02-22-2017 Board Meeting Agenda

Orange County Sanitation District Wednesday, February 22, 2017 Regular Meeting of the 6:00 P.M. BOARD OF DIRECTORS Board Room 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433

AGENDA

CALL TO ORDER

INVOCATION AND PLEDGE OF ALLEGIANCE (Denise Barnes, City of Anaheim)

ROLL CALL (Clerk of the Board)

1. RECEIVE AND FILE MINUTE EXCERPTS OF MEMBER AGENCIES RELATING TO APPOINTMENTS TO THE ORANGE COUNTY SANITATION DISTRICT BOARD OF DIRECTORS (Clerk of the Board)

CITY/AGENCY DIRECTOR ALTERNATE DIR.

City of Fullerton Greg Sebourn Jesus Silva City of Santa Ana Sal Tinajero David Benavides City of Newport Beach Scott Peotter Brad Avery (amended)

DECLARATION OF QUORUM (Clerk of the Board)

PUBLIC COMMENTS: If you wish to address the Board of Directors on any item, please complete a Speaker’s Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you wish to speak. Speakers will be recognized by the Chairperson and are requested to limit comments to three minutes.

SPECIAL PRESENTATIONS:

• Employee Service Award(s) • CSDA Transparency Certificate

REPORTS: The Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors.

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CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business.

2. APPROVAL OF MINUTES (Clerk of the Board)

RECOMMENDATION: Approve the minutes of the Regular Board of Directors Meeting held on January 25, 2017.

3. REPLACEMENT OF PLANT 2 MAINTENANCE BUILDING HVAC SYSTEM (Ed Torres)

RECOMMENDATION:

A. Award a purchase order for the replacement of the Plant 2 Maintenance building air conditioning system with a TRANE IntelliPak VAV rooftop HVAC unit with gas heat in agreement with TRANE US Communities 15-JLP-023 for a total amount not to exceed $210,607 delivered; and

B. Approve a contingency amount of $21,061 (10%).

4. PAYMENT OF ANNUAL OCEAN DISCHARGE PERMIT FEE (Jim Colston)

RECOMMENDATION: Approve payment in an amount not to exceed $525,537 to the State Water Resources Control Board for annual permit fees for the ocean discharge permit.

RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair.

5. COMMITTEE MINUTES (Clerk of the Board)

RECOMMENDATION: Receive and file the approved minutes of the following standing committees:

A. Operations Committee Meeting of December 7, 2016 B. Administration Committee Meeting of November 9, 2016. C. Legislative and Public Affairs Committee Meeting of December 14, 2016. D. GWRS Steering Committee Meetings of October 10, 2016 and January 9, 2017.

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6. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2017 (Lorenzo Tyner)

RECOMMENDATION: Receive and file the report of the Investment Transactions for the month of January 2017.

OPERATIONS COMMITTEE:

7. AGREEMENT WITH THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE MEMBER AGENCIES FOR COST-SHARING REIMBURSEMENT (Ed Torres)

RECOMMENDATION: Adopt Resolution No. OCSD 17-02 entitled, “A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the General Manager to enter into an agreement with the California Alliance for Sewer System Excellence Member Agencies for cost-sharing reimbursement for approved agency-administered projects.”

8. SLUDGE DEWATERING AND ODOR CONTROL AT PLANT NO. 1, PROJECT NO. P1-101 (Rob Thompson)

RECOMMENDATION: Approve a contingency increase of $714,000 (10%) to the Professional Consultant Services Agreement with HDR Engineering, Inc. to provide construction support services for Sludge Dewatering and Odor Control at Plant No. 1, Project No. P1-101, for a total contingency amount of $1,285,200 (18%).

9. SAFETY IMPROVEMENT PROGRAM, PROJECT NO. J-126 (Rob Thompson)

RECOMMENDATION:

A. Approve a budget increase of $1,500,000 for Safety Improvements Program, Project No. J-126, for a total budget amount of $11,202,000; and

B. Approve Amendment No. 1 to the Professional Design Services Agreement with Arcadis, US, Inc., for Safety Improvement Program, Project No. J-126, for an additional amount of $1,500,000 for a total budget amount of $3,040,000.

10. INTERIM FOOD WASTE RECEIVING FACILITY, PROJECT NO. P2-124 (Rob Thompson)

RECOMMENDATION: Establish a project for Interim Food Waste Receiving Facility, Project No. P2-124, with a budget of $5,400,000.

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ADMINISTRATION COMMITTEE:

11. GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST (Lorenzo Tyner)

RECOMMENDATION: Receive and file the Orange County Sanitation District purchases made under the General Manager’s authority and additions to the pre- approved OEM Sole Source List for the period of October 1, 2016 - December 31, 2016.

12. MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2016 (Lorenzo Tyner)

RECOMMENDATION: Receive and file Orange County Sanitation District Mid- Year Report for the period ended December 31, 2016.

13. CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2017-18 BUDGET UPDATE (Lorenzo Tyner)

RECOMMENDATION: Approve the FY 2017-18 budget assumptions and direct staff to incorporate these parameters in preparing the FY 2017-18 budget update.

14. COOPERATIVE PROCUREMENT AGREEMENTS WITH U.S. COMMUNITIES GOVERNMENT PURCHASING ALLIANCE AND NATIONAL ASSOCIATION OF STATE PROCUREMENT OFFICIALS VALUEPOINT COOPERATIVE PURCHASING ORGANIZATION (Lorenzo Tyner)

RECOMMENDATION: Authorize the purchasing of information technology products, services, and solutions utilizing the U.S. Communities Government Purchasing Alliance and National Association of State Procurement Officials ValuePoint Cooperative Purchasing Organization (NASPO ValuePoint) for the period of March 1, 2017 through February 29, 2020 for a total amount not to exceed $6,000,000, in accordance with Ordinance No. OCSD-47, Section 2.03(B) Cooperative Purchases.

INFORMATION ITEMS:

15. HEADQUARTERS COMPLEX, SITE AND SECURITY, AND ENTRANCE REALIGNMENT PROGRAM, PROJECT NO. P1-128 (Rob Thompson)

AB 1234 REPORTS: This is the time of the meeting when Board Members will provide a brief oral report on any conference, meeting, or travel paid by the Sanitation District.

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CLOSED SESSION:

During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted.

Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information.

CONVENE IN CLOSED SESSION.

(1) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1))

Number of Cases: 2

Klean Waters, Inc. et al. v. Orange County Sanitation District, et al., United States District Court, Central District of California, Southern Division, Case No. 8:15−cv−00627.

Klean Waters, Inc. et al. v. Orange County Sanitation District, et al. United States District Court, Central District of California, Southern Division, Case No. 8:15−cv−01498.

(2) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1))

Number of Cases: 1

City of Los Angeles v. County of Kern, Tulare County Superior Court, Case No. 242057.

(3) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8)

Property: 300 East Coast Highway, Newport Beach, CA - APN No.440-132-60

Agency negotiators: General Manager, Jim Herberg; Assistant General Manager, Bob Ghirelli; Director of Finance and Administrative Services, Lorenzo Tyner; Director of Engineering, Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; and CIP Project Manager, Adam Nazaroff.

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Negotiating parties: Bayside Village Marina LLC

Under negotiation: Instruction to negotiator will concern price and terms of payment.

(4) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8)

Property: 10950 Virginia Cir. Fountain Valley, CA - APN No.156-165-05; 10870 Spencer Ave. Fountain Valley, CA -APN No.156-163-07; 18480 Pacific St. Fountain Valley, CA - APN No.156-165-04; 18430 Pacific St. Fountain Valley, CA - APN No.156-165-06; 18370 Pacific St. Fountain Valley, CA - APN No.156-165-08; 18429 Pacific St. Fountain Valley, CA - APN No.156-163-09; 18410 Bandilier Cir. Fountain Valley, CA - APN No.156-163-10; 18368 Bandilier Cir. Fountain Valley, CA - APN No.156-163-11; 10700 Spencer St. Fountain Valley, CA - APN No.156-163-16; 10700 Spencer Ave. Fountain Valley, CA - APN No.156-154-07; 18350 Mt. Langley St. Fountain Valley, CA - APN No.156-154-08; 18386 Mt. Langley St. Fountain Valley, CA - APN No.156-154-06; 18385 Bandilier Cir. Fountain Valley, CA - APN No.156-163-12; 18401 Bandilier Cir. Fountain Valley, CA - APN No.156-163-13; 18424 Mt. Langley St. Fountain Valley, CA - APN No.156-154-05; 18435 Bandilier Cir. Fountain Valley, CA - APN No.156-163-14; 18475 Bandilier Cir. Fountain Valley, CA - APN No.156-163-15; 10725 Ellis Ave. Fountain Valley, CA - APN No.156-154-04; 10540 Talbert Ave. Fountain Valley, CA - APN No.156-151-03; and 7311 Doig Drive Garden Grove, CA - APN No. 131-651-20

Negotiating parties:

Valley, Business Park, APN Nos. 156-165-05, 13T156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai, Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; K & A Investments LP, APN No. 156-154-08; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin-Lin TR, APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; 02/22/2017 OCSD Board of Directors’ Agenda Page 6 of 8

Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC, APN No. 156-151-03

Under negotiation: Instruction to negotiator will concern price and terms of payment.

RECONVENE IN REGULAR SESSION.

CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION:

OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:

ADJOURNMENT:

Adjourn the Board meeting until the Special Meeting of the Board of Directors on March 15, 2017 at 3:00 p.m.

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Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board’s office at (714) 593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested.

Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District’s Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, and on the Sanitation District’s website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board.

Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate.

NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting.

Kelly A. Lore Clerk of the Board (714) 593-7433 [email protected]

For any questions on the agenda, Committee members may contact staff at:

General Manager Jim Herberg (714) 593-7300 [email protected] Assistant General Manager Bob Ghirelli (714) 593-7400 [email protected] Director of Engineering Rob Thompson (714) 593-7310 [email protected] Director of Environmental Services Jim Colston (714) 593-7450 [email protected] Director of Finance and Lorenzo Tyner (714) 593-7550 [email protected] Administrative Services Director of Human Resources Celia Chandler (714) 593-7202 [email protected] Director of Operations & Maintenance Ed Torres (714) 593-7080 [email protected]

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ITEM NO. 2

Orange County Sanitation District MINUTES BOARD MEETING January 25, 2017

Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018

01/25/2017 Minutes of Board Meeting Page 1 of 12 ROLL CALL

A regular meeting of the Board of Directors of the Orange County Sanitation District was called to order by Board Chair Greg Sebourn on January 25, 2017, at 6:00 p.m., in the Administration Building. Director Michelle Steel delivered the invocation and led the Pledge of Allegiance.

The Clerk of the Board provided late communication regarding Item No. 1. Two additional appointments were received after the posting of the agenda.

1. RECEIVE AND FILE MINUTE EXCERPTS OF MEMBER AGENCIES RELATING TO APPOINTMENTS TO THE ORANGE COUNTY SANITATION DISTRICT BOARD OF DIRECTORS (Clerk of the Board)

Received and filed Minute Excerpts of member agencies relating to appointments to the Orange County Sanitation District Board, as follows:

City / Agency Active Director Alternate Director City of Anaheim Denise Barnes Lucille Kring City of Brea Glenn Parker Cecilia Hupp City of Fountain Valley Steve Nagel Cheryl Brothers City of Garden Grove Steve Jones Kris Beard City of Huntington Beach Barbara Delgleize Erik Petersen City of Irvine Donald Wagner Lynn Schott City of La Habra Tim Shaw Michael Blazey City of La Palma Peter Kim Gerard Goedhart City of Los Alamitos Richard Murphy Warren Kusumoto City of Newport Beach Scott Peotter Kevin Muldoon City of Placentia Chad Wanke Ward Smith City of Seal Beach Ellery Deaton Sandra Massa-Lavitt City of Stanton Dave Shawver Carol Warren City of Tustin Allan Bernstein Chuck Puckett City of Villa Park Robert Collacott Diana Fascenelli Costa Mesa Sanitary District James Ferryman Bob Ooten Yorba Linda Water District Phil Hawkins Brooke Jones Irvine Ranch Water District John Withers Doug Reinhart City of Buena Park Fred Smith Virginia Vaughn

01/25/2017 Minutes of Board Meeting Page 2 of 12 The Clerk of the Board declared a quorum present as follows:

ACTIVE DIRECTORS ALTERNATE DIRECTORS

X Gregory Sebourn, Chair Doug Chaffee X Denise Barnes Lucille Kring X Allan Bernstein Chuck Puckett X Robert Collacott Diana Fascenelli Ellery Deaton X Sandra Massa-Lavitt X Barbara Delgleize Erik Peterson X James M. Ferryman Bob Ooten Phil Hawkins X Brooke Jones Steven Jones X Kris Beard X Peter Kim Gerard Goedhart X Al Krippner Charlie Nguyen X Richard Murphy Warren Kusumoto A Steve Nagel Cheryl Brothers A Glenn Parker Cecilia Hupp X Scott Peotter Kevin Muldoon Tim Shaw X Michael Blazey X David Shawver Carol Warren X Fred Smith Virginia Vaughn X Teresa Smith Mark Murphy X Michelle Steel Shawn Nelson X Sal Tinajero David Benavides X Donald Wagner Lynn Schott X Chad Wanke Ward Smith X John Withers Douglas Reinhart Mariellen Yarc X Stacy Berry

STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Rob Thompson, Director of Engineering; Lorenzo Tyner, Director of Finance & Administrative Services; Celia Chandler, Director of Human Resources; Jim Colston, Director of Environmental Services; Miriam Angold; Jennifer Cabral; Mike Dorman; Mark Esquer; Damein Fabrizio; Al Garcia; Tina Knapp; Mark Manzo; Gerry Matthews; Kathy Millea; and Jeff Mohr.

OTHERS PRESENT: Brad Hogin (General Counsel); Jason Burden, Flatiron West Inc.; James Clark, Black & Veatch; and Eleanor Torres, OCWD.

01/25/2017 Minutes of Board Meeting Page 3 of 12 PUBLIC COMMENTS:

None.

SPECIAL PRESENTATIONS:

• Employee Service Awards:

Director of Environmental Services, Jim Colston presented a 25-year service award to Yu Li Tsai, Senior Scientist (Division 630).

ELECTIONS:

General Counsel, Brad Hogin announced that the following nominations were made for Board Vice-Chairperson at the Board of Directors meeting held on December 14, 2016:

• Director David Shawver • Director John Withers • Director Lucille Kring

He stated that subsequent to this meeting, Lucille Kring was not reappointed as the representative from the City of Anaheim and is therefore no longer eligible for the position of Board Vice-Chairperson. Mr. Hogin provided further instructions and facilitated the election for the Vice-Chairperson of the Board of Directors.

Director Withers and Director Shawver addressed the Board with qualifying statements.

Kelly Lore, Clerk of the Board proceeded to take the vote by roll call:

SHAWVER: Barnes; Beard (Alternate); Berry (Alternate); Delgleize; B. Jones (Alternate); Kim; Krippner; Massa-Lavitt (Alternate); R. Murphy; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; and Withers

WITHERS: Bernstein; Blazey (Alternate); Collacott; Ferryman; Peotter; Sebourn; and Wagner

Mr. Hogin announced that by a vote of 16/7, Director Shawver had been elected as Board Vice-Chairman to be effective immediately.

Board Vice-Chair Shawver thanked everyone for their support.

REPORTS:

Chair Sebourn congratulated Vice-Chair Shawver and acknowledged Director Withers. He commended both gentleman on the way they conducted themselves during the election period.

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Chair Sebourn announced that Board Orientation will take place on February 15th and March 15th from 3:00 – 5:00 p.m. and that all Board Members and Alternate Board Members are encouraged to attend. He stated that closed toed shoes are required as the orientation will include a tour of Plant No. 1. He also encouraged the Board to contact General Manager, Jim Herberg with any questions about OCSD.

Board Chair Sebourn announced recently appointed Committee Assignments:

Administration Committee: LaPA Committee: Chad Wanke, Chair Tim Shaw Don Wagner, Vice-Chair Don Wagner Chad Wanke

Steering Committee: GWRS Steering Committee: Tim Shaw Phil Hawkins Don Wagner Tim Shaw Chad Wanke Don Wagner

Audit Ad Hoc Committee: Glenn Parker Peter Kim

General Manager, Jim Herberg reported on the recent storms. He stated that during the event, possibly the highest flows OCSD had ever recorded, the high flow element in the OCSD Integrated Emergency Response Plan was activated but was successfully handled. He thanked the dedicated staff, and our sister agencies who worked together to weather this storm. Mr. Herberg also stated that Ed Torres, Director of Operations and Maintenance, will provide an informational presentation next month about the event.

Mr. Herberg noted that on the agenda tonight, staff is recommending adoption of a resolution to enter into a Memorandum of Understanding with OCERS establishing the terms for early pay off of OCSD’s Unfunded Actuarial Accrued Liabilities (UAAL). He stated that the OCERS Board members expressed appreciation of OCSD’s efforts to pay down OCSD’s UAAL early.

Mr. Herberg asked that the meeting tonight be adjourned in memory of Brent Wride, a data management technician in our GIS group who passed away on January 7th after battling a serious illness. Brent had been with OCSD for 3 years; however, he had made a real impact and was a valued member of our IT team, the Wellness Committee and the Emergency Response Team. He left behind a wife and four young children.

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CONSENT CALENDAR: Item No. 3 pulled and heard separately.

3. APPROVAL OF MINUTES (Clerk of the Board)

MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the regular Board of Directors Meeting held on December 14, 2016.

AYES: Barnes; Bernstein; Ferryman; Kim; Krippner; R. Murphy; Peotter; Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wagner; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: Beard (Alternate); Berry (Alternate); Blazey (Alternate); Collacott; Delgleize; B. Jones (Alternate); and Massa-Lavitt (Alternate) ABSENT: Nagel and Parker

4. DEFERRED PAYMENT AGREEMENT FOR CHARGES AND FEES OWED BY ONE INDUSTRIAL WASTEWATER DISCHARGE PERMITTEE (Lorenzo Tyner)

MOVED, SECONDED, AND DULY CARRIED TO: Approve the deferred payment agreement negotiated by the General Manager for the collection of all charges and fees owed for sanitary sewer service charges, plus interest of 5.75% per annum, with Van Law Food Products, Inc., in a form approved by General Counsel.

AYES: Barnes; Beard (Alternate); Berry (Alternate); Bernstein; Blazey (Alternate); Collacott; Massa-Lavitt (Alternate); Delgleize; Ferryman; B. Jones (Alternate); Kim; Krippner; R. Murphy; Peotter; Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wagner; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Nagel and Parker

5. TAYLOR-DUNN CART PURCHASE FROM YALE CHASE EQUIPMENT AND SERVICES, INC. (Ed Torres)

MOVED, SECONDED, AND DULY CARRIED TO:

A. Authorize the award of a sole source purchase of nineteen (19) Taylor-Dunn electric carts from Yale Chase Equipment and Services, Inc., in accordance with 03/28/01 Minute Order 12(C)(2), for a total cost of $212,127 to include tax and delivery; and B. Approve a contingency of $10,606 (5%).

01/25/2017 Minutes of Board Meeting Page 6 of 12 AYES: Barnes; Beard (Alternate); Berry (Alternate); Bernstein; Blazey (Alternate); Collacott; Massa-Lavitt (Alternate); Delgleize; Ferryman; B. Jones (Alternate); Kim; Krippner; R. Murphy; Peotter; Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wagner; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Nagel and Parker

Item No. 6 pulled and heard separately. 6. MEMORANDUM OF UNDERSTANDING WITH ORANGE COUNTY EMPLOYEES’ RETIREMENT SYSTEM REGARDING PAYMENT OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (Lorenzo Tyner)

Director Peotter asked that this item be pulled to inquire if the Administration Committee had heard this item. Director of Finance and Administrative Services Lorenzo Tyner explained that the Administration Committee and the Board of Directors previously budgeted and approved the paydown. He stated that the requested MOU is necessary to set forth terms and conditions under which OCERS will recognize and apply the contribution; and that due to the Committee being dark in January, and to act in conjunction with the OCERS Board, the item was placed on tonight’s agenda. Mr. Tyner also provided a brief history of the intent of the Board’s decision to paydown the UAAL.

MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 17-01 entitled; “A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the General Manager to enter into a Memorandum of Understanding with the Orange County Employees’ Retirement System establishing the terms to recognize and apply the District’s full satisfaction of its Unfunded Accrued Actuarial Liability and deferred Unfunded Accrued Actuarial Liability.”

AYES: Barnes; Beard (Alternate); Berry (Alternate); Bernstein; Blazey (Alternate); Collacott; Massa-Lavitt (Alternate); Delgleize; Ferryman; B. Jones (Alternate); Kim; Krippner; R. Murphy; Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wagner; Wanke; Withers; and Yarc NOES: Peotter ABSTENTIONS: None ABSENT: Nagel and Parker

01/25/2017 Minutes of Board Meeting Page 7 of 12 RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair.

7. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF DECEMBER 2016 (Lorenzo Tyner)

Received and filed the report of the Investment Transactions for the month of December 2016.

STEERING COMMITTEE:

8. OUTREACH FOR GROUNDWATER REPLENISHMENT SYSTEM (GWRS) BOTTLED WATER AND THE 10TH ANNIVERSARY OF THE GWRS (Bob Ghirelli)

Assistant General Manager, Bob Ghirelli provided a brief report on the item. Board Chair Sebourn stated that the Steering Committee unanimously approved the item.

MOVED, SECONDED, AND DULY CARRIED TO: Approve $63,000 as the Orange County Sanitation District’s share of costs related to GWRS bottled water outreach efforts.

9. GENERAL MANAGER’S FY 2016-2017 WORK PLAN MID-YEAR UPDATE (Jim Herberg)

Mr. Herberg provided a brief report on the status of the FY 2016-17 Work Plan initiatives including: Cyber Security; Plant Safety; Physical Security; Succession Planning; Resource Recovery; Reliability; Operational Resiliency; and alternative locations for the OCSD Headquarters Building.

MOVED, SECONDED, AND DULY CARRIED TO: Receive and file the General Manager’s FY 2016-2017 Work Plan Mid-Year Update.

01/25/2017 Minutes of Board Meeting Page 8 of 12 NOES: None ABSTENTIONS: None ABSENT: Nagel and Parker

NON-CONSENT CALENDAR:

10. REIMBURSEMENT AGREEMENT WITH ORANGE COUNTY FLOOD CONTROL DISTRICT FOR FULLERTON CREEK CHANNEL PROJECT (Rob Thompson)

Director of Engineering, Rob Thompson provided a brief history of the Channel and the modifications required to complete the work under one construction action.

MOVED, SECONDED, AND DULY CARRIED TO: Approve a Reimbursement Agreement with the Orange County Flood Control District for the modifications to the Magnolia Relief Sewer under the Fullerton Creek Channel, in the City of Buena Park.

11. CONSOLIDATED DEMOLITION AND UTILITY IMPROVEMENTS AT PLANT NO. 2, PROJECT NO. P2-110 (Rob Thompson)

Board Chair Sebourn recused himself and left the room for the discussion and vote on Item No. 11 due to a conflict of interest.

Board Vice-Chair Shawver presided.

Mr. Thompson provided a brief overview and history of the consolidated demolition project. He also provided information regarding a protest that was received noting there was no merit to the protest found.

Mr. Thompson responded to questions regarding the large variance between the engineer’s estimate and the bids that were received. He stated that demolition is a market driven situation, with varying factors including: storage; taking up the road base; and recycling. Mr. Herberg stated his confidence in the accuracy of the bids.

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MOVED, SECONDED, AND DULY CARRIED TO:

A. Receive and file Bid Tabulation and Recommendation for Consolidated Demolition and Utility Improvements at Plant No. 2, Project No. P2-110;

B. Receive and file Orange County Sanitation District’s Notice of Intent to Award dated December 5, 2016; C. Receive and file Award Protest from Shimmick Construction Co., Inc dated December 13, 2016, concerning the award to Flatiron West, Inc.;

D. Receive and file response letter from Flatiron West, Inc. dated December 20, 2016, regarding the bid protest of Shimmick Construction Co., Inc.;

E. Receive and file Orange County Sanitation District’s determination letter dated December 27, 2016, to Shimmick Construction Co., Inc. responding to Award Protest;

F. Deny Award Protest filed by Shimmick Construction Co., Inc.;

G. Award a Construction Contract to Flatiron West Inc. for Consolidated Demolition and Utility Improvements at Plant No. 2, Project No. P2-110, for a total amount not to exceed $16,730,000; and

H. Approve a contingency of $1,338,400 (8%);

I. Approve a Professional Consultant Services Agreement with Stantec Consulting Services, Inc. to provide construction support services for Consolidated Demolition and Utility Improvements at Plant No. 2, Project No. P2-110, for an amount not to exceed $1,499,839; and

J. Approve a Professional Consultant Services Agreement contingency of $149,984 (10%).

AYES: Barnes; Beard (Alternate); Berry (Alternate); Bernstein; Blazey (Alternate); Collacott; Massa-Lavitt (Alternate); Delgleize; Ferryman; B. Jones (Alternate); Kim; Krippner; R. Murphy; Peotter; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wagner; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Nagel; Parker and Sebourn

01/25/2017 Minutes of Board Meeting Page 10 of 12

AB 1234 REPORTS:

Director Ferryman provided an update on the NWRI General Manager recruitment and announced upcoming meeting dates of the OCCOG, SARFC and Border Patrol committees.

Chair Sebourn reported on his recent attendance at the ACC-OC Energy and Environment Policy Committee on January 23rd, where he serves as the Chairman. He invited the Board to attend future meetings if interested

INFORMATION ITEMS:

None.

CLOSED SESSION:

CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54956.9(d)(1), 54956.9(d)(2) & 54956.8:

The Board convened in closed session at 7:02 p.m. to discuss two items. (Items No. 2, 4 and 5 were not heard.) Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings.

RECONVENED IN REGULAR SESSION:

The Board reconvened in regular session at 7:31 p.m.

CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION:

General Counsel Brad Hogin stated that the Board of Directors unanimously voted to deny the claims of Melissa Forman-Woodbridge and Roy Hendy.

01/25/2017 Minutes of Board Meeting Page 11 of 12 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:

At the inquiry of Director Withers, Mr. Thompson provided information on recent negotiations with OC Flood Control regarding a possible fee for right of entry, where OCSD had pipeline that crisscrosses the County. Director Steel stated that this item was brought before the Board of Supervisors and was denied.

ADJOURNMENT:

At 7:34 p.m. Chair Sebourn adjourned the meeting until the Special Meeting (Board Orientation) on February 15, 2017 at 3:00 p.m. in memory of former employee Brent Wride.

Submitted by:

______Kelly A. Lore Clerk of the Board

01/25/2017 Minutes of Board Meeting Page 12 of 12 Meeting Date To Bd. of Dir. BOARD OF DIRECTORS -- 02/22/17 Item Number Item Number AGENDA REPORT -- 3 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance

SUBJECT: REPLACEMENT OF PLANT 2 MAINTENANCE BUILDING HVAC SYSTEM

GENERAL MANAGER'S RECOMMENDATION

B. Approve a contingency amount of $21,061 (10%).

BACKGROUND

The existing air conditioning system in the Plant 2 Maintenance building was installed in 1998 and is the sole source for the building’s heating, ventilation, and air conditioning (HVAC). The building houses approximately fifty staff members. The existing HVAC roof top unit has exceeded its useful life expectancy and suffered multiple system failures. In 2015 the HVAC system experienced multiple refrigerant leaks and 75% of the unit was removed from service to comply with EPA regulations. Maintenance staff have been able to maintain the remaining portion of the unit in service but due to extensive corrosion, the systems reliability is severely compromised.

U.S. Communities Government Purchasing Alliance is the leading national government purchasing cooperative, providing government procurement resources and solutions to local and state government agencies, school districts (K-12), higher education institutes, and nonprofits looking for the best overall government pricing supplier. The program is available to all State of California government entities (State agencies, cities, counties, special districts, school districts, universities, etc.) that expend public funds for the acquisition of both goods and services.

RELEVANT STANDARDS

• Protection of Orange County Sanitation District assets • Participate in National Joint Powers Authority (NJPA) cooperative purchasing program

Page 1 of 2 PROBLEM

The sole source of heating, ventilation, and air conditioning to the Plant No. 2 Maintenance building is failing and is beyond economical repair. This building, housing approximately fifty staff members, has reached temperatures in excess of 95 degrees Fahrenheit over three days during a failure last Summer.

PROPOSED SOLUTION

TRANE US Communities 15-JLP-023 provides a previously bid contract to participating agencies affording lowest cost options, thus eliminating the requirement for the bid or sole source approval processes. Award a purchase order through TRANE US Communities to provide a turnkey replacement HVAC roof mounted system.

TIMING CONCERNS

The existing HVAC roof mounted system capacity has been reduced by 75% due to refrigerant leaks and component failures. Higher temperatures expected during the summer months will increase the stress to the cooling system, increasing the likelihood of complete system failure.

RAMIFICATIONS OF NOT TAKING ACTION

The building will not provide ventilation, heating, or air conditioning to its occupants. Loss of ventilation or air conditioning during high temperature periods presents a health and safety concern to the building occupants.

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance. This item has been budgeted in the FY2016-17 Operating budget. (Line item: Repairs and Maintenance, Section 6, page 92). Project contingency funds will not be used for this purchase.

Date of Approval Contract Amount Contingency 2/22/2017 $210,607.70 $21,061

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

N/A

Page 2 of 2

Meeting Date To Bd. of Dir. BOARD OF DIRECTORS -- 02/22/17 Item Number Item Number AGENDA REPORT -- 4 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: James Colston, Director of Environmental Services

SUBJECT: PAYMENT OF ANNUAL OCEAN DISCHARGE PERMIT FEE

GENERAL MANAGER'S RECOMMENDATION

Approve payment in an amount not to exceed $525,537 to the State Water Resources Control Board for annual permit fees for the ocean discharge permit.

BACKGROUND

To maintain legal authority to discharge to the Pacific Ocean via the long and short outfall systems, the Orange County Sanitation District (Sanitation District) must pay an annual permit fee to the State Water Resources Control Board. The California Code of Regulations Title 23, Division 3, Chapter 9 establishes annual fee schedules for National Pollutant Discharge Elimination System (NPDES) permit holders.

PRIOR COMMITTEE/BOARD ACTIONS

Annual fee.

RELEVANT STANDARDS

• California Code of Regulations Title 23, Division 3, Chapter 9 • Meet Discharge Permit 24/7/365

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance. This item has been budgeted. (Budget Update FY2016-17, Line item: Page 43, Operating Expense, Other).

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

N/A

JC:rc:bg

Page 1 of 1 ITEM NO. 5a

MINUTES OF THE OPERATIONS COMMITTEE

Orange County Sanitation District Wednesday, December 7, 2016, 5:00 p.m.

A regular meeting of the Operations Committee was called to order by Committee Vice-Chair Shawver on Wednesday, December 7, 2016 at 5:02 p.m. in the Administration Building .

Director Yarc led the Flag Salute.

A quorum was declared present, as follows:

COMMITTEE MEMBERS PRESENT: STAFF PRESENT: David Shawve r, Vice-Chair Jim Herberg, General Manager Ellery Deaton Bob Ghirelli, Assistant General Manager Steve Jones Celia Chandler, Director of Human Resources Richard Murphy Jim Colston, Director of Environmental Services Steve Nagel Rob Thompson , Director of Engineering Fred Smith Ed Torres, Director of Operations and Maintenance Tim Shaw (Alternate) Lorenzo Tyner, Director of Finance & Michelle Steel Administrative Services Mariellen Yarc Tina Knapp , Deputy Clerk of the Board Greg Sebourn , Board Vice-Chair Marc Brown John Nielsen , Board Chair Jennifer Cabral Mike Dorman COMMITTEE MEMBERS ABSENT: Mark Esquer John Withers, Chair Dean Fisher Robert Kiley Alfredo Garcia Chad Wanke Mark Manzo Kathy Millea Jeff Mohr Ryan Valentino

OTHERS PRESENT: Brad Hagin, General Counsel Bob Ooten, Alternate Director CMSD

PUBLIC COMMENTS:

None.

REPORT OF COMMITTEE CHAIR:

Committee Vice-Chair Shawver did not provide a report.

12/07/2016 Operations Committee Minutes Page 1 of 8 REPORT OF GENERAL MANAGER:

General Manager Jim Herberg reported that a tentative ruling was reached in the court case pertaining to Measure E in which Kern County is the defendant. This case involves the land application of biosolids and preliminarily found in favor of the plaintiffs, which includes Orange County Sanitation District, and finds that Class A biosolids can be composted in Kern County. This is good news as it will allow for the availability of more places for the application of biosolids. Additional information will be provided at the December Board of Directors meeting.

CONSENT CALENDAR:

1. APPROVAL OF MINUTES (Clerk of the Board)

MOVED, SECONDED, and DULY CARRIED TO: Approve Minutes of the November 2, 2016 Operations Committee Meeting.

AYES: Deaton , Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith , and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel, Wanke, and Withers

Item No. 2 was pulled for separate consideration. Vice-Chair Sebourn recused himself and left the room during the discussion and vote on Item No . 2. 2. POWER PRODUCTION CONSUL TING SERVICES, SPECIFICATION NO. CS-2016-777BD (Ed Torres)

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Approve a Professional Consultant Services Agreement with AECOM for Power Production Consulting Services, Specification No. CS 2016-777BD, for an amount not to exceed $191 ,691 ; and

B. Approve a contingency of $19, 169 (10%).

AYES: Deaton , Jones, Murphy, Nagel, Nielsen, Shaw (Alternate), Shawver, F. Smith, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Sebourn (Recused), Steel, Wanke, and Withers

12/07/2016 Operations Committee Minutes Page 2 of 8 3. CBS ARCSAFE REMOTE CIRCUIT BREAKER RACKING UNIT (Ed Torres)

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Approve a sole source purchase with CBS Arcsafe Inc. for the purchase of four CBS Arcsafe remote circuit breaker racking units (two per plant), for a total amount not to exceed $139,920 delivered, plus tax; and

B. Approve a contingency of $6 ,996 (5%).

AYES: Deaton, Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel, Wanke, and Withers

4. COOPERATIVE PROCUREMENT WITH STATE OF CALIFORNIA UNDER WSCA-NASPO FOR FUEL CARD PROGRAM (Ed Torres)

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Authorize the use of the State of California Department of General Services (DGS) Participating Addendum No. 7-16-99-27 with U.S. Bank National Association dba Voyager Fleet Systems under the State of Washington WSCA-NASPO Commercial Card Solutions Contract Number 00612- Category 2 for the period beginning February 1, 2017 through December 31 , 2018 for a total not to exceed $250,000, with four one-year renewal options.

B. Approve a $50,000 (20%) Contingency per year.

AYES: Deaton, Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel, Wanke, and Withers

5. DOIG DRIVE BUILDING IMPROVEMENTS, PROJECT NO. 3-65 (Rob Thompson)

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Establish a project for Doig Drive Building Improvements, Project No. 3-65, with a budget of $2,436,000.

12/07/2016 Operations Committee Mi nutes Page 3 of 8 AYES: Deaton , Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel, Wanke, and Withers

6. RETURN ACTIVATED SLUDGE PIPING REPLACEMENT AT ACTIVATED SLUDGE PLANT 1, PROJECT NO. P1-129 (Rob Thompson)

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Establish a project for Return Activated Sludge Piping Replacement at Activated Sludge Plant 1, Project No. P1-129, with a budget of $3,300,000.

AYES: Deaton, Jones, Murphy, Nagel, Nielsen, Sebourn , Shaw (Alternate), Shawver, F. Smith , and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel , Wanke, and Withers

NON-CONSENT CALENDAR:

7. UPDATE PRE-APPROVAL LIST FOR FREQUENTLY PROCURED SOLE SOURCE MATERIALS AND SERVICES (Ed Torres)

Director of Operations & Maintenance Ed Torres provided an overview of this item and responded to a question indicating that any new vendors identified as providing a part/service on the list would eliminate that part/item as a sole source and it would then go through the usual procurement process.

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Update authorization and set administrative controls for sole source procurement required to maintain, service, or replace equipment currently in operation at Orange County Sanitation District facilities where the parts and/or service can only be provided by the Original Equipment Manufacturer (OEM) or their designated representative, for purchases under $100,000, per purchase; and

B. Authorize the General Manager to ratify additions or deletions to the OEM list on the General Manager's quarterly approved purchases agenda report.

The following equipment, parts, and services from the listed OEMs are pre- approved as sole source items. The information below includes a general category for the part/service, not the specific, existing sole source part/service.

12/07/2016 Operations Committee Minutes Page 4 of 8 • AANDERAA DATA INSTRUMENTS - Current meters • ABB - Variable frequency drives, process controls • ACME - Plant water strainers • AGILENT TECHNOLOGIES - Liquid Chromatography Mass Spectrometer • ALFA-LAVAL - Heat exchangers for digesters, centrifuges • ALLEN BRADLEY - Process controls • AMERON - Manhole Toppers • AM-LINER® PVC - Sewer lining • ARIZONA INSTRUMENT - Odor sensing equipment • ASHBROOK (BELLMER I WINKLER) - Sludge belt filter presses • BASLER - Electrical protective relays and regulators • BEC - Building Electronics control system • BENTLEY NEVADA - Gas compressor, Cen-Gen vibration monitoring • BIO-MERIEUX - Bacterial identification system • BOERGER - Process Pumps • CHESTERTON - Mechanical seals for process equipment • CSl/EMERSON - MSP vibrations • DEZURIK WATER CONTROLS- Process valves • EATON - Variable frequency drives for process pumps • EMERSON/ROSEMOUNT - Process equipment • FOXBORO - Process equipment • GOULD/ITT/YEOMANS - Process pumps • HACH/AMERICAN SIGMA - Liquid samplers • IPT - Limitorque services • HIDROSTAL - Process pump motors • LECO - GC Time of Flight mass spectrometer • LIMITORQUE - Process valves • MARLOW - Process pumps • Modicon - PLC parts & service • MOTOROLA, INC - Radios • MOYNO - Process pumps • MSA - Safety gas detection systems • MUFFIN MONSTER - Sludge grinders • PARKSON - Washer compactor • PERKIN ELMER - ICP Mass Spectrometer • PUTZMEISTER - Sludge transfer pumps • ROBICON - Variable frequency drives for pumps • ROTORK - Valve actuators • SAN CON 100 EPOXY/URETHANE - Coating system • SCHWING - Sludge transfer pumps • SEABIRD - Ocean Monitoring instrumentation • SEEPEX - Process pumps • SIEMENS - Variable frequency drives, process controls • SIEMENS DEMAG DELAVAL TURBOMACHINERY, INC. (SDDTI) - Aeration blowers service

12/07/2016 Operations Committee Minutes Page 5 of 8 • SKALAR - BOD robotics • SPARLING INSTRUMENTS - Process flowmeters • TELEDYNE - RD instrumentation • THERMO ELECTRON - ICP Atomic Emission Spectrometer and GC Mass spectrometer • TITUS - Composite Manhole Covers • VAREC - Process safety equipment • VAUGHAN - Process Pumps • WATERS CORPORATION - Liquid chromatograph mass spectrometer • WESTFALIA- Centrifuge parts • WEMCO - Process pumps • XYLEM - Process pumps and ancillary parts

The following additional proprietary service providers are pre-approved :

• ARC WIRELESS - Paging services • AUTODESK -AutoCAD drawing program • CALIFORNIA RECREATION COMPANY -Vessel Nerissa slip fees • CORNERSTONE - On Demand Talent Management System • EMPLOYEE BENEFITS SPECIALIST, INC - Benefits Enrollment System • ENFOTECH - Pre-treatment Software • ESRI - GIS software • FIRST AMERICAN REAL ESTATE - Online Geographic-Realquest Report • GUIDANCE SOFTWARE, INC - E-Discovery Software • GOLDEN BELL - Insect Control • IBM MAXIMO - Enterprise Asset Management Software • INNOVYZE, INC - Hydraulic Monitoring and CCTV Data • L - 3 COMMUNICATIONS HOLDINGS, INC - Internet and Telecom Provider • LABWARE - Laboratory Information Management System • MICROSOFT CORPORATION - Premier Support • MOTOROLA, INC - Radios • NEOGOV - Online Job Application System • ORACLE - Oracle Database • ORACLE I JD EDWARDS - Enterprise One Materials, Equipment & Services • PLANETBIDS, INC - Online vendor and bid Management • RAND MCNALLY - Thomas Bros. Maps • RBMWARE - Software and 2310 vibration analyzers • STANDARD AUTOMATION dba WONDERWARE WEST - Historian for SCADA system • VISION INTERNET SOLUTIONS, INC - Internet Website • WORKFORCE - Time Entry

AYES: Deaton , Jones, Murphy, Nagel, Nielsen , Sebourn, Shaw (Alternate), Shawver, F. Smith, and Yarc

12/07/2016 Operations Committee Minutes Pa ge 6 of 8 NOES: None ABSTENTIONS: None ABSENT: Kiley, Steel, Wanke, and Withers

8. PROJECT MANAGEMENT INFORMATION SYSTEM, PROJECT NO. J-128 (Rob Thompson)

Director of Engineering Rob Thompson introduced Dean Fisher, Engineering Manager, who provided an informative PowerPoint presentation that offered an overview of what is needed for the proper management of the documents and correspondence generated by Engineering projects, an overview of the problems presented by the current software application no longer being supported by the District's vendor, and opportunities for web-based Project Management solutions. Mr. Fisher responded to questions from the Committee regarding a number of topics including the current process, tracking of modifications (version control), number of licenses to be purchased, and whether or not there is value/cost savings in using the same system as a peer agency, like the Orange County Water District.

Director Steel arrived at 5:17 p.m.

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Establish a project for Project Management Information System, Project No. J-128, with a budget of $4,000,000.

AYES: Deaton, Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith, Steel, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Wanke, and Withers

9. OVERHAUL OF CENTRAL GENERATION ENGINES AT PLANT NOS.1AND2, SPECIFICATION NO. S-2016-764BD (Ed Torres)

Director of Operations & Maintenance Ed Torres provided an overview of this item and responded to questions from the Committee regarding how many years the number of running hours equates to and the benefits of the engines to the operation of the Sanitation District.

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Approve a Service Contract to NRG Energy Services, LLC for the overhaul of Central Generation Engines, Specification No. S-2016-764BD, for the period of February 1, 2017 through January 31 , 2018, for total amount not to exceed $2,633, 119 with four (4) one-year renewal options and;

12/07/2016 Operations Committee Minutes Page 7 of 8 B. Approve an annual contingency of$ 526,624 (20%)

AYES: Deaton, Jones, Murphy, Nagel, Nielsen, Sebourn, Shaw (Alternate), Shawver, F. Smith, Steel, and Yarc NOES: None ABSTENTIONS: None ABSENT: Kiley, Wanke, and Withers

INFORMATION ITEMS:

10. ORANGE COUNTY SANITATION DISTRICT FINANCIAL UPDATE (Lorenzo Tyner)

Director of Finance & Administrative Services Lorenzo Tyner presented an informative PowerPoint presentation that provided a summary of the District's financial operations and the Comprehensive Annual Financial Report (CAFR). Mr. Tyner responded to questions from the Committee regarding debt payments and indicated that staff would provide debt payment projections for the next four to five years to the Board of Directors.

DEPARTMENT HEAD REPORTS:

General Manager Jim Herberg reviewed meeting dates for December 2016 and January 2017. Director of Engineering Rob Thompson thanked Chair Nielsen for his service and Chair Nielsen thanked everyone for the opportunity to work with them and their commitment to the Sanitation District. Chair Nielsen commended staff for all the phenomenal work they do and wished everyone a happy holiday season.

Board Vice-Chair Sebourn requested individuals contact him regarding desired Committee appointments or changes as these appointments will be forthcoming.

OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IFANY:

None.

ADJOURNMENT

Committee Vice-Chair Shawver declared the meeting adjourned at 5:38 p.m . to the next scheduled meeting of Wednesday, February 1, 201 rat 5:00 p ~ n.· _,.,; .·. / ,,..... Submitted by, --· r~~~ ,,. .... - ..... _...... ,. Tina Knapp ..- Deputy Clerk of the Board

12/07/2016 Operations Committee Minutes Page 8 of 8 ITEM NO. 5b MINUTES OF THE ADMINISTRATION COMMITTEE

Orange County Sanitation District Wednesday, November 9, 2016 at 5:00 P.M.

A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chairman Curry on November 9, 2016 at 5:00 p.m. in the Administration Building of the Orange County Sanitation District.

Chairman Curry led the Flag Salute.

A quorum was declared present, as follows:

COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Keith Curry, Chair Jim Herberg, General Manager Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager Jim Ferryman Celia Chandler, Director of Human Resources Jim Katapodis Jim Colston, Director of Environmental Services Peter Kim Rob Thompson, Director of Engineering Greg Mills Ed Torres, Director of Operations & Joy Neugebauer Maintenance John Nielsen, Board Chair Lorenzo Tyner, Director of Finance & Greg Sebourn, Board Vice-Chair Administrative Services Kelly Lore, Clerk of the Board COMMITTEE MEMBERS ABSENT: Eddie Baker Steven Choi Elvia Harvey Glenn Parker Al Garcia Teresa Smith Rebecca Long Sal Tinajero Mark Manzo Kathy Millea Man Nguyen Steve Speakman John Swindler Mike White

OTHERS PRESENT: Brad Hogin, General Counsel

PUBLIC COMMENTS:

None.

REPORT OF COMMITTEE CHAIR:

Committee Chairman Curry did not provide a report.

11/09/2016 Administration Committee Minutes Page 1 of 5 REPORT OF GENERAL MANAGER:

General Manager Jim Herberg did not provide a report.

REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:

In response to questions posed in previous meetings, Director of Finance and Administrative Services Lorenzo Tyner stated that at the time of purchase, the investment with Lehman Brothers was appropriate under our investment policy. The new investment policy would not allow the same today. He then presented a slide illustrating the average benchmark of our portfolio vs. probable investment in CD's for the same 15-year period.

CONSENT CALENDAR:

1. APPROVAL OF MINUTES (Clerk of the Board)

MOVED, SECONDED AND DULY CARRIED TO: Approve Minutes of the October 12, 2016 Administration Committee Meeting.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero

2. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner)

MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of July 1, 2016 - September 30, 2016.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero

3. IBM MAXIMO EMERGENCY AND LEVEL 3 SUPPORT (Lorenzo Tyner)

MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to:

A. Authorize a sole source purchase order agreement with Total Resource Management (TRM) for Maximo Emergency and Level 3 Support for one year commencing January 1, 2017 through December 31, 2017 for a total amount not to exceed $160,000.

11/09/2016 Administration Committee Minutes Page 2 of 5 B. Authorize an option for three annual renewals at $160,000 per year for a total amount of $480,000.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero

4. CONSOLIDATED FINANCIAL REPORT FOR FIRST QUARTER ENDED SEPTEMBER 30, 2016 (Lorenzo Tyner)

MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2016.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero

NON-CONSENT:

5. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2017A (Lorenzo Tyner)

Mr. Tyner introduced Controller Mike White who provided a brief overview of this item.

MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize the General Manager to issue new fixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, Series 2017A, in an amount sufficient to refund up to $91,620,000 of COP Series 2007 A.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Nielsen, Parker, T. Smith, and Tinajero

Board Chairman John Nielsen arrived at the meeting at 5:04 p.m.

11/09/2016 Administration Committee Minutes Page 3 of 5 6. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2016 (Lorenzo Tyner)

Mr. White presented an informative PowerPoint regarding the CAFR including: financial measurement; the net position over the prior year; changes in net assets in the last five years; decreased cash and investments; and collection, treatment, and disposal costs in comparison to budget. Mr. White then introduced auditor Peter George, MGO, who provided a presentation and distributed a handout regarding: responsibilities of the Auditor; deliverables; communications with the Administration Committee and stated there were no major issues encountered and no material weaknesses or significant deficiencies noted for FY 15/16.

MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2016, prepared by staff and audited by Macias Gini & O'Connell LLP (MGO), Certified Public Accountants, along with the following reports prepared by MGO:

A. Report to the Board of Directors; and

B. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets.

AYES: Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen and Sebourn NOES: None ABSTENTIONS: None ABSENT: Choi, Parker, T. Smith, and Tinajero

INFORMATION ITEMS:

7. ORANGE COUNTY SANITATION DISTRICT TREATMENT PLANT OVERVIEW (Ed Torres)

Director of Operations and Maintenance Ed Torres introduced Operations Supervisor Eddie Baker who provided an informative PowerPoint presentation on the Sanitation District's treatment plant operations, including an overview of the 2015-16 treatment plant operating expenses, future flows for the Groundwater Replenishment System, and maintenance efforts.

8. ORANGE COUNTY SANITATION DISTRICT SEWER SERVICE CHARGES - REBATES (Lorenzo Tyner)

Mr. Tyner provided a brief PowerPoint presentation on the Rebate of paid Sewer Service charges application process.

11/09/2016 Administration Committee Minutes Page 4 of 5 CLOSED SESSION:

None.

OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:

Committee Chair Curry congratulated those that had successfully been reelected to their agencies, and said goodbye to those Committee members who would not be returning to OCSD. He stated that it had been an honor to work with the group.

ADJOURNMENT:

Committee Chair Curry declared the meeting adjourned at 5:49 p.m. to the next regularly scheduled meeting of Wednesday, January 11, 2017 at 5:00 p.m .

Submitted by:

11/09/2016 Administration Committee Minutes Page 5 of 5 ITEM NO. 5c

MINUTES OF THE LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE

Orange County Sanitation District Wednesday, December 14, 2016 at 4:30 p.m.

A meeting of the Legislative and Public Affairs Committee was called to order by Chair Sebourn on Wednesday, December 14, 2016 at 4:31 p.m. in the Administration Building of the Orange County Sanitation District.

Chair Sebourn led the pledge of allegiance.

A quorum was declared present, as follows:

COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Greg Sebourn , Board Chair Jim Herberg , General Manager Tom Beamish , Director Bob Ghirelli, Assistant General Manager Peter Kim , Director Celia Chandler, Director of Human Lucille Kring , Di rector Resources John Withers, Director Rob Thompson, Director of Engineering Ed Torres, Director of Operations and COMMITTEE MEMBERS ABSENT: Maintenance VACANT, Member-At-Large Lo renzo Tyner, Director of Finance & VACANT, Member-At-Large Administrative Services Tina Knapp, Deputy Clerk of the Board Jennifer Cabral Tanya Chong Alfredo Garcia Mark Manzo Kelly Newell

OTHERS PRESENT: Brad Hagin , General Counsel Eric O'Donnell, Townsend Public Affairs Eric Sapirstein , ENS Resources (via Teleconference) Cori Williams, Townsend Public Affairs

PUBLIC COMMENTS:

None.

12/14/2016 Legislative and Public Affairs Committee Minutes Pa ge 1 of 4 REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee.

No reports were given .

CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business.

1. APPROVAL OF MINUTES (Clerk of the Board)

MOVED, SECONDED, and DULY CARRIED TO: Approve minutes for the regular Legislative and Public Affairs Committee meeting held on November 8, 2016.

AYES: Beamish, Kim , Kring , Sebourn , and Withers NOES: None ABSTENTIONS: None ABSENT: None

NON-CONSENT CALENDAR:

2. AB 2022 BOTTLING OF GROUNDWATER REPLENISHMENT SYSTEM WATER (Bob Ghirelli)

Principal Public Affairs Specialist Jennifer Cabral provided an overview of this item and answered questions from the Committee regarding specifics of the cost breakdown , types of bottles to be used, and logistics of testing and bottling the water.

MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to:

A. Authorize up to $15,000 for the initial testing and bottling of Groundwater Replenishment System water, with the cost of the bottling and testing to be equally shared between the Orange County Sanitation District and Orange County Water District; and

B. Authorize the General Manager to approve the label for the first-run of GWRS water bottles.

AYES: Beamish , Kim, Kring , Sebourn, and Withers NOES: None ABSTENTIONS: None ABSENT: None

12/14/2016 Legislative and Public Affairs Committee Minutes Page 2 of 4 3. APPROVAL OF 2017 LEGISLATIVE & REGULATORY PLAN (Bob Ghirelli)

Principal Public Affairs Specialist Jennifer Cabral provided an overview of this item indicating that the 2017 Legislative Plan was developed keeping in mind what industry partners, like the Orange County Water District, California Association of Sanitation Agencies, Association of California Cities-Orange County, and the County of Orange, might view as key issues. The 2017 Legislative Plan was developed around three guiding principles: funding assistance for Sanitation District projects through grants, appropriations, or other means; maintaining local control over governance of special districts, and other local entities; and opposing any additional, or redundant, regulatory requirements.

Staff responded to questions from the Committee regarding what specific funding/grants we may be seeking in 2017. Director Withers requested that financial information detailing grants that might be pursued be identified to establish measurable targets. Staff will develop this information and bring the information back to the Committee at the next meeting.

Staff also responded to questions regarding whether or not the Sanitation District has received grants for infrastructure and the possibility of developing a plan for which project timing would coincide with the availability of funding.

MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve the Orange County Sanitation District 2017 Legislative & Regulatory Plan.

AYES: Beamish, Kim , Kring , Sebourn, and W ithers NOES: None ABSTENTIONS: None ABSENT: None

INFORMATION ITEMS:

4. LEGISLATIVE AFFAIRS UPDATE (Rebecca Long)

Eric Sapirstein, ENS Resources, provided an update on Water Resources Development Act (WRDA) legislation, which includes the Water Infrastructure Improvements for the Nation (WllN) Act. Mr. Sapirstein also provided a brief overview of WRDA legislation as it currently stands, including funding programs for water supply and alternative recycling programs, drought provisions, and water education.

Cori Williams, Townsend Public Affairs (TPA), provided an update on activities in the State government over the past month and indicated that legislation has

12/14/2016 Legislative and Public Affairs Committee Minutes Page 3 of 4 not yet been seen pertaining to water, with the exception of the water funding language seen in the parks bond that was introduced in the prior session.

In response to a question from the Committee regarding whether or not the passage of Proposition 64 will affect wastewater, staff indicated that the passage of Proposition 64 should not affect wastewater.

5. PUBLIC AFFAIRS UPDATE (Jennifer Cabral)

No Public Affairs Update was provided.

OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:

None.

ADJOURNMENT:

Chair Sebourn declared the meeting adjourned at 5:00 p.m. to the next Legislative and Public Affairs Committee meeting, Monday, February 6, 2017 at 8:00 a.m.

Submitted by:

-r~~ Tina Knapp Deputy Clerk of the Board

r. - _, - ,. "'

12/14/2016 Legislative and Publ ic Affairs Committee Minutes Page 4 of 4 ITEM NO. 5d

MINUTES OF MEETING GROUNDWATER REPLENISHMENT SYSTEM STEERING COMMITTEE October 10, 2016

Committee Chair Yoh called the Groundwater Replenishment System Steering Committee meeting to order in the Boardroom at the District office. Following the Pledge of Allegiance to the flag, the Recording Secretary called the roll and reported a quorum.

2016 Committee Members Roger Yoh OCWD Director, Chair (present) Cathy Green OCWD Director Philip Anthony OCWD Director (present) John Nielsen OCSD Director, Vice Chair (present) Tom Beamish OCSD Director Jim Ferryman OCSD Director (present)

Alternates Denis Bilodeau OCWD Director (No. 1) Jordan Brandman OCWD Director (No. 2) Dina Nguyen OCWD Director (No. 3) Lucille Kring OCSD Director (No. 1) Greg Sebourn OCSD Director (No. 2) (present) Steve Jones OCSD Director (No. 3)

OCWD OCSD Mike Markus Jim Herberg Mehul Patel Kathy Millea Sandy Scott-Roberts Rebecca Lonq Eleanor Torres Eros Yong John Kennedy Judy-Rae Karlsen, Assistant District Secretary Others: Debbie Burris - DOB Engineering Kenneth Chua - Sinqapore Pubic Utilities

CONSENT CALENDAR

The Consent Calendar was approved upon motion by Director Anthony, seconded by Director Nielsen and carried (5-0] as follows. [Yes - Nielsen, Ferryman, Sebourn, Yoh, Anthony/No - OJ

1. Minutes of Previous Meeting

The Minutes of the GWRS Steering Committee meeting held July 11, 2016 are approved as presented.

INFORMATIONAL ITEMS

2. GWRS Operations Update

Director of Water Production/GWRS Mehul Patel reported that OCWD shares an exchange program with Singapore Public Utilities Board and he introduced Kenneth Chua as the exchange student

1 10/10/2016 visiting OCWD. He also gave an update on the GWRS microfiltration unit membranes and noted they will all be replaced by March 2017.

Executive Director of Operations Bill Dunivin updated the Committee on GWRS Operations, noting that as of September 30, 2016 the GWRS Fiscal Year to Date production was 22,896.16 acre feet (AF) which is -3,065.48 AF below the target production goal of 25,962 AF. He advised the September flow reductions and the facility shutdown to inspect the GWRS pipeline and other preventative maintenance tasks caused the production rate to fall below target production rates. Mr. Dunivin noted the daily average production for the quarter July through September 2016 was 80.97 million gallons per day.

OCWD General Manager Mike Markus reported that during the GWRS plant shutdown staff performed a major software upgrade.

3. Update on SP-173 Effluent Reuse Study/GWRS Final Expansion

Mr. Patel reported the OCSD SP-173 Effluent Reuse Study has been completed. He advised that both agency staff are working on the terms and conditions within the Joint Exercise of Powers Agreement for the GWRS Final Expansion project.

OCSD Engineer Kathy Millea reported the new Joint Exercise of Powers Agreement will outline the financial and operational responsibilities of each agency and will include the new projects associated with the GWRS Final Expansion project. She advised the GWRS Final Expansion project was approved by both agency boards and the project will now move forward to issuance of Request for Proposals (RFP) for design. She reported the following next steps.

October • Receive and file Final SP-173 Effluent Reuse Study Report • Begin Water Quality Microfiltration Pilot Study at OCSD Plant 2

November • Present Joint Agreement at OCSD/OCWD Board meetings for approval

January • Finalize RFP for design

4. Quarterly Outreach Report

OCWD Director of Public Affairs Eleanor Torres provided an update on GWRS outreach activities.

GENERAL MANAGERS REPORT

OCWD General Manager Mike Markus advised the GWRS Steering Committee will hold elections at the January 9, 2017 meeting.

ADJOURNMENT

There being no further business, the mee&Z

OCWD Director Roger Yoh, Chair 2 MINUTES OF THE MEETING GROUNDWATER REPLENISHMENT SYSTEM STEERING COMMITTEE Monday, January 9, 2017

OCSD Director Sebourn called the Groundwater Replenishment System Steering Committee meeting to order in the Boardroom at the District office. Following the Pledge of Allegiance to the flag, the Secretary called the roll and reported a quorum.

Committee Members Roger Yoh OCWD 1 (not present) Cathy Green OCWD 2 Phil Anthony OCWD 3 Greg Sebourn OCSD 1 James Ferryman OCSD 2 Lucille Kring OCSD 3 Alternates Steve Jones OCSD 1 Vacant OCSD 2 Vacant OCSD 3 Denis Bilodeau OCWD1 Jordan Brandman OCWD2 (arrived 5:05 p.m.) Dina Nguyen OCWD3 (not present)

OCWD Staff OCSD Staff Mike Wehner Jim Herberg Bill Dunivin Kathy Millea Sandy Scott-Roberts Eleanor Torres Others Judv-Rae Karlsen, Assistant District Secretary Debbie Burris - DDB Engineering

• Annual Reorganization of GWRS Steering Committee Officers

GWRS Steering Committee member Greg Sebourn stated the Steering Committee reorganizes on an annual basis. It was a consensus of the Committee members present to approve the following nominations:

• 2017 GWRS Steering Committee Chair - OCSD Director Greg Sebourn • 2017 GWRS Steering Committee Vice Chair- OCWD Director Roger Yoh

Chairman Sebourn noted that alternate Committee members will be appointed by OCSD prior to the next meeting.

CONSENT CALENDAR

The Consent Calendar was approved upon motion by Director Anthony, seconded by Director Ferryman and carried [6-0] as follows. [Yes - Sebourn, Ferryman, Kring, Green, Anthony, Bilodeau/No - OJ

1. Minutes of Previous Meeting

The minutes of the GWRS Steering Committee meeting held October 9, 2016 are approved as presented.

- 1 - 1/9/2017 MATTER FOR CONSIDERATION

OCWD Director Brandman arrived during the following discussion.

2. Outreach for GWRS Bottled Water and the 10th Anniversary of GWRS

OCWD Director of Public Affairs Eleanor Torres noted the 10th anniversary of the GWRS project is in January and deserves a commemorative event and media attention. She then discussed options for the event and presented marketing ideas for the limited quantity of bottled GWRS water. Ms. Torres reminded the Committee of the importance of keeping GWRS, OCWD and the OCSD at the forefront of positive media attention and solidifying the agencies' global leadership role in the water industry. She noted the labels on the water bottles have been designed and the initial run of 16,000 bottles of GWRS water will be available for distribution in February 2017. The Committee asked questions about the outreach plan developed by Dick Jones Communications and the proposed budget required to support the outreach activities.

Director Anthony recommended that each agency be given an opportunity to review the options presented and then hold a special GWRS Steering Committee meeting on January 30, 2017 to discuss the priorities of each agency. The Committee was in support of this recommendation and took the following action.

Upon motion by Director Anthony, seconded by Director Ferryman and carried (6-0) the Committee recommended that staff schedule a special GWRS Steering Committee meeting on January 30, 2017@ 5:00 pm. [Yes- Sebourn, Ferryman, Kring, Green, Anthony, Bilodeau/No - OJ

INFORMATIONAL ITEMS

3. GWRS Operations Update

OCWD Executive Director of Operations Bill Dunivin gave a brief update on GWRS operations, the replacement of reverse osmosis and microfiltration modules and water production statistics.

4. Update on GWRS Final Expansion

GWRS Program Manager Sandy Scott-Roberts gave a brief overview of the GWRS Final Expansion project. She reviewed the five projects involved in the GWRS Final Expansion and then advised the Committee that both agencies have issued their respective Requests for Proposals for construction design contracts.

5. Quarterly Outreach Report [October - December 20161

Ms. Torres reviewed the GWRS Quarterly Outreach report. Director Sebourn requested that staff schedule a tour for the GWRS Steering Committee members that includes GWRS facilities, Prado dam and OCWD recharge basins and operations near the Santa Ana river. Ms. Torres advised that she will return to the Committee to schedule a tour after OCSD has its alternate members.

- 2 - 1/9/2017 DIRECTORS' REPORTS

OCWD Director Anthony asked OCSD Jim Herberg if OCSD was providing assistance to the Los Angeles Sanitation District. Mr. Herberg said OCSD was not contacted for assistance but he would reach out to their staff and offer support.

Director Sebourn advised the next GWRS Steering Committee will be a special meeting on Monday, January 30, 2017 at 5:00 p.m. in the OCWD boardroom.

ADJOURNMENT

There being no further business to come before the Committee, the meeting was adjourned at 5:50 p.m.

- 3 - Meeting Date To Bd. of Dir. BOARD OF DIRECTORS -- 02/22/17 Item Number Item Number AGENDA REPORT -- 6 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services

SUBJECT: REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2017

GENERAL MANAGER'S RECOMMENDATION

Receive and file the report of the Investment Transactions for the month of January 2017.

BACKGROUND

The CA Government Code requires that a monthly report of investment transactions be provided to the legislative body. Attached is the monthly report of investment transactions for the month ended January 31, 2017.

RELEVANT STANDARDS

• CA Government Code Section 53607

PRIOR COMMITTEE/BOARD ACTIONS

N/A

FINANCIAL CONSIDERATIONS

N/A

ATTACHMENT The following attachment(s) is included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

• Report of the Investment Transactions for the month ended January 31, 2017

Page 1 of 1 Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss ACQUISITIONS

Purchase 01/02/2017 261908107 74,400.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 74,400.00 0.00 74,400.00 0.00 Purchase 01/03/2017 261908107 1.53 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1.53 0.00 1.53 0.00 Purchase 01/04/2017 261908107 3,701.75 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 3,701.75 0.00 3,701.75 0.00 Purchase 01/04/2017 261908107 2,530.74 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,530.74 0.00 2,530.74 0.00 Purchase 01/09/2017 261908107 55,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 55,000.00 0.00 55,000.00 0.00 Purchase 01/09/2017 261908107 11,472.51 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 11,472.51 0.00 11,472.51 0.00 Purchase 01/12/2017 261908107 18,750.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 18,750.00 0.00 18,750.00 0.00 Purchase 01/14/2017 261908107 43,750.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 43,750.00 0.00 43,750.00 0.00 Purchase 01/15/2017 261908107 6,612.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 6,612.58 0.00 6,612.58 0.00 Purchase 01/15/2017 261908107 11,250.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 11,250.00 0.00 11,250.00 0.00 Purchase 01/15/2017 261908107 3,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 3,000,000.00 0.00 3,000,000.00 0.00 Purchase 01/16/2017 261908107 24,375.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 24,375.00 0.00 24,375.00 0.00 Purchase 01/17/2017 261908107 2,096.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,096.58 0.00 2,096.58 0.00 Purchase 01/17/2017 261908107 2,742.66 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,742.66 0.00 2,742.66 0.00 Purchase 01/17/2017 261908107 2,706.83 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,706.83 0.00 2,706.83 0.00 Purchase 01/17/2017 261908107 1,859.13 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,859.13 0.00 1,859.13 0.00 Purchase 01/17/2017 261908107 3,657.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 3,657.00 0.00 3,657.00 0.00 Purchase 01/17/2017 261908107 1,592.09 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,592.09 0.00 1,592.09 0.00 Purchase 01/17/2017 261908107 30.65 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 30.65 0.00 30.65 0.00 Purchase 01/17/2017 261908107 972.95 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 972.95 0.00 972.95 0.00 Purchase 01/17/2017 261908107 254,820.75 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 254,820.75 0.00 254,820.75 0.00 Purchase 01/17/2017 261908107 184,045.73 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 184,045.73 0.00 184,045.73 0.00 Purchase 01/17/2017 261908107 164,034.11 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 164,034.11 0.00 164,034.11 0.00 Purchase 01/17/2017 261908107 231,589.98 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 231,589.98 0.00 231,589.98 0.00 Purchase 01/18/2017 261908107 17,850.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 17,850.00 0.00 17,850.00 0.00 Purchase 01/18/2017 261908107 91,998.53 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 91,998.53 0.00 91,998.53 0.00 Purchase 01/18/2017 261908107 244,446.07 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 244,446.07 0.00 244,446.07 0.00 Purchase 01/18/2017 4581X0CW6 3,000,000.00 Inter-American Dev Bank Note 99.877 2.15 % 2,996,310.00 0.00 2,996,310.00 0.00 2.125% Due 1/18/2022 Purchase 01/20/2017 261908107 14,075.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 14,075.00 0.00 14,075.00 0.00 Purchase 01/20/2017 261908107 4,040,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 4,040,000.00 0.00 4,040,000.00 0.00

Chandler Asset Management - CONFIDENTIAL Page 11 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss ACQUISITIONS

Purchase 01/20/2017 261908107 257.16 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 257.16 0.00 257.16 0.00 Purchase 01/20/2017 261908107 293.32 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 293.32 0.00 293.32 0.00 Purchase 01/20/2017 261908107 592.75 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 592.75 0.00 592.75 0.00 Purchase 01/20/2017 261908107 164.08 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 164.08 0.00 164.08 0.00 Purchase 01/20/2017 261908107 1,325.39 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,325.39 0.00 1,325.39 0.00 Purchase 01/20/2017 313385FE1 2,000,000.00 FHLB Discount Note 99.840 0.56 % 1,996,791.67 0.00 1,996,791.67 0.00 0.55% Due 5/5/2017 Purchase 01/20/2017 313589FA6 4,000,000.00 FNMA Discount Note 99.850 0.54 % 3,993,990.50 0.00 3,993,990.50 0.00 0.54% Due 5/1/2017 Purchase 01/22/2017 261908107 65,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 65,000.00 0.00 65,000.00 0.00 Purchase 01/23/2017 084664BS9 1,000,000.00 Berkshire Hathaway Note 100.176 1.03 % 1,001,760.00 3,022.22 1,004,782.22 0.00 1.6% Due 5/15/2017 Purchase 01/23/2017 166764BC3 1,000,000.00 Chevron Corp Note 100.078 1.24 % 1,000,780.00 2,762.67 1,003,542.67 0.00 1.344% Due 11/9/2017 Purchase 01/23/2017 24422ESN0 1,000,000.00 John Deere Capital Corp Note 100.042 1.01 % 1,000,420.00 1,281.25 1,001,701.25 0.00 1.125% Due 6/12/2017 Purchase 01/23/2017 261908107 22,500.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 22,500.00 0.00 22,500.00 0.00 Purchase 01/23/2017 261908107 1,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,000,000.00 0.00 1,000,000.00 0.00 Purchase 01/23/2017 261908107 225,787.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 225,787.00 0.00 225,787.00 0.00 Purchase 01/25/2017 261908107 4,900,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 4,900,000.00 0.00 4,900,000.00 0.00 Purchase 01/25/2017 261908107 3,188.25 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 3,188.25 0.00 3,188.25 0.00 Purchase 01/25/2017 261908107 182.73 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 182.73 0.00 182.73 0.00 Purchase 01/25/2017 261908107 300.04 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 300.04 0.00 300.04 0.00 Purchase 01/25/2017 261908107 2,955.35 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,955.35 0.00 2,955.35 0.00 Purchase 01/25/2017 261908107 1,663.40 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,663.40 0.00 1,663.40 0.00 Purchase 01/25/2017 261908107 578.17 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 578.17 0.00 578.17 0.00 Purchase 01/25/2017 261908107 13,519.30 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 13,519.30 0.00 13,519.30 0.00 Purchase 01/25/2017 261908107 9,909.87 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 9,909.87 0.00 9,909.87 0.00 Purchase 01/25/2017 261908107 5,720.33 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 5,720.33 0.00 5,720.33 0.00 Purchase 01/25/2017 261908107 49.42 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 49.42 0.00 49.42 0.00 Purchase 01/25/2017 261908107 2,112.92 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,112.92 0.00 2,112.92 0.00 Purchase 01/25/2017 261908107 10,370.07 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 10,370.07 0.00 10,370.07 0.00 Purchase 01/25/2017 261908107 680.11 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 680.11 0.00 680.11 0.00

Chandler Asset Management - CONFIDENTIAL Page 12 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss ACQUISITIONS

Purchase 01/25/2017 261908107 9,509.97 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 9,509.97 0.00 9,509.97 0.00 Purchase 01/25/2017 261908107 761.21 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 761.21 0.00 761.21 0.00 Purchase 01/25/2017 261908107 1,769.37 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,769.37 0.00 1,769.37 0.00 Purchase 01/25/2017 91159HHD5 675,000.00 US Bancorp Callable Note Cont 4/15/2017 100.127 1.08 % 675,857.25 2,165.63 678,022.88 0.00 1.65% Due 5/15/2017 Purchase 01/26/2017 261908107 5,250,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 5,250,000.00 0.00 5,250,000.00 0.00 Purchase 01/27/2017 261908107 2,500.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 2,500.00 0.00 2,500.00 0.00 Purchase 01/27/2017 261908107 18,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 18,000,000.00 0.00 18,000,000.00 0.00 Purchase 01/27/2017 261908107 7,260.30 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 7,260.30 0.00 7,260.30 0.00 Purchase 01/27/2017 912796LG2 5,000,000.00 US Treasury Bill 99.753 0.56 % 4,987,655.56 0.00 4,987,655.56 0.00 0.56% Due 7/6/2017 Purchase 01/28/2017 261908107 77,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 77,000.00 0.00 77,000.00 0.00 Purchase 01/30/2017 261908107 1,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 1,000,000.00 0.00 1,000,000.00 0.00 Purchase 01/30/2017 912796LG2 10,000,000.00 US Treasury Bill 99.752 0.58 % 9,975,163.47 0.00 9,975,163.47 0.00 0.57% Due 7/6/2017 Purchase 01/31/2017 261908107 33,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.40 % 33,000,000.00 0.00 33,000,000.00 0.00 Purchase 01/31/2017 261908107 164,375.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.40 % 164,375.00 0.00 164,375.00 0.00 Purchase 01/31/2017 261908107 70,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.40 % 70,000.00 0.00 70,000.00 0.00 Purchase 01/31/2017 313385EX0 5,000,000.00 FHLB Discount Note 99.870 0.55 % 4,993,475.00 0.00 4,993,475.00 0.00 0.54% Due 4/28/2017 Purchase 01/31/2017 313397DK4 1,250,000.00 FHLMC Discount Note 99.929 0.51 % 1,249,114.58 0.00 1,249,114.58 0.00 0.5% Due 3/23/2017 Purchase 01/31/2017 3135G0S38 3,000,000.00 FNMA Note 99.819 2.04 % 2,994,570.00 3,666.67 2,998,236.67 0.00 2% Due 1/5/2022 Purchase 01/31/2017 369604BC6 1,000,000.00 General Electric Co Note 103.365 1.24 % 1,033,650.00 8,020.83 1,041,670.83 0.00 5.25% Due 12/6/2017 Purchase 01/31/2017 91159HHD5 65,000.00 US Bancorp Callable Note Cont 4/15/2017 100.110 1.10 % 65,071.50 226.42 65,297.92 0.00 1.65% Due 5/15/2017 Purchase 01/31/2017 912796KQ1 10,000,000.00 US Treasury Bill 99.916 0.47 % 9,991,595.14 0.00 9,991,595.14 0.00 0.47% Due 4/6/2017 Subtotal 120,350,687.68 120,316,892.35 21,145.69 120,338,038.04 0.00

TOTAL ACQUISITIONS 120,350,687.68 120,316,892.35 21,145.69 120,338,038.04 0.00

Chandler Asset Management - CONFIDENTIAL Page 13 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss DISPOSITIONS

Sale 01/18/2017 261908107 2,996,310.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.42 % 2,996,310.00 0.00 2,996,310.00 0.00 Sale 01/20/2017 261908107 5,990,782.17 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 5,990,782.17 0.00 5,990,782.17 0.00 Sale 01/23/2017 261908107 3,010,026.14 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 3,010,026.14 0.00 3,010,026.14 0.00 Sale 01/25/2017 261908107 678,022.88 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 678,022.88 0.00 678,022.88 0.00 Sale 01/27/2017 261908107 4,987,655.56 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 4,987,655.56 0.00 4,987,655.56 0.00 Sale 01/30/2017 261908107 9,975,163.47 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.39 % 9,975,163.47 0.00 9,975,163.47 0.00 Sale 01/31/2017 261908107 1,106,968.75 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.40 % 1,106,968.75 0.00 1,106,968.75 0.00 Sale 01/31/2017 261908107 2,998,236.67 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.42 % 2,998,236.67 0.00 2,998,236.67 0.00 Sale 01/31/2017 261908107 16,234,184.72 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.40 % 16,234,184.72 0.00 16,234,184.72 0.00 Subtotal 47,977,350.36 47,977,350.36 0.00 47,977,350.36 0.00

Paydown 01/09/2017 62888UAA8 11,109.35 NCUA Guaranteed Note CMO 2010-R2Due 100.000 11,109.35 363.16 11,472.51 0.00 11/6/2017 Paydown 01/17/2017 161571HH0 0.00 Chase CHAIT Pool #2016-A7 100.000 0.00 3,657.00 3,657.00 0.00 1.06% Due 9/16/2019 Paydown 01/17/2017 3133TCE95 1,480.15 FHLMC FSPC E3 A 100.000 1,480.15 111.94 1,592.09 0.00 2.892% Due 8/15/2032 Paydown 01/17/2017 31348SWZ3 25.62 FHLMC FH 786064 100.000 25.62 5.03 30.65 0.00 2.262% Due 1/1/2028 Paydown 01/17/2017 3837H4NX9 940.74 GNMA Pool# 2000-9 100.000 940.74 32.21 972.95 0.00 9.5% Due 2/16/2030 Paydown 01/17/2017 43814QAC2 0.00 Honda Auto Receivables 2016-2 A3 100.000 0.00 2,096.58 2,096.58 0.00 1.39% Due 4/15/2020 Paydown 01/17/2017 477877AD6 252,816.29 John Deere Owner Trust 2014-B A3 100.000 252,816.29 2,004.46 254,820.75 0.00 1.07% Due 11/15/2018 Paydown 01/17/2017 47788MAC4 0.00 John Deere Owner Trust 2016-A A3 100.000 0.00 2,742.66 2,742.66 0.00 1.36% Due 4/15/2020 Paydown 01/17/2017 47788NAB4 0.00 John Deere Owner Trust 2016-B A2 100.000 0.00 2,706.83 2,706.83 0.00 1.09% Due 2/15/2019 Paydown 01/17/2017 65478WAB1 0.00 Nissan Auto Receivables Owner 2016-C 100.000 0.00 1,859.13 1,859.13 0.00 A2A 1.07% Due 5/15/2019 Paydown 01/17/2017 89231MAC9 183,789.41 Toyota Auto Receivables Owner 2014-A 100.000 183,789.41 256.32 184,045.73 0.00 0.67% Due 12/15/2017 Paydown 01/17/2017 89231TAB6 163,607.47 Toyota Auto Receivables Owner 2015-C 100.000 163,607.47 426.64 164,034.11 0.00 0.92% Due 2/15/2018

Chandler Asset Management - CONFIDENTIAL Page 14 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss DISPOSITIONS

Paydown 01/17/2017 89236WAC2 228,898.92 Toyota Auto Receivables Owner 2015-A 100.000 228,898.92 2,691.06 231,589.98 0.00 1.12% Due 2/15/2019 Paydown 01/18/2017 43814GAC4 91,653.79 Honda Auto Receivables 2014-2 A3 100.000 91,653.79 344.74 91,998.53 0.00 0.77% Due 3/19/2018 Paydown 01/18/2017 43814NAB1 242,745.78 Honda Auto Receivables 2016-1 A2 100.000 242,745.78 1,700.29 244,446.07 0.00 1.01% Due 6/18/2018 Paydown 01/20/2017 36225CAZ9 214.65 GNMA Pool# G2 80023 100.000 214.65 42.51 257.16 0.00 2.816% Due 12/20/2026 Paydown 01/20/2017 36225CC20 240.70 GNMA Pool# G2 80088 100.000 240.70 52.62 293.32 0.00 2.817% Due 6/20/2027 Paydown 01/20/2017 36225CN28 445.14 GNMA Pool# G2 80408 100.000 445.14 147.61 592.75 0.00 2.691% Due 5/20/2030 Paydown 01/20/2017 36225CNM4 145.36 GNMA Pool# G2 80395 100.000 145.36 18.72 164.08 0.00 2.877% Due 4/20/2030 Paydown 01/20/2017 36225DCB8 1,170.95 GNMA Pool# G2 80965 100.000 1,170.95 154.44 1,325.39 0.00 2.31% Due 7/20/2034 Paydown 01/23/2017 43813JAC9 225,634.93 Honda Auto Receivables 2014-1 A3 100.000 225,634.93 152.07 225,787.00 0.00 0.67% Due 11/21/2017 Paydown 01/25/2017 03215PFN4 0.00 AMRESCO Residential Securities 1999-1 100.000 0.00 182.73 182.73 0.00 ADue 6/25/2029 Paydown 01/25/2017 31371NUC7 204.71 FNMA FN 257179 100.000 204.71 95.33 300.04 0.00 4.5% Due 4/1/2028 Paydown 01/25/2017 31376KT22 2,237.51 FNMA FN 357969 100.000 2,237.51 717.84 2,955.35 0.00 5% Due 9/1/2035 Paydown 01/25/2017 31381PDA3 609.98 FNMA FN 466397 100.000 609.98 1,053.42 1,663.40 0.00 3.4% Due 11/1/2020 Paydown 01/25/2017 3138EG6F6 507.07 FNMA FN AL0869 100.000 507.07 71.10 578.17 0.00 4.5% Due 6/1/2029 Paydown 01/25/2017 31394JY35 8,196.10 FHLMC FSPC T-58 2A 100.000 8,196.10 5,323.20 13,519.30 0.00 6.5% Due 9/25/2043 Paydown 01/25/2017 31397QRE0 9,504.73 FNMA FNR 2011-3 FA 100.000 9,504.73 405.14 9,909.87 0.00 0.832% Due 2/25/2041 Paydown 01/25/2017 31398VJ98 0.00 FHLMC FHMS K006 A2 100.000 0.00 3,188.25 3,188.25 0.00 4.251% Due 1/25/2020 Paydown 01/25/2017 31403DJZ3 5,005.84 FNMA Pool #745580 100.000 5,005.84 714.49 5,720.33 0.00 5% Due 6/1/2036 Paydown 01/25/2017 31403GXF4 27.79 FNMA Pool# FN 748678 100.000 27.79 21.63 49.42 0.00 5% Due 10/1/2033 Paydown 01/25/2017 31406PQY8 914.47 FNMA Pool# FN 815971 100.000 914.47 1,198.45 2,112.92 0.00 5% Due 3/1/2035

Chandler Asset Management - CONFIDENTIAL Page 15 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss DISPOSITIONS

Paydown 01/25/2017 31406XWT5 9,974.92 FNMA Pool# FN 823358 100.000 9,974.92 395.15 10,370.07 0.00 2.875% Due 2/1/2035 Paydown 01/25/2017 31407BXH7 551.00 FNMA Pool# FN 826080 100.000 551.00 129.11 680.11 0.00 5% Due 7/1/2035 Paydown 01/25/2017 31410F4V4 8,108.19 FNMA Pool# FN 888336 100.000 8,108.19 1,401.78 9,509.97 0.00 5% Due 7/1/2036 Paydown 01/25/2017 31417YAY3 651.05 FNMA Pool# FN MA0022 100.000 651.05 110.16 761.21 0.00 4.5% Due 4/1/2029 Paydown 01/25/2017 78445JAA5 1,549.55 SLMA 2008-9 ADue 4/25/2023 100.000 1,549.55 219.82 1,769.37 0.00 Paydown 01/27/2017 31396X3Q5 7,240.89 FNMA FNR 2007-114 A6Due 10/27/2037 100.000 7,240.89 19.41 7,260.30 0.00 Subtotal 1,460,203.05 1,460,203.05 36,813.03 1,497,016.08 0.00

Maturity 01/15/2017 912828A91 3,000,000.00 US Treasury Note 100.000 3,000,000.00 0.00 3,000,000.00 0.00 0.75% Due 1/15/2017 Maturity 01/20/2017 313385AV8 2,040,000.00 FHLB Discount Note 100.000 2,040,000.00 0.00 2,040,000.00 0.00 0.34% Due 1/20/2017 Maturity 01/20/2017 313397AV3 2,000,000.00 FHLMC Discount Note 100.000 2,000,000.00 0.00 2,000,000.00 0.00 0.47% Due 1/20/2017 Maturity 01/23/2017 89233GNP7 1,000,000.00 Toyota Motor Credit Discount CP 99.813 1,000,000.00 0.00 1,000,000.00 0.00 0.74% Due 1/23/2017 Maturity 01/25/2017 02665JNR7 900,000.00 American Honda Corp Discount CP 99.933 900,000.00 0.00 900,000.00 0.00 0.73% Due 1/25/2017 Maturity 01/25/2017 313385BA3 1,000,000.00 FHLB Discount Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 0.356% Due 1/25/2017 Maturity 01/25/2017 313589BA0 3,000,000.00 FNMA Discount Note 100.000 3,000,000.00 0.00 3,000,000.00 0.00 0.41% Due 1/25/2017 Maturity 01/26/2017 912796KE8 5,250,000.00 US Treasury Bill 100.000 5,250,000.00 0.00 5,250,000.00 0.00 0.347% Due 1/26/2017 Maturity 01/27/2017 313385BC9 15,000,000.00 FHLB Discount Note 100.000 15,000,000.00 0.00 15,000,000.00 0.00 0.42% Due 1/27/2017 Maturity 01/27/2017 3137EADU0 1,000,000.00 FHLMC Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 0.5% Due 1/27/2017 Maturity 01/27/2017 69372ANT5 2,000,000.00 Paccar Financial Discount CP 99.932 2,000,000.00 0.00 2,000,000.00 0.00 0.7% Due 1/27/2017 Maturity 01/30/2017 313385BF2 1,000,000.00 FHLB Discount Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 0.5% Due 1/30/2017 Maturity 01/31/2017 313397BG5 17,000,000.00 FHLMC Discount Note 100.000 17,000,000.00 0.00 17,000,000.00 0.00 0.47% Due 1/31/2017

Chandler Asset Management - CONFIDENTIAL Page 16 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss DISPOSITIONS

Maturity 01/31/2017 912828SC5 16,000,000.00 US Treasury Note 100.000 16,000,000.00 0.00 16,000,000.00 0.00 0.875% Due 1/31/2017 Subtotal 70,190,000.00 70,190,000.00 0.00 70,190,000.00 0.00

Security 01/31/2017 261908107 28,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 28,000,000.00 0.00 28,000,000.00 0.00 Withdrawal Security 01/31/2017 912828WU0 15,080.00 US Treasury Inflation Index Note 99.678 15,080.00 0.00 15,080.00 121.53 Withdrawal 0.125% Due 7/15/2024 Subtotal 28,015,080.00 28,015,080.00 0.00 28,015,080.00 121.53

TOTAL DISPOSITIONS 147,642,633.41 147,642,633.41 36,813.03 147,679,446.44 121.53

OTHER TRANSACTIONS

Interest 01/02/2017 073902CD8 3,200,000.00 Bear Stearns Note 0.000 74,400.00 0.00 74,400.00 0.00 4.65% Due 7/2/2018 Interest 01/09/2017 36962G7M0 5,000,000.00 General Electric Capital Corp Callable Note 0.000 55,000.00 0.00 55,000.00 0.00 1X 12/9/2019 2.2% Due 1/9/2020 Interest 01/12/2017 3137EADN6 5,000,000.00 FHLMC Note 0.000 18,750.00 0.00 18,750.00 0.00 0.75% Due 1/12/2018 Interest 01/14/2017 3137EADV8 5,000,000.00 FHLMC Note 0.000 18,750.00 0.00 18,750.00 0.00 0.75% Due 7/14/2017 Interest 01/14/2017 4581X0CG1 5,000,000.00 Inter-American Dev Bank Note 0.000 25,000.00 0.00 25,000.00 0.00 1% Due 7/14/2017 Interest 01/15/2017 912828A91 3,000,000.00 US Treasury Note 0.000 11,250.00 0.00 11,250.00 0.00 0.75% Due 1/15/2017 Interest 01/15/2017 912828WU0 10,586,784.00 US Treasury Inflation Index Note 0.000 6,612.58 0.00 6,612.58 0.00 0.125% Due 7/15/2024 Interest 01/16/2017 40428HPH9 3,000,000.00 HSBC USA Inc Note 0.000 24,375.00 0.00 24,375.00 0.00 1.625% Due 1/16/2018 Interest 01/18/2017 38141GFG4 600,000.00 Goldman Sachs Group Inc Note 0.000 17,850.00 0.00 17,850.00 0.00 5.95% Due 1/18/2018 Interest 01/20/2017 45950KCJ7 2,500,000.00 International Finance Corp Note 0.000 14,075.00 0.00 14,075.00 0.00 1.125% Due 7/20/2021 Interest 01/22/2017 94974BGM6 5,000,000.00 Wells Fargo Corp Note 0.000 65,000.00 0.00 65,000.00 0.00 2.6% Due 7/22/2020

Chandler Asset Management - CONFIDENTIAL Page 17 Execution Time: 2/8/2017 2:51:07 PM Orange County Sanitation District Consolidated Transaction Ledger Account #10283 12/31/16 Thru 1/31/17

Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss OTHER TRANSACTIONS

Interest 01/23/2017 46625HKA7 2,000,000.00 JP Morgan Chase Callable Note Cont 0.000 22,500.00 0.00 22,500.00 0.00 12/23/2019 2.25% Due 1/23/2020 Interest 01/27/2017 3137EADU0 1,000,000.00 FHLMC Note 0.000 2,500.00 0.00 2,500.00 0.00 0.5% Due 1/27/2017 Interest 01/28/2017 61747WAL3 2,800,000.00 Morgan Stanley Note 0.000 77,000.00 0.00 77,000.00 0.00 5.5% Due 7/28/2021 Interest 01/31/2017 912828B33 11,000,000.00 US Treasury Note 0.000 82,500.00 0.00 82,500.00 0.00 1.5% Due 1/31/2019 Interest 01/31/2017 912828N89 6,000,000.00 US Treasury Note 0.000 41,250.00 0.00 41,250.00 0.00 1.375% Due 1/31/2021 Interest 01/31/2017 912828SC5 16,000,000.00 US Treasury Note 0.000 70,000.00 0.00 70,000.00 0.00 0.875% Due 1/31/2017 Interest 01/31/2017 912828WW6 5,000,000.00 US Treasury Note 0.000 40,625.00 0.00 40,625.00 0.00 1.625% Due 7/31/2019 Subtotal 91,686,784.00 667,437.58 0.00 667,437.58 0.00

Dividend 01/03/2017 261908107 6,205,492.70 Dreyfus Trsy/Agcy Cash Management 521 0.000 1.53 0.00 1.53 0.00 Dividend 01/04/2017 261908107 5,643,509.21 Dreyfus Trsy/Agcy Cash Management 521 0.000 2,530.74 0.00 2,530.74 0.00 Dividend 01/04/2017 261908107 6,205,492.70 Dreyfus Trsy/Agcy Cash Management 521 0.000 3,701.75 0.00 3,701.75 0.00 Subtotal 18,054,494.61 6,234.02 0.00 6,234.02 0.00

TOTAL OTHER TRANSACTIONS 109,741,278.61 673,671.60 0.00 673,671.60 0.00

Chandler Asset Management - CONFIDENTIAL Page 18 Execution Time: 2/8/2017 2:51:07 PM Meeting Date To Bd. of Dir. OPERATIONS COMMITTEE 02/01/17 02/22/17 Item Number Item Number AGENDA REPORT 3 7 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance

SUBJECT: AGREEMENT WITH THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE MEMBER AGENCIES FOR COST-SHARING REIMBURSEMENT

GENERAL MANAGER'S RECOMMENDATION

Adopt Resolution No. OCSD 17-02 entitled, “A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the General Manager to enter into an agreement with the California Alliance for Sewer System Excellence Member Agencies for cost-sharing reimbursement for approved agency-administered projects.”

