenue Enhancement Group to review non-residential parcels to provide some or all services related to collecting the appropriate sewer service fees, and to provide corrected sewer service fees for the 2003/04 property tax bills, for $2,500,000 plus or minus performance adjustments. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 4 February 19, 2003 Gary Streed briefly outlined the policy issues that need to be resolved regarding the District’s use of the County Auditor’s database to collect sewer service fees. Bob Lockhart of Revenue Enhancement Group indicated his proposal to review non-residential parcels and all services related to collecting the appropriate sewer service fees was flexible. Directors entered into discussion and expressed concern for the average consumer/business and the impact of imposing/collecting underpayment for the last four years, concern that those users who have been overcharged be treated the same as those who have been undercharged, and concern that there was not a competitive selection process. It was moved and seconded to authorize the consultant’s work but wait until the amount or impact is known to decide about past undercharges, and overcharges, to include negotiation on consultant costs prior to the February 26, 2003 Board of Directors meeting. The motion failed by a 4/4 vote. MOTION: It was moved, seconded and duly carried to refer the item back to staff for additional information to include similar programs in place by other agencies. b. FAHR03-10 Direct staff to revise the 1996 Reserves Policy and to provide the Board with cash flows and sewer user fee projections that incorporate those revisions and the Committee’s preference for a sewer user fee increase program. This item was deferred to the March 12, 2003 meeting due to time constraints. (13) INFORMATIONAL PRESENTATIONS There were none. (14) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. (15) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (16) CONSIDERATION OF UPCOMING MEETINGS The next FAHR Committee meeting is scheduled for March 12, 2003 at 5 p.m. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 5 February 19, 2003 (17) ADJOURNMENT The Chair declared the meeting adjourned at 7:05 p.m. Submitted by: _______________________________ Penny M. Kyle FAHR Committee Secretary G:\wp.dta\agenda\FAHR\FAHR2003\0203\021903 FAHR Minutes.doc February 13, 2003 NOTICE OF MEETING FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, FEBRUARY 19, 2003 - 4:30 P.M. DISTRICT'S ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 WWW.OCSD.COM A regular meeting of the Finance, Administration and Human Resources Committee of the Board of Directors of the Orange County Sanitation District, will be held at the above location, date and time. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATES FAHR Committee Meeting Date Board Meeting Dates *February 19, 2003 February 26, 2003 March 12, 2003 March 26, 2003 April 9, 2003 April 23, 2003 May 14, 2003 May 28, 2003 June 11, 2003 June 25, 2003 July 9, 2003 July 23, 2003 Dark August 27, 2003 September 10, 2003 September 24, 2003 October 8, 2003 October 22, 2003 November 12, 2003 *November 19, 2003 December 10, 2003 *December 17, 2003 Dark January 28, 2003 *Meetings being held the third Wednesday of the month. ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Meeting Date: February 19, 2003 Time: 4:30 p.m. Adjourn: COMMITTEE MEMBERS Brian Brady (Chair) ____ Roy Moore (Vice Chair) ____ Alberta Christy ____ Mike Duvall ____ Mark Leyes ____ Joy L. Neugebauer ____ James W. Silva ____ Shirley McCracken (Board Chair) ____ Steve Anderson (Board Vice Chair) ____ OTHERS Tom Woodruff, General Counsel ____ Steve Filarsky, Special Labor Counsel ____ Don Hughes ____ John Bartel ____ STAFF Blake Anderson, General Manager ____ David Ludwin, Director of Engineering ____ Bob Ooten, Director of O & M ____ Lisa Tomko, Director of Human Resources ____ Gary Streed, Director of Finance/Treasurer ____ Patrick Miles, Director of Information Technology ____ Robert Ghirelli, Director of Technical Services ____ Carol Beekman, Communications Services Mgr ____ Mike White, Controller ____ Greg Mathews, Administrative Services Manager ____ Penny Kyle, Committee Secretary ____ c: Lenora Crane AGENDA REGULAR MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, FEBRUARY 19, 2003, AT 4:30 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 www.ocsd.com 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. All current agendas and meeting minutes are also available via Orange County Sanitation District’s Internet site located at www.ocsd.com . Upon entering the District’s web site, please navigate to the Board of Directors section. (1) ROLL CALL (2) APPOINTMENT OF CHAIR PRO TEM, IF 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 three 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). February 19, 2003 2 (4) CLOSED SESSION During the course of conducting the business set forth on this agenda as a regular meeting of the Committee, the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. A. Convene in closed session. 1. Confer with Lisa Tomko, Director of Human Resources re pending matter of litigation re Sargent v. Orange County Sanitation District, Orange County Superior Court Case No. 02CC11206 (Government Code Section 54956.9). 2. Confer with Lisa Tomko, Human Resources Director and Steve Filarsky, Special Labor Counsel, re Managers’ salaries (Government Code Section 54957.6). 3. Confer with Lisa Tomko, Human Resources Director, Steve Filarsky, Special Labor Counsel, and John Bartel of Aon Consulting Group, re retirement benefits enhancement (Government Code Section 54957.6). B. Reconvene in regular session. C. Consideration of action, if any, on matters considered in closed session. (5) REPORT OF COMMITTEE CHAIR (6) REPORT OF GENERAL MANAGER (7) REPORT OF DIRECTOR OF FINANCE (8) REPORT OF DIRECTOR OF HUMAN RESOURCES (9) REPORT OF COMMUNICATIONS SERVICES MANAGER (10) REPORT OF GENERAL COUNSEL February 19, 2003 3 All matters placed on the consent calendar are considered as not requiring discussion or further explanation and unless any particular item is requested to be removed from the consent calendar by a Director or staff member, there will be no separate discussion of these items. All items on the consent calendar will be enacted by one action approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar. All items removed from the consent calendar shall be considered in the regular order of business. The Chair will determine if any items are to be deleted from the consent calendar. (11) CONSENT CALENDAR ITEMS Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: a. Approve minutes of the December 11, 2002 Finance, Administration and Human Resources Committee meeting. b. FAHR03-01 Recommend to the Board of Directors to receive and file Treasurer’s Report for the month of January 2003. c. FAHR03-02 Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR03-03 Receive and file Employment Status Report as of January 29, 2003. e. FAHR03-04 Receive and file OSHA Incidence Rates and Workers’ Compensation Claims and Costs Report. f. FAHR03-05 Recommend to the Board of Directors to receive and file the Mid-Year Financial Report for the period ending December 31, 2002. g. FAHR03-06 Recommend to the Board of Directors to receive and file Quarterly Investment Management Program Report for the period October 1, 2002 through December 31, 2002. h. FAHR03-07 Recommend to the Board of Directors to adopt Resolution No. OCSD 03-__, Amending Resolution No. OCSD 98-33, Amending Human Resources and Policies Procedures Manual. i. FAHR03-08 Recommend to the Board of Directors to approve SAFETY-POL-205 – Electrical Safety Policy, as provided for in Resolution No. OCSD 02-5, regarding the District’s Injury and Illness Prevention Program Policy. END OF CONSENT CALENDAR Consideration of items deleted from Consent Calendar, if any. February 19, 2003 4 (12) ACTION ITEMS a. FAHR03-09 1) Consider a policy regarding issues surrounding Sewer Service User Fee Database adjustments and fee collections; and, 2) Determine if staff will solicit competitive bids or award a sole source contract to Revenue Enhancement Group to review non-residential parcels to provide some or all services related to collecting the appropriate sewer service fees, and to provide corrected sewer service fees for the 2003/04 property tax bills, for $2,500,000 plus or minus performance adjustments. (Gary Streed – 10 minutes) b. FAHR03-10 Direct staff to revise the 1996 Reserves Policy and to provide the Board with cash flows and sewer user fee projections that incorporate those revisions and the Committee’s preference for a sewer user fee increase program. (Gary Streed – 25 minutes) (13) INFORMATIONAL PRESENTATIONS (14) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY (15) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT (16) FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for March 12, 2003, at 5 p.m. (17) ADJOURNMENT February 19, 2003 5 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: Brian Brady (949) 453-5300 Committee Secretary: Penny Kyle (714) 593-7130 pkyle@ocsd.com General Manager Blake Anderson (714) 593-7110 banderson@ocsd.com Director of Finance Gary Streed (714) 593-7550 gstreed@ocsd.com Director of Human Resources Lisa Tomko (714) 593-7145 ltomko@ocsd.com Administrative Services Manager Greg Mathews (714) 593-7104 gmathews@ocsd.com Communication Services Manager Carol Beekman (714) 593-7120 cbeekman@ocsd.com G:\wp.dta\admin\BS\FAHR\021903 draft FAHR Agenda.doc In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Board Secretary’s office at (714) 593-7130 at least 48 hours prior to the meeting to allow the District to make reasonable arrangements to ensure accessibility to this meeting. February 13, 2003 FAHR COMMITTEE AGENDA CALENDAR Month Item Action March General Manager Approved Purchases Action March Revised Records Retention Schedule Action March Consider Preliminary User Fees for 2003/04 Action March Consider Connection Fees for 2003/04 Action March Consider Issuance of COPs Action April Consider Internal Audit Firm Action April Consider Revised Purchasing/Delegation of Authority Resolution Action April Consider 2003/04 User Fees Action May Consider Preliminary 2003/04 Budget Information June Consider Final 2003/04 Budget Action June General Manager Approved Purchases Action MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Orange County Sanitation District Wednesday, December 11, 2002, 5:00 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on December 11, 2002, at 5:00 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: Brian Brady, Chair Roy Moore, Vice Chair Mark Leyes Joy Neugebauer James W. Silva Shirley McCracken, Board Chair Steve Anderson, Vice Board Chair Directors Absent: STAFF PRESENT: Blake P. Anderson, General Manager Mike White, Controller Greg Mathews, Administrative Services Manager Doug Stewart, Asset Management Program Manager Penny Kyle, Committee Secretary OTHERS PRESENT: Don Hughes Toby Weissert Bill Kennedy (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. (4) REPORT OF THE COMMITTEE CHAIR The Chair had no report. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 December 11, 2002 (5) REPORT OF THE GENERAL MANAGER Blake Anderson, General Manager, reported on a meeting held earlier that day for special districts in Orange County to discuss state budget issues and potential vulnerability to the District’s portion of the property tax revenue, which is approximately $35 million, and designated “reserve” funds. Chair Brady requested an agenda item be prepared for the February 2003 meeting to direct staff to optimize the district’s management of reserves to maintain maximum protection from confiscation by the state. Mr. Anderson also reported on several other items: The possible development of a legislative proposal to modify Proposition 218 to provide an exemption for fees associated with urban runoff treatment programs; a public infrastructure funding ballot measure that is scheduled to appear on the March 2004 ballot state-wide, which earmarks a part of the general fund towards public infrastructure improvements; and, the possible expansion of the Regional Water Quality Control Board’s oversight authority as it relates to biosolids management programs. He also discussed his participation as a member of the board of directors of the Orange County Business Council and as a member of the Orange County Coastkeepers, and the reasons for his participation in the groups. (6) REPORT OF DIRECTOR OF FINANCE The Director of Finance was not present. Mike White, Controller, referred to the Treasurer’s Report that was distributed to the Directors that evening, and reported that one of the two securities that had previously fallen below the District’s investment policy rating requirements has been sold at 100.82% of par. The other security is an asset-backed security issued by United Airlines, who has now filed for Chapter 11 bankruptcy reorganization. Pacific Investment Management Company (PIMCO), the District’s external money manager, has advised District staff not to sell the security at this time as they believe the underlying value of the airplanes securing the asset is greater than the current market value of the security. PIMCO will continue to monitor this security very closely. (7) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources was not present. (8) REPORT OF GENERAL COUNSEL General Counsel was not present (9) CONSENT CALENDAR ITEMS a. The Chair ordered that the November 13, 2002 minutes for the Finance, Administration and Human Resources Committee meeting be deemed approved, as mailed. b. FAHR02-107: Receive and file Treasurer’s Report for the month of November 2002. c. FAHR02-108: Receive and file Certificate of Participation (COP) Monthly Report. d. FAHR02-109: Receive and file Employment Status Report as of November 27, 2002. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 December 11, 2002 e. FAHR02-110: Receive and file OSHA Incidence Rates and Workers’ Compensation Claims and Costs Report. f. FAHR02-111: Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. g. FAHR02-112: Recommend to the Board of Directors to adopt Resolution No. OCSD-__, Amending Resolution No. OCSD 98-33, Amending Human Resources and Policies Procedures Manual, providing for adoption of Policy No. E90.00, Internet and Electronic Mail Usage. MOTION: It was moved, seconded and duly carried to approve the recommended actions for items specified as 9(a) through (g) under Consent Calendar. Directors Brian Brady and Jim Silva abstained on Item 9(a). END OF CONSENT CALENDAR (10) ACTION ITEMS a. FAHR02-113: Approve the 2003/04 Budget Assumptions, Fiscal Policy Statements, and Budget Calendar. Mike White, Controller, gave a brief verbal report reviewing the budget assumptions and the process of developing the 2003/2004 budget. MOTION: It was moved, seconded and duly carried to approve the recommended action. b. FAHR02-114: Recommend to the Board of Directors to approve a change order to the purchase order contract to appoint Moreland & Associates as the District’s independent auditors for fiscal year 2002-03 in an annual amount not to exceed $47,800, and not to exceed $49,700 for fiscal year 2003-04. Mike White, Controller, gave a brief report for the need to renewal the existing contract with Moreland & Associates, indicating the District has been pleased with their past service. MOTION: It was moved, seconded and duly carried to recommend approval to the Board of Directors. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 4 December 11, 2002 (11) INFORMATIONAL PRESENTATIONS a. FAHR02-116 Asset Management Strategic Plan and Framework Analysis Doug Stewart, Asset Management Program Manager, reported on the findings of Phase 1, and described the steps to be taken for development and implementation of Phase 2. (12) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. (13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (14) CONSIDERATION OF UPCOMING MEETINGS The next FAHR Committee meeting is scheduled for January 8, 2003 at 5 p.m. (15) CLOSED SESSION There was no closed session. (16) ADJOURNMENT The Chair declared the meeting adjourned at 6:49 p.m. Submitted by: _______________________________ Penny M. Kyle FAHR Committee Secretary G:\wp.dta\agenda\FAHR\FAHR2002\2002 Minutes\111302 FAHR Minutes.doc \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\06.03-01.Treasurer Report.doc Page 1 FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-01 Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Michael White, Controller SUBJECT: TREASURER’S REPORT FOR THE MONTH OF JANUARY 2003 GENERAL MANAGER'S RECOMMENDATION Receive and file Treasurer’s Report for the month of January 2003. SUMMARY 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. Some funds are also deposited in the State of California Local Agency Investment Fund for liquidity. 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” portfolios. 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. As shown on page 2 of the attached PIMCO’s Performance Monitoring and Reporting Report for of the Long-Term Operating Monies, there is an investment policy compliance issue pertaining to the holding of a security that had an acceptable rating at the time of purchase but have since fallen below the minimum rating allowed by the investment policy. The District’s investment policy requires a minimum rating of A3 by Moody’s or A- by S&P, with at least a BBB rating in the event of a split rating, at the time of purchase. The compliance issue pertains to the holding of a United Airlines (UAL) Asset Backed Security whose rating from Moody’s has fallen several times, from A3 to BA1, then to BA3, and finally to B3. Likewise, the rating from Standard & Poor’s has also fallen several times, first from A- to BBB, then to BB, then to B+, and finally to B-. Although these ratings are less than what is required at the time of purchase, PIMCO believes, based on the financial strength of UAL and the underlying collateral of the security, that the District would suffer an unwarranted loss if this security was sold. The District’s investment policy does not require any action because of "credit watch" notices or the decline in credit standing. PIMCO will continue to monitor the credit very closely. 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. \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\06.03-01.Treasurer Report.doc Page 2 BUDGET IMPACT 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 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. Also provided is a summary of monthly investment balances and transactions within the State of California Local Agency Investment Fund (LAIF). 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 following table details the book balances of the District’s investment accounts at month-end. A graphical representation of month-end balances is shown on the attached bar chart. Investment Accounts Book Balances December 31, 2002 Estimated Yield (%) State of Calif. LAIF Union Bank Checking Account PIMCO – Short-term Portfolio PIMCO - Long-term Portfolio Petty Cash TOTAL Debt Service Reserves w/Trustees $ 21,084,844 3,499,091 63,960,864 317,749,499 5,000 $406,299,298 $35,357,528 2.10 N/A 2.50 4.27 N/A 4.13 4.28 ATTACHMENTS 1. Monthly Investment Reports 2. Monthly Transaction Report MW:lc FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. AGENDA REPORT Item Number FAHR03-02 Item Number Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: CERTIFICATES OF PARTICIPATION (COP) MONTHLY REPORT – JANUARY 2003 GENERAL MANAGER'S RECOMMENDATION Receive and file Certificates of Participation (COP) Monthly Report for the month of January 2003. SUMMARY The District began issuing Certificates of Participation (COPs) on a variable interest rate basis in 1990. These variable rate COPs were a part of our long-term financing plan which also included some more traditional fixed rate borrowing. In 1992 and 1993, some of the fixed rate COPs were refunded and replaced with synthetic-fixed rate COPs. These are variable interest rate COPs that are also subject to a long-term fixed-rate interest exchange agreement (SWAP). The SWAP provides the maximum interest rate to be paid by the District, and is less costly than traditional fixed rate borrowing. In August 2000, the entire financing program was restructured and modernized to incorporate and take advantage of the consolidation of District books of account and revenue structure. This process has reduced the number of COP issues from five to three; 1992 Refunding COPs, 1993 Refunding COPs and 2000 Refunding COPs. The 2000 COPs can be divided into Series A and Series B, if additional remarketing agents are desired. Variable interest rate COPs can be put back on the market by the buyer each day. When this happens, they must be remarketed or sold to another buyer. This process, called remarketing, is generally provided by a municipal bond underwriter. The remarketing agent sets the interest rate they believe is required to sell the COPs. Some issuers believe that having more than one remarketing agent promotes competition and results in lower interest costs. Staff has monitored variable interest rate issues of other agencies since the inception of our program. The attached charts are described in the "Additional Information" section of this agenda report. They are provided monthly to compare our actual interest rates to a composite index, and to other selected issuers of similar credit quality, and with COP issues of similar amounts. Many variables affect interest rates, but staff expects our rates to be among the lowest. PROJECT/CONTRACT COST SUMMARY N/A \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\07.03-02.COP.DOC Revised: 8/20/01 Page 2 BUDGET IMPACT 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 No report for December 2002 was issued because there was no FAHR meeting in January 2003. The attached graphs that provide information through January 2003, also contain the information for December 2002. The first graph entitled, "OCSD COP Rate History Report,” shows the actual variable interest rates paid 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 "swap." 