The URL can be used to link to this page

Home My WebLink About2004-09-08MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Orange County Sanitation District Wednesday, September 8, 2004, 5:00 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on September 8, 2004, 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: Roy Moore, Chair Mike Duvall, Vice Chair Patricia Bortle Bill Dalton Shirley McCracken Joy Neugebauer Steve Anderson, Board Chair Directors Absent: Darryl Miller James W. Silva Jim Ferryman, Vice Board Chair (2) APPOINTMENT OF CHAJR 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. STAFF PRESENT: Bob Ghirelli, Director of Technical Services and Acting General Manager Gary Streed, Director of Finance/Treasurer Lisa Tomko, Director of Human Resources Bob Ooten, Director of Operations & Maintenance Mike White, Controller Jeff Reed, Human Resources Manager Karen Baroldi Ed Torres Penny Kyle, Committee Secretary OTHERS PRESENT: Tom Nixon, General Counsel FILED RY IN THE OFFICE OF THE SECf\ET;RIC ORANGE r,r,i ,.,.,..,, ,.. ... ,¥•-•n I DI SEP 22 2004 BY _J2.Lli,!-& ~· (5) REPORTOFTHEGENERALMANAGER Bob Ghirelli, Acting General Manager, reported that a 13,000 gallon spill occurred on Saturday, September 4, at Plant 2, during a power interruption by Edison. The effluent had been treated and disinfected but the Orange County Health Department closed a portion of the beaches by the Santa Ana River. Staff is investigating to determine why the back-up systems malfunctioned. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 September 8, 2004 (6) REPORT OF DIRECTOR OF FINANCE/TREASURER Gary Streed, Director of Finance/Treasurer, referred the Directors to handouts that evening including a chart that would be discussed in greater detail during consideration of Agenda Item No. 12(a) -FAHR04-82. (7) REPORT OF DIRECTOR OF HUMAN RESOURCES The Director of Human Resources had no report. (8) REPORT OF DIRECTOR OF OOMMUNICATIONS & ADMINISTRATIVE SERVICES The Director of Communications and Administrative Services was not present. (9) REPORT OF GENERAL COUNSEL General Counsel had no report. (10) CONSENT CALENDAR ITEMS a. Approve minutes of the June 9, 2004, Finance, Administration and Human Resources Committee meeting, as corrected. b. FAHR04-71 Recommend to the Board of Directors to receive and file Treasurer's Report for the month of August 2004. c. FAHR04-72 Receive and file Certificates of Participation (COP) Monthly Report. d. FAHR04-73 Receive and file Employment Status Report as of August 18, 2004. e. FAHR04-74 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. f. FAHR04-75 Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. g. FAHR03-76 Receive and file SWAP Report for the quarter ended June 30, 2004. h. FAHR04-77 Recommend to the Board of Directors to receive and file Quarterly Investment Management Program Report for the period April 1, 2004 through June 30, 2004. i. FAHR04-78 Recommend to the Board of Directors to adopt Resolution No. OCSD 04- _, Amending Resolution No. OCSD 98-33, Amending Human Resources Policies and Procedures Manual. Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 September 8, 2004 MOTION: It was moved, seconded and duly carried to approve the recommended actions for items specified as 1 0(a) through (i) under Consent Calendar. END OE CONSENT CALENOAR (11) ACTION ITEMS a. FAHR04-79 Receive, file and approve staff's responses to the Internal Audit Report issued on May 8, 2004 by the District's contracted internal auditors, Moss, Levy & Hartzheim. MOTION: Mike White, Controller, responded to the findings identified in the internal auditors written report of May 8, 2004. Directors were pleased with staff's responses to the findings. It was moved, seconded and duly carried to receive, file and approve. b. FAHR04-80 Recommend to the Board of Directors to approve Change Order No. 1 to the Purchase Order No. 43620 issued to Moss, Levy & Hartzheim as the District's internal auditor for fiscal year 2004/05, for an amount not to exceed $19,260. MOTION: It was moved, seconded and duly carried to recommend approval to the Board of Directors. c. FAHR04-81 Recommend to the Board of Directors to adopt Resolution No. OCSD 04- _, Establishing A Grant Funding Program Policy and Code of Ethics in Support of Meeting the Contractual Requirements of Awarding Agencies for Monetary Assistance Granted to the District. MOTION: Karen Baroldi discussed the need to allow the General Manager or his designee to be authorized to apply for and enter into contractual agreements with federal, state and local agencies in order to facilitate the operation of the grant funding program. This policy would also authorize development of procedures for administration of the program, as well as include a Code of Ethics to provide compliance with grant requirements. It was moved, seconded and duly carried to recommend approval to the Board of Directors. (12) INFORMATION PRESENTATIONS a. FAHR04-82 Permit User Rate Calculations for Flow, Biochemical Oxygen Demand and Suspended Solids. Rick Hurtle of House Foods requested the Directors to reconsider a rate increase less than 27% as it would negatively impact local businesses. Brian Keating of Kimberly Clark also spoke in support of a lower rate increase. \ . Minutes of the Finance, Administration and Human Resources Committee Meeting Page4 September 8, 2004 Gary Streed, Director of Finance, explained the method of rate calculation and referred to the Expense and Cost Allocation for Permit User Fee Calculations handout that was distributed to the Directors that evening. It was his recommendation to ensure that all are treated fairly with the rate calculation that this item come back to the FAHR Committee and the Board of Directors for consideration and action in October. (13) CLOSED SESSION There was no closed session. (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 October 13, 2004 at 5 p.m. (17) ADJOURNMENT The Chair declared the meeting adjourned at 6:30 p.m. Submitted by: Penny M. yle FAHR Committee Secreta H:\dept\agenda\FAHR\FAHR2004\0904\090804 FAHR Minutes.doc STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, I hereby certify that the Notice and the Agenda for the Fin~ation, and Human Resources Committee meeting to be held on ~!u J--, 200~, was duly posted for public inspection in the main lobb; of the District's offices on ~ / 200_.i. d. IN WITNESS WHEREOF, I have hereunto set my hand this tr;; ..J-c~, 200~ I J#('-day of Penny M. Kyik, 'secre~ Board of Directors Orange County Sanitation District G:\WP.DTA\ADMIN\BS\FORMS\AGENDA CERTIFICA TION-FAHR COMMITTEE.DOC phane: (7141 962-2411 fu: (714) 962-0356 -.ocad.com maili119 address: P.O. Box 8127 Fountain Valley, CA 92728-8127 stl'llllt address: 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Member Agencies • Cities Anaheim Brea Buena Park Cypress Fountain Valley Fullerton Garden Grove Huntington Beach Irvine La Habra La Palma Los Alamitos Newport Beach Orange Placentia Santa Ana Seal Beach Stanton Tustin Villa Park Yorba Linda ~aunty of Orange anitary Districts Costa Mesa Midway City Water Districts Irvine Ranch ORANGE COUNTY SANITATION DISTRICT September 1, 2004 NOTICE OF MEETING FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, SEPTEMBER 8, 2004-5:00 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. To maintain world-class leadership in wastewater and water resource management. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATES FAHR Committee Meeth1U Date September 8, 2004 October 13. 2004 November 10, 2004 December 8, 2004 January -Dark Febmary 9. 2005 March 9, 2005 April 13. 2005 May 1~.2005 June 8, 2005 July 13., 2005 Board Meetin.g Dates September 22, 2004 October 27, 2004 *November 17, 2004 *December 15, 2004 January 26, 2005 February 23, 2005 March 23, 2005 April 27, 2005 May 25, 2005 June 22, 2005 July 27, 2005 •Meelilgs being held the third Wednesday of the month. ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Meeting Date: September 8, 2004 p.m. Time: 5:00 Adjourn: ___ _ COMMITTEE MEMBERS Roy Moore (Chair) Mike Duvall (Vice Chair) Patricia Bortle Bill Dalton Shirley McCracken Darryl Miller Joy L. Neugebauer James W. Silva Steve Anderson (Board Chair) Jim Ferryman (Board Vice Chair) OTHERS Tom Woodruff, General Counsel Don Hughes STAFF Blake Anderson, General Manager Carol Beekman, Director of Communications & Administrative Services 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 Mike White, Controller Penny Kyle, Committee Secretary c: Lenora Crane AGENDA REGULAR MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, SEPTEMBER 8, 2004, AT 5:00 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 www.ocsd.com Agenda Posting: 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. Items Not Posted: 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 because there is a need to take immediate action, which need came to the attention of the Committee subsequent to the posting of 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. Accommodations for-the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Board Secretary's office at (714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Items Continued: Items may be continued from this meeting without further notice to a Committee meeting held within five (5) days of this meeting per Government Code Section 54954.2(b)(3). Meeting Adioumment: This meeting may be adjourned to a later time and items of business from this agenda may be considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section 54955 (posted within 24 hours). (1) ROLL CALL (2) APPOINTMENT OF CHAIR PRO TEM, IF NECESSARY Book page I September 8, 2004 (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). (4) REPORT OF COMMITTEE CHAIR (5) REPORT OF GENERAL MANAGER (6) REPORT OF DIRECTOR OF FINANCE (7) REPORT OF DIRECTOR OF HUMAN RESOURCES (8) REPORT OF DIRECTOR OF COMMUNICATIONS & ADMINISTRATIVE SERVICES (9) REPORT OF GENERAL COUNSEL (10) CONSENT CALENDAR ITEMS Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: \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, i )here will be no separate discussion of these items. All items on the consent calendar will be enacted by one i jaction approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar. All ) j items removed from the consent calendar shall be considered in the regular order of business. ) 1 I ?he Chair will determine if any items are to be deleted from the consent calendar. ! : ........................... _, ___ , .. _, .. ,.......... . ..... _, ............ u_, ......... _ .. ,H ...................... H ______ ...... ..-.-•: .... ······--•-·•·----·-··•-•n ......... o .... •HODUHh• .• •·•--·-··-..,.....-···-··-· .......................... ,_, _____ ••••.• -·· : a. Approve minutes of the June 9, 2004, Finance, Administration and Human Resources Committee meeting. b. FAHR04-71 Recommend to the Board of Directors to receive and file Treasurer's Report for the month of August 2004. The Treasurer's Report will be distribut_ed at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. 2 Book page2 September 8, 2004 c. FAHR04-72 Receive and file Certificates of Participation (COP) Monthly Report. d. FAHR04-73 Receive and file Employment Status Report as of August 18, 2004. e. FAHR04-74 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. f. FAHR04-75 Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. g. FAHR04-76 Receive and file SWAP Report for the quarter ending June 30, 2004. h. FAHR04-77 Recommend to the Board of Directors to receive and file Quarterly Investment Management Program Report for the period April 1, 2004 through June 30, 2004. i. FAHR04-78 Recommend to the Board of Directors to adopt Resolution No. OCSD 04- _, Amending Resolution No. OCSD 98-33, Amending Human Resources Policies and Procedures Manual. END .OF CONSENT CALENDAR Consideration of items deleted from Consent Calendar, if any. (11) ACTION ITEMS a. FAHR04-79 Receive, file and approve staff's responses to the Internal Audit Report issued on May 8, 2004 by the District's contracted internal auditors, Moss, Levy & Hartzheim. (Mike White -15 minutes) b FAHR04-80 Approve Change Order No. 1 to the Purchase Order No. 43620 issued to Moss, Levy & Hartzheim as the District's internal auditor for fiscal year 2004/05, for an amount not to exceed $19,260. (Mike White-5 minutes) c. FAHR04-81 Recommend to the Board of Directors to adopt Resolution No. OCSD 04- _, Establishing A Grant Funding Program Policy and Code of Ethics in Support of Meeting the Contractual Requirements of Awarding Agencies for Monetary Assistance Granted to the District. (Jim Colston -5 minutes) 3 Book page 3 September 8, 2004 (12) INFORMATIONAL PRESENTATIONS a. FAHR04-82 Permit User Rate Calculations for Flow, Biochemical Oxygen Demand and Suspended Solids. (Gary Streed -30 minutes) (13) CLOSED SESSION j During · the course of cmnducting the business set forth on this agenda as a regular meeting of the · l \ Committee, the Chair may convene the Committee in closed session to consider matters of pending real j 1 estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code 1 1 Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. 1 I Reports relating to (a) pun;:hase and sal!3 of real property; (b) matters of pending or potential lltigatlon: (c) I j employee actions or negotiations with emplayee representa_Uves~ or which are exempt from public disclosure i 1 under the California Public:: Records Act, may be review~d b.y the C0mmittea during a permitted closed 1 ·1 session and are not availal;)le for public inspecti0n. At such time as -final action~ are taken by -the 'Committee 1 1 on any of these subjects, the minutes will reflect all required disclosures of information. 1 ~ H•••-•-•o•n••-•· u•~•---•------•••••;••·•·•·•-H-HUO·O • •.• -.. . ...., ... .......,.,.. .. nHu~Hw>o•••· .. ·•••· .. ·..,...• .. n•---•UO-•·••••• .... ••••••••• .. •• .. •·HOo .. ••-•••••••-., ... ,,,_, .. •••••·•-•••·'"J • •• '--•~--...... ••••••uooH_.......,_,.,,, '•••••-••-•-Ho i a. Convene in closed session. b. Reconvene in regular session. c. Consideration of action, if any, on matters considered in closed session. (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 October 13 2004, at 5 p.m. (17) ADJOURNMENT l Notice to C~mmittee Members: . .. · -. . . . l ! ! !For any questions on the agenda or to place any items on the agenda, Committee members should contact the j. ;committee Chair or Secretary ten days in advance of the Committee meeting. j· . ! ]Committee Chair: Roy Moore (714) 990-7703 1 1Committee Secretary: Penny Kyle (714) 593-7130 pkyle@ocsd.com !,,,':,,_ )General Manager Blake Anderson (714) 593-7110 banderson@ocsd.com 1DirectorofFinance Gary Streed (714) 593-7550 gstreed@ocsd.com I Director of Human Resources Lisa Tomko (714) 593-7145 ltomko@ocsd.com \ Director of Communications & Carol Beekman (714) 593-7120 cbeekman@ocsd.com 1 !Administrative Services . ! \ ••. .,.-• .. ••••• .. •h••••••·•••u ... • .. •-u•••• .. •••oo••-•••·••---•u·•·•-• ... •••--•-·•·--••••<••., •• ·· ••-·•·.,.·•-••-•n•••u•-•••• ..... ~..,.,.,.,., , ... _,,.,, .• ~,,~ .. ,, ..................... _,.,.,,,,,. ___ ,,_ ......... •·•-••-•-• .. ••·•·--••-••-•· • ..... r ... ,,.,,,, ... _,11 H:ldeptlagenda\FAHRIFAHR2004\0904\01.3.090804 draft FAHR Agenda.doc 4 Book page 4 September 1, 2004 FAHR COMMITTEE AGENDA CALENDAR Month Item Action October Consider Structure of 2005-06 COP Offering Action October Consider Financing Team for 2005-06 Offering Action October Consider Permit User Rates for Flow, BOD and SS Action November FY03/04 Comprehensive Annual Financial Report Action November Investment Management Report (1 st Quarter) Action November SWAP Status Report (1 st Quarter) Action November Financial Report (1 st Quarter) Action November Employee Reclassification Recommendations Action December Consider Preliminary Budget Assumptions for 2005-06 Action December Purchases Authorized by the General Manager Action January No meeting scheduled Book page 5 MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING Orange County Sanitation District Wednesday, June 9, 2004, 5:00 p.m. A meeting of the Finance, Administration and Human Resources Committee of the Orange County Sanitation District was held on June 9, 2004, 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 Bill Dalton Mike Duvall Joy Neugebauer James W. Silva Shirley McCracken, Board Chair Steve Anderson, Vice Board Chair Directors Absent: Patricia Bortle (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. (4) REPORT OF THE COMMITTEE CHAIR STAFF PRESENT: Blake Anderson, General Manager Gary Streed, Director of Finance/Treasurer Lisa Tomko, Director of Human Resources Mike White, Controller Jeff Reed, Human Resources Manager Lisa Arosteguy, Human Resources Supervisor Jan Collins, Senior Human Resources Analyst Penny Kyle, Committee Secretary OTHERS PRESENT: Tom Nixon, General Counsel Don McLean Don Hughes Bob Lockhart Chair Brady reported that the FAHR Committee would be meeting on July 14 at 5:00 p.m. (5) REPORT OF THE GENERAL MANAGER Blake Anderson advised that Sacramento was discussing different proposals that would include a much larger take of the District's ad valorem taxes, and reported he would keep the Directors apprised. Book page 6 Minutes of the Finance, Administration and Human Resources Committee Meeting Page 2 June 9, 2004 (6) REPORT OF DIRECTOR OF FINANCE/TREASURER The Director of Finance/Treasurer had no report. (7) REPORT OF DIRECTOR OF HUMAN RESOURCES Lisa Tomko, Director of Human Resources, announced that Jan Collins was leaving employmeht with the District and moving out of state. Her replacement had begun employment earlier that month. (8) REPORT OF COMMUNICATIONS SERVICES MANAGER The Communications Services Manager was not present. (9) REPORT OF GENERAL COUNSEL Tom Nixon, General Counsel, reported the District has been served with a lawsuit by SAWPA that attempts to establish the term sheet as a binding agreement. He advised the lawsuit would be defended very aggressively, and depositions for the principals would be scheduled in the near future. (10) CONSENT CALENDAR ITEMS a. Approve minutes of the May 12, 2004, Finance, Administration and Human Resources Committee meeting, as corrected. b. FAHR04-46 Recommend to the Board of Directors to receive and file Treasurer's Report for the month of May 2004. c FAHR04-47 Receive and file Certificates of Participation (COP) Monthly Report. d. FAHR04-48 Receive and file Employment Status Report as of May 26, 2004. e. FAHR04-49 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. f. FAHR04-50 Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. g. FAHR03-51 Receive and file SWAP Report for the quarter ended March 31, 2004. h. FAHR04-52 Receive and file update on Health Insurance Benefit Program for FY04/05 (Information only). i. FAHR04-53 Recommend to the Board of Directors to authorize the General Manager to issue a purchase order contract to Dharma Consulting to provide continuing professional services to assist executive and senior staff with ongoing strategic planning, executive management team coaching and team development; and staff team building, for a monthly amount not to Book page 7 Minutes of the Finance, Administration and Human Resources Committee Meeting Page 3 June 9, 2004 MOTION: exceed $15,000 for a maximum of nine months effective July 1, 2004. It was moved, seconded and duly carried to approve the recommended actions for items specified as 1 0(a) through (i) under Consent Calendar. END OF CONSENT CALENDAR (11) ACTION ITEMS a. FAHR04-54 Recommend to the Board of Directors to adopt Resolution No. OCSD 04- MOTION: _, Amending Resolution No. OCSD 98-33, Amending Human Resources and Policies Procedures Manual, providing for: (1) Change the title of current classification Communications Services Manager at pay grade 94 ($8,001 -$10,001) to Director of Communications and Administrative Services. There is no recommended pay grade change at this time; (2) Create the Security and Risk Management Specialist classification at pay grade 82 ($5,949 -$7,436); (3) Create the Assistant Board Secretary classification at pay grade 67 ($4,108 -$5, 135); (4) Create the Planner/Scheduler classification at pay grade 80 ($5,663 - $7,079); (5) Create the Cost Estimator classification at pay grade 80 ($5,663 - $7,079); (6) Revise the Storekeeper job family as follows: (a) Create the Lead Storekeeper classification at pay grade 62 ($3,630 -$4,538); (b) Change the title of the current classification Storekeeper II at pay grade 58 ($3,290 -$4, 112) to Senior Storekeeper. There is no recommended pay grade change at this time; (c) Change the title and pay grade of the current classification Storekeeper I at pay grade 54 ($2,980 -$3,725) to Storekeeper at pay grade 52 ($2,837 -$3,546); and, (d) Delete the classification of Storekeeper Assistant at pay grade 46 ($2,445 -$3,056). It was moved, seconded and duly carried to recommend approval to the Board of Directors. Book page 8 Minutes of the Finance, Administration and Human Resources Committee Meeting Page4 June 9, 2004 Chair Brady reported that Item 11(b) would be considered after Items 11(c)-(g). c. FAHR04-56 Recommend to the Board of Directors to renew the District's Excess Workers' Compensation Insurance for the period July 1, 2004 through June 30, 2005, in an amount to be determined. MOTION: Don Mclean, the District's insurance broker, reported on the excess workers' compensation insurance market, and advised that the renewal premium should not exceed $210,000 per year, an increase of approximately 28%. He reported bids were requested from several insurance carriers but to date none had responded. It was moved, seconded and duly carried to recommend approval to the Board of Directors to renew the District's Excess Workers' Compensation Insurance for the period July 1, 2004 through June 30, 2005, in an amount not to exceed $210,000. d. FAHR04-57 Recommend to the Board of Directors to renew the District's Excess General Liability Insurance Program for the period July 1, 2004 through June 30, 2005, in an amount to be determined. MOTION: Don Mclean of Driver Alliant reported CAMEL (California Municipal Excess Liability Program) has not released their renewal premium. However, he anticipates it will be available to present to the Board of Directors at the June 23rd meeting. He forecasted the increase would not exceed $425,000, an increase of approximately 35%. It was moved, seconded and duly carried to recommend approval to the Board of Directors to renew the District's Excess General Liability Insurance Program for the period July 1, 2004 through June 30, 2005, in an amount not to exceed $425,000. e. FAHR04-58 Recommend to the Board of Directors to renew the District's Boiler & Machinery Insurance Program for the period July 1, 2004 through June 30, 2005, in an amount not to exceed $27,654. MOTION: It was moved, seconded and duly carried to recommend approval to the Board of Directors. f. FAHR04-59 Recommend to the Board of Directors to renew the District's All-Risk Property and Flood Insurance Program for the period July 1, 2004 through June 30, 2005, in an amount not to exceed $729,388. MOTION: It was moved, seconded and duly carried to recommend approval to the Board of Directors. Book page 9 Minutes of the Finance, Administration and Human Resources Committee Meeting Page 5 June 9, 2004 g. FAHR04-60 Recommend to the Board of Directors to direct staff to proceed to MOTION: evaluate non-residential parcels to determine if they have been undercharged for annual sewer service user fees and, if so, to collect the proper charges on the property tax bill in the future. Bob Lockhart of Revenue Enhancement Group addressed the Directors and thanked Director Duvall for visiting his organization. He stated he did not agree with the facts as stated in Director Duvall's May 24th report regarding the Register and Kimberly-Clark. Mr. Lockhart had no opinion regarding how many years to go back for over/under charges. His only concern was the possibility of creating two distinct classes if the Board approved to not go back for four years. Director Duvall discussed his findings with the Committee after his meetings with Mr. Lockhart and District staff, and the three options available to resolve the issue. He advised he had received a new proposal from Revenue Enhancement Group for $1.8 million to review 20,000 parcels at a cost of $90 per parcel. He noted that the opportunity had been missed to include the updated information on the property tax roll for this year. Directors then discussed the pros and cons of preparing an RFP, sole- sourcing the project, or to direct staff to do the work for a cost of approximately $750,000. Blake Anderson, General Manager, reported staff was ready to move forward with the project, and if they discovered they were not able to complete the task in a timely and efficient manner, they would advise the FAHR Committee. He felt it was important that District staff perform the person-to-person contact that would be required in this project. A motion was moved and seconded to direct staff to improve the database in-house over an extended time period using temporary employees and to determine at a later time the number of years to go back for under/over charges. A substitute motion was moved and seconded to direct staff to conduct a formal RFP process, compare the results to the costs to complete the process in-house and return to the FAHR Committee with a recommendation. The substitute motion failed by a vote of six nays and two ayes. It was moved, seconded and duly carried to recommend approval to the Board of Directors direct staff to improve the database in-house over an extended time period using temporary employees and to determine at a later time the number of years to go back for under/over charges. Book page 10 Minutes of the Finance, Administration and Human Resources Committee Meeting Page6 June 9, 2004 b. FAHR04-55 Recommend to the Board of Directors to approve proposed Operating, MOTION: Capital, Debt/COP Service and Self-Insurance Budgets for 2004/05, as follows: Net Joint Works Operating/Working Capital Worker's Compensation Self Insurance General Liability and Property Self-Insurance Collection System Operating Net Capital Improvement Program Debt/COP Service $83,614,140 735,000 1,141,000 22,605,790 231,223,600 41,917,000 Director of Finance/Treasurer Gary Streed and Mike White, Controller, reviewed the basic elements of the proposed FY 04/05 Budget. Directors commended Mr. Streed and his staff for a well-prepared and easy to use document. It was moved, seconded and duly carried to recommend approval to the Board of Directors. (12) INFORMATION PRESENTATIONS There were none. (13) CLOSED SESSION There was no closed session. (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 July 14, 2004 at 5 p.m. (17) ADJOURNMENT The Chair declared the meeting adjourned at 6:49 p.m. Book page 11 Minutes of the Finance, Administration and Human Resources Committee Meeting Page? June 9, 2004 Submitted by: Penny M. K FAHR Committee Secre ry H:\dept\agenda\FAHR\FAHR2004\0604\060904 FAHRdraft Minutes.doc Book page 12 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller Meeting Date 09/08/04 Item Number FAHR04-72 SUBJECT: CERTIFICATES OF PARTICIPATION (COP) MONTHLY REPORT- AUGUST 2004 GENERAL MANAGER'S RECOMMENDATION To Bd. of Dir. Item Number Receive and file Certificates of Participation (COP) Monthly Report for the month of August 2004. 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. In August 2003, the District issued $280 million of fixed rate COPs, Series 2003, that have varying coupon rates that are matched against the varying maturity dates. The true interest cost for the entire issue is 5.15 percent. 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. Book page 13 PRIOR COMMITTEE/BOARD ACTIONS NIA PROJECT/CONTRACT COST SUMMARY NIA BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [8] Not applicable (information item) ADDITIONAL INFORMATION No reports for June or July 2004, were issued because there were no FAHR meetings held in June or July 2004. The attached graphs that provide information through August 2004, also contain the information for June and July 2004. 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 R~te 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 tl:le mcmthly variable interest rate performance of the District's Daily Rate COPs as compared to the composite index. Estimated annual interest payments calculated for a sta·ndard $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. ATTACHMENTS H:ldeptlagenda\FAHRIFAHR2004\0904\04-72.COP.doc Revised: 06/04103 Page 2 Book page 14 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 H:ldept\agenda\FAHRIFAHR2004\0904\04-72.COP.doc Revised: 06/04/03 Book page 15 Page 3 t:C 0 0 r. "O "' ~ 0: Prepared by Finance, 8/31/2004, 3:00 PM OCSD COP RA TE HISTORY REPORT AUGUST 2004 I l . -· -· .... , -,, ., ... : ....... , . .;.....· ., ... · .... , .. . . ., , ., . •·· •.• '--': ..... ; • . ., . ·-.. , . ·~· 5 -t---------------------------------------------- 4 - I ~ i 3 I 2 0 ., ., I ., ., ! ~ i n ~ ~ ~ ~ ~ ~ ! ~ ~ ; • ~ ~ ~ ~ ~ ~ DATE cp cp cp i Cjl Cjl Cl. Cl. ~ > ¥ I: I: .a .a ! t I: I: :i :i Ill Ill " " 0 0 • • .; .; I :I ~ Cl. Cl. :I :I :I :I q z z 0 'jl i' -,: -,: :I! 'jl 'jl 'jl 'jl cf: -,: ., ... .. 1G gs ..:, Ii Cl ;s ... .. .... Ill ., .:. -.... IS m • :3 ... .. .... Ill .. .. .. .. N .. -., .. .. N .. -+-Series 2003 Fixed --e-SocGen Swap-Series '93 Daily -+-Series '92 Variable Weekly ....a.:.... AIG Swap-Series '92 Weekly ......,_ Series '93 and ·oo Variable Dail G:\excel.dta\fln\2220\geggi\Flnance\RA TE HIST .97 0:, 0 0 "'" -0 .., (fQ n; :j Prepared by Finance, 8/31/2004, 2:58 PM COMPARATIVE DAILY COP RATE HISTORY REPORT August 2004 4.00 ~-~--------------------~---, 3.00 -f----------------------------------------1 l I ~ 200 ~ I 1.00 0.00 DATE (I') C') C') (I') ~ ~ ..,. ..,. ..,. ..,. ..,. ~ 0 0 0 0 0 0 0 0 0 a: tf >-u c .&i ..: ..: ~ c ci a, 0 a, ca a, ca 0. ca ::::, ::::, ::::, rn 0 z 0 ., LL ::? < ::? ., ., < DOCSD COP Series '93 and 2000 •COMPOSITE INDEX G:lexcel.dta\fin\2220\geggi\Finance\dallycoplntrate.xls -~ ~ w ~ I- i:::, ~ "' CJ<, a -"" 1.5 1.25 - 1 0.75 ., 0.5 • • + •! liar, D4 ~~ 1::r~w ----1 Apr, D4 COP DAILY RATE HISTORY COMPARISON OF HIGHEST & LOWEST RATES il!rll : 11~,~ll ❖:•:•:•\, l1ilf 1i • ::. ••• ••• •:i i· ::i i:H :· :: .... :: •• •• •• •• ••• ••• ••• :: :i •• ••-••• ::1 •• • II~::\ May,D4 Jun,04 11111 !1J!I -.·,····•·· ;1:i:11:1 Jul,04 l~~!va-11:~~~ 11:~~~ 11:~~ I j Iii Highest rate D OCSD _ COP Series '00-PW • OCSD COP Series '93-PW • Lowest rate f ••• ••• ••• •·: H: n: ::: iU ih .... ••• ••• :•· .::: li .. : : • •• ••• tt• ••-• ••• ... ·:· • • ••• ••• ••• • •• ••• ••• ••• ••• ... IPWIOCSD Mi:BYIIIBWQ Aug,04 G:\excel.dla\fin\2220\geggl\Flnance\RA TE HIST _HILO _bargraph Prepared by Finance, 8/31/2004, 3:01 PM tJ:I 0 0 :,:- i 'D Prepared by Finance, 8/31/2004, 2:59 PM Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 AVERAGE DAILY COP RATE HISTORY COMPARISON OF MONTHLY AVERAGES SEP 2003 -AUG 2004 OCSD $218.SM $46M Series2000 Series 93 Ref Composite PaineWebber PaineWebber Index" 0.89 0.89 0.88 0.89 0.89 0.88 1.06 1.06 1.05 1.00 1.00 0.99 0.88 0.88 0.87 0.87 0.87 0.86 0.94 0.94 0.92 1.01 1.01 1.00 1.05 1.05 1.03 1.02 1.02 1.00 0.99 0.99 0.97 1.15 1.15 1.13 0.98% I 0.98% 0.97% ESTIMATED ANNUAL INTEREST PAYMENTS PER $100M PAR AMOUNT $ 979,167 I $ 979,167 I$ 965,000 *FOOTNOTE Composite index consists of the following COP transactions: . IRWD, Series 86-COP, 88, 95, $106.1M, Solomon Smith Barney . IRWD, Series C-Ref93-B, 85-B, $62.1M, Lehman Brothers . IRWD, Series 91, 93, 85, $93.0M, PaineWebber . IRWD, Serles 89, C-Ref 93-A, C-Ref 95, $70.9M, Merrill Lynch . Western Riverside Co. Reg. Waslewater Aufh., Series 96, $25.4M, PaineWebber . Orange Co., Irvine Coast Asst. Dist. 88-1, $94.5M, J.P. Morgan G :\excel .dta\fin\2220\geggi\Finance\COPdaily$rate comparison -------- - FAHR COMMITTEE Meeting Date 09/08/04 AGENDA REPORT Item Number FAHR04-73 Orange County Sanitation District FROM: Lisa Tomko, Director of Human Resources Originator: Lisa Arosteguy, Human Resources Supervisor SUBJECT: EMPLOYMENT STATUS REPORT AS OF AUGUST 18, 2004 GENERAL MANAGER'S RECOMMENDATION Receive and file the Employment Status Report SUMMARY To Bd. of Dir. Item Number As of August 18, 2004, the number of full-time equivalent (FTE) employees at OCSD is 576.25. PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [81 Not applicable (information item) ADDITIONAL INFORMATION The actual number of employees (headcount) was 587 as of August 18, 2004. There were 6 promotions: • Mark Narciso was promoted from Information Technology Analyst I to Information Technology Analyst Ill (Customer & Network Support) • Gail Garrett was promoted from Contracts/Purchasing Assistant to Secretary to the General Manager (General Management Administration) H:\dept\agenda\FAHRIF.AHR2004\0904\04-73 Employment Status Report.doc Revised: 06104/03 Book page 20 Page 1 • John Myer was promoted from Instrumentation Technician II to Information Technology Analyst II (Process Control Integration) • Ron Wade was promoted from Operations Supervisor to Chief Plant Operator (Operations, Plant No. 1) • Jamiann Questa was promoted from Office Assistant to Environmental Specialist (Environmental Assessment) • Purvi Patel was promoted from Information Technology Technician I to Information Technology Analyst I (Customer and Network Support) There were 10 new hires: • 2 Administrative Assistants (Purchasing/Warehouse) • Engineering Data Management Specialist (Planning) • Senior Human Resources Analyst (Human Resources Administration) • 4 Interns (3-Environmental Compliance Services; 1-O&M Processing Engineering) • Safety and Health Representative (Safety and Health) • Public Information Specialist (Communications) There were 3 terminations: • Secretary to the General Manager (General Management Administration) • Executive Assistant (Administrative Services) • Senior Plant Operator (Operations, Plant No. 1) ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. August 18, 2004 Employment Status Report 2. Performance compared to budgeted FTE's H:\deptlagenda\FAHRIFAHR200410904104-73 Employment Status Repon,doc Revised' 06/04/03 Book page 21 Page 2 Ci:l 0 0 "' "O "' ~ 'J N DIV 110 General Management Admln 120 Admlnlslrallve Services 130 Communlcallona Services General Management Totals 210 Finance Admlnlllrallon 220 Aa:ounllng 230 Purchalllng & Warehoualng Finance Talala 510 Human Resoun:ea Admln lnlama lntem Program (510) 520 Employee Developmenl!Tralnlng 530 Safely & Heellh 540 Employee Servkm 540 Planned RecnJHmenla Human RNoun:N Total• 810 Tech.nlca.1 SeMOIIII Admln 820 Envlronmenlal Aaleumenl 830 Envlronmenlal Sciences Lab 840 Soun:e Control 880 Environmental Compliance Svea Tachnlcal S.rvlc:N Talala 710 Englneertng Admln 740 Planning 750 Project Management Office 780 Englneertng & Conslrucllon E1111lneerlng Talala 810 O&M AdmlnllllBllon 420 Reglonel Allsels & Servkm 430 Facllilles Maintenance Svea 820 O&M ProCIIIII Englnee~ng 830 Operations, Plant No. 1 840 Operations, Plant No. 2 850 Mech Malnt & POWllr Produdlon 880 Eledrtcal & lnatrumenlallon Malnl Operatlora & Malntanenm Talala 910 IT Administration 930 IT Customer & Nelwork Support 940 IT Programming & Dalabme Sys 950 IT ProCIIIII Controls Integration lnrormallon TachnolaaY Talala GRAND TOTAL FT& HEADCOUNT m;g 2.00 1.00 7.00 15.00 2.00 20.00 22.00 44.00 7.00 3.00 7.00 8.00 2.00 25.00 2.00 15.00 31.00 .u.oo 11.DO 111.00 3.00 11.00 17.00 u.oo 14.00 4.00 21.75 32.00 18.00 .a.oo 47.00 II.DO 84.011 271.78 2.00 17.00 12.00 13.00 44.DO 112.78 = EIIPLOYIIENT STATUII REPORT AUTHORIZED FTE 0,IIO 0,75 I TOTAL 1.00 0.50 uo II.Ill O.liO I.DO 9.00 1.00 1.00 O.liO 0.78 0./SO 1.75 13.71 = 0.75 0.71 0.71 0.78 1.liO = I.OD 1.011 7.111 1tsl 2.00 20.011 22.10 .U..liO 1.00 ,.oo ,.oo 1.00 .... 