BACKGROUND

In 2011, the Sacramento Area Sewer District (SASD) led the formation of the California Alliance for Sewer System Excellence (CASSE). CASSE envisioned a collaborative effort of interested agencies to reduce sanitary sewer overflows, protect surface waters, help further develop the workforce, and drive performance up and costs down through development and implementation of sewer collection system best practices.

CASSE currently consists of approximately one third of the largest sewer agencies in California, which all manage, operate, and maintain public sewers. The Orange County Sanitation District (Sanitation District) is a co-founder of CASSE and has been a leader in the organization since 2012. CASSE is not a legal entity and is not funded independently; instead, receives voluntary labor from employees of member agencies. CASSE’s capacity to drive industry improvements is limited due to a lack of resources. In an effort to complete projects to the mutual benefit of all member agencies, CASSE’s member agencies desire to engage consultant assistance to implement and share in the costs of efforts necessary for realizing the goals of CASSE.

The cost-sharing reimbursement agreement provided will allow CASSE to engage consultants, contractors, and other resources to provide support for CASSE studies or other activities of mutual interest to the Sanitation District. SASD will lead the effort on behalf of CASSE and the Sanitation District will only be responsible for projects it approves. The Sanitation District may opt out of any CASSE project prior to the start of the project.

The Sanitation District must enter into the cost sharing reimbursement program to participate in studies and share resulting information collected by CASSE. The shared

Page 1 of 3 project cost is based on sewer size. The Sanitation District’s share should not exceed $6,000 per project. The Sanitation District is not obligated to participate in this effort, but participation ensures the Sanitation District access to shared information and work product at a reduced rate. By adopting the resolution, the Board authorizes the General Manager to enter into the cost-sharing reimbursement agreement and determine which CASSE projects to approve.

RELEVANT STANDARDS

• Maintain collaborative and cooperative relationships with neighboring agencies • Ensure the public’s money is wisely spent • Use all practical and effective means for recovering wastewater for reuse

PROBLEM

The Sanitation District may not participate in CASSE member agencies mutually beneficial projects without the Board adopting the proposed resolution.

PROPOSED SOLUTION

Adopt a resolution directing the General Manager to enter into a cost-sharing reimbursement agreement with the CASSE member agencies and to determine which projects to approve.

TIMING CONCERNS

Failure to adopt the resolution will delay Sanitation District participation in and benefit from CASSE projects.

RAMIFICATIONS OF NOT TAKING ACTION

Failure to enter into the agreement will preclude the Sanitation District from participating in CASSE projects.

FINANCIAL CONSIDERATIONS

Based on the size of the Sanitation District, the Sanitation District’s share of the cost reimbursement per CASSE project should not exceed $6,000. The Sanitation District will not exceed the amounts established by Purchasing Ordinance No. OCSD-47. Funds will be allocated from the FY16-17 Annual Budget (Section 6, page 76), Professional Services.

Page 2 of 3 ATTACHMENT The following attachment(s) are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

• Resolution No. OCSD 17-02 • Cost-Sharing Reimbursement Agreement

Page 3 of 3

RESOLUTION NO. OCSD 17-02

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE GENERAL MANAGER TO ENTER INTO AN AGREEMENT WITH THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE MEMBER AGENCIES FOR COST-SHARING REIMBURSEMENT FOR APPROVED AGENCY-ADMINISTERED PROJECTS.

The Board of Directors of the Orange County Sanitation District ("District") does hereby find:

WHEREAS, in 2011, the Sacramento Area Sewer District (SASD) led the formation of the California Alliance for Sewer System Excellence (CASSE) with a vision to reduce sanitary sewer overflows, protect surface waters, help further develop the workforce, and to drive performance up and costs down through development and implementation of sewer collection system best practices; and

WHEREAS, CASSE is large group consisting of approximately a third of the largest sewer agencies in California, that manage, operate, and maintain public sewers; and

WHEREAS, the District is a co-founder of CASSE and has been a leader in the organization since 2012; and

WHEREAS, CASSE’s capacity to drive industry improvements is limited due to a lack of resources since it is not a legal entity and has no funding, and thus, its output is a product of volunteer work by employees of its member agencies; and

WHEREAS, CASSE’s member agencies desire to engage consultant assistance to implement and share in the costs of efforts necessary for realizing goals of CASSE; and

WHEREAS, a cost-sharing reimbursement agreement will allow CASSE to engage consultants, contractors, and other resources for providing support for CASSE studies or other activities of mutual interest. SASD will lead the effort on behalf of CASSE and the District will only be responsible for projects that may benefit the District and may opt out of any CASSE project prior; and

WHEREAS, as a CASSE member agency, the District must agree to participate in the cost sharing reimbursement program in which the shared project cost is based on sewer size, and the District has the opportunity to approve of or opt out of specific projects prior to committing funds which should not exceed $6,000 per project; and

1204038.1 OCSD 17-02-1 WHEREAS, the District is not obligated to participate in this effort but participation ensures the District has access to shared information and work product at a reduced rate.

NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE, AND ORDER:

Section 1: The above recitals are true and correct and are incorporated herein by reference.

Section 2: That the General Manager, or his designee, be, and is hereby authorized and directed, to enter into an agreement with the California Alliance for Sewer System Excellence member agencies for cost-sharing reimbursement for agency-administered projects.

Section 3: That the General Manager, or his designee, be, and is hereby authorized and directed to review the projects proposed by CASSE and approve of projects which may be beneficial to the Orange County Sanitation District and update the Board annually regarding the status of all CASSE projects.

Section 4: The Clerk of the Board shall certify to the adoption of this Resolution.

PASSED AND ADOPTED at a regular meeting of the Board of Directors held February 22, 2017.

______Gregory C. Sebourn Board Chairman Orange County Sanitation District

ATTEST:

______Kelly A. Lore Clerk of the Board Orange County Sanitation District

1204038.1 OCSD 17-02-2 STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE )

I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 17-02 was passed and adopted at a regular meeting of said Board on the 22nd day of February 2017, by the following vote, to wit:

AYES: NOES: ABSTENTIONS: ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 22nd day of February 2017.

Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District

1204038.1 OCSD 17-02-3 Contract No. 80000079

SACRAMENTO AREA SEWER DISTRICT

COST-SHARING REIMBURSEMENT AGREEMENT WITH MEMBER AGENCIES OF THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE

THIS AGREEMENT is made and entered into on this day of , 2017 by and between signatory members of the CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE (“CASSE”), a California inter-municipal wastewater collection alliance, (collectively “AGENCIES” or “PARTIES,” individually “AGENCY” or “PARTY”). RECITALS

WHEREAS, CASSE was formed to supply expertise and facilitate collaboration to improve the efficiency of California wastewater collection utilities, as well as collaborate on projects of mutual interest, share information for the protection of water quality, and improve wastewater collection and conveyance system maintenance and operation; and

WHEREAS, wastewater collection utilities desiring to join CASSE as member agencies must meet membership criteria to obtain membership privileges; and

WHEREAS, the AGENCIES desire to implement a contract administration service as part of CASSE membership privileges for AGENCY collaboration on projects of mutual interest and benefit; and

WHEREAS, the SACRAMENTO AREA SEWER DISTRICT, a county sanitation district pursuant to and operating under the authority of the County Sanitation District Act, commencing at Health and Safety Code section 4700 (“SASD”) offers to lead, facilitate, and administer solicitation, acquisition, and financing efforts for consulting service projects that may benefit AGENCIES; and

WHEREAS, AGENCIES agree that funding for projects of mutual interest and the associated contract administration service should be equitably shared by the AGENCIES choosing to participate on a project (“PARTICIPATING AGENCIES”); and

WHEREAS, the AGENCIES desire to enter into this Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, the AGENCIES agree as follows:

1. PURPOSE SASD will provide administrative services on behalf of AGENCIES, and AGENCIES may participate in mutual interest projects as described in Exhibit A, which is attached hereto and incorporated herein.

Page 1 of 7 Contract No. 80000079

2. TERM This Agreement shall be effective and commence as of the date first written above, and shall end on June 30, 2020.

3. NOTICE Any notice, demand, request, consent, or approval that any party hereto may or is required to give the other pursuant to this Agreement shall be in writing and shall be either personally delivered or sent by mail, addressed as follows:

TO SASD: TO NON-SASD AGENCIES:

Sacramento Area Sewer District SEE CONTACT INFORMATION 8521 Laguna Station Rd. FOUND ON SIGNATURE PAGES Elk Grove, CA 95758 Attn: Contracts Payment Desk

Any party may change the address to which subsequent notice and/or other communications can be sent by giving written notice designating a change of address to the other party, which shall be effective upon receipt.

4. GOVERNING LAWS AND JURISDICTION This Agreement shall be deemed to have been executed and to be performed within the State of California and shall be construed and governed by the internal laws of the State of California. Any legal proceedings arising out of or relating to this Agreement shall be brought in Sacramento County, California.

5. OWNERSHIP OF WORK PRODUCT All technical data, evaluations, plans, specifications, reports, documents, or other work products obtained through projects managed pursuant to this Agreement shall be the exclusive property of SASD and each project’s respective PARTICIPATING AGENCIES. AGENCIES not participating in a project will have no rights in the development of the project’s work product or deliverables. PARTICIPATING AGENCIES may retain copies thereof for their files and internal use, and may share these copies with other AGENCIES who did not participate. Publication, by any AGENCY, for monetary gain of any information directly derived from work performed pursuant to this Agreement must first be mutually approved in writing by the project’s PARTICIPATING AGENCIES.

6. INSURANCE Each AGENCY, at its sole cost and expense, shall carry insurance--or self-insure --its activities in connection with this Agreement, and obtain, keep in force, and maintain insurance or equivalent programs of self-insurance for general liability, workers compensation, property, professional liability, and business automobile liability adequate to cover its potential liabilities hereunder. Each party agrees to provide the other thirty (30) days advance written notice of any cancellation, termination, or lapse of any of the insurance or self-insurance coverages. Failure to maintain insurance as required in this Agreement is a material breach of contract and is grounds for termination of the Agreement. Page 2 of 7 Contract No. 80000079

7. INDEMNIFICATION To the fullest extent permitted by law, each of the AGENCIES shall indemnify, defend, and hold harmless each of the other AGENCIES, their respective governing boards, officers, directors, officials, employees, and authorized volunteers and agents from and against any and all claims, demands, actions, losses, liabilities, damages, and all expenses and costs incidental thereto (collectively “Claims”), including cost of defense, settlement, arbitration, and reasonable attorneys' fees resulting from injuries to or death of persons, including but not limited to employees of either AGENCY hereto, and damage to or destruction of property, or loss of use thereof, including but not limited to the property of any AGENCY hereto, arising out of, pertaining to, or resulting from the alleged or actual negligent acts or omissions of the respective governing boards, officers, directors, officials, employees, volunteers, agents, or contractors of the indemnifying AGENCY.

It is the intention of the AGENCIES that the provisions of this indemnity be interpreted to impose on each AGENCY responsibility to the other for the negligent acts and omissions of their governing boards, officers, directors, officials, employees, volunteers, agents, or contractors. It is also the intention of the AGENCIES that where comparative fault is determined to have been contributory principles of comparative fault will be followed, and each AGENCY shall bear the proportionate cost of any Claims attributable to the fault of that AGENCY, its governing board, officers, directors, officials, employees, volunteers, agents, or contractors.

This indemnity shall not be limited by the types and amounts of insurance or self- insurance maintained by the AGENCIES.

Nothing in this Indemnity shall be construed to create any duty to, any standard of care with reference to, or any liability or obligation, contractual or otherwise, to any third party.

The provisions of this Indemnity shall survive the expiration or termination of the Agreement.

8. COST SHARING, COMPENSATION AND PAYMENT OF INVOICES SASD will submit project reimbursement invoices on a quarterly basis and at the end of the project to PARTICIPATING AGENCIES according to the weighted cost sharing formula as described in Exhibit A. PARTICIPATING AGENCIES payments to SASD must be made within 90 days of invoice date. Compensation by each AGENCY per project shall be limited to the Per Project Maximum Payment Amount as set forth in Exhibit B, or Exhibit B as modified.

9. PROJECT PROPOSALS SASD will circulate project proposals to the AGENCIES for review, discussion, and comment. AGENCIES interested in participating in a project will respond timely and comprehensively to project scope development. AGENCIES not interested in participating will indicate such at the earliest opportunity.

Page 3 of 7 Contract No. 80000079

10. AMENDMENT AND WAIVER Except as provided herein, no alteration, amendment, variation, or waiver of the terms of this Agreement shall be valid unless made in writing and signed by all AGENCIES. Modifications to an AGENCY’S Per Project Maximum Payment Amount as set forth in Exhibit B shall be valid if made in writing and signed by the AGENCY requesting the change and SASD. If such an amendment is made, an amended Exhibit B shall be provided to the PARTIES. Addition of a CASSE member as a party to this Agreement shall be valid if made in writing and signed by SASD and the joining CASSE member. Waiver by any party of any default, breach or condition precedent shall not be construed as a waiver of any other default, breach or condition precedent, or any other right hereunder.

11. SUCCESSORS This Agreement shall bind the successors of the AGENCIES in the same manner as if they were expressly named.

12. INTERPRETATION This Agreement shall be deemed to have been prepared equally by all PARTIES, and the Agreement and its individual provisions shall not be construed or interpreted more favorably for any one party on the basis that another party prepared it.

13. DISPUTES In the event of any dispute arising out of or relating to this Agreement, the PARTIES shall attempt, in good faith, to promptly resolve the dispute mutually between themselves. Pending resolution of any such dispute, AGENCIES shall continue without delay to carry out all their responsibilities under this Agreement unless the Agreement is otherwise terminated in accordance with the Termination provisions herein. SASD shall not be required to make payments for any services that are the subject of a dispute resolution process until such dispute has been mutually resolved by the PARTIES. If the dispute cannot be resolved within 15 calendar days of initiating such negotiations or such other time period as may be mutually agreed to by the PARTIES in writing, any PARTY may pursue its available legal and equitable remedies, pursuant to the laws of the State of California. Nothing in this Agreement or provision shall constitute a waiver of any of the government claim filing requirements set forth in Title 1, Division 3.6, of the California Government Code or as otherwise set forth in local, state and federal law.

14. TERMINATION A. Any AGENCY may terminate their participation in this Agreement without cause upon fifteen (15) days written notice to the other PARTIES. Notice shall be deemed served on the date of mailing. If notice of termination for cause is given by SASD to any AGENCY and it is later determined that the AGENCY was not in default or the default was excusable, then the notice of termination shall be deemed to have been given without cause pursuant to this paragraph (A).

B. Any AGENCY may terminate or amend their participation in this Agreement immediately upon giving written notice to the AGENCIES, 1) if advised that funds are not available from external sources for this Agreement or any portion thereof, including if distribution of such funds to SASD is suspended or delayed; Page 4 of 7 Contract No. 80000079

2) if funds for the services and/or programs provided pursuant to this Agreement are not appropriated by the State; 3) if funds in the AGENCY 'S yearly proposed and/or final budget are not appropriated for this Agreement or any portion thereof; or 4) if funds that were previously appropriated for this Agreement are reduced, eliminated, and/or re-allocated by the AGENCY as a result of mid-year budget reductions.

C. If this Agreement is terminated by SASD or any AGENCY under paragraph (A) or (B) above SASD shall not incur any expenses relating to the terminating AGENCY under this Agreement after notice of termination and shall cancel any outstanding expenses and obligations to a third party attributable to the terminating AGENCY that SASD can legally cancel.

D. If this Agreement is terminated under paragraphs (A) or (B), above, SASD shall be reimbursed for authorized and approved services performed prior to the termination date in accordance with the provisions of the Cost Sharing, Compensation and Payment of Invoices provision of this Agreement.

15. SEVERABILITY If any term or condition of this Agreement or the application thereof to any person(s) or circumstance is held invalid or unenforceable, such invalidity or unenforceability shall not affect other terms, conditions, or applications which can be given effect without the invalid term, condition, or application; to this end the terms and conditions of this Agreement are declared severable.

16. FORCE MAJEURE No AGENCY shall be liable or responsible for delays or failures in performance resulting from events beyond the reasonable control of such party and without fault or negligence of such PARTY. Such events shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, acts of government (excepting acts of the PARTIES to this Agreement), fire, power failures, nuclear accidents, earthquakes, unusually severe weather, acts of terrorism, or other disasters, whether or not similar to the foregoing, and acts or omissions or failure to cooperate of any PARTY or third parties (except as otherwise specifically provided herein).

17. SURVIVAL OF TERMS All services performed and deliverables provided pursuant to this Agreement are subject to all of the terms, conditions, price discounts and rates set forth herein, notwithstanding the expiration of the initial term of this Agreement or any extension thereof. Further, the terms, conditions and warranties contained in this Agreement that by their sense and context are intended to survive the completion of the performance, cancellation or termination of this Agreement shall so survive.

18. DUPLICATE COUNTERPARTS This Agreement may be executed in multiple counterparts. The Agreement shall be deemed executed when it has been signed by all AGENCIES. Any CASSE members that desire to opt in as participants to this AGREEMENT may do so in the future by:

Page 5 of 7 Contract No. 80000079

 Obtaining concurrence of SASD representative  Providing SASD a resolution of the AGENCY’S governing body authorizing inclusion to this Agreement  Signature to this AGREEMENT by an authorized representative of the AGENCY

19. AUTHORITY TO EXECUTE Each person executing this Agreement represents and warrants that he or she is duly authorized and has legal authority to execute and deliver this Agreement for or on behalf of the PARTIES to this Agreement. Each PARTY represents and warrants to the other that the execution and delivery of the Agreement and the performance of such PARTY’S obligations hereunder have been duly authorized.

(SIGNATURE PAGE FOLLOWS)

Page 6 of 7 Contract No. 80000079 IN WITNESS WHEREOF, the PARTIES hereto have caused this Agreement to be duly executed as of the day and year first written above.

SACRAMENTO AREA SEWER AGENCY, a California municipal DISTRICT, a county sanitation district wastewater collection agency pursuant to and operating under the authority of the County Sanitation District Act, commencing at Health and Safety Code section 4700

By: ______By: ______Prabhakar Somavarapu, District Engineer James D. Herberg, General Manager Orange County Sanitation District

Attest: ______Date: ______Kelly A. Lore, Clerk of the Board Orange County Sanitation District Agreement Approved by the Board of Directors with Authority Delegated to the District Engineer to execute the Agreement on behalf of Date: ______SASD.

Agenda Date: ______

Item Number: ______

Resolution No.: ______

By: ______Date: ______Sarah Britton District Counsel

Prepared by: ______Katherine E. Manne, Senior Contract Services Officer Internal Services Department Sanitation Districts Agency Phone: (916) 876-6074

Page 7 of 7 Contract No. 80000079

EXHIBIT A to COST-SHARING REIMBURSEMENT AGREEMENT WITH MEMBER AGENCIES OF THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE

PROJECT ADMINISTRATION AND COST-SHARING APPROACH

A. Initiation 1. Any AGENCY or group of AGENCIES can propose a project. 2. AGENCIES prepare and submit a description of the proposed project and estimated costs to SASD. 3. SASD reviews and circulates the project proposal to all AGENCIES for comment. 4. Once comments to the project proposal are received and reviewed, SASD will assist the proposing AGENCY or group of AGENCIES with finalizing the project proposal and cost estimate.

B. Approval and Funding 1. CASSE chairperson (CHAIR) will solicit AGENCIES to participate in the proposed project’s cost-sharing by sending out the final project proposal and a letter of intent. 2. All AGENCIES interested in being PARTICIPATING AGENCIES will have fifteen (15) business days to sign and return the Letter of Intent for project participation. The letter may only be signed by a representative of AGENCY authorized to do so. 3. CHAIR will issue a final Cost Share Summary Sheet to each AGENCY returning a Letter of Intent indicating each interested AGENCY’S percentage of estimated costs. Funding percentages are based on methodology described in Exhibit C. 4. Each interested AGENCY has fifteen (15) business days to sign the final Cost Share Summary Sheet (“Sheet”) and return such to SASD. The Sheet may only be signed by a representative of AGENCY authorized to do so for the estimated cost share amount. SASD may request documents supporting the AGENCY representative’s authority to commit such funds. The signed sheet commits each participating AGENCY to fund the indicated percentage of the total project costs, including administrative fees paid to SASD of three percent (3%) of the final project costs. Those AGENCIES executing the Cost Share Summary Sheet are known as PARTICIPATING AGENCIES. 5. In the event an Agency terminates the agreement due to funding constraints as specified by Article 14 – Termination, Section A or B, the cost-sharing formula will be applied for re-distribution of un-invoiced costs to remaining Participating Agencies on any given project impacted by the termination. 6. The project next moves to the Procurement Phase. Contract No. 80000079

C. Procurement 1. PARTICIPATING AGENCIES assign a team to develop Request for Proposals (RFP). When using an existing contract the team negotiates the scope of work and fee with the consultant, and then the project moves to the Management Phase. 2. SASD releases the RFP once agreed upon by PARTICIPATING AGENCIES. Responses must be in electronic format so they can be reviewed remotely. The PARTICIPATING AGENCY team reviews proposals and selects a winning consultant. 3. PARTICIPATING AGENCIES negotiate a proposed contract with the consultant. 4. SASD secures SASD Board of Directors approval of consultant agreement. 5. The Project next moves to the Management Phase.

D. Management 1. As part of its contract administration duties, SASD will supply the Project Manager; other tasks may be assigned by other PARTICIPATING AGENCIES. 2. Project decisions will be made by the PARTICIPATING AGENCIES. SASD will then provide written direction to the Consultant. 3. Changes in scope of work, schedule, and cost will be agreed upon by the PARTICIPATING AGENCIES. Decision-making will be done by consensus when possible. If the PARTICIPATING AGENCIES are unable to come to consensus the decision will be made by majority vote. 4. SASD will pay Consultant invoices as required by the Consultant agreement. 5. SASD will prepare quarterly billing and invoice each PARTICIPATING AGENCY their fair share of project costs to date plus the administrative fee. 6. Upon project completion and receipt of final invoice from Consultant, SASD will prepare final billing and invoice each PARTICIPATING AGENCY any remaining fair share of project costs and the administrative fee.

E. Cost-sharing Methodology

1. PARTICIPATING AGENCIES are assigned points as follows:

Size Micro Small Medium Large Mega Miles of Pipe 0-19 20-199 200-999 1,000-2,999 ≥ 3,000 (including laterals) Cost share 1 10 60 200 500 points

2. The sum of all PARTICIPATING AGENCIES’ points is totaled. Each PARTICIPATING AGENCY’S project cost share percentage is calculated by dividing that PARTICIPATING AGENCY’S points by the total number of points for all PARTICPATING AGENCIES. Contract No. 80000079

3. The same methodology is used to calculate each PARTICIPATING AGENCY’S share of the administrative fee. Please refer to Exhibit C for an example of the Project Cost Sharing Worksheet. Contract No. 80000079

EXHIBIT B to COST-SHARING REIMBURSEMENT AGREEMENT WITH MEMBER AGENCIES OF THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE

PER PROJECT MAXIMUM PAYMENT AMOUNT

Except as otherwise provided herein, each AGENCY, utilizing the size category identified by calculating its miles of AGENCY pipe in Exhibit A , is authorized to sign and return a Letter of Intent and a Cost Share Summary Sheet, or amendments thereto, as a PARTICIPATING AGENCY for a project in an amount not to exceed:

Size Per Project Maximum Payment Amount Micro $1,000 Small $1,000 Medium $6,000 Large $20,000 Mega $50,000 EXHIBIT C to COST-SHARING REIMBURSEMENT AGREEMENT WITH MEMBER AGENCIES OF THE CALIFORNIA ALLIANCE FOR SEWER SYSTEM EXCELLENCE

EXAMPLE PROJECT COST SHARING SHEET

Project Name: Example 1 Admin fee % 3% Estimated Project Cost: $ 95,000.00 Admin fee $ 2,850

Size Participant? % Cost Share CASSE Agencies Factor 1=yes/0=no Points Share Project Admin Total Mega (>= 3,000 miles) 500 Agency 1 500 1 500 31.43% $ 29,855 $ 896 $ 30,751 Agency 2 500 0 0 0.00% $ - $ - $ - Agency 3 500 1 500 31.43% $ 29,855 $ 896 $ 30,751 Large (1,000-2,999 miles) 200 Agency 4 200 0 0 0.00% $ - $ - $ - Agency 5 200 0 0 0.00% $ - $ - $ - Agency 6 200 0 0 0.00% $ - $ - $ - Agency 7 200 1 200 12.57% $ 11,942 $ 358 $ 12,300 Agency 8 200 0 0 0.00% $ - $ - $ - Agency 9 200 0 0 0.00% $ - $ - $ - Agency 10 200 1 200 12.57% $ 11,942 $ 358 $ 12,300 Medium (200-999 miles) 60 Agency 11 60 0 0 0.00% $ - $ - $ - Agency 12 60 1 60 3.77% $ 3,583 $ 107 $ 3,690 Agency 13 60 0 0 0.00% $ - $ - $ - Agency 14 60 0 0 0.00% $ - $ - $ - Agency 15 60 0 0 0.00% $ - $ - $ - Agency 16 60 1 60 3.77% $ 3,583 $ 107 $ 3,690 Agency 17 60 0 0 0.00% $ - $ - $ - Agency 18 60 0 0 0.00% $ - $ - $ - Agency 19 60 0 0 0.00% $ - $ - $ - Agency 20 60 1 60 3.77% $ 3,583 $ 107 $ 3,690 Agency 21 60 0 0 0.00% $ - $ - $ - Agency 22 60 0 0 0.00% $ - $ - $ - Small (20-199 miles) 10 Agency 23 10 0 0 0.00% $ - $ - $ - Agency 24 10 1 10 0.63% $ 597 $ 18 $ 615 Micro (0-19 miles) 1 Agency 25 1 1 1 0.06% $ 60 $ 2 $ 62

Totals 1591 100.00% $ 95,000 $ 2,850 $ 97,850 Meeting Date To Bd. of Dir. OPERATIONS COMMITTEE 02/01/17 02/22/17 Item Number Item Number AGENDA REPORT 4 8 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering

SUBJECT: SLUDGE DEWATERING AND ODOR CONTROL AT PLANT NO. 1, PROJECT NO. P1-101

GENERAL MANAGER'S RECOMMENDATION

Approve a contingency increase of $714,000 (10%) to the Professional Consultant Services Agreement with HDR Engineering, Inc. to provide construction support services for Sludge Dewatering and Odor Control at Plant No. 1, Project No. P1-101, for a total contingency amount of $1,285,200 (18%).

BACKGROUND

Sludge Dewatering and Odor Control at Plant No. 1, Project No. P1-101, replaces existing solids and dewatering odor control systems and installs sludge thickening systems at the Orange County Sanitation District (Sanitation District) Plant No. 1. The objectives of the project include the following:

1. Additional solids handling capacity to support expansion of the Ground Water Replenishment System (GWRS).

2. Replacement of aging sludge dewatering facilities built in the late 1970s and early 1980s.

3. Reduce annual biosolids management costs by $3.6 milion by reducing biosolids water content.

4. Improve sludge thickening to avoid the need to construct new digesters.

HDR Engineering, Inc. was awarded a Professional Consultant Services Agreement for engineering support services during construction, including reviewing contractor submittals, responding to requests for information, preparing design modifications, and providing other services needed of the original design firm. This support is essential for successful completion of the project.

At the beginning of the project, based on new equipment cost information, a decision was made to change the type of equipment used for biosolids conveyance that substantially improved reliability and reduced maintenance requirements. This change, however, consumed all but $35,595 of the original $571,200 Board-authorized consultant contingency.

Page 1 of 3

When awarded, construction was expected to last four years. Due to changes during construction, and a longer than anticipated commissioning period, construction is now anticipated to last almost six years. This longer duration substantially increases the consultant’s level of effort for construction-support services.

The complexity of the project has also resulted in significantly more requests for information and design changes than originally anticipated. This project is installing the most complex electromechanical system at the Sanitation District and includes sludge conveyance, centrifuge operation, biosolids conveyance, and truck loading upgrades.

RELEVANT STANDARDS

• Sound engineering and accounting practices, complying with local, state, and federal laws

PROBLEM

There is insufficient Consultant contract contingency to fund the anticipated engineering support services during construction.

PROPOSED SOLUTION

Increase the Consultant contract contingency.

TIMING CONCERNS

Construction is still ongoing at the new thickening and dewatering facility, and commissioning activities have started. To complete all remaining work and address any unknown conditions that arise, the contingency needs to be increased such that design clarifications can be addressed timely and the work can progress as scheduled without delay to the project.

RAMIFICATIONS OF NOT TAKING ACTION

The current contingency is insufficient to cover the projected costs for Consultant support needed to complete the project. Without the additional funds, construction and commissioning activities would be severely hampered and project delays would be incurred.

PRIOR COMMITTEE/BOARD ACTIONS

November 2011 - Authorized the General Manager to negotiate a Professional Consultant Services Agreement with HDR Engineering, Inc. for engineering support services during construction of Project No. P1-101, Sludge Dewatering and Odor Control at Plant No. 1.

April 2012 – Approved a Professional Consultant Services Agreement with HDR Engineering, Inc. to provide bid and construction support services for Sludge Dewatering and Odor Control at Plant No. 1, Project No. P1-101, for an amount not to exceed $7,140,000; and approved a contingency of $571,200 (8%).

Page 2 of 3 ADDITIONAL INFORMATION

N/A

CEQA

Construction of this project is within the scope of the Subsequent Environmental Impact Report for the Secondary Treatment and Plan Improvement Project, dated March 2005. The Subsequent Environmental Impact Report for the Secondary Treatment and Plan Improvement Project, supplementing the Sanitation District’s Strategic Plan Program Environmental Impact Report (PEIR), was certified in October 1999. Pursuant to CEQA Guidelines section 15168(c)(4), the Sanitation District has used a written checklist to document its evaluation of the project and has determined that the project is still within the scope of program EIR.

In addition, the Project was determined to be eligible for a categorical exclusion under the National Environmental Pollution Act (NEPA) in June 2006.

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance. This item has been budgeted (FY2016-17 and 2017-18), Section 8, Page 50. Project contingency funds will be used for this additional contingency.

Date of Approval Contract Amount Contingency 04/25/12 $7,140,000 $ 571,200 ( 8%) 02/22/17 714,000 (10%) $1,285,200 (18%)

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

N/A

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Meeting Date To Bd. of Dir. OPERATIONS COMMITTEE 02/01/17 02/22/17 Item Number Item Number AGENDA REPORT 5 9 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering

SUBJECT: SAFETY IMPROVEMENT PROGRAM, PROJECT NO. J-126

GENERAL MANAGER'S RECOMMENDATION

A. Approve a budget increase of $1,500,000 for Safety Improvements Program, Project No. J-126, for a total budget amount of $11,202,000; and

BACKGROUND

The Orange County Sanitation District (Sanitation District) owns and operates facilities that were designed and constructed from the 1950s to present. In July 2014, the Facility Wide Safety Assessment, Project No. SP-145-1, reviewed safety issues at the Sanitation District Plant Nos. 1 and 2, and pump stations. The study identified approximately 2,000 facility issues impacting worker safety and compliance with Cal/OSHA regulations including electrical, fall protection, machine guarding, hazardous area classifications, skylights, and walkway hazards. Each item was assigned a high, medium, or low priority rating. Pending resolution of the safety items, the Sanitation District took interim measures to minimize life-safety risks.

There was approximately an even distribution between identified issues that would be addressed using Sanitation District resources, and those that would be addressed through the Capital Improvements Program (CIP), depending on their nature and complexity. Items on the CIP list that could not be timely assigned to existing projects have been assigned to Safety Improvement Program, Project No. J-126.

Construction Costs

The current J-126 budget was based on construction cost estimates developed in the 2014 SP-145-1 study, which totaled $5.4 million for the items assigned to this project. Although more design development is required, there is a reasonable possibility that the construction cost could double. The reasons for the potential increase include:

• The unit prices developed for the study significantly underestimated the actual installed costs.

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• Additional deficiencies were identified after the 2014 study and could not be addressed using Sanitation District staff. A total of 40 deficiencies have been added to the program since the design agreement was awarded.

• The project may need to include correction of a slippery surface issue that has arisen with roofing on the first four of twelve digesters domes that were installed under the Digester Rehabilitation at Plant No. 1, Project No. P1-100, in 2013 to 2014. The roofing material was found to be a slip hazard as the embedded grit material was lost over time. The roofing was not replaced under the P1-100 project as a warranty issue because the material satisfied the specification requirements, and the issue could not have been foreseen. The construction cost is expected to be between $500,000 and $750,000.

As cost estimates become available, staff will return to the Board to request necessary budget revisions for increased construction costs. In addition, all construction contracts greater than $100,000 will be submitted to the Board for award.

Consultant Costs

To resolve the deficiencies as quickly as possible, Safety Improvement Program, Project No. J-126, is being executed through multiple construction packages which can be completed in a shorter time than using a single construction contract. Development of multiple construction packages also allows higher priority safety items to be completed more quickly than lower priority items.

At the time the design services agreement was awarded, the number of construction packages had not yet been determined. That, and the large number of unique deficiencies located throughout the Sanitation District facilities, made it impossible to precisely determine the level of effort required for detailed design.

Therefore, the Consultant’s Scope of Work was divided into two sections; one for program services with a defined scope and the other for design services with an undefined scope. For design services, a set number of hours was used to establish an allowance for the design budget. The plan was for staff to authorize allocations from the pool of hours as construction packages are identified and the specific scopes and budgets are negotiated.

Staff established the set number of hours for design based on the estimated construction cost of $5.4 million, an assumption that design would cost approximately 20% of the construction cost, and an assumed average hourly rate. As discussed above under Construction Costs, the construction cost could double, to approximately $10 million. Upon closer examination, the ratio of consultant costs to construction costs may be closer to 25%, due to the nature of the work. This includes an allowance for consultant support during construction and closeout, which was not included in the 20% factor.

The basis of the original and proposed consultant fees is summarized in the table below. It is important to remember the Consultant was selected on their qualification to do the work and they provide services on an as-needed basis at a pre-negotiated rate. Proper engineered designs will correct the safety deficiencies and limit future change order risks. Page 2 of 4

Original Basis Current Estimates Construction Cost Estimate $5,400,000 $10,000,000 Consultants Costs Program Services $ 576,162 (11%) $ 576,162 (6%) Design Services $ 963,838 (18%) $ 2,463,838 (25% Total Consultants Costs $1,540,000 (29%) $ 3,040,000 (31%)

Current Project Status

The implementation plan prepared under the Program Services scope allocated the deficiencies into 18 construction packages. Eight of the packages address high priority issues, six address medium priority issues, and the remainder low priority issues. To date, staff has completed negotiations for consultant budgets for all high priority packages. The design of all high priority packages, along with a field investigation effort for the medium priority items, consumed approximately 87% of the $963,838 budgeted for Design Services.

RELEVANT STANDARDS

• Provide a safe and collegial workplace

PROBLEM

The project budget and consultant budget are not sufficient to complete the project.

PROPOSED SOLUTION

Increase the project budget by $1,500,000 and approve Amendment No. 1 to the Professional Design Services Agreement with Arcadis, US, Inc. to increase the contract amount by $1,500,000.

TIMING CONCERNS

Without additional consultant funds, staff will not be able to authorize design for additional construction packages, which will delay resolution of safety deficiencies.

RAMIFICATIONS OF NOT TAKING ACTION

Without additional funding for the existing Professional Design Services Agreement, another consulting firm would have to be selected and awarded an agreement to complete the remaining design work. This would delay completion of the work by at least six months, probably resulting in higher design fees and staff effort, and prolonging Sanitation District exposure to the identified safety risks.

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PRIOR COMMITTEE/BOARD ACTIONS

July 2016 – Awarded a Professional Design Services Agreement to Arcadis, US, Inc. for an amount not to exceed $1,540,000 and approved a contingency of $154,000 (10%).

ADDITIONAL INFORMATION

N/A

CEQA

A CEQA Notice of Exemption for this project was filed on August 14, 2015, and 180-day statute of limitations has passed from the approval of the Professional Design Services Agreement.

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance. This item has been budgeted (Line item: Section 8, Page 68), but the budget is insufficient for the recommended action. The funds will be allocated to the project from the Replacement, Rehabilitation, and Refurbishment line item in the cash flow projections, FY2016-17 and 2017-18, Section 4, Page 16.

Date of Approval Contract Amount Contingency 07/27/16 $1,540,000 $154,000 02/22/17 $1,500,000 TOTAL $3,040,000 $154,000

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

• PDSA Amendment No. 1 • PowerPoint Presentation from February 1, 2017 Operations Committee Meeting

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AMENDMENT NO. 1 TO AGREEMENT

THIS AMENDMENT NO. 1 TO AGREEMENT, is made and entered into to be effective the 22nd day of February, 2017 by and between the ORANGE COUNTY

SANITATION DISTRICT, hereinafter referred to as "SANITATION DISTRICT", and

ARCADIS U.S. , Inc., for purposes of this Agreement hereinafter referred to as

"CONSULTANT".

WITNESS ETH:

WHEREAS, the SANITATION DISTRICT and CONSULTANT have previously executed an Agreement dated July 27, 2016, for professional design services for Safety

Improvements Program, Project No. J-126; and,

WHEREAS, the SANITATION DISTRICT has determined that additional professional design services are required ; and,

WHEREAS, CONSULTANT is qualified to provide the necessary services in connection with these additional requirements based on its demonstrated competence and has agreed to provide the necessary engineering services, and has been selected in accordance with the SANITATION DISTRICT selection policy regarding professional design services; and,

WHEREAS, the SANITATION DISTRICT acting through its Director of Engineering,,, has negotiated with CONSULTANT, and has certified the final negotiated fee for said services as reasonable, and,

WHEREAS, the Board of Directors has accepted the recommendation of the

Operations Committee, pursuant to the current Purchasing Ordinance, has approved this

Amendment No. 1 between the SANITATION DISTRICT and CONSULTANT.

Amendment No. 1 -1- Project No. J-126

Revised 12/0111 O NOW, THEREFORE, in consideration of the promises and mutual benefits, which will result to the parties in carrying out the terms of this Amendment No. 1, it is mutually agreed as follows:

1. CONSULTANT agrees to provide additional services necessary to provide design, construction support and closeout services for the Safety Improvements Program,

Project No. J-126 as outlined in Exhibit "A" - Scope of Work, attached hereto and by this reference made a part of this Amendment No. 1 to Agreement.

2. Article 2 of that certain Agreement dated July 27, 2016, between the

SANITATION DISTRICT and CONSULTANT is hereby amended to increase the total compensation by $1,500,000 from $1,540,000 to an amount not to exceed $3 ,040,000, all in accordance with the same terms and conditions as otherwise specified in Article 3 and the other provisions of said Agreement.

3. The additional compensation authorized hereby and sums paid by the

SANITATION DISTRICT to CONSULTANT pursuant hereto shall be based upon and allocated as in Exhibit "C" - Fee Proposal.

4. The SANITATION DISTRICT agrees to pay CONSULTANT on a monthly basis pursuant to invoices submitted to the SANITATION DISTRICT from CONSULTANT and as approved by the SANITATION DISTRICT's Director of Engineering.

5. This modifying Amendment is supplemental to the Agreement dated

July 27, 2016, and is by reference made a part of said Agreement. All of the term s, conditions, and provisions thereof, unless specifically modified herein, shall continue in full force and effect.

6. In the event of any conflict or inconsistency between the provisions of this

Amendment and any of the provisions of the original Agreement, the provisions of this

Amendment No. 1 shall in all respects govern and control.

Amendment No. 1 -2- Project No. J-126

Revised 12/01/10 IN WITNESS WHEREOF, this Amendment No. 1 to Agreement has been executed in the name of the SANITATION DISTRICT by its officers thereunto duly authorized and executed by CONSULTANT as of the day and year first above written .

ORANGE COUNTY SANITATION DISTRICT

By~~~~~~~~~~~~ Gregory C. Sebourn Date Board Chairman

By~~~~~~~~~~~~~- Kelly A. Lore Date Clerk of the Board

ARCADIS U.S., Inc.

