Agenda Item Submittal

AGENDA ADMINISTRATION/FINANCE ISSUES COMMITTEE MEETING WITH BOARD OF DIRECTORS* ORANGE COUNTY WATER DISTRICT 18700 Ward Street, Fountain Valley, CA 92708 Thursday, February 14, 2019, 8:00 a.m.-Conference Room C-2

*The OCWD Administration and Finance Issues Committee meeting is noticed as a joint meeting with the Board of Directors for the purpose of strict compliance with the Brown Act and it provides an opportunity for all Directors to hear presentations and participate in discussions. Directors receive no additional compensation or stipend as a result of simultaneously convening this meeting. Items recommended for approval at this meeting will be placed on the February 20, 2019 Board meeting Agenda for approval.

ROLL CALL

ITEMS RECEIVED TOO LATE TO BE AGENDIZED

RECOMMENDATION: Adopt resolution determining need to take immediate action on item(s) and that the need for action came to the attention of the District subsequent to the posting of the Agenda (requires two-thirds vote of the Board members present, or, if less than two-thirds of the members are present, a unanimous vote of those members present).

VISITOR PARTICIPATION

Time has been reserved at this point in the agenda for persons wishing to comment for up to three minutes to the Board of Directors on any item that is not listed on the agenda, but within the subject matter jurisdiction of the District. By law, the Board of Directors is prohibited from taking action on such public comments. As appropriate, matters raised in these public comments will be referred to District staff or placed on the agenda of an upcoming Board meeting.

At this time, members of the public may also offer public comment for up to three minutes on any item on the Consent Calendar. While members of the public may not remove an item from the Consent Calendar for separate discussion, a Director may do so at the request of a member of the public.

CONSENT CALENDAR (ITEMS NO. 1 – 6)

All matters on the Consent Calendar are to be approved by one motion, without separate discussion on these items, unless a Board member or District staff request that specific items be removed from the Consent Calendar for separate consideration.

1. MINUTES OF ADMINISTRATION/FINANCE ISSUES COMMITTEE MEETING HELD JANUARY 10, 2019

RECOMMENDATION: Approve minutes as presented

2. MONTHLY CASH CONTROL REPORT

RECOMMENDATION: Agendize for February 20 Board meeting: Receive and file Summary Cash and Cash Equivalents Control Reports dated January 31, 2019

3. INVESTMENT PORTFOLIO HOLDINGS REPORTS

RECOMMENDATION: Agendize for February 20 Board meeting: Receive and file the Investment Portfolio Holdings Reports dated January 31, 2019

4. 3-YEAR EXTENDED WARRANTY PURCHASE FOR HYBRID BULLDOZERS: TL-36, TL-37 AND TL-39

RECOMMENDATION: Agendize for February 20 Board meeting: Authorize purchase of Caterpillar-issued, 3-year extended warranties for hybrid bulldozers: TL-36, TL-37 and TL-39

5. LABORATORY TECHNICIAN FOR RESEARCH & DEVELOPMENT DEPARTMENT

RECOMMENDATION: Agendize for February 20 Board meeting: Authorize recruitment of an R&D Laboratory Technician to be filled as a Limited Term Employee

6. EXTENSION OF 2003A LETTER OF CREDIT

RECOMMENDATION: Agendize for February 20 Board meeting: 1) Authorize the preparation and execution of documents necessary to extend the current Letter of Credit and Reimbursement Agreement with Citibank, N.A. for the 2003A variable rate debt for a term of 2 years consistent with the offer provided by Citibank, and 2) Authorize payment for costs of issuance not to exceed $12,500

END OF CONSENT CALENDAR

MATTERS FOR CONSIDERATION

7. WIFIA LOAN STRUCTURING OPPORTUNITY

RECOMMENDATION: Agendize for February 20 Board meeting: 1) Authorize issuance of Request for Proposals for investment banking/underwriting services for the issuance tax-exempt short-term obligations; 2) Authorize issuance of Request for Proposals for investment advisory services; 3) Authorize engaging Stradling, Yocca as Bond Counsel and Fieldman, Rolapp & Associates as Municipal Advisor and 4) Authorize the preparation of documents for future issuance of tax-exempt short-term obligations pending further action by the Board

8. CONTRACT NO. FV-2018-1, VIDEO MONITORING SYSTEM AMEND ENGINEERING SERVICES AGREEMENT WITH TRC COMPANIES

RECOMMENDATION: Agendize for February 20 Board meeting: Authorize issuance of an Amendment to Agreement No. 1281 with TRC for Video Monitoring System Replacement Project Consulting and Construction Support Services for the amount not to exceed $124,646

9. AUTHORIZE PROPOSED USE OF FUNDS RECEIVED FROM SALE OF BALL ROAD BASIN

RECOMMENDATION: Agendize for February 20 Board meeting: Authorize the District CFO/Treasurer to contribute $15 million to the District’s PARS OPEB trust by December 31, 2019, and paydown the outstanding taxable commercial paper debt by $8.2 million

10. BUDGET TO ACTUAL REPORT FOR SECOND QUARTER FY 2018–19

RECOMMENDATION: Agendize for February 20 Board meeting: Receive and file the Budget to Actual Report for Second Quarter of Fiscal Year 2018-19 ending December 31, 2018

11. RATIO ANALYSIS – FIRST HALF OF FY 2018-2019

RECOMMENDATION: Agendize for February 20 Board meeting: Receive and file the Ratio Analysis Report for FY 2018-19 Second Quarter ending December 31, 2018

INFORMATIONAL ITEM

12. MONTHLY CASH DISBURSEMENTS REPORT

CHAIR DIRECTION AS TO WHICH ITEMS IF ANY TO BE AGENDIZED AS MATTERS FOR CONSIDERATION AT FEBRUARY 20 BOARD MEETING

DIRECTOR’S ANNOUNCEMENTS/REPORTS

GENERAL MANAGER’S ANNOUNCEMENT/REPORT

ADJOURNMENT ADMINISTRATION AND FINANCE ISSUES COMMITTEE MEMBERS

Committee Members Bruce Whitaker - Chair Tri Ta - Vice Chair Roger Yoh Dina Nguyen Kelly Rowe

Alternates Cathy Green Steve Sheldon Jordan Brandman Denis Bilodeau Vicente Sarmiento

In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted at the guard shack entrance and in the main lobby of the Orange County Water District, 18700 Ward Street, Fountain Valley, CA and on the OCWD website not less than 72 hours prior to the meeting date and time above. All written materials relating to each agenda item are available for public inspection in the office of the District Secretary. Backup material for the Agenda is available at the District offices for public review and can be viewed online at the District’s website: www.ocwd.com

Pursuant to the Americans with Disabilities Act, persons with a disability who require a disability-related modification or accommodation in order to participate in a meeting, including auxiliary aids or services, may request such modification or accommodation from the District Secretary at (714) 378-3233, by email at [email protected] by fax at (714) 378-3373. Notification 24 hours prior to the meeting will enable District staff to make reasonable arrangements to assure accessibility to the meeting.

As a general rule, agenda reports or other written documentation has been prepared or organized with respect to each item of business listed on the agenda, and can be reviewed at www.ocwd.com. Copies of these materials and other disclosable public records distributed to all or a majority of the members of the Board of Directors in connection with an open session agenda item are also on file with and available for inspection at the Office of the District Secretary, 18700 Ward Street, Fountain Valley, California, during regular business hours, 8:00 am to 5:00 pm, Monday through Friday. If such writings are distributed to members of the Board of Directors on the day of a Board meeting, the writings will be available at the entrance to the Board of Directors meeting room at the Orange County Water District office. 1 MINUTES OF BOARD OF DIRECTORS MEETING ADMINISTRATION AND FINANCE ISSUES COMMITTEE ORANGE COUNTY WATER DISTRICT January 10, 2019 @ 8:00 a.m.

Director Whitaker called the Administration and Finance Issues Committee to order in Conference Room C-2 in Fountain Valley, CA. The Assistant District Secretary called the roll and reported a quorum of the Committee as follows. Committee Members OCWD staff Bruce Whitaker Mike Markus - General Manager Roger Yoh (absent) Jeremy Jungreis – General Counsel Dina Nguyen (absent) Randy Fick - CFO/Treasurer Cathy Green Christina Fuller - Assistant District Secretary Steve Sheldon

Alternates Tri Ta Denis Bilodeau (absent) Kelly Rowe Jordan Brandman (absent) Vicente Sarmiento

CONSENT CALENDAR The Consent Calendar was approved upon motion by Director Ta, seconded by Director Green and carried [4-0]. Ayes- Whitaker, Green, Ta, Rowe

1. Minutes of Previous Meeting

The minutes of the Administration/Finance Issues Committee meeting held December 13, 2018 were approved as presented.