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 tend to 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 may occur. ALTERNATIVES N/A CEQA FINDINGS N/A 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:MW:lc \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\10.03-05.Financial Report.doc Revised: 8/20/98 Page 1 FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-05 Item Number Orange County Sanitation District FROM: Gary Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: MID-YEAR FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2002 GENERAL MANAGER'S RECOMMENDATION Receive and file FY 2002-03 Mid-Year Financial Report for the period ended December 31, 2002. SUMMARY Attached in a separately bound document is the District's Mid-Year Financial Report for the period ended December 31, 2002. This report is a consolidation of the financial accomplishments of the District at the December 31, 2002 Mid-Year point. Contained within the Mid-Year Financial Report are budget summary reviews of the Joint Operating & Working Capital Funds, the Capital Improvement Program, the Revenue Areas, and the self-insurance funds. As indicated within the Overview Section of this report, 45.65 percent, or $29.86 million of the 2002-03 net joint operating budget of $65.42 million has been expended. Net cost has increased $4.96 million, or 19.9 percent in comparison with the same period last year primarily due to the increased level of wastewater treatment with full disinfection. The total cost per million gallons at December 31, 2002, is $682.17 based on flows of 43.78 billion gallons, or 237.92 million gallons per day. This is $34.78, or 4.85 percent below the budgeted cost per million gallons of $716.95. This shortfall is primarily due to expenditures being lower than budget by 8.70 percent, or $2.85 million. This expenditure shortfall is somewhat offset by the fact that flows are 4.83 percent lower than the budget estimate of 250 million gallons per day. PROJECT/CONTRACT COST SUMMARY N/A \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\10.03-05.Financial Report.doc Revised: 8/20/98 Page 2 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) ADDITIONAL INFORMATION None. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. FY 2002-03 Mid-Year Financial Report for the period Ended December 31, 2002. MW \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\11.03-06.Quarterly Investment Management.doc Revised: 8/20/98 Page 1 FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-06 Item Number Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: QUARTERLY INVESTMENT MANAGEMENT PROGRAM REPORT FOR THE PERIOD OCTOBER 1, 2002 THROUGH DECEMBER 31, 2002 GENERAL MANAGER'S RECOMMENDATION Receive and file the Quarterly Investment Management Program Report for the period October 1, 2002 through December 31, 2002. SUMMARY Section 15.0 of the District's Investment Policy includes monthly and quarterly reporting requirements for the District's two investment portfolios. These two funds, the "Liquid Operating Monies," and the "Long-Term Operating Monies" are managed by PIMCO, the District's external money manager. The ongoing monitoring of the District's investment program by staff and Callan Associates, the District's independent investment advisor, indicates that the District's investments are in compliance with the District's adopted Investment Policy and the California Government Code, and that overall performance has tracked with benchmark indices. In addition, sufficient liquidity and anticipated revenues are available for the District to meet budgeted expenditures for the next six months. The District's portfolios do not include any reverse repurchase agreements or derivative securities. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT 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) \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\11.03-06.Quarterly Investment Management.doc Revised: 8/20/98 Page 2 ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Review, prepared by PIMCO, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, are attached for reference. Also attached are Long-Term and Liquid Operating Monies Summary of Performance Data and Portfolio Statistics charts that depict the performance results, estimated yield and duration, credit quality, and sector diversification of the District's portfolios, as of September 30, 2002 and December 31, 2002. The Liquid Operating Monies portfolio, with an average maturity of 90 days, consists entirely of cash equivalent investments such as U.S. Treasuries and corporate discount notes. Portfolio Performance Summary The following table presents a performance summary of the District's portfolios as compared to their benchmarks for the period October 1 through December 31, 2002. Portfolio Performance Summary Quarter Ended December 31, 2002 Liquid Operating Monies (%) Long-Term Operating Monies (%) Total Rate of Return Benchmark(1) Total Rate of Return Benchmark(1) 3 Months 0.48 0.39 1.03 1.35 6 Months 0.91 0.82 4.50 4.83 9 Months 1.53 1.26 7.50 8.02 12 Months 2.03 1.70 7.92 7.91 Since inception 30 Sept. 95 4.78 4.60 6.83 6.93 Market Value $64.3M $321.2M Average Quality “AAA” “AAA” Current Yield (%) 2.6 5.5 Estimated Yield to Maturity (%) 1.6 2.5 Quarterly Deposits (Withdrawals) $20.0M $0.0M Estimated Annual Income $1.7M $16.0M (1) Benchmarks:  Liquid Operating Portfolio: 3-Month Treasury Bill Index  Long-Term Operating Portfolio: Merrill Lynch Corp/Govt. 1-5 Year Bond Index \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\11.03-06.Quarterly Investment Management.doc Revised: 8/20/98 Page 3 Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Quarter Ending Liquid Operating Monies ($M) Long-Term Operating Monies ($M) 31 Mar. 02 43.6 355.8 30 June 02 43.9 366.1 30 Sept. 02 44.1 317.8 31 Dec. 02 64.3 321.2 ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. PIMCO Report 2. Callan Report 3. Quarter End Portfolio Market Value Bar Chart 4. Long-Term and Liquid Operating Monies Portfolio Characteristics Charts (2) 5. Historical Yield Curve Graph Page 1 of 3 Orange County Sanitation District Policy Number: B30.00 Effective Date: February 26, 2003 April 28, 1999 Subject: HARASSMENT POLICY Supersedes: April 28, 1999 October 22, 1997 Approved by: 1.0 PURPOSE 1.1 It is the policy of the Orange County Sanitation District to provide a working environment for all employees which is free of harassment and discriminatory intimidation whether based on actual or perceived mental or physical race, color, religion, sex, sexual orientation, age, national origin, disability, veteran status, marital status, exercise of rights relating to family care leave, or any other legally protected basis. 1.2 All District employees are expected to support and comply with this policy. Any supervisor or manager observing or knowing of a harassing situation shall take immediate action to stop it. Supervisory and management personnel who receive reports of harassment are expected to consider all such complaints seriously and take immediate steps to implement this policy in accordance with the provisions contained herein. Harassing behavior, sexual or otherwise, as defined herein, is not within the course and scope of employment at the District. 2.0 ORGANIZATIONAL UNITS AFFECTED 3.0 DEFINITIONS 3.1 Harassment for the purposes of this policy, includes verbal, physical or visual conduct based on protected status that is so severe and/or pervasive that it creates a hostile or abusive working environment, and interferes with an employee’s ability to do his or her job. An environment may be hostile if unwelcome behaviors, sexual or other, are directed specifically at an individual or if an individual witnesses unlawful harassment in his/her immediate surroundings. Examples of Prohibited Behavior: • Verbal conduct such as epithets, demeaning comments of a personal nature, derogatory jokes, slurs, yelling, screaming, intimidation or threats. 2.1 This policy applies to all employees regardless of their organizational unit. Additionally, all persons who perform any services for the District including persons working under contract, regardless of their employment status, are covered by this policy. Page 2 of 3 • Patronizing or ridiculing statements that convey derogatory attitudes about a particular gender. • Leering. • Displaying or distributing posters, cartoons, computer graphics or electronic media transmissions containing material that could be viewed as offensive. • Physical contact such as assault, unwanted touching, blocking normal movement, pushing or interfering with work because of sex, race or any other protected basis. • Retaliation for having reported or threatened to report harassment. 3.2 Sexual Harassment may involve the behavior of a person of either sex against a person of the opposite or same sex, and occurs when such behavior constitutes unwelcome sexual advances, unwelcome requests for sexual favors, and other unwelcome verbal, physical, or visual behavior of a sexual nature where: • Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment; • Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting the individual’s welfare; or • Such conduct has the purpose or effect of substantially interfering with an individual’s welfare or work performance, or creates an intimidating, hostile, offensive, or demeaning work environment. Examples of Prohibited Behavior: Prohibited acts that constitute sexual harassment may take a variety of forms. Examples of the kinds of conduct that may constitute sexual harassment include, but are not limited to: • Unwelcome sexual propositions, invitations, solicitations, flirtations and gestures. • Threats or insinuations that a person’s employment, wages, promotional opportunities, or other conditions of employment may be adversely affected by not submitting to sexual advances. Unwelcome verbal expressions of a sexual nature, including graphic sexual commentaries about a person’s body, dress, appearance or sexual activities; the unwelcome use of sexually degrading language, jokes or innuendoes; unwelcome suggestive or insulting sounds or whistles; leering. • Sexually suggestive objects, pictures, videotapes, audio recordings or literature placed in the work area which may embarrass or offend individuals. • Unwelcome touching, patting or pinching. • Consensual sexual relationships where such relationships lead to favoritism of a subordinate employee with whom the superior is sexually involved and Page 3 of 3 where the conduct has the purpose or effect of substantially interfering with another individual’s welfare or work performance, or creates an intimidating, hostile, offensive, or demeaning work environment. Romantic or sexual relationships between supervisors and subordinate employees are discouraged. There is an inherent imbalance of power and potential for exploitation in such relationships. The relationship may create an appearance of impropriety and lead to charges of favoritism by other employees. A welcome sexual relationship may change with the result that sexual conduct which was once welcome becomes unwelcome and harassing. 4.0 POLICY 4.1 The Orange County Sanitation District will not tolerate any form of harassment and is committed to providing a work environment that is free from unlawful discrimination. 4.2 The District will take allegations of harassment seriously and will respond promptly to complaints of harassment. Where it is determined that inappropriate conduct has occurred, the District will act immediately to eliminate the conduct and impose such corrective action as is necessary, including disciplinary action where appropriate. 5.0 PROCEDURE 5.1 Any employee who believes that he or she has been the victim of harassment prohibited by this policy must immediately report the matter, verbally or in writing, to his or her supervisor or manager, or to any other supervisor or manager, including the General Manager, or to the Human Resources Department. 5.2 Upon receipt of the complaint, the District will promptly investigate the allegation in a fair and expeditious manner. The investigation will be conducted in such a way as to maintain confidentiality to the extent practicable under the circumstances and permissible under the law. If it is determined that unlawful harassment has occurred, appropriate corrective action will be taken. 5.3 It is important to be aware that under the California Fair Employment and Housing Act (“FEHA”), employees may be held personally liable for any acts of unlawful harassment. 6.0 EXCEPTIONS 7.0 PROVISIONS AND CONDITIONS 7.1 Post in offices. 8.0 RELATED DOCUMENTS Page 1 of 9 Orange County Sanitation District Policy Number: B150.00 Effective Date: February 26, 2003 April 25, 2001 Subject: Recruitment Supersedes: B40.00 Reference Checks B50.00 Employment Opportunity Bulletins B60.00 Lateral Transfers B70.00 Employment of Relatives B80.00 Employment of Former Employees B90.00 Probationary Employees Approved by: 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for the District’s recruitment activities. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all District departments, divisions, sections and employees. 3.0 DEFINITIONS 3.1 Recruitment is the process of attracting qualified individuals to apply for jobs that are open within the organization, whether internal or external. 3.2 Internal recruitment means considering only present employees as applicants for job openings within the organization. 3.3 Open recruitment means attracting applicants from outside the organization, as well as internally to apply for job openings within the organization. 3.4 Probationary Period - Initial as defined in applicable MOU provisions, includes at least the first 6 months or 26 weeks of employment with the District beginning with the date of hire. This period is regarded as an extension of the hiring process, and provides an opportunity for both the employee and the District management to assess, over a substantial period of time, whether or not the hiring decision was appropriate. Probationary employees become regular, full-time employees upon successful completion of their probationary period and the appropriate approval form, as provided by the Director of Human Resources. 3.5 Probationary Period - Promotional as defined in applicable MOU provisions, includes either at least the first 6 months or a 90-day period, depending on Page 2 of 9 applicable MOU provisions, immediately following the date of promotion. 120 days of employment with the District, beginning with the effective date of promotion. This period is regarded as an extension of the selection process, and provides an opportunity for both the employee and the District management to assess, over a substantial period of time, whether or not the decision was appropriate. “At-will” employees do not serve a promotional probationary period. 3.6 Relative is any person related by one of the following familial relationships to any employee at the agency: spouse, mother, father, brother, sister, child, grandmother, grandfather, grandchild, cousin, aunt, uncle, mother-in-law, father-in-law, brother-in-law or sister-in-law. 4.0 POLICY 4.1 It is the District’s policy to provide nondiscriminatory, lawful and consistent guidelines and procedures to its recruitment process, whether internal or open. 5.0 PROCEDURE 5.1 PERSONNEL REQUISITIONS 5.1.1 A personnel requisition is the first step for the hiring supervisor to communicate personnel needs. 5.1.2 The hiring supervisor completes the personnel requisition and receives the appropriate signatures required before sending it to Human Resources. 5.1.3 Human Resources reviews the requisition to make sure the required/desired qualifications are appropriate for the position. If changes are necessary, Human Resources will work with the appropriate manager/supervisor. 5.2 EMPLOYMENT OPPORTUNITY BULLETINS/POSTINGS 5.2.1 The recruiter prepares the internal employment opportunity bulletin, also known as a posting. and includes Each employment opportunity bulletin posting will include the following information: • Wage range • Department • Brief job description • Required qualifications • Desired qualifications • Posting/closing dates • Procedure for applying • Brief benefits overview 5.2.2 The recruiter provides the draft posting to the hiring manager for approval. Page 3 of 9 5.2.2 The recruiter shall prepare the internal and open employment opportunity bulletins as prescribed in the District’s Human Resources Policy B50.00. 5.2.3 Internal and open recruitment postings shall remain up open for ten working days. 5.2.4 Department representatives District Administrative Assistants are provided with postings for communication within the their designated departments. 5.2.5 Bulletin boards at Plant No. 1 where Employment Opportunity Bulletins will be regularly posted are located in the Control Center, and Warehouse, outside the Human Resources Office and in the lunch room in the Administration Building lunchroom. 5.2.6 Internal Job Announcement Notifications are sent via e-mail to all District employees for internal recruitments. 5.2.7 Employment Opportunity bulletin boards at Plant No. 2 are located in the Operations Center, Maintenance Office, Maintenance lunchroom and Warehouse. 5.2.8 Employment Opportunity Bulletins may also be found in other convenient areas throughout both plants. 5.3 ADVERTISING 5.3.1 Advertising is done for positions at the District to assure that we can fill the position ensures positions are filled with the best-qualified candidate for the job. 5.3.2 The recruiter and hiring supervisor determine the advertising needs. Generally, nonexempt All positions are advertised in the Orange County Register on the Internet. and exempt, Technical and hard-to-fill positions are advertised in the Los Angeles Times and the Orange County Register. on trade specific websites. 5.3.3 Trade magazines, the Internet and other forms of advertising may be used for hard-to-fill or specialized positions. 5.3.4 Human Resources lists positions on the District’s Job Hotline. 5.4 APPLICANT SCREENING 5.4.1 Resumes or applications that are received are reviewed and selected for further consideration only if they meet the minimum job requirements. 5.4.2 The recruiter forwards copies of the resumes or applications of qualified applicants to the hiring supervisor for review. Originals remain in HR in the Recruiting files. 5.4.3 All materials (e.g., applications, resumes, interviewer notes, interview packets, packets, etc.) submitted by applicants/candidates during the interview process are confidential and are considered District property; that is, they and must be returned to Human Resources upon completion of the hiring process. Page 4 of 9 5.5 INTERVIEW PROCESS 5.5.1 The interview panel members are selected and a date is set for along with the interview date(s). Applicants are scheduled, interview questions are prepared, and the interview panel conducts the actual interview. 5.5.2 The recruiter and the hiring supervisor work together to select the interview panel. However, the recruiter makes the final decision to ensure consistency. The ideal interview panel will include the hiring supervisor, one employee within the department, two individuals outside the department, and the recruiter, or another member of the Human Resources Department. Normally, no subordinates within the hiring department are to be part of not included in the interview panel. 5.5.3 The recruiter and the hiring manager work together to establish a set of questions for the candidates. Ideally, there are no more than 10-12 questions. 5.5.4 The recruiter prepares interview packets and distributes them to the interview panel, either electronically, or via inter-office mail. Packets include: resumes. • An overview of the interview process • A copy of the interview schedule • A copy of the employment bulletin opportunity/posting • Copies of candidate applications • Interview questions and evaluation forms for each candidate 5.5.5 The interview panel will meet at least one half hour before the interview. The panel will finalize the interview questions that are recommended by the hiring supervisor and the recruiter. The panel may add or delete questions. The panel will gain an understanding from the hiring supervisor about the criteria needed in with which to select the ideal candidate, and adopt the appropriate criteria. 5.5.6 The recruiter facilitates the interview process. and collects the documentation at the end of the interviews. When interviews are completed, the interview panel members evaluate each candidate interviewed. The candidates are ranked in order of preference based on the criteria established at the start of the interview. The top three candidates will be are identified and ranked in order of preference based on the criteria established at the start of prior to the interview. The recruiter collects the documentation at the end of the interview process. 5.5.7 The final candidate is selected from the top three candidates when a majority decision is reached. If a majority decision cannot be reached, the General Manager or designee will make the final determination based on the input of the hiring supervisor, the panel, and the HR representative. If a majority decision is reached, and the hiring supervisor does not agree with the final decision, he or she may appeal for a final decision from the General Manager or designee. 5.6 EMPLOYMENT OFFERS Page 5 of 9 5.6.1 The recruiter and hiring supervisor discuss determine an appropriate starting salary for all candidates, except those designated as “at-will” employees, based on a Salary Offer Analysis. This analysis will include the applicant’s: Items considered include the following: • Qualifications • Years of experience • Educational background • Salary history • Parity within the department The HR Compensation Analyst reviews the recommended salary, and approves or makes additional recommendations. All salary offers that are either at or beyond the midpoint of the range will require the approval of the Human Resources Director (or designee). Under no circumstances should panel members (excluding the HR representative) or any other District employee discuss salary offers with candidates or make promises of any kind. “At-will” EMT members are exempt from section 5.6. 5.6.2 The recruiter prepares a status change form for the candidate and receives appropriate signatures: Department Head, Manager/Supervisor and Human Resources. 5.6.3 When the status change form is approved, the recruiter makes a verbal employment offer to the candidate, contingent upon results of a pre-employment physical, drug screening and a background investigation. 5.6.4 The recruiter schedules the pre-employment physical for the candidate, works with the supervisor to establish a potential start date, initiates the background check and prepares a formal offer letter for the candidate. The recruiter then prepares regret letters for unsuccessful open candidates or contacts unsuccessful internal candidates. 5.6.5 When the Safety Manager (or designee) has cleared the pre-employment physical results and the recruiter has cleared the background check results, the recruiter will contact the applicant to confirm the employment offer and start date. 5.6.6 The recruiter works with the hiring supervisor to establish coordinates the candidate’s start date and then prepares regret letters for unsuccessful open candidates or contacts unsuccessful internal candidates. 6.0 EXCEPTIONS 6.1 EMPLOYMENT OF FORMER EMPLOYEES 6.1.1 Employment of former employees for full-time equivalent or part-time positions shall be subject to and conducted in accordance with the District’s policies and procedures on open recruitment this policy. 