1/12//7 Date

Date

ORANGE COUNTY SANITATION DISTRICT

By~~~~~~~~~~~~~~ Marc Dubois Date Contracts, Purchasing, and Materials Management Manager

TG:dm

Attachments: Exhibit "A" - Scope of Work Exhibit "B" - Cost Matrix Exhibit "C" - Fee Proposal

Amendment No. 1 -3- Project No. J-126

Revised 12101 / 10

Safety Improvements Program, Project No. J-126 PDSA Amendment No. 1 Exhibit “A” – Scope of Work

1. Provide an additional $1,500,000 of professional services under Task 2.

Amendment No.1 Fully BurdenedHourlyRate(includespayrollcosts,OH,andProfit) Task Item Average ActualSalary 40 50 00 40 40 90 00 10 20 25.00 32.00 41.00 50.00 79.00 74.00 74.00 60.00 45.00 74.00 635 Project Manager

Program Develop. Lead

Project Controls Lead

195 Quality Control Manager

Lead Safety Labor hours Professional ,7 ,4 3,120 2,340 1,270 Lead Project Enginer SAFETY IMPROVEMENTSPROGRAM,PROJECTJ-126

Engineer

Senior Designer EXHIBIT "B"-COSTMATRIX PDSA AMENDMENTNO.1

Project Assitant

295 Administrative Assistant oa or a ao FringeCosts RawLabor Total Hours 7,855 414,045 269,668 65.13% udndLbrOverhead Burdened Labor 683,713 7,4 1,356,759 673,047 98.44% Burdened Labor& Overhead Profit 95,109 7.01% Total Subs Allowable Direct Costs 4,3 $1,500,000 $48,132 Total Fees Safety Improvements Program, Project No. J-126 PDSA Amendment No. 1 Exhibit “C” – Fee Proposal

Purchase Order: 105813-OB P rojec t No. J -126 S afety Im provem ent at P lant Nos . 1 and 2 Professional Design S ervices Agreement Fee Allocation Table C urrent C ontrac t Proposed Revised C ontract Amount C hange Amount Arc adis B urdened L abor - R aw labor + F ringe @ 65.13% $ 677,925 $ 683,713 $ 1,361,638 Overhead @ 98.44% $ 667,349 $ 673,047 $ 1,340,396 F ixed P rofit @ 7.01% $ 94,304 $ 95,109 $ 189,413 D irec t C os ts , N T E $ 51,000 $ 48,131 $ 99,131 S ubtotal = $ 1,490,578 $ 1,500,000 $ 2,990,578

Minor S ubconsultants (Under $100k Labor Fee) T&M Associates $ 49,422 $ - $ 49,422 S ubtotal = $ 49,422 $ - $ 49,422 T otal Not to E xc eed $ 1,540,000 $ 1,500,000 $ 3,040,000 Safety Improvement Program, Project No. J-126

Operations Committee February 1, 2017 Background

• Facility Wide Safety Assessment, Project No. SP-145-1 completed in December 2014. Comprehensive safety assessment of all OCSD facilities to: • Enhance worker safety • Ensure compliance with safety codes • Provide reliable and efficient facilities for O&M • Identified ~ 1700 deficiencies, ranked by priority • Corrective measures developed based on ANSI risk assessment methodology Plant 1 – Cen Gen Roof Access Fall Hazard

Ladder exposed to stairwell. Ladder cage needs to be extended down to guardrail Bay Bridge Pump Station Equipment Access

Board to stand on while accessing pipes at wall. Ladder requires side Proper access and rail extensions platform are required Slater Avenue Pump Station Fall Protection

Elevated areas around pumps are working surfaces – Guardrails are required Plant 1 – Cen Gen Building Hot Surfaces

Exposed hot piping requires insulation Plant 2 - Digesters Machine Guards

Rotating shafts need to be enclosed 15th Street Pump Station Fall Protection

Guardrail required around hatch opening Plant 2 – Scott Tunnel Fall Protection

Unprotected edge of elevated surface Plant 1 – Primary Distribution Fall Protection

Missing guardrail at elevated surface. Guardrail needs to be fit around existing piping Plant 1 - Power Building Fall Protection

Fall protection required at edge of roof

Fall protection required at skylights Corrective Strategy

• Staff developed a comprehensive strategy to correct SP-145-1 deficiencies • Assignment of deficiencies for correction: • Small and simple corrections: In-house (700 items) • Larger, more complex items: Capital Improvement Program (940 items) • Active CIP Projects (240) • J-126 Safety Improvement Program (700 items) Unique Program Characteristics

• Large number of distinct items • Design solutions unknown until after field investigations • Work at many locations (2 Plants, 15 Pump Stations) • Numerous hazard categories • Difficult to estimate: • Construction cost • Design effort Considerations for Construction Packaging • Speed • Lower priority should not delay higher priority • Lower complexity can be designed faster than high complexity • Related Work • Similar items may be grouped together • Smaller contracts = higher non-construction costs • “Piece-mealing” will not be used to circumvent procurement requirements Project J-126 Delivery

Title Subject Location

A Phase 1 Field Investigation

1 Package J-126A Hot Surfaces Insulation and Machine Guarding P1, P2

2 Package J-126B Emergency Lights, Exit Signs, Electrical Maintenance PS

3 Package J-126C HVAC Improvements (NFPA 820) P1

4 Package J-126D Hatch Modifications P1

5 Package J-126E Roof Fall Protection and Skylights P1, P2 High Priority 6 Package J-126F Ladder and Walkway Hazards P1, P2

7 Package J-126G Ladder Modifications PS

8 Package J-126H Various Bay Bridge PS, Slater PS

B Phase 2 Field Investigation

9 Package J-126I Exit Signs and Electrical Disconnects P1, P2

10 Package J-126J Stairs, Hatches, Walkway Hazards P1, P2, PS

11 Package J-126K Ladders, Guardrails, Roof Fall Protection P1, P2

12 Package J-126L Various PS

MediumPriority 13 Package J-126M Machine Guarding and Walkway Hazards P1, P2

14 Package J-126N Electrical Upgrades (NFPA 820) P1, P2

C Phase 3 Field Investigation

15 Package J-126O Emergency Lights and Gas Detection P1, P2

16 Package J-126P Ladders and Hatches Sari, College Ave, Lido and Main Street PS

17 Package J-126Q Roof Fall Protection P1, P2 Low Prioity Low 18 Package J-126R Machine Guarding P1, P2 Consultant Selection

• RFP Issued (April 2016) • Two Proposals Received (Arcadis, Hazen & Sawyer) • Arcadis selected as best qualified • PDSA Awarded to Arcadis, US, Inc (July 2016) Consultant Scope and Budget

• Task 1 Program Services • Project Management • Implementation Plan (Construction Packaging) • Chartering Construction Packages • Cost Estimating and Scheduling • Safety Review • Workshops and Meetings Consultant Scope and Budget

• Task 2 Construction Package Execution • Original scope of work based on deficiency types with allocations • Multiple Construction Packages • Large number of unique deficiencies • Difficult to determine level of effort • Design at 20% of original construction estimate ~ $1,000,000 • Individual package fees negotiated after detailed field investigations define solutions Construction Costs

• SP-145-1 Construction Cost Estimate = $5.4 million • Reasonable possibility that the construction cost could double • SP -145-1 unit prices significantly underestimated 2017-2018 installed costs • 40 additional deficiencies have been added to the program since the design agreement was awarded • Re-roofing of four P1 digesters to correct slippery surface conditions (P1-100) ($500,000 - $750,000) Consultant Scope and Budget

• Need for Additional Task 2 Funding • Increase in Construction Cost • Original fee estimate did not include construction phase services

Original Basis Current Estimates Increase

Consultants Costs

Program Services (Task 1) $ 576,162 (11%) $ 576,162 (6%) $0

Engineering Services (Task 2) $ 963,838 (18%) $ 2,463,838 (25%) $1,500,000

Total Consultants Costs $1,540,000 (29%) $ 3,040,000 (31%) $1,500,000

Construction Cost Estimate $5,400,000 $10,000,000 $4,600,000 Project J-126 Delivery Status

Title Subject Status

A Phase 1 Field Investigation Negotiated

1 Package J-126A Hot Surfaces Insulation and Machine Guarding Negotiated

2 Package J-126B Emergency Lights, Exit Signs, Electrical Maintenance Negotiated

3 Package J-126C HVAC Improvements (NFPA 820) Pending Additional Funding

4 Package J-126D Hatch Modifications Pending Additional Funding

5 Package J-126E Roof Fall Protection and Skylights Negotiated High Priority 6 Package J-126F Ladder and Walkway Hazards Negotiated

7 Package J-126G Ladder Modifications Negotiated

8 Package J-126H Various Negotiated

B Phase 2 Field Investigation Negotiated

9 Package J-126I Exit Signs and Electrical Disconnects Pending Additional Funding

10 Package J-126J Stairs, Hatches, Walkway Hazards Pending Additional Funding

11 Package J-126K Ladders, Guardrails, Roof Fall Protection Pending Additional Funding

12 Package J-126L Various Pending Additional Funding

MediumPriority 13 Package J-126M Machine Guarding and Walkway Hazards Pending Additional Funding

14 Package J-126N Electrical Upgrades (NFPA 820) Pending Additional Funding

C Phase 3 Field Investigation Pending Additional Funding

15 Package J-126O Emergency Lights and Gas Detection Pending Additional Funding

16 Package J-126P Ladders and Hatches Pending Additional Funding

17 Package J-126Q Roof Fall Protection Pending Additional Funding Low Prioity Low 18 Package J-126R Machine Guarding Pending Additional Funding Recommendations

• Approve a budget increase of $1,500,000 for Safety Improvements Program, Project No. J-126

• Approve Amendment No. 1 to the Professional Design Services Agreement with Arcadis, US, Inc., for Safety Improvement Program, Project No. J-126, for an additional amount of $1,500,000 Meeting Date To Bd. of Dir. OPERATIONS COMMITTEE 02/01/17 02/22/17 Item Number Item Number AGENDA REPORT 6 10 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering

SUBJECT: INTERIM FOOD WASTE RECEIVING FACILITY, PROJECT NO. P2-124

GENERAL MANAGER'S RECOMMENDATION

Establish a project for Interim Food Waste Receiving Facility, Project No. P2-124, with a budget of $5,400,000.

BACKGROUND

The Orange County Sanitation District (Sanitation District) utilizes anaerobic digestion to stabilize and reduce biosolids generated from treating wastewater. The process also produces a methane-rich digester gas which is burned in engine generators at both plants to supply approximately 60% of the plants’ power requirements.

Separately, the State of California is implementing regulations to divert organic material, typically food waste, from landfills, with the intention of extending the lives of landfills and reducing greenhouse gases generated as the organic material decays in the landfill. As a result, waste haulers, such as Waste Management Inc., Republic Services, and CR&R Incorporated, are seeking options for disposal or reuse of food waste.

One strategy the haulers are pursuing is processing the food waste into an organic-rich liquid to be trucked to digestion facilities, such as the Sanitation District’s anaerobic digesters. The haulers would pay a tipping fee to discharge the waste, and the Sanitation District would also generate more digester gas and, therefore, more electricity. Waste Management is currently paying tipping fees to the Los Angeles County Sanitation District to receive pre-processed food waste at the Joint Water Pollution Control Plant in Carson.

The Biosolids Master Plan, Project No. PS15-01, is currently developing a program for replacement of the anaerobic digesters at Plant No. 2 based on end-of-life considerations and seismic vulnerability. Staff intends to report the finding of the Biosolids Master Plan to the Operations Committee later this year. This study is also evaluating food waste issues, including market drivers, stakeholders, technologies, operational impacts, and available digester capacity. The payback period for a food waste receiving facility depends on the quantity of food waste from the haulers, the unit tipping fee, and the capital cost. Since the new digesters will take many years to complete, a smaller and simpler food waste receiving facility is proposed to accommodate the current market need and gain operational experience. This Interim Food Waste Receiving Facility would be replaced in approximately 10 years, with a payback period ranging from 5 to 10 years, depending on market conditions. This estimated payback period would need to be re- evaluated at each phase of the project. Page 1 of 3

There are currently two opportunities for grant funding the interim facility. On March 9, 2017, the California Department of Resources Recycling and Recovery (CalRecycle) will accept grant applications for their Organics Grant Program (FY 2016-2017). This grant could provide up to $4 million, but requires an approved project by the date of application.

Orange County Waste and Recycling (OCWR) is also offering a grant for up to $3 million. Waste Management is taking the lead on this application on behalf of the communities they serve, and the Sanitation District. The deadline for this application is April 7, 2017.

RELEVANT STANDARDS

• Biosolids Master Plan, Energy Master Plan • Use all practical and effective means for recovering energy

PROBLEM

To generate additional electricity from digester gas, utilize existing excess capacity in digestion and electrical generators, and to help solve a regional resources recovery problem, an Interim Food Waste Receiving Facility is required at Plant No. 2. The receiving facility will require design, construction, and administrative support.

PROPOSED SOLUTION

Authorize a project and budget to construct an Interim Food Waste Receiving Facility at Plant No. 2.

TIMING CONCERNS

If the project is not authorized at this time, the Sanitation District cannot apply for significant grant programs to offset the cost of construction.

RAMIFICATIONS OF NOT TAKING ACTION

Not taking action will mean that tipping fees could not be collected from food waste haulers and additional digester gas and electricity will not be generated.

CEQA

This project will require CEQA documentation, which will be completed as part of the Biosolids Master Plan, Project No. PS15-01.

Page 2 of 3

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance. This item has not been budgeted. The funds will be allocated from the Replacement, Rehabilitation and Refurbishment, in the cash flow projections, FY 2016-17 and 2017-18, Section 4, Page 16.

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

N/A

JM:dm:gc

Page 3 of 3

Meeting Date To Bd. of Dir. ADMINISTRATION COMMITTEE 02/08/17 02/22/17 Item Number Item Number AGENDA REPORT 2 11 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services

SUBJECT: GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST

GENERAL MANAGER'S RECOMMENDATION

Receive and file Orange County Sanitation District purchases made under the General Manager’s authority and additions to the pre-approved OEM Sole Source List for the period of October 1, 2016 - December 31, 2016.

BACKGROUND

Staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved purchases between $50,000 and $100,000 and additions to the pre-approved OEM Sole Source List.

RELEVANT STANDARDS

• Quarterly financial reporting • Ensure the public’s money is wisely spent

PRIOR COMMITTEE/BOARD ACTIONS

December 2016 - Authorized the General Manager to ratify additions or deletions to the OEM Sole Source list on the General Manager’s quarterly approved purchases agenda report.

ADDITIONAL INFORMATION

In accordance with Board purchasing policies, Ordinance No. OCSD-47, the General Manager has authority to approve purchases between $50,000 and $100,000. Below is a summary of General Manager approved purchases, in amounts exceeding $50,000, for the first quarter of fiscal year 2016-17:

Vendor Name Amount Department Description/Discussion ALMEGA Plant No. 1 Trunklines Air Sample ENVIRONMENTAL Collection & Analysis $98,150.00 Engineering & TECHNICAL for Project No. P1-105 SVCS Specification No. S-2016-793

Page 1 of 2 Vendor Name Amount Department Description/Discussion Legal Services for Utility Relocations and LEWIS BRISBOIS other Real Estate Matters BISGAARD & $75,000.00 Engineering 10/13/16 to 10/12/18 SMITH LLP Sole Source Justification # 1637 Reason: Unique Product/Service

Sewer Pipeline Rehabilitation Services SANCON Operations & $89,880.00 1/1/17 to 12/31/17 ENGINEERING INC Maintenance Specification No. S-2016-783BD

Spectro Scientific MiniLab 53 Used for Oil Analysis SPECTRO Operations & $76,616.00 Approved CORF Budget SCIENTIFIC, INC Maintenance Sole Source Justification # 1668 Reason: Unique Product/Service

ADDITIONS TO PRE-APPROVED OEM SOLE SOURCE LIST

• SNAP-ON – Smog Machine Repair Services

CEQA

N/A

FINANCIAL CONSIDERATIONS

This request complies with authority levels of the Sanitation District’s Purchasing Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. This item has been budgeted in the FY 16-17 Budget.

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

N/A

Page 2 of 2

Meeting Date To Bd. of Dir. ADMINISTRATION COMMITTEE 02/08/17 02/22/17 Item Number Item Number AGENDA REPORT 3 12 Orange County Sanitation District

FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services

SUBJECT: MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2016

GENERAL MANAGER'S RECOMMENDATION

Receive and file Orange County Sanitation District Mid-Year Report for the period ended December 31, 2016.

BACKGROUND

Included in this consolidated report are the following mid-year reports for the period ended December 31, 2016:

• Mid-Year Budget Review The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the mid-year financial results of the Orange County Sanitation District (Sanitation District) for the period ended December 31, 2016.

• Mid-Year Treasurer’s Report This section reports on financial portfolio performance with respect to the Sanitation District’s funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the U.S. and global economic outlook from the Sanitation District’s investment manager, Chandler Asset Management.

• Certificates of Participation Mid-Year Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history.

RELEVANT STANDARDS

• Quarterly financial reporting

ADDITIONAL INFORMATION

The mid-year treasurer’s report contained within the Consolidated Financial Reports for the period ended December 31, 2016 is being submitted in accordance with the Sanitation District’s investment policy that requires the report be submitted to the governing body following the end of each quarter and includes the following information:

Page 1 of 3 • Performance results in comparison with the 3-month treasury bill index for the liquid operating portfolio; and the Merrill Lynch Corp./Govt. 1-5 Year Bond index for the long-term portfolio as identified in the investment policy; and the time- weighted total rate of return for the portfolio for the prior three months, six months, nine months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods:

Portfolio Performance Summary Quarter Ended December 31, 2016 Long-Term Operating Monies Liquid Operating Monies (%) (%) Total Rate Total Rate of

of Return Benchmark Return Benchmark 3 Months 0.12 0.09 -0.84 -1.06 6 Months 0.22 0.18 -0.78 -1.12 9 Months 0.31 0.25 -0.07 -0.26 12 Months 0.48 0.33 1.47 1.30 Annualized Since inception 30 Nov 2014 0.34 0.18 1.01 0.98

• A listing of individual securities held at the end of each reporting period (see the detailed listings of each security contained within the report).

• Cost and market values of the portfolios:

Liquid Oper. Long-Term Cost $112.9 M $316.4 M MV $113.0 M $316.6 M

• Modified duration of the portfolio compared to Benchmark:

Liquid Oper. Long-Term B.M. 0.15 2.61 Port. 0.14 2.48

• Dollar change in value of the portfolio for a one-percent (1%) change in interest rates:

Liquid Oper.- $153,567 Long-Term- $7,856,757

• None of the portfolios are currently invested in reverse repurchase agreements.

• The percent of the Liquid Operating Monies portfolio maturing within 90 days:

79.9%

Page 2 of 3

• Average portfolio credit quality:

Liquid Oper. – AAA/Aaa Long-Term – AA+/Aa1

• Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities:

Liquid Portfolio- no exceptions Long Term Portfolio- Percent of portfolio – 3.4%

Maturity Cost Date Moody S&P Fitch AMRESCO Residential Securities 1999-1 $ 100,432.85 6/25/2029 Not Rated AA+ BBB Bank of America Corp Note $ 4,334,014.00 12/1/2017 Baa1 BBB+ A Goldman Sachs Group Inc. Note $ 692,806.00 1/18/2018 A3 BBB+ A American Express Credit Note $ 3,377,385.79 3/19/2018 A3 BBB+ A Morgan Stanley Note $ 3,200,848.00 7/28/2021 A3 BBB+ A

• All investments are in compliance with this policy and the California Government Code, except for the following Lehman Brothers holdings that the Sanitation District is pursuing collection through the bankruptcy court:

Lehman Brothers Note-Defaulted $ 600,000 par value purchased 9/19/2008 Lehman Brothers Note-Defaulted $2,000,000 par value purchased 9/18/2008

• Sufficient funds are available for the Sanitation District to meet its operating expenditure requirements for the next six months.

CEQA

N/A

FINANCIAL CONSIDERATIONS

N/A

ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:

• Mid-Year Consolidated Financial Reports for the period ended December 31, 2016

Page 3 of 3

ORANGE COUNTY SANITATION DISTRICT Mid-Year Financial Report for the period ended December 31, 2016 Orange County, California Table of Contents

Executive Summary………………………………………………………………………..…….………1

Budget Review

Section 1 – Consolidated Financial Reports ...... 1

Section 2 – Operating Budget Review

Chart of the Cost per Million Gallons by Department – Budget and Actual ...... 1 Chart of the Net Expenses by Major Category – Budget and Actual...... 1 Divisional Contributions to Cost Per Million Gallons ...... 2 Comparison of Expenses by Department ...... 3 Summary of Collection, Treatment, and Disposal Expenses by Major Category ..... 4 Summary of District-Wide Revenues ...... 5 Summary of Collection, Treatment and Disposal Revenues ...... 5 Summary of Collection, Treatment, and Disposal Expenses by Line Item ...... 6 Summary of Collection, Treatment, and Disposal Expenses by Process...... 8 Chart of Staffing Trends ...... 9

Section 3 – Capital Improvement Program Budget Review

Capital Improvement Program Graphs by Type and Funding Source ...... 1 Summary of Capital Improvement Construction Requirements - Current Year ...... 2 Summary of Capital Improvement Construction Requirements - Project Life ...... 6

Section 4 – Capital Assets Schedule & Debt Service Budget Review

Capital Assets Schedule ...... 1 Debt Service Budget Review ...... 1

Section 5 – Self Insurance Budget Review

General Liability and Property Fund Budget Review ...... 1 Workers’ Compensation Fund Budget Review ...... 2

Quarterly Treasurer’s Report…………………………………………………………………………….1

Quarterly COP Report…………………………………………………………………………………....1

FY 2016-17 Mid-Year Financial Report

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Executive Summary

Consolidated Financial Reports For the Mid-Year Ended December 31, 2016

Included in this consolidated report are the following quarterly financial reports for the period ended December 31, 2016:

 Mid-Year Budget Review: The Consolidated Financial Reports Section provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the mid-year ended December 31, 2016.

Contained within the Consolidated Financial Reports is the budget-to-actual status of the Collections, Treatment and Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of December 31, 2016.

Various detail information can be found in this report. In summary:

a) Most major expense categories are anticipated to be at or below budget.

b) Total revenues are at 77.3 percent mainly due to the receipt of $112.5 million from the issuance of Revenue Refunding Certificate Anticipation Notes, Series 2016B, during the second quarter of the fiscal year. The 2016B Notes were used to refund the Revenue Refunding Certificate Anticipation Notes, Series 2014B. Excluding debt financing proceeds, total revenues are at 51.2 percent of the budget. Except for IRWD Intra District Sewer Use, IRWD Capital Assessments, Interest Earnings, and Other Revenues, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to approximate budget at year-end. More detailed information on District revenues is provided within Section 1 – Pages 3 through 5.

c) Collection, Treatment and Disposal Costs: As indicated within the Consolidated Financial Reports Section of this report, the net operating requirements through the mid-year of $67.6 million is currently tracking at 46.2 percent of the $146.4 million budget. In addition, net operating expenses have decreased $4.3 million or 6.0 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain within budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3.

The total cost per million gallons is approximately $2,012 based on flows of 182.6 million gallons per day. This is $154.8 per million gallons, or 7.1 percent lower than the budgeted cost per million gallon per day. A further

Page 1 FY 2016-17 Mid-Year Review

description of these costs and benchmarking with other agencies is contained within Section 1 – Pages 6 through 8.

d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2016-17 has been revised to $132.3 million, or 77.2 percent of the board approved cash outlay of $171.3 million. The actual cash outlay spending through the mid-year is $59.0 million, or 31.0 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3.

 Quarterly Treasurer’s Report This section reports on financial portfolio performance with respect to the Sanitation District’s funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District’s money manager, Chandler Asset Management (Chandler).

Chandler notes that the Long-Term Portfolio returned a negative return of 22 basis points over the quarter, but still outperforming the Bank of America Merrill Lynch 1-5 year AAA U.S. Corporate and Government Index return of a negative 106 basis points, while the Liquid Operating Monies Portfolio returned 12 basis over the quarter, outperforming the three-month Treasury Bill index return benchmark of 9 basis points.

Chandler further notes that the Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted that economic activity has expanded at a moderate pace and labor market trends have improved, but inflation remains below target. The Fed’s revised “dot plot” was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee’s GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC’s median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of two or three more 25 basis point rate hikes this year. The Fed’s longer-run median fed funds target rate was revised up to 3.0% from 2.9%. The market is now pricing in more than a 70% chance of another rate hike in June 2017.

Domestic economic data points to ongoing moderate growth this year. The U.S. labor market continues to improve, consumer confidence remains strong, and housing trends remain mostly favorable. The manufacturing sector has also improved. Market participants estimate GDP grew 2.2% in the fourth quarter.

Page 2 Executive Summary

heightened expectations for fiscal stimulus, and a potential increase in inflation, in light of President-elect Trump's victory and the Republican Party congressional sweep in the US.

The Consumer Price Index (CPI) was up 1.7% year-over-year in November, versus up 1.6% year-over-year in October. Core CPI (CPI less food and energy) was up 2.1% year-over-year in November, unchanged from October. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in November, unchanged from October. Core PCE (excluding food and energy) was up 1.6% year-over-year in November, after being up 1.8% year-over-year in October. Although Core CPI is trending above 2.0%, the Fed's primary inflation gauge is PCE which remains below the Fed's 2.0% target.

Economic Outlook

The US Presidential election results were a surprise to markets and materially repriced the domestic interest rate market higher. During the fourth quarter the two year Treasury note yield moved higher by 43 basis points, to 1.19%, while the five year Treasury note moved higher by 78 basis points, to 1.93. The Federal Reserve was also finally able to tighten monetary policy, raising interest rates by 25 basis points on December 14. Post the election results, the outlook for risk assets improved as most market participants lowered the probability of a recession over an intermediate time horizon given the more positive outlook on a tax policy and higher probability of additional domestic fiscal spending. In Chandler’s judgement the market got ahead of itself with the strong risk asset performance and aforementioned adjustment in interest rates; the Chandler team will be looking for some consolidation of performance in both the fixed income and equity markets during the first quarter of 2017.

Monetary policy is poised to continue to normalize, with rates moving higher, but the Chandler team anticipates the process will continue to be slow. Currently the team is anticipating two rate hikes in 2017, with the timing likely in June and close to year-end. Economic activity in overseas markets remains lackluster, however if the team were to observe an uptick in economic activity in the Eurozone and/or Japan it would lead us to adjust our expectations for a quicker pace of domestic monetary policy normalization. Chandler continues to have the view the terminal fed funds rate will be low, despite the forecasted lowering of the tax rate and potential fiscal stimulus. Specific to domestic fiscal stimulus, the impact to the domestic economy is more likely to be a 2018 event as it takes time to put the necessary plans in place, in our judgement. Overall the team expects interest rates to be modestly higher on a year-over-year basis; the team is more willing to allocate monies to longer maturity assets given the large adjustment to domestic interest rates during the fourth quarter.

 Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history.

Page 3 FY 2016-17 Mid-Year Review

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Page 4 Consolidated Financial Reports

Mid-Year Financial Report December 31, 2016

Financial Management is pleased to present the FY 2016-17 mid-year financial report. This report provides a comprehensive overview of the financial condition of the Sanitation District and reports on the status of all capital projects in progress. A summary of the sections contained within this report is provided below.

Operating Budget Review: This section reports on collection, treatment and disposal net operating requirements. At December 31, 2016, 46.2 percent, or $67.6 million of the FY 2016-17 net operating budget of $146.4 million has been expended. Net operating expenses decreased from the same period last year by $4.3 million, or 6.0 percent, mainly due to a decrease of $1.7 million in Salaries and Benefits, $958,000 in Utilities, $878,000 in Repairs and Maintenance, $727,000 in Operating Materials and Supplies, $212,000 in Administrative Expenses, and $176,000 in Other Operating Supplies, and an increase of $323,000 in indirect costs allocated out to capital projects. These reductions to net operating expenses have been partially offset by increases of $269,000 in Contractual Services, $189,000 in Professional Services, $117,000 in Training and Meetings, and $36,000 in Research and Monitoring. These and other variances that factor into this net increase in expenses are discussed in more detail below. Overall, staff expects the total operating costs to remain at or slightly below budget throughout the remainder of the year.

Significant operating results as of December 31, 2016 include the following:

 Salaries, Wages and Benefits – Personnel costs of $44.5 million are on target at 49.9 percent of budget through the mid-year of FY 2016-17. Although the budget is based on a 5 percent vacancy factor, staffing is 45 full-time equivalents (FTE’s), or 7.2 percent below the total 627 FTE’s approved in the FY 2016-17 budget. Salary and benefit costs are $1.7 million or 3.6 percent lower than the $46.2 million incurred in the same period last year, mainly due to the decrease in OCERS retirement of $2.4 million. This decrease is reflective of the decrease in the employee contribution rate as a result of the $175 million pay down on the unfunded actuarial accrued liability over the previous two fiscal years. This decrease is partially offset by an increase of $700,000 in salaries and wages due to the recent completion of bargaining unit agreements that became effective as of July 1, 2017. Net operating personnel costs are expected to be slightly below budget throughout the remainder of the year.

 Administrative Expenses – Administrative Expenses totaled $761,000, or 39.9 percent of the $1.9 million budget through December 31. These costs are $212,000 or 21.8 percent lower at December 31 in comparison with the prior year mainly due to a decrease of $194,000 in purchases of small computer items,

Section 1 - Page 1 FY 2016-17 Mid-Year Report primarily Microsoft Surface Pro tablets purchased in the prior year. It is anticipated that the administrative costs will approximate or be below budget at year-end.

 Printing and Publication Expenses – Printing and Publication Expenses totaled $136,000, or 43.7 percent of the $311,000 budget through December 31. These costs are $14,000 or 11.3 percent higher at December 31 in comparison with the prior year, mainly due to an increase of $28,000 in notices and ads for career recruitment, that were somewhat offset by a decrease of $15,000 in copy center costs as a result of removing mailroom services from the Xerox contract. It is anticipated that the printing and publication costs will be below budget at year-end  Training and Meetings – Training and meetings of $447,000 are below target at 38.6 percent of the $1.2 million budget. This account is lower than the proportionate budget due to the timing and need for training throughout the year. These costs have increased over the same period last year by $117,000 or 35.4 percent, which includes $72,000 for Total Productive Maintenance Certification Program costs not incurred in the prior period. Total training and meeting costs are anticipated to be below budget at year-end.  Operating Materials and Supplies – Operating materials and supplies of $7.6 million is slightly below target at 45.2 percent of budget through December 31. Operating Materials and Supplies have decreased from the prior year by $727,000 or 8.8 percent, primarily due to decreases in Chemical Coagulants of $384,000, Odor Control of $144,000, Tools of $100,000, Gas, Diesel and Oil of $52,000, and Safety Equipment of $29,000. The decreases are mainly brought about by chemical process optimization, a decrease in unit costs, and a decrease of purchases for tools and equipment from the prior year. Based on current processes, operating materials and supplies are anticipated to approximate budget at year-end.  Contractual Services – Contractual services is slightly below target at $11.4 million or 45.2 percent of budget through December 31. Solids Removal costs, budgeted at $17.2 million, comprise the majority of this expense category. With an increase of $19,000, or 0.2 percent higher than the prior year, solids removal costs totaled $8.8 million, or 51.4 percent of budget at December 31. Overall, Contractual Services is higher by $269,000 or 2.4 percent over the same period last year. Security Services increased by $216,000 due to heighted security and the addition of armed patrol services at both plants. In addition, Other Contractual Services increased by $152,000 due to an increase preventive maintenance services for the Civil Assets Management Program (CAMP). These increases were offset by decreases of $62,000 in Oxygen Plant Operation due to prior period increased flows diverted from plant 2 and $54,000 in Janitorial Service dues to renegotiation of contract rates. Total contractual services costs are anticipated to approximate budget at year-end.  Professional Services – Professional services costs totaled $1.5 million or 34.8 percent of the $4.3 million budget through December 31. Most professional

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service costs, such as Audit and Accounting, Engineering, Environmental Scientific Consulting, and Other Services, are proportionately low through December 31 due to a variety of factors such as services being in the planning or request for proposal stage, timing of services needed, the need for the service being re-evaluated, or utilization of internal staffing for projects. These costs are $189,000 or 14.4 percent higher at December 31 in comparison with the prior year mainly due to an increase of $171,000 in engineering services and timing of services performed. It is anticipated that the costs for this category will be below budget at year-end.

 Research and Monitoring – Research and monitoring costs totaled $346,000, or 43.2 percent of the $800,000 budget through December 31. These costs are $36,000, or 11.6 percent higher at December 31 in comparison with the prior year, mainly due to an increase in environmental monitoring costs. Total Research and Monitoring costs are anticipated to be below budget at year-end.

 Repairs and Maintenance – Repair and maintenance costs totaled $6.1 million, or 43.1 percent of the $14.3 million budget through December 31. These costs are $878,000, or 12.5 percent lower at December 31 in comparison with the prior year, mainly due to Plant 2 digester treatment and engine repairs in the prior year. It is anticipated that the costs for this category will approximate budget at year- end.  Utilities – Utilities costs totaled $3.4 million, or 41.0 percent of the $8.2 million budget through December 31. These costs are $958,000 or 22.1 percent lower at December 31 in comparison with the prior year, primarily due to a decrease in electricity charges of $1.0 million as a result of decreased usage related to decreased activities and outfall pumping, that is somewhat offset by an increase in natural gas charges of $65,000. The overall operating philosophy of the Central Generation facilities is to purchase electricity for power production rather than to purchase natural gas as a supplement to the digester gas needed to run the Central Generation facilities. This operating philosophy allows the Central Generation facilities to meet air emission requirements. It is anticipated that the costs will approximate budget at year-end.  Other Operating Supplies – Other operating supplies costs totaled $902,000, or 39.6 percent of the $2.3 million budget through December 31. Property and General Liability Insurance comprise the majority of this expense category. These costs are $308,000 or 124.0 percent higher at December 31 in comparison with the prior year primarily due to an increase in budgeted in-lieu premium charges in order to maintain recommended reserve balances. Regulatory Operating Fees have decreased over the prior year by $498,000, or 78.2 percent due to timing of payments for OCSD’s ocean discharge permit fees. It is anticipated that the costs will approximate or be below budget at year-end.

 Revenues – Service Fees and Property Taxes – Through December 31, revenues from service fees are at $158.6 million, or 55.4 percent of budget and Property taxes are $41.6 million, or 47.8 percent of budget. These items comprise the

Section 1 - Page 3 FY 2016-17 Mid-Year Report majority of the Sanitation District’s revenues and are mostly collected by the County through the property tax roll and distributed to the Sanitation District throughout the year based on a set distribution schedule that begins in November of each year. A decrease of $270,000 or 0.2 percent in service fee revenue over the prior period is due in part to timing of customer payments, change in invoicing wholly-exempt agency invoices, and an increase in user fee refunds issued in the current period, offset by an increase in fees of 1.6 percent. An increase of $296,000 or 0.7 percent in property tax revenues over the prior period is due to an increase of approximately 2.0 percent in property tax rates, higher construction activities and property values, offset by a decrease due to timing of redevelopment pass-through collections. These revenues are expected to approximate budget at year-end.  Revenues – Permittee User Fees – Permittee User Fees are at $6.0 million, or 53.3 percent of the $11.3 million budget. The number of permittees fluctuates from year to year as businesses are established or close their operations. The revenues through the mid-year are $1.7 million or 38.9 percent higher in comparison with the same period last year due to an increase in the number of permittees and an increase in the amount of discharge from the permittees. It is estimated that the permittee user charges will approximate budget at year-end.  Revenues – Inter District Sewer Use – SAWPA and SBSD – Inter District Sewer revenues - SAWPA and SBSD are at $1.6 million, or 47.5 percent of the $3.3 million budget. This revenue is derived from charges to the Santa Ana Watershed Protection Agency (SAWPA) and Sunset Beach Sanitary District (SBSD) for treatment of flows. These revenues are expected to approximate budget at year-end.  Revenues – Intra District Sewer Use – IRWD – Intra District Sewer revenues- IRWD are at $761,000, or 20.4 percent of the $3.7 million budget. This revenue is derived from charges to the Irvine Ranch Water District (IRWD) for treatment of flows. The revenues through the mid-year are lower than the same period last year by $89,000 or 10.5 percent mainly due to a $93,000 increase of property tax owed to IRWD that is somewhat offset the cost reimbursements received from IRWD. These revenues are expected to approximate budget at year-end.  Revenues - Sludge Disposal – IRWD – Sludge Disposal fees - IRWD are at $5.0 million, or 54.9 percent of the $9.1 million budget. The revenue is derived and fluctuated from flows discharged from IRWD to Sanitation District for the handling, treatment and disposal of solids. The revenues through the mid-year are lower than the same period last year by $252,000 or 4.8 percent, mainly due to an anticipated decline in sludge disposals. These revenues are expected to approximate or exceed budget at year-end.

 Revenues – Capital Assessments – IRWD – Capital Assessments-IRWD are at $927,000, or 21.1 percent of the $4.4 million budget. The revenues through the mid-year are lower than the same period last year by $317,000 or 25.5 percent

Section 1 - Page 4 Consolidated Financial Reports

mainly due to a decrease in joint capital costs charged to IRWD. It is estimated that the capital assessments will be below budget at year-end.  Revenues – Capital Facilities Capacity Charges (CFCC) – CFCC are at $5.8 million, or 42.8 percent of the $13.5 million budget. The revenues through the mid-year are lower than the same period last year by $169,000 or 2.9 percent due to decreased construction activity, offset by more supplement capital facilities capacity charges from industrial dischargers than at this time last year. These revenues are expected to approximate the budget at year-end.

 Revenues – Interest Earnings – Interest Earnings are at ($1.4 million) or (16.4) percent of the $8.6 million budget. The revenues through the mid-year are lower than the same period last year by $2.8 million or 204.2 percent due to a decline in the current market value of the securities held in the investment portfolios. It is estimated that the interest earnings will be below the budget amount at year- end.

 Revenues – Wastehauler – Wastehauler revenues are at $358,000 or 47.7 percent of the $750,000 budget. This revenue is derived from fees charged to wastehaulers allowing them to dump waste into the Sanitation District’s system. These revenues are expected to approximate budget at year-end.

 Revenues – CNG Sales – CNG Sales revenues are at $227,000 or 56.8 percent of the $400,000 budget. This revenue is derived from public sales at the District’s Compressed Natural Gas (CNG) fueling station. The revenues through the mid-year are higher than the same period last year by $6,000 or 2.8 percent. These revenues are expected to approximate budget at year-end.

 Revenues - Other – Other revenues are at $227,000 or 28.3 percent of the $800,000 budget. These revenues consist of miscellaneous revenues, such as reimbursements from insurance and employees. The revenues through the mid- year are lower than the same period last year by $508,000 or 69.1 percent mainly due to a settlement received in the prior year from the County of Orange bankruptcy filing in 1994 of $480,000. These revenues are expected to be below budget at year-end.

Section 1 - Page 5 FY 2016-17 Mid-Year Report

Comparison of Mid-Year Cost per Million Gallon Results with Budget Last Five Years

As demonstrated in the preceding graph for each of the last four fiscal years, the cost per million gallons at the end of the mid-year has been between 2.1 percent lower to 3.5 percent higher than the annual budget. The FY 2016-17 mid-year is 7.1 percent lower when compared with this year’s budget. The variance from previous years is primarily due to a decrease in operating expenses, which are 6.0 percent lower than the same period last year, offset by a decrease in flows, which are 1.1 percent lower than the same period last year. Staff believes that overall operating costs will be below budget at year-end.

The total cost per million gallons at December 31 is $2,012.18 based on flows of 182.6 million gallons per day. This is $154.8 per million gallons, or 7.1 percent, lower than the budgeted cost per million gallons of $2,167. There is an inverse relationship between the amount of flows and the cost per unit of collection, treatment, and disposal. Consequently, the lower cost per million gallons is due to net expenses being 7.6 percent less than the proportionate budget through December 31, which is partially offset by flows of 182.6 million gallons per day being 1.3 percent lower than the budgeted flow of 185 million gallons per day.

More detailed information on operating revenues, costs, and related information is provided within Section 2.

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Following are data tables showing the last five years of Single Family Residential User Fees (SFR) and the cost per MG to collect, treat, and dispose of wastewater for OCSD and for similar agencies. The agencies used in the table were determined to be those that most closely resembled OCSD in terms of services provided and treatment levels. The summaries demonstrate that OCSD’s SFR and cost per million gallons are each one of the lowest in their respective group.

Benchmark Study Five-Year Single Family Rate

Rates as of July 2012 2013 2014 2015 2016 Agency SFR SFR SFR SFR SFR Notes San Francisco $ 667.92 701.40$ $ 744.83 $ 784.44 842.14$ City of San Diego $ 572.58 572.58$ $ 572.58 $ 572.58 572.58$ Vallejo Sanitation/Flood Control District$ 495.12 507.48$ $ 520.20 $ 520.20 520.20$ Central Contra Costa Sanitary District$ 371.00 405.00$ $ 439.00 $ 471.00 503.00$ City of Los Angeles $ 391.56 409.20$ $ 435.40 $ 464.04 $ 494.77 Note 1 Sacramento County $ 288.00 312.00$ $ 348.00 $ 384.00 420.00$ Dublin San Ramon Services District$ 355.44 355.44$ $ 372.96 $ 382.38 382.38$ Union Sanitary District $ 319.55 337.76$ $ 357.02 $ 377.00 380.05$ East Bay MUD $ 305.10 331.10$ $ 358.14 $ 355.18 372.50$ City of Hayward $ 327.24 327.24$ $ 337.08 $ 347.16 357.60$ Orange County Sanitation District$ 294.00 308.00$ $ 316.00 $ 322.00 327.00$ City of Fresno $ 309.00 309.00$ $ 309.00 $ 309.00 309.00$ Irvine Ranch Water District $ 206.40 220.80$ $ 246.00 $ 288.60 $ 309.00 Note 2 Oro Loma Sanitary District $ 189.00 195.00$ $ 200.00 $ 206.00 221.00$ Los Angeles County $ 149.00 150.00$ $ 151.00 $ 155.00 $ 159.00 Note 3

Notes: (1) - Data is for the typical SFR customer rate and is not the average rate. (2) - Data represents the maximum SFR rate and is not the average rate. (3) - Data for 2013 and 2014 was revised to remove ad valorem monies that were inadvertently included.

Section 1 - Page 7 FY 2016-17 Mid-Year Report

Benchmark Study Five-Year Cost per MG

FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Agency Svc. Trt. Cost/MG Cost/MG Cost/MG Cost/MG Cost/MG Notes Central Contra Costa Sanitary District B 4 $4,203.43 $4,621.84 $5,778.43 $6,280.58 $6,453.65 Vallejo Sanitation/Flood Control District B 3 $5,176.00 $5,435.00 $6,153.00 $5,590.00 $5,396.00 San Francisco B 3 $4,778.96 $5,006.74 $5,400.28 $5,357.97 $5,268.23 Note 1 Union Sanitary District B 3 $3,267.06 $3,805.40 $3,832.47 $3,910.73 $3,957.08 City of San Diego B 2 $3,242.30 $3,340.35 $3,156.43 $3,591.69 $3,171.51 Dublin San Ramon Services District B 3 $2,009.57 $2,159.49 $2,506.60 $2,522.00 $2,895.95 East Bay MUD T 4 $2,320.02 $2,359.40 $2,559.18 $2,727.97 $2,598.53 Sacramento County T 3 $3,312.50 $2,143.16 $2,375.47 $2,494.40 $2,571.14 Note 2 City of Los Angeles B 4 $1,935.00 $2,062.00 $2,163.00 $2,269.00 $2,452.00 Orange County Sanitation District B 3 $1,871.47 $1,906.01 $1,935.05 $2,070.97 $2,110.43 City of Fresno B 3 $1,383.60 $1,411.89 $1,552.39 $1,628.91 $1,678.28 Los Angeles County B 4 $1,156.00 $1,008.00 $1,223.72 $1,239.40 $1,371.06 Note 3

Legend for Service Provided and Treatment Level: B - Agency operates both collection and treatment facilities T - Agency provides treatment services but not collection 2 - Advanced primary or primary with some secondary treatment 3 - Secondary treatment 4 - Advanced secondary or secondary with some tertiary treatment

Notes: (1) - Beginning in Fiscal Year 2012-13, dataset represents wastewater flows from finalized publicly available audited documents. (2) - Miles of sewers number changed in 2012 to include parallel force main pipes per the 2011 State of the District Report. (3) - Does not include source control or overhead costs.