2. Monthly Cash Control Report

Recommended by Committee for approval at January 16 Board meeting: Receive and file Summary Cash and Cash Equivalents Control Reports dated December 31, 2018.

3. Investment Portfolio Holdings Reports

Recommended by Committee for approval at January 16 Board meeting: Receive and File the Investment Portfolio Holdings Reports dated December 31, 2018.

4. Surplus of Equipment, Vehicles, Miscellaneous Furniture and Computer Hardware

Recommended by Committee for approval at January 16 Board meeting: Declare items on Surplus List as of 12/31/18, surplus and authorize the sale and disposal thereof.

5. Amendment Three to License Agreement with Pub Construction for Storing of Construction Equipment Located at Upper Five Coves Basin, Anaheim

Recommended by Committee for approval at January 16 Board meeting: Approve and authorize execution of Amendment Three to License Agreement with PUB Construction to extend the License expiration date to February 28, 2019, with an additional license fee of $1,148, with all other Agreement terms to remain the same.

6. Amendment Three to License Agreement with T.E. Roberts for Storing of Construction Equipment Located at Huckleberry Pond, Anaheim

Recommended by Committee for approval at January 16 Board meeting: Approve and authorize execution of Amendment Three to License Agreement with T.E. Roberts, Inc. to extend the License expiration date to June 30, 2019, with a license fee of $500 per month, with all other Agreement terms to remain the same.

MATTER FOR CONSIDERATION

7. Basin Production Percentage and Replenishment Assessment Estimates for Fiscal Year 2019-20

Executive Director John Kennedy reviewed BPP issues and total water demands. He stated that at this time staff recommends that the projected BPP for FY 2019-20 be established at 75%.

CFO/Treasurer Randy Fick reviewed the Replenishment Assessment (RA) issues and reported that staff is preparing the FY 2019-20 budget for review at the March 6 Board meeting. He stated that the RA is currently $462/acre-foot and is expected to increase to somewhere between $498 to $505 per acre-foot.

Upon motion by Director Ta, seconded by Director Green and carried [5-0], the Committee recommended that the Board at its January 16 Board meeting: Provide the Fiscal Year 2019- 20 Replenishment Assessment and Basin Production Percentage estimates to the Groundwater Producers.

Yes- Whitaker, Green, Sheldon, Ta, Rowe

INFORMATIONAL ITEMS

8. Monthly Cash Disbursements Report

There was no verbal report on this item.

9. Employment Status Report

General Manager Mike Markus stated the District is actively filling open positions.

ITEMS TO BE AGENDIZED ON CONSENT CALENDAR AT THE JANUARY 16 BOARD MEETING

It was agreed that Item Nos. 2-7 be agendized on the Consent Calendar at the January 16 Board meeting.

ADJOURNMENT

There being no further business, the meeting was adjourned at 8:45 a.m.

Bruce Whitaker, Vice Chair

2 2

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: N/A Budgeted Amount: N/A To: Administration/Finance Issues Cte. Cost Estimate: N/A Board of Directors Funding Source: N/A Program/Line Item No.: N/A From: Mike Markus General Counsel Approval: N/A Engineers Report: N/A Staff Contact: R. Fick/V. Sharma CEQA Compliance: N/A

Subject: MONTHLY CASH CONTROL REPORT

SUMMARY

The following monthly financial information is provided in the staff report.

Attachment(s): . Summary Cash and Cash Equivalent Control Report . Summary of Reserves . Summary Sources and Disbursements . Sources of Funds . Disbursement of Funds

RECOMMENDATION

Agendize for February 20 Board meeting: Receive and file Summary Cash and Cash Equivalents Control Reports dated January 31, 2019.

PRIOR RELEVANT BOARD ACTION(S) Monthly

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: N/A Budgeted Amount: N/A To: Administration/Finance Issues Cte. Cost Estimate: N/A Board of Directors Funding Source: N/A Program/Line Item No: N/A From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A Staff Contact: R. Fick/V. Sharma CEQA Compliance: N/A

Subject: INVESTMENT PORTFOLIO HOLDINGS REPORTS

SUMMARY

The District’s monthly Investment Portfolio Holdings Report is provided for Committee review.

Attachment(s): Investment Portfolio Holdings Reports dated January 31, 2019.

RECOMMENDATION

Agendize for February 20 Board meeting: Receive and file the Investment Portfolio Holdings Reports dated January 31, 2019.

BACKGROUND/ANALYSIS

The Investment Portfolio Holdings Report is a list of each of the District’s fixed income investments and provides the market value at the end of each month. All securities within the District’s Investment Portfolio are in compliance with the District’s Statement of Investment Policy. The District’s portfolio maturities provide cash liquidity sufficient to meet the District’s projected six-month expenditures (as required by Government Code Section 53646).

Highlights of the current and previous report:

Description Prior Month Current Month SWAP Value (in Citi’s favor) $14,247,258 $14,524,326 Required Collateral $0 $0 Duration/Maturity 491 Days or 1.35 years 347 Days or 0.97 years Rate of Return/Yield 1.976% 2.122%

. The yield on the one-year Treasury note as of the month end is at 2.55%; two- year at 2.45% and the five-year at 2.43%

. The last Federal Open Market Committee (FOMC) meeting was held on January 29-30, 2019. The FOMC kept the Federal funds in the range of 2.25% to 2.50%. This is the rate prime banks lend to each other. Orange County Water District Investment Portfolio Holdings Report 01/31/19

TRADE PURCHASE NEXT MATURITY INVESTMENT INSTITUTION OR PAR DISC RATE YIELD TO ORIGINAL MARKET VALUE (1) Portfolio CUSIP DATE DATE CALL DATE RATING TYPE ISSUER AMOUNT or COUPON MATURITY COST 1/31/2019 % NUMBER

Investment Pools

Local Agency Invest Fund (LAIF) State of California Treasury $41,906,797 (JAN rate) 2.355% (1) $41,906,797 $41,906,797 20.91% Orange County Invest Pool (OCIP) County of Orange $4,227,651 (DEC rate) 1.939% (1) $4,227,651 $4,227,651 2.11%

Federal Agencies

04/22/16 04/28/16 04/28/19 04/28/21 AA+/Aaa FHLMC - qtrly call on/after 10/28/16 Freddie Mac - Step $3,000,000 1.500% 2.136% $2,997,000 $2,977,080 3134G8XX2 07/15/16 07/26/16 04/26/19 07/26/19 AA+/Aaa FHLMC - qtrly call on/after 10/26/16 Freddie Mac $3,000,000 1.250% 1.250% $3,000,000 $2,981,790 3134G9Q75 08/09/16 08/25/16 02/23/19 08/23/19 AA+/Aaa FHLMC - qtrly call on/after 11/23/16 Freddie Mac $3,000,000 1.300% 1.300% $3,000,000 $2,979,750 3134GAAF1 10/24/16 10/31/16 04/27/19 04/27/20 AA+/Aaa FHLMC - qtrly call on/after 4/27/17 Freddie Mac - Step $5,000,000 1.500% 1.564% $5,000,000 $4,974,400 3134GAVD3 01/13/17 01/27/17 04/27/19 01/27/22 AA+/Aaa FHLMC - qtrly call on/after 4/27/17 Freddie Mac - Step $3,000,000 1.750% 2.492% $3,000,000 $2,990,160 3134GAS21 04/20/17 04/26/17 04/26/19 10/26/20 AA+/Aaa FHLMC - qtrly call on/after 10/26/17 Freddie Mac $3,000,000 1.750% 1.750% $3,000,000 $2,959,800 3134GBJY9 04/20/17 04/27/17 04/26/19 04/26/21 AA+/Aaa FHLMC - qtrly call on/after 7/26/17 Freddie Mac $3,000,000 1.875% 1.875% $3,000,000 $2,957,160 3134GBKA9 06/21/17 06/21/17 03/21/19 09/21/20 AA+/Aaa FHLMC - qtrly call on/after 9/21/17 Freddie Mac $3,000,000 1.750% 1.750% $3,000,000 $2,960,760 3134GBSG8 07/13/17 07/27/17 04/27/19 04/27/21 AA+/Aaa FHLMC - qtrly call on/after 10/27/17 Freddie Mac $3,000,000 2.000% 2.000% $3,000,000 $2,965,350 3134GBYQ9 08/23/17 08/28/17 02/28/19 08/28/20 AA+/Aaa FHLMC - qtrly call on/after 2/28/18 Freddie Mac $3,000,000 1.700% 1.700% $3,000,000 $2,960,880 3134GBD33 10/03/17 10/27/17 04/27/19 07/27/21 AA+/Aaa FHLMC - qtrly call on/after 4/27/18 Freddie Mac $3,000,000 2.000% 2.000% $3,000,000 $2,961,960 3134GBQ39 01/04/18 01/26/18 04/26/19 01/26/21 AA+/Aaa FHLMC - qtrly call on/after 4/26/18 Freddie Mac $3,000,000 2.220% 2.220% $3,000,000 $2,984,670 3134GSBW4 07/27/18 07/30/18 04/30/19 12/30/21 AA+/Aaa FHLMC - qtrly call on/after 1/30/19 Freddie Mac $3,000,000 3.000% 3.000% $3,000,000 $3,002,400 20.29% 3134GSSX4