6.1.2 Employment of a former employee is subject to the approval of the General Manager and the Director of Human Resources. Page 6 of 9 6.1.3 In all cases, approval of the General Manager and the Director of Human Resources shall be received prior to an offer of employment to a former employee. 6.1.4 The General Manager may, with the written approval of the Board Chair, employ on a part-time or as-needed basis, a former employee retired from the District when the individual possesses knowledge and expertise of unique and particular benefit to the District and when the services are required. The length of service performed in any one year shall be limited in accordance with the provisions prescribed by the Orange County Employees’ Retirement System (currently 120-day maximum). 6.1.5 Part-time or as-needed service shall be compensated at the same current hourly rate of the retired employee’s position classification, or if no such classification exists, at a rate not to exceed that paid for the most comparable classification. The retired employee shall not be entitled to receive any benefits otherwise payable to District employees. In the event any employment under this provision involves work assignments outside of Orange County, the current expense reimbursement policy established for regular employees will apply. 6.1.6 If any former employee commences doing business wherein the employee, his/her spouse, or members of his/her immediate family are sole proprietors, or majority or controlling shareholders or owners of a corporation, partnership or other business entity, such business shall not be retained as an independent contractor or consultant to provide service directly to the District for a period of one year after leaving District’s employment. Thereafter, said business entity shall be allowed to contract with the District upon compliance with all resolutions and regulations of the District then in effect, relating to the procurement of services. 6.1.7 If any former employee becomes employed by any firm or business entity in which the former employee, his/her spouse or members of his/her immediate family own less than the majority or controlling interest in said entity, said entity shall not be prohibited from contracting with the District. However, the former employee shall not perform work on District projects for a period of one year after leaving District employment; nor shall such former employee contact District officers or employees for the purpose of attempting to influence any District decision, including but not limited to, the award of contract, issuance of permits, or compromise of administrative civil penalties, for a like period of one year. Said services shall be obtained only in accordance with all rules and procedures of the District relating to procurement. 6.1.8 Any District employee who receives an offer of employment or a request to discuss potential employment from any person or business entity performing services for the District shall report such contact to his or her immediate supervisor, who shall decide whether any change in assignment is necessary or appropriate while the offer or discussions are pending. 6.1.9 The prohibitions of this policy may be waived by the Finance, Administration and Human Resources Committee of the Boards of Directors if, on a case-by-case basis, it is determined to be in the best interests of the District to do so. Page 7 of 9 6.2 EMPLOYMENT OF RELATIVES 6.2.1 It is the District policy that No employee, prospective employee or applicant shall be denied employment or benefits of employment solely on the basis of his or her familial relationship with an employee of the agency. 6.2.2 The District will make reasonable efforts to assign job duties to eliminate any potential for an adverse impact on supervision, safety, security or morale, or potential conflicts of interest. 6.3 LATERAL TRANSFERS 6.3.1 Employees may request a lateral transfer to a vacant position in the same classification in another department providing they have demonstrated at least six months of continuous competent or above performance in their current position, and the transfer is of benefit to the District. 6.3.2 Employees who wish to be considered for a lateral transfer should notify Human Resources in writing of their intent. In the event a transfer is approved and accepted by the employee, the department from which the employee is transferring may determine the effective date based upon operational requirements and a reasonable period of time to acquire a suitable replacement. 6.3.3 Lateral transfers do not normally involve increased levels of duties and responsibilities, or otherwise qualify as promotions, and therefore do not involve salary adjustments. 6.3.4 In the event an adjustment appears warranted based on extenuating circumstances, the adjustment must have written approval from the department head prior to being extended to the employee. 7.0 PROVISIONS AND CONDITIONS 7.1 The District’s Board of Directors must approve unbudgeted positions for new hires or promotions before any internal or open or promotional recruitment effort is initiated. 7.2 Hiring an individual into a budgeted position requires the approval of the Department Head and General Manager. 7.3 Promoting an individual into a budgeted position requires the approval of the Division Manager, Department Head or General Manager. 7.4 Notwithstanding the above provisions, The District retains the right to refuse to place a relative under the direct supervision of a District employee where such has a potential for creating an adverse impact on supervision, safety, security or morale. 7.5 The District retains the right to refuse to place relatives in the same department, division, or facility where such has a potential for creating an adverse impact on supervision, safety, security or morale, or involves potential conflicts of interest. Page 8 of 9 7.6 The District will take into consideration whether there have been any actual problems with supervision, safety, security or morale, in determining whether individuals who were relatives prior to the adoption of this policy pose a risk to supervision, safety, security or morale or raise a conflict of interest. The District will consider the possibility of reassignment or transfer of one of the individuals to eliminate such potential risk. 7.7 INITIAL PROBATIONARY PERIOD 7.7.1 All persons hired by the District, except those designated as “at-will” employees, are considered to be probationary employees for a period of at least the first 26 weeks or 6 months of employment, depending upon the applicable MOU provisions, from their beginning with their date of hire. This six-month probationary period is regarded as an extension of the hiring process, and provides an opportunity for both the employee and District’s management to assess, over a substantial period of time, whether or not the hiring decision was appropriate and resulted in a relationship that adequately meets the needs of both the individual and the District. 7.7.2 The probationary period may be extended by mutual agreement between the District and the employee, prior to the expiration of the six-month probationary period. An employee’s probationary period may be extended when there is a need to further assess the individual’s abilities to satisfactorily perform the duties required for their job classification. Probationary employees are not considered to be regular, full-time employees until they have completed the probationary period (including any extension) and may be released by the District at any time during the probationary period (including any extension) without cause or reason. 7.7.3 A probationary employee’s work performance is closely monitored during this period to ensure that the employee understands the duties, responsibilities and management expectations of the position, and to allow an opportunity for the supervisor or manager to provide proper direction and guidance. Employees who do not demonstrate the potential for meeting performance expectations for their position within a reasonable period of time may be released prior to the completion of the Probationary Period. Probationary employees shall serve at the will of the District during this period. In the event of release of a probationary employee, the employee shall not be entitled to receive any severance pay. 7.8 PROMOTIONAL PROBATIONARY PERIOD 7.8.1 All promoted employees, except those designated as “at-will” employees, shall serve a promotional probationary period lasting at least 120 days or 6-months, depending upon the applicable MOU provisions, beginning with the effective date of promotion. This period is regarded as an extension of the selection process, and provides an opportunity for both the employee and the District management to assess, over a substantial period of time, whether or not the decision was appropriate. 7.9 REFERENCE CHECKS Page 9 of 9 7.9.1 Employment with the District is contingent upon a pre-employment screening process which includes a physical examination, drug/alcohol test and background investigation. Candidates must also be able to provide documentation authorizing their legal right to work in the United States as per the Immigration Reform and Control Act of 1986. 7.9.2 It is the District policy to The District may verify information contained in the job application of a prospective employee with the prospective employee’s authorization. about an employee concerning positions held, dates of employment, and verification of last salary. 7.9.3 Inquiries to District employees regarding job reference checks of former employees, or employment verification checks of former or present employees, shall be discussed with or referred to the Human Resources Department prior to any response. 8.0 RELATED DOCUMENTS 8.1 501, OCEA and SPMT memorandums of understanding (MOUs) 8.2 Policy C180.00, At-Will Policy \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\12.03-07.HR P&P.doc Revised: 12/29/2022 Page 1 FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-07 Item Number Orange County Sanitation District FROM: Lisa Tomko, Director of Human Resources and Employee Development Originator: Denise Martinez, Human Resources Analyst SUBJECT: CHANGES AND ADDITIONS TO HUMAN RESOURCES POLICIES AND PROCEDURES AS AUTHORIZED BY RESOLUTION 98-33. GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 03-XX, amending Resolution No. OCSD 98-33, amending Human Resources Policies and Procedures Manual. SUMMARY The attached policies are routine updates or additions to maintain consistent language with the Memorandums of Understanding (MOU) and/or new legislation or to explain procedures more clearly. PROJECT/CONTRACT COST SUMMARY None BUDGET IMPACT 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 Policy Number and Subject From To Reason for Change B30.00 Harassment Policy Current Language. Revised Language. Clarification of policy. B150.00 Recruitment Current Language. Revised Language. Clarification of policy. Revisions for consistency with MOUs. Consolidation of related policies. Addition of text from existing related policies. C190.00 Variable Non-Base Pay N/A New Policy. Consolidation of related policies. \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\12.03-07.HR P&P.doc Revised: 12/29/2022 Page 2 Policy Number and Subject From To Reason for Change E90.00 Internet and Electronic Mail Usage Current Language. Revised Language. Clarification of policy. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. Policy B30.00, Harassment Policy 2. Policy B150.00, Recruitment 3. Policy C190.00, Variable Non-Base Pay 4. Policy E90.00, Internet and Electronic Mail Usage 5. Proposed Resolution Page 1 of 6 Orange County Sanitation District Policy Number: C190.00 Effective Date: February 26, 2003 Subject: Variable Non Base PAY Supersedes: C50.00 Overtime Pay Non-Exempt Employees C60.00 Acting Pay C70.00 Call-Back Pay C80.00 Standby Pay C100.00 Unscheduled Overtime Meals C140.00 Severance Pay C160.00 Shift Differential Pay Approved by: Lisa L. Tomko 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for variable pay other than basic hourly rate. This variable pay includes: use in the compensation of non-exempt employees for overtime hours worked overtime pay for non-exempt employees, acting pay employees who are temporarily assigned to perform the duties of a higher level classification, call-back pay, use in the compensation of District employees who perform standby duties pay, providing employees with money for meals when they are required to serve unscheduled overtime meals, use in the administration of the District’s severance pay plan and differential shift pay. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 Overtime pay for non-exempt – applies to all District employees represented by one of the following bargaining units either the Engineering Unit, Technical Services Unit, Administrative/Clerical Unit, Operations and Maintenance and certain nonexempt confidential positions. 2.2 Acting pay, unscheduled overtime meals and severance pay – this policy applies to all District employees regardless of their organizational unit. 2.3 Call-back pay and standby pay – is available applies to all non-exempt District employees in every regardless of their organizational unit except for “exempt” range employees. 2.4 Shift differential pay – applies to all District employees who are covered by an MOU that entitles them to shift differential pay. Page 2 of 6 3.0 DEFINITIONS Acting means performing substantially all of the duties of a vacant budgeted position with a higher maximum rate of pay. Call-back pay is compensation for paid to an employees by the District when an employee is who have been called back to work by the District following a normal work shift in accordance with the procedure outlined in this policy management without prior notice, and the employee has completed his or her normal work shift and left the plant, or when prior notice is given but the work begins on the same day at least three hours after completion of the regular shift, the employee shall receive a minimum of three hours of call-back pay. Non-Exempt means those employees whose job classifications fall under the provisions of the who are covered by the minimum wage and overtime provisions of the Fair Labor Standards Act, as amended. Such employees, because of the type of work that they perform and their earnings level, are subject to receiving overtime pay in addition to any entitlement otherwise provided for in applicable Memoranda of Understanding or other policies. Overtime means is the number of hours worked in paid status in excess of 40 during a workweek. Salary Range is the complete set of standard salary increments adjusted over time, as published in the District’s salary guide for any given position or job classification approved salary minimum and approved salary maximum for each pay grade in the District’s approved compensation structure. Standby is time during which an employee is not required to be at the work location or at the employee’s residence but is required to be available for immediate return to work. A Step is an increment on the salary guide. Where not provided on the salary guide, a step shall be 5.5% of the employee’s current salary, calculated to the nearest cent per hour. Workweek means a seven-day period starting at 12:01 a.m. Friday and ending at midnight on the following Thursday. If a work shift begins on Thursday before midnight but ends any time after midnight on Friday, all hours worked on that shift are considered to be worked on Friday. 4.0 POLICY 4.1 Overtime pay for non-exempt employees 4.1.1 Non-exempt employees who qualify for overtime compensation for work beyond their normal schedule shall be paid one-and-a-half times their regular rate of pay in accordance with the procedures listed in section 5.1. 4.2 Acting pay 4.2.1 It is District policy to compensate employees, in accordance with this policy, for performing substantially all of the duties of a vacant budgeted position with a higher maximum rate of pay in accordance with the procedures listed in section 5.2. Page 3 of 6 4.2.2 Acting pay status shall continue for a maximum of six months. 4.3 Call-back pay 4.3.1 It is District policy to compensate employees for call-back pay in accordance with the following procedures listed in section 5.3. 4.4 Standby pay 4.4.1 An employee covered by a Memorandum of Understanding provision for standby pay who is placed on standby shall be compensated at the rate of two hundred dollars per week, and will also receive call-back pay when they are actually called to work in accordance with the procedures listed in section 5.4. 4.5 Unscheduled overtime meals 4.5.1 It is the District’s policy to provide employees with money for meals or food service when they are required to serve unscheduled overtime in accordance with the procedures in this policy listed in section 5.5. 4.6 Severance pay 4.6.1 Employees are expected required to give a minimum of two weeks written notification when resigning from employment with the District. The District will follow the procedures for a Notice of Intent to Separate as listed in section 5.6. 4.7 Shift differential pay 4.7.1 It is District policy to compensate employees for shift work outside normal business hours at an hourly rate above their normal hourly rate as specified in this policy in accordance with the procedures listed in section 5.7. 5.0 PROCEDURE 5.1 Overtime pay for non-exempt employees 5.1.1 When an employee’s work schedule requires that they work on an observed holiday, the employee may opt to be paid at two-and-one-half times their regular rate of pay for the holiday or to be paid at one-and-one-half times their regular rate and receive an amount of Holiday Compensatory Time Off equivalent to the number of hours in the shift. Normally, employees that accumulate in excess of fifty hours of Holiday Compensatory Time Off will be scheduled to take such excess time off or be paid for the excess accumulated Holiday Compensatory Time Off at the convenience of the District. For good reason, the Department Head may allow Holiday Compensatory Time Off to be accumulated in excess of fifty hours. 5.2 Acting pay Page 4 of 6 5.2.1 Employees who are temporarily assigned by District management to perform substantially all of the duties of a higher level classification for a period of at least 100 consecutive hours will be eligible for a salary increase, for further continued service in the higher classification. 5.2.2 For service beyond 100 consecutive hours, pay shall be 5.5% higher than the employee’s current rate of pay, or at the minimum of the pay range for the acting position, whichever is greater. 5.2.2.1 The higher rate of pay begins with the 101st hour, and continues until the assignment ends. 5.2.2.2 Requests for acting pay require the approval of the employee’s Department Head and the Director of Human Resources. 5.3 Call-back pay 5.3.1 When an employee is called back to work by the District without prior notice, and the employee has completed his or her normal work shift for that day and left the work site, or when prior notice is given by the District, but the work begins on the same day at least three hours after completion of an employee’s regular shift, the employee shall receive a minimum of three hours of call-back pay. The three hours minimum, whether or not actually worked, shall be paid at the rate of one and one half times the employee’s regular hourly rate. If the actual work time exceeds three hours, the employee will be compensated for that time as well, except that no employee may work for or be compensated for more than 16 hours in a 24-hour period. Employees who are called back a second time within a normal shift period are considered to be working for the duration of that shift. 5.4 Standby pay 5.4.1 Standby assignments shall first be made on a voluntary basis. 5.4.2 A volunteer standby list shall be established by classification and job location. 5.4.3 Standby assignments shall be made from the list of employees who are competent and experienced, in alphabetical order, on a rotating basis. 5.4.4 In the event that no one volunteers, the District shall, on a rotational basis, assign standby by job classification and work location from employees who are competent and experienced. 5.5 Unscheduled overtime meals 5.5.1 When employees are required to work overtime due to an emergency, and actually work at least five hours, or due to an unanticipated extension of their regular workday that includes a regular meal period, the employee is entitled to reimbursement for the actual cost of a meal, not to exceed $5.00 for breakfast, $7.00 for lunch or $15.00 for dinner in addition to any compensation for time worked. Receipts must be submitted to the Accounting Division for expense reimbursement. In lieu of cash reimbursement, the District may provide actual food service to the employees. Page 5 of 6 5.6 Severance Pay 5.6.1 When a full-time regular employee is separated from employment by action of the District, except for disciplinary cause, the employee will be notified in writing through a Notice of Intent to Separate two weeks prior to the effective separation date. The notification period for employees on unpaid leave will be reduced by the number of calendar days of such leave. In the event such notification is not given, the employee shall be entitled to severance pay in accordance with the formula set forth below: 5.6.1.1 Full-time, non-probationary, regular employees shall be entitled to six eight hours pay for each full calendar month of continuous employment not to exceed eighty one hundred sixty hours pay, or as may be determined by the General Manager. 5.6.1.2 Employees in temporary limited term or part-time classifications, initial probationary employees, and employees who are dismissed for cause, are not eligible for severance pay under any circumstances. 5.7 Shift differential pay 5.7.1 Employees who are regularly assigned to work a night shift that consists of 50% or more of their hours between 6 p.m. and 6 a.m., and who actually work that shift, shall receive a shift differential of $2.50 per hour. 5.7.2 Employees hired prior to 02/05/97 who currently receive either a.m. or p.m. shift differential shall retain a $1.25 per hours shift differential if they are involuntarily displaced to a day shift (12-hour shift) for the purposes of converting to a 6:00 a.m. to 6:00 p.m. and 6:00 p.m. to 6:00 a.m. 12-hour shift structure. The $1.25 shift differential shall continue until October 30, 1999. Thereafter, the shift differential for these employees shall be discontinued. 5.7.3 Employees who voluntarily change shifts at any time during the contract period shall forfeit their eligibility for the $1.25 per hour shift differential. 6.0 EXCEPTIONS 6.1 Acting pay - the 100-hour eligibility period may be waived at the discretion of the General Manager. 6.2 Call-back pay – this policy does not apply to “exempt” range employees. 