2.00 M.00 UIII 11UIII 37.0II ...... 1t.OII 112.0CI 3.00 11.DO 17.71 II.OIi 14.78 4.00 21.U 31.78 11.10 .... 71 ,1.00 ••• M.00 Zll.21 2.DO 17.0II 12.0II 1:S.011 44-00 !i§g 200 5.00 7.00 14.00 2.00 17.00 19.00 31.00 5.00 2.00 700 800 20.00 2.00 14.00 34.00 40.00 11.00 108.00 3.00 14.00 11.00 47.00 1&.00 4.00 25.00 31.00 14.00 31.00 41.00 SS.00 52.00 243,00 2.00 14.00 11.00 12.00 31.00 5118.00 ACTUALFTE UJl Q.Il JJM 1.00 0.50 1.110 0.50 0.50 1.00 8.50 1./iO 2.00 2.00 o.so 0.75 1.21 12.25 = 1.50 1.110 0.7S 0.7S 1.10 3.00 1.00 1.00 2.00 1.00 1.00 1.00 1.00 2.00 1.00 1.00 e.oo = .mr& 2.00 8.00 1,150 fUO 2,00 17.IJO 19.t!O aoo 5.00 1.6D 2.00 7.00 8.00 2',ISO 2.00 14.00 31.00 40.00 11.00 11D.DO 3.00 14.00 12,60 41,00 n.ao 4.00 U ,25 31.75 14,00 3US 4'.00 9 .00 .S,,00 217.71 2.00 f.100 11.00 12.00 40.00 RecruHment.s 200 2.00 200 400 8.00 150 1.00 2.10 1.00 f.00 1.00 2.00 3.00 1.00 3.00 1 00 1 00 2.00 1 00 2.00 1 00 11.00 200 1.00 3.00 Vacanclas 100 1.00 250 300 5.50 200 250 100 200 7.50 1.00 1.00 Z.00 200 5.25 1000 17.26 300 100 150 400 1 00 3.00 100 14.50 200 1()1] 1.00 4.00 ~ -. --2-_ ___;;555.c..;;_ --25---.----,- ·""""""'""' :-: "'"""'"' • • -• ,_ ·~•-•'l I TOTAL 11 TOTAL I B:Eolal Total Vacancies 121.00 571.25 31.50 20.26 H:\540\open\Recruiling_shared\Posilion Control-FAHR REPORT 8/25/2004 til 0 0 :,;- 1.l ~ N t.,; 700 _.,_ AUTHORIZED FTE -a-ACTUAL FTE - - - - - - - - - • • • • SEP OCT 596 596 544.25 545.25 STAFFING REPORT • • • • • • • • / •---• • • •--• •--• • • NOV DEC JAN FEB MAR APR MAY JUN JUL AUG 596 596 596 596 596 596 596 598 598 628 548.25 552.25 558.25 558.75 559.75 564.75 567.75 571.75 571.75 578.25 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Lisa L. Tomko, Director of Human Resources Originator: Jim Matte, Safety & Health Supervisor Meeting Date To Bel. of Dir. 09/08/04 Item Number Item Number FAHR04-74 SUBJECT: OSHA INCIDENCE RATES AND WORKERS' COMPENSATION CLAIMS AND COSTS REPORT GENERAL MANAGER'S RECOMMENDATION Receive and file the OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. SUMMARY Safety and Health Division staff track OSHA Incidence Rates for DART* Cases (DART Incidence Rate) and Total Accidents (Total Injury Frequency Rate). There were 8 DART Cases District-wide for the period of January-July 2004. The industry average is 4.5 for the DART Case Incidence Rate while the District Incident Rate was 2.45 for the period of January-July 2004. There were 10 OSHA Recordable Accidents District-wide for the period of January-July 2004. The industry average is 7.3 for the Total Injury Frequency Rate while the District Incident Rate was 3.06 for the period of January-July 2004. The Division also tracks the District's Workers' Compensation Claims and Costs. The District's claim count for Fiscal Year 2003-2004 was 15. The costs associated with these claims for year-to-date is $78,856, which includes medical bills, temporary disability payments, legal costs and a claim reserve account. * DART -Days Away, Restricted or Transfer; replaces Lost Work Day. PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A Revised: 06/04/03 Book page 24 Page 1 BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [XI Not applicable (information item) ADDITIONAL INFORMATION The District had 8 DART cases and 2 other injuries that required only medical treatment for the period of January -July 2004. The reporting period is for 45 days prior to committee meeting. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. OSHA Incidence Rates Reports for DART Cases and Total Injuries 2. Workers' Compensation Claims and Costs Revised: 06/04/03 Book page25 Page2 Safety and Health Division DART Cases District-Wide There were 8 DART Cases in January-July 2004 (DART -Days Away, Restricted or Transfer) 2000 DART Cases 2001 2002 Calendar Year OSHA Incidence Rates District-Wide 2003 2004 The industry average for DART Cases is 4.5 and the District rate was 2.45 for January-July 2004. The OSHA DART Case Incidence Rate is calculated by multiplying the number of injuries by 200,000 and dividing the sum by total hours worked. The rate is also based on the data for the calendar year so the rate will change as the number of hours worked increases. 5 .l!! tl 4 Q) 3 u 5i 2 OSHA Incidence Rates DART Cases =§ 1 -t----lk.~ 1---1 ,, £a ~~~~~~~~~~~~~~~~~~ 2000 2001 2002 Calendar Year 2003 2004 Book page 26 Total Injuries District-Wide There were 10 OSHA Recordable Accidents in January-July 2004 Total OSHA Recordable Accidents 2000 2001 2002 Calendar Year 2003 2004 OSHA Incidence Rates District-Wide The Total Injury Frequency Rate is a combination of the DART Cases and the cases that require Other Medical Treatment. The industry average for Total Injury Frequency rate is 7.3 and the District rate was 3.06 for January-July 2004. First Aid cases are not included in the calculation of this rate. 10.00 .l!! 8.00 a, c::: Q) 6.00 0 C: 4.00 Q) "'O ·u 2.00 .5 0.00 OSHA Incidence Rate Total Injuries 2000 2001 2002 Calendar Year 2003 2004 Book page 27 Workers' Compensation Claims and Costs The Workers' Compensation Claims and Costs are reported by fiscal year. The DART and Total Injury graphs shown above are calendar year rates as required for OSHA recordkeeping. All claims and medical invoices are reviewed by a third party to ensure that proper medical treatment is provided for injured employees and the costs for the treatment are within established guidelines. The medical bills reviewed July 2003 -June 2004 totaled $282,491.16. Medical treatment costs are charged to the fiscal year in which the injury occurred. All open claims have the potential to incur additional costs. After the medical review process, the amount was reduced to $152,423.89, which resulted in savings of $130,067.27 for this reporting period. Workers Compensation Claims and Costs Fiscal Period Claim Count Open Claims Total Incurred 7/1/85 -6/30/86 38 0 $270,794 7/1/86 -6/30/87 53 0 $99,933 7 /1 /87 -6/30/88 51 0 $173,583 7 /1 /88 -6/30/89 41 0 $153,481 7 /1 /89 -6/30/90 61 0 $292,489 7/1/90 -6/30/91 76 0 $121,978 7/1/91 -6/30/92 58 2 $224,712 7 /1 /92 -6/30/93 58 0 $93,198 7 /1 /93 -6/30/94 47 0 $217,922 7 /1 /94 -6/30/95 46 0 $276,359 7/1/95 -6/30/96 46 1 $191,323 7/1/96 -6/30/97 36 1 $377,924 7/1/97 -6/30/98 45 1 $1,026,722 7/1/98 -6/30/99 38 2 $274,034 7/1/99 -6/30/00 43 2 $347,768 7/1/00-6/30/01 32 3 $433,748 7/1/01 -6/30/02 30 7 $371,367 7 /1 /02 -6/30/03 18 4 $118,034 7 /1 /03 -6/30/04 15 5 YTD $78,856 "Total Incurred" includes medical bills, temporary disability payments to employees, legal costs, and a claim reserve account. Book page 28 FAHR COMMITTEE Meeting Date To Bd. of Dir. 09/08/04 09/22/04 AGENDA REPORT Item Number Item Number FAHR04-75 Orange County Sanitation District FROM: Marc Dubois, Contracts/ Purchasing Manager SUBJECT: GENERAL MANAGER APPROVED PURCHASES GENERAL MANAGER'S RECOMMENDATION Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. SUMMARY In May 1998, the FAHR Committee and the Board approved changes to the staff purchasing authority. One of the changes was to increase the dollar threshold before Board authority was required for purchases of goods or services, excluding public works purchases, to $100,000. When approving this change, the Committee asked for periodic reports showing purchases approved by the General Manager for amounts between $50,000 and $100,000. Subsequent to receiving the initial report, the Committee requested that future reports be placed on the Consent Calendar. Vendor Name Amount TMV Systems Engineering $75,000 Xerox Corporation $99,121 Xerox Corporation $53,504 SoftChoice Corporation $75,000 American Airlines $99,999 Undersea Graphics, Inc. $95,000 National Plant Service $60,000 DGA Consultants $95,000 David's Tree Service $70,000 Lifecom-Safety, Inc. $60,534 Boyle Engineering Corporation $58,532 Delta Contracting Corporation $76,230 H:ldepllagenda\FAHRIFAHR2004\0904104-75,GM approved purchases.doc Revised: 06/04/03 Description/Discussion Software services for Division 950. Five-year lease for print shop copier. Annual blanket order for managed services. Annual blanket order for software as needed. Annual blanket for the air travel card. Underwater inspection services. Annual blanket for vacuum services. Annual blanket for CCTV data evaluation support. Annual blanket for tree maintenance at both plants. Multi-gas detectors and miscellaneous equipment. Consultant services to update sewer master plans. Replacement of 13 door sets at Plant 2. Page 1 Book page 29 Section 4.03.B of Resolution 04-08, the District's Delegation of Authority Resolution, authorizes the Contracts/Purchasing Manager to purchase items that have been previously authorized by the Board as identified in the annual District budget. During the budget adoption process, the lists of these items were highlighted for the Directors. For these reasons, purchases that fell into these categories are not included in this report. PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. IXl Not applicable (information item) ADDITIONAL INFORMATION N/A ALTERNATIVES N/A CEQA FINDINGS NIA ATTACHMENTS None. MD H:ldeptlagenda\FAHRIFAHR200410904\04-75 GM approved purchases doc Revised: 06/04/03 Book page 30 Page 2 FAHR COMMITTEE Meeting Date 09/08/04 AGENDA REPORT Item Number FAHR04-76 Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller SUBJECT: SWAP REPORT FOR THE QUARTER ENDED JUNE 30, 2004 GENERAL MANAGER'S RECOMMENDATION Receive and file Swap Report for the quarter ended June 30, 2004. SUMMARY To Bet of Dir. Item Number In August 2003, the Committee approved an Interest Rate Exchange Agreement Policy that provides guidelines for the use of hedging products including swaps, caps, floors, collars, options, and other similar financial instruments (collectively, "hedging products") in connection with the financial exposure of the District, including interest rate exposure. As required by this policy, following are the quarterly monitoring and reporting requirements and status at June 30, 2004: Requirement Highlight all material changes to hedging product agreements including counterparty downgrades and/or terminations. Results: The District currently utilizes two hedging product agreements, the AIG Swap agreement and the Soc Gen Swap Agreement. The AIG Swap agreement was originally entered into in October 1, 1992 in order to convert the Refunding Certificates of Participation, 1992 Series (the "1992 Certificates") to a fixed rate obligation. There have been no material changes to the agreement. American International Group, Inc. 's current ratings are AAA and Aaa from Standard and Poor's and Moody's, respectively. The Soc Gen Swap Agreement was originally entered into in September 1, 1993 in order to convert the Refunding Certificates of Participation, 1993 Series (the "1993 Certificates) to a fixed rate obligation. There have been no material changes to the agreement. Soc Gen's current ratings are AA-and Aa3 from Standard and Poor's and Moody's, respectively. Requirement Summarize any new hedging products entered into by the District since the last report. Results: No new hedging products have been entered into by the District since the last report covering the period ended September 30, 2003. As stated above, the District utilizes only two hedging product agreements, the AIG Swap agreement entered into in 1992, and the Soc Gen Swap Agreement, entered into in 1993. Book page 31 Requirement Summarize any planned hed~ing product transactions and the impact of such transactions on the District; a description of each outstanding Hedging Product agreement, including a summary of its terms and conditions, the notional amount, volume, rates, maturity, the estimated market value of each agr:eement, the method of procurement (competitive or negotiated}, and the full name, description and credit ratings of the agreement's counterparty and if necessary, its applicable guarantor. Results: The District currently is not planning any additional hedging product transactions at this time. Requirement List any amounts which were required to be paid and received, and any amounts which actually were paid and received under each outstanding hedging product over the last quarter; Results: Following are the amounts that were actually paid and received under the District's two swap agreements. All amounts required to be paid and received were actually paid and received. April Paid by the District tg the Swap Provider Paid by the Swap Provider on behalf of the District May Paid by the District to the Swap Provider Paid by the Swap Provider on behalf of the District June Paid by the District to the Swap Provider Paid by the Swap Provider on behalf of the District Requirement 1992 Certificates AIG Swap 1993 Certificates Soc Gen Swap $161,500.00 $ (37,634.56) $161,500.00 $ (35,149.59) $161,500.00 $ (35,405.04) List any. credit enhancement, liquidity facility or reserv~s asso.ciated therewith including an accountiRg of all costs and expenses incurred, whether or not in conjunction with the procurement of credit enhancement or liquidity facilities under each outstanding Hedging Product. Results: Credit Enhancemen~s. liquidity facility or reserves associated with the 1992 Certificates AIG Swap: -Lloyds Bank Letter of Credit cost for the quarter ended June 30, 2004: $70,909.65 H:ldepllagenda\FAHRIFAHR200410904\04-76.SWAP doc Revised: 06/04/03 Book page 32 Page 2 Credit Enhancements, liquidity facility or reserves associated with the 1993 Certificates Soc Gen Swap: -Soc Gen Irrevocable Letter of Credit Fee for the quarter ended June 30, 2004: No costs or expenses were incurred during the quarter ended June 30, 2004. Credit Enhancements, liquidity facility or reserves associated with the 2000 Certificates: -Dexia Public Finance Bank Standby Certificate Purchase Agreement Commitment Fee for the quarter ended June 30, 2004: No costs or expenses were incurred during the quarter ended June 30, 2004. Requirement An assessment of the counterparty risk, termination risk, and other risks associated therewith, which shall include the value of the collateral posted by counterparties and the District, the aggregate marked-to-market value for each counterparty and relative exposure compared to other counterparties, and a calculation of the District's Value at Risk for each counterparty. Results: The counter party risk and termination risk has been calculated by Public Resources Advisory Group (PRAG). PRAG used the value at risk methodology in determining the county party risk at maximum exposure over the term of the Swap Agreements. Counterparty exposure limits are important because they create diversification, so if any one counterparty goes bankrupt, the District's total loss would be limited to only one counterparty. The termination risk is what the District would have to pay the counterparty upon a termination of the Swap Agreement. Counterparty Risk Termination Risk Requirement 1992 Certificates AIG Swap 1993 Certificates Soc Gen Swap $3,101,035 $3,940,748 $11,957,555 $2,282,836 The report shall also include a copy of this Policy in the quarter after it is adopted or subsequently modified. Results: No modifications have been made to the Policy since its adoption. PRIOR COMMITTEE/BOARD ACTIONS NIA H:ldepllagenda\FAHRIFAHR2004\0904\04-76.SWAP.doc Revised: 06/04/03 Book page 33 Page 3 PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. 181 Not applicable (information item) ADDITIONAL INFORMATION N/A ATTACHMENTS N/A H:\depl\agenda\FAHRIFAHR2004\0904104-76.SWAP.doc Revised: 06/04/03 Book page 34 Page4 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller Meeting Date To Bd. of Dir. 09/08/04 09/22/04 Item Number Item Number FAHR04-77 SUBJECT: QUARTERLY INVESTMENT MANAGEMENT PROGRAM REPORT FOR THE PERIOD APRIL 1, 2004 THROUGH JUNE 30, 2004 GENERAL MANAGER'S RECOMMENDATION Receive and file the Quarterly Investment Management Program Report for the period April 1, 2004 through June 30, 2004. 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 D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. ~ Not applicable (information item) H:ldept\agenda\FAHRIFAHR2004\0904\04-77 QuarterlylnvestmenlMgmtRpt doc Revised: B/20/98 Book page 35 Page 1 ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Re'1'.iew, 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 March 31, 2004, and June 30, 2004. 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 p.erformance summary of the Districfs portfolios as compared to their benchmarks for the period April 1 through June 30, 2004. Portfolio Performance Summary Quarter Ended June 30, 2004 Liquid Op_erating Monie}s (%) Lorig-Term Operatfng Monies (%) Total Rate l:otal Rate of of Return Benchmark(1l Return Benchmark(1l 3 Months 0.27 024 -1 .10 -1 .71 6 Months 0.52 0.47 0.41 -0.08. 9 Months 0.78 0.71 0.65 0.06 12 Months 1.07 0.96 0.98 0,.40 Since in~ption 30 Sept. 95 4 .45 3.98 6.19 6.10 Market Value $1 12.4M $388.4M Average_ Quality "AAA" "AAA' Current Yield ,(%) 1.2 4.0 Estimated Y1ell:I to Maturity (%) 1.4. 3.6 Quarterly Oeposits.,(W1tt,drawals) $20.5M $0.0M Estimated ,<\nnual Income $1 .3M $15.2M (1) Benchmarks: • Liquid Operating Portfolio: 3-Month Treasury Bill Index • Long-Term Operating Portfolio: Merrill Lynch Corp/Govt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Liquid Long-Term Quarter Operating Operating Ending Monies ($M) Monies ($M) 30 Sept. 03 38.0 385.9 31 Dec. 03 91 .4 386.8 31 Mar. 04 91.6 392.7 30 June 04 112.4 388.4 H:\dept\agenda\FAHRIFAHR200410904104-77 OuartertylnvestmenlMgmlRpt doc Revised: 8120/98 Book page 36 Page 2 District's Investment Account Balances as of June 30, 2004 Investment Accounts State of Calif. LAIF Union Bank Checking Account PIMCO -Short-term Portfolio PIMCO -Long-term Portfolio Petty Cash TOTAL Debt Service Reserves w/Trustees ALTERNATIVES NIA CEQA FINDINGS N/A ATTACHMENTS 1. Historical Yield Curve Graph 2. PIMCO Quarterly Report Book Balances June 30, 2004 $ 29,908,764 1,308,811 112,169,899 384,762,625 5000 S528 j 55 Q99 S 87,959.39Z 3. Quarter End Portfolio Market Value Bar Chart Estimated Yield(%) 1.47 1.02 1.44 3.42 NIA 2.88 2.37 4. Summary of Performance Data and Portfolio Statistics -Liquid Operating Monies 5. Summary of Performance Data and Portfolio Statistics -L-T Operating Monies 6. Asset Summary by Asset Type -Liquid Operating Portfolio 7. Asset Summary by Asset Type -Long Term Portfolio 8. Investment Listing of Liquid Operating and L-T Portfolios (Yield Analysis Report). 9. Investment Transactions and Balances in LAIF 10. Callan Report (separate bound document) 11. PIMCO Report (separate bound document) H:ldeptlagenda\FAHRIFAHR2004\0904104-77 QuarterlylnvestmentMgmtRpl doc Revised: 8120/98 Book page 37 Page 3 5.50 5.25 5.00 4.75 4.50 4.25 4.00 3.75 -3.50 c:, ~ 3.25 g C """ m 3.oo "O "' ~ > 2.75 w 00 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0 E M 0 E co .. >, .... I HISTORICAL YIELD CURVE I .. >, N .. >, M .. >, "if' .. >, .,, .. >, .... -+-31-Dec-03 _.....31-Mar-04 ---30-Jun-04 .. >, 0 """ .. >, 0 N .. >, 0 M t:ll 8 ;,:- 'O "' Cl\j t,.) '° OCSD Investment Management Program Quarter End Portfolio Values (Marked-to-Market) $450,000,000 -,,---------------------------------------------------, $400,000,000 -i---------------------------------------------------------1 $350,000,000 ·t-------------------------1' $300,000,000 +-------r $250,000,000 ----- $200,000,000 +-----f' $150,000,000 ------ $100,000,000 +----- 31 Mar 03 30 Jun 03 30 Sep 03 30 Dec 03 31 Mar 04 30 Jun 04 •Liquid Operating Monies !I Long-Term Operating Monies LIQUID OPER-PIMCO -OCSF0751 l 102 Description CASH & CASH EQUIVALENTS U.S. DOLLAR INTEREST CERTIFICATES OF DEPOSIT -DOMESTIC COMMERCIAL PAPER -DISCOUNT FED HM LOAN BNK -LESS THAN 1 YR FEDERAL HOME LOAN MORTGAGE -LESS THAN 1 FNMA ISSUES -LESS THAN 1 YR MUTUAL FUNDS REPURCHASE AGREEMENTS TREASURY BILLS -LESS THAN 1 YR U.S. DOLLAR g CASH & CASH EQUIVALENTS 7'" -0 :~ !CED INCOME SECURITIES _,,. 0 U.S. DOLLAR BANKING & FINANCE TOT AL ASSETS -BASE: Asset Summary by Asset Type with Sectors 6/30/2004 Cost Shares Par Base 219,209.30 2,100,000.000 2,100,000.00 3,000,000.000 2,989,360.00 15,300,000.000 15,272,553.53 22,500,000.000 22,422,007.36 20,000,000.000 19,941,122.55 120,562.820 120,562.82 17,700,000.000 17,700,000.00 30,300,000.000 30,167,391.64 111,020,562.820 110,932,207.20 111,020,562.820 110,932,207.20 1,452,000.000 1,495,000.18 Report ID: GL8251 Base Currency: USD Alternate Base Currency: Exchange Rate: Status: FINAL Market Value Base % of Total Net Unrealized I Gain/Loss Base , 219,209.30 0.20% 0.00 2,100,000.00 1.87% 0.00 2,989,360.00 2.66% 0.00 15,272,553.53 13.59% 0.00 22,422,007.36 19.95% 0.00 19,941,122.55 17.74% 0.00 120,562.82 0.11% 0.00 17,700,000.00 15.75% 0.00 30,167,391.64 26.84% 0.00 110,932,207.20 98.70% 0.00 110,932,207.20 98.70% 0.00 1,456,900.68 1.30% -38,099.50 112,472,562.820 112,427,207.38 112,389,107.88 100.00% -38,099.50 1 Workbench LONG TERM OPER-PIMCO -OCSF07522202 Description CASH & CASH EQUIVALENTS U.S. DOLLAR PENDING TRADES INTEREST MUTUAL FUNDS U.S. DOLLAR CASH & CASH EQUIVALENTS FIXED INCOME SECURITIES U.S. DOLLAR c:, 0 0 ;,s- tl "' cw ~ ABS -AIRPLANE RECEIVABLES ABS -HOME EQUITY BANKING & FINANCE COLLATERALIZED MORTGAGE OBLIGATION FHLMC MULTICLASS FHLMC POOLS FNMA POOLS FNMAREMIC GNMA MULTI FAMILY POOLS GNMA SINGLE FAMILY POOLS INFLATION INDEXED SECURITIES INSURANCE PVT PLACEMENTS -MORE THN lYR U.S. AGENCIES U.S. GOVERNMENTS UTILITY -ELECTRIC U.S. DOLLAR FIXED INCOME SECURITIES TOT AL ASSETS -BASE: Asset Summary by Asset Type with Sectors 6/30/2004 Cost Shares Par Base -52,327,483.66 3,683,982.49 10,386,387.100 10,386,387.10 10,386,387.100 -38,257,114.07 10,386,387.100 -38,257,114.07 1,600,000.000 1,600,000.00 886,044.050 886,044.05 14,200,000.000 14,278,233.00 2,069,684.500 2,069,684.50 945,034.190 946,040.98 70,064.660 68,356.82 60,549,689.220 61,255,557.93 900,000.000 918,000.00 3,040,979.670 3,016,895.06 8,828,764.080 8,854,464.87 35,002,290.000 35,019,209.79 1,600,000.000 1,594,032.00 752,000.000 826,199.84 33,990,306.260 34,957,904.32 250,060,886.080 258,298,043.23 4,750,000.000 4,694,370.00 419,245,742.710 429,283,036.39 419,245,742.710 429,283,036.39 429,632,129.810 391,025,922.32 1 Report ID: GL8251 Base Currency: USD Alternate Base Currency: Exchange Rate: Status: FINAL Market Value Base -52,327 ,483.66 3,683,982.49 10,386,387.10 -38,257,114.07 -38,257,114.07 149,216.00 879,260.50 14,384,607.00 2,199,453.72 945,412.20 72,409.65 60,989,715.55 906,395.94 3,031,810.50 9,049,328.01 38,234,401.22 1,670,000.00 826,199.84 35,307,019.85 253,184,219.25 4,874,272.50 426,703,721.73 426,703,721.73 388,446,607.66 % of Total -13.47% 0.95% 2.67% -9.85% -9.85% 0.04% 0.23% 3.70% 0.57% 0.24% 0.02% 15.70% 0.23% 0.78% 2.33% 9.84% 0.43% 0.21% 9.09% 65.18% 1.25% 109.85% 109.85% 100.00% Net Unrealized Gain/Loss Base 0.00 0.00 0.00 0.00 0.00 -1,450,784.00 -6,783.55 106,374.00 129,769.22 -628.78 4,052.83 -265,842.38 -11,604.06 14,915.44 194,863.14 3,215,191.43 75,968.00 0.00 349,115.53 -5, 113,823.98 179,902.50 -2,579,314.66 -2,579,314.66 -2,579,314.66 Workbench Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund June 30, 2004 Par Value Book VaJue Market Value Balance June 1, 2004 $36,508,764 $36,508,764 $36,508,764 Deposits: 6/17/2004 7,500,000 7,500,000 7,500,000 Total Deposits 7,500,000 7,500,000 7,500,000 Withdrawals: 6/3/2004 (3,500,000) (3,500,000) (3,500,000) 6/7/2004 (3,300,000) (3,300,000) (3,300,000) 6/9/2004 (4,300,000) (4,300,000) (4,300,000) 6/23/2004 (3,000,000} (3,000,000} (3,000,000) Total Withdrawls (14,100,000} (14,100,000} (14,100,000) Balance June 30, 2004 $29,908,764 $29,908,764 $29,908,764 Book page 42 Rate Yield 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 1.469 FAHR COMMITTEE Meeting Date To Bd. of Dir. 9/08/04 9/22/04 AGENDA REPORT Item Number Item Number FAHR04-78 Orange County Sanitation District FROM: Lisa Tomko, Director of Human Resources SUBJECT: CHANGES AND ADDITIONS TO HUMAN RESOURCES POLICIES AND PROCEDURES AS AUTHORIZED BY RESOLUTION 98-33. GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 04-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 or Understanding (MOU) and/or new legislation or to explain procedures more clearly. PRIOR COMMITTEE/BOARD ACTIONS Human Resources Policies and Procedures Manual revisions were presented at the July 2004 FAHR and Board of Directors meetings. 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) ADDITIONAL INFORMATION Policy Number From And Subject B20.00, Non-Discrimination in Current Language Employment B30.00, Harassment Policy Current Language B31.00, Anti-Retaliation and N/A Whistleblower H:ldept\agenda\FAHRIFAHR2004\0904\04-78.HR Policies & Procedure.doc Revised: 06114/04 To Revised Language Revised Language Current Language Book page 43 Reason for Change Update to Section 6 - Exceptions Update to Section 6 - Exceptions New Policy Page 1 ALTERNATIVES NIA CEQA FINDINGS NIA ATTACHMENTS 1. 820.00, Non-Discrimination in Employment 2. 830.00, Harassment Policy 3. 831.00, Anti-Retaliation and Whistleblower 4. Resolution No. OCSD 04-XX H:ldeptlagenda\FAHRIFAHR2004\0904\04-7B.HR Policies & Procedure.doc Revised: 06/14/04 Bookpage44 Page2 RESOLUTION NO. OCSD 04-XX AMENDING RESOLUTION NO. OCSD 98-33 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AMENDING THE HUMAN RESOURCES POLICIES AND PROCEDURES *******--Jrl:-lrl:*'irlt*~****·*** ....... *** The Board of Directors of the 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. B20.00, Non-Discrimination in Employment, 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. B30. 00, Harassment, 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. B31.00, Anti-Retaliation and Whistleblower, set forth in Attachment No. 3, attached hereto and incorporated herein by reference. Section 4: That all other terms and conditions of Resolution No. OCSD 98-33, as previously recommended, shall remain in full force and effect. Section 5: That all future amendments to Resolution No. OCSD 98-33 be made by Resolution. PASSED AND ADOPTED at a regular meeting held September 22, 2004. Chair ATTEST: Board Secretary H:\depllagenda\FAHRIFAHR2004\0904\04-78.HR Policies & Procedure.doc Revised: 06/14/04 Book page 45 Page 3 @ Orange County Policy Number: 820.00 Sanitation District Effective Date: September 22, 2004 . . OGtebeF 22, ~997 Subject: NON-DISCRIMINATION IN Supersedes: October 22, 1997 EMPLOYMENT Approved by: Lisa L. Tomko 1.0 PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for maintaining a non- discriminatory work environment and non-discriminatory employment practices. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all current or potential employees. 3.0 DEFINITIONS 3.1 Harassment for purposes of this policy includes conduct that is so severe and pervasive that it creates a hostile and abusive working environment, and it interferes with an employee's ability to do his or her job. 4.0 POLICY 4.1 It is the District policy to maintain non-discriminatory employment practices in accordance with the procedures of this policy. 4.2 The District is an Equal Opportunity Employer, and does not discriminate against any person in matters of employment, application for employment, participation in programs and benefits, or in the application of rules and regulations with regard to race, ancestry, color, religion, national origin, sex, sexual orientation, age, veteran status, marital status or mental or physical disability or citizenship. 4.3 The District does not tolerate any form of harassment, and is afe committed to providing a work environment that is harassment-free. In keeping with that commitment, the District prohibits harassment based on race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, marital status, sex, age (40 years of age or above), sexual orientation, exercise of rights relating to family care leave, or any other legally protected basis. 5.0 PROCEDURE 5.1 Any employee who believes that he or she has been the victim of discrimination or harassment prohibited by this policy should immediately report the matter to his or her supervisor or manager, or to any other supervisor or manager, including the General Manager. All reported incidents of harassment will be promptly and thoroughly investigated, and appropriate corrective action will be taken. 6.0 EXCEPTIONS 6.1 Any employee who knowingly files a false and malicious report of discrimination, as opposed to a complaint which, even if erroneous, is made in good faith; or anyone who fails to report an actual or perceived form of discrimination as outlined in this policy, maybe the subject of appropriate disciplinary action, up to and including termination. Psook pagi 46 7.0 PROVISIONS AND CONDITIONS 7.1. Post in offices. 8.0 RELATED DOCUMENTS 8.1 U.S. and California State Constitutions 8.2 Title VII of the Civil Rights Act of 1964 8.3 California Fair Employment and Housing Act (FEHA) 8.4 Any other federal and state laws that have expanded Title VII discrimination-type protections 8.5 Policy 830.00, Harassment Policy 8.6 Policy 831.00, Anti-Retaliation and Whistleblower 8. 7 Policy F10.00, Rules of Conduct Orange County Sanitation District Subject: HARASSMENT POLICY 1.0 PURPOSE Policy Number: B30.00 Effective Date: September 22, 2004 February 26, 2003 Supersedes: Approved by: February 26, 2003 April 28, 1999 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 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 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. 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. Page I of 4 Book page 48 3.2 • 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. 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 expliciltly 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. • 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 Page 2 of4 Book page 49 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 6.1 Any employee who knowingly files a false and malicious report of harassment, as opposed to a complaint which, even if erroneous, is made in good faith; or anyone who fails to report an actual or perceived form of harassment as outlined in this policy, maybe the subject of appropriate disciplinary action, up to and including termination. 7 .0 PROVISIONS AND CONDITIONS 7 .1 Post in offices. Page 3 of4 Book page 50 8.0 RELATED DOCUMENTS 8.1 U.S. and California State Constitutions 8.2 Title VI I of the Civil Rights Act of 1964 8.3 California Fair Employment and Housing Act (FEHA) 8.4 Any other federal and state laws that have expanded Title VII harassment-type protections 8.5 Policy B20.00, Nondiscrimination in Employment 8.6 Policy B31 .00, Anti-Retaliation and Whistleblower 8.7 Policy F10.00, Rules of Conduct 8.8 Policy F80.00, Workplace Violence 8.Q Title VII ef the Ci•.iil Rights Act Page4 of4 Book page 51 Orange County Sanitation District Subject: ANTI-RETALIATION AND WHISTLEBLOWER 1.0 PURPOSE Policy Number: 831.00 Effective Date: September 22, 2004 Supersedes: N/A Approved by: Lisa L. Tomko 1.1 The purpose of this policy is to establish uniform guidelines and procedures prohibiting retaliation against individuals who report or participate in the investigation of a report of discrimination, harassment, or individuals who engage in whistleblowing, as defined below. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all employees, potential employees, and all persons who perform services for OCSD, including persons working under contract. 3.0 DEFINITIONS 3.1 Retaliation: refers to actions such as discipline, failure to promote, failure to hire, termination of a contract, and other actions in the workplace which have a substantial and material impact on an employee's terms and conditions of employment. Examples include, but are not limited to, inaccurate poor performance evaluations, arbitrarily changing work assignments, or arbitrarily changing work locations. Retaliation means that a supervisor or manager takes one of these actions towards an individual because that employee, outside contractor or prospective employee engaged in the protected activity prohibited in Section 4.0. 3.2 Whistleblowing: refers to retaliatory actions that are taken in reprisal for an employee reporting ( 1) violations or non-compliance with state or federal statutes; (2) unfair labor practices; (3) billing for services not performed or for goods not delivered; (4) gross mismanagement, significant waste of funds, and abuse of authority or a substantial and (5) specific danger to the public health or safety or unsafe working conditions. 