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Capital Outlay Review:

As depicted by the preceding chart, Capital Outlays totaled $59.0 million or 34.5 percent of the capital outlay cash flow budget for FY 2016-17 as of December 31, 2016. Costs are proportionately low through the mid-year as some projects are still in the design phase or have experienced various delays. Examples as of December 31 are the Sludge Dewatering and Odor Control for Plants 1 and 2, which has a combined FY16-17 cash flow budget of $41.9 million but actual costs of only $14.3 million and the Rehabilitation of Western Regional Sewers, which has a budget of $16.0 million but actual costs of only $2.0 million. Overall, the capital outlay costs of the capital improvement program are expected to approximate $132.3 million, or 77.2 percent of the capital outlay cash flow budget at year-end.

More detailed information on the capital improvement program is provided within Section 3.

Capital Assets Schedule and Debt Service Budget Review: Section 4 is the Capital Assets Schedule and Debt Service Section. This section shows the cost value of the Sanitation District’s capital facilities at December 31, 2016, as well as the debt service costs resulting from the need to provide funding for the construction of capital facilities.

The majority of principal payments on debt issues are due in August during the first quarter, and in February during the third quarter of each fiscal year. Excluding payments on refunding debt from the Revenue Refunding Certificate Anticipation Notes, Series 2014B, as of December 31, 2016, 55.2 percent of the principal payments have been made through the end of the mid-year. Total principal payments are expected to

Section 1 - Page 9 FY 2016-17 Mid-Year Report approximate budget at year-end. Interest costs are expensed ratably throughout the fiscal year. Interest expense is anticipated to approximate budget at year-end.

Self-Insurance Budget Reviews: Section 5 is the Self-Insurance Section. Through December 31, the Self-Insurance Fund revenues totaled $1.2 million or 49.8 percent of the budget, while expenses were $1.7 million or 66.7 percent of the budget.

Separate fund accounting is used for recording the revenue and expenses incurred in managing these liability claims. The revenues to these funds represent charges to operating divisions. Expenses to these funds include actual claims paid, claims administration, and excess loss policies.

Section 1 - Page 10 Operating Budget Review

Cost per Million Gallons by Department Budget and Actual December 31, 2016

$1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Human Resources Services Executive Services Engineering Operations & Maintenance Management Administrative Enviornmental

Budget Actual

Collection, Treatment, & Disposal Expenses by Major Category Budget and Actual (in thousands) December 31, 2016

$70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Utilities Salary Wages & Salary Other Materials, Supplies, & Svcs Supplies, Employee Benefits Training & Meetings & Training Operating Expenses Contractual Services Printing & Publication Printing& Professional Services Research & Monitoring Repairs & Maintenance Administrative Expenses Budget Actual

Section 2 - Page 1

2016-17 Mid-Year Report Divisional Contributions to Cost Per Million Gallons For the Six Months Ended December 31, 2016

2016-17 12/31/14 12/31/15 Annual 12/31/16 Actual Actual Budget Actual Flow in Million Gallons 35,166.23 33,974.26 67,525.00 33,601.96 Flow in Million Gallons per Day 191.12 184.64 185.00 182.62 Executive Management Department General Management Administration $ 25.60 $ 31.50 $ 43.31 $ 36.87 Board Services 7.32 6.67 9.38 8.07 Public Affairs 7.93 13.11 15.11 15.05 Subtotal 40.85 51.28 67.80 59.99 Human Resources Department Human Resources 54.65 56.17 58.04 54.33 Risk Management / Safety / Security 48.23 43.67 70.33 60.60 Subtotal 102.88 99.84 128.37 114.93 Administrative Services Department Administrative Services 9.87 9.43 8.75 7.66 Financial Management 45.60 46.69 50.51 42.54 Contracts, Purchasing, & Materials Mgmt. 62.59 61.57 61.74 63.24 Information Technology 150.60 157.32 154.39 143.82 Subtotal 268.66 275.01 275.39 257.26 Facilities Support Services Department Facilities Support Administration 9.89 14.91 - - Facilities Support 8.21 - - - Equipment Rebuild 24.89 - - - Fleet Services 30.11 32.14 - - Collections Engineering 44.33 42.60 - - NPDES Source Inspection 33.08 34.61 - - Odor and Corrosion Control 104.94 105.34 - - Collection Facilities O & M 60.76 56.94 - - Subtotal 316.21 286.54 - - Environmental Services Department Environmental Services Administration - - 12.41 12.16 Resource Protection - - 88.10 81.92 Laboratory & Ocean Monitoring - - 153.76 146.20 Subtotal - - 254.27 240.28 Engineering Department Engineering Administration 10.43 7.75 5.91 6.72 Planning 44.49 50.91 48.61 49.05 Project Management Office 52.03 37.39 39.89 39.75 Civil and Mechanical Engineering 129.56 140.56 124.51 127.49 Electrical & Control System Engineering - - 68.29 61.45 Environmental Compliance 109.09 105.11 - - Subtotal 345.60 341.72 287.21 284.46 Operations & Maintenance Department Operations & Maintenance Administration 10.66 13.23 10.15 7.29 Collections Facilities O & M - - 190.21 166.05 Fleet Services - - 31.27 28.10 Plant No. 1 Operations 378.10 489.49 429.22 414.15 Plant No. 2 Operations 308.15 309.99 309.80 302.10 Building, Grounds & Mechanical Maintenance 205.58 - - - Instrumentation & Electrical Maintenance 215.79 - - - Plant No. 1 Maintenance - 226.80 299.69 256.09 Plant No. 2 Maintenance - 171.72 168.14 163.51 Environmental Laboratory & Ocean Monitoring 117.48 120.34 - - Subtotal 1,235.76 1,331.57 1,438.48 1,337.29 Total Operating Expenses 2,309.96 2,385.96 2,451.52 2,294.21 Cost Allocation (234.13) (269.45) (284.52) (282.03) Net Operating Requirements $ 2,075.83 $ 2,116.51 $ 2,167.00 $ 2,012.18

Section 2 - Page 2

Operating Budget Review

Comparison of Expenses by Department For the Six Months Ended December 31, 2016 2016-17 12/31/14 12/31/15 Year to Date Budget % Department and Division Actual Actual Budget 12/31/16 Realized Executive Management Department General Management Administration $ 900,333 $ 1,070,092 $ 2,924,220 $ 1,238,775 42.36% Board Services 257,548 226,641 633,540 271,180 42.80% Public Affairs 278,804 445,273 1,020,100 505,756 49.58% Subtotal 1,436,685 1,742,006 4,577,860 2,015,711 44.03% Human Resources Department Human Resources 1,921,945 1,908,246 3,918,890 1,825,529 46.58% Risk Management / Safety / Security 1,696,087 1,483,739 4,749,050 2,036,378 42.88% Subtotal 3,618,032 3,391,985 8,667,940 3,861,907 44.55%

Administrative Services Department Administrative Services 347,258 320,249 590,830 257,262 43.54% Financial Management 1,603,533 1,586,133 3,410,810 1,429,448 41.91% Contracts, Purchasing, & Materials Mgmt. 2,200,926 2,091,743 4,169,220 2,125,049 50.97% Information Technology 5,296,062 5,344,753 10,425,510 4,832,573 46.35% Subtotal 9,447,779 9,342,878 18,596,370 8,644,332 46.48%

Facilities Support Services Department Facilities Support Administration 347,941 506,529 - - 0.00% Facilities Support 288,601 - - - 0.00% Equipment Rebuild 875,449 - - - 0.00% Fleet Services 1,058,813 1,091,964 - - 0.00% Collections Engineering 1,558,758 1,447,182 - - 0.00% NPDES Source Inspection 1,163,166 1,176,019 - - 0.00% Odor and Corrosion Control 3,690,482 3,578,950 - - 0.00% Collection Facilities O & M 2,136,631 1,934,347 - - 0.00% Subtotal 11,119,841 9,734,991 - - 0.00% Environmental Services Department Environmental Services Administration - - 838,250 408,709 48.76% Resource Protection - - 5,948,920 2,752,519 46.27% Laboratory & Ocean Monitoring - - 10,382,450 4,912,625 47.32% Subtotal - - 17,169,620 8,073,853 47.02% Engineering Department Engineering Administration 366,932 263,193 399,390 225,956 56.58% Planning 1,564,599 1,729,470 3,282,440 1,648,112 50.21% Project Management Office 1,829,753 1,270,433 2,693,360 1,335,715 49.59% Civil and Mechanical Engineering 4,556,182 4,775,392 8,407,280 4,284,039 50.96% Electrical & Control System Engineering - - 4,610,980 2,064,785 44.78% Environmental Compliance 3,836,238 3,571,061 - - 0.00% Subtotal 12,153,704 11,609,549 19,393,450 9,558,607 49.29% Operations & Maintenance Department Operations & Maintenance Administration 374,959 449,368 685,600 244,910 35.72% Collections Facilities O & M - - 12,844,162 5,579,495 43.44% Fleet Services - - 2,111,320 944,263 44.72% Plant No. 1 Operations 13,296,458 16,630,063 28,982,656 13,916,367 48.02% Plant No. 2 Operations 10,836,567 10,531,806 20,918,950 10,151,167 48.53% Building, Grounds & Mechanical Maintenance 7,229,649 - - - 0.00% Instrumentation & Electrical Maintenance 7,588,641 - - - 0.00% Plant No. 1 Maintenance - 7,705,229 20,236,812 8,605,039 42.52% Plant No. 2 Maintenance - 5,833,922 11,353,810 5,494,260 48.39% Environmental Laboratory & Ocean Monitoring 4,131,065 4,089,195 - - 0.00% Subtotal 43,457,339 45,239,583 97,133,310 44,935,501 46.26% Total Operating Expenses 81,233,380 81,060,992 165,538,550 77,089,911 46.57% Cost Allocation (8,234,303) (9,153,971) (19,182,030) (9,476,871) 49.40% Net Operating Requirements $ 72,999,077 $ 71,907,021 $ 146,356,520 $ 67,613,040 46.20%

Section 2 - Page 3

2016-17 Mid-Year Report

Summary of Collection, Treatment, & Disposal Expenses by Major Category For the Six Months Ended December 31, 2016

Expense Expense Increase Increase Percent Budget Through Through (Decrease) (Decrease) Budget Remaining Description 2016-17 12/31/16 12/31/15 $ % Realized Budget Salary & Wages $ 66,833,000 33,174,80 5 32,474,470 $ 700,335 2.16% 49.64%$ 33,658,195

Employee Benefits 22,456,800 11,355,931 13,709,333 (2,353,402) -17.17% 50.57% 11,100,869

Administrative Expenses 1,909,150 760,690 972,801 (212,111) -21.80% 39.84% 1,148,460

Printing & Publication 310,690 135,662 121,931 13,731 11.26% 43.66% 175,028

Training & Meetings 1,158,070 446,676 329,883 116,793 35.40% 38.57% 711,394

Operating Materials & Supplies 16,698,250 7,554,763 8,281,648 (726,885) -8.78% 45.24% 9,143,487

Contractual Services 25,138,420 11,354,51 7 11,085,727 268,790 2.42% 45.17% 13,783,903

Professional Services 4,320,830 1,503,976 1,315,067 188,909 14.36% 34.81% 2,816,854

Research & Monitoring 800,000 345,735 309,764 35,971 11.61% 43.22% 454,265

Repairs & Maintenance 14,265,930 6,145,263 7,023,304 (878,041) -12.50% 43.08% 8,120,667

Utilities 8,242,240 3,378,952 4,337,178 (958,226) -22.09% 41.00% 4,863,288

Other Materials, Supplies, and Services 3,405,170 932,941 1,099,886 (166,945) -15.18% 27.40% 2,472,229

Net Cost Allocation (19,182,030) (9,476,871) (9,153,971) (322,900) 3.53% 49.40% (9,705,159)

Net Operating Requirements 146,356,52 0 67,613,040 71,907,021 (4,293,981) -5.97% 46.20% 78,743,480

Gallonage Flow (MG) 67,525.00 33,601.96 33,974.26 (372.30) -1.10%

Gallonage Flow (MGD) 185.00 182.62 184.64 (2.02) -1.09%

Gallonage Flow ($'s /MG) $2,167.00 $2,012.18 $2,116.51 ($104.33) -4.93%

Section 2 - Page 4

Operating Budget Review

Summary of Revenues For the Six Months Ended December 31, 2016

Revenue Percent Revenue Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 12/31/16 Realized Budget 12/31/15 $ % Service Fees $ 286,554,000 $ 158,606,025 55.35%$ 127,947,975 $ 158,875,947 $ (269,922) -0.17% Permit Fees 11,272,000 6,004,948 53.27% 5,267,052 4,322,983 1,681,965 38.91% Inter District Sewer Use-SAWPA & SBSD 3,283,000 1,560,261 47.53% 1,722,739 1,633,381 (73,120) -4.48% Intra District Sewer Use-IRWD 3,737,690 761,413 20.37% 2,976,277 850,469 (89,056) -10.47% Sludge Disposal-IRWD 9,090,000 4,993,946 54.94% 4,096,054 5,246,103 (252,157) -4.81% Capital Assessments-IRWD 4,402,000 926,696 21.05% 3,475,304 1,243,274 (316,578) -25.46% Capital Facilities Capacity Charges 13,500,000 5,776,293 42.79% 7,723,707 5,945,771 (169,478) -2.85% Debt Proceeds - 112,494,420 N/A (112,494,420) - 112,494,420 100.00% Property Taxes 87,017,000 41,601,683 47.81% 45,415,317 41,305,268 296,415 0.72% Interest Earnings 8,606,000 (1,409,703) -16.38% 10,015,703 1,352,547 (2,762,250) -204.23% Wastehauler 750,000 357,741 47.70% 392,259 337,513 20,228 5.99% CNG Sales 400,000 227,216 56.80% 172,784 221,094 6,122 2.77% Rents & Leases 255,000 124,284 48.74% 130,716 129,940 (5,656) -4.35% Other 800,000 226,733 28.34% 573,267 734,790 (508,057) -69.14% Power Sales 20,000 23,600 118.00% (3,600) 7,822 15,778 201.71% Other Sales 35,000 19,123 54.64% 15,877 30,717 (11,594) -37.74%

Total Revenues $ 429,721,690 $ 332,294,679 77.33% $ 97,427,011 $ 222,237,619 $ 110,057,060 49.52%

Section 2 - Page 5

2016-17 Mid-Year Report Summary of Collection, Treatment, & Disposal Expenses by Line Item For the Six Months Ended December 31, 2016

Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 12/31/16 Expensed Budget 12/31/15 $ % Salaries, Wages & Benefits Salaries & Wages $ 66,833,000 $ 33,174,805 49.64%$ 33,658,195 $ 32,474,470 $ 700,335 2.16% Employee Benefits Retirement 10,950,600 5,747,044 52.48% 5,203,556 8,099,396 (2,352,352) -29.04% Group Insurances 9,725,700 4,640,020 47.71% 5,085,680 4,605,766 34,254 0.74% Tuition & Certification Reimb 175,600 49,982 28.46% 125,618 60,625 (10,643) -17.56% Edu. degrees, Cert. & Lic. 314,600 199,660 63.46% 114,940 157,128 42,532 27.07% Uniform Rental 53,200 55,295 103.94% (2,095) 26,643 28,652 107.54% Workers' Compensation 1,196,300 598,150 50.00% 598,150 739,349 (141,199) -19.10% Unemployment Insurance 2,900 12,334 425.31% (9,434) 1,459 10,875 745.37% EMT Supplemental Benefits 37,900 53,446 141.02% (15,546) 18,967 34,479 181.78% Total Benefits 22,456,800 11,355,931 50.57% 11,100,869 13,709,333 (2,353,402) -17.17% Salaries, Wages & Benefits 89,289,800 44,530,736 49.87% 44,759,064 46,183,803 (1,653,067) -3.58% Matl, Supply, & Services Administrative Expenses Memberships 586,050 335,649 57.27% 250,401 343,816 (8,167) -2.38% Office Exp - Supplies 61,370 30,114 49.07% 31,256 25,970 4,144 15.96% Postage 41,040 19,870 48.42% 21,170 14,418 5,452 37.81% Books & Publications 50,970 21,308 41.80% 29,662 15,459 5,849 37.84% Forms 1,300 - 0.00% 1,300 231 (231) -100.00% Small Computer Items 908,000 311,023 34.25% 596,977 504,933 (193,910) -38.40% Minor Furniture & Fixtures 260,420 42,726 16.41% 217,694 67,974 (25,248) -37.14% Subtotal 1,909,150 760,690 39.84% 1,148,460 972,801 (212,111) -21.80% Printing & Publication Repro-In-House 243,690 95,150 39.05% 148,540 110,407 (15,257) -13.82% Printing-Outside 22,250 6,912 31.07% 15,338 6,314 598 9.47% Notices & Ads 44,700 33,600 75.17% 11,100 5,210 28,390 544.91% Photo Processing 50 - 0.00% 50 - - N/A Subtotal 310,690 135,662 43.66% 175,028 121,931 13,731 11.26% Training & Meetings Meetings 188,310 49,741 26.41% 138,569 71,634 (21,893) -30.56% Training 969,760 396,935 40.93% 572,825 258,249 138,686 53.70% Subtotal 1,158,070 446,676 38.57% 711,394 329,883 116,793 35.40% Operating Mat'ls & Supplies Chemical Coagulants 5,126,550 2,617,231 51.05% 2,509,319 3,001,217 (383,986) -12.79% Odor Control 8,157,300 3,603,443 44.17% 4,553,857 3,747,900 (144,457) -3.85% Disinfection 170,500 101,701 59.65% 68,799 100,885 816 0.81% Chemicals - Misc & Cogen 472,000 153,559 32.53% 318,441 144,253 9,306 6.45% Gasoline, Diesel & Oil 632,790 253,014 39.98% 379,776 304,595 (51,581) -16.93% Tools 691,950 135,343 19.56% 556,607 235,123 (99,780) -42.44% Safety equipment/tools 587,560 299,478 50.97% 288,082 328,389 (28,911) -8.80% Solv, Paints & Jan. Supplies 82,390 38,507 46.74% 43,883 43,353 (4,846) -11.18% Lab Chemicals & Supplies 601,360 270,598 45.00% 330,762 289,837 (19,239) -6.64% Other Operating Supplies 171,850 80,858 47.05% 90,992 84,203 (3,345) -3.97% Property Tax Fees 4,000 1,031 25.78% 2,969 1,893 (862) -45.54% Subtotal 16,698,250 7,554,763 45.24% 9,143,487 8,281,648 (726,885) -8.78% Contractual Services Solids Removal 17,206,000 8,844,955 51.41% 8,361,045 8,826,087 18,868 0.21% Other Waste Disposal 886,400 393,159 44.35% 493,241 388,010 5,149 1.33% Groundskeeping 129,720 69,332 53.45% 60,388 69,306 26 0.04% Janitorial 345,700 181,110 52.39% 164,590 235,632 (54,522) -23.14% Outside Lab Services 275,000 62,718 22.81% 212,282 91,956 (29,238) -31.80% Oxygen Plant Oper 406,000 146,240 36.02% 259,760 208,302 (62,062) -29.79% County Service Fee 671,700 24,468 3.64% 647,232 21,229 3,239 15.26% Temporary Services 814,400 223,713 27.47% 590,687 203,824 19,889 9.76% Security Services 1,330,000 416,489 31.31% 913,511 200,691 215,798 107.53% Other 3,073,500 992,333 32.29% 2,081,167 840,690 151,643 18.04% Subtotal 25,138,420 11,354,517 45.17% 13,783,903 11,085,727 268,790 2.42%

(Continued)

Section 2 - Page 6

Operating Budget Review Summary of Expenses by Line Item For the Six Months Ended December 31, 2016

Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2016-17 12/31/16 Expensed Budget 12/31/15 $ % Continued: Professional Services Legal 1,363,500 606,591 44.49% 756,909 644,443 (37,852) -5.87% Audit & Accounting 270,700 71,077 26.26% 199,623 85,607 (14,530) -16.97% Engineering 743,000 262,085 35.27% 480,915 91,060 171,025 187.82% Enviro Scientific Consulting 125,000 23,481 18.78% 101,519 37,683 (14,202) -37.69% Software Prgm Consulting 370,000 198,661 53.69% 171,339 115,713 82,948 71.68% Advocacy Efforts 176,000 78,870 44.81% 97,130 112,456 (33,586) -29.87% Industrial Hygiene Services 50,000 43,802 87.60% 6,198 41,635 2,167 5.20% Labor Negotiation Services 80,000 32,200 40.25% 47,800 - 32,200 N/A Other 1,142,630 187,209 16.38% 955,421 186,470 739 0.40% Subtotal 4,320,830 1,503,976 34.81% 2,816,854 1,315,067 188,909 14.36% Research & Monitoring Environmental Monitoring 305,000 145,203 47.61% 159,797 97,857 47,346 48.38% Air Quality Monitoring 95,000 532 0.56% 94,468 11,907 (11,375) -95.53% Research 400,000 200,000 50.00% 200,000 200,000 - 0.00% Subtotal 800,000 345,735 43.22% 454,265 309,764 35,971 11.61% Repairs & Maintenance Materials & Services 11,453,670 4,962,286 43.32% 6,491,384 5,756,023 (793,737) -13.79% Svc. Mtc. Agreements 2,812,260 1,182,977 42.06% 1,629,283 1,267,281 (84,304) -6.65% Subtotal 14,265,930 6,145,263 43.08% 8,120,667 7,023,304 (878,041) -12.50% Utilities Telephone 400,000 170,340 42.59% 229,660 151,285 19,055 12.60% Diesel For Generators 18,240 4,056 22.24% 14,184 5,711 (1,655) -28.98% Natural Gas 519,000 307,085 59.17% 211,915 242,158 64,927 26.81% Power 6,654,000 2,591,513 38.95% 4,062,487 3,623,124 (1,031,611) -28.47% Water 651,000 305,958 47.00% 345,042 314,900 (8,942) -2.84% Subtotal 8,242,240 3,378,952 41.00% 4,863,288 4,337,178 (958,226) -22.09% Other Operating Supplies Outside Equip Rental 139,600 35,852 25.68% 103,748 5,919 29,933 505.71% Insurance Premiums 32,000 31,049 97.03% 951 31,386 (337) -1.07% Prop & Gen Liab Insurance 1,111,100 555,552 50.00% 555,548 247,998 307,554 124.01% Freight 70,030 35,151 50.19% 34,879 39,738 (4,587) -11.54% Misc. Operating Expense 207,310 105,433 50.86% 101,877 115,106 (9,673) -8.40% Regulatory Operating Fees 715,900 139,093 19.43% 576,807 637,582 (498,489) -78.18% Subtotal 2,275,940 902,130 39.64% 1,373,810 1,077,729 (175,599) -16.29% General Mgr Contingency & Reappropriations 1,015,700 - 0.00% 1,015,700 - - N/A Other Non-Oper Expense Others 113,530 30,811 27.14% 82,719 22,157 8,654 39.06% Subtotal 113,530 30,811 27.14% 82,719 22,157 8,654 39.06%

Total Materials, Supplies & Services 76,248,750 32,559,175 42.70% 43,689,575 34,877,189 (2,318,014) -6.65%

Total Expenditures 165,538,550 77,089,911 46.57% 88,448,639 81,060,992 (3,971,081) -4.90%

Cost Allocation (19,182,030) (9,476,871) 49.40% (9,705,159) (9,153,971) (322,900) 3.53% Net Operating Requirements $ 146,356,520 $ 67,613,040 46.20%$ 78,743,480 $ 71,907,021 $ (4,293,981) -5.97%

Section 2 - Page 7

2016-17 Mid-Year Report

Summary of Collection, Treatment, & Disposal Expenses by Process For the Six Months Ended December 31, 2016

Increase Increase Actual Actual (Decrease) (Decrease) 12/31/16 12/31/15 $ % Process:

Preliminary Treatment $ 3,790,935 $ 4,356,349 $ (565,414) -12.98%

Primary Treatment 5,018,856 6,049,026 (1,030,170) -17.03%

Secondary Treatment 3,792,044 3,896,615 (104,571) -2.68%

Cryogenic Plant (Plant 2) 289,718 389,023 (99,305) -25.53%

Effluent Disposal 313,093 609,674 (296,581) -48.65%

Solids Handling 22,753,395 23,627,692 (874,297) -3.70%

Cogeneration 6,975,711 9,009,038 (2,033,327) -22.57%

Utilities 1,413,404 1,451,895 (38,492) -2.65%

Electrical Distribution 707,948 1,065,714 (357,765) -33.57%

Miscellaneous Buildings 4,395,607 4,240,680 154,927 3.65%

External Location 27,628 38,192 (10,564) -27.66%

Nerissa Vessel 113,056 102,352 10,703 10.46%

North County Yard 2,079 37,504 (35,425) -94.46%

Laboratory 7,241,498 6,262,185 979,313 15.64%

Collections 10,778,070 10,771,083 6,988 0.06%

Net Operating Requirements $ 67,613,040 $ 71,907,021 $ (4,293,980) -5.97%

Section 2 - Page 8

Operating Budget Review

Staffing Trends Full Time Equivalents December 31, 2016

700

626 624 624 624 650 627

38 36 45 600 44 52

550

588 588 580 572 582 500

450 6/30/13 6/30/14 6/30/15 6/30/16 12/31/16

Actual Vacant

At December 31, 2016, the total head count was 594 employees, or a full time equivalency of 582.

Section 2 - Page 9

2016-17 Mid-Year Report

This Page Intentionally Left Blank

Section 2 - Page 10 CIP Budget Review

Capital Improvement Program By Type and Funding Source For the Six Months Ended December 31, 2016

Collections Facilities: 36.7% Headworks: 5.1% Primary Treatment: 2.7% Secondary Treatment: 0.1% Solids Handling & Digestion: 33.1% Ocean Outfall Systems: 7.5% Utility Systems: 1.6% Process Related Special Projects: 0.9% Information Management Systems: 2.3% Strategic & Master Planning: 2.3% Water Management Projects: 0.4% Research: 0.1% Support Facilities: 4.9% Others: 0.0% Prior Year Treatment Projects: 0.3% Capital Equipment Purchases: 2.0%

Total Capital Improvement Outlays - $59,018,230

Replacement/Rehabilitation: 45% Improved Treatment: 15% Additional Capacity: 36% Support: 4%

Total Capital Improvement Outlays - $59,018,230

Section 3 - Page 1 FY 2016-17 Mid-Year Report

Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016

2016-17 2016-17 2016-17 Cashflow Actual at Projected Budget 12/31/2016 Outlay Collection System Improvement Projects Collections Facilities Santa Ana Trunk Sewer Rehab. $ 74,119 $ 17,305 $ 41,900 Raitt and Bristol Street Sewer Rehab & Extension 204,379 - 196,600 Santa Ana River Interceptor (SARI) Realignment 562,271 35,622 73,300 SARI Rock Stabilizers Removal 312,927 9,023 242,500 Newhope-Placentia Trunk Grade Separation Replacements 934,520 7,192 37,300 Newhope-Placentia Trunk Replacement 7,181,679 9,126,938 16,384,800 Newhope-Placentia Trunk Replacement, Segment B 13,762,266 2,172,924 2,173,000 Lakeview Grade Separation Project 154,706 - 80,200 Tustin Rose OCTA Grade Separation Project 71,317 132,287 132,300 Seal Beach Pumping Station Upgrade and Rehabilitation 5,964,626 660,411 3,042,400 Rehabilitation of Western Regional Sewers 16,018,059 2,009,451 7,137,300 Doig Drive Building Improvements - - 173,600 Newport Force Main Rehabilitation 5,903,015 1,309,508 1,333,900 Bay Bridge Pumping Station Replacement - 91,168 91,200 District 6 Trunk Sewer Relief 4,623,818 209,852 979,800 Southwest Costa Mesa Trunk 876,199 199,083 199,100 Gisler-Redhill System Improvements, Reach "B" 11,951,892 5,401,542 11,209,200 Gisler Red-Hill Interceptor Rehabilitation 102,511 - 46,700 Master Facilities Engineering Projects-Collections 1,429,603 92,390 1,194,400 Master Planning Studies-Collections 2,748,262 66,589 66,600 Bay Bridge Pump Station and Force Mains Rehab Study 361,019 51,612 61,200 Additional Charges to CIP Closed at 6/30/16 - 19,447 19,500 Subtotal - Collections Facilities 73,237,188 21,612,344 44,916,800

Revenue Area 14 Newport Force Main Rehabilitation (2.18%) 131,554 29,183 29,800 Subtotal - Revenue Area 14 131,554 29,183 29,800 Total Collection System Improvement Projects 73,368,742 21,641,527 44,946,600

(Continued)

Section 3 - Page 2 CIP Budget Review

Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016

2016-17 2016-17 2016-17 Cashflow Actual at Projected Budget 12/31/2016 Outlay Treatment & Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 6,705,388 1,773,439 5,855,000 Truck Line Odor Control Improvements P1 3,244,621 1,158,329 1,317,100 Headworks Modifications at P2 for GWRS Final Expansion - 62,608 168,100 Subtotal - Headworks 9,950,009 2,994,376 7,340,200

Primary Treatment Primary Clarifier & Trickling Filter Odor Control at P1 95,767 - 58,700 Plant No. 1 Primary Treatment Upgrades 293,871 156,059 175,400 Primary Clarifiers Repl & Impr at Plant No. 1 - 351,542 404,700 A-Side Primary Clarifiers Repl. at P2 1,684,096 1,083,650 3,650,300 Subtotal - Primary Treatment 2,073,734 1,591,251 4,289,100

Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 - - 24,600 Activated Sludge Aeration Basin Deck Repair at P2 295,085 67,944 82,500 Oxygen Plant Demolition at Plant No. 2 428,585 16,659 36,700 Subtotal - Secondary Treatment 723,670 84,603 143,800

Solids Handling & Digestion Digester Rehabilitation at Plant 1 4,754,023 4,769,978 5,978,300 Sludge Dewatering and Odor Control at Plant 1 18,460,389 6,122,425 12,043,300 Solids Thickening and Processing Upgrades 4,208,003 503,474 621,000 Sludge Dewatering and Odor Control at Plant 2 23,463,706 8,159,404 19,863,800 Subtotal - Solids Handling & Digestion 50,886,121 19,555,281 38,506,400

Ocean Outfall Systems Final Effluent Sampler and Building Area Upgrades 5,602,416 2,976,864 4,862,900 Ocean Outfall System Rehabilitation 4,648,804 1,394,818 4,136,400 Interplant Effluent Pipeline Rehabiliation - 66,348 66,400 Subtotal - Ocean Outfall Systems 10,251,220 4,438,030 9,065,700

Utility Systems Cengen Cooling Water System Replacement - 6,114 9,700 Cengen Emissions Control Project 692,372 236,832 253,600 Digester Gas Facilities Rehabilitation 332,017 16,009 84,700 Natural Gas Pipelines Repl at Plant No. 1 and 2 33,573 12,981 85,400 Plant Water System Rehabilitation at Plant No. 1 11,645 410 500 Plant Water System Rehabilitation at Plant No. 2 1,884 4,084 4,100 Consolidated Demolition & Utility Improvements at P2 1,081,187 645,733 1,088,000 Plant Air System Master Plan 45,061 (42) (100) Subtotal - Utility Systems 2,197,739 922,121 1,525,900

(Continued)

Section 3 - Page 3 FY 2016-17 Mid-Year Report

Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016

2016-17 2016-17 2016-17 Cashflow Actual at Projected Budget 12/31/2016 Outlay Process Related Special Projects Safety Improvements at Plants Nos. 1 and 2 704,960 353,735 2,624,300 Odor Control Master Plan 585,791 166,595 626,000 Subtotal - Process Related Special Projects 1,290,751 520,330 3,250,300

Information Management Systems Programmable Control Panel Upgrade 74,645 21,348 62,200 Project Management Information System - - 137,500 Power Monitoring & Control Systems at P2 2,590,934 473,174 1,977,300 Master Information Technology Capital Program 502,307 423,587 437,800 Geographic Information System 616,445 379,135 409,200 EAM Software and Process Implementation 471,467 34,893 94,900 PDS2D Software Replacement 98,061 6,250 36,300 Process Control System Upgrades Study 1,348,089 5,234 222,600 Subtotal - Information Management Systems 5,701,948 1,343,621 3,377,800

Strategic & Master Planning Master Planning Studies 3,363,060 1,356,202 5,872,100 Subtotal - Strategic & Master Planning 3,363,060 1,356,202 5,872,100

Water Management Projects Effluent Reuse Study 1,104,241 239,243 239,300 Subtotal - Water Management Projects 1,104,241 239,243 239,300

Research Research Program 1,149,080 20,489 77,000 Fuel Cell Demo 16,644 12,925 13,000 SCCWRP Nutrient Cycling Sampling 42,659 - 7,000 AquaCritox Evaluation/Design 255,469 54,680 131,900 Subtotal - Research 1,463,852 88,094 228,900

Support Facilities Master Facilities Engineering Projects - Plant 12,735,831 2,212,582 5,070,700 Master Small Capital Replacement/Rehabilitation 1,711,019 28,337 491,800 Title 24 Access Compliance & Building Rehab Project 3,816,143 553,493 2,128,100 Headquarters Complex, Site & Security & Entrance Realign. 5,951,410 95,456 1,909,700 Site and Security Improvements at Plant No.2 12,797 - 4,300 Subtotal - Support Facilities 24,227,200 2,889,868 9,604,600

(Continued)

Section 3 - Page 4 CIP Budget Review

Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2016

2016-17 2016-17 2016-17 Cashflow Actual at Projected Budget 12/31/2016 Outlay

Others Capital Improvement Program Mgmt. Services 24,326 12 100 Subtotal - Others 24,326 12 100

Additional Charges to CIP Completed at 6/30/16 - 177,492 177,500

Total Treatment and Disposal Projects 113,257,871 36,200,524 83,621,700

Capital Equipment Purchases 3,682,780 1,176,179 3,682,800

Total Collection, Treatment and Disposal Projects and Capital Equipment Purchases 190,309,393 59,018,230 132,251,100

Less: CIP Savings and Deferrals (19,032,000) - -

Net Collection, Treatment and Disposal Projects and Capital Equipment Purchases $171,277,393 $ 59,018,230 $132,251,100

Section 3 - Page 5 FY 2016-17 Mid-Year Report

Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016

Current Total Approved June 30, 2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2017 Budget Collection System Improvement Projects Collections Facilities Santa Ana Trunk Sewer Rehab. 6,974,000 6,686,800 41,900 6,728,700 245,300 Raitt and Bristol Street Sewer Rehab & Extension 13,622,000 259,075 196,600 455,675 13,166,325 Santa Ana River Interceptor (SARI) Realignment 11,404,000 5,592,473 73,300 5,665,773 5,738,227 SARI Rock Stabilizers Removal 4,046,000 265,733 242,500 508,233 3,537,767 Taft Branch Sewer Relief 1,928,000 12,083 - 12,083 1,915,917 Newhope-Placentia Trunk Grade Separation Replacements 5,739,000 4,045,695 37,300 4,082,995 1,656,005 Newhope-Placentia Trunk Replacement 34,708,000 9,737,373 16,384,800 26,122,173 8,585,827 Newhope-Placentia Trunk Replacement, Segment B 65,367,000 26,909 2,173,000 2,199,909 63,167,091 Yorba Linda Pumping Station Abandonment 7,053,000 - - - 7,053,000 Lakeview Grade Separation Project 330,000 68,892 80,200 149,092 180,908 Tustin Rose OCTA Grade Separation Project 586,000 283,638 132,300 415,938 170,062 Beach Trunk/Knott Interceptor Sewer Relief 118,678,000 - - - 118,678,000 Seal Beach Pumping Station Upgrade and Rehabilitation 60,840,000 2,073,689 3,042,400 5,116,089 55,723,911 Rehabilitation of Western Regional Sewers 217,069,000 2,518,370 7,137,300 9,655,670 207,413,330 Doig Drive Building Improvements 2,436,000 - 173,600 173,600 2,262,400 Newport Force Main Rehabilitation 62,604,800 56,646,974 1,333,900 57,980,874 4,623,926 Crystal Cove Pumping Station Rehabilitation 10,882,000 - - - 10,882,000 Bay Bridge Pumping Station Replacement 54,000,000 - 91,200 91,200 53,908,800 Newport Beach Pump Stations Odor Control Improvements 4,066,000 - - - 4,066,000 District 6 Trunk Sewer Relief 7,965,000 1,421,400 979,800 2,401,200 5,563,800 Southwest Costa Mesa Trunk 29,650,000 1,747,830 199,100 1,946,930 27,703,070 Gisler-Redhill System Improvements, Reach "B" 25,213,000 6,299,980 11,209,200 17,509,180 7,703,820 Browning Subtrunk Sewer Relief 16,952,000 - - - 16,952,000 MacArthur Pumping Station Rehabilitation 8,762,000 - - - 8,762,000 Main Street Pump Station Rehabilitation 39,219,000 - - - 39,219,000 Gisler Red-Hill Interceptor Rehabilitation 5,486,000 - 46,700 46,700 5,439,300 Edinger/Bolsa Chica Trunk Improvements 5,159,000 - - - 5,159,000 Edinger Pumping Station Rehabilitation 8,880,000 - - - 8,880,000 Slater Avenue Pump Station Rehabilitation 9,729,000 - - - 9,729,000 Master Facilities Engineering Projects-Collections 12,192,000 1,199,298 1,194,400 2,393,698 9,798,302 Master Planning Studies-Collections 10,636,304 402,264 66,600 468,864 10,167,440 Bay Bridge Pump Station and Force Mains Rehab Study 725,000 341,878 61,200 403,078 321,922 Additional Charges to CIP Closed at 6/30/16 - - 19,500 19,500 (19,500) Subtotal - Collections Facilities 862,901,104 99,630,354 44,916,800 144,547,154 718,353,950

Revenue Area 14: Newport Force Main Rehabilitation (2.18%) 1,395,200 1,262,425 29,800 1,292,225 102,975 Subtotal - Revenue Area 14 1,395,200 1,262,425 29,800 1,292,225 102,975 Total Collection System Improvement Projects 864,296,304 100,892,779 44,946,600 145,839,379 718,456,925

(Continued)

Section 3 - Page 6 CIP Budget Review

Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016

Current Total Approved June 30, 2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2017 Budget Treatment & Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 274,841,000 2,433,404 5,855,000 8,288,404 266,552,596 Truck Line Odor Control Improvements P1 9,299,000 7,359,325 1,317,100 8,676,425 622,575 Headworks Modifications at P2 for GWRS Final Expansion 50,000,000 - 168,100 168,100 49,831,900 Subtotal - Headworks 334,140,000 9,792,729 7,340,200 17,132,929 317,007,071

Primary Treatment Primary Clarifier & Trickling Filter Odor Control at P1 94,228,000 - 58,700 58,700 94,169,300 Plant No. 1 Primary Treatment Upgrades 9,146,000 8,118,861 175,400 8,294,261 851,739 Primary Clarifiers Repl & Impr at Plant No. 1 158,332,000 - 404,700 404,700 157,927,300 A-Side Primary Clarifiers Repl. at P2 428,264,000 978,734 3,650,300 4,629,034 423,634,966 Subtotal - Primary Treatment 689,970,000 9,097,595 4,289,100 13,386,695 676,583,305

Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 3,300,000 - 24,600 24,600 3,275,400 Activated Sludge Aeration Basin Deck Repair at P2 2,331,000 55,798 82,500 138,298 2,192,702 Oxygen Plant Demolition at Plant No. 2 3,444,000 2,816,671 36,700 2,853,371 590,629 Subtotal - Secondary Treatment 9,075,000 2,872,469 143,800 3,016,269 6,058,731

Solids Handling & Digestion Digester Rehabilitation at Plant 1 67,150,000 57,765,401 5,978,300 63,743,701 3,406,299 Sludge Dewatering and Odor Control at Plant 1 188,328,000 152,105,764 12,043,300 164,149,064 24,178,936 Solids Thickening and Processing Upgrades 51,150,000 46,778,286 621,000 47,399,286 3,750,714 Plant No.2 Digester Facilities Rehabilitation 49,220,000 152,343 - 152,343 49,067,657 Sludge Dewatering and Odor Control at Plant 2 90,477,000 25,961,621 19,863,800 45,825,421 44,651,579 Subtotal - Solids Handling & Digestion 446,325,000 282,763,415 38,506,400 321,269,815 125,055,185

Ocean Outfall Systems Final Effluent Sampler and Building Area Upgrades 16,411,000 11,079,895 4,862,900 15,942,795 468,205 Ocean Outfall System Rehabilitation 91,000,000 3,043,856 4,136,400 7,180,256 83,819,744 Interplant Effluent Pipeline Rehabiliation 25,200,000 - 66,400 66,400 25,133,600 Subtotal - Ocean Outfall Systems 132,611,000 14,123,751 9,065,700 23,189,451 109,421,549

Utility Systems Cengen Cooling Water System Replacement 11,477,000 11,374,655 9,700 11,384,355 92,645 Cengen Emissions Control Project 23,820,000 21,945,471 253,600 22,199,071 1,620,929 UPS System Upgrades 8,087,000 - - - 8,087,000 Digester Gas Facilities Rehabilitation 87,897,000 9,458 84,700 94,158 87,802,842 Natural Gas Pipelines Repl at Plant No. 1 and 2 1,310,000 2,282 85,400 87,682 1,222,318 Electrical Power Distribution System Improvements 34,608,000 - - - 34,608,000 Plant Water System Rehabilitation at Plant No. 1 6,157,000 6,113,517 500 6,114,017 42,983

(Continued)

Section 3 - Page 7 FY 2016-17 Mid-Year Report

Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016

Current Total Approved June 30, 2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2017 Budget Utility Systems (continued) Central Generation Rehab at Plant No. 1 73,151,000 - - - 73,151,000 Plant Water System Rehabilitation at Plant No. 2 3,704,000 3,737,750 4,100 3,741,850 (37,850) Consolidated Demolition & Utility Improvements at P2 38,460,000 3,205,873 1,088,000 4,293,873 34,166,127 Central Generation Rehab at Plant No. 2 95,906,000 - - - 95,906,000 Plant Air System Master Plan 225,000 187,096 (100) 186,996 38,004 Subtotal - Utility Systems 384,802,000 46,576,102 1,525,900 48,102,002 336,699,998

Process Related Special Projects Safety Improvements at Plants Nos. 1 and 2 9,702,000 202,858 2,624,300 2,827,158 6,874,842 Odor Control Master Plan 1,950,000 1,233,922 626,000 1,859,922 90,078 Subtotal - Process Related Special Projects 11,652,000 1,436,780 3,250,300 4,687,080 6,964,920

Information Management Systems Process Control Systems Upgrades 102,399,000 - - - 102,399,000 Programmable Control Panel Upgrade 2,283,000 1,785,807 62,200 1,848,007 434,993 Project Management Information System 4,000,000 - 137,500 137,500 3,862,500 Power Monitoring & Control Systems at P2 34,123,000 604,790 1,977,300 2,582,090 31,540,910 Master Information Technology Capital Program 10,000,000 - 437,800 437,800 9,562,200 Geographic Information System 4,568,000 1,947,390 409,200 2,356,590 2,211,410 EAM Software and Process Implementation 7,500,000 4,700,097 94,900 4,794,997 2,705,003 PDS2D Software Replacement 525,000 342,351 36,300 378,651 146,349 Process Control System Upgrades Study 3,554,000 - 222,600 222,600 3,331,400 Subtotal - Information Management Systems 168,952,000 9,380,435 3,377,800 12,758,235 156,193,765