6.3 Standby pay – this policy does not apply to “exempt” range employees in the affected organizational unit. 7.0 PROVISIONS AND CONDITIONS 7.1 Standby pay – a standby list will be developed by the Operations and Maintenance Department weekly, and it shall be posted at both the Plant No. 1 Control Center and at the Plant No. 2 Operations Center. Page 6 of 6 7.2 Severance pay – employees who are dismissed for cause will not receive a Notice of Intent to Separate under the provisions of the policy. 8.0 RELATED DOCUMENTS 8.1 Overtime pay non-exempt employees - Fair Labor Standards Act Page 1 of 10 Orange County Sanitation District Policy Number: E90.00 Effective Date: December 18, 2002 Subject: INTERNET AND ELECTRONIC MAIL USAGE Supersedes: E60.00 Internet Usage and E70.00 E-mail Usage Approved by: Lisa L. Tomko 1.0 PURPOSE 1.1. To establish policies and procedures for the use of the District’s computer resources, including Internet and electronic mail (“e-mail”) systems, by District Employees and to establish policies and procedures for the retention of e-mail as District records. Computer resources also include all hardware, software, and computer files. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1. This policy applies to all District employees using the District’s computer resources, e-mail system, and Internet services in the performance of their job duties (“employees”), as well as to all other persons, such as employees of independent contractors (contract or temporary employees), consultants, appointed officials, authorized volunteers, special committee members, and other persons (“other users”) who are authorized to use the District’s computer resources in the performance of District business. 3.0 DEFINITIONS 3.1. Attachment: An application specific file, such as a Word or Excel document that is transported with an e-mail message. The recipient must have suitable software for viewing the attachment. 3.2. E-mail: A message, possibly with attachments, composed on a computer and received by a computer. A network, potentially including the Internet, is the transmission medium. 3.3. Internet: A worldwide network of computers, adhering to universal standards that are capable of exchanging data with each other. 4.0 POLICY 4.1. GENERAL INFORMATION 4.1.1. Internet services and e-mail are unique mediums that are viewed by most users as being different from traditional written correspondence or telephone communication. One of the greatest dangers of the use of Internet services and e-mail is that they are treated far more informally than other forms of business communication. Due to the perceived impermanence of Internet communications and e-mail messages, employees and other users often use them to express sentiments and Page 2 of 10 opinions they would never memorialize in traditional business writing. In drafting any Internet communication or e-mail message, employees and other users should exercise care and diligence as such communications reflect on the District and the employee’s department. As such, employees and other users should always conduct themselves in a professional manner and should refrain from sending anything by way of Internet communications or e-mail messages that should not appear in an official memorandum or letter. 4.1.2. The District’s computer resources are provided for the purpose of conducting District business, enhancing efficiency, and better serving the public interest. Internet services and e-mail are business communication tools that are made available to certain District employees and other users in order to enhance efficiency and effectiveness in the performance of job duties and District-related business and are to be used in accordance with state and federal laws, and this Policy. The e- mail system may not be used to solicit or persuade others for commercial ventures, religious or political causes, outside organizations, or other non-job-related solicitations. 4.1.3. The District’s computer resources, regardless of their physical location or the form in which they are maintained, are the exclusive property of the Orange County Sanitation District. Employees and other users are provided access to the District’s computer resources as authorized by the General Manager, Department Directors and/or the Information Technology Director (IT Director). 4.1.4. Use of the District’s computer resources, including Internet and e-mail communications, and Internet websites visited, should be predominantly for the accomplishment of business-related tasks and/or directly pertain to District business, administration, or practices. 4.1.5. Employees should be aware that all records, whether on paper or computerized, are subject to the mandatory public disclosure requirements of the California Public Records Act, subject to the specific exceptions provided under the Act. The information created or transmitted on any District computer resource, including Internet communications and e-mail messages, may be subject to public disclosure under the California Public Records Act or in connection with litigation. 4.1.6. Employees who are terminated or laid-off have no rights to the contents of their computer files or e-mail messages and are not allowed access to such systems. The District shall have the right to delete or retain any or all e-mail messages or computer files of a District employee who is no longer employed by the District. When an employee leaves District employment, it is the responsibility of the Department Director and the IT Director to ensure that access to the District’s computer resources is terminated and all computer files are retained by the District. 4.1.7. The District prohibits sexual, racial, or other forms of harassment and the District’s computer resources shall not be used for such purpose. If you are harassed or discriminated against through the use of the District’s computer resources, you must report the act of harassment or discrimination to your immediate supervisor or Department Director immediately. If you feel uncomfortable doing so, or if your immediate Page 3 of 10 supervisor or Department Director is the source of the harassment, condones the problem, or ignores the problem, report the harassment to Human Resources. 4.1.8. The dissemination of derogatory, defamatory, obscene, disrespectful, sexually explicit, sexually suggestive or in any other way inappropriate Internet and/or e-mail communications is prohibited. For example, the District prohibits the display or transmission of sexually explicit images, messages, or cartoons or any transmission or use of e-mail communications that contain ethnic slurs, racial epithets, or anything that may be construed as harassment or disparagement of others based on their race, national origin, color, sex, sexual orientation, age, disability, religious or political beliefs. Sending or forwarding a copy of these types of offensive communications on the District’s computer system is prohibited. 4.1.9. Electronic snooping or tampering by any employee is prohibited. “Electronic snooping” is the unauthorized use of or attempt to use another employee’s password without the employee’s consent, or the unauthorized entry to or attempt to enter the computer files and communications of another without that person’s consent, or the unauthorized entry or attempt to enter the encrypted storage of e-mail messages. 4.1.10. The District reserves the right for any reason to access, disclose or delete all messages and other electronic data sent over its electronic mail system or stored in its files. 4.2. ACCESS TO COMPUTER INFORMATION/CONFIDENTIALITY 4.2.1. An employee’s use of the District’s computer resources, including, but not limited to, all computer files, Internet services, and e-mail, are not confidential. The District provides no assurance of privacy with respect to any employee or other user’s use of any District computer resource, and the District expressly reserves the right to access or monitor, with or without notice, any employee or other user’s use of the District’s computer resources. 4.2.2. The District reserves the right to monitor and record individual employee and other user computer files, as well as Internet and e-mail usage, at any time as allowed by the Electronic Communications Privacy Act of 1986. No employee or other user shall have any expectation of privacy as to his/her computer files, Internet communications, or e-mail messages. The District has software and systems in place that can and will monitor and record all usage for each and every user, including, but not limited to, all internal transmissions, Internet website visits, newsgroups, e-mail messages, computer files, and file transfers into and out of the District’s internal network. District representatives may access, audit, and review all activity and analyze usage patterns, and may, for whatever reason, disclose this data to ensure that the District’s computer resources are devoted to maintaining the highest level of efficiency and productivity. Page 4 of 10 5.0 PROCEDURE 5.1. E-MAIL USAGE 5.1.1. E-mail should always be used with the assumption that a message will be read by someone other than its intended recipient. When transmitting e-mail messages, employees and other users should consider that the message, even though “deleted,” may later be disclosed to outside parties, members of the public, or in connection with litigation. Due to these concerns, employees and other users are required to maintain the highest standards of courtesy and professionalism when sending e-mail messages. 5.1.2. District employees shall have no right or expectation of privacy or confidentiality in any e-mail messages created, sent, received, deleted, or stored using the District’s computer resources. Management and supervisors shall have the right to read and review any e-mail message created, sent, received, deleted, or stored of any employee at any time and for any reason. 5.1.3. Employees are expected to exercise good judgment in sending any e-mail communication, especially if such communication is deemed sensitive. All confidential communications should be in hard copy form and be filed and retained in accordance with the District’s Records Retention Policy. 5.1.4. The sending of mass e-mailings on a “District-wide” basis to all employees without the prior authorization of a Department Director or the Communications Manager is prohibited. 5.1.5. Error on the side of caution. Whatever you write, assume the message is permanent. It can be printed-out and it may be retrievable. 5.1.6. Use appropriate language. Remember that as a system user, you are a representative of the Orange County Sanitation District. E-mail is a unique medium that is unlike traditional written correspondence, in that, while you may compose your e-mail transmission statement alone at your computer and that statement is intended for a single recipient, what you actually transmit can be viewed globally. 5.1.7. Transmitting a message under another employee’s name or password without their permission is prohibited. Any employee who obtains a password or user identification must keep that password confidential. 5.1.8. Employees should regularly change their individual passwords. Employees shall not share individual passwords with other individuals except for legitimate District business reasons. 5.1.9. Employees shall not use, or attempt to use, another employee’s password without the employee’s consent. 5.1.10. All communications should follow proper etiquette, such as: • Materials posted by District employees shall professionally represent the Orange County Sanitation District. The transmission of defamatory, obscene, offensive or harassing messages or messages Page 5 of 10 which disclose personal information without authorization is prohibited. • E-mail messages and electronic postings may be read by people beyond the addressee, and upon request may be produced to a court in connection with litigation and should be composed accordingly. 5.1.11. Employees should carefully consider the names on a mailing list as addressees or copies. Some employees may not want their e-mail addresses to be widely known or to receive responses to widely distributed messages. 5.1.12. E-MAIL ACCESS FROM HOME • Non-exempt District employees are prohibited from accessing their District e-mail accounts from home. If extenuating circumstances apply (i.e., lead worker “acting” as supervisor), HR will evaluate the situation on a case-by-case basis. 5.2. RETENTION OF E-MAIL 5.2.1. E-mail generates correspondence and other documentation, which may be recognized as Official District Records in need of protection/ retention in accordance with the California Public Records Act and as evidence in connection with litigation. Although the use of e-mail is primarily for official District business, the e-mail system is intended as a medium of communication. Therefore, the e-mail system should not be used for the electronic storage or maintenance of documentation, including, but not limited to, Official District Records. 5.2.2. E-mail messages sent and received, including any attachments, which can be considered an Official District Record, are to be stored in computer files or printed as a hard copy and filed in accordance with their Department’s Filing Policy. Generally, the sender of the e-mail should be the person responsible for storing or printing and filing it accordingly. The persons responsible for a particular program or project file shall be responsible for retaining all e-mail they send or receive related to that program or project. 5.2.3. Individual employees are responsible for the management of their mailboxes and associated folders. In order to assure maximum efficiency in the operation of the e-mail system, employees are encouraged to delete e-mail messages that are not Official District Records from their in-boxes once they are no longer needed. If a hard copy of data, which constitutes an Official District Record, has been printed and filed in accordance with the District’s Record Retention Policy and Schedule, the e-mail may be deleted. 5.2.4. It is the responsibility of individual employees and their Department Heads to determine if e-mail is an Official District Record which must be retained in accordance with the District’s Record Retention Policy and Schedule. The District’s Records Manager will assist you in making such a determination. You should keep in mind, however, that preliminary drafts, notes or interagency or intra-agency memoranda, which are not Page 6 of 10 retained by the District in the ordinary course of business, are generally not considered to be Official District Records subject to disclosure. Employees are encouraged to delete documents, which are not otherwise required to be kept by law or whose preservation is not necessary or convenient to the discharge of your duties or the conduct of the District’s business. 5.2.5. A record of additions and deletions made in the course of creating a draft letter or memorandum need not be saved. 5.2.6. Periodically, the District receives requests for inspection or production of documents pursuant to the California Public Records Act, as well as demands by subpoena or court order for the production of evidence in connection with litigation. In the event of such a request, the applicable Department Head shall require all employees to make available relevant e-mail files to the extent e-mail is stored in the computer and not printed and filed. The employee having control over e-mail files, once he/she is made aware of the request, shall immediately print and transmit a hard copy of any computer files that either are or may be responsive to the request or subpoena to his/her Department Head. 5.2.7. E-mail records that are Official District Records must be kept for the minimum retention period identified in the District’s Record Retention Disposition Schedule. Such e-mail records may not be destroyed except after approval of the Division Manager, the District’s Records Manager and General Counsel. 5.2.8. E-mail messages are subject to the same disclosure requirements as other public records. Requests from the public for e-mail records must be honored in the same manner as for other public records. E-mail messages, which are determined to be Official District Records must be accessible and retrievable during their entire retention period and are to be maintained in a manner which permits easy and timely retrieval. 5.3. ATTORNEY-CLIENT PRIVILEGED COMMUNICATIONS 5.3.1. Some messages sent, received or stored on the District e-mail system will constitute confidential, privileged communications between the District and its attorneys. Attorney-client communications should not be forwarded without consulting the General Manager’s office and/or the General Counsel’s office. 5.4. CONFIDENTIAL INFORMATION 5.4.1. Most communication among District employees is not considered confidential. However, certain communications, such as law enforcement investigations and personnel records, may be confidential or contain confidential information. Questions about whether communications are confidential should be discussed with the employee’s supervisor. 5.4.2. Employees shall exercise caution in sending confidential information on the e-mail system as compared to written memoranda, letters or phone calls, because of the ease with which such information may be retransmitted. Page 7 of 10 5.4.3. Confidential information should not be sent or forwarded to individuals or entities not authorized to receive that information and should not be sent or forwarded to other District employees not directly involved with the specific matter. 5.4.4. Care should be taken in using e-mail to ensure messages are not inadvertently sent to the wrong individual. In particular, exercise care when using distribution lists to make sure all addressees are appropriate recipients of the information. Lists are not always current and individuals using lists should take measures to ensure lists are current. 5.4.5. Employees shall not discuss confidential information outside of the workplace. 5.4.6. Confidential information should not be reproduced unnecessarily. 5.4.7. Employees shall return all tangible forms of confidential information to the District upon termination of employment or at the District’s request. 5.5. INTELLECTUAL PROPERTY RIGHTS 5.5.1. It is the Orange County Sanitation District’s policy to retain all copyrights and other intellectual property rights of which it is the legal owner. All copyrights and other intellectual property rights, which are created by District employees in the course and scope of their employment by the Orange County Sanitation District, are the exclusive property of the Orange County Sanitation District. 5.5.1.1. TRANSFER OF INFORMATION • District employees shall not post material on Internet or Intranet services or send material via e-mail, which is copyrighted by a party other than the District. • District employees shall not download copyrighted materials from these services except where permitted for research use. 5.6. COMPUTER SOFTWARE 5.5.1. VALID SOFTWARE REGISTRATION OR LICENSING 5.5.1.1. Each piece of proprietary software operating on a District computer must have valid registration (individually for stand-alone personal computers) or must be covered by users’ license (if connected to a local area network). Proprietary software and associated documentation are subject to copyright laws and licensing agreements, and are not to be reproduced unless authorized under a licensing agreement. Appropriate documentation to substantiate the legitimacy of the software is necessary. Employees shall not use unauthorized software on District computer resources. • Personal Software - Installation and use of privately-owned software, including screen savers and shareware, on District computers is prohibited. Page 8 of 10 • Entertainment Software - The use of entertainment software in District offices is prohibited at all times, except for training purposes, when it is authorized by the appropriate authority. 5.7. PASSWORDS 5.7.1. A confidential password does not guarantee privacy, nor does deletion mean the District cannot retrieve past communications, nor does it suggest that computer resources are the property right of the employee. Passwords and codes will help secure information, but they do not ensure privacy and security. Passwords should be changed periodically to ensure security. Users should not share their passwords with anyone else. The Information Technology Department has specific standards on password security. 5.8. INTERNET ACCESS 5.8.1. Use of the Internet is becoming increasingly necessary for District employees to provide effective and efficient public services. The efficient utilization of the Internet for communications and research can improve the quality, productivity, and general cost-effectiveness of the District’s work force. Internet capability and employee access is provided by the District on an “as needed” basis and is a revocable privilege. 5.8.2. Internet access and use of online services are business communication tools, which are made available to certain employees and other users in order to enhance efficiency and effectiveness in the performance of job duties and District-related business and are to be used in accordance with generally accepted business practices and current laws. Use of the Internet or online services should be predominantly for the purpose of District business activities or contain information essential to District employees for the accomplishment of business-related tasks, and/or communication directly related to District business, administration, or practices. 5.8.3. The District reserves the right to monitor individual Internet access and use of online services for any purpose including, but not limited to, review, audit, and disclosure of all matters transmitted over the District’s computer system or placed in its network storage. 5.8.4. Downloaded information including e-mail attachments shall be checked for virus contamination. The Information Technology Department has information available on how to scan for viruses. 5.8.5. Downloading of large data images, video and graphics should be timed so as not to impact the performance of the District network. Very large files should be downloaded after normal working hours. 5.9. ACCEPTABLE USE OF THE INTERNET 5.9.1. Specifically acceptable uses of the Internet include: Page 9 of 10 • Communication and information exchange that is directly related to the mission, objectives, and business activities of the Orange County Sanitation District. • Communication and exchange for professional development, to maintain currency of training or education, or to discuss issues related to the employee or other user’s job-related activities. • Use for advisory, standards, research, analysis, and professional society activities related to the employee or other user’s work tasks or job-related duties. • Announcement of new District procedures, policies, rules, services, programs, information, or activities. • Communication with professional associations, public agencies, universities, businesses, and/or individuals associated with the facilitation of District-related business, research, and/or continuing education. 