4.0 POLICY 4.1 It is OCSD's policy to prohibit retaliation or reprisals towards employees, prospective employees or outside contractors who engage in the protected activity described below. OCSD policy requires employees to report all perceived incidents of retaliation or whistleblowing, regardless of the offender's identity or position. Any employee who in good faith reports an alleged incident involving the protected activities below shall, under no circumstances, be subjected to reprisal or retaliation of any kind. 4.1.1 OCSD prohibits retaliation against an employee who discloses information to a government or law enforcement agency or internally to OCSD, where the employee has reasonable cause to believe that the information discloses a violation of state or federal statute or non-compliance with a state or federal regulation. 4.1.2 OCSD prohibits discrimination, harassment or retaliation against an employee who discloses or initiates or assists in the filing of a false claim for money, goods, or services to OCSD. Page Book page 52 4.1.3 OCSD prohibits retaliation against an employee who files a written complaint, under penalty of perjury, of gross mismanagement, a significant waste of funds, an abuse of authority or a substantial and specific danger to public health or safety. 4.1.4 OCSD prohibits retaliation against any employee who complains of discrimination or harassment or any other conduct prohibited by the Fair Employment and Housing Act. 4.1.5 OCSD prohibits retaliation against employees who complain about an unfair labor practice. 5.0 PROCEDURE 5.1 Any employee who believes that he or she has been the victim of retaliation prohibited by this policy should report the matter to his or her supervisor or manager, or to any other supervisor or manager, including the General Manager. All reported incidents of retaliation will be promptly and thoroughly investigated, and appropriate corrective action will be taken. 5.2 Reports of retaliation will be investigated promptly. The investigation may include individual interviews with the parties involved and, where, necessary, with individuals who may have observed the alleged conduct or may have other relevant knowledge. 5.3 Confidentiality will be maintained throughout the investigatory process to the extent consistent with an adequate investigation and appropriate corrective action. 5.4 No fixed report period has been established. However, prompt reporting of complaints or concerns have proven to be the most effective method in finding rapid and constructive action and resolution. 6.0 EXCEPTIONS 6.1 An employee who knowingly files a false and malicious report of retaliation --as opposed to a complaint which, even if erroneous, is made in good faith --may be the subject of appropriate disciplinary action, up to and including termination. 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 8.1 Policy B10.00, Conflict of Interest Code and Code of Ethics 8.2 Policy B20.00, Non-Discrimination in Employment 8.3 Policy B30.00, Harassment Policy 8.4 Policy F10.00 Rules of Conduct Page Book page 53 FAHR COMMilTEE Meeting Date To Bd. of Dir. 09/08/04 09/22/04 AGENDA REPORT Item Number Item Number Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller FAHR04-79 SUBJECT: RESPONSES TO INTERNAL AUDIT REPORT ISSUED ON MAY 8, 2004 GENERAL MANAGER'S RECOMMENDATION Receive, approve, and file staff's responses to the Internal Audit Report issued on May 8, 2004 by the District's contracted internal auditors, Moss, Levy & Hartzheim. SUMMARY In February 2004, the Finance, Administration and Human Resources (FAHR) committee appointed Moss, Levy, & Hartzheim to serve as the District's contracted internal auditors for FY 2003-04. At the May 2004 FAHR meeting, the auditors presented their second report to the committee on findings, potential effects and related recommendations from their interim work during April 2004. The attached memorandum recaps the contracted internal auditors' eight (8) findings, effects, and recommendations and staff's responses to these 8 items. PRIOR COMMITTEE/BOARD ACTIONS In order to remain independent of staff, the auditors presented their written report directly to the committee without previously providing staff with a copy. At the May FAHR meeting, the committee directed staff to provide a written response to the auditors report. PROJECT/CONTRACT COST SUMMARY NIA BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. cg) Not applicable (information item) ATTACHMENTS Memorandum to FAHR dated July 14, 2004. H:ldepl\agenda\FAHR\FAHR2004\0904\04-79.lnternal Audit Response.doc Revised: 06/04/03 Book page 54 Page 1 July 14, 2004 TO: FROM: MEMORANDUM Finance, Administration and Human Resources Committee Michael D. White, Controller SUBJECT: Responses to Internal Audit Report Issued on May 8, 2004 In February 2004, the Finance, Administration and Human Resources (FAHR) Committee appointed Moss, Levy, & Hartzheim to serve as the District's contracted internal auditors for FY 2003-04. At the May 8, 2004, FAHR meeting, the auditors presented their second report to the committee on findings, potential effects and related recommendations from their work performed during April 2004. In order to remain independent of staff, the auditors presented their written report directly to the committee without previously providing staff with a copy. At the May FAHR meeting, the committee directed staff to provide a written response to the auditors report. Below is a listing of the auditors findings contained within their May 8, 2004 report along with staff responses. A. Voided Checks Finding-Signature Portion of Voided Checks: During our review of voided checks, we noted that the signature portions of the voided checks are not removed. Effect: There is a possibility that the voided checks could be used if the signature portion is not removed. Recommendation: All voided checks should be properly defaced and the signature portion removed . OCSD • P.O. Box 8127 • Fountain V l'IIPv r.A !1?728-8127 • (714) 962-2411 Book page 55 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 2 of 7 Staff Response: Staff is in agreement with the recommendation. Our policy and practice is to deface all voided checks. After receiving the auditors' report, staff reviewed every voided check in the file and found that most had the signature portion removed but all had been properly defaced so that no bank would honor them if they had been presented. The signature portion has now been removed from all voided checks and staff will make a concerted effort to ensure that all future voided checks are defaced in this manner. B. Cell Phone Invoices Finding -Cell Phone Invoices: During our test of cell phone invoices, we noted that one employee had only marked outgoing calls as personal, was over his base minutes by $89.10, and reimbursed the District only $10. Effect: Employees could be receiving personal calls and not reimbursing the District for them. Recommendation: Better monitoring of incoming calls or a change in the cell phone policy to allow for a certain number of incoming calls per month. Staff Response: Cell phones are provided to employees in order to more effectively accomplish OCSD business, as authorized by HR Policy EBO.DO, Cellular Telephone. The program provides for approved personal use of cell phones and includes provisions on reimbursement to OCSD for personal phone calls. This provision allows employees who utilize a personal cell phone to have just one phone rather than maintaining a second phone for personal use. The finding by the auditors occurred under the previous rate plan the District had with AT&T. Under this plan, each phone had a separate number of "any time" minutes with the requirement that personal phone calls be reimbursed to the District. In February 2004, the District implemented a new program with regard to the procurement and use of cell phones. This new program, established through Cingular, changed the way the District administers business service and personal use plans, and the overall cellular billing structure resulted in significant cost savings to the organization. Book page 56 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 3 of 7 The District switched from individual plans to a "pooled minutes" plan. The pooled minutes are for official business use ONLY. Under the "pooled minute plan," the Information Technology Department monitors the total minutes used and the minutes used by each individual District employee in order to control costs. However, total base minutes are billed by Cingular to the agency as a whole and not allocated to individual users. If an employee elects to use the OCSD issued cell phone for personal use, they must elect and authorize (through a payroll deduction) the purchase of optional personal coverage, including one or more of the following options: • $10.00 per month for 215 minutes (includes free long distance) from home area. • $10.00 per month for Unlimited Nights and Weekends (includes free long distance) from home area. • $5.00 per month for 5,000 cell-to-cell minutes (only for calling Cingular cell phones) from home area. Note that these are the actual costs that OCSD pays for these services and an employee who elected all of these services would pay $25 per month. The Information Technology Department monitors the monthly cellular bill to ensure that there are no apparent abuses by any individual assigned a cell phone and that employees, through payroll deductions, are paying for the personal use of the cell phone. Managers and Supervisors are expected to minimize the personal use of cell phones during working hours. C. Retentions Finding -Reduction of Retentions: During our review of internal controls, we noted that the District can reduce construction retentions to 5% after 50% of the project is complete. Effect: This could expose the District to a liability if the construction is not completed on time or is not up to the specifications of the District. This also reduces the amount of "penalty" the Contractor would face for nonperformance. Recommendation: The District should always retain 10% of construction contracts until the Notice of Completion has been filed and accepted by the Board of Directors. Book page 57 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 4 of 7 Staff Response: As the auditors noted, the reduction of retained amounts is permissible, but there is no legal requirement to reduce the construction retentions below 10%. However, there have been intangible benefits obtained from certain contractors when retentions have been reduced and no issues or problems have ever occurred from a contractor as a result of lowering the retention from 10% to 5%. In most cases, the retention was not reduced until well after 50% completion. Experience shows that when the contractor knows that there is a practice of lowering the retention as the project draws near to completion, they are more inclined to perform at the highest level in order for them to be able to receive these funds. It makes good business sense to work with contractors and to be allowed the flexibility on a case-by- case basis to lower retention requirements. Staff also believes that more advantageous construction bids are received when the contractor is aware of the District's practice of lowering retentions upon showing good faith in performance. D. Construction Management Finding #D1 -Financial Statements of IPMC: During our review of the construction management contract with IPMC, we noted that the District did not receive a financial statement of IPMC. Effect: Risk of non-performance of the contract and inability of the District to collect any damages or cost overruns if IPMC were to cease operating. Recommendation: The District should always request and analyze financial statements of contractors that the District is entering into long-term contracts with. Staff Response: Integrated Program Management Consultants (IPMC), a joint venture of Parsons Infrastructure & Technology Group, Inc. and CH2M Hill, Inc., was required to provide us with the number of employees (22,000), annual revenue ($4 billion), and past and current clients for references. Additional research by staff determined that the parent companies were ranked by Engineering News Record in 2004 as the No. 6 and No. 7 design firms in the world, respectively, based on revenue generated. They were also required to provide insurance coverage of $1 million for Errors & Omissions, $2 million for general liability, and $1 million for workers' compensation. Book page 58 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 5 of 7 Although the District does not require bidders to provide financial statements for the purpose of ascertaining financial condition, the District does require performance bonds on construction bids and errors and omission insurance on professional service contracts. Finding #D2 -Monthly Invoices of IPMC: During our review of the construction management contract with IPMC, we noted that IPMC submits a monthly invoice to the District with a category of "Other Direct Costs," which includes travel, transportation, lodging, and meals. Effect: IPMC could pass through costs not related to the District, without proper monitoring by the District. Recommendation: The District should carefully review the "Other Direct Costs" submitted by IPMC for reasonableness according to the contract between the District and IPMC. Staff Response: The District requires supporting documentation from all vendors for each item that is over $25 as listed on the invoice including travel, transportation, lodging, and meals. All supporting documentation for each item on the IPMC invoices greater than $25 had previously been obtained and carefully reviewed by staff. This is our standard practice. E. Fixed Assets Finding #E1 -Fixed Assets Not Removed From Fixed Asset Listing: During our test of fixed assets, we noted that eight assets sold in 2001 were not removed from the fixed asset system until 2003, and two assets sold in February 2003 were not removed until October 2003. Effect: Overstatement of fixed assets that were not fully depreciated, could occur. Overpayment of insurance premiums could also occur if the District uses the fixed asset list to set its insurance coverage limits. Book page 59 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 6 of 7 Recommendation: The Fixed Asset Accountant should remove fixed assets sold at auction immediately upon receipt of sale agreement from the auction house. Staff Response: Staff concurs with the auditors' finding and , prior to their discovery, staff had already identified this issue and had worked diligently to bring our business process up to date. The delay was due to the fixed asset computer system conversion coupled with the turnover of the fixed asset accountant position . At the time of the ~uditors' finqing, all property disposals received had been reviewed and processed. There currently is no back log in the removal of fixed assets that have been sold or scrapped. Finding #E2-Missing Sales Remittances from Auction Houses: During our test of fixed assets, we noted that eight fixed assets were sold, but there were no sales remittance or sales advices from the auction house on file. Effect: Without proper documentation, improper sales of fixed assets or misappropriations of funds could occur. Recommendation: We recommend that the District require auction houses to remit a sales remittance or sales advice upon sale of fixed assets. Staffs Response: As noted in the response to "Finding #E1 ," some fixed asset deletions we re not completed in a timely manner primarily due to the fixed asset computer conversion and staff turnover within the fixed asset section. When the concerted effort was made over this past year to update the fixed assets listing for fixed asset deletions, every effort was made to find the appropriate documents and match them with the disposal sheets. Most of those documents were found and matched. A few were not as noted by the internal auditors. All disposals and required documentation are now kept current. Book pnge 60 Response to Contracted Internal Auditors Report of May 8, 2004 July 14, 2004 Page 7 of 7 F. Debit/Credit Memos Finding -Pre-numbered Debt/Credit Memos: During our review of internal control, we noted that debit memos and credit memos are not pre-numbered. Effect: Since debit memos and credit memos are printed off the computer with no pre-printed number, there is no way to track the documents. Therefore, unauthorized use of the documents could occur. Recommendation: Press printed pre-numbered debit memos and credit memos should be used. Staff Response Although debit and credit memos are not printed onto pre-preprinted, numbered stock, all debit and credit memos are accounted for. The numbers for the debit and credit memos are assigned in numerical order by the computer system, and all debit and credit memos are filed by staff in numerical sequence. Whenever a debit or credit memo is prepared, the approver reviews the printed number and verifies that it is the next number in the sequence. Staff believes that using pre-printed, numbered stock would be an additional cost to the District without providing any additional internal control. Book page 61 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Gary G. Streed, Director of Finance Originator: Michael D. White, Controller Meeting Date To Bd. of Dir. 9/08/04 9/22/04 Item Number Item Number FAHR04-80 SUBJECT: RENEWAL OF CONTRACTED INTERNAL AUDITING SERVICES WITH MOSS, LEVY & HARTZHEIM FOR FISCAL YEAR 2004-05 GENERAL MANAGER'S RECOMMENDATION Approve a change order to the purchase order contract to appoint Moss, Levy & Hartzheim as the District's contracted internal auditors for fiscal year 2004-05, for 300 hours of internal auditing in an annual amount not to exceed $19,260. SUMMARY At the direction of the Committee, staff solicited a request for proposal (RFP) to provide 300 hours of Internal Auditing Services for fiscal year 2003-04, with the option of auditing the following two years at the Committee's discretion. Moss, Levy & Hartzheim was the firm selected to perform internal auditing services in fiscal year 2003-04 at a total cost not to exceed $19,780. Moss, Levy & Hartzheim's has now submitted a proposal to perform internal auditing services for fiscal year 2004-05. Since their last proposal was low bid and their new proposal is even lower, staff does not believe any significant cost savings could be achieved by opening up the bid process. If the Committee has been satisfied with the quality and timeliness of the work performed by Moss, Levy & Hartzheim, it would be appropriate now to approve the second year option. PRIOR COMMITTEE/BOARD ACTIONS In February 2004, Moss, Levy & Hartzheim was selected to service as the District's contracted internal auditors through June 30, 2004. PROJECT/CONTRACT COST SUMMARY Although not the primary consideration at the time, Moss, Levy & Hartzheim was the lowest all-inclusive maximum price on 300 hours of internal auditing services for fiscal year 2003-04, as follows: Moss, Levy & Hartzheim Lance, Soll & Lunghard Vavrinek Trine Day & Co. Conrad & Associates H:ldeptlagenda\FAHRIFAHR2004\0904104-60.Moss Levy doc Revised: 06/04/03 Book page 62 $19,780 27,680 30,775 31,150 Page 1 Moss, Levy & Hartzheim is now proposing to perform 300 hours of internal auditing services for fiscal year 2004-05 at a cost not to exceed $19,260, a reduction of 2.6 percent from the prior year. BUDGET IMPACT ~ This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. D Not applicable (information item) ALTERNATIVES Decline the second year option renewal for internal auditing services from Moss, Levy & Hartzheim and direct staff to solicit bids from other qualified certified public accounting firms on a new three-year internal auditing services contract. ATTACHMENTS 1. Moss, Levy & Hartzheim's dollar cost bid proposal for internal auditing services for the fiscal year ended June 30, 2005. MW H:ldepl\agenda\FAHRIFAHR200410904104-80.Moss Levy:doc Revised: 06/04/03 Book page 63 Page2 ORANGE COUNTY SANITATION DISTRICT SEALED DOLLAR COST BID PROPOSAL FOR INTERNAL AUDITING SERVICES For the Fiscal Year Ending June 30, 2005 Submitted by: Moss, Levy & Hartzheim 9107 Wilshire Blvd. Suite 320 Beverly Hills, CA 90210 Phone: (310) 273-2745 Fax: (310) 273-1689 Email: mlh bh@pacbell .net Submitted on: June 16, 2004 Contact Persons: Robert M. Moss, C.P .A. Ron A. Levy, C.P.A. Craig A. Hartzheim, C.P.A. Book page 64 NAME OF FIRM: CONTACT PERSON: TELEPHONE: Compem1ation: AUDIT PROPOSAL SUMMARY FOR 2004-2005 Moss, Levy & Hartzheim 9107 Wilshire Blva. Suite 320 Beverly Hills, CA 90210 Robert M. Moss, C.P .A. (310) 273-2745 1. Total All-inclusive Maximum Price Internal Audit Services DiscoWlt-20% Total All-inclusive Maximum Price Fiscal Year 2004-2005 $ 24,075 (4,815) S 19,260 Under penalties of perjury, I declare that I am entitled to represent the firm, empowered to submit the bid, and I am an authorized signer. There are no and have never been any financial interests between any officials or employees of the Orange County Sanitation District and Moss, Levy & Hartzheim. Respectfully submitted, MOSS, LEVY & HARTZHEIM AMJl/?4,-- RobertM. Moss, C.P.A. Managing Partner Moss, Levy & Hartzheim is an equal opportunity employer Book page 65 ORANGE COUNTY SANITATION DISTRICT SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE FISCAL YEAR 2004-05 INTERNAL AUDITING SERVICES Standard Quoted Hourly Hourly Hours Rates Rates Partners 35 s 175 s 145 $ Managers 60 125 110 Supervisory Staff 95 90 75 Staff 95 75 50 Other (specify): Clerical 15 50 35 Subtotal 300 Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Discount Total all-inclusive maximum price for fiscal year 2004-05 audit $ Total 5,075 6,600 7,125 4,750 525 24,075 NIA NIA (4,815) 19,260 Note: All out-of-pocket expenses are included in the fee. No costs will be passed on to the District. Book page 66 ORANGE COUNTY SANITATION DISTRICT RATES FOR ADDITIONAL PROFESSIONAL SERVICES AND MANNER OF PAYMENT Rates per hour for other services requested: STANDARD QUOTED HOURLY HOURLY RATES RATES A. Partner $ 175 $ 145 B. Manager 125 llO C. Supervisory Staff 90 75 D. Staff 75 50 E. Clerical 50 35 Progress payments will be made on the basis of hours of work completed during the course of the engagement in accordance with the firm's dollar cost bid proposal. Interim billings shall cover a period of not less than one calendar month. Book page 67 FAHR COMMITTEE Meeting Date 09/08/04 AGENDA REPORT Item Number FAHR04-81 Orange County Sanitation District FROM: Robert Ghirelli, Director of Technical Services Originator: Karen Baroldi, Senior Environmental Specialist SUBJECT: Adoption of Revised Grant Funding Program Policy GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 04-_, Establishing a Grant Funding Program Policy and Code of Ethics in Support of Meeting the Contractual Requirements of Awarding Agencies for Monetary Assistance Granted to the District. SUMMARY In order to facilitate the operation of the grant funding program, OCSD must adopt a Grant Funding Program Policy to allow for the General Manager or his designee to apply for and enter into contractual agreements with federal, state and local agencies. The Policy also allows the General Manager or his designee to develop procedures for administration of the program, and it includes a Code of Ethics to provide compliance with grant requirements. PRIOR COMMITTEE/BOARD ACTIONS NIA PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [gl Not applicable (No budget implications) ADDITIONAL INFORMATION Earlier this year OCSD received a $250,000 grant for its Fats, Oils and Grease Program under the auspices of the State Water Resources Control Board (SWRCB) Proposition 13 Water Bond monies. As OCSD prepared to H:\deptlagenda\FAHRIFAHR200410904\04-81.Granl Program Policy doc Revised: 06/04/03 Book page 68 Page 1 To Bd. of Dir. 09/22/04 Item Number enter into a contract to receive this grant, it became apparent that the General Manager lacked specific authority to enter into this contract under the requirements of the SWRCB. In order to remedy the situation, the Board of Directors adopted a resolution specifically authorizing the General Manager to enter into a contract with the SWRCB to receive the grant monies and administer the program. The proposed Resolution will allow the General Manager or his designee to enter into future grant contracts and conduct grant administration without bringing individual resolutions to the Board of Directors for each new grant award. This item was originally scheduled for consideration at the July Board meeting. The item was pulled at the request of staff to incorporate new information obtained at a recent EPA training session. The policy now specifies compliance with federal requirements and the use of the State Single Point of Contact for the State's intergovernmental review process. ALTERNATIVES No Action CEQA FINDINGS N/A ATTACHMENTS Resolution No. OCSD 04-_, Adoption of the Grant Funding Program Policy and Code of Ethics H:ldeptlagenda\FAHRIFAHR2004\0904\04-61 Grant Program Policy doc Revised: 06/04/03 Book page 69 Page 2 RESOLUTION NO. OCSD 04-_ ESTABLISHING A GRANT FUNDING PROGRAM POLICY AND CODE OF ETHICS A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING A GRANT FUNDING PROGRAM POLICY AND CODE OF ETHICS IN SUPPORT OF MEETING THE CONTRACTUAL REQUIREMENTS OF AWARDING AGENCIES FOR MONETARY ASSISTANCE GRANTED TO THE DISTRICT WHEREAS, it is the intent of the District to pursue publicly available federal, state, and local monies for District approved projects where the projected economic benefits are greater than the costs. WHEREAS, the District has been awarded monetary assistance from and entered into contractual agreements with federal and state agencies to receive monetary assistance for District projects. These contractual agreements commit the District to comply with awarding agencies requirements. Hence the District is required to develop policies and a Code of Ethics relating to the management of government monetary assistance awards. The awarding agencies require the governing body to specify and approve of grant polices and a Code of Ethics. NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: ARTICLE I GRANT FUNDING PROGRAM POLICY Section 1 : Policy Statement It is the policy of the District to pursue publicly available federal, state and local monies for approved projects including the collection, treatment, recycling and disposal of wastewater and biosolids, monitoring and research, and environmental stewardship and watershed activities, where such pursuit is deemed economically practical. Each division is responsible to inform the District's grant administrator, at the earliest date possible, about their projects and to work cooperatively with the grant administrator to locate and secure funds for the projects. • Book page 70 Section 2: Policy The District Board of Directors, as the agency's governing body, gives authorization for the General Manager, or authorized representative or designee, to apply for and enter into contractual agreements with federal, state, and local agencies for funding assistance and to commit the institutional, managerial and financial resources (including funds sufficient to pay the non-federal, non-state, or non-local share of project cost) to ensure proper planning, management and completion of the obligations required by the awarding agencies. The District's Director of Finance, as the agency's Chief Financial Officer, or designee, the Controller, have the authorization to conduct financial transactions relating to payment from assistance awards. The General Manager, or authorized representative or designee, shall develop procedures for administration of the Grant Funding Program and shall report annually to the Board of Directors on the Program's implementation. The District's Board of Directors, management and staff involved in grant assistance administration shall follow the Orange County Sanitation District Grant Funding Program's Code of Ethics. Assistance award applications shall be processed, and awarded funds shall be administered, through the District's Grant Funding Program. District staff involved in projects funded by grant money or other government monetary assistance shall comply with all applicable laws and regulations that govern the award as well as all other applicable federal state and local regulatory requirements. District staff involved in the administration of an assistance award shall make good faith efforts to ensure that the vendors who are paid in part by federal, state or local funds comply with the applicable laws and regulations that govern the award. For federal grants, the District shall contact the State Single Point of Contact for Federal Executive Order 12372 to determine whether the application is subject to the State's intergovernmental review process. District shall develop an auditing system for assistance awards and retain the services of an independent auditor to conduct any required audits in compliance with federal, state or local auditing requirements of assistance awards. ARTICLE II GRANT FUNDING PROGRAM CODE OF ETHICS ') Book page 71 The District shall give the awarding agency, through any authorized representative, access to and the right to examine all records, books, papers or documents related to the award. The District shall also give such access to the Comptroller General of the United States and or the State of California, as appropriate. The District will account for grant funds pursuant to generally accepted accounting standards and directives of the awarding agency. Except as otherwise required by law, the District shall not release information to the public relating to an assistance award that mentions the awarding agency by name, or any agency employee, without the awarding agency's approval. District staff shall follow the Code of Ethics established by its Purchasing Division and, as applicable, California State or federal procurement standards on assistance funded projects. The grant administrator or designee directly involved in the administration of assistance awards, and Board of Directors shall not be involved in the hiring of staff or procurement of contracts for services funded through assistance awards. The grant administrator shall comply with any other ethics policy as specified in individual assistance awards. The District shall ensure that safeguards are in effect to prohibit Board of Directors and staff from using their positions for a purpose that constitutes or presents the appearance of personal or organizational conflict of interest, or personal gain. The District shall certify that no funds appropriated from the federal government have been paid or will be paid by or on behalf of the District, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, and officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding, extension, continuation, renewal, amendment, or modification of any federal assistance awards. PASSED AND ADOPTED at a regular meeting held ____ , 2004. Chair ATTEST: Board Secretary ,., Book page 72 FAHR COMMITTEE Meeting Date To Bd. of Dir. 09/08/04 10/27/04 AGENDA REPORT Item Number Item Number FAHR04-82 Orange County Sanitation District FROM: Gary Streed, Director of Finance/Treasurer SUBJECT: PERMIT USER RA TES FOR FLOW, BIOCHEMICAL OXYGEN DEMAND AND SUSPENDED SOLIDS GENERAL MANAGER'S RECOMMENDATION This is an informational item tonight. Staff expects to bring this back to the Committee in October to answer any questions, make adjustments and to report the results of meetings with some of our major users. At that time, the recommendation to the Committee is expected to be: Recommend the Board of Directors adopt revised rates to be charged Permit Users for flow, biochemical oxygen demand (BOD) and suspended solids (SS) based upon the Validated Capital Improvement Program (CIP) that includes meeting secondary treatment standards and the actual operations & maintenance expense ratios and provides for the continuation of a total fee reduction for actual property taxes allocated to the District for each Permit User. SUMMARY In July, staff advised the Board that we had discovered an inappropriate credit had reduced the calculation of the rates that individual Permit Users pay to compute their annual sewer service charge based upon their actual flow, BOD and SS discharge. The total funds that needed to be raised for the year had been reduced by the total property taxes that were expected while each Permit User's actual annual bill was subsequently reduced by their actual property taxes allocated to the District. Correcting this double credit was expected to recover approximately $1.7 million per year. In order to brief the Board in July, the staff work behind the recommended solution to this property tax credit calculation was rushed; the immediate computation was addressed, but the opportunity to review the entire calculation was deferred. In the time between the first reading of the proposed Ordinance and the second reading in August, staff completed that analysis, developed additional recommendations and asked that consideration of the Ordinance be postponed until October when a detailed explanation of the calculation and the formula could be provided. This report will explain the process of calculating the Permit User rates, will discuss the various assumptions involved, will evaluate alternative calculation methods and will present the staff recommendation for a thorough discussion by the FAHR Committee. PRIOR COMMITTEE/BOARD ACTIONS 1. The Committee reviewed and recommended rates for 2004-05 in April, 2004, and those rates were adopted by the Board. H:ldeptlagenda\FAHRIFAHR2004\0904104-82 User Permit Rates doc Revised: 06/04/03 Book page 73 Page 1 2. In July, 2004, the Board introduced Ordinance No. OCSD-24 for first reading. 