07/25/16 07/29/16 04/26/19 07/26/19 AA+/Aaa FNMA - qtrly call on/after 10/26/16 Fannie Mae $3,000,000 1.250% 1.250% $3,000,000 $2,981,670 3136G3D51 07/21/16 07/26/16 04/26/19 07/26/19 AA+/Aaa FNMA - qtrly call on/after 1/26/17 Fannie Mae $3,000,000 1.250% 1.250% $3,000,000 $2,981,670 3135G0N25 07/15/16 07/18/16 03/23/19 12/23/19 AA+/Aaa FNMA - qtrly call on/after 12/23/16 Fannie Mae $3,400,000 1.500% 1.408% $3,410,472 $3,368,516 3136G3RP2 10/24/16 10/25/16 03/30/19 03/30/20 AA+/Aaa FNMA - qtrly call on/after 3/30/17 Fannie Mae $5,000,000 1.300% 1.306% $4,999,000 $4,930,150 7.12% 3135G0Q63

11/04/16 11/07/16 cont. 09/30/21 AA+/Aaa FHLB - call on/after 12/31/16 Federal Home Loan Bank $1,100,000 1.500% 1.492% $1,098,625 $1,067,935 3130A9MG3 07/20/17 07/21/17 cont. 07/13/20 AA+/Aaa FHLB - call on/after 10/13/17 Federal Home Loan Bank $3,000,000 1.750% 1.753% $2,999,700 $2,963,730 3130ABNV4 08/23/17 08/30/17 02/24/19 02/24/21 AA+/Aaa FHLB - qtrly call on/after 11/24/17 Federal Home Loan Bank $3,000,000 1.800% 1.800% $3,000,000 $2,956,680 3130AC6L3 10/05/17 10/26/17 04/26/19 10/26/22 AA+/Aaa FHLB - qtrly call on/after 1/26/18 Federal Home Loan Bank - Step $3,000,000 2.125% 2.824% $3,000,000 $2,999,700 3130ACLG7 10/23/17 10/30/17 04/26/19 10/26/22 AA+/Aaa FHLB - qtrly call on/after 1/26/18 Federal Home Loan Bank - Step $3,000,000 2.000% 2.387% $3,000,000 $2,979,030 3130ACQ64 01/18/18 01/25/18 cont. 01/25/21 AA+/Aaa FHLB - call on/after 01/25/19 Federal Home Loan Bank $3,000,000 2.280% 2.280% $3,000,000 $2,989,590 3130ADGA4 01/18/18 01/26/18 04/26/19 01/26/21 AA+/Aaa FHLB - qtrly call on/after 4/26/18 Federal Home Loan Bank $3,000,000 2.300% 2.300% $3,000,000 $2,983,410 3130ADG30 01/04/18 01/29/18 04/29/19 01/29/21 AA+/Aaa FHLB - qtrly call on/after 1/29/19 Federal Home Loan Bank $3,000,000 2.200% 2.200% $3,000,000 $2,979,030 3130ADC26 01/23/18 01/30/18 04/30/19 07/30/20 AA+/Aaa FHLB - qtrly call on/after 1/30/19 Federal Home Loan Bank $3,000,000 2.170% 2.211% $2,998,500 $2,980,950 3130ADF98 10/03/18 10/03/18 03/01/19 03/01/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $5,048,000 2.300% 2.354% $4,999,946 $5,038,560 313384CM9 01/23/19 01/23/19 06/24/19 06/24/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $5,360,000 2.435% 2.494% $5,304,893 $5,308,276 313384HG7 01/30/19 01/30/19 04/08/19 04/08/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $7,800,000 2.380% 2.424% $7,764,935 $7,765,680 313384EB1 01/31/19 01/31/19 03/12/19 03/12/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $17,200,000 2.360% 2.399% $17,154,898 $17,155,280 313384CY3 01/31/19 01/31/19 05/20/19 05/20/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $12,000,000 2.400% 2.451% $11,912,800 $11,913,240 313384FV6 01/31/19 01/31/19 03/21/19 03/21/19 AA+/Aaa FHLB - discount note Federal Home Loan Bank $10,000,000 2.370% 2.411% $9,967,742 $9,968,000 40.95% 313384DH9

07/11/16 07/12/16 cont. 07/12/19 AA+/Aaa FFCB - call on/after 10/12/16 Federal Farm Credit Bank $3,000,000 1.080% 1.121% $2,996,400 $2,982,510 3133EGLC7 07/11/16 07/18/16 cont. 10/18/19 AA+/Aaa FFCB - call on/after 10/18/16 Federal Farm Credit Bank $3,000,000 1.180% 1.196% $2,998,500 $2,971,830 3133EGLD5 09/11/17 09/13/17 cont. 12/06/21 AA+/Aaa FFCB - call on/after 12/06/17 Federal Farm Credit Bank $3,000,000 1.930% 1.930% $3,000,000 $2,947,290 3133EHXM0 04/25/17 04/27/17 cont. 04/20/21 AA+/Aaa FFCB - call on/after 4/20/18 Federal Farm Credit Bank $3,000,000 1.930% 1.956% $2,997,000 $2,960,130 3133EHGG2 08/23/17 08/24/17 cont. 11/01/21 AA+/Aaa FFCB - call on/after 11/01/17 Federal Farm Credit Bank $2,500,000 2.000% 2.000% $2,500,000 $2,462,375 3133EHTE3 08/30/17 08/30/17 cont. 04/05/22 AA+/Aaa FFCB - call on/after 10/05/17 Federal Farm Credit Bank $3,000,000 2.000% 2.000% $3,000,000 $2,947,320 8.62% 3133EHQG1

Total Federal Agencies $155,408,000 $155,100,410 $154,238,712 76.98%

Sub Totals $201,542,448 2.122% $201,234,858 $200,373,160 100% Restricted / Debt Service Funds: Certificate Payment Fund Series 2003A/2005B/2013A/2017AB $9 1.990% $9 Interest Fund Series 2003A $0 0.000% $0 Interest Fund Series 2013A/2017A/2017B $351 2.020% $351 Investment Revenue $201,542,807 $200,373,519 FYTD Fair Market Value Adj. Unrestricted 844,103 Restricted - Investment Income OCWD - Petty Cash $2,700 Unrestricted 1,815,234 Bank Balance (unreconciled) Union Bank Gen - Interest 0.010% $36,285 Restricted 398 Bank Balance (unreconciled) Wells Fargo - Checking 0.000% $3,607,668 Total per G/L 2,659,735 Total $204,020,172

(1) Market value is as of the most recent quarter-end/month-end as reported by LAIF/OCIP/FCB. Security values are provided by Bloomberg Financial Markets and/or Union Bank Investment Services. Note: This Investment Summary Report is in conformity with OCWD's Investment Policy and provides sufficient liquidity to meet the next six months estimated expenditures. OCWD - Investment Portfolio as of January 31, 2019

Federal Agencies , $154,238,712 , 76%

LAIF , $41,906,797 , 20% Working Cash & Debt Service Funds, $3,647,011 , 2% Orange County Pool , $4,227,651 , 2% OCWD - Investment Return Comparision for the Month Ended 01/31/19

3.000%

2.550%

2.500% 2.355%

2.122%

1.939% 2.000%

1.500% Percentage/Return

1.000%

0.500%

0.000% LAIF Orange County Pool Total OCWD Investment Return U.S. Treasury 1 Year Note

Agencies

Note: Orange County Pool rate is as of December 31, 2018. OCWD - Investment Maturities as of January 31, 2019

$140,000,000 Investment Maturities Estimated 6 month Expenditures

$120,000,000

$100,000,000

$80,000,000

$60,000,000 Investments

$40,000,000

$20,000,000

$0 0-6 Months 7-12 Months 1-3 Years 3-4 Years 4-5 Years

Years Orange County Water District Investment Portfolio Holdings Report 01/31/19

Investment Pools

Federal Agencies

Total Federal Agencies $155,408,000 $155,100,410 $154,238,712 76.98% Sub Totals $201,542,448 2.122% $201,234,858 $200,373,160 100% Restricted / Debt Service Funds: Certificate Payment Fund Series 2003A/2005B/2013A/2017AB $9 1.990% $9 Interest Fund Series 2003A $0 0.000% $0 Interest Fund Series 2013A/2017A/2017B $351 2.020% $351 Investment Revenue $201,542,807 $200,373,519 FYTD Fair Market Value Adj. Unrestricted 844,103 Restricted - Investment Income OCWD - Petty Cash $2,700 Unrestricted 1,815,234 Bank Balance (unreconciled) Union Bank Gen - Interest 0.010% $36,285 Restricted 398 Bank Balance (unreconciled) Wells Fargo - Checking 0.000% $3,607,668 Total per G/L 2,659,735 Total $204,020,172