5.10. UNACCEPTABLE USE OF THE INTERNET 5.10.1. Specifically unacceptable uses of the Internet include: • Downloading any program, software, or application from the Internet or online services without prior written approval from both a Department Director and the IT Director and without scanning such applications for viruses before they are run, stored, or accessed. • Downloading or distributing pirated software or data. • Deliberately propagating any virus or any other destructive programming. • Downloading entertainment software or games. • Uploading any software licensed to the Orange County Sanitation District or data owned or licensed by the Orange County Sanitation District without the prior written authorization from both a Department Director and the IT Director. • Releasing and/or disseminating any confidential District information. • Intentionally introducing the District’s computer systems to, or experimenting with, malicious computer code, such as computer worms or viruses. • Transmitting any material or information on the Internet or through the use of online services in violation of applicable copyright laws or patents. • Using any Internet access or online services that are likely to result in the loss of any recipients’ work or which could cause congestion on the District’s electronic network or which could otherwise interfere Page 10 of 10 or disrupt the District’s local area network users, services, or equipment. 6.0 EXCEPTIONS 7.0 PROVISIONS AND CONDITIONS 7.1. PENALTIES 7.1.1. An employee who violates this policy may be subject to formal disciplinary action up to and including termination from District employment. In addition, any employee found to have violated this policy may have his/her access to computer files, Internet, and e-mail limited or revoked. Unlawful use of the District’s computer resources, including Internet and e-mail services, may result in referral for civil or criminal prosecution. 7.1.2. It is the responsibility of each employee to ensure that his/her conduct conforms to the requirements set forth in this policy. Employees who are unsure as to whether a contemplated activity or course of conduct constitutes a violation of this policy shall request clarification from the IT Director and/or Human Resources Director. 8.0 RELATED DOCUMENTS 8.1. Policy B30.00, Harassment Policy 8.2. Policy F40.00, Use of District Property \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\12.5.03-07.doc RESOLUTION NO. OCSD 02-XX AMENDING RESOLUTION NO. OCSD 98-33 A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT AMENDING THE HUMAN RESOURCES POLICIES AND PROCEDURES ***************************** The Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That Exhibit “A” of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. B30.00, Harassment Policy, set forth in Attachment No. 1, attached hereto and incorporated herein by reference. Section 2: That Exhibit “A” of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. B150.00, Recruitment, set forth in Attachment No. 2, attached hereto and incorporated herein by reference. Section 3: That Exhibit “A” of Resolution No. OCSD 98-33 is hereby amended by adding Policy No. C190.00, Variable Non-Base Pay, set forth in Attachment No. 3, attached hereto and incorporated herein by reference. Section 4: That Exhibit “A” of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. E90.00, Internet and Electronic Mail Usage Policy, set forth in Attachment No. 4, attached hereto and incorporated herein by reference. Section 5: That all other terms and conditions of Resolution No. OCSD 98-33, as previously recommended, shall remain in full force and effect. Section 6: That all future amendments to Resolution No. OCSD 98-33 be made by Resolution. PASSED AND ADOPTED at a regular meeting held February 26, 2003. __________________________________________ Chair ATTEST: ___________________________________ Board Secretary ORANGE COUNTY SANITATION DISTRICT Safety and Health Division SAFETY-POL-205 Electrical Safety APPROVALS Approved by: Date:________ Director of Human Resources Approved by: Date:________ Manager, Human Resources Approved by: Date:________ Safety Supervisor PROCEDURE REVISION HISTORY Rev. Date Approval 0 02/19/2003 This document is controlled when viewed online. When downloaded and printed, this document becomes UNCONTROLLED, and users should check the Safety and Health Division public folder to ensure that they have the latest version. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 2 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc Contents 1. Purpose ............................................................................................... 3 2. Definitions ........................................................................................... 3 3. Requirements .................................................................................. 556 3.1 General Requirements-Equipment ...................................................... 556 3.2 General Requirements-Work Procedures ............................................ 667 3.3 General Requirements for Hot Work-Personal Protective Equipment . 778 3.4 General Requirements-Service Providers ........................................... 989 4. Service Providers ............................................................................. 10 4.1.1 General Requirements-Work Procedures ................................. 101011 4.1.2 Personal Protective Equipment ................................................ 121012 5. Training Requirements ............................................................. 121213 6. Program Administration ........................................................... 131314 6.1.1 Program Management and Review .......................................... 141314 7. References ................................................................................ 141415 8. Attachments .............................................................................. 151516 Orange County Sanitation District Number: SAFETY-POL-205 Revision Number: 0 Electrical Safety Date: February 19, 2003 Approved by: Lisa Tomko/Jeff Reed Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 3 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\wp.dta\hr\530\shared documents\safety policies-sops-forms\draft pol-sop-sp\draft - safety policies\safety-pol-205 electrical safety.doc 1. Purpose This document contains general requirements for all work involving the use of electrical equipment and systems. All employees, visitors, vendors and contractors who install, construct, service or operate electrical equipment shall comply with these requirements. Electricity is used in many different ways at the District. Each application has its own combination of hazards that includes the potential of electric shock, fire, and burns. Thus, it is essential for all employees, visitors and contractor employees, to be aware of the hazards associated with electrical work and use appropriate protective methods to minimize the risk of an injury or accident. 2. Definitions Construction The erection of new wiring and equipment, and the alteration, conversion, and improvement of existing wiring and equipment. Deenergized Free from any electrical connection to a source of potential difference and from electrical charge. Electrical Hazard A dangerous condition such that contact or equipment failure can result in electric shock, arc flash burn, thermal burn, or blast. Electrical Single-Line Diagram A diagram that shows, by means of single lines and graphic symbols, the course of an electric circuit or system of circuits and the component devices or parts used in the circuit or system. Electrically Safe Work Condition A state in which the conductor or circuit part to be worked on or near has been disconnected from energized parts, locked and tagged with established standards and tested to ensure the Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 4 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc absence of voltage, and grounded if determined necessary. Energized Parts (Live Parts) Parts which are of a potential difference from that of the earth, or some conducting body which serves in place of the earth. Equipment A general term including material, fittings, devices, appliances, fixtures, apparatus, and the like used as a part of, or in connection with, an electrical installation. Explosion-Proof Apparatus Apparatus enclosed in a case that is capable of withstanding an explosion of a specified gas or vapor which may occur within it and of preventing the ignition of a specified gas or vapor surrounding the enclosure by sparks, flashes, or explosion of the gas or vapor within, and which operates at such an external temperature that a surrounding flammable atmosphere will not be ignited. Exposed. (As applied to live parts.) Capable of being inadvertently touched or approached nearer than a safe distance by a person. It is applied to parts not suitably guarded, isolated, or insulated. Flash Hazard A dangerous condition associated with the release of hazardous energy caused by an electric arc. Ground A conducting connection, whether intentional or accidental, between an electrical circuit or equipment and the earth, or to some conducting body that serves in place of the earth. Grounded Connected to earth or to some conducting body that serves in place of the earth. Ground-Fault Circuit-Interrupter A device intended for the protection of personnel that functions to de-energize a circuit or portion thereof within an established period of time when a current to ground exceeds some predetermined value that is less than that required to operate the overcurrent protective device of the supply circuit. High Voltage A sustained voltage of more than 600 volts. Limited Approach Boundary A shock protection boundary to be crossed only by qualified persons (at a distance from the live part) which is not to be crossed by unqualified persons unless escorted by a qualified person. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 5 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc Listed Equipment or materials included in a list published by a nationally recognized testing laboratory, inspection agency, or other organization concerned with product evaluation that maintains periodic inspection of production of listed equipment or materials, and whose listing states either that the equipment or material meets nationally recognized standards or has been tested and found suitable for use in a specified manner. The means for identifying listed equipment may vary for each testing laboratory, inspection agency, or other organization concerned with product evaluation, some of which do not recognize equipment as listed unless it is also labeled. The authority having jurisdiction should utilize the system employed by the listing organization to identify a listed product. Low Voltage A sustained voltage of less than 600 volts. On-site Activity Representative The District employee who has been designated to oversee and monitor the Service Provider activities for the using division. Prohibited Approach Boundary A shock protection boundary to be crossed only by qualified persons (at a distance for a live part) which when crossed by a body part or object, requires the same protection as if direct contact is made with a live part. Qualified Electrical Worker A qualified person who by reason of a minimum of two years of training and experience with high-voltage circuits and equipment and who has demonstrated by performance familiarity with the work to be performed and the hazards involved. Qualified Person A person, designated by the employer, who by reason of experience or instruction has demonstrated familiarity with the operation to be performed and the hazards involved. 3. Requirements The goal of the District’s Electrical Safety Program is to establish requirements to ensure personnel safety and to install and maintain equipment in accordance with best industry practices. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 6 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc 3.1 General Requirements-Equipment 1. The District’s Master Engineering Specification shall determine equipment specifications for electrical equipment installations on District projects and sites. 2. All equipment shall conform to or exceed the applicable requirements of the National Electric Code (NEC). A. Where a local code or ordinance is in conflict with the NEC, the provisions of said local code or ordinance shall take precedence. 3. The construction and installation of all electrical equipment and materials shall comply with all applicable provisions of the Cal/OSHA Safety orders (Title 8, CCR), State Building Standards, and applicable local codes and regulations. 3.2 General Requirements-Work Procedures 1. All employees working on electrical equipment shall be trained in the specific hazards associated with electrical energy prior to working with electrical equipment. a. Supervision shall address the adequacy of training to perform specific tasks. b. Records of training shall be kept in accordance with Section 5 of this document. 2. Safety related work practices shall be developed to safeguard employees from injury while they are working on or near exposed electric conductors or circuit parts that are or can be energized. a. The specific safety related work practices shall be consistent with the nature and extent of the associated electric hazards. 4. Live parts to which an employee may be exposed shall be put in an electrically safe work condition by a qualified person before an employee works on or near them. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 7 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc 5. Only qualified persons shall be permitted to work on electrical conductors or circuit parts that have been put into an electrically safe work condition. 6. Electrically safe work conditions shall be achieved by completing the process outlined in Appendix A. 7. Hazardous energy control procedures shall be developed for all electrical work in accordance with SAFETY-SP-105.1 Hazardous Energy Control Program for District Employees. 8. A flash hazard analysis shall be conducted before a person approaches any exposed electrical conductor or circuit part that has not been placed in an electrically work safe condition. 9. Unqualified persons shall not be permitted into areas that only qualified persons can enter until the conductors and equipment involved are in an electrically safe work condition. A. This shall not apply in emergency situations. B. The Safety and Health Supervisor in conjunction with the Senior Electrical Supervisor or designee may provide written permission to allow unqualified individuals into these areas. (1) This authorization shall be in writing. 10. Before the start of each job, a Safety Tailgate shall be conducted by the electrical lead person on the job. (Or equivalent job description.) A. Sample topics to be covered are found in Appendix B. 11. Employees shall be instructed to be alert at all times when working with or near live parts or in situations where unexpected electrical hazards may exist. 12. Qualified persons shall exercise due caution and not reach blindly into areas that contain live parts. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 8 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc 3.3 General Requirements for Hot Work-Personal Protective Equipment 1. A flash hazard analysis shall be conducted in accordance with NFPA 70E, Standard for Electrical Safety Requirements for Employee Workplaces (most recent edition) to determine flash protection boundaries. A. The flash protection boundary shall be established at 4.0 feet for all systems 600 volts or less and available bolted fault current of 50 kilo-amperes (kA) or any combination not exceeding 300 kA. 2. Personal protective equipment shall be selected in accordance with the results of the flash hazard analysis. Protective clothing shall be selected and maintained in accordance with Table 3-3.8 of NFPA 70E (2000 Edition). 3. Personal protective equipment shall be worn as determined by the flash hazard analysis at all times by all personnel within the flash protection boundary when equipment is not in an electrically safe work condition. A. See SAFETY-SOP-205.1 Electrical Work Procedures 4. Qualified persons shall not approach or take any conductive object within proximity of live parts as listed in SAFETY-SOP-205.1 Electrical Work procedures. 5. Qualified persons shall not wear conductive articles of jewelry and clothing when the conductive articles present an electrical contact hazard with live parts. 6. Conductive materials, tools and equipment that are in contact with any part of an employee’s body shall be controlled in such a manner that will prevent accidental contact with live parts. 7. Employees shall use insulated tools and test equipment when working in areas where tools or test equipment may make contact with live parts. 8. Insulated tools, test equipment and personal protective Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 9 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc equipment shall be inspected for defects prior to use and at intervals specified by the manufacturer. A. Defective equipment shall not be used. 3.4 General Requirements-Service Providers The District’s On Site Activity Representative shall be responsible to ensure service providers comply with the provisions of this policy and the regulations referenced below. In addition, the on site activity representative is responsible to ensure that the following conditions are met in accordance with SAFETY-SP-105.1 Hazardous Energy Control Program. 1. The District shall not release any piece of equipment or process to any service provider that is energized, except for the following: EXCEPTION 1-Equipment that is cord and plug and may be unplugged by the contractor provided this is the only source of hazardous energy and the service provider’s Qualified employee is made aware the equipment is energized. EXCEPTION 2- Equipment that will be tested by the contractor as part of the routine servicing of the equipment may be energized provided the service provider’s Qualified employee is made aware the equipment is energized. 2. Each piece of equipment that is to be de-energized and released to a service provider for repair, servicing, maintenance or construction shall have a written hazardous energy control procedure describing the steps that shall be followed to ensure that equipment will be deenergized and the procedure to verify that hazardous energy has been released. 3. The procedure shall be developed by Operations and Maintenance a. If specific situations warrant, Engineering, Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 10 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc Construction Management and the contractor shall all have input into the development of the hazardous energy control procedure. 4. The service provider, in the presence of a Qualified District employee, shall apply locks and tags and verify that all hazardous energy has been released from the process or equipment before the contractor starts work. a. Each subcontractor shall also verify that hazardous energy has been released before work is started by the subcontractor. 5. Each Qualified person shall sign off on the hazardous energy control procedure, affirming verification that hazardous energy has been released from the equipment before the start of work. 4. Service Providers Service Providers shall comply with the work practice requirements of Title 8, California Code of Regulations Subchapter 5. Electrical Safety Orders (Sections 2299 - 2974) and Subchapter 7. General Industry Safety Orders (Sections 3200 - 6184). In addition, the Service Provider shall follow the requirements of the Standard for Electrical Safety Requirements for Employee Workplaces (NFPA 70 E) , Most recent edition, published by the National Fire Protection Association for determining training and personal protective equipment requirements. 4.1.1 General Requirements-Work Procedures for Service Providers 1. All employees working on electrical equipment shall be trained in the specific hazards associated with electrical energy prior to working with electrical equipment. A. Safety related work practices shall be developed to safeguard employees from injury while they are working on or near exposed electric conductors or circuit parts Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 11 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc that are or can be energized. 2. The specific safety related work practices shall be consistent with the nature and extent of the associated electric hazards. 3. Live parts to which an employee may be exposed shall be put in an electrically safe work condition before an employee works on or near them. 4. Only qualified persons shall be permitted to work on electrical conductors or circuit parts that have been put into an electrically safe work condition. 5. Hazardous energy control procedures shall be developed for all electrical work. A. These procedures shall be developed and supplied by the District prior to the start of any work on existing District equipment. 6. A flash hazard analysis shall be conducted before a person approaches any exposed electrical conductor or circuit part that has not been placed in an electrically safe condition. A. The service provider may use a District supplied flash hazard analysis. (1) The service provider is responsible to ensure the accuracy of a District supplied flash hazard analysis for the work being performed. 7. Unqualified persons shall not be permitted into areas that only qualified persons can enter unless the conductors and equipment involved are in an electrically safe work condition. A. This shall not apply in emergency situations. B. The On-Site Activity Representative in conjunction with the Safety and Health Supervisor and the Senior Electrical Supervisor or designee may provide written permission to allow unqualified individuals into these Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 12 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc areas. (1) This authorization shall be in writing. 8. Before the start of each job, a Safety Tailgate shall be conducted by the lead person on the job in the presence of the On-Site Activity Representative. 9. Employees shall be instructed to be alert at all times when working with or near live parts or in situations where unexpected electrical hazards may exist. 