3. In August, 2004, the Board deferred consideration of adoption of Ordinance No. OCSD-24 until October, 2004. PROJECTICONTRACTCOSTSUMMARY The financial cost to the District of implementing the staff recommendation will be minimal. A notice of the proposed rates will need to be mailed to every Permit User informing them of the change that is proposed and the rates that are projected for 2004-05, 2005-06, 2006-07 and 2007-08. Of course, the Boar:d will consider these rates separately each year along with the annual sewer service fee rates. Providing the notice through 2007-08 will put all users on the same notification schedule. The cost to some Permit Users will be significant. A schedule is attached that estimates the total annual cost to each Permit User during the planning period. There will be additional, but unquantified costs to the District from explaining these costs to various Permit Users. BUDGET IMPACT ~ This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. D Not applicable (information item) ADDITIONAL INFORMATION Since the im:epti0n of the Permit User Fee program in 1970, users of the Djstrict's system that discharge high volumes or high strengtt:i wastewater have been reql'..lired to obtain a discharge permit (either a Class I or Class II Permit) and to pay extra fees for the cost of service. The fees are initially calculated on the basis of actual flow, BOD and SS discharged to the sewer and subsequently reduced by the actual property taxes they have paid to the District. This practice was intended to ensure that these users paid their actual cost of service through a combination of user fees and property taxes. There are approximately 500 Permit Users that pay for sewer services based upon their actual flow, BOD and SS. The individual user rate that was adopted for 2004-05 for each of these parameters was calculated based upon net revenue requirements for O&M and the CIP, after subtracting other projected revenu.es, including property taxes, from our total revenue or spending requirements. In Jt,1ly, staff recommended that it was appropriate to modify tlie computation of the rates for flow, BOD and SS so that Permit Users were not allowed two reductions for property taxes. The attached staff report provides a very detailed accounting of the steps involved to calculate the individual rates for flow, BOD and SS for Operations & Maintenance (O&M) expenses, the CIP and for Certificate of Participation (COP) Service. The most H:\depl\agenda\FAHRIFAHR200410904\04-62 User Permit Rates doc Revised: 06/04/03 Book page 74 Page 2 important factors or allocations that are used in the calculations are shown in the following table. Cost Parameter Allocations Collection Treatment & Collection Treatment & System O&M Disposal O&M System CIP Disposal CIP COP Service Flow 100% 12% 90% 33% 49% BOD 34% 10% 39% 31% ss 54% 28% 20% Reouirement $20,474,054 $11,308,884 $78,446,388 $37,981 ,923 $37,964,208 The theory, philosophy, formula and allocations were used to estimate the individual Permit User rates for 2004-05 and the following three fiscal years. All of these calculations are based upon the cash flow projections in the 2004-05 budget. The actual rates for the years beyond 2004-05 will be brought to the Board as a part of each year's financial actions; they are not a part of this action. Adopted Proposed Estimated Estimated Estimated Description 2004-05 2004-05 2005-06 2006-07 2007-08 Flow per mo $368.58 $651 .09 $732.18 $943.48 $1,056.64 BOD per 1000 lb $248.55 $251.10 $282.36 $356.68 $398.36 SS per 1000 lb $238.45 $251.09 $282.85 $341.17 $379.09 Avg Permit User@ $20,245.54 $24,839.28 $27,940.81 $35,295.30 $39,429.81 15 mg, 42 k#, 17 k# Estimated Total $9,126,337.14 $11,107,052.91 $12,494,017.24 $15,774,247.22 $17,620,859.53 Fees Using 2002-03 Quant ALTERNATIVES Alternatives are discussed in the attached staff report and include different effective dates for the Permit User rates, changing the allocation of costs to flow, BOD and SS in some or all cost categories, and various reductions to the budgeted requirements. CEQA FINDINGS NIA ATTACHMENTS 1 . Staff Report 2. Schedule of Impact on Permit Users By City 3. Permit User Rate Calculation Model (4) 4. Allocation of 2003-04 Treatment and Disposal Costs to Flow, BOD and SS 5. Allocation of Validated Capital Improvement Program to Flow, BOD and SS H:\deptlagenda\FAHR\FAHR200410904\04-62 User Permit Rates doc Revised: 06/04/03 Book page 75 Page 3 September 8, 2004 STAFF REPORT Calculation of Permit User Rates For Flow, Biochemical Oxygen Demand and Suspended Solids Since the inception of the Permit User Fee program in 1970, users of the District's system that discharge high volumes or high strength wastewater have been required to obtain a discharge permit (either a Class I or Class II Permit) and to pay extra fees for the cost of service. These extra fees are initially calculated on the basis of actual flow, biochemical oxygen demand (BOD) and suspended solids (SS) discharged to the sewer and that calculated total is subsequently reduced by the actual property taxes they have paid to the District. This practice was intended to ensure that these users paid their actual cost of service through a combination of user fees and property taxes. There are approximately 500 Permit Users that pay for sewer services based upon their actual flow, BOD and SS discharge to the sewer. The individual user rate that was adopted for 2004-05 for each of these parameters was calculated based upon net revenue requirements for operations and maintenance (O&M) and the validated capital improvement program (GIP), after subtracting other projected revenues, including property taxes, from our total revenue and spending requirements. In July, Staff recommended that it was appropriate to modify the computation of the rates for flow, BOD and SS so that Permit Users were not allowed two reductions for property taxes. During the last month, staff has re-evaluated each of the assumptions that are involved in calculating these rates. Central to this process was the goal to verify how our costs are allocated to, or based upon, flow, BOD and SS. This report contains the results of those evaluations. Attached to this report is a spreadsheet that calculates the proposed rates for 2004-05. Each of the lines in this spreadsheet is numbered for reference and those line numbers are included in the descriptions that follow. Component Costs There are five component costs that must be funded each year. These are: O&M in the collection system, O&M in the treatment plants, GIP in the collection system, GIP in the treatment plants and certificates of participation (COP) service. Each of these components must be allocated to flow, BOD or SS before OCSD D P.O Box 8127 ll Fountain Valley, CA 92728-8127 Cl (714) 962-2411 Book page 76 Calculation of Permit User Rates Page 2 of 6 September 8, 2004 rates can be calculated. A column is included in the attached spreadsheet for each of these types of costs. O&M in the collection system is allocated 100% to flow because there is no treatment or removal of BOD or SS in the sewers. The job of the collection system is to collect and transport all of the wastewater to the treatment plants. (Column A, lines 1, 7-9, 10-14) CIP in the collection system could be allocated in the same manner as O&M. However, because some of the rehabilitation, refurbishment and replacement work in the sewers has been caused by gasses in the wastewater that are formed from the BOD, 10% of the collection system CIP is allocated to BOD. (Column B, lines 1, 7-9, 10-14) O&M in the treatment plant allocation percentages are calculated each year based upon the actual expenses from the year before. Each of the major unit processes (preliminary treatment, primary treatment, secondary treatment, solids disposal, effluent disposal) are allocated appropriately to flow, BOD or SS in order to calculate an average allocation for the year. Based upon the actual costs for 2003-04, the 2004-05 budget for treatment plant expenses is allocated 12% to flow, 33% to BOD and 54% to SS. (Column C, lines 1, 7-9, 10-14) CIP in the treatment plant is the most difficult to properly allocate. Every Master Plan or Strategic Plan requires the engineering team to evaluate every project that is proposed for the planning period and to develop the appropriate allocation ratio for that project. For example, a headworks project would be allocated 75% to flow -5% to BOD -20% to SS, while a secondary treatment project would be allocated 93% to BOD-7% SS. When all of the projects have been allocated, a weighted average is determined for the CIP through the planning period. These weighted averages may differ for each Strategic Plan based upon the level of treatment proposed or other major Board decisions. The result of this effort for the Validated Capital Improvement Program in 2003 for the treatment plants is 33% to flow-39% to BOD-28% to SS. (Column D, lines 1, 7-9, 10-14) COP service is the principal and interest we pay on the money we borrow in the municipal finance market. The District borrows only for the CIP, not for O&M. Because the COP (debt) service is related exclusively to the CIP and to the entire CIP, the annual payments are allocated to flow, BOD and SS based on the weighted average of the GIP for the collection system and for the treatment plants. This average is 49% to flow-31% to BOD -20% to SS. (Column D, lines 1, 7-9, 10-14) These allocation percentages are applied to the projected expenses or costs of the collection system O&M, treatment plant O&M and COP service in order to determine the total allocation of funding requirements to flow, BOD and SS. Book page 77 Calculation of Permit User Rates Page 3 of 6 September 8, 2004 Capital Improvement Program Adjustments The CIP for the planning period, through 2020, is very much higher in the first few years than in the later years. In order to avoid an immediate rate spike when the CIP is the highest, the average annual CIP through 2020 is used to calculate the rates. In addition to avoiding an immediate rate spike, this method will provide for smooth rate increases over time. For example, the average CIP for 2004-05 is about $150 million, while the budgeted CIP is over $231 million. (Columns B & D, line 3) Not all of our CIP is initially funded through user fees. The Board has decided to fund $1.4 billion of the CIP by borrowing. This is approximately 54% of the CIP through 2020. Borrowing defers the need for user fees. Because we include the annual COP service in the user fee rate calculation, it is appropriate to reduce the budgeted CIP outlay by 54% to avoid double counting the CIP and the COP service. This exercise will replace $80 million of the budgeted CIP with the $42 million budget for COP service. (Columns B & D, line 4) Impact of Revenues Now that the cash needs for the year have been determined and they have been allocated to flow, BOD and SS, rates could be calculated for each of these wastewater parameters. However, it may be appropriate, or fair, to reduce these total needs by projected revenues from other sources, notably interest income and connection fees (Capital Facilities Capacity Charges or CFCCs). While income from these sources does not reduce the cost of service, it does reduce the total amount of revenue needed from all other sources. Interest income has been allocated to flow, BOD and SS in the ratio of the allocated costs developed to this point. Effectively this allocation reduces each rate by the same percentage. The interest income budget for 2004-05 was $20.5 million. (Columns A, B, C, D & E, line 5a) Connection fees (CFCCs) are collected from new or expanding users to fund CIP for additional capacity projects. As such, the connection fee revenue is allocated only to the CIP costs and not to O&M or COP service. The connection fee revenue budget for 2004-05 was $11.6 million. (Columns B & D, line 5b) When these two revenue streams are deducted from the cash requirements the result is the remaining amount that must be raised by user fees or funded by cash in the bank. The impact of accumulated funds or reserves will be discussed later in this report. Quantities of Flow, BOD and 55 Each Master Plan or Strategic Plan contains a flow projection for the planning period. The current Strategic Plan projection is for an average daily flow of 321 Book page 78 Calculation of Permit User Rates Page 4 of 6 September 8, 2004 million gallons in 2020. Each year this projection is reviewed by staff and a flow estimate for the next year is developed. The current estimate for 2004-05 is 250 million gallons per day or 91,250 million gallons per year (91 billion). (Columns A, B, C, D & E, line 16) The average BOD and SS concentration is reported each year in the O&M Annual Report for each plant along with the actual flow. The concentration for each is converted to mass, in pounds, for each plant and then divided by the total actual flow to develop a weighted average concentration for both BOD and SS for the combined treatment plants. The most recent, 2002-03, annual average concentration for BOD was 228 milligrams per liter and the concentration for SS was 232.6 milligrams per liter. These concentrations are then combined with the budgeted flow to determine the budgeted pounds of BOD and SS. (Columns A, B, C, D & E, lines 17 & 18) Individual Rate Calculations Dividing the total requirement for flow by the total budgeted flow produces a rate for flow. The same process is followed for BOD and SS. These rates would generate all the funds required for the average year if every user was billed based upon actual flow, BOD and SS. Of course, that is not the case. The vast majority of our users are billed as a separate line item on their property tax bill based upon the type of use recorded for that parcel. The rates for this process are developed based upon the annual cash flow projection after the use of borrowing or savings is taken into account. The process to make this adjustment requires us to first convert the annual flat rate sanitary sewer service user fee to a rate based upon flow, BOS and SS. These individual rates are the de facto rates paid by all of the users who do not have Source Control permits. These rates for 2004-05 are significantly lower than the "requirement-based rates" calculated to this point because $185 million of the budgeted needs will be funded from "reserves" and another $28 million will be received as property taxes. (Columns A, B, C, D, E, F, lines 19-24) For the past few years these reduced de facto rates were presented to the Board for adoption as Permit User rates. The issue with using these rates comes from the Ordinance that provides for Permit User rates. Ordinance No. OCSD-01 requires that the annual cost of service calculated from the actual Permit User discharge and the adopted Permit User rates must be reduced by the property tax paid by that user. Those taxes have already been considered during the calculation of the reduced rates that are equivalent to the flat rate sanitary sewer service user fee. Correcting this calculation was the original intent of staff in July. That said, the next step in determining the proper rates for flow, BOD and SS for Permit Users is to back the property tax reduction out of the flat rate-equivalent rates. All property tax revenues are dedicated to COP service. COPs are issued Book page 79 Calculation of Permit User Rates Page 5 of 6 September 8, 2004 only for the CIP. The total property taxes are allocated to flow, BOD and SS in the weighted average of the total CIP: 49% to flow -31 % to BOD -20% to SS. These allocations are then divided by the total flow, BOD and SS to be treated during the year and the result is the value of property taxes expressed in terms of flow, BOD and SS. (Columns A, B, C, D, E & F, lines 25-29) The final step to determine the Permit User rates for flow, BOD and SS is to add the individual rates from the flat rate-equivalent determination to those developed in the property tax value computation. When this is done we have the rates for flow, BOD and SS that can used to determine the requirements for each Permit User before those requirements are reduced by the actual property taxes paid by that user. (Columns D, E & F, lines 30-34) The resultant rates for 2004-05 are higher than the rates that were presented to the Board and adopted in April as shown in the following table. Percent Description Adopted Proposed Change Flow per mg $ 368.58 $ 651.09 77% BOD per 1000 lb $ 248.55 $ 251.10 1% SS per 1000 lb $ 238.45 $ 251.09 5% Avg Permit User@ $20,245.54 $24,839.28 23% 15 mg, 42 k#, 17 k# Alternatives Providing the Directors agree with this proposed method of calculation and wish to recommend that these rates be adopted it will then be necessary to determine an effective date. The options include: • January 1, 2005, as that will be subsequent to the public hearing and the action and will provide Permit Users some opportunity to adjust their processes, • July 1, 2005, which would finish 2004-05 with the rates that have been previously adopted and use the proposed methodology beginning in fiscal year 2005-06. A January 1, 2005, effective date clearly meets the requirements of public notice, public hearing and the referendum period. Having two rates for a year is problematic for staff, but could be accommodated in the reconciliation process. Invoices during the year are based upon estimated quantities and are reconciled to actual at year end. The rate adjustment could be included in that process. Holding this methodology in abeyance until the next rate adoption cycle is the simplest administrative option. The Board will need to adopt rates for 2005-06 in April or May 2005 and will have to conduct a Proposition 218 notification of all users. This notification will include Permit Users, but they could also receive a special notice. The rates that have been adopted are lower in each category Book page 80 Calculation of Permit User Rates Page 6 of 6 September 8, 2004 than the proposed rates, so no Permit User is being overcharged. The problem of double credit for Permit User property taxes would remain for another year. Permit User property taxes are estimated to total $908,000. A single user accounts for $559,000 of that amount and no additional Permit User fees are collected from that user. This means the approximate total Permit User fees that would potentially be improperly offset by property taxes is $349,000. GGS H:ldeptlfin\210\CRANE\FAHR\FAHR2004\SEPT\Staff Report_Attachment_ 1_ Permit User staff report 9-2004.doc Book page 81 8/31/2004 Impact of Permit User Rate Change Page 1 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 C~y Permit User Name Share of Total Total Tolal 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimaled Estimated Tax (MG} (lbs) (lbs) Flow Rate per Million Gallons s 368.58 $ 651 09 $ 732.18 $ 943.48 $ 1,056.64 BOD Rate per 1000 Pounds $ 248.55 $ 251.10 $ 282.36 $ 356.68 $ 398.36 SS Rate per 1000 Pounds s 238.45 $ 251.09 $ 282.52 $ 341 17 $ 379.09 ANAHEIM ALSTYLE APPAREL-ACTIVEWEAR MFG CO. INC. 3,875 360 6536 ·1,541,360 501,739 835,674 747,835 641.033 1,061,220 1,185,301 ANAHEIM M C P FOODS INC. 251 16 4867 1,554,057 46,840 403,506 412,719 464 108 585,836 654,251 ANAHEIM NOR-CAL BEVERAGE CO. INC. (MAIN) 1,898 38 9144 827,333 122,382 249,159 263,809 296,673 373,561 417,089 ANAHEIM NOR-CAL BEVERAGE CO. INC. (TETRA) 23.3847 540,446 33,930 151,038 159,451 179,308 226,405 252,864 ANAHEIM DISNEYLAND RESORT -DCA 810 94.7449 197,543 197,543 131 125 160,892 180,958 227 245 253,691 ANAHEIM EXPO DYEING AND FINISHING INC 656 105.4495 161,547 34.471 87.239 117,877 132,561 168,871 188,844 ANAHEIM SUNDOR BRANDS INC. A PROCTER & GAMBLE CO 5,122 27.1223 360,115 34,457 107,719 116,736 131,275 165,791 185,176 ANAHEIM STEPAN COMPANY 2,670 7.3083 210.697 647 55,217 57,827 65,026 82,267 91 901 ANAHEIM STEINER CORP OBA AMERICAN LINEN SUPPLY 21.5522 135,249 39,368 50,947 57,878 65,091 82,006 91,575 ANAHEIM PRECISION ANODIZING AND PLATING INC. 308 34.7895 1,635 158,469 51,016 62,851 70,704 87,471 97,485 ANAHEIM ANAHEIM MEMORIAL MEDICAL CENTER 33.3875 69,613 69,613 46,207 56,697 63,769 80,080 89,399 0:, ANAHEIM DYNAMIC DETAILS INC. 28 46 5497 28,668 28,316 31,035 44,616 50,177 63,805 71,341 0 ANAHEIM SIOUX HONEY ASSOCIATION CO-OP 890 21595 140,914 1,149 36,094 37,078 41,694 52,690 58,852 0 :,,,- -0 ANAHEIM DON MIGUEL MEXICAN FOODS INC. 303 14.4226 78,233 35,480 33,221 37,943 42,674 53,616 59,855 0, (JQ ANAHEIM KC A ELECTRONICS INC. 3,217 39.2034 10,306 9,990 19,393 30,621 34,436 44,072 49,316 (1) 00 ANAHEIM WEST ANAHEIM MEDICAL CENTER 1,968 16 7858 34,998 34,998 23,231 28,505 32,060 40,261 44,946 l-,.,) ANAHEIM HARRYS DYE & WASH INC 182 21.0879 25,138 14,600 17,502 23,708 26,663 33,843 37,831 ANAHEIM TAC WEST, INC 11.6491 46,692 11,789 18,710 22,269 25,044 31,667 35,378 ANAHEIM CITY OF ANAHEIM -WATER SERVICES 6 0756 95 71,658 19,350 21,972 24,720 30,214 33,622 ANAHEIM U.W.M.C HOSPITAL CORPORATION 3,883 10.6352 22,174 22,174 14,719 18.060 20,313 25,508 28,477 ANAHEIM BRIDGFORD FOODS CORPORATION 766 9.1297 27,877 19,171 14,865 17,758 19,972 25,097 28,019 ANAHEIM WEYERHAEUSER COMPANY 7,751 9.1163 26,073 16,304 13,728 16,576 18.643 23,463 26,200 ANAHEIM IDEAL ANODIZING INC. 264 8 8475 718 41,707 13,385 16,413 18,464 22,833 25,446 ANAHEIM MULTI-FINELINE ELECTRONIX INC. 847 151614 9,990 7,526 9,866 14,270 16,048 20,435 22,853 ANAHEIM S & S POLISHING/PLATING 11 13.7040 873 19,377 9,888 14,007 15,755 19,852 22.174 ANAHEIM ANAHEIM GENERAL HOSPITAL 1,997 7 9434 16,582 16,562 10,993 13,489 15,172 19,052 21,269 ANAHEIM DANONE WATERS OF N A -ANAHEIM 656 17.9175 995 554 6,983 12,055 13,556 17,449 19,539 ANAHEIM ORS TECHNOLOGIES INC 1,093 13.0501 4,543 4,543 7,022 10,778 12,121 15.463 17,321 ANAHEIM ARTISTIC PLATING & METAL FINISHING INC 260 11.4455 5,004 4,835 6,615 9,923 11,159 14,233 15,920 ANAHEIM DELPHI AUTOMOTIVE SYSTEMS 2,234 9.9865 4,398 4,871 5,936 8,830 9,930 12,653 14,151 ANAHEIM INTEC PRODUCTS INC 219 3.9456 509 29,197 8,543 10,028 11.281 13,B65 15,440 ANAHEIM HAWK INDUSTRIAL UNIFORM 114 5.9494 10,069 7,830 6,563 8,368 9,411 11,876 13,266 ANAHEIM MICROMETALS INC #2 792 5 2761 6,325 3,899 4,446 6,002 6.750 8,564 9,573 ANAHEIM UNIVERSAL ALLOY CORP. 855 5 6353 5,350 2,964 4,113 5,757 6,474 8.236 9,209 ANAHEIM CEROMET INC_ 311 2 0917 15,012 1,948 4,966 5,620 6,320 7,992 6,929 ANAHEIM AMERICAN CIRCUIT TECHNOLOGY INC 322 6.6465 2,445 2,232 3,590 5,502 6,187 7,904 8,843 ANAHEIM PRIVATE LABEL LABORATORIES 413 0 2325 18,055 1.151 4,848 4,974 5.594 7,052 7.875 ANAHEIM COPPER CLAD MULTILAYER PRODUCTS INC 5.0918 1 603 4,034 3,237 4,731 5,320 6,752 7,548 ANAHEIM LINGO INDUSTRIES INC 64 3.2995 577 10,910 3,961 5,033 5,661 7,041 7,852 H:ldeptlfin\210\STREEDIE•cel\Permil Users\2002-03 recon and rates xis 8/31/2004 Impact of Permit User Rate Change Page 2 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-06 Property Flow BOD ss Adopted Proposed Esvmated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 36B,5B $ 651.09 $ 732.18 $ 943.48 $ 1,056 64 BOD Rale per 1000 Pounds $ 248,55 $ 251,10 $ 282.36 $ 356.68 $ 398,36 SS Rate per 1 ooo Pounds $ 238,45 $ 251.09 S 282 52 $ 341 .17 $ 379.09 ANAHEIM MAGNETIC METALS CORP 944 1.6861 8,253 5,761 4,046 4,B17 5,192 6,500 7,253 ANAHEIM Y K K (U.S.A) INC, 2,284 5.6158 2,184 1,218 2,903 4,511 5,073 6,493 7,266 ANAHEIM J & H DEBURRING INC. #2 25 1.3247 4,837 8,936 3,821 4.321 4,860 6,024 6,714 ANAHEIM BLACK OXIDE INDUSTRIES INC 55 4.5814 597 1.924 2,296 3,616 •.066 5,192 5,608 ANAHEIM AP W ENCLOSURE SYSTEMS, LLC 468 2 7002 4,060 2,663 2,639 3,446 3,876 4,904 5,480 ANAHEIM CLASSIC PLATING INC. 3.9877 1,014 1.268 2,024 3,169 3,564 4,557 5,098 ANAHEIM ANAHEIM PLATING & POLISHING INC. 96 3 6712 1.605 1,320 2.067 3,125 3,514 4,487 5,019 ANAHEIM BOEING COMPANY -BLDG. 271 1,606 2 1347 3,712 3,627 2,574 3,233 3.636 4,575 5,109 ANAHEIM GENERAL CERAMICS LLC 2 7953 456 4,712 2,268 3,118 3,508 4,409 4,923 ANAHEIM SMT DYNAMICS 1 8364 3,402 3,402 2,333 2.904 3,266 4,106 4,585 ANAHEIM CALIFORNIA CUSTOM SHAPES, INC 168 1.5832 5,692 815 2,192 2,665 2,996 3,B02 4,249 c::, ANAHEIM CREST COATING INC 272 1 3333 5,574 1,145 2,150 2,555 2.873 3,637 4,063 0 ANAHEIM 0 MILBANK WEST INC. 250 1 8581 3,053 2.200 1,968 2,529 2.B4• 3,593 4,014 ;,;- tl ANAHEIM ESSEX ELECTRIC INC 915 1 7635 3,452 1,889 1,958 2,489 2,800 3,540 3,955 "' (IQ ANAHEIM GUNTHER ATHLETIC SERVICE 22 2.5562 1,716 1.373 1,696 2,440 2,744 3,492 3,905 (1) 00 ANAHEIM MURRIETTA CIRCUITS INC. 88 2.1751 1,706 1,796 1,654 2,296 2,582 3,273 3,659 t.,.) ANAHEIM ECONOLITE CONTROL PRODUCTS INC 353 1.4443 2,559 2,259 1,707 2,150 2,418 3,046 3,402 ANAHEIM CYTECH ENGINEERIED MATERIALS 1.1798 2,372 2,373 1,590 1,959 2,204 2,769 3,091 ANAHEIM STAINLESS MICRO-POLISH INC 93 2.3054 933 309 1. 155 1,813 2,039 2.613 2,925 ANAHEIM ADVANCE TECH PLATING INC. #2 126 1 7249 604 1,631 1,175 1,584 1,894 2,399 2,681 ANAHEIM NEVILLE CHEMICAL COMPANY 0 1 9686 700 657 1,056 1,623 1,825 2,331 2,608 ANAHEIM UOP LLC 1,8723 635 635 999 1,538 1,730 2,210 2,472 ANAHEIM KINSBURSKY BROTHERS SUPPLY INC. 71 1.4611 1,197 1,162 1,113 1,543 1,736 2,202 2,461 ANAHEIM SUPERIOR PLATING 1 9708 325 325 885 1,447 1,627 2,086 2.335 ANAHEIM TAORMINA INDUSTRIES INC #4 524 0.9676 2.138 1,219 1,179 1,473 1,657 2,091 2,336 ANAHEIM PRECISION PAINTING 284 0.3766 760 4,826 1,478 1,648 1,854 2,273 2.530 ANAHEIM AMERIMAX BUILDING PRODUCTS INC. 266 1.4767 244 1,616 990 1,428 1,607 2,032 2.270 ANAHEIM ALLIED PACIFIC METAL STAMPING 476 0,5544 3,239 513 1,132 1.303 1,465 1,853 2,070 ANAHEIM LEACH INTERNATIONAL 156 1.6300 285 496 790 1,257 1,414 1,809 2,024 ANAHEIM NU-TEC POWDER COATING 196 0.6009 1,820 1,340 993 1,185 1,332 1,673 1,B68 ANAHEIM I PC CAL FLEX INC. 123 0.B600 1,729 426 848 1,101 1,238 1,573 1,759 ANAHEIM JELLCO CONTAINER INC. 576 0.6923 1,160 1,701 949 1,169 1,315 1,647 1,838 ANAHEIM ANAHEIM TRUCK DEPOT #2 BIN WASH 524 06163 1.265 1.285 853 1.047 1.177 1,478 1,650 ANAHEIM SECHRIST INDUSTRIES, INC 0.5401 1,117 1,447 822 996 1.120 1.402 1,564 ANAHEIM ELECTRORACK PRODUCTS CO. INC 471 0_5619 1,201 999 744 918 1,033 1,299 1,451 ANAHEIM R TI ELECTRONICS, INC 8 0.5217 1.024 1,029 692 855 962 1,208 1,349 ANAHEIM TAYLOR•DUNN MANUFACTURING COMPANY 1.464 1 2090 2.480 2,432 1,642 2.021 2,273 2,855 3,187 ANAHEIM MILLENNIUM CIRCUITS SERVICES CORP 0 5159 1.299 161 551 702 790 1 005 1,124 ANAHEIM PICOFARAD INC 62 0.5654 629 792 554 725 815 1 028 1.14B H ldept\fin\210\STREEDIExcel\Permit Users\7.002-03 recon and ralP-s xis 8/31/2004 Impact of Permit User Rate Change Page 3 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 368,58 $ 651 09 $ 732.18 s 943 48 $ 1,056.64 BOD Rate per 1000 Pounds $ 248.55 I 251.10 $ 282 36 $ 356.68 $ 398 36 55 Rate per 1000 Pounds $ 238.45 $ 251.09 $ 282.52 $ 341.17 $ 379.09 ANAHEIM RTR INDUSTRIES 46 0.3975 829 829 550 675 759 953 1.084 ANAHEIM RIGIFLEX TECHNOLOGY INC. 87 0.6432 508 234 419 605 681 86B 971 ANAHEIM LINVATEC CORPORATION 38 0.3281 684 684 454 557 627 787 879 ANAHEIM PACIFIC UTILITY PRODUCTS INC. 169 0 5937 235 347 360 533 599 762 852 ANAHEIM IKON POWDER COATING 0,3639 722 344 396 505 568 718 803 ANAHEIM BRIDGEMARK CORP-DOWLING #2 0.7155 264 466 524 675 756 ANAHEIM AQUARIAN COATINGS CORP 21 0.2813 587 587 389 478 537 675 753 ANAHEIM ARO SERVICE 243 0.2962 474 493 345 436 490 617 689 ANAHEIM PRECON, INC 34 0.2709 573 384 334 416 468 591 660 ANAHEIM A & R POWDER COATING INC. 0.4615 187 154 253 386 434 554 620 ANAHEIM ANAHEIM EXTRUSION CO. INC, 569 0.4868 943 993 651 803 903 1,134 1,267 t:O ANAHEIM UNITED CUSTOM POLISHING & PLATING 49 0.4086 197 181 243 361 406 518 579 0 ANAHEIM ADVANCE TECH PLATING INC 0.4279 0 78 173 218 342 384 490 549 .,.,. "O ANAHEIM POWDERCOAT SERVICES INC. #1 25 0 3058 264 249 238 328 369 468 523 "' (IQ ANAHEIM PACIFIC IMAGE TECHNOLOGY, INC. 0.4080 97 94 197 314 353 452 505 Cl) 00 ANAHEIM S M T DYNAMICS LLC 0 2562 176 176 180 255 287 365 408 ~ ANAHEIM ELECTRO METAL FINISHING CORPORATION 91 0 1443 292 263 188 233 262 330 368 ANAHEIM EXQUISITE DESIGNS INC. 0.2938 27 27 121 205 230 296 332 ANAHEIM POWDERCOAT SERVICES INC #4 0,21106 127 127 136 194 218 278 310 ANAHEIM POWDERCOAT SERVICES INC. #2 25 0 1170 244 244 162 199 223 281 313 ANAHEIM ACROBURR INC #2 55 0.1726 106 131 121 172 193 245 274 ANAHEIM POWDERCOAT SERVICES INC #3 0 1214 168 166 126 163 183 231 258 ANAHEIM MTS MICROELECTRONICS INC 0,0937 194 193 129 158 178 224 250 ANAHEIM OLIVE OIL CO. 65 0 1207 95 76 86 122 137 174 194 ANAHEIM DETAILS INC #3, OBA DYNAMIC DETAILS INC. 100 0.0867 181 181 120 147 165 208 232 ANAHEIM TECHPLATE ENGINEERING CO. INC. 0.0613 108 128 80 99 112 140 156 ANAHEIM TRANSLINE TECHNOLOGY INC 213 0 3958 150 158 221 335 377 481 538 ANAHEIM REMEDY ENVIRONMENTAL SERVICES 0,0225 47 47 31 38 43 54 60 ANAHEIM CUSTOM POWDER COATINGS 0,0189 39 39 26 32 36 45 51 ANAHEIM VEECO ELECTRO FAB INC #2 89 0.1848 41 41 88 141 158 203 227 ANAHEIM ALL METAL PAINT STRIPPING INC. #2 598 0.0437 154 144 89 103 116 145 162 ANAHEIM A PW ENCLOSURE SYSTEMS LLC SOUTH 4,473 2 5900 1,227 1,578 1,636 2,390 2,688 3,419 3,823 ANAHEIM H. KOCH & SONS COMPANY 492 0.3262 212 212 223 319 358 456 509 ANAHEIM DISNEYLAND RESORT 559.204 354.5B20 731,345 731,345 486,857 598,139 672,740 844,910 943,250 BREA HEALTH CARE APPAREL SERVICES 442 15.5040 23,419 12,349 14,480 19,076 21,453 27,194 30,393 BREA GERARD TILE 690 4,7316 2,801 53,895 15,291 17,317 19,482 23.851 26,547 BREA COOPER ANO BRAIN INC. 4 15.4992 9,708 2,990 8,839 13,280 14,934 19,106 21,378 BREA WINONICS (BREA) 603 16.1971 5, 1B0 3,750 8,152 12,788 14,381 18,409 20,599 BREA HARTE-HANKS SHOPPERS 1 330 4.B353 21,063 7,905 8,902 10.422 11.721 14,772 16.496 H:\dep\llinl210ISTREEO\Excel\Permi\ Users\2002-03 recon and rates.Mis 8/31/2004 Impact of Permit User Rate Change Page 4 of 12 Estimated ocso 60% 2002-03 2002-03 2002-03 City Share cf Total Total Total 2004-05 2004--05 2005-06 2006-07 2007-08 Permit User Name Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) {lbs) Flow Rate per Million Gallons $ 36B 58 $ 651.09 $ 732 18 $ 943 4B $ 1,056.64 BOD Rate per 1000 Pounds $ 24B.55 $ 251.10 $ 2B2.36 $ 356 68 $ 398 36 SS Rate per 1000 Pounds $ 238.45 $ 251 09 $ 282.52 $ 34117 $ 379 09 BREA KIRKHILL RUBBER CO (SOUTH) 828 8.0498 9,630 10.212 7,795 10,223 11,498 14 514 16,213 BREA ELECTRONIC PRECISION SPECIAL TIES INC 121 8.4544 499 2,280 3,784 6,202 6,975 8,932 9,996 BREA BREA COMMUNITY HOSPITAL 3,175 3.5041 7,306 7,306 4,650 5,951 6,693 8,405 9,383 BREA CRC RIM INC 1,590 5.2437 3,313 3,525 3,597 5,131 5,771 7.332 8,197 BREA BRISTOL INDUSTRIES 6B4 4.3756 2,394 2,609 2,830 4,105 4.617 5,872 6,566 BREA FINELINE CIRCUITS & TECHNOLOGY INC 118 1.0779 2,628 296 1 121 1,436 1,615 2,055 2,298 BREA SCISOREK & SON FLAVORS, INC 375 0,8409 3,114 418 1,184 1.434 1,613 2,047 2.28B BREA HARBOR TRUCK BODIES INC. 378 0.4984 961 916 641 796 895 1,126 1.257 BREA MORAVEK BIOCHEMICALS INC 3 0.6624 261 261 371 562 632 807 903 BREA CENTRAL POWDER COATING 0.2652 570 147 274 353 397 504 563 BREA ENGRAVERS INK CO B5 0.1137 54 250 115 150 169 212 236 t:c BREA KIRKHILL RUBBER CO (SOUTH) 1,026 0 0 0 0 0 0 BREA AERA ENERGY LLC #2 246 0.0821 171 171 114 139 157 197 220 0 r. -0 BUENA PARK DEAN FOODS CO OF CALIF. INC{MILK PLANT) "' 1,418 38 2970 468,307 163,225 169,434 183,511 206,386 258,856 288,898 ere, BUENA PARK SABA TEXTILES INC. 1,009 129.0030 213,403 100,129 124,465 162,719 182,998 231,989 259,279 11> 00 BUENA PARK SEVEN-UP BOTlLING COMPANY 766 34.6324 405,376 30,279 120,741 131,942 148,374 187,595 209,558 V, BUENA PARK AMERIPEC INC 584 22 1770 332,831 22,560 96,27B 103,678 116,589 147,334 164,572 BUENA PARK DEAN FOODS CO. OF CALIF INC.{ICE CREAM) 615 10 1365 181,045 79,231 67,628 71,954 80,926 101.170 112,868 BUENA PARK PEPSI-COLA BOTTLING GROUP 3,837 1B 5449 189,786 26.282 60,274 66,329 74,591 94,156 105,162 BUENA PARK KU A TEXTILES INC 650 2B 8471 50,339 50,806 35,259 44,179 49,689 62,505 69,794 BUENA PARK SUNCUPSE, INC DBA CORRU KRAFT II 2,347 10.7188 71,270 67,362 37,727 41,789 47 ,003 58.515 65,253 BUENA PARK CLEUGH'S RHUBARB COMPANY 216 10 3142 86,100 17,371 29,344 32,697 36,771 46,368 51.783 BUENA PARK ULTRA WHEEL COMPANY 1,212 15,9033 11,085 10,244 11,060 15,710 17,668 22.453 25.103 BUENA PARK PRIMATEX INDUSTRIES OF CA INC 335 12.83B0 6,273 14,786 9,817 13,646 15,348 19,394 21,669 BUENA PARK GEORGIA PACIFIC CORPORATION 3,808 2 5314 21,268 3,772 7.119 7,936 8,924 11,261 12,577 BUENA PARK CROCKETT CONTAINER CORP 676 0.8970 15,491 1,106 4,444 4,751 5,343 6,749 7,538 BUENA PARK MEAD PACKAGING 1,906 19054 6,879 3,471 3,240 3,839 4,318 5 436 6,069 BUENA PARK TRIM-LOK/ R T P 959 3.B647 1,376 1,376 2,095 3,207 3,607 4,607 5,153 BUENA PARK HANSON-LORAN CO., INC. 276 1.1809 5,872 911 2,112 2472 2,780 3,519 3,932 BUENA PARK ALLOY DIE CASTING CO. 456 1.7335 2,222 1,915 1.648 2 167 2,437 3,081 3,443 BUENA PARK WEYERHAEUSER COMPANY #2 0.5313 1,108 1,108 735 902 1,015 1,274 1.423 BUENA PARK GENERAL CONTAINER CORPORATION 349 0.4284 813 709 529 661 743 936 1,045 BUENA PARK GARDNER LITHOGRAPH, INC. 327 0.4076 685 685 484 609 685 662 963 BUENA PARK DERM COSMETICS LAB'S INC 169 0.1070 1,047 165 339 374 421 531 593 COSTA MESA WEST NEWPORT OIL COMPANY 0 43.9568 174,686 1B,133 63,944 77,038 86,633 109,967 122,910 COSTA MESA FAIRVIEW STATE HOSPITAL 32.8890 157,171 7B,448 69,893 80,577 90,623 113,654 127.101 COSTA MESA LOS ANGELES TIMES COMMUNICATIONS LLC 8,296 10 5488 60.439 7,405 20,676 23,904 26,8B1 34,036 38,030 COSTA MESA I C N PHARMACEUTICALS INC 2,585 1B 5636 5.421 5,421 9,482 14,809 16,854 21.297 23,830 COSTA MESA VELIE CIRCUITS INC 88 8 5218 4,055 2.008 4,628 7,071 7,952 10 171 11,381 H.\deptlfin\210\STREED\Excel\Perrntt Users\2002-03 recon and rates.,1s 8131/2004 Impact of Permit User Rate Change Page 5 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Ci\y Permit User Name Flow BOD ss Adopted Proposed Estimated Estimaled Estimated Property Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 368 58 $ 651.09 $ 732.18 $ 943,48 $ 1.056.64 BOO Rate per 1 ooo Pounds $ 248 55 $ 251.10 $ 282,36 $ 356.68 $ 398,36 SS Rate per 1000 Pounds $ 238.45 S 251,09 $ 282 52 $ 34117 $ 379.09 COSTA MESA SANMINA CORPORATION (AIRWAY) 1,571 7.6862 1,623 2,300 3.785 5.989 6,736 8.615 9.640 COSTA MESA MESA CONSOLIDATED WATER DISTRICT 4 6293 1,776 5,521 3,464 •,846 5.