Meeting Date: February 14, 2019 Budgeted: No Budgeted Amount: $0 To: Administration Finance Committee Cost Estimate: $53,720 Board of Directors Funding Source: General Reserves Program/Line Item No.: N/A From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A CEQA Compliance: N/A Staff Contact: J. Bonsangue/M. Patel

Subject: 3-YEAR EXTENDED WARRANTY PURCHASE FOR HYBRID BULLDOZERS: TL-36, TL-37 AND TL-39

SUMMARY

In an effort to meet the Districts recharge needs and satisfy requirements of the California Air Resources Board, the District purchased three first-generation hybrid Caterpillar bulldozers. These three hybrid bulldozers, which utilize a diesel and an electric motor, have been problematic, requiring repair work that exceed what non-hybrid dozers typically require. After many discussions with the manufacturer, Caterpillar is offering the District an exclusive 3- year extended warranty option for each of the three first-generation hybrid dozers.

RECOMMENDATION

Agendize for February 20 Board meeting: Authorize purchase of Caterpillar-issued, 3-year extended warranties for hybrid bulldozers: TL-36, TL-37 and TL-39.

BACKGROUND/ANALYSIS

In an effort to meet the Districts recharge needs and satisfy emission requirements of the California Air Resources Board, The District purchased three Caterpillar first-generation hybrid bulldozers. These three hybrid dozers, which utilize a combination of a diesel and an electric motor, have been problematic. This has required repair work that exceeds what typical non-hybrid dozers normally require. After many lengthy and detailed discussions with the manufacturer, Caterpillar, they have agreed to offer the District an exclusive 3-year extended warranty for each the three first-generation hybrid dozers: TL-36, TL-37 and TL-39. The extended warranty covers the full power-train and hydraulic systems for each of the hybrid dozers.

TL-36 and TL-37 were purchased new by the District in 2012. TL-39 was purchased new by the District in 2014. All three of these first-generation hybrid bull dozers have relatively low hours of usage. However, all three machines have experienced an unusually high number of mechanical failures.

The following table summarizes each dozer’s age, usage and repair expenses to date. The table also shows the usage-based extended warranty cost for each dozer.

1st Generation Age Hours of Repair Expenses Cost of 3-Year Hybrid Dozer (years) Operation (from Original Warranty) Extended Warranty TL-36 7 3,780 $82,550 $19,170 TL-37 7 3,583 $67,731 $19,170 TL-39 5 2,287 $106,099 $15,380

When purchased, each of these hybrid dozers was covered by a 5-year power-train and hydraulic system warranty from Caterpillar. The repair expenses summarized in the table above were covered under warranty. Warranties for TL-36 and TL-37 have expired. The warranty for TL-39 will expire in April 2019.

District maintenance staff and management have had several meetings with the manufacturer regarding the performance of the three first-generation hybrid bulldozers. Representatives from the Caterpillar headquarters in Illinois and from the local dealership participated in the discussions.

Caterpillar staff is sympathetic to the District’s hybrid bulldozer issues and has offered the District an exclusive 3-year extended warranty that covers all power-train and hydraulic system failures for each of the first-generation hybrid bulldozers. Because of the extreme conditions these hybrid dozers work in, staff feels that future failures are inevitable and recommends purchasing the 3-year extended warranties for TL-36, TL-37 and TL-39.

District maintenance staff developed a list of 14 deficiencies and shared the list with the manufacturer. Caterpillar has addressed 11 of the 14 issues for their next generation hybrid bulldozer. It is hoped that because of these discussions the newer generation of hybrid bulldozers from Caterpillar will have less issues.

PRIOR RELEVANT BOARD ACTION(S) N/A

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: No (FY18-19); Proposed (FY19-20) Budgeted Amount: $0 (FY18-19) To: Administration/Finance Issues Cte Cost Estimate: $21,949 (FY18-19) Board of Directors Funding Source: General Fund Program/ Line Item No. 1040 From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A Staff Contact: M. Plumlee/J. Dadakis CEQA Compliance: N/A

Subject: LABORATORY TECHNICIAN FOR RESEARCH & DEVELOPMENT DEPARTMENT

SUMMARY

The Research and Development (R&D) Department seeks to hire a Laboratory Technician. The position would be filled via a Limited Term Employee (LTE) contract and has been included in the initial Fiscal Year (FY) 2019-20 proposed budget. Pending recruitment of a suitable candidate, staff would seek board approval to officially hire via an LTE in Spring 2019, just ahead of the new FY to support immediate grant-supported research activities.

RECOMMENDATION

Agendize for February 20 Board meeting: Authorize recruitment of an R&D Laboratory Technician to be filled as a Limited Term Employee

BACKGROUND/ANALYSIS

Introduction The mission of the Research and Development (R&D) Department at OCWD is to conduct applied research that supports the District’s operational, regulatory, and water quality objectives through technology evaluation, development of new processes, and collaboration with universities and topic experts.

The R&D Laboratory Technician would be responsible for performing chemical and biological analyses under the direction of the Department’s existing staff Scientists, Senior Scientists, Principal Scientists, and R&D Director. The District’s Philip L. Anthony Water Quality Laboratory employs similar entry-level laboratory technician positions. A Laboratory Technician in the R&D Department would increase the Department’s productivity and extend the District’s capacity to conduct pertinent applied research, a significant portion of which is externally grant-funded.

Timing Recruitment for the position would begin in February 2019. The Laboratory Technician would begin their term in Spring 2019, just before the start of the OCWD 2019-20 Fiscal Year.

Term The initial tenure of the Laboratory Technician position would be a one-year appointment via a limited-term (at will) contract with the District. Any extension beyond the initial period would depend on status of research and grant activities and the need for ongoing laboratory support.

Funding The position is currently included in the District’s FY2019-20 proposed budget for the R&D Department at $87,797 to cover anticipated salary plus benefits. Once a candidate is identified, subsequent Board approval for the hiring of a staff-recommended Laboratory Technician to a limited-term (at will) contract would be required. With respect to the intent to fill this position in Spring of 2019, the estimated FY18-19 cost is $21,949 with an assumed start data of April 1, 2019. Offsetting personnel funding is available for the R&D Department in FY2018-19 due to a recent staff scientist retirement and external grant funds.

Research Projects The Laboratory Technician will be directed to support key projects in the R&D Department, including those which involve commitments to external grant funding agencies. Some of these will include:

• Sample analysis for N-nitrosodimethylamine (NDMA) using R&D’s prototype detector, for two grant-supported projects (USBR and National Science Foundation). The District will receive a total of $106,000 of grant funds over the course of these two projects.

• Measurement of enteric virus occurrence at Orange County Sanitation District (OCSD) Reclamation Plant No. 1 in raw water and secondary effluent, to support development of log credit toward GWRS virus removal requirements. Project will be partially supported through a Metropolitan Water District (MWD) grant. The District will receive a total of $27,000 of grant funds for this project.

• Sample analysis and field work related to ongoing use of OCWD’s pilot-scale UV/AOP reactor for various research projects and collaborations (e.g., UC Riverside; USBR grant for CCRO and FO-RO treatment of reverse osmosis concentrate which includes treating the permeates with UV/AOP). The District will receive a total of $150,000 of grant funds for these projects.

• Sample analysis and operation of instrumentation related to USBR grant to study four different monitoring technologies for real-time or daily evaluation of reverse osmosis process integrity. The District will receive a total of $75,000 of grant funds for this project.

PRIOR RELEVANT BOARD ACTION(S)

N/A

6 AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: Yes Budgeted Amount: $435,300 To: Administration/ Finance Issues Cte Cost Estimate: $447,791 Board of Directors Funding Source: Debt Program Program/Line Item No N/A From: Mike Markus General Counsel Approval: Yes Engineers/Feasibility Approved: N/A Staff Contact: R. Fick CEQA Compliance: N/A

Subject: EXTENSION OF 2003A LETTER OF CREDIT

SUMMARY

The District currently has a Letter of Credit (LOC) and Reimbursement Agreement with Citibank N.A. for the District’s outstanding 2003A variable rate Certificates of Participation (COPs) in an amount of $129,815,000. The existing LOC was executed with Citibank on June 1, 2011 with an original expiration date of May 30, 2014. Subsequently, effective May 23, 2013, the expiry date of the LOC was extended to May 23, 2016, with a reduction in fees. In March 2016, the Citibank LOC was again extended to May 23, 2019, with no change in the rate and no fees. Citibank has offered to extend the current LOC for two years at the current rate of 33 basis points with no fees and the District can optionally terminate the LOC at any time.