4.1.2 Service Provider Personal Protective Equipment 1. A flash hazard analysis shall be conducted in accordance with NFPA 70E, Standard for Electrical Safety Requirements for Employee Workplaces (most recent edition) to determine flash protection boundaries. A. The flash protection boundary shall be established at 4.0 feet for all systems 600 volts or less and available bolted fault current of 50 kilo-amperes (kA) or any combination not exceeding 300 kA. 2. Personal protective equipment shall be selected in accordance with the results of the flash hazard analysis. Protective clothing shall be selected and maintained in accordance with Table 3-3.8 of NFPA 70E (2000 Edition). 3. Personal protective equipment shall be worn as determined by the flash hazard analysis at all times by all personnel within the flash protection boundary when equipment is not in an electrically safe work condition. 4. Qualified persons shall not approach or take any conductive object closer to live parts as listed in NFPA 70 E (2000 Edition) , Table 2-1.3.4 Approach Boundaries to Live Parts for Shock Protection. 5. Qualified persons shall not wear conductive articles of jewelry and clothing when the conductive articles present an electrical contact hazard with live parts. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 13 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc 6. Conductive materials, tools and equipment that are in contact with any part of an employee’s body shall be controlled in such a manner that will prevent accidental contact with live parts. 7. Employees shall use insulated tools and equipment when working in areas where tools or equipment may make contact with live parts. 5. Training Requirements All persons working with electrical equipment shall receive training appropriate to the work being performed by the employee. 1. All employees shall receive periodic training on basic electrical safety in accordance with the job they perform. 2. Employees deemed qualified electrical workers shall be trained and knowledgeable of the construction and operation of equipment or a specific work method. 3. Employees deemed qualified electrical workers shall be trained and knowledgeable to recognize and avoid specific electrical hazards that might be present with respect to equipment or a work method. 4. Employees deemed qualified electrical workers shall be trained and knowledgeable of special precautionary techniques, personal protective equipment, insulating and shielding materials and insulated tools and test equipment. 5. Unqualified persons shall be trained in and familiar with any of the electrical safety related practices that are necessary for their safety. 6. Training shall consist of classroom or on-the job-training, or a combination of the two. 7. The degree of training provided shall be determined by the risk to the employee. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 14 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc 8. Employee safety training records shall be maintained in accordance with procedures established by the Employee Development Division. A. These records are retained in accordance with the District’s Record Retention Policy. 6. Program Administration The electrical safety program shall be jointly administered by the Safety and Health Division and the Instrumentation and Electrical Maintenance Division. 6.1.1 Program Management and Review This Electrical Safety Program shall be evaluated annually to ensure that it is effective in providing adequate protection against electrical hazards. The following steps shall be followed to conduct this program review: 1. The Safety and Health Division shall determine if regulations or national consensus standards have changed since the last annual program review. A. Review Federal OSHA Standards, interpretations and documents. B. Review consensus standards. 2. The Safety and Health and the Instrumentation and Electrical Maintenance Divisions shall review the current Electrical Safety Program, proposed changes to State and Federal Regulations and national consensus standards and recommend changes to the District’s Electrical Safety Program as required. 3. The Safety and Health Division shall be responsible for making changes to the written Electrical Safety Program. A. The Safety and Health Division shall have 30 days to make minor program changes, and 60 days in the case Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 15 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc of major program revisions. 4. Reviews of the Electrical Safety Program shall start by February 15 of each year. 7. References Title 29, Code of Federal Regulations, Part 1910.269 Title 29, Code of Federal Regulations, Part 1910, Subpart S Title 8, California Code of Regulations, Chapter 4. Division of Industrial Safety • Subchapter 4. Construction Safety Orders (Sections 1500 - 1938) • Subchapter 5. Electrical Safety Orders (Sections 2299 - 2974) • Subchapter 7. General Industry Safety Orders (Sections 3200 - 6184) NFPA 70, National Electric Code, 2002 Edition, National Fire Protection Association, Quincy, MA NFPA 70E, Standard for Electrical Safety Requirements for Employee Workplaces, Most recent edition, National Fire Protection Association, Quincy, MA. Orange County Sanitation District, Engineering Standards (latest revision) SAFETY-POL-101, Injury and Illness Prevention Program SAFETY-POL-102 Personal Protective Equipment Policy SAFETY-POL-105, Hazardous Energy Control Policy SAFETY-POL-108, Service Provider Safety Policy SAFETY-SP-105.1 Hazardous Energy Control Program for District Employees Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 16 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc SAFETY-SP-205.1 Electrical Safety Program SAFETY-SP-205.2 High Voltage Electrical Safety Program O&M-SOP-860-001, Procedure for working on 1kV and above Equipment O&M-SOP-860-002, Working 1kV and Above Equipment with Contractors and Service Providers 8. Attachments Appendix A- Achieving Electrically Safe Work Conditions Appendix B- Safety Tailgate Topics Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 17 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc Appendix A- Achieving Electrically Safe Work Conditions An electrically safe work condition shall be achieved when completing the following procedure: 1. Written hazardous energy control procedures shall be developed and used to de-energize equipment. 2. The requirements of SAFETY-SP-105.1 and SAFETY-SP-105.2 shall be followed for hazardous energy control. 3. All sources of electrical supplies to equipment to be worked on shall be determined. A. Check up to date drawings, diagrams and identification tags when applicable. 4. Appropriate personal protective equipment shall be worn at all times by all qualified persons, observers and other personnel present in the area. 5. After properly interrupting the load current, open the disconnecting device(s) for each electrical source. 6. Where it is possible, visually verify that all blades of the disconnecting devices are fully open or that drawout type circuit breakers are withdrawn to the fully disconnected position. 7. Apply lockout and tagout devices in accordance with established written hazardous energy control procedures. 8. Qualified persons shall use an adequately rated voltage detector to test each phase conductor or circuit part to verify that they are de-energized. A. Before and after each test, determine that the voltage detector is operating properly. B. Verification shall be performed by each Qualified person (or as a group) if more than 4 hours have lapsed after a work stoppage. 9. Where the possibility of induced voltages or stored electrical energy exists, ground the phase conductors or circuit parts before touching them. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 18 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc A. Where it can be reasonably anticipated that the conductors or circuit parts being de-energized could contact other exposed energized conductors or circuit parts, apply ground connecting devices rated for the available fault duty. Electrical Safety Program SAFETY-POL-205 Rev. 0 Hard Copy Is Uncontrolled Date 02/19/2003 19 of 19 \\filer-1\ocsd\dept\gmo\120\bs\agenda\archived-agenda\archived committees\fahr\2003\fahr2003 drafts\0203\13.1.03-08.docc:\documents and settings\kyle\local settings\temporary internet files\olk48f\03-08.1.docg:\ntglobal\safety\safety policies\final - safety policies\safety-pol-205 electrical safety.doc Appendix B- Safety Tailgate Topics 1. An overview of the work to be performed. This shall include: A. Tools and equipment B. Specific hazards in this work C. What the end result of the task is to be. 2. What the role of each person is to be. 3. Hazards that may be encountered specific to the work location. A. Vaults and basements B. Confined spaces, permit required confined spaces C. Traffic patterns pedestrian as well as vehicle. D. Sources of energy other than electrical energy E. High noise F. Pedestrian traffic and crowd control. 4. The required personal protective equipment. A. How each piece of equipment shall be worn, inspected and maintained. 5. Hazardous energy control A. Hazardous energy control procedures. B. Verification and testing for de-energization of equipment (1) Methods of test C. Individual versus group lock and tag. D. Contractor involvement in lock and tag. 6. Emergency procedures FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-08 Item Number Orange County Sanitation District FROM: Lisa Tomko, Director of Human Resources Originator: James Matte, Safety and Health Supervisor SUBJECT: Electrical Safety Policy - SAFETY-POL-205 GENERAL MANAGER'S RECOMMENDATION Approve SAFETY-POL-205 – Electrical Safety Policy, as provided for in Resolution No. OCSD 02-5, regarding the District’s Injury and Illness Prevention Program Policy. SUMMARY The District is implementing a written policy to adopt portions of the Electrical Safety Orders, found in Title 8 of the California Code of Regulations and National Fire Protection Agency Standard 70 E, Electrical Safety Requirements for Employee Workplaces that require specific work and practices be performed when working with electrical equipment. In addition, this new policy requires equipment be installed and maintained in accordance with State and local requirements, as well as the National Electric Code. This is a new program combining elements found in existing Safety and Health, Operations and Maintenance and Engineering documents. The document presented for your review and adoption represents the districts written Electrical Safety Policy that conforms to the elements defined in the Electrical Safety Orders, Title 8 of the California Code of Regulations and the National Fire Protection Agency Standard 70 E, Electrical Safety Requirements for Employee Workplaces. PROJECT/CONTRACT COST SUMMARY Not Applicable BUDGET IMPACT 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) \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\13.03-08.Safety Policy.doc Revised: 8/20/01 Page 2 ADDITIONAL INFORMATION Policy required under the Electrical Safety orders, found in Title 8 of the California Code of Regulations. ALTERNATIVES Not Applicable CEQA FINDINGS Not Applicable ATTACHMENTS Electrical Safety Policy (SAFETY-POL-205) FAHR COMMITTEE Meeting Date 02/19/03 To Bd. of Dir. 02/26/03 AGENDA REPORT Item Number FAHR03-09 Item Number Orange County Sanitation District FROM: Blake P. Anderson, General Manager Gary G. Streed, Director of Finance SUBJECT: CONSIDER ISSUES SURROUNDING THE SEWER SERVICE USER FEE DATABASE GENERAL MANAGER'S RECOMMENDATION 1) Consider a policy regarding issues surrounding Sewer Service User Fee Database adjustments and fee collections; and, 2) Determine if staff will solicit competitive bids or award a sole source contract to Revenue Enhancement Group to review non-residential parcels to provide some or all services related to collecting the appropriate sewer service fees, and to provide corrected sewer service fees for the 2003/04 property tax bills, for $2,500,000 plus or minus performance adjustments. SUMMARY Since 1981, an increasingly larger portion of the District has collected annual sewer service user fees as a separate line item on the property tax bill. Our user fee is currently based upon the property use code and the building square feet in the County Assessor’s database. We have purchased a copy of that data base and each year we purchase the annual adjustments and changes for our use in developing and assessing annual fees. Currently our copy of the database is maintained at the County data processing center by the County’s consultants. The total sewer user fees levied for 2002-03 was $78.5 million. Non-residential users make up approximately $27.5 million of that and represent 28,800 parcels of the total 487,700 parcels that were billed. In 1999, the FAHR Committee and the Board authorized staff to hire a consultant to review parcels that had not been charged user fees including those parcels owned by governmental agencies. The cost of that contract was $1 million and the fees that were generated have exceeded $4 million each year since that work. The scope of this contract was very limited however, and not all parcels were reviewed. Because we use a database that has been created for a use other than ours, some of the data does not match our needs. Sometimes the use code is very broad and covers a wide range of business and of sewer use, such as code 114 for industrial parks. Sometimes the square footage of a building is missing or incorrect. These types of errors are not significant for the Assessor’s intended use, but are significant for calculating our user fee. Over the past several years, some firms have been very successful in challenging our property use and building size based fees. (One of these firms, Revenue Enhancement Group, Inc. even participated in the Rate Advisory Committee during the 1999 Strategic Plan process.) Our fee \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\14.03-09.User Fee Database.doc Revised: 8/20/01 Page 2 ordinance allows adjustments to the assumed user fee if a more accurate use can be demonstrated. Proof of water purchases and actual building size and use are generally required. Because our fees are collected on the general property tax bill, users are eligible for adjustments for the current tax year and the four preceding tax years. The firms that find these adjustments are generally paid a percentage of the refund or rebate that their client receives. Because our non-residential fees are based upon average flow, BOD and TSS discharges for user categories, there will also be a number of users who are currently undercharged. How many and how much are not known at this time. The Revenue Enhancement Group has suggested that they could find many non-residential properties that are currently undercharged. While they normally work on a contingency basis with their private clients, they would combine a fee and contingency arrangement for any work with us. The contingency portion could be an addition or a reduction to their flat fee based upon the amount of unbilled sewer fees that they find. Before staff goes any farther with this proposal we need to resolve several policy issues with the Committee. These issues will be discussed at the Committee meeting. 1. Will we assess undercharges for the prior four years, just as we allow refunds? Most public agencies do not do this, but it is legal. The argument for doing it is that it is fair and legal. If overcharges are refunded, then undercharges should be collected. The argument against doing it is that the user did nothing to cause the undercharge. They paid what we billed them; our process caused the error. We are allowed to collect unbilled fees for the prior years, but we are not required to collect them. 2. How will we deal with delinquent payments or with property owners that have moved on? We will not be able to put these corrections on the property tax bill; we will have to generate invoices to the property owners. We can expect that some of the properties will have changed owners and some uses have changed. Since these properties are not connected to our sewers (they are connected to City sewers generally), and do not have discharge permits we cannot shut them off or discontinue service. We would need to use persuasion, collection agencies and small claims court to collect these fees. 3. Are there other methods of finding undercharged parcels? Are there other firms that challenge direct assessments that would be willing or able to work on the assessment side? How would we find them? How about using existing or additional or limited-term staff to do the work? We know there is at least one such firm because we hired one in 1999 to do some special work for us. We have not discussed this work with that firm. We have the ability and the knowledge to do the work in house, but not the staff to do it quickly. The demands on staff would be lessened if the adjustments were made on a going-forward basis only. Staff estimates that it would take approximately 1,440 person days to review and visit all 28,800 parcels. To complete the work in one year would require 6 limited-term employees. 4. Is it worth the effort? This is the bottom-line question. We believe that there are businesses that are being undercharged. We believe this because we have found errors in the database and because there have been businesses that were over charged. Unfortunately, we cannot even estimate the value or magnitude of the undercharges. Our goal is for every user to pay its fair share. Because our rates are determined by how much money we need to raise, if we are not collecting everything that is due us, we may be setting the rates too high in subsequent years. There is also some value to \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\14.03-09.User Fee Database.doc Revised: 8/20/01 Page 3 having a system that is as good as can be economically developed. We know that every year that we do not collect the proper fee from every user or that we wait to develop a more accurate process results in some lost fees or rates that may be somewhat high. 5. What about changing the fee basis from use and building size to use and water use? A change like this is probably possible. We have the property use that is on the Assessor’s database and we could even mail a survey to each non-residential user to determine the type of use on each developed parcel. Determining the water use is somewhat more difficult. First we would need to determine the total water purchased for each parcel. This would require some type of agreement with the water sellers. There would certainly be a cost for us to get the information from those agencies, but it could probably be worked out. In these days of computers, we should be able to get the data in a format that we could work with. The next step would be to determine how much of the purchased water gets discharged to the sewer. Some is generally used for landscape, some evaporates and some becomes product. The same survey that determined the property use could also ask for this information. A change like this would probably take some time to complete and would require the help of a consulting firm. The cost and the time required to develop such a program is not known. 6. What if we find any parcels that were overcharged? Options are to do nothing, to notify the property owner to verify the changes or to simply issue an unsolicited refund. 7. What is the proposal from Revenue Enhancement Group? REG has proposed to review all 28,800 non-residential parcels and to supply the accurate use and building square fee for the last four years and the current year by July 31, 2002. They do not propose to visit every site. They propose to prepare and to mail our invoices for the four prior years and the current year. No money would be mailed to, or handled by, REG; all payments would be sent to OCSD. REG would contact delinquent accounts and would use their attorney if needed. REG would install additional phone lines to handle customer inquiries and complaints. They would prepare a separate database of all of the parcels they adjusted, including the source of the revised data. REG has proposed that they could do all of this or any pieces of this work. Their fee proposal is based upon them doing all of the work. The fee proposal is a flat fee of $2.5 million. The flat fee would be adjusted upward or downward by 15% of any adjustments above or below $3.5 million. The $3.5 is based on REG’s estimate of undercharges for the current and four prior years based upon a very small sample. PROJECT/CONTRACT COST SUMMARY The revised proposal from Revenue Enhancement Group for this work is $2.5 million plus or minus 15% of any identified undercharges over or under $3.5 million. Undercharges would be calculated for the current tax year and for the prior four tax years, for a total of five years. No proposals have been solicited from other potential consultants. Minimal staff time is expected for oversight. The work is proposed to be completed by July 1, 2003, so those corrected sewer service fees could be placed on the 2003-04 property tax bills. Should the Directors require additional information or a competitive selection process or for staff and/or limited-term employees to complete this work, the time to complete would be lengthened and the cost would be different. \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\14.03-09.User Fee Database.doc Revised: 8/20/01 Page 4 BUDGET IMPACT This item has been budgeted. (Line item: ) This item has been budgeted, but there are insufficient funds. This item has not been budgeted. (See Additional Information below) Not applicable (information item) ADDITIONAL INFORMATION Fees of the County Assessor, the County Auditor-Controller and the data processing service associated with the sewer service user fee program are budgeted within the collection system, or Revenue Area, operating budgets. No budget appropriation was made for the proposed services. If the consultant’s estimate of a minimum recovery of $3.5 million is correct, then that would be approximately $700,000 for each of the five years. We know that rates have increased during this period and that the amounts for each year would not be equal, but would probably be back-weighted. Assume this for discussion purposes however. If we collect $3.5 million the first year and the cost is $2.5 million, we are $1 million to the good. Then in 2003-04 we will use the corrected data base and collect another additional $700,000. And so on. Of course we could collect less and spend less and be in the same net position. The combinations of costs and benefits are many and unknown. In subsequent conversations with the consultant, we have learned that the $3.5 million estimate was based upon less than 50 companies, including governmental agencies. Based upon that estimate, the consultant believes the actual four-year undercharges could actually be closer to $7 million. If all of this were to be collected, including the public agency portion, the total fee would be $3,025,000. Should the Directors decide to only go forward with the corrected database and not to collect the unbilled user fees for the previous 4 years, it will take longer to recover the consultant costs. In the base case example, the $2.5 million fee would be repaid in four years. Of course if the unbilled amount is higher, then the payback period is shorter. The immediate out-of-pocket costs can be paid from either budget savings, from current year revenues or from reserves. ALTERNATIVES 1. Authorize the consultant’s work but do not bill for past undercharges. 