Strategic & Master Planning Master Planning Studies 13,015,696 1,190,605 5,872,100 7,062,705 5,952,991 Climate Change Impact Study 590,000 - - - 590,000 Subtotal - Strategic & Master Planning 13,605,696 1,190,605 5,872,100 7,062,705 6,542,991

Water Management Projects Effluent Reuse Study 3,250,000 2,529,365 239,300 2,768,665 481,335 Subtotal - Water Management Projects 3,250,000 2,529,365 239,300 2,768,665 481,335

Research Research Program 8,500,000 - 77,000 77,000 8,423,000 Fuel Cell Demo 135,000 118,192 13,000 131,192 3,808 SCCWRP Nutrient Cycling Sampling 95,000 71,250 7,000 78,250 16,750 AquaCritox Evaluation/Design 588,000 402,510 131,900 534,410 53,590 Subtotal - Research 9,318,000 591,952 228,900 820,852 8,497,148

(Continued)

Section 3 - Page 8 CIP Budget Review

Summary of Capital Improvement Construction Requirements - Project Life For the Six Months Ended December 31, 2016

Current Total Approved June 30, 2016 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30, 2017 Budget Support Facilities Master Facilities Engineering Projects - Plant 43,325,000 7,856,037 5,070,700 12,926,737 30,398,263 Master Small Capital Replacement/Rehabilitation 15,622,000 2,065,761 491,800 2,557,561 13,064,439 Title 24 Access Compliance & Building Rehab Project 17,509,000 12,967,931 2,128,100 15,096,031 2,412,969 Headquarters Complex, Site & Security & Entrance Realign. 179,067,000 169,006 1,909,700 2,078,706 176,988,294 Site and Security Improvements at Plant No.2 252,000 227,660 4,300 231,960 20,040 Subtotal - Support Facilities 255,775,000 23,286,395 9,604,600 32,890,995 222,884,005

Others Banning Gate Relocation & Grading at Plant No. 2 2,812,000 227,660 - 227,660 2,584,340 Capital Improvement Program Mgmt. Services 300,000 9,591 100 9,691 290,309 Subtotal - Others 3,112,000 237,251 100 237,351 2,874,649

Additional Charges to CIP Completed at 6/30/16 - - 177,500 177,500 (177,500)

Total Treatment and Disposal Projects 2,462,587,696 403,878,844 83,621,700 487,500,544 1,975,087,152

Capital Equipment Purchases 16,000,000 7,083,097 3,682,800 10,765,897 5,234,103

Total Collection, Treatment and Disposal Projects and Capital Equipment Purchases $ 3,342,884,000 $511,854,720 $132,251,100 $644,105,820 $2,698,778,180

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Section 3 - Page 10 Capital Assets Schedule & Debt Service Budget Review Capital Assets Schedule For the Six Months Ended December 31, 2016 Capital Facilities Budget Review Balance Year-to-Date Balance 07/01/16 Additions 12/31/16 CONSTRUCTION IN PROGRESS: Treatment Plant $ 405,065,130 $ 37,376,703 $ 442,441,833 Collection System 94,310,929 21,641,527 115,952,456 Subtotal 499,376,059 59,018,230 558,394,289

PROPERTY, PLANT & EQUIPMENT (at cost): Land and Property Rights 15,959,559 - 15,959,559 Collection Lines and Pump Stations 781,138,758 - 781,138,758 Treatment Facilities 2,278,136,004 - 2,278,136,004 Effluent disposal facilities 97,014,820 - 97,014,820 Solids disposal facilities 3,463,236 - 3,463,236 General and administrative facilities 229,446,444 - 229,446,444 Excess purchase price over book value on acquired assets 19,979,000 - 19,979,000 Subtotal 3,425,137,821 - 3,425,137,821 Total Property, Plant & Equipment & CIP $ 3,924,513,880 $ 59,018,230 $ 3,983,532,110

Debt Service Budget Review 2016-17 Year-to-Date Remaining Budget Payments % of Budget Budget Principal Payments by Debt Issue: 2007A COP 265,000 - 0.00% 265,000 2007B COP 7,110,000 - 0.00% 7,110,000 2008B COP 8,815,000 8,815,000 100.00% - 2009A COP 4,250,000 - 0.00% 4,250,000 2010A BABs - - 0.00% - 2010C BABs - - 0.00% - 2011A COP 15,135,000 15,135,000 100.00% - 2012A COP - - 0.00% - 2012B COP - - 0.00% - 2014A COP - - 0.00% - 2014B CANs 7,827,411 120,850,000 1543.93% (113,022,589) 2015A COP - - 0.00% - 2016A COP - - 0.00% - 2016B COP - - 0.00% - Subtotal Principal Payments 43,402,411 144,800,000 333.62% (101,397,589)

Interest Expense by Debt Issue: 2007A COP 4,108,278 2,054,139 50.00% 2,054,139 2007B COP 355,500 177,750 50.00% 177,750 2008B COP 132,225 22,025 16.66% 110,200 2009A COP 585,250 292,625 50.00% 292,625 2010A BABs 2,897,639 2,107,769 72.74% 789,870 2010C BABs 6,523,780 4,745,475 72.74% 1,778,305 2011A COP 4,774,725 2,261,250 47.36% 2,513,475 2012A COP 3,735,900 1,867,950 50.00% 1,867,950 2012B COP 3,187,400 1,593,700 50.00% 1,593,700 2014A COP 4,254,500 2,127,250 50.00% 2,127,250 2014B CANs 496,694 1,624,711 327.11% (1,128,017) 2015A COP 6,375,500 3,187,750 50.00% 3,187,750 2016A COP 5,833,798 3,493,448 59.88% 2,340,350 2016B COP - 617,967 N/A (617,967) Subtotal Interest Expense 43,261,189 26,173,809 60.50% 12,177,247 Total Debt Service $ 86,663,600 $ 170,973,809 197.28% $ (89,220,342)

Section 4 - Page 1 2016-17 Mid-Year Report

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Section 4 - Page 2 Self Insurance Budget Review

General Liability and Property Fund Budget Review For the Six Months Ended December 31, 2016

Percent Actual of Budget Remaining Actual 2016-17 Through Through 2016-17 Through Increase Budget 12/31/16 12/31/16 Budget 12/31/15 (Decrease)

Revenues:

In-Lieu Premiums $ 1,111,100 $ 555,552 50.00%$ 555,548 $ 247,998 $ 307,554

Service Department Allocations 18,700 9,348 49.99% 9,352 2,748 6,600

Total Revenues 1,129,800 564,900 50.00% 564,900 265,080 299,820

Expenses:

Benefits/Claims 40,000 667,161 1667.90% (627,161) 13,549 653,612

Legal Services 130,000 72,136 55.49% 57,864 28,905 43,231

Professional Services - 25,976 N/A (25,976) - 25,976

Subtotal 170,000 765,273 450.16% (595,273) 42,454 722,819

Policy Premium Expense 1,220,000 585,721 48.01% 634,279 580,262 5,459

Total Expenses 1,390,000 1,350,994 97.19% 39,006 622,716 728,278

Excess Revenue (Expense) (260,200) (786,094) $ 525,894 (357,636) (428,458)

Beginning Reserves 55,260,200 55,252,299 56,125,515 (873,216)

Ending Reserves $ 55,000,000 $ 54,466,205 $ 55,767,879 $ (1,301,674)

Section 5 - Page 1 FY 2016-17 Mid-Year Report

Workers' Compensation Fund Budget Review For the Six Months Ended December 31, 2016

Percent Actual of Budget Remaining Actual 2016-17 Through Through 2016-17 Through Increase Budget 12/31/16 12/31/16 Budget 12/31/15 (Decrease)

Revenues:

In-Lieu Premiums $ 1,196,300 $ 598,150 50.00%$ 598,150 $ 739,350 $ (141,200)

Miscellaneous Other Revenue 10,000 - 0.00% 10,000 - -

Total Revenues 1,206,300 598,150 49.59% 608,150 739,350 (141,200)

Expenses:

Benefits/Claims 660,000 137,622 20.85% 522,378 433,699 (296,077)

Legal Services 170,000 23,875 14.04% 146,125 124,201 (100,326)

Professional Services 60,000 36,232 60.39% 23,768 35,847 385

Subtotal 890,000 197,729 22.22% 692,271 593,747 (396,018)

Policy Premium Expense 200,000 104,413 52.21% 95,587 97,169 7,244

Total Expenses 1,090,000 302,142 27.72% 787,858 690,916 (388,774)

Excess Revenue (Expense) 116,300 296,008 $ (179,708) 48,434 247,574

Beginning Reserves 1,883,700 1,913,178 1,523,264 389,914

Ending Reserves $ 2,000,000 $ 2,209,186 $ 1,571,698 $ 637,488

Section 5 - Page 2

January 31, 2017

STAFF REPORT

Mid-Year Treasurer’s Report For the Period Ended December 31, 2016

SUMMARY

Section 15.0 of the District's Investment Policy includes 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 Chandler Asset Management, 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.

ADDITIONAL INFORMATION

Performance Reports The Quarterly Strategy Review, prepared by Chandler Asset Management, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, is 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 December 31, 2016. The Liquid Operating Monies portfolio, with an average maturity of 51 days, consists entirely of high quality fixed income investments consistent with the District’s investment policy.

Portfolio Performance Summary The following table presents a performance summary of the District's portfolios as compared to their benchmarks for the period ended December 31, 2016.

OCSD ♦ P.O. Box 8127 ♦ Fountain Valley, CA 92728-8127 ♦ (714) 962-2411

Mid-Year Treasurer’s Report For the Period Ended December 31, 2016 Page 2 of 3

Portfolio Performance Summary As of December 31, 2016 Liquid Operating Monies (%) Long-Term Operating Monies (%) Total Rate of Total Rate of

Return Benchmark(1) Return Benchmark(1) 3 Months 0.12 0.09 -0.84 -1.06 6 Months 0.22 0.18 -0.78 -1.12 9 Months 0.31 0.25 -0.07 -0.26 12 Months 0.48 0.33 1.47 1.30 Annualized Since inception 30 Nov 2014 0.34 0.18 1.01 0.98

Market Value $113.0M $316.6M Average Quality “AAA”/”Aaa” “AA+”/”Aa1” Current Yield (%) 0.8 1.7 Estimated Yield to Maturity (%) 0.6 1.5 Quarterly Deposits (Withdrawals) $55.0M ($7.1M) Estimated Annual Income $0.6M $5.0M

(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)

31 Mar. 16 63.8 319.6

30 Jun. 16 139.4 332.7

30 Sep. 16 58.0 325.9

30 Dec. 16 113.0 316.6

District’s Investment Account Balances as of December 31, 2016

Book Balances Estimated Investment Accounts December 31, 2016 Yield (%)

State of Calif. LAIF $ 62,400,000 0.72 Union Bank Checking Account 132,512 0.00 Union Bank Overnight Sweep Account 87,000 0.01 Union Bank W/C Checking 89,873 0.00 Chandler – Short-term Portfolio 112,898,829 0.55 Chandler - Long-term Portfolio 315,497,191 1.51 Petty Cash 3,000 N/A BNY Mellon OCIP Reserve 3,614,750 0.87 TOTAL $494,723,155 1.19

Debt Service Reserves w/Trustees $ 22,066,544 2.58

Mid-Year Treasurer’s Report For the Period Ended December 31, 2016 Page 3 of 3

District’s Cost of Funds on Debt Issues as of December 31, 2016

Annual Cost of Funds Outstanding Interest Issue Description COP Balance Rate (%)

2007A Fixed $91,885,000 4.50 2007B Fixed 7,110,000 4.71 2009A Fixed 13,405,000 4.72 2010A Fixed 80,000,000 3.68 2010C Fixed 157,000,000 4.11 2011A Fixed 96,330,000 2.61 2012A Fixed 100,645,000 3.54 2012B Fixed 66,395,000 1.50 2014A Fixed 85,090,000 2.34 2015A Fixed 127,510,000 3.30 2016A Fixed 145,880,000 3.02 2016B Fixed 109,875,000 0.87

TOTAL $1,081,125,000

Weighted Avg. Cost of Funds 3.06

ATTACHMENTS

1. Chandler Quarterly Report 2. Summary of Performance Data and Portfolio Statistics – Liquid Operating Monies 3. Summary of Performance Data and Portfolio Statistics – L-T Operating Monies 4. Investment Transactions and Balances in LAIF 5. Asset Summary by Asset Type – Liquid Operating Portfolio 6. Asset Summary by Asset Type – Long Term Portfolio 7. Asset Summary by Asset Type – Owner Controlled Insurance Program Escrow Account 8. Investment Listing (Yield Analysis Report) 9. Asset Detail – Consolidated 10. Custody Transaction History – Consolidated 11. Callan Quarterly Review 12. Chandler Quarterly Review 13. Rating Agency Comparisons December 31, 2016

Mr. Mike White, CPA Controller Orange County Sanitation District 10844 Ellis Avenue Fountain Valley CA 92708-7018

Dear Mike,

Bond Market Recap

The Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted that economic activity has expanded at a moderate pace and labor market trends have improved, but inflation remains below target. The Fed’s revised “dot plot” was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee’s GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC’s median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of two or three more 25 basis point rate hikes this year. The Fed’s longer-run median fed funds target rate was revised up to 3.0% from 2.9%. Fed Chair Yellen downplayed the forecast changes during her post-meeting press conference, and continued to emphasize that future increases in the fed funds rate are expected to be gradual. She added that it is too early to anticipate how potential changes in fiscal policy will impact the economy and the Fed’s outlook. The market is now pricing in more than a 70% chance of another rate hike in June 2017.

Consumer Prices

Retail Sales

On a year-over-year basis, total retail sales were up 3.8% in November compared with a 4.2% increase in October. On a month-over-month basis, retail sales were up just 0.1% in November, below expectations of 0.4%. Excluding autos and gas, retail sales rose 0.2% in the month.

Labor Market

Nonfarm payrolls were lower than expected in December, up 156,000 versus the consensus forecast of 175,000. However, October and November payrolls were revised up by a total of 19,000. On a trailing 3-month and 6-month basis, payrolls increased by an average of 165,000 and 188,500 per month, respectively. The unemployment rate inched back up to 4.7% from 4.6%, but the participation rate also increased to 62.7% from 62.6%. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, declined to 9.2% in December from 9.3% in November. Wages were up a solid 0.4% in December, versus expectations for a 0.3% increase. On a year-over-year basis, wages were up 2.9% in December (the highest year-over- year increase since June 2009), vs. 2.5% in November.

Housing Starts

Total housing starts fell 18.7% in November, following a gain of 27.4% in October. Single-family starts fell 4.1% in November while multi-family starts plunged 45.1%. Housing starts tend to be volatile on a month-to-month basis.

TREASURY YIELDS 12/31/2016 9/30/2016 CHANGE

3 Month 0.50 0.28 0.22

2 Year 1.19 0.76 0.43

3 Year 1.45 0.88 0.57

5 Year 1.93 1.15 0.78

7 Year 2.25 1.42 0.83

10 Year 2.45 1.60 0.85

30 Year 3.07 2.32 0.75

Performance Attribution

Long-Term Portfolio

The long-term portfolio produced a negative absolute return but a positive relative return of 0.22% during the quarter. The quarterly return for the portfolio was (0.84%) versus (1.06%) for the Bank of America Merrill Lynch 1-5 Year AAA-A US Corporate and Government Index. The primary driver of the positive performance differentiation of the portfolio versus the benchmark was the lower than benchmark interest rate exposure of the portfolio. As market interest rates moved higher late in the quarter the Chandler team moved to tighten the duration differential versus the benchmark; the team anticipates further lengthening the maturity profile of the portfolio during the first quarter of 2017.

The Chandler team added exposure to the portfolio in the Treasury, Supranational, and Commercial Paper sectors of the market during the quarter. The Agency market has become very expensive in our judgement and the team is finding better value in the Supranational and by default the Treasury sector. Although the regulatory change specific to prime money market funds has taken place, the team is still finding the Commercial Paper market to be somewhat dislocated and thus we continue to allocate to the sector in the front end of the curve. The duration of the portfolio increased to 2.48 compared to 2.38 at the end of September; in Chandler’s judgement the market is currently pricing in a reasonable expectation for a tightening of monetary policy in 2017 thus the overall interest rate sensitivity of the portfolio is likely to increase to be closer to the benchmark in the upcoming quarter.

Liquid Portfolio

The liquidity portfolio modestly outperformed the benchmark during the quarter, generating a return of 0.12% compared to 0.09% for the Bank of America Three Month Treasury Bill Index. The portfolio experienced large cash flows, both positive and negative, and the Chandler team worked to position the portfolio for upcoming liquidity needs in January 2017 and beyond. Many securities were purchased across the Treasury, Agency, Supranational, Yankee CD, and Commercial Paper sectors to offset upcoming liquidity needs first and secondarily to attempt to enhance the overall yield of the portfolio with attractively valued longer maturity securities.

Economic Outlook

Monetary policy is poised to continue to normalize, with rates moving higher, but the Chandler team anticipates the process will continue to be slow. Currently the team is anticipating two rate hikes in 2017, with the timing likely in June and close to year-end. Economic activity in overseas markets remains lackluster, however if the team were to observe an uptick in economic activity in the Eurozone and/or Japan it would lead us to adjust our expectations for a quicker pace of domestic monetary policy normalization. Chandler continues to have the view the terminal fed funds rate will be low, despite the forecasted lowering of the tax rate and potential fiscal stimulus. Specific to domestic fiscal stimulus, the impact to the domestic economy is more likely to be a 2018 event as it takes time to put the necessary plans in place, in our judgement. Overall the team expects interest rates to be modestly higher on a year-over- year basis; the team is more willing to allocate monies to longer maturity assets given the large adjustment to domestic interest rates during the fourth quarter.

Strategy

Strategy highlights for the Long-Term Portfolio in coming months:

 Continue to optimize the overall term structure positioning of the portfolio by closing some of the large deviations relative to the benchmark. The market is pricing in a realistic probability of monetary policy tightening in 2017 and thus the duration shortfall relative to the benchmark will lessen.  Opportunistically increase the Corporate and Supranational exposure of the portfolio to enhance the total return opportunity of the strategy. o The focus of the Corporate allocation will continue to be both sector diversification and relative valuation. o The Agency sector is expensive (i.e. tight spreads) thus we are allocating more monies to the more attractively valued Supranational sector.  Utilize out of benchmark allocations to the Asset Backed and Commercial Paper sectors of the market to enhance the overall credit quality and return potential of the portfolio.

Strategy highlights for the Liquidity Portfolio in coming months:

 Continue to ladder the Agency discount note and Treasury exposure to correspond to upcoming liquidity needs.  Periodically add to the Corporate exposure of the portfolio between maturities of six months to one year, where the additional spread to the Treasury curve is compelling.  Maintain a dedicated exposure to the Treasury sector on an ongoing basis to ensure ample liquidity in the portfolio at all times.

Compliance Issues

Orange County Sanitation District Liquid December 31, 2016

COMPLIANCE WITH INVESTMENT POLICY Assets managed by Chandler Asset Management are in full compliance with State law and with the investment policy

Category Standard Comment Treasury Issues 1 year maximum maturity; Minimum allocation of 10% Complies Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 1 year maturity; Complies Includes only: IADB, IBRD, and IFC per CGC U.S. Agencies 20% max issuer; 1 year maximum maturity Complies* U.S. Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 1 Complies year max maturity Asset Backed/ CMOs "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; Complies 20% maximum; 5% max issuer; 1 year max maturity Negotiable CDs "A" or better on its long term debt by 1 of 3 NRSROs ; "A1/P1" or highest short term Complies ratings by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 1 year max maturity CDs/ TDS 5% max issuer; 1 year max maturity Complies Banker’s Acceptances A-1, or equivalent short term rating by 1 of 3 NRSROS; 40% maximum; 5% max Complies issuer; 180 days max maturity Commercial Paper A-1, or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term Complies debt issued; 25% maximum; 5% max issuer; 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Not to exceed 180 days; Max duration of 1/2 year Complies Maximum Maturity 1 year maximum maturity Complies * Max issuer complies on a consolidated basis

OCSD Lehman Exposure December 31, 2016

COMPLIANCE WITH INVESTMENT POLICY Assets managed by Chandler Asset Management are in full compliance with State law and with the investment policy

Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max; 5 years Complies maturity; Includes only: IADB, IBRD, and IFC per CGC U.S. Agencies 20% max issuer; 5 years maximum maturity Complies U.S. Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30% maximum; 5% Complies* max issuer; 5 years max maturity Municipal Securities "A" or higher by 1 of 3 NRSROS; 10% maximum; 5% max issuer; 5 Complies years maximum maturity Asset Backed/ CMOs/ Mortgage- "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 Complies backed NRSROs; 20% maximum; 5% max issuer (excluding MBS/govt agency); 5 years max maturity Negotiable CDs "A" or better on its long term debt by 1 of 3 NRSROs ; "A1/P1" or Complies highest short term ratings by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity CDs/ TDS 5% max issuer; 5 years max maturity Complies Banker’s Acceptances A-1, or equivalent highest short term rating by 1 of 3 NRSROS; 40% Complies maximum; 5% max issuer; 180 days max maturity Commercial Paper A-1, or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, Complies if long term debt issued; 25% maximum; 5% max issuer; 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to 120% of the benchmark) Complies Maximum Maturity 5 years maximum maturity Complies * Account holds $2 million face value (cusip 525ESC0Y6) and $600,000 face value (cusip 525ESC1B7) of defaulted Lehman Bros Holdings that were purchased by the previous manager. Complied at time of purchase.

Defaulted Bonds

Ratings

OCSD Investment Program Quarter End Portfolio Value $600,000,000

Liquid Operating Monies $500,000,000 Long-Term Operating Monies

$400,000,000

$300,000,000

$200,000,000

$100,000,000

HISTORICAL YIELD CURVE

4.00%

DEC 2016 3.07% NOV 2016 3.00% DEC 2015 2.45% 2.25%

2.00% 1.93% 1.45% 1.19%

0.61% 1.00% 0.50%

0.00%

Orange County Sanitation District Liquid Portfolio Summary Account #10282 As of 12/31/2016

PORTFOLIO CHARACTERISTICS ACCOUNT SUMMARY TOP ISSUERS

Beg. Values End Values Issuer % Portfolio Average Duration 0.14 as of 11/30/16 as of 12/31/16 Government of United States 34.8 % Average Coupon 0.76 % Market Value 32,974,552 112,916,619 Federal Home Loan Bank 22.1 % 46,188 126,058 Average Purchase YTM 0.52 % Accrued Interest Federal Home Loan Mortgage Corp 17.7 % Total Market Value 33,020,740 113,042,677 Average Market YTM 0.55 % Federal National Mortgage Assoc 6.6 % Average S&P/Moody Rating AAA/Aaa Income Earned 14,916 23,707 Dreyfus Treasury Money Market F 5.0 % Average Final Maturity 0.14 yrs Cont/WD 80,000,000 Paccar Financial 1.8 % 32,965,202 Average Life 0.04 yrs Par 112,903,509 Pepsico Inc 1.3 % Book Value 32,977,791 112,921,628 Toronto Dominion Holdings 1.0 % Cost Value 33,003,378 112,941,193 90.3 %

SECTOR ALLOCATION MATURITY DISTRIBUTION CREDIT QUALITY (S&P)

PERFORMANCE REVIEW

Total Rate of Return Current Latest Year Annualized Since As of 12/31/2016 Month 3 Months To Date 1 Yr 3 Yrs 5 Yrs 10 Yrs 11/30/2014 11/30/2014 Orange County Sanitation District Liquid 0.04 % 0.12 % 0.48 % 0.48 % N/A N/A N/A 0.34 % 0.72 % BAML 3-Month US Treasury Bill Index 0.04 % 0.09 % 0.33 % 0.33 % N/A N/A N/A 0.18 % 0.38 %

Chandler Asset Management - CONFIDENTIAL Page 1 Execution Time: 1/12/2017 10:21:15 AM Orange County Sanitation District Long Term Portfolio Summary Account #10268 As of 12/31/2016

PORTFOLIO CHARACTERISTICS ACCOUNT SUMMARY TOP ISSUERS

Beg. Values End Values Issuer % Portfolio Average Duration 2.48 as of 11/30/16 as of 12/31/16 Government of United States 30.1 % Average Coupon 1.65 % Market Value 281,266,378 315,341,911 Federal National Mortgage Assoc 9.3 % 1,169,842 1,250,939 Average Purchase YTM 1.57 % Accrued Interest Federal Home Loan Bank 8.0 % Total Market Value 282,436,221 316,592,849 Average Market YTM 1.51 % Federal Home Loan Mortgage Corp 7.8 % Average S&P/Moody Rating AA+/Aa1 Income Earned 357,592 371,284 Inter-American Dev Bank 2.7 % Average Final Maturity 2.87 yrs Cont/WD 33,913,216 John Deere ABS 2.4 % 280,302,410 Average Life 2.56 yrs Par 315,136,824 International Finance Corp 2.3 % Book Value 280,875,824 315,079,227 Toyota Motor Corp 2.0 % Cost Value 282,154,240 316,376,297 64.6 %

SECTOR ALLOCATION MATURITY DISTRIBUTION CREDIT QUALITY (S&P)

(.7%)

( 22.4%)

(3.8%)

(1.5%)

(1.9%)

PERFORMANCE REVIEW

Total Rate of Return Current Latest Year Annualized Since As of 12/31/2016 Month 3 Months To Date 1 Yr 3 Yrs 5 Yrs 10 Yrs 11/30/2014 11/30/2014 Orange County Sanitation District Long Term 0.06 % -0.84 % 1.47 % 1.47 % N/A N/A N/A 1.01 % 2.11 % BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index 0.04 % -1.06 % 1.30 % 1.30 % N/A N/A N/A 0.98 % 2.06 % BAML US 1-5 Yr US Corp/Govt Rated AAA-BBB Index 0.07 % -1.02 % 1.61 % 1.61 % N/A N/A N/A 1.10 % 2.30 %

Chandler Asset Management - CONFIDENTIAL Page 1 Execution Time: 1/12/2017 10:21:03 AM Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund December 31, 2016

Par Value Book Value Market Value Rate Yield

Balance December 1, 2016 $33,131,963 $33,131,963 $33,131,963 0.72 0.72

Deposits: 12/1/2016 31,869,000.00 31,869,000.00 31,869,000.00 0.72 0.72 12/21/2016 9,100,000.00 9,100,000.00 9,100,000.00 0.72 0.72

Total Deposits 40,969,000.00 40,969,000.00 40,969,000.00 0.72 0.72

Quarterly Interest Distribution - - - 0.72 0.72

Withdrawals:

12/1/2016 (962.54) (962.54) (962.54) 0.72 0.72 12/7/2016 (1,800,000) (1,800,000) (1,800,000) 0.72 0.72 12/8/2016 (2,100,000) (2,100,000) (2,100,000) 0.72 0.72 12/15/2016 (5,200,000) (5,200,000) (5,200,000) 0.72 0.72 12/29/2016 (2,600,000) (2,600,000) (2,600,000) 0.72 0.72

Total Withdrawals (11,700,963) (11,700,963) (11,700,963) 0.72 0.72

Balance December 31, 2016 $62,400,000 $62,400,000 $62,400,000 0.72 0.72 - . ( !"#$ ) *+$, %& % '

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OCSD-CONSOLIDATED - OCSG00010000 As Of Date 12/31/2016

Mellon Base Base Market Percent of Local Unrealized Net Unrealized . Security Description Shares/Par Base Cost Security ID Price Value Total Gain/Loss Gain/Loss Base

Grand Total 434,279,114.491 435,991,210.18 433,425,928.75 100.00 -2,565,281.43 CASH & CASH EQUIVALENTS 104,323,993.440 105,648,971.90 105,581,298.34 24.36 -67,673.56 U.S. DOLLAR 104,323,993.440 105,648,971.90 105,581,298.34 24.36 -67,673.56 CASH 0.000 1.0000 -0.04 -0.04 0.00 0.00 0.00 99VVAEU30 SLH PROXY LONG EXPOSURESLHOPNTA4 60,641.490 0.4225 93,294.59 25,621.03 0.01 -67,673.56 -67,673.56 89113E7K6 TORONTO-DOMINION NY INSTL C/D1.150% 05/03/2017 DD 05/05/16 1,150,000.000 99.9969 1,149,964.14 1,149,964.14 0.27 0.00 0.00 89113WHF6 TORONTO DOMINION BANK C/D1.190% 03/13/2017 DD 08/23/16 4,075,000.000 100.0000 4,075,000.00 4,075,000.00 0.94 0.00 0.00 02665JNR7 AMERICAN HONDA FN DISC01/25/2017 900,000.000 99.9331 899,397.75 899,397.75 0.21 0.00 0.00 06538BQ63 BANK TOKYO-MITSUB DISC03/06/2017 6,870,000.000 99.6281 6,844,447.45 6,844,447.45 1.58 0.00 0.00 69372ANT5 PACCAR FINL CORP DISC01/27/2017 2,000,000.000 99.9319 1,998,638.88 1,998,638.88 0.46 0.00 0.00 89233GNP7 TOYOTA MTR CR CP DISC01/23/2017 1,000,000.000 99.8129 998,129.44 998,129.44 0.23 0.00 0.00 89233GRL2 TOYOTA MTR CR CP DISC04/20/2017 1,000,000.000 99.6689 996,689.44 996,689.44 0.23 0.00 0.00 89233GV29 TOYOTA MTR CR CP DISC08/02/2017 6,300,000.000 99.2381 6,251,999.25 6,251,999.25 1.44 0.00 0.00 RECEIVABLE FOR INVESTMENTS SOLD 0.000 1.0000 25.62 25.62 0.00 0.00 0.00 313385AV8 FEDERAL HOME LN BK CONS DISCMAT 01/20/2017 2,040,000.000 99.9128 2,038,220.95 2,038,220.95 0.47 0.00 0.00 313385BA3 FEDERAL HOME LN BK CONS DISCMAT 01/25/2017 1,000,000.000 99.9110 999,110.00 999,110.00 0.23 0.00 0.00 313385BC9 FEDERAL HOME LN BK CONS DISCMAT 01/27/2017 15,000,000.000 99.9451 14,991,760.00 14,991,760.00 3.46 0.00 0.00 313385BF2 FEDERAL HOME LN BK CONS DISCMAT 01/30/2017 1,000,000.000 99.9444 999,444.44 999,444.44 0.23 0.00 0.00 313385DL7 FEDERAL HOME LN BK CONS DISC NMAT 03/24/2017 6,000,000.000 99.8622 5,991,734.16 5,991,734.16 1.38 0.00 0.00 313397AV3 FEDERAL HOME LN MTG CORP DISCMAT 01/20/2017 2,000,000.000 99.9582 1,999,164.44 1,999,164.44 0.46 0.00 0.00 313397BG5 FEDERAL HOME LN MTG CORP DISC01/31/2017 17,000,000.000 99.9552 16,992,388.63 16,992,388.63 3.92 0.00 0.00 313589BA0 FEDERAL NATL MTG ASSN DISCMAT 01/25/2016 3,000,000.000 99.9370 2,998,110.00 2,998,110.00 0.69 0.00 0.00 313589BX0 FEDERAL NATL MTG ASSN DISCMAT 02/15/2017 1,920,000.000 99.9274 1,918,606.08 1,918,606.08 0.44 0.00 0.00 INTEREST RECEIVABLE 0.000 1.0000 1,435,908.57 1,435,908.57 0.33 0.00 0.00 996085247 DREYFUS TREAS & AGY CSH CSH MGVAR RT 12/31/2049 DD 04/09/97 11,758,351.950 100.0000 11,758,351.95 11,758,351.95 2.71 0.00 0.00 912796KE8 U S TREASURY BILL0.000% 01/26/2017 DD 07/28/16 5,250,000.000 99.9350 5,246,586.58 5,246,586.58 1.21 0.00 0.00 912796KT5 U S TREASURY BILL0.000% 04/20/2017 DD 10/20/16 15,000,000.000 99.8133 14,971,999.58 14,971,999.58 3.45 0.00 0.00 FIXED INCOME SECURITIES 329,955,121.051 330,342,238.28 327,844,630.41 75.64 -2,497,607.87 U.S. DOLLAR 329,955,121.051 330,342,238.28 327,844,630.41 75.64 -2,497,607.87 43813JAC9 HONDA AUTO RECEIVABLES 20 1 A30.670% 11/21/2017 DD 02/27/14 272,358.990 99.9730 271,529.15 272,285.45 0.06 756.30 756.30 43814GAC4 HONDA AUTO RECEIVABLES 20 2 A30.770% 03/19/2018 DD 05/21/14 537,546.510 99.9160 537,168.56 537,094.97 0.12 -73.59 -73.59 43814NAB1 HONDA AUTO RECEIVABLES 20 1 A21.010% 06/18/2018 DD 02/25/16 2,020,144.820 99.9670 2,019,943.01 2,019,478.17 0.47 -464.84 -464.84 43814QAC2 HONDA AUTO RECEIVABLES 20 2 A31.390% 04/15/2020 DD 05/31/16 1,810,000.000 99.8450 1,809,964.89 1,807,194.50 0.42 -2,770.39 -2,770.39 65478WAB1 NISSAN AUTO RECEIVABLES C A2A1.070% 05/15/2019 DD 08/10/16 2,085,000.000 99.8290 2,084,917.85 2,081,434.65 0.48 -3,483.20 -3,483.20 89231MAC9 TOYOTA AUTO RECEIVABLES 2 A A30.670% 12/15/2017 DD 03/19/14 459,078.170 99.9560 458,127.73 458,876.18 0.11 748.45 748.45 89231TAB6 TOYOTA AUTO RECEIVABLES C A2A0.920% 02/15/2018 DD 08/26/15 556,481.450 99.9750 556,436.70 556,342.33 0.13 -94.37 -94.37 89236WAC2 TOYOTA AUTO RECEIVABLES 2 A A31.120% 02/15/2019 DD 03/04/15 2,883,281.480 99.9470 2,882,845.53 2,881,753.34 0.66 -1,092.19 -1,092.19 161571HH0 CHASE ISSUANCE TRUST A7 A71.060% 09/16/2019 DD 09/13/16 4,140,000.000 99.9090 4,139,643.13 4,136,232.60 0.95 -3,410.53 -3,410.53 477877AD6 JOHN DEERE OWNER TRUST 20 B A31.070% 11/15/2018 DD 09/03/14 2,247,986.480 99.9930 2,249,040.21 2,247,829.12 0.52 -1,211.09 -1,211.09 47788MAC4 JOHN DEERE OWNER TRUST 20 A A31.360% 04/15/2020 DD 03/02/16 2,420,000.000 99.7380 2,419,619.09 2,413,659.60 0.56 -5,959.49 -5,959.49 47788NAB4 JOHN DEERE OWNER TRUST 20 B A21.090% 02/15/2019 DD 07/27/16 2,980,000.000 99.8850 2,979,818.22 2,976,573.00 0.69 -3,245.22 -3,245.22 03215PFN4 AMRESCO RESIDENTIAL SECURI 1 AVAR RT 06/25/2029 DD 10/20/99 133,743.290 93.8280 100,432.85 125,488.65 0.03 25,055.80 25,055.80 83162CLJ0 SBA GTD PARTN CTFS 2001-20C 16.340% 03/01/2021 70,644.450 105.5730 70,644.45 74,581.47 0.02 3,937.02 3,937.02 78445JAA5 SLM STUDENT LOAN TRUST 200 9 AVAR RT 04/25/2023 DD 08/28/08 36,113.900 100.1290 35,967.38 36,160.49 0.01 193.11 193.11

Report Id GL8013 Report Timestamp: Tue Jan 17 2017 03:34:40 PM Page 1 of 4 Asset Detail

OCSD-CONSOLIDATED - OCSG00010000 As Of Date 12/31/2016

Mellon Base Base Market Percent of Local Unrealized Net Unrealized . Security Description Shares/Par Base Cost Security ID Price Value Total Gain/Loss Gain/Loss Base

025816AY5 AMERICAN EXPRESS CO7.000% 03/19/2018 DD 03/19/08 2,900,000.000 106.2690 3,377,385.79 3,081,801.00 0.71 -295,584.79 -295,584.79 02665WAH4 AMERICAN HONDA FINANCE CORP2.250% 08/15/2019 DD 09/09/14 4,000,000.000 100.9740 4,046,640.00 4,038,960.00 0.93 -7,680.00 -7,680.00 060505DP6 BANK OF AMERICA CORP5.750% 12/01/2017 DD 12/04/07 3,800,000.000 103.5850 4,334,014.00 3,936,230.00 0.91 -397,784.00 -397,784.00 06050TLX8 BANK OF AMERICA NAVAR RT 05/08/2017 DD 05/08/14 600,000.000 100.0920 600,000.00 600,552.00 0.14 552.00 552.00 06406HCW7 BANK OF NEW YORK MELLON CORP/T2.300% 09/11/2019 DD 09/11/14 2,120,000.000 100.8240 2,142,175.20 2,137,468.80 0.49 -4,706.40 -4,706.40 073902CD8 BEAR STEARNS COS LLC/THE4.650% 07/02/2018 DD 06/25/03 3,200,000.000 103.9950 3,523,520.00 3,327,840.00 0.77 -195,680.00 -195,680.00 24422ESS9 JOHN DEERE CAPITAL CORP2.300% 09/16/2019 DD 09/15/14 5,000,000.000 101.0840 5,046,984.00 5,054,200.00 1.17 7,216.00 7,216.00 38141GFG4 GOLDMAN SACHS GROUP INC/THE5.950% 01/18/2018 DD 01/18/08 600,000.000 104.1740 692,806.00 625,044.00 0.14 -67,762.00 -67,762.00 40428HPH9 HSBC USA INC1.625% 01/16/2018 DD 12/20/12 3,000,000.000 99.8250 3,003,290.00 2,994,750.00 0.69 -8,540.00 -8,540.00 40428HPR7 HSBC USA INC2.350% 03/05/2020 DD 03/05/15 1,250,000.000 99.2180 1,222,787.50 1,240,225.00 0.29 17,437.50 17,437.50 46623EJY6 JPMORGAN CHASE & CO1.350% 02/15/2017 DD 02/18/14 1,000,000.000 100.0170 1,000,470.00 1,000,170.00 0.23 -300.00 -300.00 46625HKA7 JPMORGAN CHASE & CO2.250% 01/23/2020 DD 01/23/15 2,000,000.000 99.7650 1,994,880.00 1,995,300.00 0.46 420.00 420.00 525ESC0Y6 LEHMAN BRTH HLD ESC0.000% 12/30/2016 DD 10/24/05 2,000,000.000 5.7500 1,207,405.21 115,000.00 0.03 -1,092,405.21 -1,092,405.21 525ESCIB7 ESC LEHMAN BRTH HLD ESCROW0.000% 11/24/2013 DD 01/22/08 600,000.000 5.8000 352,614.36 34,800.00 0.01 -317,814.36 -317,814.36 61747WAL3 MORGAN STANLEY5.500% 07/28/2021 DD 07/28/11 2,800,000.000 110.8140 3,200,848.00 3,102,792.00 0.72 -98,056.00 -98,056.00 94974BFD7 WELLS FARGO & CO2.100% 05/08/2017 DD 05/07/12 1,000,000.000 100.2830 1,008,550.00 1,002,830.00 0.23 -5,720.00 -5,720.00 94974BGM6 WELLS FARGO & CO2.600% 07/22/2020 DD 07/22/15 5,000,000.000 100.5780 5,001,650.00 5,028,900.00 1.16 27,250.00 27,250.00 94988J2L0 WELLS FARGO BANK NAVAR RT 06/15/2017 DD 06/12/14 500,000.000 100.0180 500,000.00 500,090.00 0.12 90.00 90.00 36962G7M0 GENERAL ELECTRIC CO2.200% 01/09/2020 DD 01/09/15 5,000,000.000 100.3250 5,014,950.00 5,016,250.00 1.16 1,300.00 1,300.00 3133TCE95 FHLMC MULTICLASS MTG E3 AVAR RT 08/15/2032 DD 12/01/97 43,729.550 100.8130 43,775.30 44,085.07 0.01 309.77 309.77 31394JY35 FHLMC MULTICLASS MTG 58 2A6.500% 09/25/2043 DD 09/01/03 982,745.060 114.4080 1,112,990.15 1,124,338.97 0.26 11,348.82 11,348.82 31398VJ98 FHLMC MULTICLASS MTG K006 A24.251% 01/25/2020 DD 04/01/10 900,000.000 105.8550 951,046.88 952,695.00 0.22 1,648.12 1,648.12 31348SWZ3 FHLMC POOL #78-6064VAR RT 01/01/2028 DD 12/01/97 2,413.320 103.1190 2,354.51 2,488.59 0.00 134.08 134.08 31371NUC7 FNMA POOL #02571794.500% 04/01/2028 DD 03/01/08 25,421.170 107.5550 26,885.38 27,341.74 0.01 456.36 456.36 31376KT22 FNMA POOL #03579695.000% 09/01/2035 DD 09/01/05 172,280.910 109.0280 185,201.98 187,834.43 0.04 2,632.45 2,632.45 31381PDA3 FNMA POOL #04663973.400% 11/01/2020 DD 11/01/10 359,837.410 104.6320 352,050.32 376,505.08 0.09 24,454.76 24,454.76 3138EG6F6 FNMA POOL #0AL08694.500% 06/01/2029 DD 09/01/11 18,959.930 107.5550 20,051.99 20,392.35 0.00 340.36 340.36 31403DJZ3 FNMA POOL #07455805.000% 06/01/2036 DD 05/01/06 171,477.530 109.2400 184,338.35 187,322.05 0.04 2,983.70 2,983.70 31403GXF4 FNMA POOL #07486785.000% 10/01/2033 DD 10/01/03 5,192.310 109.5280 5,581.73 5,687.03 0.00 105.30 105.30 31406PQY8 FNMA POOL #08159715.000% 03/01/2035 DD 03/01/05 287,627.260 109.1540 309,199.32 313,956.66 0.07 4,757.34 4,757.34 31406XWT5 FNMA POOL #0823358VAR RT 02/01/2035 DD 04/01/05 169,347.900 105.3350 168,024.88 178,382.61 0.04 10,357.73 10,357.73 31407BXH7 FNMA POOL #08260805.000% 07/01/2035 DD 06/01/05 30,985.350 109.0480 33,309.24 33,788.90 0.01 479.66 479.66 31410F4V4 FNMA POOL #08883365.000% 07/01/2036 DD 04/01/07 336,428.020 109.1050 361,660.14 367,059.79 0.08 5,399.65 5,399.65 31417YAY3 FNMA POOL #0MA00224.500% 04/01/2029 DD 03/01/09 29,376.200 107.5550 31,068.20 31,595.57 0.01 527.37 527.37 31396X3Q5 FNMA GTD REMIC P/T 07-114 A6VAR RT 10/27/2037 DD 11/30/07 21,155.320 99.8920 20,124.00 21,132.47 0.00 1,008.47 1,008.47 31397QRE0 FNMA GTD REMIC P/T 11-3 FAVAR RT 02/25/2041 DD 01/25/11 338,527.120 100.9720 338,421.34 341,817.60 0.08 3,396.26 3,396.26 713448CL0 PEPSICO INC0.950% 02/22/2017 DD 02/28/14 1,500,000.000 99.9610 1,501,765.00 1,499,415.00 0.35 -2,350.00 -2,350.00 36225CAZ9 GNMA II POOL #0080023VAR RT 12/20/2026 DD 12/01/96 25,504.740 103.3130 25,927.16 26,349.71 0.01 422.55 422.55 36225CC20 GNMA II POOL #080088MVAR RT 06/20/2027 DD 06/01/97 29,714.770 103.1000 30,364.78 30,635.93 0.01 271.15 271.15 36225CN28 GNMA II POOL #080408XVAR RT 05/20/2030 DD 05/01/00 83,358.440 103.4710 82,511.85 86,251.81 0.02 3,739.96 3,739.96 36225CNM4 GNMA II POOL #0080395VAR RT 04/20/2030 DD 04/01/00 10,571.740 103.5530 10,475.91 10,947.35 0.00 471.44 471.44 36225DCB8 GNMA II POOL #0080965VAR RT 07/20/2034 DD 07/01/04 87,212.640 104.3470 87,158.14 91,003.77 0.02 3,845.63 3,845.63 3837H4NX9 GNMA GTD REMIC P/T 00-9 FHVAR RT 02/16/2030 32,010.820 100.5050 32,010.82 32,172.47 0.01 161.65 161.65 532457BB3 ELI LILLY & CO5.200% 03/15/2017 DD 03/14/07 1,000,000.000 100.8130 1,027,930.00 1,008,130.00 0.23 -19,800.00 -19,800.00 532457BF4 ELI LILLY & CO1.950% 03/15/2019 DD 02/25/14 4,000,000.000 100.6210 4,009,675.00 4,024,840.00 0.93 15,165.00 15,165.00