•51 6.885 7,692 COSTA MESA SANMINA CORPORATION (REDHILL) 1.061 5.4701 1,218 908 2,535 4,095 4,606 5,905 6,609 COSTA MESA EATON CORPORATION 192 2.4984 2,565 6,437 3,093 3,887 4,372 5,468 6,102 COSTA MESA TOYOTA RACING DEVELOPMENT 242 2.2652 4.319 4,185 2,906 3,610 4,060 5.105 5,701 COSTA MESA PRIME TECHNOLOGIES, INC. 245 2.0057 5,166 738 2,200 2,789 3.136 3,988 4,458 COSTA MESA SEMICOA SEMICONDUCTORS 137 1.9849 1.191 1,191 1.312 1,891 2,126 2,704 3.024 COSTA MESA CRITERION MACHINE WORKS 140 0,3265 465 551 367 468 526 662 739 COSTA MESA RAILMAKERS, INC 51 0.0975 203 203 135 166 166 234 261 COSTA MESA IRVINE SENSORS CORP 699 0 2916 314 263 248 335 376 477 533 COSTA MESA AVIATION EQUIPMENT STRUCTURES, INC. 535 0.2834 565 566 380 469 527 662 739 Cil CYPRESS BOIENG COMPANY (CYPRESS) 0 888 1.2994 2,709 2,709 1.798 2.207 2,482 3,117 3,479 0 CYPRESS TAYCO ENGINEERING, INC. 0.6582 1,732 1,298 983 1.189 1,338 1,681 1,877 r. -0 CYPRESS HYATT DIE CASTING & ENGINEERING CORP. 630 0.5373 1,120 1,120 744 912 1.026 1,289 1,439 "' (JO FOUNTAIN VALLEY PRO-TECH 15.2290 8,011 2,736 8.257 12,614 14.185 18,159 20.320 n> 00 FOUNTAIN VALLEY PAYTON TECHNOLOGY CORP o-. 13.6517 5,292 5,292 7,609 11,546 12,985 16.573 18,539 FOUNTAIN VALLEY KODAK PROCESSING LABS 143 9.9591 10,862 3,118 7.114 9,995 11.240 14,334 16,032 FOUNTAIN VALLEY OMNI METAL FINISHING, INC 130 10.0612 784 3.046 4,630 7,512 8.449 10,811 12,098 FOUNTAIN VALLEY CUSTOM ENAMELERS INC, 143 11772 784 768 812 1,156 1,300 1,652 1,847 FOUNTAIN VALLEY SANMINA CORPORATION 116 1.1513 1,301 146 782 1,113 1 252 1.600 1.790 FOUNTAIN VALLEY UNITED CIRCUIT TECHNOLOGY INC. 57 0.8111 696 463 582 819 921 1,171 1,310 FOUNTAIN VALLEY KENLEN SPECIALITIES INC. 126 0.5638 278 219 329 492 553 706 789 FOUNTAIN VALLEY A & G ELECTROPOLISH 167 0.5794 94 174 278 445 500 639 716 FULLERTON KIMBERLY-CLARK WORLDWIDE. INC 19,607 451.6799 201,519 422,093 317.216 450,669 506,862 642,034 717.551 FULLERTON FULLERTON CUL TU RED SPECIAL TIES 959 31.4260 518.277 117,289 168,368 180,051 202,487 254 ,524 284,130 FULLERTON DAE SHIN USA, INC. 1,180 132.8300 199.711 116,954 126.484 165,998 186,686 236,457 264.246 FULLERTON VAN LAW FOOD PRODUCTS. INC 554 4.6960 440.157 187,636 155,874 160.694 180,732 225,441 251 434 FULLERTON Y2K TEXTILE co_, INC. 1.996 119.7883 219,995 48.356 110,362 145.375 163,486 207.983 232,541 FULLERTON CALIF STATE UNIV@FULLERTON 98.2000 81,899 61.424 71,197 99,925 112,379 142.817 159.673 FULLERTON FAIRCHILD FASTENERS 833 26.2354 23,849 27.310 22.109 29,927 33.659 42,576 47,575 FULLERTON WORLD CITRUS WEST 1,811 6.3974 82,474 14,836 26.395 2B,600 32,163 40,514 45,238 FULLERTON ST. JUDE MEDICAL CENTER 12 7750 26,636 26,636 17,6B0 21,694 24,400 30,641 34,207 FULLERTON ORANGE COUNTY METAL PROCESSING 50 19,6506 366 25,541 13.424 19.299 21.707 27,384 30,592 FULLERTON BECKMAN COULTER. INC. 6,432 14.4015 15,963 17,088 13,351 17,676 19.880 25,111 26.054 FULLERTON PC A METAL FINISHING, INC 99 16.3000 3,700 4,956 8,109 12,7B6 14.379 18,389 20,576 FULLERTON W1NONICS, INC. 59 16 2635 919 2,106 6,725 11,349 12 762 16.391 18,349 FULLERTON WESTERN YARN DYING 248 6,7536 11,189 2,130 5,778 7,741 e 706 11.089 12.401 FULLERTON NELCO PRODUCTS. INC. 283 8 0274 5.459 5.459 5.617 7.968 8,961 11,383 12.726 FULLERTON JOHNSON CONTROLS BATlERY INC. 2.174 9 0172 1,935 5,241 5,054 7,673 B.629 10.986 12.286 H.ldeptlfin\210\STREEDI.Excel\Permit Users\2002-03 recon and rates xis 8/31/2004 Impact of Permit User Rate Change Page 6 of 12 Estimated 0CSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 200!>-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 368.5B $ 651 .09 $ 732.18 S 943.48 s 1,056,64 BOD Rate per 1000 Pounds $ 248,55 $ 251.10 $ 262,36 $ 356.68 $ 39B,36 SS Rate per 1000 Pounds $ 236.45 $ 251.09 $ 282 52 s 341 17 $ 379.09 FULLERTON CARGILL INC 1,107 6.2534 7,742 5.020 5,426 7,276 8,183 10,374 11,595 FULLERTON SUNCLIPSE, INC (CORRUGATOR PLANT) 1.032 1.6164 13,838 11,906 6,87• 7,517 8,454 10.523 11,734 FULLERTON WEIDMANN WATER CONDITIONERS, INC. 20 7 ,9213 213 4,060 3,941 6,230 7,007 8,935 9.994 FULLERTON MONOGRAM SYSTEMS 1,979 3.4190 2,881 8.591 4.025 5,106 5,744 7,184 8.017 FULLERTON B I TECHNOLOGIES, INC. 1,554 2.2038 2,590 2,614 2,079 2,742 3.084 3.895 4,351 FULLERTON KRYLER CORPORATION 3.1952 250 250 1,300 2,206 2.481 3,189 3,571 FULLERTON SUNCLIPSE INC. 1,032 11293 3,443 2,436 1,853 2,211 2,487 3,124 3,468 FULLERTON SCIENTIFIC SPRAY FINISHES, INC 25 1 6540 1,426 1,105 1,228 1.712 1,926 2,446 2.735 FULLERTON CARAN PRECISION ENGINEERING 556 0,6903 1,439 1,439 955 1,172 1,318 1,656 1.848 FULLERTON SANT ANA SERVICES 15 0.4538 34 895 389 529 595 746 632 FULLERTON DR SMOOTHIE ENTERPRISES 0.0416 87 87 58 71 79 100 111 a, FULLERTON FULLERTON PLATING 398 0 2750 85 81 142 221 248 31B 355 0 GARDEN GROVE 0 ,.,. HOUSE FOODS AMERICA CORPORATION 76,7310 1,019,871 367,846 369,484 398,411 448,076 561,660 626,800 "O GARDEN GROVE U S. DYEING & FINISHING INC, 660 208.0300 380,501 160,667 209,560 271,332 305,145 386,804 432.297 ~ °" GARDEN GROVE PILKINGTON AEROSPACE 2,361 19.1630 5,843 42,052 18,543 24,503 27,561 34.511 38.517 n; 00 GARDEN GROVE LINFINITY MICROELECTRONICS INC. 3,241 27.3190 1,095 5,7B7 11,721 19,515 21,947 28,140 31,496 ....., GARDEN GROVE IDEAL UNIFORM RENTAL SERVICE 7 7478 14,390 25,036 12,402 14,944 16,609 20,964 23,410 GARDEN GROVE GOODWIN COMPANY 142 1 7556 27,415 2,157 7.976 8,569 9,636 12,171 13,594 GARDEN GROVE CATALINA CYLINDERS A DIV. OF APP 638 6.7488 5,669 4,995 5,092 7,077 7,959 10,100 11,291 GARDEN GROVE AIR INDUSTRIES CORP.-KNOTT 1,856 3,9312 8,197 8,197 5,441 6,676 7,50B 9,429 10,526 GARDEN GROVE COASTLINE METAL FINISHING CORP. 230 5.9377 1.357 2,283 3,070 4,780 5,376 6,865 7,680 GARDEN GROVE ELECTRON PLATING Ill INC 131 5.1320 469 1,001 2,247 3,711 4,173 5,351 5,989 GARDEN GROVE BAZZ HOUSTON CO 343 3.065B 2,926 1,504 2,216 3,108 3,496 4,449 4.975 GARDEN GROVE CANNON EQUIPMENT WEST INC 437 1.2770 1,953 1,887 1,406 1,796 2.020 2,545 2,843 GARDEN GROVE LACEY CUSTOM LINENS 40 11490 1,218 3,279 1,508 1,87i 2,112 2,637 2,942 GARDEN GROVE AIR INDUSTRIES CORP. (CHAPMAN) 508 0,5379 1,386 1,095 804 973 1.094 1.375 1,535 GARDEN GROVE D & S CUSTOM PLATING INC. 42 0 8982 407 459 542 802 902 1,149 1.285 GARDEN GROVE CD VIDEO INC 0,6673 440 440 460 656 737 937 1,047 GARDEN GROVE BASIC ELECTRONICS, INC. 201 0 2176 833 308 361 428 482 608 679 GARDEN GROVE STAR POWDER COATING 9 0 0306 106 30 45 54 61 77 86 GARDEN GROVE MIRACLE STRIPPING & PLATING. INC 0.0220 46 46 30 37 42 53 59 GARDEN GROVE GRAPHIC PACKAGING CORP 2,043 0 9599 1,995 1,995 1.325 1,627 1,830 2,298 2.565 HUNTINGTON BEACH BOEING COMPANY (GENERAL FAC) 5,970 55 9220 94,640 192,113 89.944 108,412 121,943 152,060 169,618 HUNTINGTON BEACH JOHN A THOMAS 11.6342 71,025 6,210 23,422 26,969 30,327 38,429 42,941 HUNTINGTON BEACH COLUMBIA HUNTINGTON BEACH HOSPITAL 906 10 5715 22.042 22,042 14,631 17,952 20,191 25,356 28,306 HUNTINGTON BEACH NUEVO ENERGY CO (HB) 193 11.4379 14,800 20,324 12,741 16.267 18,296 23.004 25,686 HUNTINGTON BEACH CAL-AURUM INDUSTRIES INC. 226 13 0295 626 944 5,183 8,877 9,983 12,838 14,375 HUNTINGTON BEACH BRINDLE/THOMAS OIL COMPANY 59 2 1900 19,342 639 5,767 6.443 7.246 9,183 10,262 HUNTINGTON BEACH CAMBRO MANUFACTURING 934 3.5750 7,454 7.454 4,948 6.071 6,828 8.575 9 573 H:ldepllfin\210\STREEDIE•cel\Permit Users\2002-03 reccn and rates xis 8/31/2004 Impact of Permit User Rate Change Page 7 of 12 Estimatecl OCSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOO ss Adoptecl Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 36B.58 $ 651.09 $ 732 18 $ 943.48 $ 1,056 64 BOD Rate per 1000 Pounds $ 248.55 $ 251.10 $ 282.36 $ 356 68 $ 398.36 SS Rate per 1000 Pounds $ 238.45 $ 251.09 $ 282.52 $ 341.17 $ 379.09 HUNTINGTON BEACH PRECISION RESOURCE, CALIF DIV 626 3_8086 5,881 4,051 3,832 4,974 5,594 7,073 7,903 HUNTINGTON BEACH SPEEDY CIRCUITS, FACILITY #2 120 4 7120 4,137 1,293 3,073 4,431 4.983 6,362 7,117 HUNTINGTON BEACH GARG-OIL PRODUCTION LLC 139 34973 1,289 2,277 2,561 3,300 3,695 HUNTINGTON BEACH TIODIZE COMPANY. INC. 96 3,0931 488 655 1.417 2,301 2,587 3,316 3,711 HUNTINGTON BEACH CITY OF HUNTINGTON BEACH FIRE DEPARTMENT 2.5012 1,064 709 1,355 2,074 2,332 2,981 3,336 HUNTINGTON BEACH BOEING COMPANY (GRAHAM) 1.1200 2,335 2,335 1,550 1,902 2,139 2,686 2,999 HUNTINGTON BEACH CAPRO OIL COMPANY 22 1.9152 706 1,247 1,402 1,807 2,024 HUNTINGTON BEACH SOUTH COAST OIL CORPORATION 1B2 1 7B92 659 1,165 1,310 1,688 1 891 HUNTINGTON BEACH HB OIL OPERATIONS TRUST 22 1 0490 1,137 744 847 1,155 1,299 1,649 1.843 HUNTINGTON BEACH SOLDERMASK, INC, 132 0.3184 1,140 942 625 730 821 1,028 1,148 HUNTINGTON BEACH CEMPI INDUSTRIES INC 175 0.5315 560 560 469 628 706 893 997 to HUNTINGTON BEACH LOGI GRAPHICS, INC. 144 0,7108 306 167 378 582 654 837 936 0 HUNTINGTON BEACH MILLETT INDUSTRIES 0,3409 602 598 41B 523 589 740 827 0 :r. "O HUNTINGTON BEACH M.S. BELLOWS 52 01455 1,118 257 393 440 495 624 697 "' UC, HUNTINGTON BEACH ROCK INDUSTRIES INC. 97 0_3820 347 (1) 308 301 413 465 589 659 00 HUNTINGTON BEACH SPEEDY CIRCUITS, DIV OF PJC 0,2320 484 484 00 321 394 443 556 621 HUNTINGTON BEACH PIER OIL COMPANY 35 0 5550 205 361 406 524 586 HUNTINGTON BEACH PETROPRIZE 7 0.2877 106 187 211 271 304 HUNTINGTON BEACH BRINDLE/THOMAS 0.1460 54 95 107 138 154 HUNTINGTON BEACH SIGNAL ASSOCIATES 3 0,0683 25 44 50 64 72 HUNTINGTON BEACH SOUTH COAST OIL COMPANY 0 0 0 0 0 HUNTINGTON BEACH ALEXANDER OIL COMPANY 3 0 0 0 0 0 HUNTINGTON BEACH W M ELLIOTT 7 0 0 0 0 0 HUNTINGTON BEACH WILVIAN JEWELL RENNER 17 0 0029 1 2 2 3 3 HUNTINGTON BEACH \NILLIAM J SCOTT 28 0 0 0 0 0 HUNTINGTON BEACH O'DONNELL OIL COMPANY 65 0 0091 19 19 13 15 17 22 24 HUNTINGTON BEACH S & COIL CORPORATION 106 0 0 0 0 0 IRVINE ROYALTY CARPET MILLS INC. 155 173.3180 752,704 105,273 276,068 328,283 369,175 467,913 522,890 IRVINE B. BRAUN MEDICAL INC 15,072 237.2520 50,689 43,228 110,353 178,055 200,237 256,670 287,270 IRVINE MARUCHAN, INC 890 14.6254 137,997 20,673 44,619 49,364 55,514 70,072 78,263 IRVINE TODDS ENTERPRISES 424 7.7908 120,786 53,243 45,589 4B.771 54,852 68,597 76,532 IRVINE PACKARD-HUGHES INTERCONNECT SYSTEMS 994 39.2168 11,619 9,427 19,591 30,818 34,658 44,361 49,641 IRVINE EDWARD LIFESCIENCES LLC 2.B10 26.0706 25,842 25,842 22,194 29,952 33,686 42,631 47,638 IRVINE UNION INCORPORATED 15.6178 54,008 11,849 22,006 26,705 30,032 38,041 42,509 IRVINE PRUDENTIAL OVERALL SUPPLY 215 6.0088 16,583 12,621 9,346 11,245 12,647 15,B90 17,740 IRVINE JEFFERSON SMURFIT CORPORATION (U.S-) 2,349 4 9626 18,334 9,469 8,644 10,212 11,486 14,452 16,137 IRVINE RAYNE DEALERSHIP CORP 12.3764 611 3,376 5,519 9,059 10,188 13,047 14,601 IRVINE ENTHONE INC. 211 2.0340 23.113 1,797 6,923 7,579 B,523 10,776 12,038 IRVINE ELECTROLURGY INC 67 9.4495 1,084 5,106 4,970 7,707 8,667 11,044 12.352 H:\dept\fin\21 0\STREEOIF.xcel\Permit Users\2002-03 rer.on and rates xis 8/31/2004 Impact of Permit User Rate Change Page 8 of 12 Estimated OCSD6D% 2002-03 2002-03 2002-03 Cily Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 36B,58 $ 651.09 $ 732.18 $ 94348 $ 1,056 64 BOD Rate per 1000 Pounds $ 248 55 $ 251.10 $ 282.36 $ 356.68 $ 398,36 SS Rate per 1000 Pounds $ 238.45 $ 251.09 s 282 52 $ 34117 $ 379 09 IRVINE SUNSET ENVIRONMENTAL, INC. #2 164 1 8145 6,756 13,6B3 5,611 6,313 7,102 B 790 9.796 IRVINE COSMOTRONIC CORP 26 3.1835 6.851 1,718 3,286 4,224 4,751 6,033 6,744 IRVINE RICOH ELECTRONICS INC. 116 3 9095 3,028 2,961 2,900 4,049 4,554 5,779 6,460 IRVINE PRINTRONIX, INC 1,184 1.B325 3,375 3,375 2,319 2.888 3,248 4,084 4,560 IRVINE NEWPORT CORPORATION 1,303 1 6967 3,536 3,536 2,347 2,880 3,240 4,068 4,542 IRVINE 0 C B REPROGRAPHICS 106 1,5625 3,258 3,258 2,162 2,653 2,984 3,748 4,184 IRVINE FMH INVESTOR GROUP 370 1 4464 1,593 1,467 1,279 1,710 1.923 2,434 2,719 IRVINE NEWPORT PRECISION OPTICS 0.6627 1,162 1.233 827 1,033 1,162 1,460 1,630 IRVINE SUNSET ENVIRONMENTAL. INC #1 246 0,5850 1,220 1,220 810 993 1,117 1.403 1,566 IRVINE ALLTEK CIRCUIT INC. 0.9059 284 94 427 685 770 988 1,106 IRVINE DYE TECHNIQUE INC 26 0,1348 281 281 187 229 257 323 361 IRVINE WINTEC, LLC 0.0991 168 162 117 148 166 209 233 0:, LA HABRA RALPHS GROCERY COMPANY (BAKERY) 2,715 6.6379 91,387 17,521 29,339 31,669 35,614 44,836 50,061 0 0 lAHABRA SHEPARD BROTHERS INC, 316 0.3155 21,984 932 5,803 5,960 6,702 8,457 9,444 ;,;- -0 LA HABRA WATER MAN 9 5.6179 190 190 2,163 3,753 4,220 5,433 6,084 "' (rQ LA HABRA (1) ARNOLD ELECTRONICS, INC #1 22 4 1023 474 733 1,805 2,974 3,345 4,290 4,801 00 '° LA HABRA LA HABRA PLATING CO INC. 15 2 1230 68 68 815 1,416 1.593 2,050 2,2e6 LA PALMA LA PALMA INTERCOMMUNITY HOSPITAL 1,095 12 3087 25,664 25,664 17,035 20,902 23,509 29,522 32,958 LA PALMA PERFORMANCE MACHINE INC 1 1621 2.423 2,423 1,608 1,973 2,220 2,787 3,112 LOS ALAMITOS JOINT FORCES TRAINING BASE.LOS ALAMITOS 25.8853 30,665 33,805 25,223 33,042 37.162 46,893 52,382 LOS ALAMITOS LOS ALAMITOS GENERAL HOSPITAL 3,871 12 3191 25,685 25,685 17,049 20,920 23,529 29,547 32,986 LOS ALAMITOS TREND OFFSET PRINTING SERVICES INC B,6231 17,979 17,979 11,934 14,643 16,470 20,682 23,089 LOS ALAMITOS ARROWHEAD PRODUCTS CORPORATION 2,682 10.2132 9,669 9,430 8,416 11,445 12,872 16,302 18,218 LOS ALAMITOS BEARING INSPECTION INC. 946 0.8458 1,764 1,736 1,164 1,430 1,608 2,019 2,255 NEWPORT BEACH JAZZ SEMICONDUCTOR 43,092 257 5577 12,271 12,271 100,907 173,856 195,511 251,564 281,686 NEWPORT BEACH HOAG MEMORIAL HOSPITAL PRESBYTERIAN 35 9836 75,026 75,026 49,800 61,106 6B,727 86,307 96,351 NEWPORT BEACH HIXSON METAL FINISHING 41 15.7516 894 2,684 6,668 11,154 12,544 16,096 18,017 NEWPORT BEACH RENAL RESEARCH INSTITUTE, LLC 2.2454 4,682 4,682 3,108 3,813 4,289 5,386 6,012 NEWPORT BEACH AMETEK AEROSPACE 292 2.4275 3,124 3,057 2.400 3,132 3,523 4,447 4,968 NEWPORT BEACH CITY OF NEWPORT BEACH 2.2182 1,694 1,694 1,643 2,295 2,581 3,275 3,661 NEWPORT BEACH BASIN MARINE INC. 18 0.3466 306 251 264 365 411 522 583 ORANGE UCI MEDICAL CENTER 63 2390 131.853 131,853 87,521 107,390 120,784 151,679 169,330 ORANGE ANGELICA TEXTILE 268 89.9501 85,774 60,148 68,815 95,206 107,072 135,981 152,016 ORANGE ST JOSEPH HOSPITAL 218 52.9765 110,456 110,456 73,318 89,962 101,183 127,064 141,851 ORANGE GRANDE TORTILLA INC 205 3,2605 137,285 69,118 51,805 53,950 60,678 75,624 84,336 ORANGE CHILDREN'S HOSPITAL OF ORANGE COUNTY 12.6665 26,410 26,410 17.530 21,510 24,192 30,381 33,916 ORANGE MARCEL ELECTRONICS INT 162 21 8945 10,068 7,439 12,346 18,651 20,975 26,786 29.96S ORANGE WASTE MANAGEMENT OF OC TRANSFER 393 3 2326 39,024 5,542 12,212 13,295 14,951 18,860 21,062 ORANGE CHAPMAN MEDICAL CENTER 1,253 7 1454 14,898 14,89B 9,889 12,134 13,647 17,138 19,133 H:ldeptlfin\210\STREED\Excel\Permit Users\2002-03 rec.on and rates.xis 8/31/2004 Impact of Permit User Rate Change Page 9 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-•5 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tal< (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 36B.58 $ 651.09 $ 732 1B $ 943 48 $ 1,056.64 BOD Rate per 1000 Pounds $ 24B,55 $ 251.10 $ 2B2.36 $ 356.66 s 398 36 SS Rate per 1000 Pounds $ 238.45 $ 251,09 $ 282.52 $ 341.17 $ 379 09 ORANGE CIRTECH INC 160 6.7337 9,197 7,949 6,663 8,690 9,773 12,345 13,792 ORANGE WEST AMERICAN RUBBER COMPANY INC. 1,163 7 0405 6,685 6,6B5 5,850 7,941 8,931 11,307 12,636 ORANGE SIERRA SPRING WATER COMPANY 6B 7.9708 2.471 1,226 3,844 6,118 6,880 8,B20 9,872 ORANGE STATEK CORPORATION 290 4 6971 7,773 4,278 4 683 6,084 6,842 8,664 9,681 ORANGE CONTINUOUS COATING CORPORATION 402 5.9100 1,135 2,030 2,944 4,643 5,221 6,673 7.466 ORANGE SVG THERMCO SYSTEMS INC 583 2.7000 5.630 5,630 3,737 4,585 5,157 6,476 7,230 ORANGE PLATECORP #2, INC, 176 5.4129 1,725 1,269 2,726 4,276 4,809 6,155 6,88B ORANGE ULTRA PURE METAL FINISHING, INC. 118 4.B517 363 4.108 2,858 4,281 4,B15 6,108 6,B28 ORANGE ORANGE COUNTY PLATING CO., INC. 1B 4.8133 962 1,294 2,322 3,700 4,161 5,326 5,960 ORANGE CIRCUIT ACCESS 55 1 0015 10,118 730 3,058 3,376 3,797 4,803 5,366 ORANGE VILLA PARK ORCHARDS ASSOCIATION 474 1_B421 3,634 5,998 3,012 3,618 4,069 5,081 5,668 0:, ORANGE DUCOMMUN AEROSTRUCTURES 2,083 2 9010 4,546 1,935 2,660 3,516 3,954 5,019 5,610 0 ORANGE SOUTH COAST WATER 299 2.8263 211 3,43B 1,914 2,757 3,100 3,915 4,374 0 r-ORANGE FOAMEX LP, 2,512 3,962 "Cl 1 5114 3,030 3,056 2,039 2,825 3,549 "' ORANGE CADILLAC PLATING ()Q 137 2.4991 375 1.052 1,265 1,986 2,233 2,851 3,189 (1) -D ORANGE HIGHTOWER PLATING & MANUFACTURING CO 473 2.5353 117 1,255 1,263 1,995 2,244 2,862 3,201 0 ORANGE HAMILTON MATERIALS 112 1.1900 2,481 2,481 1,647 2,021 2,273 2,854 3186 ORANGE DUNHAM METAL PROCESSING 19 1 6632 544 2,924 1,445 1,954 2,197 2,761 3,083 ORANGE QUALITY ALUMINUM FORGE# 2 77 11122 1,879 1,646 1,270 1,609 1,810 2,281 2,548 ORANGE SERRANO WATER DISTRICT 0.7951 26 5,217 1,543 1,834 2,063 2,539 2,828 ORANGE THERMAL.VAC TECHNOLOGY 1.2225 so 1,424 805 1,168 1,3t4 1,660 1,855 ORANGE QUALITY ALUMINUM FORGE 175 0 9273 477 582 599 870 97B 1,244 1,390 ORANGE SF PP, LP 32 0 3604 2,042 298 712 822 925 1,170 1,307 ORANGE DITTY DRUM COMPANY, INC. 27 0.9733 338 338 523 B03 903 1,154 1,291 ORANGE CIRCUIT TECH INC. 115 0.3761 645 215 350 461 518 658 736 ORANGE INDEPENDENT FORGE 175 0.3297 520 539 379 481 541 6B1 760 ORANGE A&A DEBURRING AND TUMBLING 0 2668 548 343 316 397 447 564 630 ORANGE PERFORMANCE POWDER, INC. 0 3086 323 299 265 357 402 509 568 ORANGE BURLINGTON ENGINEERING INC. 61 0.2627 293 293 239 318 358 452 505 ORANGE GOMTECH ELECTRONICS 27 0.1456 57 57 81 123 139 177 198 ORANGE DATA AIRE INC. #2 923 0 4202 856 734 543 673 757 852 1,063 PLACENTIA KNOTT'S BERRY FARM FOODS 2,041 16 5556 871,488 53,200 235,396 242,968 273 225 344,612 384,827 PLACENTIA PLACENTIA LINDA COMMUNITY HOSPITAL 2,B55 13.3404 27,815 27,815 18,463 22,654 25,480 31,997 35,721 PLACENTIA FROZSUN FOODS, INC 163 7 4577 28,384 6,618 11,382 13,645 15,345 19,418 21,696 PLACENTIA S.B. THOMAS INC 742 1 7687 19,044 4,113 6,366 6,966 7,834 9,864 11,014 PLACENTIA CALIF CONSOLIDATED WATER PURIFICATION 249 3 8176 363 12,879 4,568 5,811 6,536 B.125 9,061 PLACENTIA EXCELLO CIRCUITS MANUFACTURING CORP 153 5.4805 3,083 1.254 3,085 4,657 5,237 6,698 7,494 PLACENTIA CARTEL ELECTRONICS 3 6029 3,095 886 2,309 3,346 3,762 4,806 5,376 PLACENTIA HARTWELL CORPORATION 466 1.3611 2,422 1,992 1 579 1,994 2,243 2,828 3, 15B H:ldepllfin\210\STREEDIExcel\Permit Users\2002-03 recon and rates xis 8/31/2004 Impact of Permit User Rate Change Page 10 of 12 Estimated OCSD60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD SS Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 368 58 S 651 09 $ 732 18 $ 943.48 $ 1,056 64 BOD Rate per 1000 Pounds $ 248,55 :s 251 10 $ 282.36 $ 356.68 $ 398,36 SS Rate per 1000 Pounds $ 238,45 s 251,09 $ 282.52 $ 341 17 $ 379,09 PLACENTIA KG A ELECTRONICS, INC. 519 1 8194 1,491 867 1,248 1 777 1,998 2,544 2,845 PLACENTIA NOLLAC OIL COMPANY 12 1 9307 259 772 960 1,516 1,705 2,178 2.436 PLACENTIA GEORGE A, JONES, IMPERIAL #2 WELL 29 1 5463 314 314 723 1.164 1,309 1,678 1,878 PLACENTIA BRIGHT ARMOUR PLATING 78 1 3014 165 287 589 961 1,081 1,385 1,550 PLACENTIA SUPERIOR PROCESSING 128 0.5574 132 111 265 424 477 611 684 SANTAANA STREMICKS HERITAGE FOODS LLC 3,635 88.9928 2,109,695 743,727 734,507 774,429 870,970 1,090,186 1,216,391 SANTAANA CHROMA SYSTEMS PARTNERS 1,252 167.2663 268,230 43,329 138,652 187,138 210,448 268,267 300,018 SANTAANA IRWODATS 207 7076 5,235 1,770 78,280 136,995 154.0SB 198,439 222,228 SANTAANA UWMC HOSPITAL CORPORATION 8,038 37.7209 78,648 78,648 52,205 64,056 72,045 90,473 101,002 SANTAANA EL METATE FOODS. INC. 317 3,8308 101,644 51.273 36,901 40,891 45,990 57,361 63,975 SANTAANA GOGLANIAN BAKERIES 790 B.0730 71,164 63,166 35,725 38,986 43,850 54,550 60,825 0:, SANTAANA EL TORO MEAT SHOP 128 4,1564 86,921 24,979 29,093 30,804 34,644 43,447 48,487 0 SANTAANA GEMINI INDUSTRIES INC. 97 5.6713 853 133.608 34,161 37.454 42,140 51,238 56,982 0 ;,;- " SANTAANA MICRO SEMI CORP 1,892 30.4213 16.B54 11,731 18.199 26,985 30,347 38,716 43.305 CJ 00 SANTAANA DANONE WATERS OF N A ·SANTAANA 35.5825 4,219 B,009 16,073 26,238 29,507 37,808 42,314 (7) \CJ SANTAANA ORANGE COUNTY REGISTER 8,584 16.1072 35,280 32,482 22,451 27,502 30,932 38,862 43,387 SANTAANA ITT CANNON, A DIVISION OF ITT INDUSTRIES 14,959 31.0324 15,173 13,852 18,512 27.493 30,919 39,416 44,0B5 SANTAANA TTM TECHNOLOGIES #1 162 17.7899 21 ,094 11,125 14.453 19,673 22,125 28,104 31,418 SANTAANA CULLIGAN WATER CONDITIONING 16.4408 368 6,248 7,641 12.366 13,907 17,775 19,887 SANTAANA MEDTRONIC HEART VALVES, INC 527 7 1975 16,359 10,167 9,143 11,347 12,761 16,094 17,976 SANTAANA INTERNATIONAL FOOD SOLUTIONS. INC 712 2.8086 31,450 4,153 9,842 10,769 12.110 15,284 17,070 SANTAANA UNIVERSAL CIRCUITS INCORPORATED 647 14 0630 2,053 4,802 6,839 10,B77 12,233 15,639 17,498 SANTAANA ASTECH ENGINEERED PRODUCTS 118 13 9890 2,449 2,124 6,271 10,256 11,534 14,796 16,562 SANTAANA EMBEE INC #2 25 13.4831 2,396 3,600 6,424 10.284 11,566 14,804 16,566 SANTAANA BURROWS IND. OBA MINUTEMAN PUMPING 177 2 7786 24,011 4,613 8,092 8,996 10,117 12,759 14,250 SANTAANA PIONEER CIRCUITS 315 9 7955 6,549 4,053 6,204 9,040 10,166 12,960 14,495 SANTA ANA ALPHANETICS INC 102 9 .. 3168 4,891 1,677 5,049 7,715 8,676 11,107 12,428 SANTAANA MARKLAND MANUFACTURING, INC. 487 9,0452 3,370 2,977 4,881 7,483 8,415 10,752 12,029 SANTAANA TTM TECHNOLOGIES, INC 642 6.874B 6,207 6,337 5,588 7,626 8,576 10,B62 12,139 SANTAANA FABRICATION CONCEPTS CORPORATION 776 5,5691 5,655 6,054 5,379 7.068 7,950 10,019 11.190 SANTAANA EMBEE INC. #1 30 7 0646 626 1,698 3,164 5,183 5,829 7,468 8,358 SANTAANA TEXTRON AEROSPACE 4,539 7 0782 5,873 5,583 5,400 7.485 8,418 10,678 11,935 SANTAANA ANOMlL ENT OBA DANCO METAL SURFACING 150 5.4452 2,679 3,417 3,488 5,076 5,709 7.259 8,116 SANTAANA ANODYNE INC. 24 5,6640 645 4,441 3,307 4,965 5.584 7,089 7.925 SANTAANA EMBEE INC. #3 30 8.0751 1,612 1,327 2,956 4,693 5,278 6,759 7,564 SANTAANA ALUMINUM FORGE· DIV. OF ALUM PRECISION 164 2 2288 2,011 10,307 3.779 4,544 5,112 6,337 7,064 SANTAANA WEBER PRECISION GRAPHICS 162 1 0217 9,209 1,151 2,940 3,267 3,674 4,642 5,185 SANTAANA CHROME TECHNOLOGY. INC 217 3 8819 1,276 2,027 2,231 3,357 3,775 4,809 5,379 SANTAANA SOUTH COAST CIRCUITS #3 63 3 5930 2,084 1 369 2.169 3,206 3,606 4,600 5,146 H:ldept\lin\210\STREED\Excel\Permrl Users\2002-03 recon and rates xis 8/31/2004 Impact of Permit User Rate Change Page 11 of 12 Estimated OCSD 60% 2002-03 2002-03 2002-03 City Permit User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Estimated Tax (MG) (lbs) (lbs) Flow Rate per Million Gallons $ 36B,58 $ 651.09 $ 732 18 s 943.48 $ 1,056.64 BOD Rate per 1000 Pounds $ 248 55 $ 251.10 $ 282.36 $ 356.68 $ 398.36 SS Ralc per 1000 Pounds s 238 45 $ 251.09 $ 282.52 $ 34117 $ 379 09 SANTAANA RICOH ELECTRONICS #2 795 1 7501 4.412 4,085 2,716 3,273 3,681 4,618 5,155 SANTAANA ALUMINUM PRECISION PRODUCTS INC. CENTRAL 1 5766 5,120 1,955 2,320 2,803 3,152 3,981 4,447 SANTAANA DATA ELECTRONIC SERVICES INC. 75 3,1141 1,632 1.021 1,797 2.694 3,029 3,869 4,328 SANTAANA ACTIVE PLATING INC. 3.2736 1,163 796 1,686 2,623 2,950 3,775 4,224 SANTAANA INTEGRATED AEROSPACE. INC. 1 5510 3,274 3,108 2,127 2,612 2,938 3,691 4,121 SANTAANA GALL.ADE CHEMICAL INC 178 1.9846 2,303 1,880 1,752 2,343 2,635 3,335 3,727 SANTAANA ACCURATE CIRCUIT ENGINEERING 63 1.3752 4,283 1,027 1,816 2,229 2_506 3,176 3,549 SANTAANA ALUMINUM PRECISION PRODUCTS \NC.-SUSAN 124 1.7843 2,144 2,115 1,695 2,231 2,509 3 170 3,541 SANTAANA VERTEQ PROCESS SYSTEMS INC. 2.1927 1,271 1,271 1,427 2,066 2,323 2,955 3,305 SANTAANA REID METAL FINISHING 134 1 9402 939 910 1.166 1,728 1,943 2,476 2,769 SANTAANA RB C TRANSPORT DYNAMICS CORP. 298 1,0328 2,122 2,142 1,419 1,743 1,960 2.462 2,748 ttl SANTAANA SOUTH COAST CIRCUITS #4 7:1. 2 2302 431 255 990 1,624 1,827 2,345 2,625 0 SANTA ANA ELECTROSERVICES 2000 INC 174 2.1012 641 73 951 1,547 1,740 2,236 2,503 0 ;;,:-SANTAANA ALMATRON ELECTRONICS, INC 107 1 7311 1,048 654 1,054 1,554 1,748 2.230 2,494 "O "' SANTAANA BRASSTECH, INC 0.9141 1,906 1,906 1,265 1,552 1,746 2,192 2,448 (J<l (I) '° SANTAANA SOUTH COAST CIRCUITS #2 1,2736 2,019 297 1,042 1,411 1,586 2,023 2,263 ...., SANTAANA PLEION CORPORATION #2 796 1 0439 1,319 1,449 1,058 1,375 1,546 1 950 2,178 SANTAANA L & N UNIFORM SUPPLY COMPANY,INC.(CLEAN) 0.7479 1,753 1,781 1,136 1,374 1,546 1,938 2,164 SANTAANA WHEEL SERVICES GROUP, INC 1.5819 219 773 B22 1,279 1.438 1,834 2,052 SANTAANA SOUTH COAST CIRCUITS, INC. 79 15479 459 493 802 1,247 1,402 1,793 2,006 SANTAANA PACIFIC QUARTZ, INC 66 0,8499 1,400 1,389 992 1,254 1,410 1,775 1,982 SANTAANA SOUTH BAY CHROME SALES/CHROME EFFECTS 126 14043 475 700 803 1,209 1,360 1,733 1,939 SANTAANA ORANGE CONTAINER, INC. 0.6319 1,336 1,799 994 1,199 1,348 1,687 1,882 SANTAANA MASK TECHNOLOGY INC. 126 0,9916 611 397 612 899 1,011 1,289 1.441 SANTAANA SELECT CIRCUITS 278 0.7883 1,260 190 649 877 986 1,258 1,407 SANTAANA S P S TECHNOLOGIES 2,954 3,9208 3.404 3,404 3,103 4,262 4,794 6.D75 6 789 SANTAANA EFT FAST QUALITY SERVICE, INC 88 0.9660 122 357 471 749 842 1,077 1,204 SANTAANA SANTAANA PLATING (CNK CAPITAL) 44 0.3965 827 827 549 673 757 951 1,062 SANTAANA CAL-TRONICS CIRCUIT INC -SANTA ANA 0.6315 546 272 433 617 654 884 988 SANTAANA LAM-PLATE TECH INC. 118 0.7248 327 129 379 586 660 845 945 SANTAANA OLYMPIC POWDER COATINGS INC 108 0.5203 557 516 453 608 684 866 967 SANTAANA GORILLAS POLISHING AND PLATING 150 0.6832 368 192 389 585 658 841 941 SANTAANA MARGARET\$ TEXTILE SERVICE 233 0.3622 755 755 501 615 692 869 970 SANTAANA MARK OPTICS INC. 66 0.4100 395 880 459 587 660 828 924 SANTAANA BA F INDUSTRIES 231 0.4151 640 472 425 550 618 781 873 SANTAANA PRECIOUS METALS PLATING 93 0.6052 243 204 332 506 569 727 814 SANTAANA STRIP CLEAN COMPANY 14 0.6D97 184 240 328 503 566 723 808 SANTAANA PRECISION CIRCUITS WEST INC 0 4882 388 303 34B 491 552 702 785 SANTAANA AQUA-CON COMPANY 50 0.6081 149 203 310 484 545 696 779 H·\deptlfln\210'.STREED\Excel\Perm,1 Usersl2002-03 recon and rates sis B/31/2004 Impact of Permit User Rate Change Page 12 of 12 Eslimated OCSD 60% 2002-03 2002-03 2002-03 City Permrt User Name Share of Total Total Total 2004-05 2004-05 2005-06 2006-07 2007-08 Property Flow BOD ss Adopted Proposed Estimated Estimated Eslimated Tax (MG) (lbs) (lbs) Flow Rale per Million Gallons $ 368.58 S 651 09 $ 732 18 $ 943 48 $ 1,056 64 BOD Rale per 1000 Pounds $ 248.55 $ 25110 $ 282.36 $ 356.68 $ 39B.36 SS Rale per 1000 Pounds $ 238.45 $ 251 09 $ 282,52 $ 34117 S 379 09 SANTAANA ALLOY TECH ELECTROPOLISHING INC 152 0.453B 232 146 260 390 439 561 627 SANTAANA MEDEVA PHARMACEUTICALS CA. INC 131 0 1921 401 401 266 326 367 461 514 SANTAANA VICTORY CIRCUITS INC. 0 1475 551 55 204 248 279 354 396 SANTAANA X Z X ELECTRONICS 97 0 1524 324 88 158 202 228 289 323 SANTAANA AUTO-CHLOR SYSTEM OF WASHINGTON, INC. 62 0,0545 48:l 121 169 187 210 265 296 SANTAANA A&K DEBURRING AND TUMBLING 0.1006 235 189 141 172 194 243 272 SANTAANA DATA SOLDER INC 0.0648 135 135 90 110 124 155 174 SANTAANA HI-TECH STENCILS 0.0272 53 51 35 44 49 62 69 SANTAANA LAM LIGHTING INC 2,040 0.6660 1,339 1,394 911 1,120 1,260 1 582 1,766 SANTAANA PRECISION POWDERCOATING INC. 138 0.1593 143 84 114 161 181 230 257 SEAL BEACH NAVAL WEAPONS STN SEAL BCH CD 043 5.2734 10.995 10,995 7,298 8,955 10,072 12,648 14,120 cc SEAL BEACH ACCURATE METAL FABRICATORS 2.5550 5,327 5,327 3,536 4,339 4,880 6,128 6,841 0 STANTON ALL METALS PROCESSING OF O C INC. 290 2.9329 2,273 2,239 2,180 3.043 3,422 4,342 4,853 0 r. STANTON PURE-CHEM PRODUCTS COMPANY INC 70 0.1891 317 360 234 293 330 414 463 -0 "' TUSTIN CITY OF TUSTIN WATER SERVICE (17TH ST.) 96.3091 19 2,428 36,081 63,320 71.207 91,701 102,692 ~ '° w TUSTIN CITY OF TUSTIN, WATER SERVICE (MAIN ST.) 19 2910 662 1466 7,625 13.095 14,726 18.937 21,203 TUSTIN TUSTIN HOSPITAL ANO MEDICAL CENTER 5.9627 12,432 12,432 B,252 10,126 11,388 14,302 15.966 TUSTIN CITY OF TUSTIN· MAINTENANCE YARD 04317 865 873 582 717 807 1,014 1,132 TUSTIN TOYOTA RACING DEVELOPMENT #2 242 0.408B 798 741 526 653 734 923 1,031 TUSTIN CHEEK ENGINEERING & STAMPING 244 0.3671 442 261 307 415 467 593 663 TUSTIN WESCO SERVICES -D 0722 293 43 110 131 148 187 209 TUSTIN REVERE TRANSDUCERS, INC. 1,184 1.2217 1,202 1,152 1,024 1 387 1,559 1,974 2,207 WESTMINSTER VENCOR INC OBA VENCOR HOSP-ORANGE COUNTY 1,284 5.8993 12,300 12,300 8,164 10,018 11,267 14,149 15,796 WESTMINSTER LINDBERG HEAT TREATING CO.-ALUMATHERM 706 4.0551 1,408 1,408 2,180 3,347 3.764 4,808 5,379 WESTMINSTER SOUTHERN CALIFORNIA EDISON 1 3620 2,114 2,099 1,528 1,945 2,1B7 2,755 3,077 YORBA LINDA AERA ENERGY LLC 264 440 4840 62,594 29.536 184,954 309,928 348,532 447,991 501,565 YORBA LINDA METRO WATER DISTRICT OF SO CA 2.0152 3,995 4.000 2,690 3,320 3,734 4,691 5,237 YORBA LINDA PLEGEL OIL COMPANY (BLATTNER ·AH.A ) 168 1 9693 115 131 786 1,344 1,511 1 944 2,176 YORBA LINDA COLUMBINE ASSOCIATES 12 0.1483 so 5 68 110 124 159 178 YORBA LINDA SHERWIN D YOELIN 6 0.1510 25 12 65 108 121 155 174 Total for Permit Users 904,415 6,117.8307 17,914,101 7,478,311 8,490,663 10,359.218 11,650,351 14.713.028 16,435,559 H:\deptlfin\210\STREED\ExceliPermit Users\2002-03 rcr.on and rales •Is 8/31/2004 Pennit User Rate Calcula1ion Model 6.. .!l. ~ Q .E. E ~ .tl Ref Descnetion Co!IO&M Coll CIP Jo1ntO&M Joint CIP COPs Egui!Y Adj SFt Total Budget Requirements: 25,138,000 62,058,000 96,337,000 169,165,600 75,898,000 2,638,000 1,876,000 433,110,600 2 Remove lnterfund budgets (2,638,000) (1,876,000) (4,514,000) 3 Adjust CIP to Avg thru 2020 (28,255,000) (55,635, 129) (83,890,129) 4 Reduce Avg CIP to Cash Portion (18,388.267} !61,758,677) (80,146,944) s Requirements for Rate Setting 25,138,000 15,414,733 96,337,000 51,771,794 75,898,000 0 D 264,559,527 Sa Reduce for Interest tncome (1,956,237) (1,199,573) {7,496,937) (4,028,877) (5,906,378) 0 0 (20,588,000) Sb Reduce for Conn Fees !2,652,233! !B,907,767! p 1,560,000) Sc Net Requirements for Rate Setting 23,181,763 11,562.927 88,840.063 38,835,150 69,991,824 0 ~411,527 6 Allocallon parameters: Historical Validated CIP 03-04 Actual VaUdated CIP ComboVCIP 7 Flow 100% 90% 12% 33% 49% 8 BOD 10% 34¾ 39% 31% 8 ss 54¾ 28% 20% 10 Allocation to parameters: Resultant 11 Flow 23,181,763 10,406,635 10,660,808 12,815,599 34,295,896 0 0 91,360,700 39% 12 BOD 0 1,156,293 30,205,621 15,145,708 21,697,403 0 0 68,205,028 29% 13 ss 0 0 47,973,634 10,873 842 13,998,325 0 0 72,845,801 31¾ 14 23,181,763 11,562,927 88,840,063 38,835,150 69,991 ,624 0 0 232,4111527 100% 15 Parameter Rates: Would Raise 0:, 8 16 Flow @ 265 mgd, per MG 239.67 107 59 110.22 132.50 354,57 0.00 0.00 944.54 86,189,340 :r. -0 17 BOD@ 228 mg/L, per 1000 lb 0.00 e 29 164.23 82.35 117.97 0 00 0.00 370.83 84,344,308 "' 18 SS@232,B mg/L, per 1000 lb 0.00 0.00 255.68 57.95 74.60 0.00 0.00 JBB.23 68,722,395 ~ '-D 219,256,043 .;,.. 19 Single Family Residentlal Conversion 20 Paremetera Annual Quant R~mtRates Calcd Anni Fee Adjust to Rate Adoeted Rate EguivRate Would Raise 21 Flow ~ 253 gal per day MG 0 0923 944.54 87.22 83% 72 16 781,40 75,580,516 22 BOD @ 206 mg/L 1000 lbs 0 1587 370.83 58.83 83% 4B.87 308.78 56,424,235 23 SS@219mgl 1000 lbs 0.1887 388.23 65.48 83% 54.17 321.17 80,263,673 24 211.54 _ __115.00 1921268,424 25 Anticipated Property Taxes, Used for COP Service for Entire CIP Anni Quant Tax~Param Would Raise 26 Flow @ 265 mgd 49% 26,623,170 98,725 275.25 28,623.170 27 BOD @ 228 mg/L 31% 16,843,230 183,925 91.58 18,843,230 28 5S@ 232.6 mg/L 20% 10,866,600 187,635 57.91 10,866,600 29 54S000 _ 54,333,000 30 Adjust SFR Rate To Add Back Taxes For Permit User Tax e!r Param Eouiv Rale PU Rate Would Raise 31 Flow @ 265 mgd 27525 781.40 1,056 64 102,203,686 32 BOD @ 228 mg/L 91 .58 306.78 398,36 73,287,465 33 SS @ 232 6 mgll 57 91 321.17 379.09 71,130,273 34 ~601.424 H ldopt\fin\210\STREED\Excellold d capylS'fRATPLN\Perm1t U5Sr model B-2004 •ls-net 07-08 8/3112004 Permit User Rafe Calculation Model &. ~ ~ .Q f f g t! Ref Descri~lion CollO&M CollCIP JointO&M JolntCIP COPs ~~ SFI Total Budget Requirements: 24,256,000 62,058,000 92,988,000 169,165,800 62,278,000 2,638,000 1,876,000 415,259,600 2 Remove interfund budgets (2,638,000) (1.878,000) (4,514,000) 3 Adjust CIP to Avg \hru 2020 (28,255,000) (55,635,129) (83,890,129) 4 Reduce Avg CIP lo Cash Portion p B,388,267} (61,758,677) (80,146,944) 5 Requirements for Rate Setting 24,256,000 15.414,733 92,988,000 51,771,794 62,278,000 0 0 246,708,527 Sa Reduce for Interest Income (2,024,180) (1,286,370) (7,759,914) (4,320,393) (5,197,143) 0 0 (20,588,000) Sb Reduc.e for Conn Fees (2.652,233) (81907,767! (11.560,000! Sc: Net Requirements for Rate Setting 22.231,820 11,478,130 85,228,086 38,543,834 57,080,857 0 o 214,560 527 6 Allocation parameters: Historical Validated CIP 03-04 Actual Validated CIP ComboVCIP 7 Flow 100% 90% 12% 33% 49% 8 BOD 10% 34% 39% 31% 9 ss 54% 28% 20% 10 Allocation to parameters: Resuttant 11 Flow 22,231 ,820 10,328,517 10,227,370 12,719,399 27,969,620 0 0 83,478,726 39% 12 BOD 0 1,147,613 2B,977,549 15,032,017 17,695,066 0 0 62,852,245 29% 13 ss 0 0 48 023,168 10.792,217 11,416,171 0 0 68,231,555 32% 14 22.2'31 ,820 11,476,130 85,2a8,0BB 38,543,634 57,080.857 0 0 214,560,527 100% 15 Parameter Rates: ~.\!~ tI:I 0 16 Flow@ 260 mgd, per MG 234.27 108.84 107 77 134.03 294.73 0.00 0.00 879.63 80.266,083 0 "' 17 BOO @ 228 mg/L, per 1000 lb 0.00 8.36 180.58 83.30 98.06 0 00 0.00 348.30 80,435,039 'O 18 ss@ 232.6 mgll, per 1000 lb 0,00 0.00 250.00 58.62 62.01 0.00 0.00 370.63 65,607,108 "' (IQ n, \0 206,308,230 V. 19 Single Family Residential Conversion 20 Parameters Annual Quant RegmtRales Calcd Anni Fee Adjust to Rate Ado!!led Rate Eguiv Rate Would Raise 21 Flow @ 253 gal per day MG 0.0923 879.63 61.23 77o/, 62.45 676 30 64,180.436 22 BOD @ 206 mg/L 1000 lbs 0,1587 348.30 55.26 77% 42.49 267.79 46,323,529 23 SS@219mgl 1000 lbs 0 1687 370.63 62.51 77% 48.06 264.96 52,459,301 24 199.00 153.00 164,963,266 25 Anticipated Property Taxes, Used for COP Seivice for Enti1e CIP Al\nlQuant TaK~rParam WoutdRa_l_~ 26 Flow @ 260 mgd 49% 25,355,540 94,900 267.18 25,355,540 27 BOD @ 228 mg/L 31% 16,041,260 180,454 88 69 16,041,260 28 SS@ 232.8 mg/L 20% 10,349,200 184,095 56.22 10,349,200 29 51,746,000 51,746,000 30 Adjust SFR Rate To Add Back Taxes For Permit User Tax~rParam Eauiv Rate PU Rate Would Raise 31 Flow @ 260 mgd 26718 876.30 94348 89,535,976 32 BOD @ 228 mg/L 88.89 267,79 356.68 64,364,789 33 ss @ 232 a mgll 56.22 28496 341.17 62,808,501 34 216,709,266 H \dspl\fin\210\STREEOIE,ce\\old d copylSTAATPLNIPermi\ U"8t model B-2004.