2. Authorize the consultant’s work but wait until the amount or impact is known to decide about past undercharges. 3. Do not authorize the consultant’s work and direct staff to improve the database in house over an extended time period. 4. Direct staff to conduct a formal RFP process, compare the results to the costs to complete the process in house and return to FAHR with a recommendation. \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\14.03-09.User Fee Database.doc Revised: 8/20/01 Page 5 CEQA FINDINGS N/A ATTACHMENTS None. GGS OCSD P.O. Box 8127 Fountain Valley, CA 92728-8127 (714) 962-2411 February 19, 2003 STAFF REPORT OC Sanitation District Financial Plan BACKGROUND The Sanitation District has five principal sources of revenue: user fees collected on the property tax bill, user fees collected from significant (permit) users, a share of the property tax, connection fees and interest earnings. Over time some of these revenues have been accumulated and are commonly called reserves. These reserves can also used to fund current needs. While not considered income, a sixth source of funds is borrowing. Since 1986, the District has issued tax-exempt certificates of participation (COPs) to partially fund the capital improvement program. The District has not borrowed to fund operating requirements. Property Taxes For fiscal 2002-03, the District expects to receive about $39 million as our historical share of the county-wide 1% property tax basic levy. We do not control this amount; it is controlled by the State Legislature and the County. In fact, in 1992-93 the State did reallocate about 11% of District property taxes to other State-wide uses. All of the property taxes received by the District are dedicated first to debt service, the repayment of COPs and interest. Property taxes are essentially received twice a year; in November and April. Increasing property tax rates requires a two-thirds vote of our service area. User Fees Collected on the Property Tax Bill For fiscal 2002-03, the District expects to receive about $78 million of sewer service user fees collected as a separate line item on the property tax bill. These fees are used for operational and maintenance needs in the collection system and in the treatment plants as well as for a portion of the capital improvement program. They could also be used for COP service in the event that our share of property taxes was insufficient. Because these fees are collected on the property tax bill, they are also received primarily in November and April. The Directors have control over the user fee rates as well as the structure of the assessment program. The current structure was adopted subsequent to an extensive public outreach, participation and consultation program as a part of the 1999 Strategic Plan process. This structure charges every parcel in our service area based upon the size of the building and the use of building on that parcel. The County Assessor’s database is the initial source of property data and we pay a fee for the use of that data. Sewer service user fees are specifically exempted from some of the requirements of Proposition 218. Most notably, they are exempt from the election requirements, but not the requirement that fees cannot exceed the reasonable cost of service. The Board has agreed with staff, however Financial Plan Page 2 of 8 February 19, 2003 that we will comply with all of the rest of the requirements, in a spirit of good governance. A notice of rate changes is mailed to every property owner whenever the rates are proposed to increase. The rates are adopted through the ordinance process, and that requires two Board meetings and a public hearing. Typically, we refer to the annual single-family residential (SFR) rate as the benchmark for the user fees. Separate rates are charged for multi-family residential (MFR) units, and the rates for non-residential users are various percentages of the SFR rate depending upon the use of the property. The current SFR rate is $87.50 per year and it was adopted for 2002-03. Permit User Fees For fiscal 2002-03, the District expects to receive about $5 million of permit user fees. These are fees from some non-residential users that have, or could have, a significant impact on the wastewater treatment process. This impact could be from the volume of wastewater or from the constituents, or strength, of the wastewater. About 500 of these firms have been issued permits by the District’s Source Control Division. The discharge from these firms is monitored and the firms are invoiced directly based upon the actual quantity and strength of their wastewater. Connection Fees For fiscal 2002-03 the District expects to receive about $6 million of connection fees, more accurately called capital facility capacity charges (CFCC). These fees are collected for new development or remodeling that results in facilities that create a demand for sewer service. These fees are collected on our behalf by the local agency that issues building permits. The connection fee rate structure was adopted as a result of the same public participation program for the 1999 Strategic Plan that changed the user fee structure. The current structure provides separate SFR and MFR rates based upon the number of bedrooms and three non-residential rates (low demand, average demand and high demand), based upon the type and size of non-residential development. The benchmark CFCC is for a three-bedroom SFR and that fee is currently $1,820. The connection fee rates are revised whenever a new Master Plan or Strategic Plan is adopted as these are the times that we revise our planning parameters related to flow, development and the capital improvement program. Interest Income For fiscal 2002-03, the District expects to earn about $30 million of interest income. This is interest earned on our invested “reserve funds” in accordance with the Board-adopted Investment Policy. Each year the Board reconsiders the Investment Policy and every three years it is submitted to a national organization for review. The policy has earned a national award every time it has been submitted since 1996. The policy stresses liquidity and safety over yield. Some short-term operating funds are deposited with the State Local Agency Investment Fund (LAIF), but the bulk of our investments are managed by an independent money manager, Pacific Investment Management Corporation (PIMCO). Investments are held by a third-party custodian, Mellon Bank. Interest income for this year is the equivalent of approximately a $33 reduction in the annual SFR user fee. Because of limitations imposed on the money manager by our investment policy Financial Plan Page 3 of 8 February 19, 2003 and the Government Code, the major determinant of interest income is the size of the portfolio. Portfolio size is a result of the District’s reserve policy or “savings accounts”. Borrowing For fiscal 2002-03 the District expects to borrow $280 million for the capital improvement program. These funds would reimburse our “savings” accounts for some projects we have already started and would partially fund new projects during 2002-03 and 2003-04. The District has a Board-adopted debt policy for promoting consistency and continuity, for rationalizing the decision making process, for showing commitment to long-term financial planning, for enhancing the quality of decisions and for promoting credit quality to the rating agencies. Approximately 60% of our current COPs are variable rate borrowing. This means that interest rate can change everyday. Over the last 12 months, this interest rate has averaged about 1.5%. Nonetheless, the interest rates could rise, perhaps even rapidly, so the District maintains an investment fund equal to, or greater than, the outstanding principal so that interest income would rise to compensate for additional costs in that event. This compensating balance is one of the limiting factors to a variable rate borrowing program. The outstanding principal at December 31, 2002 was $365 million. CURRENT CONSIDERATIONS One thing that should be inferred from the above is how interrelated the components of our revenue program are. A change in any component will have an impact on many others. Another important fact is that there are not many chances in a year to make changes to the program that will have an effect in the short term. These last six months of each fiscal year are the window for changes for the next fiscal year. User Fees Rates for the fiscal year must be submitted to the Auditor-Controller by July in order for them to be included on the property tax bills that are mailed in September or October. These rates cannot be changed during the year. The 2002-03 rates were adopted for one year with the intent to revise them subsequent to the Interim Strategic Plan Update completion, and the Board’s determination of the amount of secondary treatment to provide in future years. Those conditions have been met, but the timing of additional capital projects is still being considered. Nonetheless, certain decisions related to user fee rates can and should be made now. Historically the District has preferred and adopted user fee schedules that included moderate and somewhat even annual increases. This type of schedule has been seen as more desirable than maintaining constant rates and experiencing significant increases in a stair-step trend. This type of schedule is appropriate when annual funding requirements are mostly stable with a slight upward trend. A five-year rate schedule was adopted from 1997-98 through 2001-02 that included average annual increases of approximately 5%. The increase for 2002-03 was just over 9%. The cash flow projections in the 2002-03 budget indicated potential increases of 9-10% for the next five years. The capital improvement program and the borrowing program each have significant impacts on the user fee rates, but they must be considered together because their impacts are in opposite directions. Our 20-year capital improvement program is very much front-loaded, with one-half of Financial Plan Page 4 of 8 February 19, 2003 the total funding requirements in the first five years. User fees could be raised sharply and quickly to meet much of this need. A program that uses mainly user fees to fund the capital improvement program is generally referred to as a “pay-as-you-go” program. On the other hand, user fees could be raised less sharply and funds could be borrowed to meet this need. In this case, the user fees initially need to pay for a smaller piece of the capital needs and the debt service costs. The annual debt service is less than that additional capital program, so annual user fees are lower. However, the total cost is higher because interest must also be paid. A program that uses a lot of borrowing generally claims to use “future dollars to pay for facilities that are used in the future”. As an example, the historical approach to user fees results in annual 10% increases (approximately $9/yr) for each of the next ten years, an annual rate of $220 from 2012-13 through 2020 and $1 billion of new borrowing. A much more rapid increase of 40% (approximately $35/yr) for the next two years results in an annual rate of $180 from 2005-06 through 2020 and new borrowing of only $475 million. Over the 17 year period, the total user fees paid by the average SFR user would be about 5% lower with the rapid rate increase model. Non-financial factors that are sometimes considered to impact rate setting include the state of the local, state and national economies, the historical and projected rate of inflation, the local election cycle and the relative or comparative cost of other services. It is important to keep in mind that user fees cannot exceed the reasonable cost of service. Connection Fees Connection fees have not been increased since the 1999 Strategic Plan. The Interim Strategic Plan Update provided an estimated capital improvement program for additional secondary treatment, but the Board’s decision to apply for a secondary equivalent discharge permit and to reach that level of treatment as soon as possible has changed that program. Today a team of staff and consultants are working diligently to devise the proper construction schedule that is being reviewed by an independent panel of experts. That work will be completed within the next month. At that time it will be appropriate to recalculate the connection fee, or CFCC. Very preliminary estimates show that the fee schedule that will be proposed to the Board could include an average increase from $1,820 to about $2,850 for a three-bedroom SFR. This could be a substantial increase on a percentage basis. It is important to note that connection fees are paid by and for new development, not by current users. Interest Income and Savings As mentioned above, interest income is largely a factor of the size of the portfolio or savings. The District has a comprehensive and very inclusive reserve policy that was developed in 1996 with the help of an independent financial advisor after a very thorough survey of many large agencies. During the past year, staff has worked closely with Public Resources Advisory Group (PRAG), another independent financial advisor to review our current policy for improvements or changes. Changes that would increase the funding level would also increase future interest earnings. Increased interest earnings tend to reduce user fee increases. The reverse is also true, decreased interest earnings lead to faster rate increases and higher rates. That leads to one of the paradoxes of public finance. Agencies that have relatively high cash and investment balances are sometimes criticized by legislators and ratepayers even though Financial Plan Page 5 of 8 February 19, 2003 the immediate effect of those balances is reduced rates for users. Staff and PRAG have evaluated several changes to the reserve policy that could result in either increases or decreases to the level of cash and investments. RESERVE POLICY The current reserve policy designates accumulated funds for several purposes. The current and proposed designations, descriptions and funding levels will be described individually below. Cash Flow Reserve Cash flow reserves are currently in place to make operations and maintenance and debt service payments during the first five months of the year, before property taxes and user fees are received through the property tax collection process. One-half of the annual operating expenses and all of the debt service requirements are currently reserved. Staff proposes to maintain the operations and maintenance portion of this category, but to decrease the debt service portion. All of our COP interest payments are made either monthly or semi-annually, while the principal payments are made in August. Principal payments account for less than half of our annual debt service requirements. Future COP issues will have principal payments due in February. Staff proposes to reduce the debt service to one half of the annual requirements. Funds from other reserve categories will be available to meet any cash flow needs that are not covered by this reduced level. Operating Contingencies An operating contingency reserve was established to provide immediate access to cash to meet changing regulations or other emergencies that could not have been anticipated during the rate setting process. A goal of 10% of the operating budget was established for this category. Staff proposes to delete this category of reserves. Funds from other reserve categories, or from budget savings or adjustments, will be available to meet any sudden requirements that may occur. Short-term Specific Capital Projects A short–term specific capital projects reserve was established primarily for the District’s share of the original GWRS project. When the reserves policy was adopted, the plan was to fund the GWRS project from cash on hand. Subsequently, the capital improvement program expanded dramatically and the cost of the GWRS project also increased so that it has become impractical to expect to pay for this water supply project from “savings.” This project has been put into the capital improvement program with the rest of the projects in the Interim Strategic Plan Update and will be paid for from a mix of borrowing, user fees, connection fees and savings. Staff is proposing to eliminate this category of reserves. It would phase out with the completion of the GWRS in any case. Capital Improvement Program The capital improvement reserve was established to partially fund annual increments of the long-term capital improvement program. The long-term program funding target was for one-half of the program to be funded by borrowing and one half from other revenues and savings. With that funding program in mind, the goal for this reserve was one half of the average annual Financial Plan Page 6 of 8 February 19, 2003 capital improvement program through 2020. This strategy is based upon the long-term borrowing program a relatively stable annual capital improvement program. Both of those bases are currently being challenged and re-evaluated. As noted above, over one-half of the 20-year capital improvement program is now scheduled for the next five years. This front-loading results in an average that is well below one-half of the requirements for each of the next five years. At the end of this fiscal year the average annual reserve would be $51 million while one-half of next year’s capital improvement program would require $129 million, over twice as much! Clearly the “average to 2020 method” does not result in adequate immediate funding for a front-loaded program like ours. Staff is proposing to shorten the planning and averaging period. We have a high degree of confidence in our capital planning for a 10-year period and an acceptable level of confidence for a 10-year period. Staff proposes to shorten the averaging period to five years. This will result in a capital improvement reserve of $74 million at the end of this year assuming 50% of the 10-year average. Shortening the planning period to five years would increase the required reserve by $31 million. Capital Replacement and Refurbishment The current estimated replacement value of the combined collection, treatment and disposal systems is over $2 billion. Infrastructure deterioration and replacement is everywhere in the news today, but the District established a fund to provide for this future need in 1996. The fund started with a balance of $50 million and a plan to be able to pay for 30% of the annual replacement, rehabilitation and refurbishment (RRR) needs through 2030. RRR needs that are not included within the Interim Strategic Plan Update through 2030 are estimated to be $769 million while the total to 2050, just another 20 years, is $2.8 billion; nearly three times as much in a much shorter period. Staff is proposing to modify this policy. It seems to be too high in these early years as much of the RRR need is included within the capital improvement program and too low in the later years when the requirements are greater. Staff proposes to model the RRR reserve after the capital improvement program reserve above and to use 30% of the average annual funding needs for the following 10-year period. This would reduce the year-end requirement from $50 million to $3 million this year. Catastrophe and Self-Insurance When the catastrophic loss reserve was established, the District was purchasing liability, property and earthquake insurance. Today we do not purchase any earthquake insurance. The reserve level was established to fund a potential loss from a magnitude 7.5 earthquake on the Newport-Inglewood fault, after FEMA participation and insurance. The loss was estimated to be approximately 30% of the replacement value of facilities and FEMA participation was estimated at 75% of the loss. Other losses, self-insurance retentions or deductibles for boiler & machinery, excess workers’ comp, faithful performance, general liability and property insurance combined with the major earthquake reserve for a total of $57 million. Staff is proposing to continue this category of reserve and to continue using the same logic that originally established the funding level. However, the loss of earthquake insurance and the addition of facilities over the past eight years combine to increase the requirement at the end of Financial Plan Page 7 of 8 February 19, 2003 this year to $93 million. This amount will increase each year as additional facilities are placed into service. Debt Service Reserve A condition of many certificates of participation sales is that the borrower establish a debt service reserve. These reserves give the lender a sense of security that the annual payment will be made even if the borrower gets into financial difficulty and does not have the cash available. Use of these reserves starts a series of remedies that would be completed by the next payment date and would ensure the lender is repaid. These funds are not under the control of the District and cannot be used for other purposes. The amounts are established by the COP documents and indentures. SUMMARY The purpose of this report was to provide the reader with an understanding of the funding side of the Sanitation District, the interrelations of the various sources and the reasons or rationale for the assorted reserves, accumulated funds or savings, and a high-level overview of proposed changes. These can perhaps best be summarized by the following table: Description Basis Current Proposed Cash Flow Operating Tax & fee allocation 43,280,000$ 43,280,000$ Annual COP Service Tax & fee allocation 50,250,000 23,925,000 Contingency 8,656,000 Short-term Capital Projects 93,066,000 - Capital Improvement Program Avg annual cost 51,434,000 73,700,000 Replacement, Rehabilitation, Refurbishment Avg annual cost 52,000,000 3,000,000 Catastrophe & Self-Insurance Expected loss 57,000,000 93,000,000 Debt (COP) Service Indentures 63,997,000 61,000,000 419,683,000$ 297,905,000$ Requirement @ 6/30/03 Reserve Policy Funding Changes The overall impact of these changes is to reduce the required reserves at this year-end by $122 million. This reduction will provide funds for the immediate capital program that would otherwise have come from borrowing. Reducing borrowing also reduces total costs and user fees over the term of the debt repayment because less interest expense is incurred. Reducing the required or targeted reserve levels also reduces short-term pressure to increase rates for future replacement, rehabilitation and refurbishment needs that are not well defined today because they will not occur for many years. Financial Plan Page 8 of 8 February 19, 2003 Staff recommends modifying the reserve policy in