Report Id GL8013 Report Timestamp: Tue Jan 17 2017 03:34:40 PM Page 2 of 4 Asset Detail

OCSD-CONSOLIDATED - OCSG00010000 As Of Date 12/31/2016

Mellon Base Base Market Percent of Local Unrealized Net Unrealized . Security Description Shares/Par Base Cost Security ID Price Value Total Gain/Loss Gain/Loss Base

166764AA8 CHEVRON CORP1.104% 12/05/2017 DD 12/05/12 2,000,000.000 99.7740 1,988,600.00 1,995,480.00 0.46 6,880.00 6,880.00 166764BG4 CHEVRON CORP2.100% 05/16/2021 DD 05/16/16 2,500,000.000 99.1430 2,485,350.00 2,478,575.00 0.57 -6,775.00 -6,775.00 30231GAV4 EXXON MOBIL CORP2.222% 03/01/2021 DD 03/03/16 3,000,000.000 100.2290 3,016,097.40 3,006,870.00 0.69 -9,227.40 -9,227.40 674599CD5 OCCIDENTAL PETROLEUM CORP1.500% 02/15/2018 DD 06/22/12 2,000,000.000 100.0910 1,986,340.00 2,001,820.00 0.46 15,480.00 15,480.00 4581X0BV9 INTER-AMERICAN DEVELOPMENT BAN1.125% 03/15/2017 DD 01/11/12 1,000,000.000 100.0260 1,001,540.00 1,000,260.00 0.23 -1,280.00 -1,280.00 4581X0CG1 INTER-AMERICAN DEVELOPMENT BAN1.000% 07/14/2017 DD 04/30/14 5,000,000.000 99.9340 5,019,550.00 4,996,700.00 1.15 -22,850.00 -22,850.00 4581X0CS5 INTER-AMERICAN DEVELOPMENT BAN1.875% 03/15/2021 DD 01/14/16 3,500,000.000 99.3920 3,590,405.00 3,478,720.00 0.80 -111,685.00 -111,685.00 459058EJ8 INTERNATIONAL BANK FOR RECONST1.000% 06/15/2018 DD 04/30/15 5,000,000.000 99.5930 4,991,170.00 4,979,650.00 1.15 -11,520.00 -11,520.00 45950KBS8 INTERNATIONAL FINANCE CORP1.000% 04/24/2017 DD 04/24/12 6,000,000.000 99.9660 6,021,790.00 5,997,960.00 1.38 -23,830.00 -23,830.00 45950KCJ7 INTERNATIONAL FINANCE CORP1.125% 07/20/2021 DD 07/20/16 2,500,000.000 95.9070 2,441,600.00 2,397,675.00 0.55 -43,925.00 -43,925.00 64971M5E8 NEW YORK CITY NY TRANSITIONAL4.075% 11/01/2020 DD 11/03/10 1,400,000.000 106.2990 1,400,000.00 1,488,186.00 0.34 88,186.00 88,186.00 73358WAG9 PORT AUTH OF NEW YORK & NEW JE5.309% 12/01/2019 DD 07/01/09 2,440,000.000 109.6550 2,507,633.89 2,675,582.00 0.62 167,948.11 167,948.11 913366EJ5 UNIV OF CALIFORNIA CA RGTS MED5.035% 05/15/2021 DD 11/18/10 400,000.000 110.0650 400,000.00 440,260.00 0.10 40,260.00 40,260.00 037833AM2 APPLE INC1.050% 05/05/2017 DD 05/06/14 1,000,000.000 100.0700 1,002,590.00 1,000,700.00 0.23 -1,890.00 -1,890.00 037833BS8 APPLE INC2.250% 02/23/2021 DD 02/23/16 4,000,000.000 99.9170 4,050,840.00 3,996,680.00 0.92 -54,160.00 -54,160.00 458140AL4 INTEL CORP1.350% 12/15/2017 DD 12/11/12 2,000,000.000 100.1500 2,008,280.00 2,003,000.00 0.46 -5,280.00 -5,280.00 594918BP8 MICROSOFT CORP1.550% 08/08/2021 DD 08/08/16 3,045,000.000 96.9910 3,041,385.15 2,953,375.95 0.68 -88,009.20 -88,009.20 747525AD5 QUALCOMM INC2.250% 05/20/2020 DD 05/20/15 5,000,000.000 100.0070 4,995,195.40 5,000,350.00 1.15 5,154.60 5,154.60 912828WU0 US TREAS-CPI INFLAT0.125% 07/15/2024 DD 07/15/14 10,587,200.000 98.2400 10,469,915.89 10,400,865.28 2.40 -69,050.61 -69,050.61 3130A7CV5 FEDERAL HOME LN BK CONS BD1.375% 02/18/2021 DD 02/18/16 5,365,000.000 98.1060 5,343,325.40 5,263,386.90 1.21 -79,938.50 -79,938.50 3133782M2 FEDERAL HOME LN BK CONS BD1.500% 03/08/2019 DD 02/06/12 7,500,000.000 100.3020 7,589,190.00 7,522,650.00 1.74 -66,540.00 -66,540.00 313378A43 FEDERAL HOME LN BK CONS BD1.375% 03/09/2018 DD 02/13/12 7,500,000.000 100.3580 7,544,850.00 7,526,850.00 1.74 -18,000.00 -18,000.00 313383HU8 FEDERAL HOME LN BK CONS BD1.750% 06/12/2020 DD 06/03/13 5,000,000.000 100.0790 5,008,950.00 5,003,950.00 1.15 -5,000.00 -5,000.00 3135G0D75 FEDERAL NATL MTG ASSN1.500% 06/22/2020 DD 04/27/15 5,000,000.000 99.5340 4,955,650.00 4,976,700.00 1.15 21,050.00 21,050.00 3135G0F73 FEDERAL NATL MTG ASSN1.500% 11/30/2020 DD 10/19/15 7,500,000.000 98.7460 7,370,726.00 7,405,950.00 1.71 35,224.00 35,224.00 3135G0G72 FEDERAL NATL MTG ASSN1.125% 12/14/2018 DD 11/03/15 5,000,000.000 99.7940 4,963,950.00 4,989,700.00 1.15 25,750.00 25,750.00 3135G0J20 FEDERAL NATL MTG ASSN1.375% 02/26/2021 DD 02/05/16 10,000,000.000 98.0510 10,040,950.00 9,805,100.00 2.26 -235,850.00 -235,850.00 3137EADM8 FEDERAL HOME LN MTG CORP1.250% 10/02/2019 DD 10/02/12 7,500,000.000 99.4150 7,399,650.00 7,456,125.00 1.72 56,475.00 56,475.00 3137EADN6 FEDERAL HOME LN MTG CORP0.750% 01/12/2018 DD 11/21/12 5,000,000.000 99.7960 4,967,500.00 4,989,800.00 1.15 22,300.00 22,300.00 3137EADP1 FEDERAL HOME LN MTG CORP0.875% 03/07/2018 DD 01/17/13 5,000,000.000 99.8700 4,974,100.00 4,993,500.00 1.15 19,400.00 19,400.00 3137EADU0 FEDERAL HOME LN MTG CORP0.500% 01/27/2017 DD 01/16/15 1,000,000.000 99.9990 1,000,320.00 999,990.00 0.23 -330.00 -330.00 3137EADV8 FEDERAL HOME LN MTG CORP0.750% 07/14/2017 DD 05/29/15 5,000,000.000 100.0170 4,994,250.00 5,000,850.00 1.15 6,600.00 6,600.00 31398ADM1 FEDERAL NATL MTG ASSN5.375% 06/12/2017 DD 06/08/07 2,500,000.000 102.0500 2,553,425.00 2,551,250.00 0.59 -2,175.00 -2,175.00 912828A91 U S TREASURY NOTE0.750% 01/15/2017 DD 01/15/14 3,000,000.000 100.0140 3,002,939.74 3,000,420.00 0.69 -2,519.74 -2,519.74 912828B33 U S TREASURY NOTE1.500% 01/31/2019 DD 01/31/14 11,000,000.000 100.5430 11,042,439.19 11,059,730.00 2.55 17,290.81 17,290.81 912828F39 U S TREASURY NOTE1.750% 09/30/2019 DD 09/30/14 5,800,000.000 100.9840 5,873,186.87 5,857,072.00 1.35 -16,114.87 -16,114.87 912828G20 U S TREASURY NOTE0.875% 11/15/2017 DD 11/15/14 5,000,000.000 100.0040 4,974,391.75 5,000,200.00 1.15 25,808.25 25,808.25 912828G61 U S TREASURY NOTE1.500% 11/30/2019 DD 11/30/14 7,500,000.000 100.2070 7,449,634.50 7,515,525.00 1.73 65,890.50 65,890.50 912828L99 U S TREASURY NOTE1.375% 10/31/2020 DD 10/31/15 5,500,000.000 98.7730 5,424,666.87 5,432,515.00 1.25 7,848.13 7,848.13 912828N89 U S TREASURY NOTE1.375% 01/31/2021 DD 01/31/16 6,000,000.000 98.4020 5,895,840.41 5,904,120.00 1.36 8,279.59 8,279.59 912828SC5 U S TREASURY NOTE0.875% 01/31/2017 DD 01/31/12 16,000,000.000 100.0400 16,008,178.61 16,006,400.00 3.69 -1,778.61 -1,778.61 912828SK7 U S TREASURY NOTE0.375% 03/15/2015 DD 03/15/12 3,594,000.000 100.0000 3,603,596.33 3,594,000.00 0.83 -9,596.33 -9,596.33 912828SN1 U S TREASURY NOTE1.500% 03/31/2019 DD 03/31/12 5,000,000.000 100.5120 5,016,423.00 5,025,600.00 1.16 9,177.00 9,177.00 912828SS0 U S TREASURY NOTE0.875% 04/30/2017 DD 04/30/12 3,750,000.000 100.1140 3,750,305.53 3,754,275.00 0.87 3,969.47 3,969.47 912828T34 U S TREASURY NOTE1.125% 09/30/2021 DD 09/30/16 7,000,000.000 96.4570 6,757,914.08 6,751,990.00 1.56 -5,924.08 -5,924.08

Report Id GL8013 Report Timestamp: Tue Jan 17 2017 03:34:40 PM Page 3 of 4 Asset Detail

OCSD-CONSOLIDATED - OCSG00010000 As Of Date 12/31/2016

Mellon Base Base Market Percent of Local Unrealized Net Unrealized . Security Description Shares/Par Base Cost Security ID Price Value Total Gain/Loss Gain/Loss Base

912828T67 U S TREASURY NOTE1.250% 10/31/2021 DD 10/31/16 6,000,000.000 96.9690 5,813,691.98 5,818,140.00 1.34 4,448.02 4,448.02 912828U65 U S TREASURY NOTE1.750% 11/30/2021 DD 11/30/16 7,000,000.000 99.2540 6,900,492.20 6,947,780.00 1.60 47,287.80 47,287.80 912828UR9 U S TREASURY NOTE0.750% 02/28/2018 DD 02/28/13 3,500,000.000 99.7660 3,496,457.04 3,491,810.00 0.81 -4,647.04 -4,647.04 912828WS5 U S TREASURY NOTE1.625% 06/30/2019 DD 06/30/14 2,000,000.000 100.7460 1,996,861.44 2,014,920.00 0.46 18,058.56 18,058.56 912828WW6 U S TREASURY NOTE1.625% 07/31/2019 DD 07/31/14 5,000,000.000 100.6990 5,012,388.70 5,034,950.00 1.16 22,561.30 22,561.30 912828XE5 U S TREASURY NOTE1.500% 05/31/2020 DD 05/31/15 5,000,000.000 99.6950 4,966,423.00 4,984,750.00 1.15 18,327.00 18,327.00 17275RAT9 CISCO SYSTEMS INC1.100% 03/03/2017 DD 03/03/14 1,000,000.000 99.9870 1,002,660.00 999,870.00 0.23 -2,790.00 -2,790.00 62888UAA8 NCUA GUARANTEED NOTES TR R2 1AVAR RT 11/06/2017 DD 11/17/10 387,664.001 100.0080 387,656.73 387,695.01 0.09 38.28 38.28

Report Id GL8013 Report Timestamp: Tue Jan 17 2017 03:34:40 PM Page 4 of 4 Transaction Report

OCSD-CONSOLIDATED - OCSG00010000

Effective Contract Trade Date Base Investment Base Investment Base . Security ID Description Shares/ Par Settle Base Amount Date Settle Date Amount Amount Gain/Loss

GRAND TOTAL -240,505.30 114,143,538.53 -10,609.57 -240,530.92 CORPORATE ACTIONS 1,000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 1,000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 U.S. DOLLAR 1,000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 06406HCA5 BANK OF NEW YORK MELLON CORP/T 2.400% 01/17/2017 DD 11/23/11 12/19/2016 12/19/2016 -1,000,000.000 1,000,000.00 -1,008,120.00 -8,120.00 1,000,000.00 MATURITIES 2,995,484.99 -2,995,484.99 0.00 2,995,484.99 CASH & CASH EQUIVALENTS 2,995,484.99 -2,995,484.99 0.00 2,995,484.99 U.S. DOLLAR 2,995,484.99 -2,995,484.99 0.00 2,995,484.99 21687AMK6 COOPERAT CENT DISC 12/19/2016 12/19/2016 12/19/2016 -1,000,000.000 995,753.33 -995,753.33 0.00 995,753.33 74005HMW9 PRAXAIR INC DISC 12/30/2016 12/30/2016 12/30/2016 -2,000,000.000 1,999,731.66 -1,999,731.66 0.00 1,999,731.66 PRINCIPAL PAYMENTS 1,460,703.32 -1,463,174.09 -2,489.57 1,460,677.70 FIXED INCOME SECURITIES 1,460,703.32 -1,463,174.09 -2,489.57 1,460,677.70 U.S. DOLLAR 1,460,703.32 -1,463,174.09 -2,489.57 1,460,677.70 31348SWZ3 FHLMC POOL #78-6064 VAR RT 01/01/2028 DD 12/01/97 11/1/2016 11/1/2016 -18.800 18.80 0.00 0.00 18.80 31348SWZ3 FHLMC POOL #78-6064 VAR RT 01/01/2028 DD 12/01/97 12/1/2016 12/1/2016 -25.620 25.62 -25.00 0.62 0.00 31394JY35 FHLMC MULTICLASS MTG 58 2A 6.500% 09/25/2043 DD 09/01/03 12/1/2016 12/1/2016 -13,720.820 13,720.82 -15,539.27 -1,818.45 13,720.82 3133TCE95 FHLMC MULTICLASS MTG E3 A VAR RT 08/15/2032 DD 12/01/97 11/1/2016 11/1/2016 -1,586.500 1,586.50 -1,588.16 -1.66 1,586.50 31371NUC7 FNMA POOL #0257179 4.500% 04/01/2028 DD 03/01/08 12/1/2016 12/1/2016 -198.270 198.27 -209.69 -11.42 198.27 31376KT22 FNMA POOL #0357969 5.000% 09/01/2035 DD 09/01/05 12/1/2016 12/1/2016 -7,661.000 7,661.00 -8,235.58 -574.58 7,661.00 31381PDA3 FNMA POOL #0466397 3.400% 11/01/2020 DD 11/01/10 12/1/2016 12/1/2016 -655.520 655.52 -641.33 14.19 655.52 31403DJZ3 FNMA POOL #0745580 5.000% 06/01/2036 DD 05/01/06 12/1/2016 12/1/2016 -4,144.860 4,144.86 -4,455.72 -310.86 4,144.86 31403GXF4 FNMA POOL #0748678 5.000% 10/01/2033 DD 10/01/03 12/1/2016 12/1/2016 -48.140 48.14 -51.75 -3.61 48.14 31406PQY8 FNMA POOL #0815971 5.000% 03/01/2035 DD 03/01/05 12/1/2016 12/1/2016 -4,169.990 4,169.99 -4,482.74 -312.75 4,169.99 31406XWT5 FNMA POOL #0823358 VAR RT 02/01/2035 DD 04/01/05 12/1/2016 12/1/2016 -593.760 593.76 -589.12 4.64 593.76 31407BXH7 FNMA POOL #0826080 5.000% 07/01/2035 DD 06/01/05 12/1/2016 12/1/2016 -752.080 752.08 -808.49 -56.41 752.08 31410F4V4 FNMA POOL #0888336 5.000% 07/01/2036 DD 04/01/07 12/1/2016 12/1/2016 -10,706.840 10,706.84 -11,509.85 -803.01 10,706.84 3138EG6F6 FNMA POOL #0AL0869 4.500% 06/01/2029 DD 09/01/11 12/1/2016 12/1/2016 -455.840 455.84 -482.10 -26.26 455.84 31417YAY3 FNMA POOL #0MA0022 4.500% 04/01/2029 DD 03/01/09 12/1/2016 12/1/2016 -512.510 512.51 -542.03 -29.52 512.51 31396X3Q5 FNMA GTD REMIC P/T 07-114 A6 VAR RT 10/27/2037 DD 11/30/07 12/25/2016 12/25/2016 -6,277.350 6,277.35 -5,971.33 306.02 6,277.35 31397QRE0 FNMA GTD REMIC P/T 11-3 FA VAR RT 02/25/2041 DD 01/25/11 12/25/2016 12/25/2016 -7,030.890 7,030.89 -7,028.69 2.20 7,030.89 3837H4NX9 GNMA GTD REMIC P/T 00-9 FH VAR RT 02/16/2030 12/16/2016 12/16/2016 -1,111.180 1,111.18 -1,111.18 0.00 1,111.18 36225CAZ9 GNMA II POOL #0080023 VAR RT 12/20/2026 DD 12/01/96 12/1/2016 12/1/2016 -212.300 212.30 -215.82 -3.52 212.30 36225CNM4 GNMA II POOL #0080395 VAR RT 04/20/2030 DD 04/01/00 12/1/2016 12/1/2016 -182.090 182.09 -180.44 1.65 182.09 36225DCB8 GNMA II POOL #0080965 VAR RT 07/20/2034 DD 07/01/04 12/1/2016 12/1/2016 -1,557.740 1,557.74 -1,556.77 0.97 1,557.74 36225CC20 GNMA II POOL #080088M VAR RT 06/20/2027 DD 06/01/97 12/1/2016 12/1/2016 -230.170 230.17 -235.21 -5.04 230.17 36225CN28 GNMA II POOL #080408X VAR RT 05/20/2030 DD 05/01/00 12/1/2016 12/1/2016 -444.740 444.74 -440.22 4.52 444.74 43814NAB1 HONDA AUTO RECEIVABLES 20 1 A2 1.010% 06/18/2018 DD 02/25/16 12/18/2016 12/18/2016 -246,776.570 246,776.57 -246,751.92 24.65 246,776.57 43813JAC9 HONDA AUTO RECEIVABLES 20 1 A3 0.670% 11/21/2017 DD 02/27/14 12/21/2016 12/21/2016 -226,865.500 226,865.50 -226,174.27 691.23 226,865.50 43814GAC4 HONDA AUTO RECEIVABLES 20 2 A3 0.770% 03/19/2018 DD 05/21/14 12/18/2016 12/18/2016 -91,844.610 91,844.61 -91,780.03 64.58 91,844.61 477877AD6 JOHN DEERE OWNER TRUST 20 B A3 1.070% 11/15/2018 DD 09/03/14 12/15/2016 12/15/2016 -215,162.690 215,162.69 -215,263.55 -100.86 215,162.69 62888UAA8 NCUA GUARANTEED NOTES TR R2 1A VAR RT 11/06/2017 DD 11/17/10 12/7/2016 12/7/2016 -10,684.810 10,684.81 -10,684.61 0.20 10,684.81 89231MAC9 TOYOTA AUTO RECEIVABLES 2 A A3 0.670% 12/15/2017 DD 03/19/14 12/15/2016 12/15/2016 -194,360.330 194,360.33 -193,957.94 402.39 194,360.33 89236WAC2 TOYOTA AUTO RECEIVABLES 2 A A3 1.120% 02/15/2019 DD 03/04/15 12/15/2016 12/15/2016 -244,929.800 244,929.80 -244,892.77 37.03 244,929.80 89231TAB6 TOYOTA AUTO RECEIVABLES C A2A 0.920% 02/15/2018 DD 08/26/15 12/15/2016 12/15/2016 -167,782.000 167,782.00 -167,768.51 13.49 167,782.00 PURCHASES -242,186,005.28 242,186,005.28 0.00 -242,186,005.28 CASH & CASH EQUIVALENTS -192,686,268.80 192,686,268.80 0.00 -192,686,268.80 Report Id TX8355 Report Timestamp: Tue Jan 17 2017 03:38:36 PM Page 1 of 3 Transaction Report

OCSD-CONSOLIDATED - OCSG00010000

Effective Contract Trade Date Base Investment Base Investment Base . Security ID Description Shares/ Par Settle Base Amount Date Settle Date Amount Amount Gain/Loss

U.S. DOLLAR -192,686,268.80 192,686,268.80 0.00 -192,686,268.80 02665JNR7 AMERICAN HONDA FN DISC 01/25/2017 12/23/2016 12/23/2016 900,000.000 -899,397.75 899,397.75 0.00 -899,397.75 996087094 BNY MELLON CASH RESERVE 0.010% 12/31/2049 DD 06/26/97 12/5/2016 12/5/2016 5,600,000.000 -5,600,000.00 5,600,000.00 0.00 -5,600,000.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/1/2016 12/1/2016 173,526.480 -173,526.48 173,526.48 0.00 -173,526.48 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/2/2016 12/2/2016 834.050 -834.05 834.05 0.00 -834.05 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/2/2016 12/2/2016 653.250 -653.25 653.25 0.00 -653.25 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/5/2016 12/5/2016 11,040.000 -11,040.00 11,040.00 0.00 -11,040.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/6/2016 12/6/2016 5,600,000.000 -5,600,000.00 5,600,000.00 0.00 -5,600,000.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/7/2016 12/7/2016 11,014.180 -11,014.18 11,014.18 0.00 -11,014.18 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/12/2016 12/12/2016 43,750.000 -43,750.00 43,750.00 0.00 -43,750.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/15/2016 12/15/2016 882,962.260 -882,962.26 882,962.26 0.00 -882,962.26 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/16/2016 12/16/2016 1,139.940 -1,139.94 1,139.94 0.00 -1,139.94 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/19/2016 12/19/2016 340,933.030 -340,933.03 340,933.03 0.00 -340,933.03 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/19/2016 12/19/2016 10,968.890 -10,968.89 10,968.89 0.00 -10,968.89 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/20/2016 12/20/2016 3,047.570 -3,047.57 3,047.57 0.00 -3,047.57 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/21/2016 12/21/2016 28,527,144.230 -28,527,144.23 28,527,144.23 0.00 -28,527,144.23 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/22/2016 12/22/2016 80,000,000.000 -80,000,000.00 80,000,000.00 0.00 -80,000,000.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/27/2016 12/27/2016 60,870.630 -60,870.63 60,870.63 0.00 -60,870.63 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/28/2016 12/28/2016 4,876.620 -4,876.62 4,876.62 0.00 -4,876.62 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/30/2016 12/30/2016 2,000,000.000 -2,000,000.00 2,000,000.00 0.00 -2,000,000.00 313385BC9 FEDERAL HOME LN BK CONS DISC MAT 01/27/2017 12/23/2016 12/23/2016 12,000,000.000 -11,994,400.00 11,994,400.00 0.00 -11,994,400.00 313385BF2 FEDERAL HOME LN BK CONS DISC MAT 01/30/2017 12/21/2016 12/21/2016 1,000,000.000 -999,444.44 999,444.44 0.00 -999,444.44 313385DL7 FEDERAL HOME LN BK CONS DISC N MAT 03/24/2017 12/23/2016 12/23/2016 6,000,000.000 -5,991,734.16 5,991,734.16 0.00 -5,991,734.16 313397BG5 FEDERAL HOME LN MTG CORP DISC 01/31/2017 12/28/2016 12/28/2016 12,000,000.000 -11,994,673.33 11,994,673.33 0.00 -11,994,673.33 313397BG5 FEDERAL HOME LN MTG CORP DISC 01/31/2017 12/27/2016 12/27/2016 5,000,000.000 -4,997,715.30 4,997,715.30 0.00 -4,997,715.30 313397AV3 FEDERAL HOME LN MTG CORP DISC MAT 01/20/2017 12/19/2016 12/19/2016 2,000,000.000 -1,999,164.44 1,999,164.44 0.00 -1,999,164.44 313589BX0 FEDERAL NATL MTG ASSN DISC MAT 02/15/2017 12/23/2016 12/23/2016 1,920,000.000 -1,918,606.08 1,918,606.08 0.00 -1,918,606.08 69372ANT5 PACCAR FINL CORP DISC 01/27/2017 12/23/2016 12/23/2016 2,000,000.000 -1,998,638.88 1,998,638.88 0.00 -1,998,638.88 74005HMW9 PRAXAIR INC DISC 12/30/2016 12/23/2016 12/23/2016 2,000,000.000 -1,999,731.66 1,999,731.66 0.00 -1,999,731.66 89113E7K6 TORONTO-DOMINION NY INSTL C/D 1.150% 05/03/2017 DD 05/05/16 12/20/2016 12/20/2016 1,150,000.000 -1,149,964.14 1,149,964.14 0.00 -1,149,964.14 89233GRL2 TOYOTA MTR CR CP DISC 04/20/2017 12/23/2016 12/23/2016 1,000,000.000 -996,689.44 996,689.44 0.00 -996,689.44 89233GV29 TOYOTA MTR CR CP DISC 08/02/2017 12/22/2016 12/22/2016 6,300,000.000 -6,251,999.25 6,251,999.25 0.00 -6,251,999.25 912796KE8 U S TREASURY BILL 0.000% 01/26/2017 DD 07/28/16 12/6/2016 12/6/2016 1,250,000.000 -1,249,349.22 1,249,349.22 0.00 -1,249,349.22 912796KT5 U S TREASURY BILL 0.000% 04/20/2017 DD 10/20/16 12/23/2016 12/23/2016 15,000,000.000 -14,971,999.58 14,971,999.58 0.00 -14,971,999.58 FIXED INCOME SECURITIES -49,499,736.48 49,499,736.48 0.00 -49,499,736.48 U.S. DOLLAR -49,499,736.48 49,499,736.48 0.00 -49,499,736.48 31398ADM1 FEDERAL NATL MTG ASSN 5.375% 06/12/2017 DD 06/08/07 12/27/2016 12/28/2016 2,500,000.000 -2,553,425.00 2,553,425.00 0.00 -2,553,425.00 912828SC5 U S TREASURY NOTE 0.875% 01/31/2017 DD 01/31/12 12/22/2016 12/23/2016 10,000,000.000 -10,005,111.63 10,005,111.63 0.00 -10,005,111.63 912828SC5 U S TREASURY NOTE 0.875% 01/31/2017 DD 01/31/12 12/23/2016 12/23/2016 6,000,000.000 -6,003,066.98 6,003,066.98 0.00 -6,003,066.98 912828T34 U S TREASURY NOTE 1.125% 09/30/2021 DD 09/30/16 12/21/2016 12/22/2016 4,000,000.000 -3,836,888.40 3,836,888.40 0.00 -3,836,888.40 912828T67 U S TREASURY NOTE 1.250% 10/31/2021 DD 10/31/16 12/14/2016 12/14/2016 6,000,000.000 -5,813,691.98 5,813,691.98 0.00 -5,813,691.98 912828N89 U S TREASURY NOTE 1.375% 01/31/2021 DD 01/31/16 12/28/2016 12/29/2016 4,500,000.000 -4,404,214.29 4,404,214.29 0.00 -4,404,214.29 912828SN1 U S TREASURY NOTE 1.500% 03/31/2019 DD 03/31/12 12/28/2016 12/29/2016 5,000,000.000 -5,016,423.00 5,016,423.00 0.00 -5,016,423.00 912828XE5 U S TREASURY NOTE 1.500% 05/31/2020 DD 05/31/15 12/21/2016 12/22/2016 5,000,000.000 -4,966,423.00 4,966,423.00 0.00 -4,966,423.00 912828U65 U S TREASURY NOTE 1.750% 11/30/2021 DD 11/30/16 12/28/2016 12/29/2016 7,000,000.000 -6,900,492.20 6,900,492.20 0.00 -6,900,492.20 RECEIPTS AND DISBURSEMENT TRANSACTIONS 113,900,000.00 13,624.00 0.00 113,900,000.00 CASH/SECURITIES RECEIVED FROM PLAN ADMINISTRATOR 113,900,000.00 0.00 0.00 113,900,000.00 Report Id TX8355 Report Timestamp: Tue Jan 17 2017 03:38:36 PM Page 2 of 3 Transaction Report

OCSD-CONSOLIDATED - OCSG00010000

Effective Contract Trade Date Base Investment Base Investment Base . Security ID Description Shares/ Par Settle Base Amount Date Settle Date Amount Amount Gain/Loss

U.S. DOLLAR 113,900,000.00 0.00 0.00 113,900,000.00 NA9123459 RECD FROM PLAN ADMIN 12/1/2016 0.000 5,600,000.00 0.00 0.00 5,600,000.00 NA9123459 RECD FROM PLAN ADMIN 12/22/2016 0.000 80,000,000.00 0.00 0.00 80,000,000.00 NA9123459 RECD FROM PLAN ADMIN 12/21/2016 0.000 28,300,000.00 0.00 0.00 28,300,000.00 MISCELLANEOUS INCOME 0.00 13,624.00 0.00 0.00 U.S. DOLLAR 0.00 13,624.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/1/2016 12/1/2016 832.000 0.00 832.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/2/2016 12/2/2016 1,248.000 0.00 1,248.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/5/2016 12/5/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/6/2016 12/6/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/7/2016 12/7/2016 520.000 0.00 520.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/8/2016 12/8/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/9/2016 12/9/2016 1,248.000 0.00 1,248.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/12/2016 12/12/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/13/2016 12/13/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/14/2016 12/14/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/15/2016 12/15/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/16/2016 12/16/2016 1,352.000 0.00 1,352.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/19/2016 12/19/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/20/2016 12/20/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/21/2016 12/21/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/22/2016 12/22/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/23/2016 12/23/2016 1,248.000 0.00 1,248.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/27/2016 12/27/2016 832.000 0.00 832.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/28/2016 12/28/2016 416.000 0.00 416.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/29/2016 12/29/2016 520.000 0.00 520.00 0.00 0.00 912828WU0 ILB INFLATION ADJUSTMENTS US TREAS-CPI INFLAT 12/30/2016 12/30/2016 832.000 0.00 832.00 0.00 0.00 SALES 122,589,311.67 -122,589,311.67 0.00 122,589,311.67 CASH & CASH EQUIVALENTS 122,589,311.67 -122,589,311.67 0.00 122,589,311.67 U.S. DOLLAR 122,589,311.67 -122,589,311.67 0.00 122,589,311.67 996087094 BNY MELLON CASH RESERVE 0.010% 12/31/2049 DD 06/26/97 12/6/2016 12/6/2016 -5,600,000.000 5,600,000.00 -5,600,000.00 0.00 5,600,000.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/6/2016 12/6/2016 -1,249,349.220 1,249,349.22 -1,249,349.22 0.00 1,249,349.22 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/14/2016 12/14/2016 -5,794,683.000 5,794,683.00 -5,794,683.00 0.00 5,794,683.00 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/20/2016 12/20/2016 -1,158,376.710 1,158,376.71 -1,158,376.71 0.00 1,158,376.71 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/21/2016 12/21/2016 -999,444.440 999,444.44 -999,444.44 0.00 999,444.44 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/22/2016 12/22/2016 -15,032,604.610 15,032,604.61 -15,032,604.61 0.00 15,032,604.61 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/23/2016 12/23/2016 -56,834,539.200 56,834,539.20 -56,834,539.20 0.00 56,834,539.20 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/27/2016 12/27/2016 -4,997,715.300 4,997,715.30 -4,997,715.30 0.00 4,997,715.30 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/28/2016 12/28/2016 -14,554,070.550 14,554,070.55 -14,554,070.55 0.00 14,554,070.55 996085247 DREYFUS TREAS & AGY CSH CSH MG VAR RT 12/31/2049 DD 04/09/97 12/29/2016 12/29/2016 -16,368,528.640 16,368,528.64 -16,368,528.64 0.00 16,368,528.64

Report Id TX8355 Report Timestamp: Tue Jan 17 2017 03:38:36 PM Page 3 of 3 December 31, 2016 Orange County Sanitation District

Investment Measurement Service Quarterly Review

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. Callan does not provide advice regarding, nor shall Callan be responsible for, the purchase, sale, hedge or holding of individual securities, including, without limitation securities of the client (i.e., company stock) or derivatives in the client’s accounts. In preparing the following report, CAI has not reviewed the risks of individual security holdings or the conformity of individual security holdings with the client’s investment policies and guidelines, nor has it assumed any responsibility to do so. Advice pertaining to the merits of individual securities and derivatives should be discussed with a third party securities expert. Copyright 2017 by Callan Associates Inc. Table of Contents December 31, 2016

Capital Market Review 1

Active Management Overview Market Overview 8 Domestic Fixed Income 9

Asset Allocation Investment Manager Asset Allocation 11 Investment Manager Returns 12 Asset Class Risk and Return 16

Manager Analysis Chandler-Long Term Operating Fund 18 Chandler-Liquid Operating Money 22

Callan Research/Education 24

Definitions 27

Disclosures 32 Orange County Sanitation District Executive Summary for Period Ending December 31, 2016

Asset Allocation

December 31, 2016 SeptemberSeptember 30, 20162016 Market Value Weight Net New Inv.In Inv.v. RReturneturn Ma Marketrket VValuealue Weight Domestic Fixed Income Long Term Operating Fund* 316,787,228 73.70% (7,100,000) (2,316,151)(2,316,151) 326,203,37326,203,3799 84.91%84.91% Liquid Operating Monies* 113,044,701 26.30% 55,000,000 55,409 57,989,291 15.09%15.09%

Total Fund $429,831,929 100.0% $47,900,000 $(2,260,742)$(2,260,742) $384,192,671$384,192,671 100.0%100.0%

Performance Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^ (0.80%) 1.58% 1.47% 1.13% 2.08% Chandler (0.80%) 1.58% - - - Blmbg Govt/Cred 1-5 Year Idx (1.05%) 1.56% 1.32% 1.29% 1.95% ML 1-5 Govt/Corp (1.02%) 1.62% 1.39% 1.39% 2.03%

Liquid Operating Monies^ 0.12% 0.47% 0.26% 0.21% 0.22% Chandler 0.12% 0.47% - - - Citigroup 3-Month Treasury Bill 0.08% 0.27% 0.11% 0.09% 0.09%

Total Fund (0.70%) 1.15% 1.22% 0.97% 1.74% Target* (0.80%) 1.35% 1.14% 1.13% 1.64%

* Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Recent Developments During the quarter, $47.9 million was deposited into the total portfolio. $7.1 million was taken from the Long Term Operating Fund and $55 million was added to the Liquid Operating Monies.

Organizational Issues N/A

Manager Performance The yield curve steepened throughout October, then took an overnight jolt upwards following announcement of the presidential election results. Positive economic data and expectations of a Federal Open Market Committee (FOMC) rate hike drove yields upwards the remainder of the quarter. On December 14th, the FOMC raised the target fed funds rate to 0.50-0.75%. They cited “solid” job numbers, “moderate” household spending, and steady economic expansion as supporting their decision. Following this announcement, Treasuries sold off. Rates softened from their peaks the last few days of December. Orange County Sanitation District January 26, 2017

During the quarter, the 5-year Treasury rose 79 bps to 1.93% and the 10-year increased 85 bps to 2.45%. The Bloomberg Barclays Aggregate Index gave up 3.0%, bringing its calendar year return to 2.7%. Government securities trailed the broader market for the three months (Barclays Government Index: -3.7%). Credit securities kept pace with broader market, also falling 3.0% (Barclays Credit Index). High yield continued its trend and led the other fixed income sectors throughout the quarter, returning 1.9%. For the calendar year, the sector produced an impressive 17.3% gain (ML High Yield CP Index). Inflation protected securities fell 2.4% but led the broader market for the trailing 12 months, up 4.7% (Barclays U.S. TIPS Index).

The Long Term Operating Fund fell 0.80% in the quarter, beating the ML 1-5 Govt/Corp Index (-1.02%) and ranking in the 92nd percentile versus peers. The portfolio was short duration (2.48 versus 2.76 years), which helped relative performance as interest rates rose across the curve throughout the quarter. The Long Term Operating Fund had less than 30% invested in credit and less than the permitted 20% invested in the combination of asset- backed securities, commercial mortgage backed securities, and CMOs as of December 31, 2016 (see page 21).

The Liquid Operating Portfolio returned 0.08% (after fees) in the quarter, which tied the return of the 3-month Treasury (+0.08%). The Portfolio returned 0.32% (after fees) for the calendar year and ranked 22nd percentile versus peers.

Cordially,

Gordon M. Weightman, CFA Vice President

Capital Market Review

CALLAN INSTITUTE CMR Preview

Fourth Quarter 2016

This “Preview” contains excerpts from the upcoming Capital Broad Market Quarterly Returns Market Review (CMR) newsletter, which will be published in several weeks. U.S. Equity (Russell 3000) 4.21% -1.25% Non-U.S. Equity (MSCI ACWI ex USA)

-2.98% U.S. Fixed (Bloomberg Barclays Aggregate)

Markets Trumped -10.26% Non-U.S. Fixed (Bloomberg Barclays Global ex US) U.S. EQUITY | Lauren Mathias, CFA Cash (90-Day T-Bills) 0.09% Source:Sources: Barclays,Bloomberg Merrill Barclays, Lynch, MSCI, Merrill Russell Lynch, Investment MSCI, RussellGroup Investment Group The S&P 500 Index notched a +3.82% return for the fourth quarter after reaching an all-time high (2,239) just days before the end of 2016. Even more impressive was the return from Treacherous Treasuries small-capitalization companies (Russell 2000 Index: +8.83%), U.S. FIXED INCOME | Rufash Lama as was the divergence between value and growth across the The U.S. bond market experienced a tumultuous fourth quarter, size spectrum (Russell 1000 Value Index: +6.68% vs. Russell triggered by the unexpected election results and strong eco- 1000 Growth Index: +1.01%; Russell 2000 Value Index: nomic data, among other factors. The Bloomberg Barclays U.S. +14.07% vs. Russell 2000 Growth Index: +3.57%). Aggregate Bond Index dropped 2.98%, while the Bloomberg Continued on pg. 2 Barclays High Yield Index rose 1.75%. But the year ended on an upbeat note, with the Aggregate up 2.65% and the High Yield Index delivering equity-like returns at 17.13%. A Depressing Dollar

NON-U.S. EQUITY | Irina Sushch The yield curve rose following the presidential election and an upward revision for third quarter GDP to 3.5%, the highest 'XULQJWKH¿QDOTXDUWHURIIRUHLJQGHYHORSHGDQGHPHUJ- LQJPDUNHWVÀRXQGHUHGLQ86GROODUWHUPVGHVSLWHKHDUW\ORFDO Continued on pg. 4 returns. Donald Trump’s election drove U.S. stocks to record highs, as investors reacted positively to his business-friendly Big League Yields stances on taxes, trade, and regulations. The U.S. dollar hit a NON-U.S. FIXED INCOME | Kyle Fekete multi-year high versus the euro and the yen and appreciated roughly 7% compared to a basket of currencies. The U.S. dollar skyrocketed against a trade-weighted basket of currencies on the back of the November U.S. election and That broad-based dollar strength detracted from overseas higher U.S. interest rates. Investment strategies with foreign returns for U.S. investors. The MSCI ACWI ex USA Index was currency exposure faced strong headwinds as the Bloomberg down 1.25% for the quarter (but up 4.93% in local currency). As Barclays Global Aggregate ex-US fell 10.26% (-1.86% on a in the previous quarter, the defensive-oriented sectors dragged hedged basis).

Continued on pg. 3 Continued on pg. 5

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-2.97% Bloomberg Barclays Credit 0% Bloomberg Barclays Corp. High Yield 1.75% 0 5 10 15 20 25 30 -2.41% Bloomberg Barclays U.S. TIPS Maturity (Years)

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Active Management Overview

Market Overview 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 Large Cap Equity manager database.

Range of Separate Account Manager Returns by Asset Class One Quarter Ended December 31, 2016

20%

15%

10% (50)

5% (49) (54) 0% (35) Returns (87) (5%)

(10%) (87)

(15%) Large Cap Small Cap Non-US Domestic Non-US Real Equity Equity Equity Fixed Income Fixed Income Estate vs vs vs vs vs vs S&P 500 Russell 2000 MSCI EAFE Blmbg Aggr Bd Citi Non-US Govt NCREIF Index 10th Percentile 8.55 14.69 1.23 (2.41) (4.38) 3.28 25th Percentile 6.57 12.12 0.00 (2.55) (7.24) 2.67 Median 3.79 8.90 (1.80) (2.73) (9.92) 1.87 75th Percentile 0.61 3.40 (3.70) (2.86) (10.42) 1.17 90th Percentile (1.35) 0.27 (5.39) (2.98) (11.22) (0.05) Index 3.82 8.83 (0.71) (2.98) (10.84) 1.77

Range of Separate Account Manager Returns by Asset Class One Year Ended December 31, 2016

35% 30% 25% (42) 20% 15% (35) 10%

Returns (53) 5% (86) (60) 0% (56) (5%) (10%) Large Cap Small Cap Non-US Domestic Non-US Real Equity Equity Equity Fixed Income Fixed Income Estate vs vs vs vs vs vs S&P 500 Russell 2000 MSCI EAFE Blmbg Aggr Bd Citi Non-US Govt NCREIF Index 10th Percentile 16.83 30.34 6.19 4.43 7.90 13.37 25th Percentile 14.48 25.35 3.43 3.79 4.49 10.76 Median 10.17 19.33 1.47 3.13 2.28 8.34 75th Percentile 4.70 11.03 (0.44) 2.80 0.52 5.52 90th Percentile 1.68 5.70 (3.77) 2.59 (0.88) (0.02) Index 11.96 21.31 1.00 2.65 1.80 8.01

Orange County Sanitation District 8 Domestic Fixed Income Active Management Overview

The 10-year U.S. Treasury yield rose 85 bps and returned -6.8% for the quarter in the sharpest quarterly selloff in more than two decades. TIPS outperformed nominal Treasuries, bolstered by rising expectations for inflation. The Bloomberg Barclays TIPS Index returned -2.4% for the quarter and the 10-year inflation breakeven rate widened to 1.95% as of December 30th. The Bloomberg Barclays U.S. Aggregate returned -3.0% for the quarter with the corporate sector performing the best, in spite of robust issuance. While long maturity corporates lost 5%, they performed well in relative terms, outperforming like-duration Treasuries by 436 bps. Mortgages underperformed Treasuries as durations extended with the increase in interest rates. Extended maturity returned -7.60% for the quarter, but was up by 7.28% for the year. High Yield managers underpeformed the Bloomberg High Yield Index for the year.