>dl-11e1 06-07 B/31/2004 Permit User Rate Calculation Model A.. !! ~ Q !;_ E ~ !:1 Ref DescriEtion CollO&M CollCIP JolntO&M JointCIP COPs Egui~Adj SF1 Total 1 Budget Requirements: 23,420,000 62,058,000 89,740,000 169.165,800 48,586,000 2,638,000 1,876,000 397,483,600 2 Remove lnterfund budgets (2,638,000) (1,876,000) (4,514,000) 3 Adjust CIP lo Avg thru 2020 (28,255,000) [65,635,129) (83,890,129) 4 Reduce Avg CIP to Cash Portion {18,388,267) 1e1.1se.sni !80, 146,944) 5 Requirements for Rate Setting 23,420,000 15,414,733 89,740,000 51,771,794 48,586,000 0 a 228,932,527 Sa Reduce for Interest Income (2,108,171) (1,386,254) (8,070,357) (4,855,860) (4,369,360) 0 0 (20,588,000) Sb Reduce for Conn Fees (2,652,233) (B,907,767l (11,560,000) 5c Net Requirements for Rate Setting 21,313,829 11,378,247 81,689,643 38,208,167 44,216,840 a 0 _ 196,784,527 e Allocation parameters: Historical Validated CIP 03-04 Actual Validated CIP ComboVCIP 7 Flow 100% 90% 12% 33% 49% 8 BOD 10% 34% 39% 31% 9 ss 54% 28% 20% 10 Allocation to parameters: Resultant 11 Flow 21,313,829 10,238,622 9,800,357 12,608,695 21,688,154 0 0 75,627,658 38% 12 BOD 0 1,137,626 27,767,679 14,901,185 13,707,158 0 0 57,513,647 29% 13 ss 0 0 44,101 ,607 10,698,287 8,843,328 0 0 63.643,222 32% 14 21,313.829 11,378.247 81.889.B43 38,208,167 44,218.640 0 0 196,784,527 100% t:O 15 Parameter Rates: Would Raise 0 0 16 Flow @ 255 mgd, per MG 229.00 110.00 105.30 135.47 232.78 0 00 0.00 812.55 75,627,658 7" -0 17 BOD @228 mg/L, per 1000 lb o_oo 8.43 156.89 84.20 77.45 0.00 0.00 324 97 56,386,018 "' ~ 18 SS @232.6 mg/l, per 1000 lb 0.00 0.00 244.26 59.25 48.98 0 00 0.00 352.49 62,395,067 '° 194,408,742 o-. 19 Single Family Residen«al Conversion 20 Parameters Annual Quant R~mtRates Calcd Anni Fee Adjust to Rate AdoEted Rate Eguiv Rate Would Raise 21 Flow @ 253 gal per day MG 0.0923 B12.55 75.03 71% 53.24 576.51 53,658,843 22 BOD @ 208 mg/L 1000 lbs 0.1587 324.97 51.56 71% 36.58 230.57 40,806,702 23 SS@21B mgl 1000 lbs 0.1887 352.49 59.45 71% 42.18 250.09 45,155,650 24 186.04 132.00 139,621,194 25 Anticipated Property Taxes, Used for COP Servloe for Entire CIP Anni Quant Tax eer Param Would~!!~ 26 Flow @ 255 mgd 49% 14,488,810 93,075 155.67 14,488,810 27 BOD @ 228 mgll 31% 9,168,390 176,984 51.79 9,166,390 28 SS @ 232 6 mg/L 20% 5,913,800 1B0,555 32.75 5,913,800 29 29,569,000 29,569,000 30 Adjust SFR Rate To Add Back Taxes For Penni! User Tax eer Param E uJvRate P.U Rate Would Raise 31 Flow@ 255 mgd 155.67 576 51 732.18 68,147,653 32 BOO @ 228 mg/L 51-79 230.57 282.36 49.973,092 33 SS @ 232 6 mgll 32 75 250.09 282.85 51,069,450 34 169,190,194 H:\deptlrin\210\STREEOIE>cellold d ecpy\STRATPLN\Perm,t user model 8-2004 xls-nel 05-06 8/31/2004 Permit User Rate Calculation Model A. R ~ Q s f ~ !:1 R~ Descril)1ion CollO&M CollCIP JointO&M Joint CIP COPs Egui~Adl SFI Total 1 Budget Requiremenls: 22,805,790 62,058,000 86,614,140 169,165,600 41,917,000 2,638,000 1,876,000 386,874,530 2 Remove interfund budge~ (2,838,000) (1,876,000) (4,514,000) 3 Adjust CIP to Avg thru 2020 (28,255,000) (55,635,129) (83,890,129) 4 Reduce Avg CIP to Cash Portion (19,388,267) 1a1i7se,sn i (80,146.944) 5 Requlremenl!I for Rate Setting 22,605,790 15,414,733 88,814,140 51,771,794 41,917,000 0 0 218,323,457 Sa Reduce for Interest Income (2,131,736) (1,4S3,816) (B, 167,752) (4,882,103) (3,952,792) 0 0 (20,588,000) Sb Reduce for Conn Fees (2,852,233) (8,907,787) p 1,seo,oooi Sc Net Requirements for Rate Setting 20.474.054 11,308,884 78,448,388 37,981,923 37,964,2(!8 __ -0 Cl J 88.175,457 6 Allocation parameters: Hislortcal Validated CIP 03-04 Actual Validated CIP ComboVCIP 7 Flow 100% 90% 12% 33% 49% e BOD 10% 34% 39% 31% 9 ss 54% 28% 20¾ 10 Allocalion to parameters: Resultant 11 Flow ,Z0,474,054 10,177,996 9,413,567 12,534,035 18,602,462 0 0 71,202,113 38% 12 BOO 0 1,130,888 26,671,772 14,812.950 11,768,905 0 0 54,384,515 29% 13 ss 0 0 42,381,049 10,634,938 71592,842 0 0 60,588,829 33% 14 20,474,0~ 11,308.884 78 446,388 37,981,923 37,964 .208 0 0 186,175,457 _100¾ to 15 Parameter Rates: Would RaJse 0 0 16 Flow @ 250 mgd, per MG 224.37 111.54 103.18 137.36 203.88 0.00 0.00 780,30 71,202.113 ,.,. "O 17 BOO (!II 228 mgll, per 1000 lb 0.00 6 52 153.72 85.37 67 83 0.00 0.00 31343 54,384,515 OJ 00 18 SS @232 8 mg/L, per 1000 lb 0.00 000 239,31 80.08 42.89 0.00 0.00 342.28 60,588,829 (1) -0 -..J 186.175.457 19 Single Family Residential ConvefSion 20 Parameters Annual Quant RegmtRates Calcd Anni Fee Adjust to Rate Ad011tedRate EgulV Rate Would Raise 21 Flow @ 253 gal per day MG 0.0923 780.3D 72.06 64% 46.16 499.87 45,613,419 22 BOO @ 208 mg/L 1000 lbs 0.1587 313.43 49.73 64:~i, 31.88 200.79 34,839,888 23 SS@219 mgl 1000 lbs 0.1687 342.28 57.73 64% 36.98 219.27 38,814,441 24 179.51 115.00 119,287,548 25 Anticipated Property Taxes, Used for COP Service for Entire CIP Anni Quant Tax eer Param Would Raise 26 Flow @ 250 mgcl 49% 13,798,890 91,250 151.22 13,798,890 27 BOO @ 228 mg/L 31% 8,729,910 173,514 50.31 8,729,910 28 SS@ 232.6 mg/L 20% 5.632,200 177,014 31 .82 5,832,200 29 28,161,000 28,161,000 30 Adjust SFR Rate To Add Back Taxes For Permit User Tax E!!!r Param Eciulv Rate PU Rate Would Raise 31 Flow @ 250 mgd 151.22 499.87 651.09 59 412,309 32 BOD @ 228 mg/L 50.31 200.79 251.10 43,569,598 33 55 @ 232.6 mg/L 31 82 219.27 251.09 44,446,641 34 147,428,548 H \dep(\fln\210\STREEOlface~d d copy\STRATPLN\Perm1t user model 8-2004 ICl&..ief 04-05 8/31/2004 Allocation of JO Costs to Flow, BOD and SS 2003-04 Actual Costs RAC Allocation Percentages Allocated Costs Percent Flow BOD ss Flow BOD ss Total ofTotal Preliminary Treatment 4,926,287 75% 5% 20% 3,694,715 246,314 985,257 4,926,287 6% Primary Treatment 7,856,330 15% 25% 60% 1,178,450 1,964,083 4,713,798 7,856,330 10% Secondary Treatment 5,364,031 100% 5,364,031 -5,364,031 7% Cryogenic Plant 580,117 100% 580,117 -580,117 1% Effluent Disposal 812,104 100% 812,104 -812,104 1% Solids Handling 28,398,473 20% 80% -5,679,695 22,718,778 28,398,473 35% Subtotal 5,685,269 13,834,239 28.417,834 47,937,342 59% Cogeneration 8,358,287 13% 40% 47% 1,086,577 3,343,315 3,928,395 8,358,287 10% Utilities 9,643,305 13% 40% 47% 1,253,630 3,857,322 4,532,353 9,643,305 12% t:C Electrical Distribution 1,118,848 13% 40% 47% 145,450 447,539 525,859 1,118,848 1% 0 Miscellaneous Bldgs 13% 40% 47% 1,908,260 4,770,650 6% 0 4,770,650 620,185 2,242,206 ;,:- "O Air Quality 1,597,905 13% 40% 47% 207,728 639,162 751,015 1,597,905 2% 0) (JO (1) Laboratory 7,155,674 13% 40% 47% 930,238 2,862,270 3,363,167 7,155,674 9% -0 00 Total 80,582,011 9,929,076 26,891, tel?_ 43,760,828 80,582,011 100% Calcuated Actual Ratios for 2003-04 Direct Charges (Subtotal) 12% 29% 59% 100% Total Charges 12% 33% 54% 100% Ratios Used to Compute Permit User O&M Rates per RAC Plan 13% 40% 47% 100% H:\deptlfin\210\STREED\Excel\Permil Users\Permil User JO Allocation 2003-04.xls 8/31/2004 Page 1 of 4 Validated Capital Improvement Program Allocation lo Flow, BOD and SS Tolal Allocated CIP Tola! Allocaled CIP Tolal Allocated CIP Tolal Allocated CIP Pro~ TNle Flow BOO TSS Total thru 2020 Flow BOD ss T atsl l\llacsted 02-41 Santa Ans River Interceptor Realignment and Prat 90% 10% 63,620,000 57,258,000 6,362,000 0 63,620,000 02-31 Santa Ana River Interceptor Relief Sewer 90% 10% 17,272,000 15,544,800 1,727,200 0 17,272,000 02-50 Atwood Subtrunk Improvements 90% 10% 3,187,000 2,868,300 318,700 0 3,187,000 06-13 Aband. of AB Trunk. Watson and Cal. Sewers 90% 10% 351,000 315,900 35,100 0 351,000 02-58 Santa Ana River Relief Sewer, Reach B 90% 10% 32,702,000 29,431,800 3,270,200 0 32,702,000 02-42 Aband of Yorba Linda Pump Station 90% 10% 955,000 859,500 95,500 0 955,000 02-49 Taft Branch Improvements 90% 10% 3,508,000 3,157,200 350,800 0 3,508,000 02-51 Lower Santa Ans River Interceptor Improvements 90% 10% 35,012,000 31,510,800 3,501,200 0 35,012,000 05-47 Balboa Trunk Sewer Rehabilitation 90% 10% 5,759,000 5,183,100 575.900 0 5,759,000 05-46 Replacement of Back Bay Trunk Sewer 90% 10% 7,189,000 6,470,100 718,900 0 7,189,000 11-22 Warner Avenue Relief Sewer 90% 10% 7,480,000 6,732,000 748,000 0 7,480,000 02-24-1 Carbon Cnyn Sewer and Pump Sin Abandonment 90% 10% 3,467,000 3,120,300 346,700 0 3,467,000 02--52 Euclld Relief Improvements -Reach "A" 90% 10% 20,856,000 18,770,400 2,085,600 0 20,856.000 02-53 Euclid Relief Improvements -Reach "B" 90% 10% 10,298,155 9,268,340 1,029,816 0 10,298,155 03-45 Trask Branch of the Hoover-Western Subtrunk 90% 10% 1,410,000 1,269,000 141,000 0 1,410,000 11-26 Coast Trunk Sewer Rehabilitation 90% 10% 16,635,000 14,971,500 1,663,500 0 16,635,000 11-25 Edinger/Boise Chica Trunk Improvements 90% 10% 2,126,000 1,913,400 212,600 0 2,126,000 01-22 Lower Main-Broadway MH Rehabilita1Ion 90% 10% 1,467,000 1,320,300 146,700 0 1,467,000 t:0 1-2-4 Bushard Trunk Sewer Rehabilitation 90% 10% 39,393,000 35,453,700 3,939,300 0 39,393,000 0 01-98 Trunk Sewer Mapping Project 90% 10% 2,013,000 1,811,700 201,300 0 2,013,000 0 :r.-01-17 Santa Ana Trunk Sewer Rehab. 90% 10% 14,638,000 13,174.200 1,463,800 0 14,638,000 "' "' 07-21 Sunflower Interceptor Manhole Rehab 90% 10% 3,991,000 3,591,900 399,100 0 3,991,000 "" co 1-10 Replacement of 1he Ellis Ave, Pump Sin 90% 10% 33,837,000 30,453,300 3,383,700 0 33,837,000 '° '° 05-49 Replacement ol 1he Bitter Point Pump Station 90% 10% 8,159,000 7,343,100 815,900 0 8, 159.D00 07-47 Replecemen1 of the College Ave Pump Station 90% 10% 6,021,000 5,418,900 602,100 0 6,021,000 01-96 Continuous Feed Chemical Trea1ment Facility 90% 10% 451,000 405,900 45,100 0 451,000 05-5D Replacement of the Rocky Point Pump Station 90% 10% 9,362,000 8,425,800 936,200 0 9,362,000 05-51 Rehabllltation of the 14th Slreet Pump Station 90% 10% 4,617,000 4,155,300 461,700 0 4,617,000 05-52 Rehabilitation of the "A" Street Pump Station 90% 10% 5,013,000 4,511 .700 501,300 0 5,013,000 03-52 Rehabilitation or the Westside Pump Station 90% 10% 2,991,000 2,691,900 299,100 0 2,991,000 05-53 Rehabilitation of the Bay Brtdge Pump Station 90% 10% 2,612,000 2,350,800 261,200 0 2,612,000 05-54 Rehabilita1ion of the Crystal Cove Pump Station 90% 10% 1,512,000 1,360,800 151,200 0 1,512.000 07-49 Rehabllttalion of the MacArthur Pump Station 90% 10% 2,355,000 2,119,500 235,500 0 2,355,000 07-37 Gisler-Redhill System Improvements, Reach B 90% 10% 6,893,000 6,203,700 689,300 0 6,893,000 07-14--04 Covey Lane Pump Station Abandonment 90% 10% 153,000 137,700 15,300 0 153,000 FE-Collect Faciltties Engineering Projects -Collections 90% 10% 5,400,000 4,860,000 540,000 0 5,400,000 07-7-2 Modifications lo 1he Main Street Pump Station 90% 10% 969,000 872.100 96,900 0 969,000 02-41-01 Abandonment of the existing SARI in SA River 90% 10% 8,456,000 7,610,400 845,600 0 8,456,000 11-14-R Newland Street Interceptor Sewer Protection 90% 10% 127,000 114,300 12,700 0 127,000 05-29-Rl Lining or 36" NPTB FM (June Box to 2nd Angle Pl) 90% 10% 1,996,000 1,796,400 199,600 0 1,996,000 03-35-R2 Rehabllltation of Magnolia Trunk Sewer 90% 10% 48,868,000 43,981,200 4,886,800 0 48,868,000 06-13-3 Abandonment of Airbase Trunk Sewer -California St 90% 10% 975,000 877,500 97,500 0 975,000 07-32-1 Gisler R&d Hill Trunk Sewer Relocation -Phase 1 90% 10% 936,000 842,400 93,600 D 936,000 01-100 Greenville Sullivan /RaiH Street Manhole Rehab 90% 10% 3,269,000 2,942,100 326,900 0 3,269,000 02-65 Newhope-Placentie & Cypress Trunk Replecements 90% 10% 28,785,000 25,906,500 2,878,500 0 28,785,000 02-66 Upper & Lower Newhope-PlecenUa MH Rehabllltalion 90% 10% 4,351 ,000 3,915,900 435,100 0 4,351,000 02-67 SARI and South Anaheim Interceptor MH Rehab 90% 10% 3,087,000 2,778,300 308,700 0 3,087,000 H:ldept\linl2101S1REEDIExr.el\old d r.apy\STRATPLN1VCIP by Row, bod, so 2003 FAHR xis ck alloc S.2004 ggs B/3112004 Page 2 of 4 Validated Capital Improvement Program Allocation lo Flow, BOD and SS Total Allocaled CIP Total Allocaled CIP Total Allocaled CIP Total Nlocalcd CIP ~ TIUe Flow BOD TSS Total thru 2020 Flow 800 ss Total Allocated Ol-55 Westside Relief lnlerceptor/ Los Alamnos MH Rehab 90% 10% 17,136,000 15,422,400 1,713,600 0 17,136,000 03-56 Rehabil~ation of the Seal Beach and Edinger PS 90% 10% 8,574,000 7,716,600 857,400 0 8,574,000 07-59 Upper Gisler-Redhill MH RehabilnBlion & Campus Dr 90% 10% 2,121,000 1,908,900 212,100 0 2,121,000 06-16 Abandonment of Airbase Trunk (Watson St) & College 90% 10% 3,276,000 2,948,400 327,600 0 3,276,000 07-57 Lower Gisler-Redhill Trunk Relocation and MH Rehab 90% 10% 6,615,000 5,953,500 661,500 0 6,615,000 07-58 Gisler Redhill Trunk lmprov. & Orange Trunk lmprov 90% 10% 23,561,000 21,204,900 2,356,100 0 23,561,000 0&-59 Big Canyon Trunk Sewer Rehab ll, Replacement 90% 10% 2,534,000 2,280,600 253,400 0 2,534,000 07-56 Tuslin WesULemon HBights Trunk Improvements 90% 10% 5,926,000 5,333,400 592,600 0 5,926,000 02-68 Rehabilitate District Siphons By Adding Air Jumper 90% 10% 5,731,000 5,157,900 573,100 0 5,731,000 0&-5B PCH FM Bitter Pt Ps To Coast Trunk@ B hurst & PCH 90% 10% 13,927,000 12,534,300 1,392,700 0 13,927,000 SP-95 Pump Station P&!Ds and Equipment Tagging 90% 10% 720 000 648,000 72,000 0 720000 Collections Facilities Total 574,645,155 517,180,640 57,464,516 0 574,645,155 Weighted Average Allocation 90% 10% 0% Pl-62 Sunflower Drive Replacement 75% 5% 20% 815,000 611,250 40,750 163,000 815,000 P1-71 Headworks Rehabllttatlon/Refurblshment 75% 5% 20% 37,510,000 28,132,500 1,875,500 7,502,000 37,510,000 P2-B6 Headworks Improvements at Plant No 2 75% 5% 20% 226,130,000 169,597,500 11,306,500 45,226,000 226,130,000 J-63 PLC Programming and Integration 75% 5% 20% 515,000 386,250 25,750 103,000 515,000 co Headworks Total 264-,970,000 198,727,500 13,2-48,500 52,994,000 264,970,000 0 0 P1-37 Pri Clarif,ers 11>-31 & Related Facilities 30% 70% 88,561 ,000 0 26,568,300 61 ,992,700 88,561,000 " 'O P2-80 Primary Trealm•nl Rehab/Refurb 30% 70% 55,093,000 0 16,527,900 38,565,100 55.093,000 "' (IQ (1) SP-70 Sludge Density Meter Upgrades 30% 70% 800,000 0 240,000 560,000 800,000 ;; P2-85 Circular Clarifier Drive Replacement/Upgrade 30% 70% 3,467,000 0 1,040,1 00 2.426,900 3,467,000 0 Primary Treatment Total 147,921 000 0 44.376,300 103,544,700 147 921 ,000 P2-74 Secondary Plant Rehabilitallon 93% 7% 20,474,000 0 19.037,063 1.436,937 20.474,000 p2-47-3 Sec Treat Monitoring & Cntrl Sys Upgrade 93% 7% 8,703,000 0 8,092,193 610,807 8,703,000 Pl-76 Trickling Fitter Rehabilitation and New Clarifiers 93% 7% 46,210,000 0 42,966,821 3,243,179 46.210,000 P1-82 Activated Sludge Plant Rehabilitation 93% 7% 23,870,000 0 22,194,720 1,675,280 23,870,000 SP-72 0Kygen Plan! Replacement/Rehabllijalion Assessment 93% 7% 2,145,000 0 1,994,456 150,544 2,145,000 SP-74 Acllvaled Sludge Aeration Basin Selector Study 93% 7% 945,000 0 878,677 66,323 945,000 SP-91 Computer Modeling of Activated Sludge System 93% 7% 120,000 0 111,578 8,422 120,000 P1-102 New secondary treatment system at Planl No 1 93% 7% 251,100,000 0 233,476,926 17,623,073 251,100,000 P2-90 New Trickling FIiiers 93% 7% 128,727.000 0 119,692,490 9,034,510 128,727,000 Secondary Treatment Total 482,294,000 0 448,444,925 33,849,074 482,294,000 SP-36 Sludge Grinder Replacement 20% 80% 224,000 0 44,800 179,200 224;000 P2-60 Solids Storage and Truck Loading Facility 45% 55% 14,582,000 0 6,561,900 8,020,100 14,582,000 SP-30-2 High Rate Digester Mix Pumps Mech. Seals 25% 75% 517,000 0 129,250 387,750 517,000 SP-79 Tule Raneh Malntenancc/Biosolids Management Needs 45% 55% 200,000 0 90,000 110,000 200,000 P1-99 Digesters, Centrifuge/Press & Cake Storage Hopper 25% 75% 61,605,000 0 15,401,250 46,203,750 61,605,000 P2-89 Digesters and Sludge Cake Hoppers al Plant 2 25% 75% 42,325,000 0 10,581,250 31,743,750 42,325,000 P2-92 Sludge Dewatering and Odor control et Plan! 2 20% 80% 79,082,000 0 15,816,400 63,265,600 79,082,000 P2·91 Digester Rehabilitation at Plant 2 25% 75% 25,621,000 0 6,405,250 19,215,750 25,621,000 P1-100 Sludge Digester Rehabll~allon al Plan! 1 25% 75% 30,223,000 0 7,555,750 22,667,250 30.223,000 Pl-101 Sludge Dewatarlng and Odor control at Plant 1 20% 80% 62,905,000 0 12,581,000 50,324,000 62,905,000 P1-96 Ammonia Side Stream Treatment 100% ,a eoo,ooo 0 18,600,000 0 18.600.000 Solids Handling & Digestion Total 335,884,000 0 93,766,850 242,117,150 335,8B4 ,000 H·\dept\fin\210\STREEDIEKcel\old d copy\STRATPLN\VCIP by flow, bod •s 2003 FAHR Kls rk alloc 8-2004 ggs CJ 0 0 r. tl ., ~ 0 8/31/2004 Pro~ J-77 J-67 SP-BB J-87 J-47 P2-79 J-25-5 J-33-1A P2-82 J-79 SP-81 SP-93 P1-97 SP-92 P2-87 SP-94 J-92 J-71-3 J-71-8 J-42 SP-01 SP-02 SP-13 SP-03 SP-15 J-33-3 SP-09 SP-61 SP-62 SP-64 SP-65 SP-89 SP-tOO SP-53 SP-54 J-44-R SP-6B-1 SP-90-8 SP-g0-1 SP-90-7 SP-90-2 SP-90-6 SP-90-5 Ttt111 Effluent Pumping Station Annex Peak Flow Management NPDES Permtt Renewal Shon Term Outfall Badena Reduction Ocean Outfall Systems Total Cable Tray Improvements at Planls 1 & 2 Gas Compressor Addrtion at Plant No 2 Elec Power System Single-line Diagrams Standby Power and Reliability Modif,cations Utilities Rehabililation end Refurbishment Central Generation Autornalion Electrical Equipment Refurbishment and Protection Indoor/Outdoor Lighting Study Plant 1 66kV Substalion Rehabilitation of Low Pressure Gas Holder Fuel Station Replacement al Plant No. 2 Plant 1 Plant Water VFD Replacement Ar9a Classification Studies Implementation Plan Utility Systems Total Facilities ModHlcations for Odor Conlrot Rehabilrtation of Odor Control Facilities Odor Control Related Projects Total Plant Reinvention / Automation Project Document Management Data Integration Source Control Programming Slrategic Information Architecture (SIA) Geographic Information System Power Monitoring and Control Systems lnterneVlntranet Development SCADA System Replacement Study SCADA Graphics Tagging Update FIS Upgrade Information Technology Disaster Recovery Network Equipment upgrade CMMS System Replacement Plant Automation & Computeriutlon Total Plant O&M Manual & SOP Project -Phase I Hazardous Energy Control Procedures Standard Specifications Revisions and Updates Corrosion Management Special Projects: Ammonia Reduction Options Special Projects: Anoxic Gas Flotation (AGF) Special Projects: Biotrlckling FIiter (BTFJ Special Projects: Anaerobic Baffled Reactor (ABR) Special Projects: Dewatering Options Comparison Special Projects: MictoliltrationlPrimary Effluent Flow 100% 100% 100% 100% H:ldeptlfin\210\STRE:EDlfacel\old d copylSTRArPLNIVCIP by now. bod, ss 2003 FAHR xis Validated Capital Improvement Program Allocation to Flow, BOD and SS BOD TSS Total t/1ru 2020 50,757.000 11,257,000 1,512,000 7,578,000 71 ,104,000 29,526,000 4,326,000 3,368,000 17,643,000 4,929,000 8,038,000 3,312,000 132,000 4,645,000 422,000 3,231,000 2,334,000 21,283,000 103J§_9_._000 4,127,000 33,224,000 37,351,000 21,915,000 864,000 4,334,000 2,956,000 724,000 4,157,000 3,790,000 650,000 300,000 425,000 3,213,000 332,000 2,901,000 3,789,000 50,350,000 4,000,000 1,190,000 657,000 7,548,000 277,000 798,000 328,000 514,000 99,000 4,095,000 Total Allocated CIP Flow 50,757,000 11,257,000 1,512,000 7 578.000 71,104,000 0 0 0 Total Allocated CIP Total Allocated CIP BOD ss 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Page 3 of 4 Total Allocated CIP Total Allocated 50,757,000 11,257,000 1,512,000 7,578,000 71 ,1 04,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 cl< alloc B-2004 ggs 8/31/2004 Page 4 of 4 Validated Capital Improvement Program Allocation to Flow, BOO and SS Tola! Allocated CIP Total Allocaled CIP Total Allocated CIP Total Allocated CIP Project TILie Flow BOD TSS Total lhru 2020 Flow BOD ss Total /\Jlocated SP-90-4 Special Projects: Oxygen Ionization I Odor Control 210,000 0 SP-90-3 Special Projects: Primal)/ Effluent Fittralion 470,000 0 J-94 Effluent Pathogen Reduction A~emalives Plan 1,549,000 0 Process Related Special Projects Total 21 ,735,000 0 0 0 0 J-62 Modifications lo Existing Meet, Systems 3,007,000 0 FE-J Facittties Engineering Projecis -Joint 18,200,000 0 FE-P2 Facilities Engineering Projects -Planl 2 18,200,000 0 FE-Pt Facilities Engineering Projects -Plant 1 18,200,000 0 J-69 Building Rehabilttation/Refurblshment 1,455,000 0 SP-34 Small Cap Equip. Replacement Project 3,000,000 0 SP-06 Security System Improvements 1,100,000 0 SP-68-2 Asset Management Program 16,555,000 0 SP-77 Warehouse Reinvention Project 600,000 0 J-25-6 Interim Fae Record & Eng Data Sysl Mein! Services 628,000 0 SP-85 Plume Modeling 377,000 0 J-40-5 Supplement No. 1 to the 1899 Strategic Plan EIR 832,000 0 J-40-7 Long Range Biosolids Management Plan 2,833,000 0 Ol J-40-9 Strategic Plan Update 3,419,000 D 0 0 J-84 Space Allocation and Interior Renovation 16,388,000 0 ;,,- i:, J-88 Laboratorv Rehabilitation 1,829,000 0 "' (IQ (1) J-89 Tenant Improvements lo Rebuild Shop 321,000 0 0 J-40-10 Supplemental Full Secondary Treatment CEQA Doc. 425,000 0 N J-90 Engineering Trailer Complex 2,006,000 0 Pl-103 Support Building Power System Modifications 2,751,000 0 SP-98 Plant 2 Maintenance Building Modifications 300,000 0 Miscellaneous & Support Projects Total 112,426,000 0 0 0 0 J-36 Groundwater Replenishment System 100% 236,206.000 236,206,000 0 0 236,206,000 J-72 Water Conservation 100% 4,644,000 4,644,000 0 0 4,644.000 J-73 Co-op Projects. Inflow/Infill Reduction 0 0 0 0 0 J-73-2 Long Term Permanent Monitoring Program 100% 2,852,000 2,852,000 0 0 2.852,000 Water Management Projects Total 243,702,000 243,702,000 0 0 243,102.000 Districts Capllal Equipment Budge! 59,092,000 0 Districts Capital Equipment Budget 59,092,000 0 0 0 0 Treatment & Disposal Total 1,930,018,000 513,533,500 599,836,575 432,504,925 _ J.i.5<\_5,875,000 Weighted Average Allocatlon 33% 39% 28% Combined Total CIP 2,504,663,155 1,030,714,140 657,301.091 432,504,925 2,120,520,155 Combined Weighted Average Allocation 49% 31% 20% H:ldeptlJin\210\STREEOIE>ccellold d copy\STRATPLNWCIP by flow. bod. ss 2003 FAHR.xls ck allo_c 6-2004 ggs ORANGE COUNTY SANITATION DISTRICT (714) 962-2411 www.ocsd.com Mailing Address: P.O. Box 8127 Fountain Va11ey; California 92728-8127 Street Address: 10844 Btis AW!nue fountain Valley, California 92708-7018 L l L L l L L L L L r L L L L L Investment Management Program Orange County Sanitation District Strategy Review for the Period March 31, 2004 -June 30, 2004 l Agenda I. Performance & Market Review 11. Economic Outlook & Strategy Ill. Organizational Update 1 PIM C 0 L L L L L L l L l L l L L l L Performance Review 12 Performance • Orange County Sanitation District 10 I-• Merrill Lynch Corp/Govt 1-Syear Bond Index Asset Growth Market Value as of Jun. 2003 $ 329,722,455 ,......, ~ 0 8 ~ Contributions / Withdrawals 54,100,000 Ul C ,_ 6 ::J Net Investment Earnings* 4,603,769 ..... Q) a:: 4 Market Value as of Jun. 2004 $ 388,426,224 2 0 96 97 98 99 00 01 Orange County Sanitation District Long Term Operating Portfolio (periods ending June 30, 2004) Since Inception 09/30/95 5 Yrs. 3 Yrs. 2 Yrs. 1 Yr. 9 Mos. 6 Mos. Before Fees(%) 6.2 6.0 5.0 4.1 1.0 0.6 0.4 Merrill Lynch Corp/Govt 1-5 year Bond Index (%) 6.1 6.1 5.2 4.0 0.4 0.1 (0.1) * Includes income and realized/unrealized gains and losses, less management fees; all periods longer than one year are annualized. 2 02 03 04 3 Mos. (1. 1) (1. 7) PIM C 0 L L L L L l L L L L L L L l L Performance Review Performance 9 ~----------------------~-~ Asset Growth Market Value as of Jun. 2003 Contributions / Withdrawals Net lm.estment Earnings* Market Value as of Jun. 2004 $ 66,540,530 45,100,100 757,155 $112,397,785 8 7 ,...._ 6 ~ 0 .___., 5 Vl C 5 4 ..., Q) a'. 3 2 1 0 • Orange County Sanitation District •Citigroup 3-Month Treasury Bill Index 96 97 98 99 00 01 Orange County Sanitation District Liquid Operating Portfolio (periods ending June 30, 2004) Since Inception 09/30/95 5 Yrs. 3 Yrs. 2 Yrs. 1 Yr. 9 Mos. 6 Mos. Before Fees (%) 4.4 3.7 2.0 1.4 1.1 0.8 0.5 Citigroup 3-Month Treasury Bill Index (%) 4.0 3.1 1.6 1.2 1.0 0.7 0.5 • Includes income and realized/unrealized gains and losses, less management fees; all periods longer than one year are annualized. 3 02 03 04 3 Mos. 0.3 0.2 PIM C 0 L l l l L l l L L L L l L l l Performance Review Asset Growth Market Value as of Aug. 2003 Contributions / Withdrawals Net lm,estment Earnings* Market Value as of Jun. 2004 Orange County Sanitation District $ 142,496,777 (117,378,022) 846,914 $ 25,965,669 2003 COP Proceeds -Future Construction (periods ending June 30, 2004) Since Inception 07/31/03 Before Fees (%) 0.9 Citigroup 3-Month Treasury Bill Index (%)1 0.8 * Includes income and realized/unrealized gains and losses, less management fees 1 Index from 08/26/03 going forward. 4 9 Mos. 6 Mos. 0.8 0.5 0.7 0.5 3 Mos. 0.2 0.2 PIM C 0 .... ~ ::R 0 ..__, L ...., c:: QJ u '-QJ c.. Market Pushes Treasury Rates Higher in Anticipation of Fed Hike 10-Year Treasury Yield 5.25 ~---------------------------------------------~ 4.75 4.25 3.75 December nonfarm payroll data disappoints FOMC replaces "considerable period" language with "patient" 3.25 Dec-03 Jan-04 SOURCE: Bloomberg Financial Markets February nonfarm payroll data disappoints Al Qaeda blamed for Madrid train bombing Feb-04 Mar-04 5 FOMC: Policy accommodation can be removed at a pace that can be measured Apr-04 May CPI data shows 0.6% increase, 3.1% yoy May-04 Jun-04 PIM C 0 L r L f L f L L r L ' L L L L L L L r "'- r L Market Priced In Sizeable Fed Hikes During Second Quarter As of June 30, 2004 • At quarter end, Eurodollar futures market priced in 275 bps of short-term rate increases over next 24 months • Market may have overestimated magnitude of Fed tightening • Fed needs to balance risk of inflation with risk of hurting economy SOURCE: Bloomberg Financial Markets Eurodollar Futures Forward Curve s ~--------------------------~ ,....., ,_ 0 .0 '.J 4 ..c: 3 .... C: 0 :a I ~ 2 2 ro c:'. 1 -06/30/2004 -03/31/2004 oL---------------------~ ~~ ~ ~ ff -...,v c,'l, 6 ~ C: Qe; ~~ ~~, ~~ ~~ ~ ff -...,v c,'l, ~~ r!J Q ~<o ~~, ~<o ~<o ~ , -...,v c,~ ~<o C: Qe; PIM C 0 L r L L r L L L L L l f L L L L L l Strong Payroll Data and Uptick in Inflation Spark Sharp Rate Rise As of June 30, 2004 • Rates rose across all maturities in the second quarter, reversing first quarter decline • Rate increases for shorter maturities topped 100 bps as markets anticipated beginning of tightening cycle 6 5 ~4 0 ....., :!:! 3 Q) :;;:: 2 1 0 U.S. Treasury Yield Curves -------- .,,,. --.. ----.. .. --- ----12/31/2003 --03/31/2004 --06/30/2004 Yield Changes 2Q (bps) ----•Yield Changes YTD (bps) 5.3 5.1 4.8 120 90 60 30 ~~---~---~----------------0 • Non-U.S. and high yield sectors performed best in the second quarter • TIPS have performed best year-to-date • Technicals drove performance of emerging markets sector SOURCE: PIMCO, Bloomberg Financial Markets, Lehman Brothers 3m 2Y SY lOY 30Y Sector Index Returns* r ,,,, 2 , L --'-· • 1 0 I--4 2Q 2004 YTD 2004 -6 L-------------='-'-------------__J 0 ~ ~ "),. 0..b -<...~~ -<...~ ~<SJ c.,d-~ ~ ~-§' ~ep· ~~ -<...~~ ~ ~VJ c.,d-~ , ~ ~o<c-<v~ ~ "),. ~ ~-§' ~(;,· ~~ , ~ ~o<c-<v(:' * Returns for mortgages and corporates have been duration adjusted utilizing Lehman Brothers reported excess returns relative to Treasuries. Treasury performance is the Lehman Brothers Treasury Index; TIPS performance is the Lehman Brothers Global Real: U.S. TIPS Index; High Yield performance is the Lehman Brothers High Yield Composite Index; Non-U.S. performance is the J.P. Morgan Non-U.S. Government Bond Index (hedged); Emerging Markets performance is the J.P. Morgan Emerging Markets Bond Index+; Municipal performance is the Lehman Brothers Municipal Bond Index. 7 PIM C 0 L L L L L L L L L L L L L L l Outperformance Resulted from Defensive Positioning as Rates Rose Interest Rate Strategies Sector Strategies • Duration: Structured below index • Curve: Focus on short/intermediate maturities • Treasuries: Emphasized TIPS • Mortgages: Modest exposure • Corporates: Underweighted 8 Performance Impact 2Q '04 + 0 + + + PIM C 0 L L L L L l r L r L l L L r L L L L Global Economy's High Wire Act -Conditions for Instability Accelerating U.S. consumer slowdown Risks Slowdown , shock in I Geopolitic~ I I Asia instability I Central Bank Deflation interest rate hikes Goals Continued Stable Climb in China, Japan Steady Economic Growth in U.S. Increased Growth in Europe Secular Implications • GDP Growth: -U.S. stabilizes around 2% Risks Twin deficits financed ~~---- by Asian central banks U.S. private sector highly I Chinese levered economy ~~---- highly levered Increased government control 'cheap money Inflation -Europe, Japan move toward 2% • Inflation peaks near 4% • Reactive Fed 9 PIM C 0 L L L l l l Flexibility Key When Seeking Value in Volatile Market Interest Rate Strategies • Duration: Below-index with tactical adjustments • Maturity Mix: Broader than ir;idex, emphasize: short maturiti.es Core Strategies Tactical Strategies • U.S. Treasuries: Seek value when market overestimates rate rise • Mortgages: Currently fully-valued; focus on coupon selection • Corporates: Diminished risk-adjusted value due to narrow spreads • Non-U.S.: Focus on short to intermediate European interest rates • Emerging Markets: Select countries with attractive yield and improving fundamentals • Municipals: Less volatile than Treasuries 10 PIM C 0 L L ~' L L ~ L Ii - L r: L l L L l L L PIMCO Update -Continuing to Improve to Meet Client Needs Focused on Managing Client Assets Committed to Client Education via PIMCO Institute Positioned to Develop Strategies to Meet Client Needs • Assets under management as of June 30, 2004: $391.9B -Process and philosophy unchanged -Introduced strategies building on fixed income and derivative expertise • PIMCO Canada, a subsidiary of PIMCO, launched this year • Building the Team -221 Investment Professionals -Added 6 investment professionals 2004 YTD • Visiting client seminars -"How to Prosper in a Low Return Environment" -"Derivatives and Risk Management" • Educational seminars in Newport Beach -CFO/Treasurers Seminar-September 27-29 -Fundamentals of Fixed Income Management -September 30-October 1 -Seminar for Investment Professionals -October 4-8 -Seminar for Investment Professional Practitioners -October 18-22 • All Asset Fund • StocksPLUS Total Return • CommodityRealReturn • International StocksPLUS 11 PIM C 0 PIMCO Governance Strives to be "Best in Business" Strong History and Culture • Client's Interests Have Always Come First l • Trust and Reputation Paramount Current Environment Requires Reaffirmation of Commitment • Knowing Our Clients • Escalating Issues to Senior Management Recent Enhancements • Revised Code of Ethics: Added Code of Business Conduct Signed By All Employees • Added to Funds' Legal Compliance Staff • Established Redemption Fees On Short-Term Fund Trading 12 PIM C 0 r: L L L L L L L L l l L l L L L Building on Fixed Income Expertise to Meet Client Needs Strategy Description Assets Traditional: Sector-Specific: Real Return: Equity PLUS: Other: Total Return Long Duration Moderate Duration Low Duration Short-Term Money Market Stable Value Credit: Investment Grade Corporates High Yield Diversified Income CBO/CLO Mortgages Global Emerging Markets Municipals Real Return CommodityReal Return All Asset, All Asset All Authority RealEstateRealReturn StocksPLUS and StocksPLUS Total Return Other PIMCO's flagship style: Core/ Core Plus Focus on long-term bonds Total return with intermediate duration Total return with shorter duration Active cash management techniques Maximize income while preserving capital Strategies that use book value wrappers High quality corporate bond portfolios Emphasis on upper tiers of high yield market Global credit combining corporate and emerging markets debt Collateralized bonds/loan obligations Includes LIBOR-based mortgage products Non-U.S. and global approaches Focus on solid credits with improving economic fundamentals Tax-efficient total return management TIPS and other inflation-hedging strategies Commodity-linked exposure backed by a bond portfolio Tactical allocation among PIMCO funds Real Estate-linked exposure backed by a bond portfolio $ 170.5 11.2 7.3 21.6 12.7 0.8 17.0 5.8 16.3 0.9 7.7 9.0 42.3 5.7 7.6 22.0 4.6 2.6 0.0* Combines passive equity index exposure with active bond management 24.9 Includes private placement investments and convertibles 0.5 Total Assets Under Management: $ 391.9 B Assets as of June 30, 2004. Potential differences in asset totals are due to rounding. * RealEstateRealReturn total assets are $383 M, of which $358 Mare accounted for by All Asset strategies. 13 PIM C 0 I [ [ L Callan Associates Inc. Investment Measurement Service Quarterly Review Orange County Sanitation District June 30, 2004 The following report was prepared by Callan Associates Inc. ("CAI") using information from sources that include the following: fund trustee(s); fund custodian(s); investment manager(s); CAI computer software; CAI investment manager and fund sponsor database; third party data vendors; and other outside sources as directed by the client. CAI assumes no responsibility for the accuracy or completeness of the information provided, or methodologies employed, by any information providers external to CAI. Reasonable care has been taken to assure the accuracy of the CAI database and computer software. In preparing the following report, CAI has not reviewed the risks of individual security holdings or the compliance/non-compliance of individual security holdings with investment policies and guidelines of a fund sponsor, nor has it assumed any responsibility to do so. Copyright 2004 by Callan Associates Inc. r r i [ l L Ill \ fj; \',ll I II ( Ill( -\(,0 \ 1 L \',"I \ DE',\ ER August 3, 2004 Mr. Michael D. White Controller Orange County Sanitation Districts 10844 Ellis A venue Fountain Valley, California 92728 RE: June 30, 2004 Quarterly Performance Report Dear Mike, The June 30, 2004 Quarterly Performance Report for the District's investment portfolio is attached. This letter provides a qualitative summary of the most important points covered in the report. Market Overview The major equity indices finished the second quarter in the black, with the S&P 500 up 1.72 percent. A rosier quarterly return was stalled by whether the Fed would raise interest rates and the concerns surrounding the handover of power in Iraq -both events occurred at the end of June. The Federal Reserve raised the Fed Funds rate 25 basis points, to 1.25 percent in June -the first increase in more than four years. The move was spurred by concerns over inflation and higher than expected employment numbers in April and May. The Fed's tightening hurt US Treasurys, which declined 3.16 percent in the second quarter. The Lehman Aggregate Index experienced its worst quarterly performance in more than a decade, falling 2.44 percent in the quarter. None of the sectors in the fixed income market did well over the last three months. Investors searching for yield looked to mortgage-backed securities, which fared the "best," returning -1.13 percent. Returns in the defensive portion of the bond market, where the District invests, declined less than the broad market due to a shorter maturity. Nevertheless, the loss of 1. 