Attachment(s): • Citibank N.A. offer letter dated January 23, 2019 • Presentation

RECOMMENDATION

Agendize for February 20 Board meeting:

1) Authorize the preparation and execution of documents necessary to extend the current Letter of Credit and Reimbursement Agreement with Citibank, N.A. for the 2003A variable rate debt for a term of 2 years consistent with the offer provided by Citibank, and

2) Authorize payment for costs of issuance not to exceed $12,500

DISCUSSION/ANALYSIS

The District is required to obtain either a standby liquidity facility or letter of credit to support its variable rate debt issuances because the bonds can be tendered weekly by investors. When tendered bonds are remarketed, proceeds from new investors are used to pay the tendering investors. With a liquidity facility, if the tendered COPs are not remarketed, the Trustee draws on the liquidity facility to pay bondholders. In the case of a Letter of Credit, the bank makes direct payments to the Trustee for the tender price and is subsequently reimbursed by the District.

The District’s 2003A variable rate COPs are currently backed by an LOC with Citibank, N.A. The Citibank, N.A. LOC was issued on June 1, 2011 for a term of three years at a cost of 57 basis points (bps) or $751,866 per year with an optional termination at the District’s discretion after two years. Subsequently, effective May 23, 2013, the expiry date was extended to May 23, 2016, at 33 basis points or $435,291 per year and total upfront fees of $2,000 for Citibank’s legal fees. The Citibank, N.A. LOC was again extended effective May 23, 2016, to May 23, 2018, at 33 basis points or $435,291 per year and no fees for Citibank’s legal costs.

Staff recommends extending the current Citibank, N.A. LOC at 33 basis points with no upfront fees payable to Citibank. The advantages to the District with this recommendation are: (1) lower cost of issuance due to extending the current liquidity facility versus a possible bank substitution via Request for Proposals (RFP) process, (2) no costs incurred in drafting a new offering document, (3) the District can optionally terminate the LOC at any time, and (4) no changes to the Reimbursement Agreement are contemplated except for the modification of the maturity date definition on the LOC.

The proposed pricing assumes the District’s current credit ratings of “Aa1/AAA/AAA” from Moody’s, Standard & Poor’s, and Fitch, respectively. Any downgrade in ratings would result in an increase in the facility fee in accordance with the proposed schedule as detailed in Table 1.

Table 1 Citibank Pricing Grid Moody’s S&P Fitch Current Proposed Facility Fee Facility Fee Aa1 or higher AA+ or higher AA+ or higher 33 bps 33 bps Aa2 AA AA 38 bps 38 bps Aa3 AA- AA- 43 bps 43 bps A1 A+ A+ 53 bps 53 bps A2 or lower A or lower A or lower 63 bps 63 bps

Approximately $12,500 in cost for extending the current LOC will be incurred by the District as follows:

$ 1,500 – District’s Legal Fees (Stradling Yocca Carlson & Rauth) $ 1,500 – Financial Advisor (Fieldman, Rolapp & Associates, Inc.) $ 0 – Citibank’s Legal Fees $ 6,000 – Rating Agency Fees $ 3,500 – Contingency for Unanticipated Costs $12,500

Staff identified two alternatives versus extending the current Citibank, N.A. LOC as follows: (1) issue an RFP to possibly obtain a lower cost liquidity facility, and (2) not extend or replace the current bank facility.

Issuing an RFP to possibly replace Citibank as the liquidity facility provider would be much costlier in terms of cost of issuance than extending the current liquidity facility. Approximately $248,000 in cost of issuance including legal fees (banks and District’s), rating agency costs, preparing a new offering document and financial advisor fees would be incurred by the District for a bank replacement. The increased cost of issuance for possibly replacing the current bank has an impact on the breakeven fee that would be required of a new bank. The Table 2 below details that the District would need a competing bank to charge a fee of 24.1 basis points or less with a cost of issuance of approximately $248,000 on a 2-year liquidity facility versus extending the current LOC with Citibank N.A. at 33 basis points and an estimated $12,500 in cost of issuance.

Table 2 Breakeven Analysis Citibank Extension: Annual Fee - Basis Points .00330 $131,906,266 Cost of Issuance $12,500 Year 1 Cost $ 447,791 Year 2 Cost $ 435,291 $ 883,082

Possible Replacement Bank due to RFP Process: Annual Fee - Basis Points .00241 $131,906,266 Cost of Issuance $248,000 Year 1 Costs $ 565,541 Year 2 Costs $ 317,541 $ 883,082

Staff went through an RFP process to replace the Letter of Credit and Reimbursement Agreement with Bayerische Landesbank to provide credit liquidity for the District’s commercial paper program in November 2015. After sending an RFP to seventeen banks a total of six bids were received ranging from 29 to 55 basis points and varying amounts of upfront costs. Based on the breakeven analysis in Table 2, a competing bank would have to come in at less than 24.1 basis points to make the economics work to switch banks.

NEXT STEPS

• Prepare necessary legal and financing documents, including updated Fee Letter Agreement, Letter of Credit and Reimbursement documents, Resolutions for the District and Financing Corporation.

PRIOR BOARD ACTIONS

4/19/06 R06-4-41: Authorize execution and delivery of an Amendment to a Standby Certificate Purchase Agreement relating to the Adjustable Rate Revenue Certificates of Participation, Series 2003A with Lloyds TSB Bank PLC

4/23/03, R03-4-58: Certificates of Participation to $150,000,000, and authorize the financing and refinancing of the acquisition of certain facilities, the refinancing of such commercial paper notes, the financing of the acquisition of real property and to approve forms of the Preliminary Official Statement, the Standby Certificate Purchase Agreement and certain required documents

ORANGE COUNTY WATER DISTRICT

Citibank, N.A. Letter of Credit Extension Proposal

February 6, 2019

Citibank, N.A. (“Citi”) is providing the information contained in this document for discussion purposes only in anticipation of serving solely as an LOC Provider on the Notes referenced herein. The primary role of Citi is to act as an LOC Provider in an arm’s-length commercial transaction between the District and Citi. Citi has financial and other interests that differ from those of the District. Citi is not acting as a municipal advisor, financial advisor or fiduciary to the District or any other person or entity. The information provided is not intended to be and should not be construed as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934. The District should consult with its own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate. The District should consider whether to engage an advisor to act in a fiduciary capacity on its behalf in connection with this transaction. Orange County Water District Letter of Credit Proposal Preliminary Terms and Conditions

Note: This Proposal constitutes a brief summary of certain, but not all, transaction terms and conditions for discussion purposes only. The summary that follows is subject to credit approval and does not constitute an offer or commitment.

I. Summary of Transaction Parties Obligor Orange County Water District (“OCWD”) Contact Randy Fick Chief Financial Officer/Treasurer 18700 Ward Street Fountain Valley, CA 92708 [email protected]

Provider Citibank, N.A. Contact Rebekah McGuire Vice President 388 Greenwich Street, 8th Floor (212) 723-5577 New York, NY 10013 [email protected] Credit Ratings Rating Agency Long-Term Short-Term Outlook Moody’s A1 P-1 Positive S&P A+ A-1 Stable Fitch A+ F1 Stable

Recent Ratings History Rating Agency Rating/Outlook Date Change Moody’s Watchlist 11/29/2018 Potential upgrade w/in 90 days Moody’s Positive 01/08/2018 Revised up from Stable S&P A+ 12/19/2016 Upgrade from A S&P Positive 7/23/2015 Revised up from Stable Moody’s A1 5/28/2015 Upgrade from A2 Fitch A+ 5/19/2015 Upgrade from A Moody’s A2/P-1 11/14/2013 Upgrade from A3/P-2 S&P Stable 6/20/2013 Revised up from Negative Bonds $129,815,000 Adjustable Rate Revenue Certificates of Participation Series 2003A Facility Extension of the Expiration Date of a Letter of Credit (the “Facility”) in an amount sufficient to provide for payment of the principal of and interest on the Bonds and payment of the purchase price of Bonds in the event of a failure to remarket tendered Bonds. The Letter of Credit Reimbursement Agreement by and among Orange County Water District, OCWD Public Facilities Corporation and Citibank, N.A., relating to $129,815,000 Orange County Water District Adjustable Rate Revenue Certificates of Participation Series 2003A dated June 1, 2011 (the “Reimbursement Agreement”). The extension shall not amend or modify the Reimbursement Agreement; the extension shall be accomplished by delivery of a Letter of Credit Amendment amending only the current Expiration Date of the Letter of Credit. Security Reimbursement obligation under the Facility Agreement is secured by a pledge of Pledged Revenues on parity with outstanding senior indebtedness. Credit Approval Final Credit Approval is subject to review and acceptance of satisfactory documentation. It is expected that final credit approval would be in place within ten days of receipt of final documentation.