accordance with the proposals in this report. GGS G:\wp.dta\fin\210\crane\FAHR\FAHR2003\FEB\AR financial plan Feb 031.doc Attachments: 1. Capital Improvement Program Graphic 2. Summary Cash Flow Through 2020, Current Policy 3. Summary Cash Flow Through 2020, Proposed Policy, 10% Rate Increases 4. Summary Cash Flow Through 2020, Proposed Policy, 40% Rate Increases Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary 10 Year Ref Description 2002-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 Total Revenues: 1 General User Fees 77,884,000 85,757,000 94,133,000 103,466,000 113,765,000 125,042,000 137,304,000 151,475,000 166,439,000 183,540,000 1,238,805,000 2 Permitted User Fees 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 63,290,000 3 Property Taxes 38,153,000 38,916,000 39,694,000 40,488,000 41,298,000 42,124,000 42,966,000 43,826,000 44,702,000 45,596,000 417,763,000 4 New COP Issues 280,000,000 - 340,000,000 - 230,000,000 - 160,000,000 - 126,000,000 - 1,136,000,000 5 Interest Revenues 30,335,000 29,502,000 28,278,000 26,533,000 22,727,000 23,038,000 23,708,000 24,781,000 24,831,000 25,098,000 258,831,000 6 Connection Fees 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 58,240,000 7 Other Revenues 23,528,000 37,428,000 62,628,000 16,228,000 21,528,000 14,928,000 14,528,000 11,828,000 11,628,000 11,528,000 225,780,000 8 Revenues 462,053,000 203,756,000 576,886,000 198,868,000 441,471,000 217,285,000 390,659,000 244,063,000 385,753,000 277,915,000 3,398,709,000 Requirements: 9 Oper & Mtce Exp 84,060,000 86,560,000 89,160,000 93,060,000 93,860,000 94,360,000 94,960,000 95,560,000 96,060,000 96,660,000 924,300,000 10 Capital Improvement Program 163,930,000 257,540,000 246,669,000 246,770,000 170,020,000 103,680,000 84,939,000 89,121,000 89,440,000 99,461,000 1,551,570,000 Repl, Rehab & Refurb 27,000,000 38,800,000 65,800,000 11 COP Service 6.0%, 30 yrs 38,995,000 50,250,000 63,696,000 77,465,000 86,707,000 96,039,000 102,384,000 109,014,000 114,107,000 118,689,000 857,346,000 12 Other Requirements 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 23,330,000 13 Requirements 289,318,000 396,683,000 401,858,000 419,628,000 352,920,000 296,412,000 284,616,000 296,028,000 328,940,000 355,943,000 3,422,346,000 14 Revenues-Requirements 172,735,000 (192,927,000) 175,028,000 (220,760,000) 88,551,000 (79,127,000) 106,043,000 (51,965,000) 56,813,000 (78,028,000) (23,637,000) Accumulated Funds: 15 Beginning of Year 437,757,000 610,492,000 417,565,000 592,593,000 371,833,000 460,384,000 381,257,000 487,300,000 435,335,000 492,148,000 437,757,000 16 End of Year 610,492,000 417,565,000 592,593,000 371,833,000 460,384,000 381,257,000 487,300,000 435,335,000 492,148,000 414,120,000 414,120,000 17 Reserve Policy 419,703,000 336,930,400 381,229,608 384,080,040 411,794,121 415,310,283 435,293,969 437,099,628 436,779,721 435,854,715 435,854,715 Sewer Service User Fees: 18 Avg SFR Annual User Fee $87.50 $96.00 $105.00 $115.00 $126.00 $138.00 $151.00 $166.00 $182.00 $200.00 19 Percentage Change 9.38%9.71%9.38%9.52%9.57%9.52%9.42%9.93%9.64%9.89% 20 Equivalent Dwelling Units 890,100 893,300 896,500 899,700 902,900 906,100 909,300 912,500 914,500 917,700 21 SFR Connection Fee $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 22 Outstanding COPs $639,975,000 $624,924,000 $953,229,000 $932,194,000 $1,139,953,000 $1,113,475,000 $1,245,369,000 $1,213,513,000 $1,113,475,000 $1,245,369,000 COP Ratios 23 Sr Lien Coverge, Min 1.25 2.51 2.33 2.32 1.37 1.36 1.28 1.33 1.36 1.43 1.53 25 Additional Bonds, 1.25 2.51 2.33 2.32 1.37 1.36 1.28 1.33 1.36 1.43 1.53 Net Revenues for ratios 97,993,000 117,196,000 147,726,000 105,808,000 117,611,000 122,925,000 135,699,000 148,503,000 163,693,000 181,255,000 Jr lien @ 7.5%- - - - - - - - - - Sr lien service 38,995,000 50,250,000 63,696,000 77,465,000 86,707,000 96,039,000 102,384,000 109,014,000 114,107,000 118,689,000 Orange County Sanitation District Summary Cash Flow Projections, Entire Collection System Secondary Effluent SPU & Existing Reserve Policy Ref Description Revenues: 1 General User Fees 2 Permitted User Fees 3 Property Taxes 4 New COP Issues 5 Interest Revenues 6 Connection Fees 7 Other Revenues 8 Revenues Requirements: 9 Oper & Mtce Exp 10 Capital Improvement Program Repl, Rehab & Refurb 11 COP Service 6.0%, 30 yrs 12 Other Requirements 13 Requirements 14 Revenues-Requirements Accumulated Funds: 15 Beginning of Year16End of Year 17 Reserve Policy Sewer Service User Fees: 18 Avg SFR Annual User Fee 19 Percentage Change 20 Equivalent Dwelling Units 21 SFR Connection Fee 22 Outstanding COPs COP Ratios 23 Sr Lien Coverge, Min 1.25 25 Additional Bonds, 1.25 Net Revenues for ratiosJr lien @ 7.5%Sr lien service Orange County Sanitation District Summary Cash Flow Projections, Entire Collections System Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Grand 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 Total 202,598,000 223,632,000 231,825,000 232,625,000 233,425,000 234,225,000 235,025,000 235,825,000 3,067,985,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 113,922,000 46,508,000 47,439,000 48,387,000 49,355,000 50,342,000 51,349,000 52,376,000 53,424,000 816,943,000 - - - - - - - - 1,136,000,000 22,270,000 21,507,000 22,667,000 23,594,000 23,904,000 23,413,000 23,590,000 25,598,000 445,374,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 5,824,000 104,832,000 11,428,000 11,428,000 11,728,000 12,128,000 12,528,000 12,428,000 11,828,000 11,628,000 320,904,000 294,957,000 316,159,000 326,760,000 329,855,000 332,352,000 333,568,000 334,972,000 338,628,000 6,005,960,000 103,760,000 104,260,000 104,960,000 105,560,000 106,360,000 107,360,000 108,260,000 109,060,000 1,773,880,000 80,700,000 21,369,000 24,179,000 50,949,000 50,340,000 84,260,000 27,518,000 16,800,000 1,907,685,000 33,800,000 46,000,000 14,900,000 34,700,000 93,400,000 76,100,000 33,100,000 13,600,000 411,400,000 118,767,000 132,516,000 118,037,000 117,983,000 119,395,000 117,811,000 117,772,000 117,752,000 1,817,379,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 41,994,000 339,360,000 306,478,000 264,409,000 311,525,000 371,828,000 387,864,000 288,983,000 259,545,000 5,952,338,000 (44,403,000) 9,681,000 62,351,000 18,330,000 (39,476,000) (54,296,000) 45,989,000 79,083,000 53,622,000 414,120,000 369,717,000 379,398,000 441,749,000 460,079,000 420,603,000 366,307,000 412,296,000 437,757,000 369,717,000 379,398,000 441,749,000 460,079,000 420,603,000 366,307,000 412,296,000 491,379,000 491,379,000 444,640,090 428,126,332 427,363,938 425,110,417 418,949,285 405,564,071 399,585,312 403,881,559 $220.00 $242.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $3,328.50 10.00%10.00%3.31%0.00%0.00%0.00%0.00%0.00% 920,900 924,100 927,300 930,500 933,700 936,900 940,100 943,300 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,820 $1,094,846,000 $1,042,627,000 $1,000,855,000 $952,419,000 $896,543,000 $847,446,000 $795,843,000 $741,645,000 1.61 1.60 1.88 1.90 1.89 1.92 1.93 1.95 1.61 1.60 1.88 1.90 1.89 1.92 1.93 1.95 191,197,000 211,899,000 221,800,000 224,295,000 225,992,000 226,208,000 226,712,000 229,568,000 - - - - - - - - 118,767,000 132,516,000 118,037,000 117,983,000 119,395,000 117,811,000 117,772,000 117,752,000 Adjusted Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Ref Description 2002-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 Revenues: 1 General User Fees 77,884,000 85,757,000 94,581,000 104,365,000 115,571,000 127,307,000 140,487,000 154,669,000 170,554,000 188,129,000 2 Permitted User Fees 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 3 Property Taxes 38,153,000 38,916,000 39,694,000 40,488,000 41,298,000 42,124,000 42,966,000 43,826,000 44,702,000 45,596,000 4 New COP Issues 250,000,000 - 300,000,000 - 230,000,000 - 120,000,000 - 100,000,000 - 5 Interest Revenues 30,335,000 29,502,000 28,278,000 26,533,000 22,727,000 23,038,000 23,708,000 24,781,000 24,831,000 25,098,000 6 Connection Fees 5,824,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 7 Other Revenues 23,528,000 37,428,000 62,628,000 16,228,000 21,528,000 14,928,000 14,528,000 11,828,000 11,628,000 11,528,000 8 Revenues 432,053,000 207,052,000 540,630,000 203,063,000 446,573,000 222,846,000 357,138,000 250,553,000 367,164,000 285,800,000 Requirements: 9 Oper & Mtce Exp 84,060,000 86,560,000 89,160,000 93,060,000 93,860,000 94,360,000 94,960,000 95,560,000 96,060,000 96,660,000 10 Capital Improvement Program 163,930,000 257,540,000 246,669,000 246,770,000 170,020,000 103,680,000 84,939,000 89,121,000 89,440,000 99,461,000 Repl, Rehab & Refurb 27,000,000 38,800,000 11 COP Service 6.0%, 30 yrs 37,795,000 47,850,000 59,696,000 71,865,000 81,107,000 90,439,000 95,184,000 100,214,000 104,267,000 107,809,000 12 Other Requirements 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 13 Requirements 288,118,000 394,283,000 397,858,000 414,028,000 347,320,000 290,812,000 277,416,000 287,228,000 319,100,000 345,063,000 14 Revenues-Requirements 143,935,000 (187,231,000) 142,772,000 (210,965,000) 99,253,000 (67,966,000) 79,722,000 (36,675,000) 48,064,000 (59,263,000) Accumulated Funds: 15 Beginning of Year 437,757,000 581,692,000 394,461,000 537,233,000 326,268,000 425,521,000 357,555,000 437,277,000 400,602,000 448,666,000 16 End of Year 581,692,000 394,461,000 537,233,000 326,268,000 425,521,000 357,555,000 437,277,000 400,602,000 448,666,000 389,403,000 17 Reserve Policy 297,857,000 293,185,000 352,290,236 355,518,500 387,099,500 394,721,000 408,480,000 407,619,500 405,175,500 406,084,500 Sewer Service User Fees: 18 Avg SFR Annual User Fee $87.50 $96.00 $105.50 $116.00 $128.00 $140.50 $154.50 $169.50 $186.50 $205.00 19 Percentage Change 9.38%9.71%9.90%9.95%10.34%9.77%9.96%9.71%10.03%9.92% 20 Equivalent Dwelling Units 890,100 893,300 896,500 899,700 902,900 906,100 909,300 912,500 914,500 917,700 21 SFR Connection Fee $1,820 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 22 Outstanding COPs $609,975,000 $595,303,000 $884,010,000 $863,908,000 $1,072,654,000 $1,047,224,000 $1,140,229,000 $1,110,056,000 $1,047,224,000 $1,140,229,000 COP Ratios 23 Sr Lien Coverge, Min 1.25 2.59 2.52 2.54 1.53 1.51 1.42 1.49 1.55 1.64 1.75 25 Additional Bonds, 1.25 2.59 2.52 2.54 1.53 1.51 1.42 1.49 1.55 1.64 1.75 Net Revenues for ratios 97,993,000 120,492,000 151,470,000 110,003,000 122,713,000 128,486,000 142,178,000 154,993,000 171,104,000 189,140,000 Jr lien @ 7.5%- - - - - - - - - - Sr lien service 37,795,000 47,850,000 59,696,000 71,865,000 81,107,000 90,439,000 95,184,000 100,214,000 104,267,000 107,809,000 Orange County Sanitation District Summary Cash Flow Projections, Entire Collection System Secondary Effluent SPU & Proposed Reserve Policy 10% Rate Increase Limitation Ref Description Revenues: 1 General User Fees 2 Permitted User Fees 3 Property Taxes 4 New COP Issues 5 Interest Revenues 6 Connection Fees 7 Other Revenues 8 Revenues Requirements: 9 Oper & Mtce Exp 10 Capital Improvement Program Repl, Rehab & Refurb 11 COP Service 6.0%, 30 yrs 12 Other Requirements 13 Requirements 14 Revenues-Requirements Accumulated Funds: 15 Beginning of Year 16 End of Year 17 Reserve Policy Sewer Service User Fees: 18 Avg SFR Annual User Fee 19 Percentage Change 20 Equivalent Dwelling Units 21 SFR Connection Fee 22 Outstanding COPs COP Ratios 23 Sr Lien Coverge, Min 1.25 25 Additional Bonds, 1.25 Net Revenues for ratiosJr lien @ 7.5%Sr lien service Orange County Sanitation District Summary Cash Flow Projections, Entire Collections System Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Grand 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 Total 202,598,000 203,302,000 204,006,000 204,710,000 205,414,000 206,118,000 206,822,000 207,526,000 2,899,800,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 113,922,000 46,508,000 47,439,000 48,387,000 49,355,000 50,342,000 51,349,000 52,376,000 53,424,000 816,943,000 - - - - - - - - 1,000,000,000 22,270,000 21,507,000 22,667,000 23,594,000 23,904,000 23,413,000 23,590,000 25,598,000 445,374,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 160,864,000 11,428,000 11,428,000 11,728,000 12,128,000 12,528,000 12,428,000 11,828,000 11,628,000 320,904,000 298,253,000 299,125,000 302,237,000 305,236,000 307,637,000 308,757,000 310,065,000 313,625,000 5,757,807,000 103,760,000 104,260,000 104,960,000 105,560,000 106,360,000 107,360,000 108,260,000 109,060,000 1,773,880,000 80,700,000 21,369,000 24,179,000 50,949,000 50,340,000 84,260,000 27,518,000 16,800,000 1,907,685,000 33,800,000 46,000,000 14,900,000 34,700,000 93,400,000 76,100,000 33,100,000 13,600,000 411,400,000 107,887,000 121,636,000 107,157,000 107,103,000 108,515,000 106,931,000 106,892,000 106,872,000 1,669,219,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 41,994,000 328,480,000 295,598,000 253,529,000 300,645,000 360,948,000 376,984,000 278,103,000 248,665,000 5,804,178,000 (30,227,000) 3,527,000 48,708,000 4,591,000 (53,311,000) (68,227,000) 31,962,000 64,960,000 (46,371,000) 389,403,000 359,176,000 362,703,000 411,411,000 416,002,000 362,691,000 294,464,000 326,426,000 437,757,000 359,176,000 362,703,000 411,411,000 416,002,000 362,691,000 294,464,000 326,426,000 391,386,000 391,386,000 416,477,000 408,815,500 410,027,500 410,012,500 408,301,500 408,495,000 407,245,000 409,174,000 $220.00 $220.00 $220.00 $220.00 $220.00 $220.00 $220.00 $220.00 $3,149.00 7.32%0.00%0.00%0.00%0.00%0.00%0.00%0.00% 920,900 924,100 927,300 930,500 933,700 936,900 940,100 943,300 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $997,068,000 $946,974,000 $907,455,000 $861,406,000 $808,060,000 $761,646,000 $712,887,000 $661,702,000 1.80 1.60 1.84 1.86 1.85 1.88 1.89 1.91 1.80 1.60 1.84 1.86 1.85 1.88 1.89 1.91 194,493,000 194,865,000 197,277,000 199,676,000 201,277,000 201,397,000 201,805,000 204,565,000 - - - - - - - - 107,887,000 121,636,000 107,157,000 107,103,000 108,515,000 106,931,000 106,892,000 106,872,000 Adjusted Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Ref Description 2002-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 Revenues: 1 General User Fees 77,884,000 109,429,000 153,750,000 161,946,000 171,551,000 172,159,000 172,767,000 173,375,000 173,755,000 174,363,000 2 Permitted User Fees 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 3 Property Taxes 38,153,000 38,916,000 39,694,000 40,488,000 41,298,000 42,124,000 42,966,000 43,826,000 44,702,000 45,596,000 4 New COP Issues 250,000,000 - 150,000,000 - 75,000,000 - - - 5 Interest Revenues 30,335,000 29,502,000 28,278,000 26,533,000 22,727,000 23,038,000 23,708,000 24,781,000 24,831,000 25,098,000 6 Connection Fees 5,824,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 7 Other Revenues 23,528,000 37,428,000 62,628,000 16,228,000 21,528,000 14,928,000 14,528,000 11,828,000 11,628,000 11,528,000 8 Revenues 432,053,000 230,724,000 449,799,000 260,644,000 347,553,000 267,698,000 269,418,000 269,259,000 270,365,000 272,034,000 Requirements: 9 Oper & Mtce Exp 84,060,000 86,560,000 89,160,000 93,060,000 93,860,000 94,360,000 94,960,000 95,560,000 96,060,000 96,660,000 10 Capital Improvement Program 163,930,000 257,540,000 246,669,000 246,770,000 170,020,000 103,680,000 84,939,000 89,121,000 89,440,000 99,461,000 Repl, Rehab & Refurb 27,000,000 38,800,000 11 COP Service 6.0%, 30 yrs 37,795,000 47,850,000 53,696,000 59,865,000 62,907,000 66,039,000 65,984,000 66,214,000 66,267,000 65,809,000 12 Other Requirements 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 13 Requirements 288,118,000 394,283,000 391,858,000 402,028,000 329,120,000 266,412,000 248,216,000 253,228,000 281,100,000 303,063,000 14 Revenues-Requirements 143,935,000 (163,559,000) 57,941,000 (141,384,000) 18,433,000 1,286,000 21,202,000 16,031,000 (10,735,000) (31,029,000) Accumulated Funds: 15 Beginning of Year 437,757,000 581,692,000 418,133,000 476,074,000 334,690,000 353,123,000 354,409,000 375,611,000 391,642,000 380,907,000 16 End of Year 581,692,000 418,133,000 476,074,000 334,690,000 353,123,000 354,409,000 375,611,000 391,642,000 380,907,000 349,878,000 17 Reserve Policy 297,857,000 290,185,000 331,290,236 331,608,500 344,789,500 350,422,000 350,214,000 347,964,500 344,168,500 345,765,500 Sewer Service User Fees: 18 Avg SFR Annual User Fee $87.50 $122.50 $171.50 $180.00 $190.00 $190.00 $190.00 $190.00 $190.00 $190.00 19 Percentage Change 9.38%40.00%40.00%4.96%5.56%0.00%0.00%0.00%0.00%0.00% 20 Equivalent Dwelling Units 890,100 893,300 896,500 899,700 902,900 906,100 909,300 912,500 914,500 917,700 21 SFR Connection Fee $1,820 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 22 Outstanding COPs $609,975,000 $595,303,000 $734,011,000 $715,806,000 $771,563,000 $750,225,000 $727,568,000 $703,511,000 $750,225,000 $727,568,000 COP Ratios 23 Sr Lien Coverge, Min 1.25 2.59 3.01 3.92 2.80 2.84 2.62 2.64 2.62 2.63 2.66 25 Additional Bonds, 1.25 2.59 3.01 3.92 2.80 2.84 2.62 2.64 2.62 2.63 2.66 Net Revenues for ratios 97,993,000 144,164,000 210,639,000 167,584,000 178,693,000 173,338,000 174,458,000 173,699,000 174,305,000 175,374,000 Jr lien @ 7.5%- - - - - - - - - - Sr lien service 37,795,000 47,850,000 53,696,000 59,865,000 62,907,000 66,039,000 65,984,000 66,214,000 66,267,000 65,809,000 ` Summary Cash Flow Projections, Entire Collection System Secondary Effluent SPU & Proposed Reserve Policy Rapid Rate Increase, 40% per Year Ref Description Revenues: 1 General User Fees 2 Permitted User Fees 3 Property Taxes 4 New COP Issues 5 Interest Revenues 6 Connection Fees 7 Other Revenues 8 Revenues Requirements: 9 Oper & Mtce Exp 10 Capital Improvement Program Repl, Rehab & Refurb 11 COP Service 6.0%, 30 yrs 12 Other Requirements 13 Requirements 14 Revenues-Requirements Accumulated Funds: 15 Beginning of Year 16 End of Year 17 Reserve Policy Sewer Service User Fees: 18 Avg SFR Annual User Fee 19 Percentage Change 20 Equivalent Dwelling Units 21 SFR Connection Fee 22 Outstanding COPs COP Ratios 23 Sr Lien Coverge, Min 1.25 25 Additional Bonds, 1.25 Net Revenues for ratiosJr lien @ 7.5%Sr lien service Orange County Sanitation District Summary Cash Flow Projections, Entire Collections System Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Grand 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 Total 174,971,000 175,579,000 176,187,000 176,795,000 177,403,000 178,011,000 178,619,000 179,227,000 2,957,771,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 6,329,000 113,922,000 46,508,000 47,439,000 48,387,000 49,355,000 50,342,000 51,349,000 52,376,000 53,424,000 816,943,000 - - - - - - - - 475,000,000 22,270,000 21,507,000 22,667,000 23,594,000 23,904,000 23,413,000 23,590,000 25,598,000 445,374,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 9,120,000 160,864,000 11,428,000 11,428,000 11,728,000 12,128,000 12,528,000 12,428,000 11,828,000 11,628,000 320,904,000 270,626,000 271,402,000 274,418,000 277,321,000 279,626,000 280,650,000 281,862,000 285,326,000 5,290,778,000 103,760,000 104,260,000 104,960,000 105,560,000 106,360,000 107,360,000 108,260,000 109,060,000 1,773,880,000 80,700,000 21,369,000 24,179,000 50,949,000 50,340,000 84,260,000 27,518,000 16,800,000 1,907,685,000 33,800,000 46,000,000 14,900,000 34,700,000 93,400,000 76,100,000 33,100,000 13,600,000 411,400,000 65,887,000 79,636,000 65,157,000 65,103,000 66,515,000 64,931,000 64,892,000 64,872,000 1,129,419,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 2,333,000 41,994,000 286,480,000 253,598,000 211,529,000 258,645,000 318,948,000 334,984,000 236,103,000 206,665,000 5,264,378,000 (15,854,000) 17,804,000 62,889,000 18,676,000 (39,322,000) (54,334,000) 45,759,000 78,661,000 26,400,000 349,878,000 334,024,000 351,828,000 414,717,000 433,393,000 394,071,000 339,737,000 385,496,000 437,757,000 334,024,000 351,828,000 414,717,000 433,393,000 394,071,000 339,737,000 385,496,000 464,157,000 464,157,000 356,886,000 349,997,500 352,027,500 352,880,500 352,089,500 353,258,000 353,040,000 355,066,000 $190.00 $190.00 $190.00 $190.00 $190.00 $190.00 $190.00 $190.00 $3,221.50 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00% 920,900 924,100 927,300 930,500 933,700 936,900 940,100 943,300 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $2,850 $611,163,000 $568,790,000 $537,456,000 $500,083,000 $455,933,000 $419,268,000 $380,841,000 $340,610,000 2.53 2.10 2.60 2.64 2.60 2.67 2.68 2.72 2.53 2.10 2.60 2.64 2.60 2.67 2.68 2.72 166,866,000 167,142,000 169,458,000 171,761,000 173,266,000 173,290,000 173,602,000 176,266,000 - - - - - - - - 65,887,000 79,636,000 65,157,000 65,103,000 66,515,000 64,931,000 64,892,000 64,872,000 FAHR COMMITTEE Meeting Date 02-19-03 To Bd. of Dir. 02-26-03 AGENDA REPORT Item Number FAHR03-10 Item Number Orange County Sanitation District FROM: Gary G. Streed, Director of Finance SUBJECT: FINANCIAL PLAN INCLUDING USER FEE AND RESERVE POLICIES GENERAL MANAGER'S RECOMMENDATION Direct staff to revise the 1996 Reserves Policy and to provide the Board with cash flows and sewer user fee projections that incorporate those revisions and the Committee’s preference for a sewer user fee increase program. SUMMARY The Board of Directors adopted a Reserves Policy in 1996. Since then the capital improvement program has increased, the Board has decided to discharge effluent that meets secondary treatment standards and to disinfect that influent. These changes suggest that the Reserves Policy could be revised. This policy and the changes noted above have significant impacts on our sewer service user fees. Historically we have increased our overall user fees in fairly small annual increments, using debt financing to smooth the impact of the capital improvement program. With the public interest in improved effluent quality now may be a good time to increase the rates more on the front-end of the capital improvement program to match the program itself and to reduce the long-term impacts of debt financing. PROJECT/CONTRACT COST SUMMARY Reducing the reserve requirements, increasing user fees more quickly and reducing borrowing can be shown to reduce the total fees paid by users over the long term. The cost of this reduction is higher fees in the immediate future. The potential savings to a residential user could be approximately $150 over the next 20 years. BUDGET IMPACT 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 The attached Staff Report explains the District’s revenue sources and reserves policy and discusses alternative rate increase philosophies. Staff is proposing a change in the reserve policy that relieves some of the need for rate increases and borrowing. \\FILER-1\ocsd\dept\gmo\120\BS\Agenda\Archived-agenda\Archived Committees\FAHR\2003\FAHR2003 drafts\0203\15.03-10.User Fee & Reserve Policies.doc Revised: 8/20/01 Page 2 ALTERNATIVES Maintain the existing reserves policy Adopt other changes to the policy Propose other, middle of the road, user fee increase schedules CEQA FINDINGS N/A ATTACHMENTS 1. Staff Report 2. CIP Chart 3. Cash Flow Secondary SPU & Existing Reserve Policy 4. Cash Flow Secondary SPU & Proposed Reserve Policy - 10% Rate Increase Limitation 5. Cash Flow Secondary SPU & Proposed Reserve Policy - Rapid Rate Increase, 40%/Yr. GGS:lc