74 percent on the Lehman 1-5 Year Gov/Credit Index for the quarter essentially wiped out the positive return for the prior quarter. External Manager Results The return for the Liquid Operating Money account, managed by PIMCO, was 0.26 percent for the quarter, which is in line with the return on the 90-day Treasury bill (0.24%). While very low on an absolute basis, the returns are competitive with any institutional money market fund available, as demonstrated by the peer group ranking on page 18 of the performance report. The yield and return on this portfolio will increase in step with short term rates, which appear to be on the rise. ( Mr. Michael White August 3, 2004 Page2 The Long Term Operating fund managed by PIMCO had a return for the quarter of -1.09 percent. Despite the loss, this return is significantly better than the return for the Merrill 1-5 Year Gov/Corp benchmark return of -1.71 percent due to a shorter duration and lower corporate exposure. The portfolio remains overweight the Treasury sector relative to the benchmark, in part due to a 10 percent allocation to TIPS (Treasury Inflation Protected Securities). The portfolio is significantly underweight the Corporate sector. Mortgages are also being used to gain some additional yield, without sacrificing quality. The overall sector allocation combined with a shorter duration means that the portfolio is very defensively positioned, and that strategy paid off this past quarter. Over the past 8 ½ years, the portfolio is in line with the benchmark and in the top quartile of the peer group. The Long Term portfolio has earned a significant premium over the Liquid Portfolio (174 basis points annualized), rewarding the District for pursuing the dual portfolio structure. The Long Term portfolio continues to hold one security rated below the 'A' rating minimum of your policy, based on Moody's ratings. The security, issued by United Airlines, is now in default and is unrated. PIMCO has provided a comprehensive discussion of their strategy for this security. A listing of the five lowest rated securities is provided on page 21 of the report. Regarding sector guidelines in the Long Term portfolio, corporate notes are less than 30 percent, and the combination of asset backed securities and mortgages remains below 20 percent. Please do not hesitate to call me if you have any questions. Yours truly, Ruthann C. Moomy, Ph.D., CFA Senior Vice President r [ L Capital Markets Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Active Management Overview Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Domestic Fixed-Income ...................................................... 14 Asset Class Risk and Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Investment Manager Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Investment Manager Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Manager Analysis PIMCO-Liquid Operating Monies PIMCO-Liquid Operating Fund Bond Portfolio Characteristics Portfolio Characteristics Detail .............................................. 18 19 20 21 : CAPITAL MARKET rev· r l L a publicatio11 of C ;\ ~i..;,( ·), 'r ;\'f'i,'C . _j -k_,..._ . \. ) L _,; U ~J , Worrying About Nothing, or Nothing to Worry About? The economy took a slight breather in the second quarter, as economic growth slowed relative to expectations. Consumer spending slowed sharply in June, as retail sales fell 1.1 %, thereby reversing most of May's gain. Job growth slowed to 112,000 in June, suggesting perhaps that the economic expan- sion may not be spiraling out of control as previously feared. Living with Uncertainty S{'(' JJ<l,i/l' I 1 Industrials and Energy, aided by growing consumer confi- dence and surging oil prices, helped push the S&P SuperComposite 1500 (+ 1.73%) to its fifth consecutive quar- terly gain-the longest run since 1998. Financials (-2.38%), which are frequently hurt by rising interest rates, turned in the worst performance. Growth stocks beat value stocks for the first time in three quarters. ·"''' 11w1c 2 Whose Measured Pace? The second quarter opened with the release of a very strong March jobs report. The market feared the Fed would be forced to raise interest rates faster than their previously described measured pace. In response, the market moved ahead of the Fed at a more than measured pace. The Lehman Aggregate lost 2.44%, its worst quarterly return in 10 years. .'<'<' Jl!l.'J<' a'J- Bricks -A Symbol of Stability Private real estate once again provided stable investment returns, as represented by the NCREIF Property Index (+3.1 %). The NAREIT Equity Index fell 5.8% in the second quarter. Leading all sectors, Apartments ( +2.2%) was the only group to end in positive territory. see p!l,C/l' .<J International MarketsTurn Defensive Rising Rates Hurt International Bonds The anticipation of rising interest rates took hold around the globe in the second quarter. The Citigroup World Government Bond Index ex-U.S. dropped 3.38% in dollar terms, but just 1.01 % in local terms. The global rotation out of higher-risk asset classes, which had done well for the past year, resulted in the JPMorgan EMBI+ Index turning in its first loss (-5.89%) in the past seven quarters. .'<'c 1in_,,,. 8 Private Equity Market June turned out to be a good month for fundraising. General partners closed just over $14 billion in new commitments, accounting for nearly half of the $30.5 billion raised year-to- date. Buyouts continued to lead the way. Absent in 2004 are a large number of "first-time" venture funds as most commit- ments are going to proven general partners. s('(' prtf/(' JO Hedge Funds Struggle in Well-Behaved Markets The median manager in the Callan Hedge Fund-of-Fund Database fell 0.50% last quarter, after fees. Over the last year the median manager advanced 7.01 %, beating its typical benchmark ofT-bills + 5% by 1.03%. Both Managed Futures (-10.07%) and Convertible Arbitrage (-1.63%) suffered. In contrast, Fixed-Income Arbitrage ( + 2. 70%) continued to prof- itably collect premia from various mortgage, credit or yield curve trades. see JJ1t_r1e LO A CoolingTrend? L MSCI EAFE Index returned just 0.2% to U.S. investors. With the equity markets both at home and abroad advancing in the second quarter, those fund sponsors with more aggres- sive asset allocations (i.e., more equity exposure) came out on top. Taft-Hartley plans (-0.05%) garnered the lowest return due to their more conservative equity allocation (57%). In the recent quarter, both global and domestic balanced managers beat their static 60% equity and 40% fixed-income bench- marks. s<.·c J"'.fJC 1 :! L L L i L Rising rates and a slowing China led investors to pull out of the higher risk areas that had recovered strongly in the past year. Japan and Asia were dealt a setback in the second quarter, with the MSCI Pacific (-4.0%) coming in last among all the developed markets regions. sc,· 1ir1,r1c (j Broad Market Returns -Second Quarter 2004 2-07% E .3 -1% ~ -2% -3% -4% 0.12% U.S. Equity Non-U.S. Equity U.S. Fixed (Super Composite 1500) (MSC! EAFE) (LB Aggregate) 0.24% -3.38% Non-U.S. Fixed Real Estate Cash (Citi Non-US.) (Callan Real Estate) (90-Day T-Bills) seconcl quarter 200!J Ill < 1111 \l,<I \ 11 \\I' I ii \\I 1: l111 < \III< JI: ',I\, I , I\ 11: I\{ 1,1 I) I \I 11111:\1 \ '>-1111 I\\ 11-,;1~!1.121 \\I\\',! ;dl:111 I 1::n r Living with Uncertainty With uncertainty hanging over the market, the S&P 500 turned in one of its tightest quarterly trading ranges (low to high daily close) in the last six plus years. The market was exposed to a mixture of both posi- tive and negative news that did not allow for a consistent trend. On the positive side, non-farm payroll added over 750,000 new jobs during the quarter for the largest three-month increase since May 2000. Personal incomes were up 5.7% over the past 12 months, and new home sales continued at a record annual level of over 6.2 million units. The counterpoints came in the form of higher mortgage rates, which rose to 5.9% (30-year fixed) from under 5.0% one year ago, and crude oil, which saw a new high of over $42 per barrel in June. Industrials and Energy, aided by growing consumer confidence and surging oil prices, helped push the S&P SuperComposite 1500 ( + 1.73%) to its fifth consecutive quarterly gain-the longest run since 1998. The low volatility bull market of 2004 continued for stocks of all sizes with the small capitalization stocks maintaining their recent leader- ship role. The S&P Small Cap 600 was up 3.60</o and the S&P r MidCap 400 climbed 0.97%. The S&P 500 split the difference with a gain of 1.72%. r Industrials ( +8.44% ), buoyed by strong demand across the board and growing construction spending, topped the S&P 1500's 10 economic sectors. 3M (+10.42%), Tyco (+15.72%), and Boeing (+24.97%) all showed double-digit gains. Led by ConocoPhillips (+9.93%), Energy (+7.94</o) was the number two performing sector as oil production companies benefited from higher energy prices. Basic Materials ( + 3 .56%) came in a distant third as many of the leading companies had a mixed quarter. Health Care (+2.78%) was also a mixed bag as biotechnology (+0.11%) and managed health care (+0.31%) put a damper on an otherwise strong sector. Consumer Staples ( +0.68%) may have been hurt by the rising oil prices that reduce the money consumers have to spend. Wal-Mart, the largest stock in the sector, fell 11 .4%, while Budweiser (+6.34%) and P&G (+4.32</o) rose. Consumer Discretionary (-0.77%) fell on poor -performance from Home Depot (-5.56%) and Viacom (-8.76% ). l Financials (-2.38%), which are frequently hurt by rising interest rates, turned in the worst performance as four of the top six stocks (by market capitalization) in the sector declined. Utilities (-0.68% ), which can also be hurt by rising interest rates, was the second worst economic sector with five of the six top stocks falling during the quarter. Weakness from AT&T (-24.0%), BellSouth (-4.44</o), and Qwest (-16.71 %) hampered the Telecommunications (-0.92%) sector. Buoyed by Microsoft (+14.56%) and Dell (+6.54%), Technology ( +2.39%) turned in a strong quarter. Based upon the S&P/Barra style indices, growth-oriented stocks beat value-oriented stocks for the first time in three quarters. To compare value and growth styles, S&P/Barra divide the capitalization indices evenly by price-to-book, creating subsectors of growth-and value- oriented stocks. Among smaller stocks, the S&P/Barra Small Cap Growth Index gained 4.42%, compared to only 2.88% for its value counterpart. In the large stock arena, the division was even wider with the S&P/Barra Growth Index advancing 2.69%, while its value counterpart was up 0.80%. ') Callan Style Group Returns -Second Quarter 2004 • 3'/c • ---.- l',t -.--.--- -2':{ -3~,i Large Cap-Growlh Large Cap-Value Small Cap-Gm\\ th Small Cap-Value SIJ'ic Style IUU1 P!.!rccnLile 3 0-1-2,95 25th l\:n:cnlilc 2 04 2,03 Mcdi:Jn L48 1.43 75th Pcrccn1ilc O 57 l.09 90th P!.!rcentik: -U 5-+ S&P Growth lkm:hmarks • 2 69 0,21 S&PValuc U.80 Style Stile 2.95 4.6--1- 1 23 3 11 0.19 1 90 -151 1,11 -2 89 0 20 S&P 600 Growth S&P 600 Value 4 42 2 H8 Capitalization Sector Performance -Second Quarter 2004 4.0'7c ~--------------------~ C: ~ 2.5% ~ ~ 2.0% t-----t-----t------11------,-----lliiil -; ;§ l.5'7o l,0'7c 0.5'7c SO% 100'7c Economic Sector Performance -S&P 1500 Second Quarter 2004 Industrials Energy Materials Healih Care Information Technology Consumer Staples Utilities Consumer Discretionary Telecommunications -0,92'7c 8.44'7c 7.94'7c Financials L-2::.3::..::8:..::'7c:.b==::!!!!!!!!'!!!L __ .J........_---1 __ _1_ __ ...1_ _ __J -4'k -27£: 0'7c 2'7c 4% 6'7c 8'7c 10'7' Return Rolling One-Year Relative Returns vs. S&P 500 30% ~--------------------~ 25% ---S&P 500 -S&PValue 20'7o ----S&P Growth 1------------.-•l---= Q ~ 15'7o '<l ~ 10'7o > ~ Ylc .. ~ 0% ~ -i -5% " "i:l-10'7c ~ -15'7o -20'7c ·25'7o 84 85 86 87 ss -----1---- ,I,,,''"" i/, I' iPIT\L 11 \H!d:T ,. U.S.EQUITY Style Median and Index Returns* for Periods ended June 30, 2004 Last Last 1/2 Last Last3 Lasts Last 10 Quarter Year Year Years Years Years Large Cap-Broad Style 1.44 3.36 18.89 -1.03 -0.67 12.50 Large Cap-Growth Style 1.48 2.65 16.93 -3.59 -4.04 11.92 Large Cap-Value Style 1.43 4.21 21.47 1.77 2.08 12.59 Aggressive Growth Style 0.82 4.21 21.84 -2.65 -0.81 12.39 Contrarian Style 1.80 5.14 22.81 4.96 4.52 13.17 Core Style 1.46 3.03 18.21 -1.03 -1.31 12.54 Yield Style 1.98 4.00 19.68 3.42 3.16 12.64 S&PSuperComposite 1500 1.73 3.91 20.38 0.19 -1.06 12.00 S&P500 1.72 3.44 19.11 -0.70 -2.20 11.83 NYSE 0.66 3.66 22.53 2.05 1.03 11.96 Dow Jones Industrials 1.22 0.79 18.57 1.94 0.92 13.40 Mid Cap-Broad Style 1.73 6.65 26.53 4.70 7.93 14.34 Mid Cap-Growth Style 1.73 5.52 23.93 -3.13 2.18 12.00 r Mid Cap-Value Style 2.19 6.96 28.99 9.42 10.51 14.80 S&P Mid Cap 400 0.97 6.08 27.98 6.58 9.05 15.47 r Small Cap-Broad Style 1.11 6.79 33.58 7.02 11.18 14.64 Small Cap-Growth Style 0.19 4.73 28.96 1.24 5.45 12.63 Small Cap-Value Style 1.90 8.64 35.72 14.15 14.96 16.23 r S&P Small Cap 600 3.60 10.05 35.25 9.35 10.69 13.60 Russell 2000 0.47 6.76 33.37 6.24 6.63 10.93 NASDAQ 2.79 2.43 26.77 -1.35 -4.94 11.74 Consumer Staples 0.68 6.63 16.95 1.11 0.26 12.12 Consumer Discretionary -0.77 l.74 19.93 5.47 1.45 10.39 Industrials 8.44 7.91 30.23 -0.47 1.74 12.31 Energy 7.94 14.08 32.25 7.66 8.44 13.42 Materials 3.56 2.47 33.42 8.53 4.53 7.61 Information Technology 2.39 0.12 25.68 -6.76 -10.54 11.86 Utilities -0.68 4.06 13.12 -6.43 1.16 8.31 Financials -2.38 2.60 20.14 4.43 5.58 16.75 Telecommunications -0.92 4.08 7.04 -13.95 -16.48 L Health Care 2.78 3.10 8.10 -0.28 1.90 L- U.S. Equity Index Characteristics as of June 30, 2004 l S&P 1500 S&PS00 S&P400 S&P600 Russell 3000 Cap Range 64-341.961 887-341.961 343-14.360 64-3.136 5-341.961 Number of Issues 1.500 500 400 600 2,998 l ¼ of S&P SuperComposite 1500 100% 88% 8% 4% Wtd Avg Mkl Cap $79.98 $90.78 $3.48 $1.18 $74.0B Price/Book Ratio 2.9 3.0 2.4 2.3 2.8 P/E Ratio (forecasted) 16.6 16.5 17.0 17.3 17.1 Dividend Yield 1.6% 1.7% I. I '7c 0.8% 1.6% 5-Yr Earnings (forecasted) 12.3% 12.0% 13.9% 13.4% 12.4% * Returns less than one year are not annualized. L ** Returns prior to \Q03 are based upon Callan Broad Market's sector returns. CATT A l\.T_A ~SOCL1-\'l'i/S_'., . .... ,., ,, ,,,, ,. , :,-o, n PIT IL .\I 1111\1:T ,,.,,,." .t\.LLt\J "1 n....:: __ _ L. Whose Measured Pace? The second quarter opened with the release of the much anticipated March jobs report. The Labor Department's report announced that 308,000 non-farm jobs were created during the month, dispelling the fears ofajobless recovery. Inflation worries, motivated by 4¼ GDP growth rates, a tightening job market, and $40 barrels of oil, suggested that the Fed would be forced to raise interest rates-possibly faster than their previously described measured pace. For the quarter, the Lehman Aggregate lost 2.44¼, its worst quarterly return in 10 years. The quarterly income return of 1.26¼ was no match for the price loss of over 3.5¼, produced by rising interest rates. Towards the end of the quarter, a disappointing jobs report and weaker than expected economic data led to a modest rally in Treasury rates. Nevertheless, on June 30, the Federal Open Market Committee (FOMC) met the market's expectation when it raised the fed funds target rate from I¼ to 1.25¼, the first increase since May 2000. At the quarter's close, the futures market was predicting an additional 25 bps increase would occur at the FOMC's August meeting and a total increase of I 00 bps would come to pass by the end of 2004. The short end of the yield curve, which is most sensitive to expected changes in the fed funds rate, bore the brunt of the market's sell-off. The yield curve flattened, as the difference between two-year and 30- year Treasurys decreased from 3.20¼ to 2.61 ¼. The yield on the two- year Treasury rose from 1.57'/o in March to 2.68¼ at the end of the quarter. The yield on the I 0-year Treasury gained 75bps to end the quarter at 4.58¼, modestly off an inter-quarter high of 4.87'/a. The rise in interest rates impacted real rates, as opposed to embedded inflation expectations. The real yield on the five-year Treasury Inflation Protected Security (TIPS) climbed from 0.45 to 1.23, while break-even inflation to nominal Treasurys edged up only 20 bps. Due to the increase in real rates, the Lehman US TIPS Index fell 3.10¼ during the second quarter. On a positive note, in order to provide a I more robust yield curve, the Treasury announced it will start issuing _ five-year and 20-year TIPS, in addition to the already issued I 0-year securities. During the first half of the quarter, the increased volatility in interest rates had a negative impact on the fixed-rate mortgage market. In April, mortgages lost 52 bps relative to Treasurys of the same dura- l tion. Most of the relative loss was regained toward the end of the _ quarkterDwh~n inhterest rate vohlatildity d~creasfedhandLrahtes fellMfrom their pea . unng t e quarter, t e urat10n o t e e man ortgage Index extended from 2.37 to 4.13 due to the increase in yields. In April, when investors began calculating the impact of rising short rates, levered (hedge funds) investors, who predicted their cost of borrowing would increase, began reducing their exposure to the carry trade-a strategy where an investor borrows at a low interest rate and invests in a higher yielding (riskier) asset. Unwinding of the carry trade had a significant impact on the emerging debt market, especially the largest and most liquid names. In response, emerging market debt indices shed more than five percent of their value during the quarter. High yield credit produced positive excess returns, relative to Treasurys of the same duration, over the quarter. But, the income advantage offered by high yield was not enough to keep total returns in positive territory. Over the quarter, the Lehman High Yield Index slipped 0.96¼. The higher quality, and more interest rate sensitive, BB market declined 2.31 ¼ while the lower quality, credit driven CCC L -market produced a positive 0.91 '/o return. Callan Style Group Returns -Second Quarter 2004 Vi 0',1 1-----1------1----+-----+~ -l'k -Yi - -5~f -6'/r lnlermedialc Stile 10th Pcnx:ntilc -1 77 25th Pcm.::ntih! -2.02 Median -2.31 75th Percentile -2,-46 90th Pcrccnlilc -2.53 Ln lnlerA~g Bcm:hmark • -I 97 Core Bond Cure Plus SIJ•le Style -1.87 -I 81 -2,21 -2 ]2 -2,34 -2 28 -2,44 -2.47 -2,54 -2,60 LBA~g LBAgg -2.4+ -2,44 • __ _!._ •• ..i Ext l\faturity Hi~hYield Stile Style -2 25 U.32 -4 29 0.1 1 -4,77 .() 18 -5A5 -0_,4 -5 87 -I IJO LB G/C Long LB High Yield -5 2~ -0,96 Sector Performance -Second Quarter 2004 ~-2.S'lo ~ -3 ,0'lo -3 5'7o -+.0'lo -3.43'il> LB Universal Index= -2.44'7o LB Aggregate Index= -2.44'7o -4.S'lo LB Gov Bd LB Credit LB MBS LB ABS LB CMBS LB High Yield U.S.TreasuryYield Curves 6'7o 5'7o __ :-:.=~-:.: 4% -End 2nd Quarter 200+ --a--Beginning 2nd Quarter 2004 2¼ ···-•--·· End 2nd Quarter 2003 0<Jo l-------------ii------+-----+-----1 0 5 10 15 20 25 30 Maturity (Years) Effective Yield OverTreasurys IO'lo ~---------------------~ L CAILAN 1" .::.~c..'(){'IA· rl'1~>, • '---\_,_ __ ~' -_.A . . j__,_) 1 ,,,, crn11'\PIT\L1J\llhET,,, U.S. FIXED INCOME Style Median and Index Returns* for Periods ended June 30, 2004 Last Last 1/2 Last Last3 Last5 Last 10 Quarter Year Year Years Years Years Active Duration Style -2.27 0.26 -0.45 6.59 6.90 7.28 Core Bond Style -2.34 0.31 0.55 6.53 7.14 7.53 Core Bond Plus Style -2.28 0.39 1.67 6.82 7.16 7.93 LB Aggregate -2.44 0.15 0.32 6.36 6.95 7.39 LB Govt/Credit -3.17 -0.1 9 -0.72 6.74 7.11 7.43 LB Govt -2.98 -0.13 -1.35 6.12 6.72 7.16 LB Credit -3.43 -0.27 0.08 7.54 7.53 7.95 Citi Broad Investment Grade -2.44 0.18 0.37 6.37 6.95 7.39 Extended Maturity Style -4.77 -0.18 -2.20 8.46 8.53 9.15 LB Gov/Credit Long -5.28 -0.46 -2.69 8.33 8.16 8.92 LB Gov Long -5.21 -0.13 -3.92 7.89 8.02 8.90 LB Credit Long -5.37 -0.89 -1.05 8.93 8.24 8.80 Citigroup High Grade -5.49 -0.86 -3.11 8.49 8.41 8.66 intermediate Style -2.31 0.05 0.18 6.17 6.80 6.98 LB Intermediate Aggregate -1.97 0.25 0.85 6.01 6.74 7.06 r LB Gov/Credit Intermediate -2.52 -0.11 -0.07 6.21 6.75 6.90 LB Gov Intermediate -2.30 -0.15 -0.48 5.49 6.25 6.56 LB Credit Intermediate -2.82 -0.08 0.44 7.14 7.38 7.56 r Defensive Style -0.95 0.26 0.87 4.35 5.54 6.06 Active Cash Style -0.10 0.42 1.11 3.05 4.34 5.16 Money Market Funds(netoffees) 0.12 0.25 0.50 1.18 2.85 3.92 ML Treasury 1-3 Year -1.06 -0.08 0.50 3.90 5.11 5.71 90-day Treasury Bills 0.24 0.47 0.98 1.71 3.29 4.27 High Yield Style -0.18 1.91 10.82 9.48 5.98 8.57 LB High Yield -0.96 1.36 10.32 9.30 5.06 7.28 CSFB High Yield -0.19 2.47 11.74 11.10 6.36 7.83 ML High Yield Master -0.88 1.33 9.97 8.88 5.39 7.69 ' . L Mortgages Style -1.15 0.83 2.30 5.96 6.91 7.57 LBMBS -1.13 0.77 2.23 5.61 6.60 7.29 LBABS -1.81 0.45 1.05 6.05 6.95 6.93 L LBCMBS -3.39 -0.25 -0.88 8.40 8.48 U.S. Fixed-Income Index Characteristics as of June 30, 2004 L Yield Modified Adj. Average %of %of Lehman Brothers Indices toWorst Duration Maturity LBG/C LB Aggregate LB Aggregate 4.64 4.77 7.47 100.00% 100.00% LB Govt/Credit 4.27 5.21 7.84 100.00% 59.77% L Intermediate 3.86 3.72 4.42 78.92% 47.17% Long-Term 5.79 10.81 20.61 21.08% l 2.609'r LB Govt 3.81 4.93 6.96 58.87% 35.18% L LB Credit 4.92 5.62 9.09 41.13% 24.58% LBMBS 5.29 4.13 7.21 35.789'r LBABS 3.77 2.63 3.00 I .649'r L LBCMBS 4.68 4.62 5.52 2.81% LB Corp High Yield 8.00 4.80 8.13 L * Returns Jess than one year are not annualized. ""' ! •;•··'"'' c'l!l!l I' \PIT\L )I \B l\.l)T ... ,.," CALLAN ASSOCIATES ,., r l International MarketsTurn Defensive International equity markets were nearly unchanged in the second quarter, with MSCI EAFE Index returning just ().2<fu to U.S. investors, as the dollar strengthened by 2.1 'lo . In a turn of events from previous quarters, rising rates and a slowing China led investors to pull out of the higher risk areas that had recovered strongly in the past year, such as emerging markets (-9.6'lo ). On the receiving end of this rotation were the defensive sectors, such as Consumer Staples (+3.6%) and Energy (+7.2%), and the previously lagging European markets ( + 2.4% ). Europe Investors finally turned their attention away from Japan and the emerging markets, where they had been focusing for the past year, and moved into some European markets that had previously been laggards. The region advanced 2.4% in dollar terms for the quarter, the highest of any developed region in the world, with the euro drifting 1 .0% lower versus the dollar. The economic data coming from the continent showed only gradual growth and tame inflation. Accordingly, the market expected that the European Central Bank could afford to postpone an increase in interest rates. The faster- growing UK economy, however, motivated the Bank of England to raise rates twice during the quarter, which may have caused the UK equity market ( + 1.5%) to slightly undef1)erform the continent. Despite the ECB accommodation, sector returns across Europe reflected the overall backdrop of rising global rates. As a result, defensive Energy (+ 7.4%) and Consumer Staples (+3.69'o) did markedly better than the more rate-sensitive Financials (-1.2%). Technology (-7.4%) and Telecommunications (-2.9%) also fell. Asia Japan and Asia were dealt a setback in the second quarter, with the MSCI Pacific (-4.0%) coming in last among all the developed markets regions. Although the economic news out of Japan remained favorable-with evidence of the recovery broadening from the indus- trial sector to the long-suffering consumer sector-investors grew concerned that a potentially slowing China could seriously undermine Japan's export-sensitive economic rebound. As a result, Japan took a pause from its strong positive performance of the past year and sank 3.8% for the quarter, primarily from the dollar gaining 4.6% versus the yen on expectations of rising rates. Most sectors were negative, with Telecommunications (-13.6</o) getting hit the hardest, but the defen- sive Energy sector (+5.79'a) benefited from rising oil prices. Elsewhere, Hong Kong (-4.5</o) suffered similarly, particularly the Financials, on perceptions of an eventual China slowdown. Australia slumped 5.39'a as its currency plunged 8.8</o versus the U.S. dollar. Emerging Markets Emerging markets gave up some of their recent stellar gains in the second quarter, declining 9.6</o as investors decided to lock in the past year's profits by exiting the asset class. The specter of rising global rates and a slowdown in the Chinese growth engine were the primary L areas of investor concern. Latin America was nearly flat with the MSCI EMF Index, with investors discriminating between the healthy economy of Mexico (-4.4</o) and still-fragile Brazil (-12.09'0). Emerging Asia (-11.69'0) was the weakest region, with Taiwan (-11.7</o) and Korea (-14.7</a) struggling considerably. A drop in the region's technology shares led the downdraft, while exporters were sold on Chinese slowdown concerns. "-Ii Callan Style Group Returns -Second Quarter 2004 3'1 o•; -3',i -6~Y -9'1< -15'., --•---------- Global Equity Style Non-U.S. Equily ·-·•-··· Emerging Markets Eq Db 10th Pcn..:cntilc 2 7LJ Style I 56 05) ~1 17 -142 -6.41 151h Percentile 1.Xt'i -~ 71 Median OR:! -11)01 751h Pcrccntik -0 63 -10 71 90th Pcm.:.ntilc -0 9:! -2.IR -12.C MSCI World Dc11<.:hmark. • 0 87 MSCI F,AFE 0 ::!::! MSCI Emerg M.arkels free -9.57 4% 2% 0% C 5 -2% J cl ~ -4'7e -6'7o -8'7o -10% Regional Performance (based on US$) Second Quarter 2004 MSCI ACWJ Free (ex U.S); -0,69'7c 2.13% MSC! EAFE; 0.22'7c MSCI Europe MSCI Japan MSC!Pac Ex Japan -9.5711, MSCIEmerg Markets Free Rolling One-Year Relative Returns vs. MSCI EAF E US$ 40'7o 94 95 96 97 98 99 00 01 02 03 04 Major Currencies vs. US$ Cumulative Returns over Last 25Years 200'70 ~-------------------~ .,. 150'70 ~ .; ;.. E 100% = .; c,: -Japanese Yen German Mark/Euro 1--------11~-------1 UK Sterling -~ 50% ----- " :i E 8 0% . .,.,/ ,, , ., "Sill; !'\Pi'!'\!. .\I \BliET ,. ' r I. L L L L L INTERNATIONAL EQUITY Style Median and Index Returns* for Periods ended June 30, 2004 Last Last I /2 Last Last 3 LastS Quarter Global Style 0.82 NoH-U.S. Style -0.17 Core Style 0.22 Top Down Style 0.28 Bottom Up Style -0.13 Small Cap Style 0.82 MSC! EAFE-Unhedgcd 0.22 MSC! EAFE-Local 2.40 MSC! EAFE Growth Index -1.43 MSC! EAFE Value Index 1.84 MSC! World-Un hedged 0.87 MSC! World-Local 1.89 MSC! AC World Free ex-U.S.-Unhedged -0.69 MSC! AC World Free-Unhedged 0.52 Pacific Basin Style -4.59 Japan Style -2.22 Pacific Rim Style -8.82 MSC! Pacific-Unhedged -4.03 MSC! Pacific-Local 1.05 MSC! Japan-Unhedged -3.83 MSC! Japan-Local 0.87 Europe Style 1.50 MSCI Europe-Unhedged 2.13 MSCI Europe-Local 3.00 Emerging Markets Database -JO.OJ MSC! Emerging Markets Free-Unhedged -9.57 MSCI Emerging Markets Free-Local -8.18 Return Attribution for EAFE Countries Second Quarter 2004 Country Total Local Currency Australia -5.52'/4--~ 55<;i -8 76<;1, Austri;1 6.97</c 8.04'if· -I OO'i'r Belgium 6,00C/r 707'1, -1 .00¼· Denmark -t69C/c s sn -0.SW Finl.ind -19.59</c -18 78¼· -1 ,00¼ Fmnre ~.-18«< • 53r;r, -I OOC/r Gennany ;\,75'7< -179¼ -J .()()r;',- Greece ~.SO«< -185'7r -1.00'i'r Hong Kong --1.SO<!r --1-IQC/, -0.1 IC/r ln.,land 7.41 ¼ 8 -19'/c -1.00C/c lialy 5.71 '7< 6 78<1, -1 QO<I, fapan -H;\C/c 0 87<;f --1.66'/c Netherlands ;\,;\6¼ -t-tO<;t -1 oor;r New Zealand -1.-19'/c ~ '27<;f --1.6l<fr Nomay 6.05¼ 7 06¼--o.9.sr;r Portu:;al -01-l'i'r 0 ::!6<;} -1 .00~i- Singapore -2,::!0C/r 0-19'7< -2 68'J Spain 0.60'7< I 61<;f--I 00?.- Sweden -l.-15C/, -1.34c1, 0 11~,;- Switzerland 2.1.Wr 0_9Yk I 15~~ Year 4.15 4.00 3.84 4.14 4.85 11.54 4.56 6.56 2.48 6.63 3.52 4.51 4.10 3.57 6.20 13.04 -2.82 8.19 11.10 10.73 12.74 2.46 3.04 4.71 -1.52 -0.78 -1.21 Year 24.94 30.15 28.98 31.86 30.16 49.56 32.37 22.73 26.42 38.43 24.00 20.19 32.50 24.92 36.23 49.30 29.37 41.12 30.32 46.22 32.87 26.57 28.87 19.78 34.52 33.51 30.38 New Zealand 0.'.?'x Austria0.3'J>, Portugal 0.-t'h, Greece 0.5% Norway 0.5%· Ireland 0.8%, Denmark 0.8% Srngn1mre 0.8%--......_ Belgium 1.2%..___ Finland 1-4%- Ho"g KgngJ_fi<;,, Sweden 2A% Spain 3.6'7o Italy 3.8'7o Years Years 2.00 2.77 4.58 2.15 4.55 2.52 5.44 1.17 5.65 3.13 13.92 12.70 3.87 0.06 -5.24 -2.86 1.73 -3.29 5.94 3.20 0.87 -1.70 -3.01 -2.83 5.25 0.97 1.80 -1.14 4.65 -0.17 3.22 0.95 10.76 3.50 3.33 -0.53 -1.98 -2.70 1.28 -1.73 -3.13 -3.75 4.40 2.32 4.07 0.30 -6.53 -2.72 14.72 6.92 13.10 3.27 12.12 5.54 Country Weights -EAFE As of June 30, 2004 UK Last 10 Years 8.78 6.91 6.77 6.37 8.83 9.21 4.06 4.15 1.78 6.21 7.13 7.36 4.40 7.18 0.59 0.70 1.90 -2.15 -1.44 -3.44 -2.46 11.14 9.34 8.77 4.52 1.20 7.00 UK 1.-18(1, 2 S-4'1 -IW« Switzerland 9.4'7o 7.l'lo * Returns less than one year are not annualized. ,!,;au c•;orl'\PIT\I, \l\llldJ,. .. ,,, CAlLAN ASSOCJA11~S Rising Rates Hurt International Bonds In the second quarter, the Citigroup World Government Bond Index ex-U.S. dropped 3.38¼ in dollar terms, but just 1.01 'lo in local terms. The anticipation ofrising interest rates look hold around the globe, and many investors who had been searching for yield outside the United States decided those days were nearly finished and rotated back into the U.S. dollar. As a result, the U.S. currency strengthened by 2.30¼ versus other currencies in the Index. Europe r The European bond market traded slightly lower in the quarter, with I the Citigroup EMU Government Bond Index declining I. 79% in U.S. dollar terms. The yield curve shifted only slightly higher as investors continued to expect that the European Central Bank could afford to postpone raising interest rates. The dollar rose l .O'lo versus the euro. The United Kingdom was a different story, however, with the Bank of England tightening twice. Despite the rising rates, sterling weakened by l.3'lo versus the U.S. dollar. Japan The Japanese government bond market fell 5.57¼ in dollar terms during the quarter but just 0.96¼ in local terms, as the dollar strength- ened by 4.6% versus the Japanese yen. The yield curve steepened Callan Style Group Returns -Second Quarter 2004 -:!',¥ -------------------~ Glohal Fixed Stile 10th PerccnLik -2_50 251h Percentile -2.79 Median -3.09 75th Pcrcl'nlilc -3.31 90th Pi.:rccnlilc -3,55 Citi World Gov Unhedged Benchmark • -3 33 Non-U.S. Fixed Style -2.91 -3.02 -3.30 -3.56 -443 Citi Non-U.S. World Gov Unhedged -3.38 significantly throughout the quarter as long-term rates increased sharply on the perception of a broadening domestic economic recovery. Emerging Markets The global rotation out of higher-risk asset classes, which had done well for the past year, resulted in the JPMorgan EMBI+ Index turning in its first loss (-5.89¼) in the past seven quarters. INTERNATIONAL FIXED INCOME L L Style Median and Index Returns* for Periods ended June 30, 2004 Global Style Citi World Govt-Unhedged Citi World Govt-Local Non-U.S. Style Citi Non-U.S. World Govt-Unhedged Citi Non-U.S. World Govt-Local Citi Euro Govt Bond Index-Unhedged Citi Euro Govt Bond Index-Local JPM Emerg Mkts Bond Index Plus Last Last I /2 Last Last 3 Last 5 Quarter Years Year Year Years -3.09 -1.12 -3.33 -1.53 -1.4..J. 0.57 -3.30 -1.64 -3.38 -1.86 -1.01 0.76 -1.79 -1.48 -0.98 1.96 -5.89 -2.82 6.38 5.64 -0.23 8.02 7.60 0.12 7.97 l.72 4.78 12.73 11.94 4.65 14.47 13.66 4.18 20.34 6.57 10.37 7.14 7.00 4.73 6.96 6.84 4.04 8.97 5.39 13.33 Last 10 Years 7.33 6.55 6.61 7.31 6.14 6.48 13.77 Return Attribution for Non-U.S. Govt Indices Second Quarter 2004 Country Weights -Citigroup Non-U.S. Govt As of June 30, 2004 Country Total Australia -8.77'1c Austria -2 06?, Belgium -l.99'7c Canada <\98<;·(' Denmark -l.85<;f Finland -l.93q France -I 95'l Germany -2 OO'J Greece -2.()..1.t;f Ireland -2 l9'k Italy -1.88'7, Japan _5_57c;:, Netherlands -L99'70 Norway -1,88'7,· Poland 3,7-t.<;'r- Po1tugal -2 O1 'X Spain -2.06rk SwcLlcn -1.23'7.· Switzerland -1.2-\Ck UK -2.3-1-'h * Returns less than one year are not annualized. *"Derived from MSCI EAFE data. <' (I Local Currency** -O.Ol<;f -8.76'J -1 .07'7r' -1()()';{, .1_()()'7, -1.00'lc -1.04'?(' -1 98<;0 -l,()3Ck -0.83<;'c -0.95<;'<--1 .00<;'c -O,96c::f -I 00% -I ,{)I Cf, -1 .()(J<;f -1 ,05'7' -I ()()<;f, -1 ,20~'. -1 ,()()t;f, -O.90C/, -1 .00<;f -096<;',, --+ 66<;( -I 01c;1,-. -1 ,OOC/r -O95'/r -0 9SSf -O.7Yk -l509c -1.OY-ir -I OOS'r -1.OYk -IJ)(J<;f- -I 3-l'lc 0 I l'!c -2.36S'< I IS'?<' -1 OW, -1 33<;'< Norway 0.3'7c Australia 0.4'7c, , Poland 0.5'7c ~ \ Ireland 0.5'7c ~ Finland O,8'70---.::::: Switzerland O.9'7o---- Portugal 0~9%- Sweden 1.0%...---, Denmark L3'7c/. Austria l.8'7o " Greece 2.1 % Canada 2.4'7o Netherlands 3,0'lc Belgium 3.5'7o France I0.4'7c '/>; ,! l'\PlT\U!\ilkE'l, .. L Bricks -A Symbol of Stability When asked the difference between private and public real estate, it is often pointed out that private real estate is not prone to some of the risks that the public sector has. The second quarter proved that point. The quarter began with positive job growth data and a spike in mort- gage rates, although still at relatively low historical levels, which sent public real estate securities investors scurrying to the door. By mid May, Real Estate Investment Trusts (REITs) declined 18% from their March highs, bottomed on May 10, then rebounded to end the quarter down 5.8'/'o , as represented by the NAREIT Equity Index. Despite the increased volatility in REITs, dedicated real estate mutual funds experienced net inflows on a year-to-date basis of $2.8 billion, accord- ing toAMG Data Services as presented by Merrill Lynch. Leading all sectors, Apartments ( +2.2%) was the only group to end in positive territory. Health Care (-13.470) and Regional Mall (-11 .5%) were the clear losers. The con-ection was healthy. REITs were trading at 20% to 3070 premiums to their underlying Net Asset Values, and the sell-off brought pricing back down to reasonable levels. Private real estate once again provided stable investment returns, as represented by the NCREIF Property Index. NCREIF returned 3. 