Letter of Credit Proposal – Preliminary Terms and Conditions Page 2 February 6, 2019 Proposal Expiration Date This term sheet shall remain firm through May 6, 2019 if accepted by the District no later than March 6, 2019. Closing Date Not later than 90 days from the date of this Proposal.

Facility Expiration Date Shall be amended to May 23, 2021

II. General Facility Features Unchanged from the Reimbursement Agreement Closing Date Facility Expiration Date Stated Amount Facility Fee Facility Fee Daycount Facility Fee Payment Frequency Bank Bonds Bank Bond Rate Base Rate Default Rate Default Premium Maximum Rate Interest Repayment Provisions Principal Repayment Provisions Conditions Precedent to Term- Out Drawing Fee Amendment/Transfer Fee

III. Events of Default Unchanged from the Reimbursement Agreement

Letter of Credit Proposal – Preliminary Terms and Conditions Page 3 February 6, 2019 IV. Additional Requirements/Conditions Reporting Requirements Unchanged from the Reimbursement Agreement Covenants Representations and Warranties Closing Conditions Most Favored Covenant Participation Governing Law Waiver of Jury Trial Consent Rights Right of Setoff Sovereign Immunity Documentation EMMA and Rating Agency Disclosure Change in Law/Increased Costs Extension of Facility Expiration Date Legal Fees/Expenses Legal Counsel Expenses

Ratings Citibank accepts the Standard & Poor’s Summary: Orange County Water District, California; Joint Criteria; Water/Sewer dated July 5, 2018 and Fitch Ratings New Issue Report Orange County Water District, California Water Infrastructure Finance Innovation Act Loan dated July 31, 2018 as evidence of ratings confirmation and waives all requirement that OCWD deliver any additional evidence of its current ratings in connection with the extension of the Facility.

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Letter of Credit Proposal – Preliminary Terms and Conditions Page 6 February 6, 2019 Variable Rate 2003A COPs Letter of Credit

Admin/Finance Committee February 14, 2018 Overview • District is required to obtain either a standby liquidity facility or a letter of credit to support its variable rate debt. • Obtained Citibank three year letter of credit (LOC) on June 1, 2011 – Effective May 23, 2013 the LOC was extended three years with a reduction in fees – Effective May 23, 2016 the LOC was extended three years at the same fees Current Citibank Pricing (3 year LOC)

Moody’s S&P Fitch Current Facility Current Fee Annual Cost

Aa1 or higher AA+ or higher AA+ or higher 33 bps $435,290

Aa2 AA AA 38 bps $501,243 Aa3 AA- AA- 43 bps $567,196 A1 A+ A+ 53 bps $699,103 A2 or lower A or lower A or lower 63 bps $831,009

bps = basis point Upfront Cost of Extending LOC versus Bank Substitution

Costs LOC Extension Bank Substitution Bond Counsel $1,500 $55,000 Rating Agencies $6,000 $110,000 Trustee $0 $5,000 Financial Adviser $1,500 $30,000 Underwriter’s Counsel $0 $45,000 Miscellaneous $3,500 $3,000 Total $12,500 $248,000 Breakeven Analysis at 24.1 Basis Points (assuming current ratings)

Proposed LOC Extension Bank Substitution

Annual Fee 33 bps 24.1 bps

Year 1 Costs $447,791 $565,541

Year 2 Costs $435,291 $317,541

Total $883,082 $883,082 Advantages of Extending LOC • Lower cost of issuance due to extending the LOC versus a possible bank substitution process • The District can optionally terminate the LOC at any time • No changes to the LOC Agreement except for the modification of the maturity date • The District went through an Request for Proposal process to replace the bank LOC for its commercial paper program – The best rate obtained was 29 bps from Sumitomo Bank Recommendation

• Agendize for February 20 Board meeting: • 1) Approve and authorize the preparation and execution of documents necessary to extend the current Letter of Credit and Reimbursement Agreement with Citibank for the 2003A variable rate debt for a term of 2 years consistent with the offer provided by Citibank, and • 2) Authorize payment for the costs of issuance not to exceed $12,500. 7

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: N/A Budgeted Amount: N/A To: Administration/Finance Issues Cte. Cost Estimate: N/A Board of Directors Funding Source: N/A Program/Line Item No. N/A From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A Staff Contact: R. Fick CEQA Compliance: N/A

Subject: WIFIA LOAN STRUCTURING OPPORTUNITY

SUMMARY

The District recently closed on an Environmental Protection Agency Water Infrastructure Finance and Innovation Act (WIFIA) loan on July 26, 2018, to fund up to $135,000,000 of the design and construction of the Groundwater Replenishment System Final Expansion (GWRSFE) Project at an interest rate of 3.06%. Staff recommends issuing tax-exempt short-term obligations to finance the project construction from Fiscal Year (FY) 2018-19 thru 2022-23. Tax-exempt short-term obligations would carry a lower interest rate than drawing on the WIFIA loan during the construction period. The tax-exempt short-term obligations would eventually be repaid from a draw on the WIFIA loan near the end of the project construction period. Staff estimates this financing plan will reduce interest expenses by about $9.3 million over the life of the WIFIA loan with a net present value savings of approximately $2.5 million.

Attachment(s): • Estimated savings analysis from Fieldman Rolapp & Associates • Request for Proposals for Investment Banking/Underwriting Services • Request for Proposals for Investment Advisory Services • Presentation

RECOMMENDATION

Agendize for February 20 Board meeting:

1. Authorize issuance of Request for Proposals for investment banking/underwriting services for the issuance tax-exempt short-term obligations;

2. Authorize issuance of Request for Proposals for investment advisory services;

3. Authorize engaging Stradling, Yocca as Bond Counsel and Fieldman, Rolapp & Associates as Municipal Advisor and

4. Authorize the preparation of documents for future issuance of tax-exempt short- term obligations pending further action by the Board.

BACKGROUND/ANALYSIS

Staff submitted a Letter of Interest on April 7, 2017, for the financial assistance program with the Environmental Protection Agency (EPA) Water Infrastructure Finance and Innovation Act (WIFIA) for an estimated $123,872,000 loan to partially fund the GWRS Final Expansion (GWRSFE) Project. The EPA notified the District on July 17, 2017, that our GWRSFE Project was selected to submit an application for credit assistance in the amount of $135 million. The application was submitted to the EPA on March 14, 2018. On July 26, 2018, the WIFIA loan closed for an amount up to $135,000,000 at an interest rate of 3.06% with a term of 35 years including the deferral period.

The current recommended plan to finance the GWRSFE Project includes the following:

1. Issue $135,000,000 of tax-exempt short-term obligations to finance the construction period from FY 2018-19 thru FY 2022-23 as staff believes these short-term obligations will carry a lower interest rate than drawing upon the WIFIA loan;

2. The remaining $157 million of the estimated $292 million GWRSFE project cost is expected to be financed through a State Revolving Fund loan. If the State does not provide full funding or any funding, it is expected that the District will issue Revenue Certificates of Participation, to fund the balance of the $157 million needed to complete the GWRSFE project. The District may choose to use a portion of its reserves to fund a portion of the GWRSFE.

3. The WIFIA loan will be drawn on after substantial completion of construction, (anticipated in October 2022), to repay the $135,000,000 of tax-exempt short- term obligations at or prior to the maturity of the short-term obligations. Staff and the District’s Municipal Advisor estimate that the rate on tax-exempt Certificates of Participation would be about 3.9 to 4.0% in today’s market and assuming rates are unchanged or higher in 2022 we would draw on the WIFIA loan at 3.06% versus issuing Certificates of Participation to take out the tax-exempt short-term obligations; and

4. The District will defer payment on the WIFIA loan for five years and begin payments in FY 2027-28 to allow the District to ramp in the Replenishment Assessment increase due to the remaining GWRSFE Project debt service and operations and maintenance costs.

Currently, tax-exempt short-term rates including estimated cost of issuance and underwriter’s discount are estimated to be lower than the 3.06% WIFIA loan rate so staff is proposing to issue the tax-exempt short-term obligations to finance a portion of the project during the construction period. The District is conservatively estimating short-term tax-exempt rates to have an interest rate of about 2.25%. When compared with immediately drawing on the WIFIA loan at a rate of 3.06% to finance a portion of the GWRSFE project construction, an opportunity to garner significant savings exists. If short-term tax-exempt rates were to increase over the WIFIA loan rate of 3.06%, the District would draw on the WIFIA loan during construction period of the GWRSFE project.