Separate Account Style Group Median Returns for Quarter Ended December 31, 2016 Blmbg Aggregate: (2.98%) 6% Blmbg High Yield: 1.75% Blmbg Long Gov/Cred: (7.84%)

2.13 2% 1.76

0% (0.33 ) (2%) (1.91 ) (2.33 ) Returns (2.73 ) (4%)

(6%)

(8%) (7.60 )

(10%) Defensive Intermed Core Core Plus Extended Bank High Yield Bond Maturity Loans

Separate Account Style Group Median Returns for One Year Ended December 31, 2016 Blmbg Aggregate: 2.65% 20% Blmbg High Yield: 17.13% Blmbg Long Gov/Cred: 6.67%

15% 14.74

10% 9.38 Returns 7.28

5% 4.67 3.13 2.33 1.54

0% Defensive Intermed Core Core Plus Extended Bank High Yield Bond Maturity Loans

Orange County Sanitation District 9

Asset Allocation

Investment Manager Asset Allocation

The table below contrasts the distribution of assets across the Fund’s investment managers as of December 31, 2016, with the distribution as of September 30, 2016. 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

December 31, 2016 September 30, 2016 Market Value Weight Net New Inv. Inv. Return Market Value Weight Domestic Fixed Income Long Term Operating Fund* 316,787,228 73.70% (7,100,000) (2,316,151) 326,203,379 84.91% Liquid Operating Monies* 113,044,701 26.30% 55,000,000 55,409 57,989,291 15.09%

Total Fund $429,831,929 100.0% $47,900,000 $(2,260,742) $384,192,671 100.0%

*Chandler replaced PIMCO during the 4th quarter of 2014. Assets were transferred in-kind as of 12/01/2014.

Orange County Sanitation District 11 Investment Manager Returns

The table below details the rates of return for the Fund’s investment managers over various time periods ended December 31, 2016. 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 December 31, 2016 Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^ (0.80%) 1.58% 1.47% 1.13% 2.08% Chandler (0.80%) 1.58% - - - Blmbg Govt/Cred 1-5 Year Idx (1.05%) 1.56% 1.32% 1.29% 1.95% ML 1-5 Govt/Corp (1.02%) 1.62% 1.39% 1.39% 2.03%

Liquid Operating Monies^ 0.12% 0.47% 0.26% 0.21% 0.22% Chandler 0.12% 0.47% - - - Citigroup 3-Month Treasury Bill 0.08% 0.27% 0.11% 0.09% 0.09%

Total Fund (0.70%) 1.15% 1.22% 0.97% 1.74% Target* (0.80%) 1.35% 1.14% 1.13% 1.64%

* Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Orange County Sanitation District 12 Investment Manager Returns

Returns for Periods Ended December 31, 2016 Last Last Last 10 15 21-1/4 Years Years Years Domestic Fixed Income Long Term Operating Fund^ 3.25% 3.53% 4.47% Blmbg Govt/Cred 1-5 Year Idx 3.05% 3.29% 4.28% ML 1-5 Govt/Corp 3.08% 3.29% 4.31%

Liquid Operating Monies^ 0.97% 1.50% 2.69% Citigroup 3-Month Treasury Bill 0.73% 1.26% 2.37%

Total Fund 2.81% 3.18% 4.20% Target* 2.61% 2.89% 3.92%

* Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Orange County Sanitation District 13 Investment Manager Returns

The table below details the rates of return for the Fund’s investment managers over various time periods. 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.

2016 2015 2014 2013 2012 Domestic Fixed Income Long Term Operating Fund^ 1.58% 0.85% 1.98% (1.77%) 3.06% Chandler 1.58% 0.85% - - - Blmbg Govt/Cred 1-5 Year Idx 1.56% 0.97% 1.42% 0.28% 2.24% ML 1-5 Govt/Corp 1.62% 1.05% 1.51% 0.32% 2.47%

Liquid Operating Monies^ 0.47% 0.22% 0.09% 0.13% 0.17% Chandler 0.47% 0.22% - - - Citigroup 3-Month Treasury Bill 0.27% 0.03% 0.03% 0.05% 0.07%

Total Fund 1.15% 0.80% 1.73% (1.49%) 2.70% Target* 1.35% 0.85% 1.21% 0.26% 1.99%

* Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Orange County Sanitation District 14 Investment Manager Returns

2011 2010 2009 2008 2007 Domestic Fixed Income Long Term Operating Fund^ 4.59% 4.42% 5.52% 5.37% 7.21% Blmbg Govt/Cred 1-5 Year Idx 3.14% 4.08% 4.62% 5.12% 7.27% ML 1-5 Govt/Corp 3.10% 4.17% 4.88% 4.65% 7.27%

Liquid Operating Monies^ 0.24% 0.25% 0.58% 2.40% 5.25% Citigroup 3-Month Treasury Bill 0.08% 0.13% 0.16% 1.80% 4.74%

Total Fund 3.70% 3.68% 4.65% 4.61% 6.84% Target* 2.49% 3.36% 3.93% 4.08% 6.76%

* Current Quarter Target = 80.0% ML 1-5 Govt/Corp and 20.0% 3mo T-Bills. ^Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Orange County Sanitation District 15 Asset Class Risk and Return

The charts below show the seven 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.

Seven Year Annualized Risk vs Return Asset Classes vs Benchmark Indices

2.5%

ML 1-5 Govt/Corp Blmbg Gov/Cr 1-5 Yr 2.0% Total Fund

Total Fund Target 1.5% Returns 1.0%

0.5%

3mo T-Bills 0.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Standard Deviation

Seven Year Annualized Risk vs Return Asset Classes vs Asset Class Median

2.0%

1.8% CAI Defensive Fixed Inc

1.6% Total Fund

1.4%

1.2%

1.0% Returns 0.8%

0.6%

0.4%

0.2%

CAI Money Market Funds 0.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Standard Deviation

Orange County Sanitation District 16

Manager Analysis

Chandler-Long Term Operating Fund Period Ended December 31, 2016

Investment Philosophy Chandler Asset Management’s Short Term Bond strategy is driven by quantitative models and focuses on active duration management, sector selection and term structure. The strategy seeks to achieve consistent above-benchmark returns with low volatility relative to the style’s performance benchmark. The firm has a unique focus on high quality fixed income management, and places risk control as a higher objective than return. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Quarterly Summary and Highlights Quarterly Asset Growth Long Term Operating Fund’s portfolio posted a (0.80)% Beginning Market Value $326,203,379 return for the quarter placing it in the 92 percentile of the CAI Net New Investment $-7,100,000 Defensive Fixed Income group for the quarter and in the 47 percentile for the last year. Investment Gains/(Losses) $-2,316,151 Long Term Operating Fund’s portfolio outperformed the ML Ending Market Value $316,787,228 1-5 Govt/Corp by 0.22% for the quarter and underperformed the ML 1-5 Govt/Corp for the year by 0.03%.

Performance vs CAI Defensive Fixed Income (Gross)

6% 5% A(12) (28) 4% B(29) A(18) 3% (27) B(29) A(27) 2% (29) (45) A(47) A(26) B(32) B(48)(43) B(45)(33) (43) B(50) 1% A(51) B(41) A(62) 0% A(92) (1%) (94) B(95) (2%) Last Qtr Last Chandler Last 3 Yrs Last 5 Yrs Last 7 Yrs Last 10 Yrs Last 20.5 Yrs Yr Inception 10th Percentile (0.15) 2.58 1.93 1.79 2.20 2.73 3.51 4.55 25th Percentile (0.25) 2.12 1.52 1.48 1.69 2.19 3.15 4.34 Median (0.33) 1.54 1.23 1.19 1.29 1.77 2.74 4.03 75th Percentile (0.44) 1.12 1.01 0.99 1.00 1.37 2.41 3.87 90th Percentile (0.58) 1.02 0.86 0.87 0.81 1.21 2.20 3.70 Long Term Operating Fund A (0.80) 1.58 1.21 1.47 1.13 2.08 3.25 4.47 Blmbg Govt/Cred 1-5 Year Idx B (1.05) 1.56 1.27 1.32 1.29 1.95 3.05 4.28 ML 1-5 Govt/Corp (1.02) 1.62 1.33 1.39 1.39 2.03 3.08 4.31

CAI Defensive Fixed Income (Gross) Relative Return vs ML 1-5 Govt/Corp Annualized Seven Year Risk vs Return

2.0% 3.5%

1.5% 3.0%

1.0% 2.5% Long Term Operating Fund 0.5% 2.0% ML 1-5 Govt/Corp 0.0% Returns Blmbg Govt/Cred 1-5 Year Idx 1.5%

Relative Returns (0.5%)

(1.0%) 1.0%

(1.5%) 0.5% 2010 2011 2012 2013 2014 2015 2016 0.0 0.5 1.0 1.5 2.0 Standard Deviation Long Term Operating Fund

Orange County Sanitation District 18 Long Term Operating Fund Return Analysis Summary

Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures and returns for rising/declining periods. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Performance vs CAI Defensive Fixed Income (Gross)

20% 15% 10% B(5) A(1) A(15) A(57) A(28)5 A(6) 5% A(21) 17 62 39 B(30) 45 A(47) B(37) A(4) 27 4 B(4) B(20) B(62) 0% B(48)22 10 B(17)89 B(90) B(38) A(64) A(100) (5%) (10%) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 10th Percentile 2.58 1.18 1.50 1.20 4.46 2.72 4.71 13.74 6.63 7.03 25th Percentile 2.12 1.03 1.27 0.80 2.60 2.28 4.02 8.60 5.64 6.88 Median 1.54 0.90 1.11 0.65 1.81 1.87 3.19 5.91 3.88 6.45 75th Percentile 1.12 0.76 0.87 0.41 1.46 1.65 2.72 2.53 (0.17) 5.66 90th Percentile 1.02 0.64 0.70 0.31 0.92 1.44 2.41 1.82 (3.47) 3.75 Long Term Operating Fund A 1.58 0.85 1.98 (1.77) 3.06 4.59 4.42 5.52 5.37 7.21 Blmbg Govt/Cred 1-5 Year Idx B 1.56 0.97 1.42 0.28 2.24 3.14 4.08 4.62 5.12 7.27 ML 1-5 Govt/Corp 1.62 1.05 1.51 0.32 2.47 3.10 4.17 4.88 4.65 7.27

Cumulative and Quarterly Relative Return vs ML 1-5 Govt/Corp

(2%)

(4%) Relative Returns (6%)

(8%) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Long Term Operating Fund Blmbg Govt/Cred 1-5 Year Idx CAI Defensive Fixed Inc

Risk Adjusted Return Measures vs ML 1-5 Govt/Corp Returns for Domestic Fixed-Income Rankings Against CAI Defensive Fixed Income (Gross) Rising/Declining Periods Seven Years Ended December 31, 2016 Seven Years Ended December 31, 2016

3.0 3.0 2.8 2.5 2.6 2.0 2.4 1.5 B(90) 2.2 A(27) 2.0 (29) 1.0 A(99) 1.8 B(32) 0.5 1.6 0.0 B(94) A(27) 1.4 (0.5) A(95) 1.2 B(73) 1.0 (1.0) Rising (1.5) (2.0) 201003- Alpha Sharpe Excess Return 201612 Ratio Ratio 10th Percentile 2.73 10th Percentile 1.19 2.18 0.71 25th Percentile 2.19 25th Percentile 0.82 1.88 0.19 Median 1.77 Median 0.43 1.71 (0.39) 75th Percentile 1.37 75th Percentile 0.23 1.48 (0.91) 90th Percentile 1.21 90th Percentile 0.02 1.28 (1.12) Long Term Long Term Operating Fund A 2.08 Operating Fund A (0.17) 1.07 0.06 Blmbg Govt/Cred Blmbg Govt/Cred 1-5 Year Idx B 1.95 1-5 Year Idx B (0.07) 1.27 (0.90) ML 1-5 Govt/Corp 2.03

Orange County Sanitation District 19 Long Term Operating Fund Bond Characteristics Analysis Summary

Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style.

Fixed Income Portfolio Characteristics Rankings Against CAI Defensive Fixed Income as of December 31, 2016

3.5 3.0 (4) (11) 2.5 (8) (22) (35) 2.0 (52) (80) 1.5 (65) 1.0 0.5 0.0 (15) (0.5) Average Effective Coupon OA Duration Life Yield Rate Convexity 10th Percentile 2.36 2.89 2.40 2.68 0.13 25th Percentile 2.02 2.29 2.02 2.31 0.06 Median 1.85 2.00 1.75 1.96 0.04 75th Percentile 1.75 1.87 1.51 1.80 0.02 90th Percentile 1.59 1.66 1.33 1.32 (0.01) Long Term Operating Fund 2.48 2.56 1.57 1.65 - Blmbg Gov/Cr 1-5 Yr 2.76 2.88 1.73 2.22 0.09

Sector Allocation and Quality Ratings The first graph compares the manager’s sector allocation with the average allocation across all the members of the manager’s style. The second graph compares the manager’s weighted average quality rating with the range of quality ratings for the style.

Sector Allocation Quality Ratings December 31, 2016 vs CAI Defensive Fixed Income Trsy 30.1 US Trsy 29.7 59.4 50% Mgr MV 23.7 AAA RMBS 1.3

22.4 AA+ 48.9 Corp (incl 144A) 50% (16) 27.7 Mgr MV 11.7 AA Other (65)

7.1 AA- ABS 11.3

1.9 A+ Cash 1.8

1.5 Tax-Exempt US Muni A

0.9 A- CMOs Weighted Average 0.7 Quality Rating CMBS 2.4 10th Percentile AAA 25th Percentile AA Gov Related 4.8 Median AA 12.9 75th Percentile AA- 90th Percentile A 0% 10% 20% 30% 40% 50% 60% 70% 80% Long Term Operating Fund CAI Defensive Fixed Income Long Term Operating Fund AA Blmbg Gov/Cr 1-5 Yr Blmbg Gov/Cr 1-5 Yr AA+

Orange County Sanitation District 20 Long Term Operating Fund Portfolio Characteristics Summary As of December 31, 2016

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 sectors. The second chart compares the duration distribution. The last chart compares the distribution across quality ratings.

Sector Allocation

US Trsy US Trsy 30% 59%

CMBS 1% ABS 7% Cash 2% RMBS 24% Other 12% Gov Related Tax-Exempt US Muni 13% 2% CMOs Corp (incl 144A) Corp (incl 144A) 1% 28% 22%

Long Term Operating Fund Blmbg Govt/Credit 1-5 Year

Weighted Average: Duration Duration Distribution Long Term Operating Fund: 2.48 70% Blmbg Govt/Credit 1-5 Year: 2.76 60% 58.6 50% 41.1 40% 39.4 33.6 30% 23.6 20% 10% Percent of Portfolio 3.4 0.3 0% <1 1-3 3-5 5-7 7-10 >10 Years Duration

Weighted Average: Quality Quality Distribution Long Term Operating Fund: AA 100% Blmbg Govt/Credit 1-5 Year: AA+

80% 68.4 65.0 60%

40%

20% 16.6 10.2 11.8 12.7 Percent of Portfolio 7.2 3.4 4.8 0% AAA AA A BBB BB B CCC CC C D N/R Quality Rating

Orange County Sanitation District 21 Chandler-Liquid Operating Money Period Ended December 31, 2016

Investment Philosophy Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Quarterly Summary and Highlights Quarterly Asset Growth Liquid Operating Money Net’s portfolio posted a 0.08% Beginning Market Value $57,989,291 return for the quarter placing it in the 25 percentile of the CAI Net New Investment $55,000,000 Money Market Funds group for the quarter and in the 22 percentile for the last year. Investment Gains/(Losses) $55,409 Liquid Operating Money Net’s portfolio outperformed the Ending Market Value $113,044,701 Citigroup 3-Month Treasury Bill by 0.00% for the quarter and outperformed the Citigroup 3-Month Treasury Bill for the year by 0.05%.

Performance vs CAI Money Market Funds (Net)

3.0%

2.5% (15) (39)

2.0%

1.5%

1.0% (25) (49) 0.5% (26) (22) (26) (20) (26) (25) (24) (24)(20) (26)(17) (21) 0.0% Last Qtr Last Chandler Last 3 Yrs Last 5 Yrs Last 7 Yrs Last 10 Yrs Last 20.5 Yrs Yr Inception 10th Percentile 0.17 0.71 0.34 0.24 0.18 0.15 0.96 2.62 25th Percentile 0.08 0.28 0.15 0.11 0.07 0.05 0.82 2.44 Median 0.04 0.10 0.06 0.04 0.03 0.02 0.72 2.29 75th Percentile 0.00 0.01 0.01 0.01 0.01 0.01 0.63 2.17 90th Percentile 0.00 0.00 0.00 0.00 0.00 0.00 0.55 2.01 Liquid Operating Money Net 0.08 0.32 0.19 0.11 0.06 0.07 0.82 2.54 Citigroup 3-Month Treasury Bill 0.08 0.27 0.15 0.11 0.09 0.09 0.73 2.37

Relative Returns vs CAI Money Market Funds (Net) Citigroup 3-Month Treasury Bill Annualized Seven Year Risk vs Return

0.10% 2.0%

0.08% 1.5% 0.06%

0.04% 1.0%

0.02%

Returns 0.5% 0.00% Relative Returns (0.02%) Citigroup 3-Month Treasury Bill 0.0% (0.04%) Liquid Operating Money Net

(0.06%) (0.5%) 2010 2011 2012 2013 2014 2015 2016 (0.2 ) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Standard Deviation Liquid Operating Money Net

Orange County Sanitation District 22 Liquid Operating Money Net Return Analysis Summary

Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager’s ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO.

Performance vs CAI Money Market Funds (Net)

6% 16 5% 48 4% 3% 37 2% 61 1% 22 14 0% 26 27 16 17 99 15 99 19 34 11 9 12 14 42 (1%) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 10th Percentile 0.71 0.11 0.07 0.08 0.18 0.08 0.15 0.52 2.77 5.20 25th Percentile 0.28 0.03 0.02 0.02 0.03 0.02 0.05 0.28 2.46 4.99 Median 0.10 0.01 0.01 0.01 0.01 0.01 0.01 0.12 2.03 4.71 75th Percentile 0.01 0.00 0.01 0.00 0.01 0.00 0.01 0.03 1.46 4.34 90th Percentile 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 1.08 3.89 Liquid Operating Money Net 0.32 0.07 (0.06) (0.02) 0.02 0.09 0.10 0.43 2.25 5.09 Citigroup 3-Month Treasury Bill 0.27 0.03 0.03 0.05 0.07 0.08 0.13 0.16 1.80 4.74

Cumulative and Quarterly Relative Return vs Citigroup 3-Month Treasury Bill

1.5%

1.0%

0.5%

0.0%

Relative Returns (0.5%)

(1.0%) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Liquid Operating Money Net CAI Money Market Funds

Risk Adjusted Return Measures vs Citigroup 3-Month Treasury Bill Rankings Against CAI Money Market Funds (Net) Seven Years Ended December 31, 2016

2 1 0 (31) (19) (20) (1) (2) (3) (4) Alpha Sharpe Excess Return Ratio Ratio 10th Percentile 0.06 0.43 1.13 25th Percentile (0.03) (1.41) (1.17) Median (0.05) (4.59) (1.98) 75th Percentile (0.06) (31.27) (2.22) 90th Percentile (0.07) - (2.62) Liquid Operating Money Net (0.04) (0.69) (0.51)

Orange County Sanitation District 23 Callan Research/Education CALLAN INSTITUTE WK4XDUWHU

Education

Research and Educational Programs The Callan Institute provides research that updates clients on the latest industry trends while helping them learn through carefully struc- tured educational programs. Visit www.callan.com/research to see all of our publications, or for more information contact Anna West at 415.974.5060 / [email protected].

New Research from Callan’s Experts

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Definitions

Risk/Reward Statistics

The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill).

Alpha measures a portfolio’s return in excess of the market return adjusted for risk. It is a measure of the manager’s contribution to performance with reference to security selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk which was taken for that level of market exposure.

Beta measures the sensitivity of rates of portfolio returns to movements in the market index. A portfolio’s beta measures the expected change in return per 1% change in the return on the market. If a beta of a portfolio is 1.5, a 1 percent increase in the return on the market will result, on average, in a 1.5 percent increase in the return on the portfolio. The converse would also be true.

Downside Risk stems from the desire to differentiate between "good risk" (upside volatility) and "bad risk" (downside volatility). Whereas standard deviation punishes both upside and downside volatility, downside risk measures only the standard deviation of returns below the target. Returns above the target are assigned a deviation of zero. Both the frequency and magnitude of underperformance affect the amount of downside risk.

Excess Return Ratio is a measure of risk adjusted relative return. This ratio captures the amount of active management performance (value added relative to an index) per unit of active management risk (tracking error against the index.) It is calculated by dividing the manager’s annualized cumulative excess return relative to the index by the standard deviation of the individual quarterly excess returns. The Excess Return Ratio can be interpreted as the manager’s active risk/reward tradeoff for diverging from the index when the index is mandated to be the "riskless" market position.

Information Ratio measures the manager’s market risk-adjusted excess return per unit of residual risk relative to a benchmark. It is computed by dividing alpha by the residual risk over a given time period. Assuming all other factors being equal, managers with lower residual risk achieve higher values in the information ratio. Managers with higher information ratios will add value relative to the benchmark more reliably and consistently.

R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of .75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio’s returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio’s return and the market.

Relative Standard Deviation is a simple measure of a manager’s risk (volatility) relative to a benchmark. It is calculated by dividing the manager’s standard deviation of returns by the benchmark’s standard deviation of returns. A relative standard deviation of 1.20, for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark.

Residual Portfolio Risk is the unsystematic risk of a fund, the portion of the total risk unique to the fund (manager) itself and not related to the overall market. This reflects the "bets" which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors, maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio.

28 Risk/Reward Statistics

Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-free" return (usually 3 Month Treasury Bill) from the portfolio return and dividing the resulting "excess return" by the portfolio’s risk level (standard deviation). The result is a measure of return gained per unit of risk taken.

Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1) the statistical significance of the denominator, and (2) its reliance on the persistence of skewness in return distributions.

Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns, the higher the standard deviation of returns, and the higher the portfolio risk. If returns are normally distributed (ie. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean.

Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market (non-diversifiable or systematic) risk and residual (diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual risk of the portfolio.

Tracking Error is a statistical measure of a portfolio’s risk relative to an index. It reflects the standard deviation of a portfolio’s individual quarterly or monthly returns from the index’s returns. Typically, the lower the Tracking Error, the more "index-like" the portfolio.

Treynor Ratio represents the portfolio’s average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed.

Note: Alpha, Total Risk, and Residual Risk are annualized.

29 Fixed Income Portfolio Characteristics

All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio.

Allocation by Sector - Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio’s weights with those of the index to identify any significant sector bets.

Average Coupon - The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value.

Average Moody’s Rating for Total Portfolio - A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody’s Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality - lowest credit risk) to C (lowest investment quality - highest credit risk).

Average Option Adjusted (Effective) Convexity - Convexity is a measure of the portfolio’s exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally, securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security’s duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments.

Average Option Adjusted (Effective) Duration - Duration is one measure of the portfolio’s exposure to interest rate risk. Generally, the higher a portfolio’s duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments.

Average Price - The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par.

Average Years to Expected Maturity - This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments.

Average Years to Stated Maturity - The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns, or prepayments.

Current Yield - The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value.

30 Fixed Income Portfolio Characteristics

Duration Dispersion - Duration dispersion is the market-value weighted standard deviation of the portfolio’s individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ("barbellness"), and the smaller the dispersion, the more concentrated the holdings’ durations around the overall portfolio’s ("bulletness"). The purpose of this statistic is to gauge the "bulletness" or "barbellness" of a portfolio relative to its total duration and to that of its benchmark index.

Effective Yield - The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns, expected mortgage principal prepayments, and the exercise of any "in-the-money" imbedded put or call options.

Weighted Average Life - The weighted average life of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities.

Disclosures

Quarterly List as of December 31, 2016

List of Callan’s Investment Manager Clients

Confidential – For Callan Client Use Only

Callan takes its fiduciary and disclosure responsibilities to clients very seriously. We recognize that there are numerous potential conflicts of interest encountered in the investment consulting industry and that it is our responsibility to manage those conflicts effectively and in the best interest of our clients. At Callan, we employ a robust process to identify, manage, monitor and disclose potential conflicts on an on-going basis.

The list below is an important component of our conflicts management and disclosure process. It identifies those investment managers that pay Callan fees for educational, consulting, software, database or reporting products and services. We update the list quarterly because we believe that our fund sponsor clients should know the investment managers that do business with Callan, particularly those investment manager clients that the fund sponsor clients may be using or considering using. Please refer to Callan’s ADV Part 2A for a more detailed description of the services and products that Callan makes available to investment manager clients through our Institutional Consulting Group, Independent Adviser Group and Fund Sponsor Consulting Group. Due to the complex corporate and organizational ownership structures of many investment management firms, parent and affiliate firm relationships are not indicated on our list.

Fund sponsor clients may request a copy of the most currently available list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by particular fund manager clients. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department.

Manager Name Manager Name 1607 Capital Partners, LLC Cambiar Investors, LLC Aberdeen Asset Management PLC Capital Group Acadian Asset Management LLC CastleArk Management, LLC AEGON USA Investment Management Causeway Capital Management Affiliated Managers Group, Inc. Channing Capital Management, LLC AllianceBernstein Chartwell Investment Partners Allianz Global Investors ClearBridge Investments, LLC Allianz Life Insurance Company of North America Cohen & Steers Capital Management, Inc. American Century Investment Management Columbia Management Investment Advisers, LLC Amundi Smith Breeden LLC Columbia Threadneedle Investments Analytic Investors Columbus Circle Investors Angelo, Gordon & Co. Corbin Capital Partners, L.P. Apollo Global Management Cornerstone Capital Management AQR Capital Management Cramer Rosenthal McGlynn, LLC Ares Management LLC Credit Suisse Asset Management Ariel Investments, LLC Crestline Investors, Inc. Aristotle Capital Management, LLC D.E. Shaw Investment Management, L.L.C. Artisan Holdings Delaware Investments Atlanta Capital Management Co., LLC DePrince, Race & Zollo, Inc. Aviva Investors Americas Deutsche Asset Management AXA Investment Managers Diamond Hill Capital Management, Inc. Babson Capital Management Duff & Phelps Investment Mgmt. Co. Baillie Gifford Overseas Limited Eagle Asset Management, Inc. Baird Advisors EARNEST Partners, LLC Bank of America Eaton Vance Management Baring Asset Management Epoch Investment Partners, Inc. Barings LLC Fayez Sarofim & Company Baron Capital Management, Inc. Federated Investors Barrow, Hanley, Mewhinney & Strauss, LLC Fidelity Institutional Asset Management BlackRock Fiera Capital Global Asset Management BMO Global Asset Management First Eagle Investment Management, LLC BNP Paribas Investment Partners First Hawaiian Bank Wealth Management Division BNY Mellon Asset Management First Quadrant L.P. Boston Partners Fisher Investments Brandes Investment Partners, L.P. Fort Washington Investment Advisors, Inc. Brandywine Global Investment Management, LLC Franklin Templeton Institutional Brown Brothers Harriman & Company Fred Alger Management, Inc.

Knowledge. Experience. Integrity. Page 1 of 2 Manager Name Manager Name Fuller & Thaler Asset Management, Inc. Opus Capital Management Inc. GAM (USA) Inc. Pacific Investment Management Company GE Asset Management Parametric Portfolio Associates GMO Peregrine Capital Management, Inc. Goldman Sachs Asset Management PGIM Guggenheim Investments PGIM Fixed Income GW&K Investment Management Pictet Asset Management Ltd. Harbor Capital Group Trust PineBridge Investments Hartford Funds Pinnacle Asset Management L.P. Hartford Investment Management Co. Pioneer Investments Henderson Global Investors PNC Capital Advisors, LLC Holland Capital Management Principal Global Investors Hotchkis & Wiley Capital Management, LLC Private Advisors, LLC HSBC Global Asset Management Putnam Investments, LLC Income Research + Management, Inc. QMA (Quantitative Management Associates) Insight Investment Management Limited RBC Global Asset Management Institutional Capital LLC Regions Financial Corporation INTECH Investment Management, LLC RidgeWorth Capital Management, Inc. Invesco Rockefeller & Co., Inc. Investec Asset Management Rothschild Asset Management, Inc. Ivy Investments Russell Investments Janus Capital Management, LLC Santander Global Facilities Jennison Associates LLC Schroder Investment Management North America Inc. Jensen Investment Management Scout Investments J.P. Morgan Asset Management SEI Investments KeyCorp Smith, Graham & Co. Investment Advisors, L.P. Lazard Asset Management Smith Group Asset Management Legal & General Investment Management America Standard Life Investments Limited Lincoln National Corporation Standish LMCG Investments, LLC State Street Global Advisors Logan Capital Management Stone Harbor Investment Partners, L.P. Logan Circle Partners, L.P. Systematic Financial Management Longview Partners T. Rowe Price Associates, Inc. Loomis, Sayles & Company, L.P. Taplin, Canida & Habacht Lord Abbett & Company The Boston Company Asset Management, LLC Los Angeles Capital Management The Davis Companies LSV Asset Management The Hartford MacKay Shields LLC The London Company Man Investments Inc. The TCW Group, Inc. Manning & Napier Advisors, LLC Thompson, Siegel & Walmsley LLC Manulife Asset Management Timberland Investment Resources, LLC Martin Currie Inc. Tri-Star Trust Bank Mellon Capital Management UBS Asset Management MFS Investment Management Van Eck Global MidFirst Bank Versus Capital Group Mondrian Investment Partners Limited Victory Capital Management Inc. Montag & Caldwell, LLC Vontobel Asset Management, Inc. Morgan Stanley Investment Management Voya Financial Mountain Lake Investment Management LLC Voya Investment Management (fka ING) MUFG Union Bank, N.A. Waddell & Reed Asset Management Group Neuberger Berman WCM Investment Management Newton Investment Management (fka Newton Capital Management) WEDGE Capital Management Nicholas Investment Partners Wellington Management Company, LLP Nikko Asset Management Co., Ltd. Wells Capital Management Northern Trust Asset Management Western Asset Management Company Nuveen Investments, Inc. William Blair & Company OFI Global Asset Management Windham Capital Management, LLC Old Mutual Asset Management

Knowledge. Experience. Integrity. Page 2 of 2 December 31, 2016 CHANDLER A SSET M A N A G EM EN T

Investment Report

Orange County Sanitation District

Period Ending December 31, 2016

6225 Lusk Boulevard | San Diego, CA 92121 | Phone 800.317.4747 | Fax 858.546.3741 | www.chandlerasset.com Table of Contents

SECTION 1 Economic Update

SECTION 2 Account Profile

SECTION 3 Consolidated Information

SECTION 4 Portfolio Holdings

1 SECTION 1

Economic Update

2 Economic Update

The Federal Open Market Committee (FOMC) unanimously voted to increase the target fed funds rate by 25 basis points to a range of 0.50%-0.75%, at the December 14 meeting. The Fed noted t hat economic activity has expanded at a moderate pace and labor market trends have improved, but inflation rem ains below target. The Fed’s revised “dot plot” was slightly more hawkish, as the projected path of the fed funds rate was revised upward. The Committee’s GDP and inflation forecasts were little changed while projections for the unemployment rate were revised down slightly. The FOMC’s median projection for the fed funds rate in 2017 was revised up to 1.4% from 1.1%, which would be indicative of three more 25 basis point rate hikes next year. The Fed’s longer-run median fed funds target rate was revised up to 3.0% from 2.9%. Fed Chair Yellen downplayed the forecast changes during her press conference, and continued to emphasize that future increases in the fed funds rate are expected to be gradual. She added that it is too early to anticipate how potential changes in fiscal policy will impact the economy and the Fed’s outlook.

Domestic economic data remains indicative of slow growth. The U.S. labor m arket continues to improve, consumer confidence remains strong, and housing trends remain mostly favorable. The manufacturing sector has also improved. Third quarter 2016 GDP grew 3.5%, following growth of 1.4% in the second quarter and 0.8% in the first quarter. Market participants estimate GDP grew 2.2% in the fourth quarter.

In December, the yield shifted upward as the 2-year Treasury yield increased nearly 8 basis points and the 10-year Treasury yield increased about 6 basis points. The move up in rates over the past two months has largely been driven by heightened expectations for fiscal stimulus, and a potential increase in inflation, in light of President-elect Trump's victory and the Republican Party congressional sweep in the US. Global fac tors (including steeper yield curves in Japan and Germany, and an expectation for ongoing stimulus from the European Central Bank) also continue to influence US Treasury yields.

3 Employment

Nonfarm Payroll (000's) Unemployment Rate 15.0% 350 14.0% Underemployment Rate (U6) 300 13.0% Unemployment Rate (U3) 12.0% 250 11.0% 200 10.0%

Rate(%) 9.0% 150 8.0% 100 7.0% MOM Change In (000's) In Change MOM 6.0% 50 5.0% 0 4.0%

Source: US Department of Labor Source: US Department of Labor

Nonfarm payrolls were lower than expected in December, up 156,000 versus t he consensus forecast of 175,000. However, October and November payrolls were revised up by a total of 19,000. On a trailing 3-month and 6-month basis, payrolls increased by an average of 165,000 and 188,500 per month, respectively. The unemployment rate inc hed back up to 4.7% from 4.6%, but the participation rate also increased to 62.7% from 62.6%. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, declined to 9.2% in December from 9.3% in November. Wages were up a solid 0.4% in December, versus expectations for a 0.3% increase. On a year-over-year basis, wages were up 2.9% in December (the highest year-over-year increase since June 2009), vs. 2.5% in November.

4 Inflation

Consumer Price Index (CPI) Personal Consumption Expenditures 3.0% (PCE) 3.0% CPI YOY % Change 2.5% PCE Price Deflator YOY % Change Core CPI YOY % Chan ge 2.5% PCE Core Deflator YOY % Change

2.0% 2.0%

1.5% 1.5%

1.0% 1.0% YOY( %) Change 0.5% YOY( %) Change 0.5%

0.0% 0.0%

-0.5% -0.5%

Source: US Department of Labor Source: US Department of Labor

The Consumer Price Index (CPI) was up 2.1% year-over-year in December, ver sus up 1.7% year-over-year in November, largely driven by an increase in energy prices. Core CPI (CPI less food and energy) was up 2.2% year-over-year in December, versus up 2.1% year- over-year in November. The Personal Consumption Expenditures (PCE) index was up 1.4% year-over-year in November, unchanged from October. Core PCE (excluding food and energy) was up 1.6% year-over-year in November, after being up 1.8% year-over-year in October. Although Core CPI is trending above 2.0%, the Fed's primary inflation gauge is PCE which remains below the Fed's 2.0% target.

5 Consumer

Retail Sales YOY % Change Consumer Confidence 4.5% 120

4.0% 115

3.5% 110

3.0% 105

2.5% 100

2.0% 95 IndexLevel

YOY YOY (%) Change 1.5% 90

1.0% 85

0.5% 80

0.0% 75

Source: US Department of Commerce Source: Federal Reserve

On a year-over-year basis, total retail sales were up 4.1% in December compared with a 3.9% increase in November. On a month-over- month basis, retail sales were up 0.6% in December, driven largely by vehic le sales. Excluding autos and gas, retail sales were flat in the month. Meanwhile, consumer confidence increased to 113.7 in December versus 109.4 in November.

6 Economic Activity

Leading Economic Indicators (LEI) Chicago Fed National Activity Index (CFNAI) 0.8% 0.40

0.30 0.6% 0.20

0.4% 0.10

0.00 0.2% -0.10 0.0%

3 MonthAverage -0.20 MOM ( %) Change %) ( MOM -0.30 -0.2% -0.40

-0.4% -0.50

Source: The Conference Board Source: Federal Reserve Bank of Chicago

The Index of Leading Economic Indicators (LEI) was flat in November, below expectations, pointing to flat economic growth ahead. Meanwhile, the Chicago Fed National Activity Index (CFNAI) improved in November on a 3-month moving average basis to -0.14 from - 0.20 in October. Still, the CFNAI suggests that the pace of economic growth is below-trend.

7 Housing

Housing Starts S&P/CaseShiller 20 City Composite Home Price Index 1600 7.0% Multi Family Housing Starts 1400 Single Family Housing Starts 6.5% 1200 6.0%

1000 5.5%

800 5.0%

600 4.5% YOY( %) Change 400 4.0%

200 3.5% MOM Change (In Thousands of Units) of Thousands (In Change MOM 0 3.0%

Source: US Census Bureau Source: S&P

Total housing rose 11.3% in December, following a decline of 16.5% in November. The overall increase was driven by multi-family starts which rose 57.3% in December. Meanwhile, single-family starts fell 4.0%. Housing starts tend to be volatile on a month-to-month basis. According to the Case-Shiller 20-City home price index, home prices were up 5.1% year-over-year in October, compared to 5.0% in September.

8 Manufacturing

Institute of Supply Management Purchasing Capacity Utilization Manager Index 80.0% 60

Expanding 58 79.0%

56 78.0%

54 77.0%

52 Rate(%) 76.0% 50

48 75.0% Contracting

46 74.0%

Source: Institute for Supply Management Source: Federal Reserve

The Institute for Supply Management (ISM) manufacturing index increased to 54.7 in December from 53.2 in November, suggesting that manufacturing activity continues to improve. Notably, a reading above 50.0 suggests the manufacturing sector is expanding. Meanwhile, capacity utilization, which is production divided by capacity, increased to 75.5% in December from 74.9% in November. The capacity utilization rate remains below the long-run average of 80.0% (1972-2015) , suggesting there is still excess capacity in the industrial sector.

9 Gross Domestic Product (GDP)

Components of GDP 12/15 3/16 6/16 9/16 Gross Domestic Product (GDP) 6.0% Personal Consumption Expenditures 1.5% 1.1% 2.9% 2.0% 5.0%

4.0% Gross Private Domestic Investment -0.4% -0.6% -1.3% 0.5% 3.0%

Net Exports and Imports -0.5% 0.0% 0.2% 0.9% 2.0%

1.0% Federal Government Expenditures 0.3% -0.1% 0.0% 0.2% 0.0% State and Local (Consumption and Gross -0.1% 0.4% -0.3% 0.0% -1.0% GDP QOQ % Change Investment) GDP YOY % Change -2.0% Total 0.9% 0.8% 1.4% 3.5%

Source: US Department of Commerce Source: US Department of Commerce

Third quarter real GDP was revised up to an annualized rate of 3.5% from the second estimate of 3.2%. The upward revision was driven by nonresidential investment, PCE, and state and local spending. This compares to 1.4% growth in the second quarter. Overall, Personal Consumption Expenditures continued to be the biggest contributor of economic growth in the third quarter, although it was down from the second quarter. Market participants estimate GDP grew 2.2% in the fourth quarter.

10 Bond Yields

US Treasury Note Yields US Treasury Yield Curve 3.0% 3.5% 2-Year Dec-16 5-Year 3.0% Sep-16 2.5% 10-Year Dec-15 2.5% 2.0%

2.0% 1.5% Yield(%)

Yield(%) 1.5% 1.0% 1.0% 0.5% 0.5%

0.0% 0.0%

Source: Bloomberg Source: Bloomberg

Over the past three months, the yield curve steepened with the 2-year Treas ury yield up nearly 43 basis points and the 10-year Treasury yield up 85 basis points. On a year-over-year basis the 2-year Treasury yield increased 14 basis points and 10-year Treasury yield increased about 18 basis points. Over the past year, financial market volatility has been elevated due to weak global economic growth, volatile commodity prices, political uncertainty, and divergent global central bank monetary policy.

11 SECTION 2

Account Profile

12 Objectives

Investment Objectives The investment objectives of the Orange County Sanitation District are first, to provide safety of principal to ensure the preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the safety and liquidity objectives.

Chandler Asset Management Performance Objective Liquid Operating Monies – will be compared to the 3-month T-Bill rate and operate with a maximum maturity of one year.

Long-Term Operating Monies – will be compared to the Bank of America Merrill Lynch 1-5 Year Corporate Government Rated AAA – A Index.

Strategy In order to achieve these objectives, the portfolio invests in high quality fixed income securities consistent with the investment policy and California Government Code.

13 Compliance

Orange County Sanitation District Long Term December 31, 2016

COMPLIANCE WITH INVESTMENT POLICY

Assets managed by Chandler Asset Management are in full compliance with State law and with the investment policy

Category Standard Comment Treasury Issues 5 years maximum maturity Complies* Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years maturity; Complies Includes only: IADB, IBRD, and IFC per CGC U.S. Agencies 20% max issuer; 5 years maximum maturity Complies U.S. Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30% maximum;5% max issuer; 5 years Complies max maturity Municipal Securities "A" or higher by 1 of 3 NRSROS; 10% maximum; 5% max issuer; 5 years maximum maturity Complies Asset Backed/ CMOs/ Mortgage- "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating yb 1 of 3 NRSROs; 20% Complies* backed maximum; 5% max issuer (excluding MBS/govtagency); 5 years max maturity Negotiable CDs "A" or better on its long termdebt by 1 of 3 NRSROs ; "A1/P1" or highest short term ratings Complies by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity CDs/ TDS 5% max issuer; 5 years max maturity Complies Banker’s Acceptances A-1, or equivalent highest short term rating by 1 of 3 NRSROS; 40% maximum; 5% max Complies issuer; 180 days max maturity Commercial Paper A-1, or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term debt Complies issued; 25% maximum; 5% max issuer; 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase Agreements 102% collateralization Complies Reverse Repurchase Agreements 5% maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80% to120% of the benchmark) Complies Maximum Maturity 5 years maximum maturity Complies* 14 *The portfolio has twenty-four (24) securities with maturitiesgreater than 5 years including one (1) ABS, five (5) CMOs, seventeen (17) MBS and one (1) treasury. All securities were inherited from the previous manager and complied at time fo purchase. 14 Account Profile

Portfolio Characteristics

Orange County Sanitation District Long Term

12/31/2016 09/30/2016 Benchmark* Portfolio Portfolio Average Maturity (yrs) 2.73 2.87 2.80 Modified Duration 2.61 2.48 2.38 Average Purchase Yield n/a 1.57 % 1.48 % Average Market Yield 1.57 % 1.51 % 1.05 % Average Quality** AAA AA+/Aa1 AA+/Aa1 Total Market Value 316,592,849 325,949,886 * BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index ** Benchmark is a blended rating of S&P, Moody's, and Fitch. Portfolio is S&P and Moody's respectively.

Multiple securities were purchased across the Treasury, Supranational, and Commercial Paper sectors of the market to keep the portfolio structure in-line with Chandler objectives. The purchased securities ranged in maturity from March 2017 to November 2021. Ten securities were sold and two matured to help fund the new additions to the portfolio and to account for the two large withdrawals early in the quarter.

15 Sector Distribution

Orange County Sanitation District Long Term

December 31, 2016 September 30, 2016

The sector allocation was relatively stable. The valuation in the Agency sector continues to compress thus the Chandler team reduced our exposure to the sector to 23.7% of the portfolio, offset by the increase in the Treasury allocation to 30.1% of the portfolio.

16 Issuers

17 Issuers Continued

18 Quality Distribution

Orange County Sanitation District Long Term

December 31, 2016 vs. September 30, 2016

12/31/16 9/30/16

AAA AA A

Source: S&P Ratings

19 Duration Distribution

Orange County Sanitation District Long Term

Portfolio Compared to the Benchmark as of December 31, 2016

0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5+