1 'lo for the quarter and 10.8% for the trailing 12 months. These returns were driven by the income component, which was 1.9% and 7.7% for those same time periods. Significant write-ups in the Retail sector caused an appreciation return of 1.3'/'o for the quarter. The stable real estate returns and relatively low interest rates drove investor alloca- tions to private real estate, especially to core investment strategies. Investors still demand stable yielding investments from core products, such as the open-end core commingled funds. Overall, investors remain in the asset class and continue to make commitments to it. Callan Style Group Returns -Second Quarter 2004 5',f 4'k J'.; o•, 1-----l~~:----+-----------l -It;, -2':"f -~•.t -4'.i -5',,f -6'.{ -7'k -Wk 10th Pcm:nlilc 25th P.:nxntilc Median 751h P.:rccnlik 90th Percentile fknchmark • ReaJ Estate Database 4.05 JIB 2 07 I 19 -0.34 NCREIF Total Index 3.13 ·--.... REIT Database .J 97 4.42 497 -5.70 -6 38 NA REIT Equity -5 ~I NAREIT Equity Sector Performance - Second Quarter 2004 Rcsidcnlial Specially -254'/4 ln dus1rial/Olfac Retail -9.38','{ Hcalih Care L--1..:..3·:...42:.i'/4:..J, =======:::::=! -16'i; -14',{ -12',{ -101,~~ .. K~ -6~ -''-'' Rc1ur11 Rolling One-Year Returns 1.40% 60% ,-------------------------, Sector lndl1strial Apartment CBD Office Suburban Office Overall Capitalization Rates 2nd Quarter 2004 One Year Ago c 50% 1---------------1 --REIT Database " ;§_ 40% Real Estate Database ,,, E .E 30% " c.: "" Strip Shopping Center 8.35'7' 7.IW 8.5Wr 9.11'7,, 7.96'7r 8.82'7r 8.92'7r 9.34'7r 9.80'7r 8.63'7r ] 0%t-----,r--~J-------t--:~-------T'--I Source: Korpacz Real Estate Investor Sun,ey® Rates based on unleveraged, all-cash transactions. 0 c.: -10% 1------------11-+-------- 92 93 94 95 96 97 98 99 00 0 I 02 03 04 REAL ESTATE Style Median and Index Returns* for Periods ended June 30, 2004 Last Last I /2 Last Last 3 Lasts Last 10 Quarter Year Year Years Years Years Real Estate Database (net of fees) 2.07 4.55 8.47 7.52 8.89 11.47 NCREIFTotal Index 3.13 5.77 10.83 7.97 9.40 10.36 REIT Database -4.97 6.96 29.39 16.48 15.94 14.66 NAREIT Equity -5.81 5.51 27.07 15.37 14.51 12.07 * Returns less than one year are not annualized, ,, . .,, ,,, ... ,., ,·"n l'\PIT\l . \111\ld·:T "' .<J IR Private Equity Market June turned out to be a good month for fundraising. General partners r:-~ closed just over $14 billion in new commitments, accounting for nearly half of the $30.5 billion raised year-to-date. This could signal a fundraising rebound eagerly expected from industry participants, as there has been a dearth of high quality partnership opportunities. First half-year fundraising statistics for 2002 and 2003 were $19 billion and $14 billion, respectively. Fundraising has picked up considerably r from the past two years as funds are being raised quickly for both " -. buyouts and venture capital. Many well-known general partners are i raising their latest funds with only one closing. Adding $12.5 billion in June commitments, buyouts continued to lead the way in fundraising with several firms closing multibillion dollar funds. Buyout firms have garnered a healthy majority of the fresh capital in 2004 and more than twice the $7 billion in commitments " -from the same period last year. Venture capital is also up more than [ L double the commitments from the first half of 2003, when they drew $ 1 .8 billion. Absent in 2004 are a large number of "first-time" venture funds, as most commitments are going to proven general partners. Please see our upcoming issue of Private Markets Trends for more in-depth coverage. Funds Closed January I through June 30, 2004 Strategy # of Funds $ Amt (mil) Venture Capital 36 4.396 Acquisition/Buyouts Subordinated Debt Distressed Debt Other Fund-of-funds Totals 27 5 I 8 II 87 Source: The Private Equity Analyst 19.516 1.327 500 1.626 3.P6 J0,491 % 14.4 64.0 4.4 1.6 5.3 10.3 100.0 Hedge Funds Struggle in Well-Behaved Markets To validate their raison d'etre, hedge funds profit from markets react- ing to new information. Unfortunately, last quarter the markets either saw no new meaningful information or just simply did not decisively react. For example, the Fed's quarter-point rate hike on June 30 was as anticipated as that day's sunrise. Representing broadly diversified programs of hedge fund strategies, the median manager in the Callan Hedge Fund-of-Fund Database fell 0.5070 last quarter, after fees. Over the last year, the median manager advanced 7 .0 l 'lo, beating its typical benchmark ofT-bills + 5¼ by 1.0370. Looking at an unmanaged composite of underlying hedge fund strate- gies, the CSFB/Tremont Hedge Fund Index dropped 0.47¼ last quarter. Besides Managed FutLtres (-10.07'/'o ), which fell dramatically when oil and other commodity markets whipsawed investors, Convertible Arbitrage (-1 .63%) systematically suffered, as lower equity volatility and rising rates undermined convertible values. In contrast, Fixed-Income Arbitrage (+2.70¼) continued to profitably collect premia from various mortgage, credit or yield curve trades. Long-Short EqLtity (-1 . I I 'lo) stumbled over the miscues of an equivo- cating S&P 500 ( + 1.72¼ ). Monthly Net Returns: CAI Hedge FoF Database L.Yk 09'1- 0 6i; O.Y; 0.0', -0,3% -OW -0 9':t, -1-2';{ -1.5".,, 10th Pi:rccntilc :!51h Percentile Median 75th Perccntik: 90th PcrccnLilc T-IJills • April 2004 03• 006 -030 -069 -I 07 008 May 2004 -007 -021 -0.5• -OXfl -111 1)09 June 2004 1.03 06., 0.29 IJOI -OJ• 0 07 ALTERNATIVE INVESTMENTS Style Median and Index Returns* for Periods ended June 30, 2004 L II Convertibles Database CSFB Convertible Securities Hedge Fund-of-Funds Database Market Neutral Equity Style CSFBrfremont Equity Market Neutral CSFBffremont Long/Short Equity CSFBffremont Event-Driven CSFB!fremont Convertible Arb CSFB!fremont Fixed-Income Arb 90-Day T-Bills VE Post Venture Cap Index GS Commodity Index MLM Managed Futures Index * Returns Jess than one year are not annualized. L~ I() Last Last I /2 Last Last 3 Quarter -1.11 -0.87 -0.50 0.27 0.70 -1.12 1.58 -1.63 2.71 0.24 0.04 2.46 -5.61 Year 1.76 2.45 2.05 0.94 2.21 2.83 5.22 0.48 4.36 0.47 5.70 12.71 1.26 Year Years 13.79 4.32 14.16 4.89 7.02 5.24 0.61 3.22 6.08 6.47 12.51 5.76 13.74 9.49 4.88 7.61 6.63 7.15 0.98 1.71 32.37 -4.05 26.19 12.82 3.87 1.05 Lasts Last 10 Years Years 6.84 11.73 5.75 10.09 9.59 10.35 3.29 6.07 9.49 10.86 8.72 13.45 10.35 11.83 12.43 10.97 7.21 7.50 3.29 4.27 -8.49 8.66 17.08 9.76 5.01 7.60 Worrying About Nothing, or Nothing to Worry About? The economy took a slight breather in the second quarter, as economic growth slowed relative to expectations. GDP growth for the first quarter was revised upward from 3.9clo to 4.Ylo. The initial estimates for second quarter GDP growth came in at 3.0¼. A slowdown in consumer spending and weaker employment gains accounted for much of the downward revision in GDP growth. The expectations for GDP growth for the year remain in the 4.5'/4 range, a sharp rise from 3.1 % in 2003. The economy remains on a solid growth track, but like the stock market, the headlines scream "failure" when perfectly reasonable levels of growth fail to meet expectations (no matter how reasonable the expectations may be). Consumer spending slowed sharply in June, as retail sales fell J .1 70, thereby reversing most of May's gain. Much of the decline was due to car sales, falling from a 17.8 million annual rate in May to 15.5 million in June. Excluding car sales, retail sales fell 0.2% in June. Until the June fall-off in sales, many observers were surprised by the willingness of consumers to keep spending, despite high oil prices and uncertainty in Iraq and the Middle East. The slowdown in June sales may be a return to reality for consumers, caused in part by a slowdown in job growth. The labor market finally got back on track this year. After struggling to add just over I 00,000 jobs in February, the job market surged, adding almost one million jobs during the next three months. Job growth slowed to 112,000 in June, suggesting perhaps that the economic expansion may not be spiraling out of control as previously feared. June can be notorious for false signals in the labor market, caused by significant seasonal shifts in employment as students graduate and schools let out for the summer. Initial unem- ployment claims have drifted down toward 340,000 (four-week moving average), well below the danger level of 400,000. Overall, the data on jobs and consumer spending suggest that economic growth cooled in June after a hot spring. The reasonable (but slower than expected) growth in the economy means the Federal Reserve can remain optimistic on both growth and inflation. The year-over-year change in the CPI for June is 3.370, up sharply from the 1.7% change in March, but the jump was fueled primarily by the surge in energy prices. The core rate of inflation- excluding the volatile energy and food components-is up just 1.9% from one year ago. The June Producer Price Index is up 6.6% from one year ago, again boosted mainly by energy price changes. However. the elevation of inflation measures in the first half of 2004 appear to be largely due to transitory factors that may be behind us . Producer prices, in fact, fell in June from the May levels, led by a decline in energy, and food prices do not appear to be a problem. Oil Inflation -Year OverYear 20%----------------------- 15% \ \ PP! (All Commodities) -CPI (All Urban Consumers) -1 O'lo fTffl..+n..+,-,-~.+....+..rrf-m.l.....-r!-rrm-.Th-n+n..+n-r1-crrfrn+..rr+,--n,h,,-J.....-r!-m+,-.Th-n+n..+n"""" 79 XO XI X2 83 84 85 86 87 88 89 90 91 92 93 9-1 95 96 97 n 99 00 01 02 0304 prices sustained above $40 per barrel will keep energy-related infla- tion a factor in the coming months, but there is little pricing pressure from elsewhere in the economy, and in particular from wages. While wage and benefit costs are rising, the increases remain contained and productivity gains have been more than enough to offset, resulting in a decline in labor costs per unil of output. Capital spending has lagged throughout the current expansion, as firms have been more cautious about investing and hiring than in any previous expansion during the past 30 years. Part of the problem has been capacity utilization, which has risen by more than four percent- age points since the low point in mid-2003, but at 77.2% for June, remains below the magic level of 80%. For decades, the reliable rule of thumb was that utilization has to reach 8070 before capital spending kicks in. The investment spree of the late 1990s led to a larger than usual overhang when the recession ended. Capital spending began to show signs of life in the second half of 2003 and has continued into 2004, showing up a little early in part because some of the capacity in the overhang has become out of date, spurring replacement demand. The Institute for Supply Management (ISM) Purchasing Managers' Index, a reliable reading on production and supply, has been above SO-the dividing line between expansion and contraction-for 13 months through June. The June reading fell sharply for manufactur- ing, led by a drop in new orders. The Index for non-manufacturing also fell in June, corroborating the slowdown in the economy suggested by the consumer and employment data. "'Special factors" can explain the decline in each of the ISM reports, but a preponder- ance of special factors in the interpretation of many economic indica- tors suggests instead that they may not be so special, and that growth in the economy has indeed cooled a bit in the second quarter. U.S. ECONOMY Recent Quarterly Indicators 3Q02 4Q02 IQ03 2Q03 3Q03 4Q03 IQ04 2Q04 CPI-All Urban Consumers (year over year) 1.5% 2.4% 3.0% 2.1 % 2.3% 1.9':0 1.7% 3.3% PPI-All Commodities (year over year) -0.8% 3.8% 8.8¼ 5.4¼ 4.7% 4.9% I.I '7o 6.6% Employment Cost-Total Compensation Growth 2.5% 3.0% 5.5'7o 3.470 4.2% 3. I '7o 4.370 3.9% Manufacturing Output-Productivity Growth 5.5% 2.3'7o 3.4'7o 6.2% 9.5'7o 2.5'7o 3.8'7o l.8'7o GDP Growth 2.6% 0.7'1<, 1.9% 4.1% 7.4% 4.2% 4.5% 3.0% Manufacturing Capacity Utilization (level%) 74.1 73.0 73.0 72.6 74.9 75.8 76.6 77.2 Consumer Sentiment Index (I 966=1.000) 0.873 0.838 0.800 0.893 0.893 0.920 0.980 0.956 f •/11111 ,,. ,, l' \PITIL \l \!Ud-:T ,.,,, CAILAN ' ')CL-\TF' ~ 1 ., -·· / l I r r r I l A CoolingTrend? The strong start to the year faded, but equity markets still managed to rise in the second quarter. Median fund sponsor returns were slightly negative during the quarter, as equity returns were not able to offset weakness in the bond markets, which were hurt by rising interest rates. Using the median manager returns from the latest quarter and ending asset allocations from the prior quarter, Callan estimates the recent total returns of the institutional investor community. The adjacent graph illustrates the range of returns for public, corpo- rate, and Taft-Hartley pension plans, as well as endowments/founda- -tions, showing gains across the board. The table below compares the returns of the four institutional fund sponsors to several benchmarks over longer periods. Choices in asset allocation explain much of the difference in performance. With the equity markets both at home and abroad advancing in the second quarter, those fund sponsors with more aggressive asset alloca- tions (i.e., more equity exposure) came out on top. With an average public equity allocation of 65</o, the median endowment/foundation fared the "best," down 0.03</o for the quarter. Despite their less aggres- sive equity allocations, corporate (62¼), public (58¼), and Taft- Hartley plans (57¼) weren't far behind, declining 0.09%, 0.04¼, and 0.05¼ in the median case, respectively. Callan's balanced manager groups generally maintain well-diversified portfolios and attempt to add value by underweighting or overweight- ing asset classes, as well as through stock selection. In the recent quarter, both global and domestic balanced managers beat their static 60¼ equity and 40</o fixed-income benchmarks. 60% 50% 40% 30% 20% 10% Callan Style Group Returns -Second Quarter 2004 1.0''."i 08'1 06'.f tH', 0.2'l O,Wf -04',{ -0 6'J -0.R', -1.w; 10th P..:n:cnlilc 25th Pcn.:cnlilc Median 75th PcrccnUlc 901h Pcn::cnlilc Public Plan Dal abase 0,(4 O.IH -0.(J.l -0.30 -0.78 CorporJle Plan Endow/Found Tart-Hartley Database Database Da1abase 0.26 0.98 0.68 0,0/\ 019 040 -009 -003 -005 -0,2X -0 (6 -039 -0,87 -0.6-1 -O.R9 Average Asset Allocation as of March 31, 2004 • Public Corporate • Endowment/Foundation Taft-Hartley US Equity Non-US. U.S Fixed Non-U.S. Real Estate Alt. Inv Equity Fixed Cash DIVERSIFIED ACCOUNT DATABASE Style Median and Index Returns* for Periods ended June 30, 2004 Last Last I /2 Last Last 3 Lasts Last 10 Quarter Year Year Years Years Years Public Database -0.04 2.87 14.96 4.42 3.91 9.59 Corporate Database -0.09 2.79 14.95 4.06 3.80 10.37 Endowmem/F oundation Database -0.03 3.20 16.10 3.98 3.93 10.27 Taft-Hartley Database -0.05 2.67 13.59 3.94 3.88 9.63 L Asset Allocator Style 0.04 2.30 13.41 1.40 1.95 10.27 L Domestic Balanced Database 0.18 2.48 Global Balanced Database -0.16 2.92 60% S&P 500 + 40'7o LB Aggregate 0.06 2.14 60'7o MSCI World+ 40¼ Citi World Govt -0.81 1.49 * Returns less than one year are not annualized. The Capital Market Rel"il'H' is puhlished quarterly for mcmb"rs of the institutional invest- ment community. hoth domestic and international The C<111iral Market R1't'ie11 focuses primarily on the latest quarterly performance of market indices and Callan style groups for each of the major asset cl,1sscs used hy institutional investors. C<1pit<1/ ll-!<1rket R,·1·ie1r contributors are as follows: Jay Kloepfcr. Economy Boh Shaw. U.S. Equity Greg De Fon-est. U .S Fix"d Income Brian Zeiler. Non-U.S. Equity. Non-U.S. Fixed Income Jamie Shen/Zachary Stassi. Real Estate 12.22 2.82 18.77 6.17 11.40 2.79 16.44 6.00 Gary Rohcrtson/Craig White. Private Equity Jim McKee. Hedge Funds 3.12 5.24 l.96 2.32 Julia Moria11y. Diwrsitied Accounts. CMR Performance Data Mary Schaefer. Editor in Chief Tanja Eisenhardt. Puhlication Layout 10.25 10.47 10.51 7.39 Callan Associates Inc. is a privatdy-held and 100 percent employee-owned tirrn whose sole business is stralcgic asset manag.t.!ment con~ulting as an independent. objt!ctivc third party. Headquartered in San Francisco. Callan also has regional offices in Chicago. Monistown. Atlanta. and Denver. ID 2004 Callan Associates Inc. I:? CAILAN "'·, 'OCL-\TB, c,w;,,·cfhl1 l'\PlTiL .\l\llkET , ,, r I L L L L L L r L MARKET OVERVIEW Ill ACTIVE MANAGEMENT VS INDEX RETURNS Market Overview The charts below illustrate the range of returns across managers in Callan' s Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes. An appropriate index is also shown for each asset class for comparison purposes. As an example, the first bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the domestic equity manager database. 6% 4% Range of Separate Account Manager Returns by Asset Class One Quarter Ended June 30, 2004 (24)...,.•~- 2%-(41) .l. V, C ... .2 0%-~ (I) ~ (2%)- (4%)- (6%) 10th Percentile 25th Percentile Median 75th Percentile 90th Percentile Index ... 50% 40% /"17\ ... (4~) (70)~ (62)• Domestic Non-US Domestic Non-US Real Cash Equity Equity Fixed-Income Fixed-Income Estate Equivalents VS vs VS vs vs vs S&PSOO MSCIEAFE LBAggrBd Citi Non-US G NCREIF Index 3 Mon T-Bills 3.59 1.56 (0.-15) (2.91) 4.05 0.30 2.37 0.53 I I.I Kl (3.02) 3.03 0.28 1.42 (0.17) (2.1')• (3.30) 2.07 0.17 0.45 (1.42) (2.5 It (3.56) 1,19 (0.09) (0.70) (2.18) (3.0-1) (4.43) (0.34) (0.41) 1.72 0.22 (2.44) (3.38) 3.13 0.24 Range of Separate Account Manager Returns by Asset Class One Year Ended June 30, 2004 30% (75)~ (36)§ V, C ... ::l 20% .... (I) ~ 10% (64) (23)• /n, I • 0% {Rli (10%) Domestic Non-OS Domestic Non-US Real Cash Equity Equity Fixed-Income Fixed-Income Estate Equivalents vs vs VS vs vs vs S&PSOO MSCIEAFE LBAggrBd Citi Non-US G NCREIF Index 3 Mon T-Bills I 0th Percentile 36.87 37.72 7.18 9.26 12.12 1.47 25th Percentile 30.89 33.72 1.73 8.38 10.41 1.20 Median 23.54 30.15 0.71 8.02 8.47 1.12 75th Percentile 19.11 26.20 0.10 7.27 7.17 1.02 90th Percentile 16.25 24.01 (0.62) 6.51 2.55 0.72 Index ... 19.1 I 32.37 0.32 7.60 10.83 0.98 Orange County Sanitation District 13 r L L L L L L L Active vs the Index DOMESTIC FIXED-INCOME Active Management Overview The Domestic Fixed-Income market did not fare as well second quarter as first quarter 2004. The Lehman Aggregate Index reported a loss of 2.44%, a 510 basis point drop from the last quarter's positive return of 2.66%. All style groups, with the exception of Extended Maturity, which was the worst performer at -4.77%, outperformed the index. The median Core Bond fund reported a return of -2.34%, 10 basis points above the index. The High Yield group suffered the least, reporting a loss of 0.18%, 226 basis points above the index. Consistent with second quarter 2004 returns, the year ended June 30, 2004 left High Yield as the best performer with earnings of 10.82% and Extended Maturity as the worst performer with losses of 2.20%. Short vs Long Duration Both Long and Short term bond returns dropped during the second quarter of 2004. Short term bonds, however, did report stronger gains for the second quarter and the year ended June 30, 2004 than their long term counterparts. Second quarter, the Defensive and Intermediate styles lost 0.95% and 2.31%, respectively, whereas Extended Maturity lost 4.77%. For the year ended June 30, 2004, Extended Maturity reported a loss of 2.20% while the median Defensive and Intermediate funds returned a minimal but positive 0.87% and 0.18%, respectively. Mortgages and High Yield High Yield and Mortgage Backed Fixed-Income style groups both reported negative returns for the second quarter 2004. High Yield gave back 228 basis points over last quarter's return to end the second quarter with a loss of 0.18%. Mortgage Backed funds fell 1.15%, 314 basis points less than its first quarter 2004 return. For the year ended June 30, 2004, High Yield was the best performing group returning 10.82% while the Mortgage Backed group finished with a modest return of 2.30%. Separate Account Style Group Median Returns for Quarter Ended June 30, 2004 0%r--------- (1%) ,,, (2%) C: .... .a (3%) ~ (4%) (5%) (0.10%) ------- ------------ (2.44%) (3.17%) (6%) ~------------------------------------~ Defensive Intermed Core Core Extended Active ,,, C: .... :, Q) 1Z Active Cash Bond Plus Maturity Duration Separate Account Style Group Median Returns Mortgage Backed High Yield for One Year Ended June 30, 2004 Lehman Aggregate: 0.32% 15% ~--------------------------t__L_eh_m_an_G_o_vtJ_C_r_ed_i_t:_(0_.7_2_%_)__, 10% 5% 0% 1:i'I' 1.11% Active Cash 0.87% 0.18% Defensive Intermed 0.55% Core Bond -·------·------------- 1.67% Core Plus (2.20%) Extended Maturity (0.45%) Active Duration 2.30% Mortgage Backed 10.82% High Yield Orange County Sanitation District r r Asset Class Risk and Return The charts below show the eight and three-quarter year annualized risk and return for each asset class component of the Total Fund. The first graph contrasts these values with those of the appropriate index for each asset class. The second chart contrasts them with the risk and return of the median portfolio in each of the appropriate CAI comparative databases. In each case, the crosshairs on the chart represent the return and risk of the Total Fund. "' C .... ::s ..... Q) i::i::: "' C .... ::s .... Q) i::i::: 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% Eight And Three-Quarter Year Annualized Risk vs Return Asset Classes vs Benchmark Indices I Lehman Brothers l-5vr Govt/Credit I I ML 1-5 Govt/Corp~ .. 1\ I Merrill Lynch 1-3~ Govt/Co!:E H I Sani District I I ML GovL/Corp 1-5 A+ ., 3-month Treasury Bill I ' . 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% 2.2% 2.4% 2.6% 2.8% 3.0% Standard Deviation Eight And Three-Quarter Year Annualized Risk vs Return Asset Classes vs Asset Class Median 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 0.8% I CAI Defensive F-1 Style H ., Mom:~ Market Fds DB I ' 1.0% 1.2% 1.4% 1.6% 1.8% Standard Deviation ' I Sani District I ' 2.0% 2.2% 2.4% Orange County Sanitation District L L L L L L L Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund's investment managers as of June 30, 2004, with the distribution as of March 31, 2004. The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers June 30, 2004 March 31, 2004 Market Value Percent Net New Inv. Inv. Return Market V aloe Percent Domestic Fixed Income Long Term Operating Fund 388,446,608 77.56% 0 (4,283,670) 392,730,278 81.08% Liquid Operating Monies 112,389,108 22.44% 20.500.000 272,240 91.616,868 18.92% Total Fund $500,835,716 100.0% $20,500,000 $( 4,011,430) $484,347,146 100.0% Orange County Sanitation District 16 l L L L L L L L /I Investment Manager Returns The table below details the rates of return for the Sponsor's investment managers over various time periods ended June 30, 2004. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended June 30, 2004 Last Last Last Last Last 3 5 8-3/4 uarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund (1.09%) 1.01% 5.05% 6.01% 6.17% Liquid Operating Monies 0.26% 1.05% 1.97% 3.64% 4.43% Net of Fees 0.22% 0.90% 1.82% 3.49% 4.28% Market Indicators LB 1-5yr Govt/Credit (1.74%) 0.38% 5.30% 6.12% 6.06% ML 1-3yr Govt/Corp (1.13%) 0.73% 4.36% 5.47% 5.71% ML 1-5yr Govt/Corp (1.71 %) 0.40% 5.21% 6.06% 6.10% ML 1-5yr G/C excl. BBBs (1.73%) 0.16% 5.06% 5.99% 6.04% Treasury Bills 0.24% 0.98% 1.71 % 3.29% 4.10% Total Fund (0.83%) 1.09% 4.70% 5.75% 6.00% Orange County Sanitation District PIMCO-LIQUID OPERATING MONEY Ill PERIOD ENDED.JUNE 30, 2004 /j Investment Philosophy The Money Market Funds Database consists of actively managed short term funds. These funds invest in low-risk, highly liquid, short-term financial instruments. Quarterly Summary and Highlights • PIMCO-Liquid Operating Money's portfolio posted a 0.26% return for the quarter placing it in the 1 percentile of the MF -Money Market Funds Database group for the quarter and in the 1 percentile for the last year. • PIMCO-Liquid Operating Money's portfolio outperformed the 3-month Treasury Bill by 0.02% for the quarter and outperformed the 3-month Treasury Bill for the year by 0.06%. Quarterly Asset Growth Beginning Market Value $91,616,868 Net New Investment $20,500,000 Investment Gains/(Losses) $272,240 Ending Market Value $112,389,108 Performance vs MF -Money Market Funds Database - - - - - - - - - 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% (S)~~ Last Quarter 10th Percentile 0.22 25th Percentile 0.18 Median 0.12 75th Percentile 0.06 90th Percentile 0.02 PJMCO-Liquid 0.26 Operating Money e A NetofFCeS •B 0.22 3-month Treasury Bill .. 0.24 §'' 1/ (3) B(I 0) • I ~W )J f3 Last Last 2 Year Years 0.89 1.12 0.73 0.95 0.50 0.74 0.28 0.52 0.12 0.28 1.05 1.38 0.90 1.23 0.98 1.25 Relative Return vs 3-month Treasury Bill 0.25% ··~-~-~----~---~-~-~~ 0.20%·· )10)~~1/ I A(I I A\l ,<"a"" (4)§"'' (1) .. I A[I) B Ii ~ Last 3 Last 5 Last7 Last 8-3/4 Years Years Years Years 1.53 3.19 3.78 4.10 L38 3.04 3.64 3.96 1.18 2.85 3.44 3.76 0.95 2.61 3.25 3.57 0.68 2.39 3.04 3.38 1.97 3.64 4.15 4.43 1.82 3.49 4.00 4.28 1.71 3.29 3.81 4.10 MF -Money Market Funds Database Annualized Eight And Three-Quarter Year Risk vs Return 5.0% ~---------~------~ 4.5% Net of Fees ~ 0.15% · 4.0% El ~ Q) >--~ a) i:::r: 0.00% (Q.JQo/o)-I I I I I 95 1996 1997 1998 1999 2000 2001 2002 2003 4 J • PIMCO-Liquid Operating Money J Orange County Sanitation District "' C .... ::::s ..., Q) i:::r: 3.5% 3.0% 2.5% 2.0% ' ' 0.80 0.85 0.90 0.95 1.00 I.OS 1.10 Standard Deviation r r r r r L L d) > PIM CO-LONG TERM OPERA TING FUND PERIOD ENDED JUNE 30, 2004 /I Investment Philosophy Defensive Style managers aim to minimize interest rate risk by investing predominantly in short to intermediate term securities. The average portfolio maturity is typically two to five years. Quarterly Summary and Highlights • PIMCO-Long Term Operating Fund's portfolio posted a (1.09)% return for the quarter placing it in the 76 percentile of the CAI Defensive Fixed-Inc Style group for the quarter and in the 46 percentile for the last year. • PIMCO-Long Term Operating Fund's portfolio outperformed the ML 1-5 Govt/Corp by 0.62% for the quarter and outperformed the ML 1-5 Govt/Corp for the year by 0.61 %. Quarterly Asset Growth Beginning Market Value $392,730,278 Net New Investment $0 Investment Gains/(Losses) $-4,283,670 Ending Market Value $388,446,608 Performance vs CAI Defensive Fixed-Inc Style 8%-r--------,----------.--------,-----.,.....--------.---------.--------, 6% 4% (JO)~~· I f 8)~~ f j4)~~t1 (9)~B(I ) ~ ~ A(I (15)~A(I) ~B(-1 I 0th Percentile 25th Percentile Median 75th Percentile 90th Percentile PIMCO-Lon g Term Opernting Fund • A ML G/C 1-5 exd. BBBs • B ML 1-5 Govt/Corp A Last Quarter (020) (071) (0 95) (1 08) (1 23) (1.09) (1.73) (1 71) Last Last 2 Year Years 1.87 4.51 1.38 3.46 0.87 3.08 0.60 2.84 0.43 2.58 1.01 4.13 0.16 3.65 0.40 4.02 Relative Return vs ML 1-5 Govt/Corp 1.0%-·~-~--------~---~----,--~ 0.5% · ---· --------_____ _,._ _ __,,._--+----I Lnst3 Last 5 Last7 LastS-3/4 Years Years Years Years 5.15 6.06 6.08 6.18 4.57 5.76 5.88 6.03 4.35 5.54 5.66 5.81 4.04 5.32 5.55 5.63 3.67 4.98 5.28 5.52 5.05 6.01 6.14 6.17 5.06 5.99 6.05 6.04 5.21 6.06 6.11 6.10 CAI Defensive Fixed-Inc Style Annualized Eight And Three-Quarter Year Risk vs Return 7.0% 6.8% • 6.6% 6,4% "' 6.2% c:: .... ::l 6.0% Q) I ML G/C 1-5 excl. BBBs I oCo /""I• -I PrMCO-Long Term Operating Fund I -~ (0.5%) -·t-t-----+--+---+----1 i::i::: 5.8% 'I ML 1-5 Govt/.Cmp ~ (1.0%) --____ ,,____.,__ ____ -+-·-+---+ (J.5%)-I 95 1996 1997 1998 1999 2000 2001 2002 2003 4 I • PIMCO-Long Term Operating Fund I Orange County Sanitation District 5.6% 5.4% 5.2% 5.0% 0.5 • [~ '% ~ D Do • ' 1~ 13 2~ 23 3.0 Standard Deviation L LONG TERM OPERATING FUND PORTFOLIO CHARACTERISTICS SUMMARY JUNE 30, 2004 /I Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sector weights. The second chart compares the portfolios based on duration, duration distribution, duration "dispersion" (degree of "barbellness"), and sector weights within duration ranges. The last chart compares the distributions across quality ratings and sector weights within quality cells. Asset Backed 0% Treasuries 67% Agenciesc h 8% as 2% Credit CMOs 5% 0% Sector Allocation Treasuries 42% Long Term Operating Fund Lehman Government/Credit 1-5 Duration Distribution by Sector 60%---,;:====================:i:::::;----,---,---,---, ~----~ .9 -.s .... r-. 0 ~ ... 0 = ~ ~ ~ ~ Weighted Average: Duration Dispersion 50% Bar #1 :Long Term Operating Fund: 2.01 1.25 Bar #2 :Lehman Government/Credit 1-5: 2.52 1.04 30% -+----t----- 20% 10% 0%-'----'------L.LI.--'---'----'--'------'--_u_-'------'------'---'--=='------'-"-----L.._-----'--'--L---'-------'LLL--'---'-'-'--_,_ _ __, <1.0 1.0-1.5 1.5-2.0 2.0-2.5 2.5-3.0 3.0-3.5 3.5-4.0 4.0-4.5 4.5+ 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years Duration Quality Distribution by Sector Weighted Average: Quality Agcy Aal -------~-~--·. ---·---+-----------l Bar #I :Long Term Operating Fund: Bar#2:Lehman Government/Credit 1-5: -----------------------------+-----t-----t -------------__ , ---+--- ------------+-----+---• --·-----+----! i-------,---+---1--------+----+-------~--+---+---........ - Trsy Agcy Aaa Aal-Aa3 Al-A3 Baal-BaaJ3al-Ba3 Bl-B3 Caal-Caa3 Ca C D NIA Moody's Rating • Agencies • Asset Backed ~ CMOs • Cash • Credit Ii] Mortgages D Treasuries • Agencies • Asset Backed li'1J CMOs • Cash • Credit D Mortgages D Treasuries * All Statistics shown on the page are dependent on the securities in the portfolio being recognized by their Cusip) and priced. In this case 99% of the secunties in the portfolio (by market value) were recognized and priced. Orange County Sanitation District LONG TERM OPERATING FUND El PORTFOLIO CHARACTERISTICS DETAIL JUNE 30, 2004 Weighted Average Portfolio Characteristics Total Fund, By Asset Class and By Sector Ending Percent Market of Effective Effective QA QA Sector Value Portfolio Couoon Maturitv Yield Duration Convexitv Qualitv Total Fund $432,286,447 100.0% 4.00 2.35 2.90 2.01 (0.20) Agcy Asset Backed $1,715,279 0.4% 3.57 1061 2.40 2.09 0.13 Aaa Agencies $35,960,08 I 8.3% 6.45 I 79 2.70 1.57 0.06 Agcy CMOs $1,505,364 0.3% 3.64 1 11 2.72 0.48 (0.00) A~~ Credit $21,103,115 4.9% 5.85 214 4.14 1.92 0.07 Mortgages $73,759,116 17.1% 5.10 3-95 4.87 4.01 (1.35) Aacy Treasunes $287,857, I 04 66.6% 3.36 2.06 2.38 1.63 0.04 't'rsy Non-Convertible Bonds $421,900,060 97.6% 4.06 2.40 2.93 2.05 (0.20) Agcy Cash Equivalents $10,386,387 2.4% 1.47 0.25 1.47 0.25 0.00 Aaa 5 Largest Holdings Ending Percent Market of Effective QA QA Issuer Name Issue Name Sector Value Portfolio Yield Duration Convexitv Quali9: r United States Treas Nts Dtd 00046 Treasuries $80,897,103 18.7% 2.49 1.54 0.03 Trsy United States Treas Nts 5.75% 11/15/05 Dtd 11/ Treasuries $60, 142,502 13.9% 2.35 1.32 0.02 Trsy United States Treas Nts Treasuries $32,907,295 7.6% 2.64 1.77 0.05 Trsy United States Treas Nts Treasuries $27,524,750 6.4% 2.72 1.93 0.04 Trsy Commit To Pur Fnma Sf Mtg 5.000% 10/01/2007 Dd Mortgages $22,017,182 5.1% 5.28 4.66 (I. I') Agcy i --,, 5 Lowest Rated Holdings (Moody's Rating) 1 Ending Percent [ Market of Effective QA QA Issuer Name Issue Name Sector Value Portfolio Yield Duration Con_vC".11i91 Qualit)'. United Airls Pass Thru Trs 6.831 % 9/1/08 2001-1 P Credit $185,648 0.0% 77.22 1.52 0.05 N/A [ General Mtrs Accep Corp 6.125% 8/28/2007 Credit $3,193,072 0.7% 4.62 2.80 0.10 A3 Virtnia Elec & Pwr Co 5.75% 3/31/06 2001 Sr Credit $1,851,438 0.4% 3.12 1.64 0.03 A3 For MtrCrCo 6.75% 5/15/05 Nt Dtd 0 Credit $1,038,775 0.2% 2.94 0.83 0.01 A3 Pacificorp Seed Medium Ter 7.3% 10/22/04 Tranche Credit $3,121,270 0.7% 2.07 0.29 0.00 A3 l 5 Longest Duration Holdings Ending Percent Market of Effective QA QA lssuci-Name· Issue Name Sector Value Portfolio Yield Duration Convexity Quality_ Fnma Tba Jul 30 Single Mortgages $2,984.531 0.7% 5.60 6.04 (3.50) Agcy Small Business Admin Gtd P 6.64% 2/1/11 Ser Sbic-Agencws $2,222.421 0.5% 5.73 5.69 0.47 Agcy Commit To Pur Fnma Sf Mtg 5.000% 10/01/2007 Dd Mortgnges $22,017,182 5.1% 5 28 4.66 (I 19) Afcy Federal Natl Mtg Assn 6.625% 9/ 15/09 Dtd 09/ Agencies S2.363,606 0.5% 4.32 4.36 0.24 aa Federal Natl Mtg Assn Gtd 5.()()0% I l/01/2018 Dd Mortgages $36.058 0.0% 4.9) 4.27 (0.98) Agcy _, 5 Holdings with Highest Effective Yield Ending Percent Market of Effective QA QA ~-uer Name Issue Name Sector Value Portfolio Yield Duration Convcxit:y Qualib! United Airls Pass Thru l'rs 6.83 1%911(082001-1 P Credit $185,648 0.0% 7722 1.52 0.05 NIA Small Business Admin Gtd P 6.64% 2/1/1 J Ser Sbic-Agcneie · S2.2'.l2.4:!I 0.5'/li 5 73 5.69 0.47 Agcy Fnma Tba Jul 30 Sinwle Mongages $2,984,.53 J 0.7% 5.60 6.04 13.501 Agcy Commit To Pur Fnn:iu §IMlg 5.000% 10/01 /2007 Dd Mortgages S22.01'7,l 82 5.1% 528 -1-.66 t 1 19) Aicy Gnrna 1 & Ii -Single Issue 6.500% I LW /2032 Dd Mortgages $52,747 0.0% 5.23 3.74 (' ",(;\ 1rsy * All Statistics shown on the page are dependent on the securities in the portfolio being recognized (by their Cusip) and priced. In this case 99% of the securities in the portfolio (by market value) were recognized and priced. Orange County Sanitation District 21 9/8/2004 Expense and Cost Allocations For Permit User Fee Calculations A: From 1999 Strategic Plan Before Adjusting to BOD & SS Collection Collection Joint Joint O&M CIP O&M CIP Flow 100% 100% 13% 62% BOD 40% 26% ss 47% 12% Total CIP 69% 22% 9% B: From 1999 Strategic Plan and Rate Advisory Committee After Shift Collection Collection Joint Joint Total O&M CIP O&M CIP CIP Flow 100% 90% 13% 27% 44% BOD 10% 40% 39% 32% ss 47% 44% 24% C: Used for Adopted Permit User Rates, Based Upon RAC Collection Collection Joint Joint Total O&M CIP O&M CIP CIP Flow 100% 100% 13% 44% BOD 40% 32% ss 47% 24% COP Service COP Service COP Service D: Proposed, From 2003 Validated Capital Improvement Plan & 2003-04 Actual Collection Collection Joint Joint Total COP O&M CIP O&M CIP CIP Service Flow 100% 90% 12% 33% 49% 49% BOD 10% 34% 39% 31% 31% ss 54% 28% 20% 20% H:\dept\fin\210\STREED\Excel\Permit Users\SC Alloc History.xis