The proposed plan to finance $135 million of construction period costs with tax-exempt short-term obligations allows the District to pay a lower interest rate than the WIFIA loan rate for about four to five years. A conservative interest rate estimate for four-five year highly-rated debt from the District is about 2.25%. As seen in the attached Table 1 the use of the construction period financing using tax-exempt short-term obligations would save the District about $2.5 million net present value or about $9.3 million in gross savings over the life of the WIFIA loan. These projected savings are net of cost of issuance and underwriter’s discount.

In order to begin moving forward with the WIFIA loan utilizing tax-exempt short-term obligations during construction, staff recommends sending out a Request for Proposals for investment banking/underwriter’s services and investment advisory services. The investment banking/underwriter services are required to market and sell the tax-exempt short-term obligations to finance the $135 million GWRSFE project construction period. The investment advisory services are required to invest the project funds until spent (see Table 1 – “Project Fund Earnings” column). Also, staff is requesting that Stradling, Yocca be continued as Bond Counsel and Fieldman, Rolapp & Associates, under its existing contract be engaged as Municipal Advisor and that legal documents be prepared for the issuance of the $135 million in tax-exempt short-term obligations pending further action by the Board. Both firms advised the District on the negotiation of the WIFIA Loan. The estimated cost of issuance which includes Bond Counsel, General Counsel, Municipal Advisor, credit ratings, investment advisory services and trustee fees is estimated at $350,000. Underwriter’s discount or the cost to market and sell the tax- exempt short-term obligations is estimated at $300,000. These costs will be paid out of bond issuance proceeds. Staff will bring back firm costs for underwriter’s discount and cost of issuance with the bond documents in March or April 2019.

PRIOR RELEVANT BOARD ACTION(S) N/A

WIFIA Loan versus WIFIA Loan with Short Term Obligations (Table 1)

Fiscal Year WIFIA Loan WIFIA Loan Difference Project Fund Net Without Notes With Notes (Cost)/Savings Earnings Cost/(Savings) With Notes 2018-19 $0 $0 $0 $0 $0 2019-20 $0 $3,240,000 $3,240,000 $3,063,121 $176,879 2020-21 $0 $3,240,000 $3,240,000 $3,051,932 $188,068 2021-22 $0 $3,240,000 $3,240,000 $1,434,906 $1,805,094 2022-23 $0 $3,240,000 $3,240,000 $78,428 $3,161,572 2023-24 $0 $0 $0 $0 $0 2024-25 $0 $0 $0 $0 $0 2025-26 $0 $0 $0 $0 $0 2026-27 $0 $0 $0 $0 $0 2027-28 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2028-29 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2029-30 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2030-31 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2031-32 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2032-33 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2033-34 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2034-35 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2035-36 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2036-37 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2037-38 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2038-39 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2039-40 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2040-41 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2041-42 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2042-43 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2043-44 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2044-45 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2045-46 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2046-47 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2047-48 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2048-49 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2049-50 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2050-51 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2051-52 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2052-53 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2053-54 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2054-55 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2055-56 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2056-57 $8,035,459 $7,561,542 ($473,917) $0 ($473,917) 2057-58 $8,035,459 $7,561,542 ($473,917) $0 ($473,917)

Total $249,099,235 $247,367,810 ($1,731,425) $7,628,387 ($9,359,812)

ORANGE COUNTY WATER DISTRICT Premium Bond @ 2.25% Yield - Short Term Note (1)

WIFIA Loan vs. Short Term Note Gross (Savings) / Cost ($9,359,812) NPV @ 3.06% Inc./(Dec) ($2,511,659) Short Term Project Note (Draw for WIFIA Loan WIFIA Loan Reimbursement Project Fund Date WIFIA) WIFIA Loan w/o Note w/ Note Difference Earnings Earnings(2) Net Payments 2019 0 0 0 0 0 0 0 0 2020 3,240,000 0 0 3,240,000 3,240,000 0 3,063,121 176,879 2021 3,240,000 0 0 3,240,000 3,240,000 0 3,051,932 188,068 2022 3,240,000 0 0 3,240,000 3,240,000 0 1,434,906 1,805,094 2023 3,240,000 0 0 3,240,000 3,240,000 0 78,428 3,161,572 2024 0 0 0 0 0 0 0 0 2025 0 0 0 0 0 0 0 0 2026 0 0 0 0 0 0 0 0 2027 0 0 0 0 0 0 0 0 2028 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2029 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2030 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2031 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2032 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2033 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2034 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2035 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2036 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2037 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2038 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2039 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2040 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2041 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2042 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2043 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2044 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2045 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2046 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2047 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2048 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2049 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2050 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2051 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2052 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2053 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2054 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2055 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2056 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2057 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2058 0 7,561,542 8,035,459 7,561,542 (473,917) 0 0 (473,917) 2059 0 0 0 0 0 0 0 0 2060 0 0 0 0 0 0 0 0 2061 0 0 0 0 0 0 0 0 TOTAL $12,960,000 $234,407,810 $249,099,235 $247,367,810 ($1,731,425) $0 $7,628,387 ($9,359,812) Assumptions: (1) Premium bond at 2.40% coupon to yield 2.25% (assumes small premium to pay for cost of issuance). (2) Assumes monthly interest earnings at arbitrage yield at 2.26%.

ORANGE COUNTY WATER DISTRICT Revenue Certificates of Participation Obligations, Series 2019A Approximately $135 Million Par Amount

Request for Proposals for Investment Banking / Underwriting Services

On behalf of the Orange County Water District, (“the District”), we are distributing this Request for Proposals for investment banking/underwriting services for the District’s interim funding in the form of Obligations in connection with the design, engineering and construction of the final expansion of the District’s Ground Water Replenishment System (the “Project”). The District intends to secure the Obligations from Net Revenues on its parity lien and has the option to use the proceeds from its WIFIA Loan to retire the Obligations. The District does not intend to capitalize interest on the Obligations.

Submittal information:

Responses are to be delivered electronically to Mr. Randy Fick, Chief Financial Officer of Orange County Water District, and Robert Porr and Lora Carpenter of Fieldman, Rolapp & Associates no later than 3:00 PM pacific time on March 1st, 2019.

Randy Fick [email protected] Robert Porr [email protected] Lora Carpenter [email protected]

Responses should be no more than twenty (20) pages, including any appendices or attachments.

All requests for additional information or questions regarding this RFP, the District or the Project shall be directed to Robert Porr in writing via email on or before February 26th, 2019.

The District may decide to interview a shortlist of underwriting firms based on the responses to this RFP.

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I. BACKGROUND

Introduction

The District plans to issue its Obligations to fund a portion of the design, engineering and construction of the Project. The District expects to pledge its Net Revenues to secure the Obligations. It is expected that proceeds from the WIFIA Loan will be used to retire the Obligations on or about March 23, 2023.

The District’s publically offered parity debt has ratings of Aa1/AAA/AAA; the Obligations are anticipated to be secured on a parity basis.

For additional information on the District, please see the documents posted on EMMA.

Timeline

It is anticipated the Obligations will price in early April 2019, depending on market conditions.

Selection Considerations & Criteria

The District is interested in firms with strong investment banking and underwriting qualifications. Firms will need to demonstrate exceptional capabilities to underwrite California water related tax- exempt revenue Obligations, or other short-term fixed rate obligations.

Firms will be selected based upon their responses to the questions below, qualifications and fees. The District reserves the right, in its sole discretion, to select one or two co-managers from responding firms.

The District’s Finance Team

Fieldman, Rolapp & Associates has been retained by the District as its Municipal Advisor for the refunding, Rutan & Tucker will act as the District’s general counsel, and Stradling Yocca Carlson & Rauth will serve as bond counsel; bond counsel will prepare the POS and Official Statement.

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II. QUESTIONS

1. Describe your firm’s sales capabilities to sell 4-5 year interim Obligations. Describe your firm’s recent success at selling similarly structured financings to retail, professional retail and institutional investors. Please provide an example of the pricing of a recent California water transaction, for which you were senior manager, preferably with a water wholesaler special district issuer and preferably with a par amount in excess of $100 million. Provide the detail of orders for retail investors, professional retail and institutional investors. In connection with institutional investors, provide details on orders from Tier 1, 2, and 3 investors. 2. Provide your experience, if any, with WIFIA Loans and the issuance of fixed rate interim funding, preferably short term fixed rate obligations, to be taken out by a WIFIA Loan. 3. Provide examples of any short term fixed rate publically offered obligations where your firm underwrote significant portions, more than 10%, of the issue. 4. Provide your thoughts on selling par bonds versus premium bonds in today’s market in the short-end of the yield curve. 5. In light of the current conditions in the municipal marketplace, discuss your structuring, ideas. Identify pricing for a four year note, a five year note without a call feature and a five year note subject to a par call at any time after the start of the fourth year. Provide appropriate quantitative support/analysis in connection with this question. Such quantitative analysis will not be counted against the page limitation of this RFP. 6. Discuss your firm’s thoughts on selling Revenue Certificates of Participation Obligations versus Revenue Obligations issued through a JPA, such as the California Municipal Finance Authority. Provide your market strategy and spread differential for selling Certificates of Participation Obligations versus Revenue Obligations. 7. Provide your firm’s forecast of taxable and tax-exempt interest rates for 2019. 8. Discuss the benefits and disadvantages of using all three of the District’s credit ratings versus the two highest ratings. 9. Describe any other considerations or factors not addressed previously that you believe should be considered by the District in selecting your firm. 10. Provide any potential conflicts of interest your firm may have in acting as Underwriter for the District.

III. QUALIFICATIONS

1. Please list or summarize your firm’s experience as underwriter for California-based enterprise revenue backed revenue tax-exempt notes, or short-term fixed-rate obligations in the last 5 years and note/highlight: a. Whether your firm served as senior or co-manager; b. Transactions with par in excess of $100,000,000; c. The three transactions you believe are most comparable to the District’s proposed transaction

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2. Please provide a proposed project team, including your underwriter, and resumes of each team member. Please provide each team member’s experience over the last 5 years with: a. Tax-exempt California water enterprise revenue notes, and revenue certificates of participation on senior managed transactions only; b. Provide a breakdown of the responsibilities of each of your project team members.

IV. FEES

Provide a detail of your proposed takedown and expenses for the proposed Obligations, and any assumptions used in deriving this fee structure.

Include the cost of underwriter’s counsel as a fixed expense item, which firm and contact person you propose to retain. If you require a 10(b)(5) opinion, the delivery of such opinion will be the responsibility of underwriter’s counsel.

V. GENERAL

The District reserves the right to waive immaterial irregularities in responses. The District reserves the right to negotiate fees prior to the selection of an underwriting firm, or firms. The District also reserves the right to select a senior manager and one or more co-managers. The District further reserves the right to select one or more firms or to reject all proposals.

ADM.07.b.Request for Proposals for Investment BankingUnderwriting Services.docx

ORANGE COUNTY WATER DISTRICT Series 2019 Revenue Interim Obligations Request for Proposals for Investment Advisory Services

On behalf of Orange County Water District, (the “District”), we are distributing this Request for Proposals for investment advisory services in connection with the investment of certain proceeds from the sale of the District’s 2019 interim obligations (the “2019 Obligations”) that is expected to price and close in April 2019.

The District is seeking an investment advisor to provide advisory services in connection with the investment of the District’s Project Fund established under an Indenture of Trust for the 2019 Obligations (“Indenture”).

The District expects to have approximately $135 million(1) in gross proceeds to invest (the “Initial Deposit Amount”) for capital purposes. Currently, the District expects to draw down funds in amounts as set forth in Exhibit A. The District will provide an updated draw schedule to the firm selected prior to the finalization of an investment strategy. Attached hereto as Exhibit B are the definitions of Permitted Investments from the draft Indenture.

Submittal information:

Responses are to be delivered electronically to Mr. Randy Fick, Chief Financial Officer of the District, and Robert Porr of Fieldman, Rolapp & Associates, Inc. no later than 4:00 PM pacific time on March 04, 2019.

Randy Fick [email protected] Robert Porr [email protected]

Responses should be no more than fifteen (15) pages including any appendices or attachments.

All requests for additional information or questions regarding this RFP shall be directed to Robert Porr in writing via email by February 27, 2019.

The selected firm will be responsible for:

1. Reviewing and providing recommendations in connection with the definitions of Permitted Investments in the Indenture. 2. Recommending to the District Permitted Investments which prioritize safety, liquidity and yield in connection with the Initial Deposit Amount.

(1) Preliminary, subject to change.

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3. Recommending to the District a passive approach to purchasing a portfolio of securities versus an active management approach, if a portfolio of securities is recommended. 4. Recommending to the District Permitted Investments which prioritize safety, liquidity and yield in connection with any earnings or amounts on deposit (over and above the Initial Deposit Amount) in the Project Fund which may require investing. 5. Preparing bid specifications, materials and packages in connection with the solicitation and settlement of Permitted Investments. 6. Managing the process of settling securities including any Investment Agreements between any provider of securities and the Trustee, (if such is recommended and solicited). 7. Representing the District in connection with the negotiation of terms and conditions for an Investment Agreement, and working with the District to close such Permitted Investment (if such is recommended and solicited).

The Finance Team

Fieldman, Rolapp & Associates, Inc. has been retained by the District as its Municipal Advisor and Stradling Yocca Carslon & Rauth will serve as Bond Counsel.

Selection Considerations & Criteria

The District intends to select a firm with highly relevant qualifications providing investment advisory services for similar issues and objectives. Selection criteria will include written responses to the questions below, firm qualifications and fees.

The District reserves the right to negotiate fees prior to the selection of an investment advisory firm. The District further reserves the right to select one or more firms or to reject all proposals.

I. QUALIFICATIONS

1. Provide an overview of your firm’s investment advisory practice, including the number of years in business and your licenses. Describe your firm’s capability related to providing investment advisory services in connection with the District’s Project Fund. 2. Taking into account the preliminary draw schedule and Permitted Investments in Exhibits A and B respectively, provide a comparison, detailing advantages and disadvantages of investing the Project Fund in an Investment Agreement, a Repurchase Agreement or purchasing a portfolio of securities. Provide a quantitative example of the three strategies. 3. Provide your thoughts on the Permitted Investments language in Exhibit B and whether or not the District should consider additional Investment vehicles. 4. Describe the process your firm would take to provide advice to the District. Include the process you would take, if selected, to bid out Permitted Investments. 5. Distinguish your approach towards an active versus a passive management approach to a portfolio of securities.

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II. EXPERIENCE

1. List or summarize your firm’s experience in the investment of tax-exempt bond proceeds in the last 5 years.

2. Provide the proposed lead advisor’s background and experience over the last 5 years in connection with services similar to the District’s requirements.

III. FEES

Provide a detail of your proposed fees and expenses for the proposed engagement and any assumptions used in deriving this fee structure. Please provide fees and expenses in connection with

1. Purchasing a portfolio of securities; distinguish your proposed fees for an actively managed portfolio versus a passive management approach. 2. Purchasing individual securities; and 3. Bidding and settling an Investment Agreement.

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Exhibit A

Orange County Water District

(1) Initial Deposit = $135,000,000

(2) MONTH DRAW DOWNs REMAINING BALANCE Apr-19 $9,905,899 $125,094,101 May-19 $784,315 $124,309,786 Jun-19 $784,315 $123,525,471 Jul-19 $1,568,630 $121,956,840 Aug-19 $1,725,493 $120,231,347 Sep-19 $4,313,733 $115,917,614 Oct-19 $3,529,418 $112,388,197 Nov-19 $4,078,438 $108,309,758 Dec-19 $3,529,418 $104,780,341 Jan-20 $3,137,260 $101,643,080 Feb-20 $3,137,260 $98,505,820 Mar-20 $3,137,260 $95,368,560 Apr-20 $3,137,260 $92,231,299 May-20 $4,312,949 $87,918,351 Jun-20 $4,705,890 $83,212,461 Jul-20 $3,921,575 $79,290,885 Aug-20 $4,622,753 $74,668,132 Sep-20 $5,804,716 $68,863,416 Oct-20 $4,790,596 $64,072,820 Nov-20 $4,849,420 $59,223,400 Dec-20 $7,355,307 $51,868,093 Jan-21 $7,066,679 $44,801,415 Feb-21 $4,705,890 $40,095,524 Mar-21 $5,323,931 $34,771,593 Apr-21 $4,083,144 $30,688,449 May-21 $4,641,577 $26,046,873 Jun-21 $5,796,873 $20,250,000 Jul-21 $1,420,498 $18,829,502 Aug-21 $1,734,683 $17,094,819 Sep-21 $1,711,924 $15,382,895 Oct-21 $1,915,090 $13,467,804 Nov-21 $1,422,440 $12,045,364 Dec-21 $1,526,383 $10,518,981 Jan-22 $975,586 $9,543,395 Feb-22 $739,114 $8,804,281 Mar-22 $1,333,902 $7,470,379 Apr-22 $963,790 $6,506,589

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May-22 $758,542 $5,748,047 Jun-22 $801,979 $4,946,068 Jul-22 $853,325 $4,092,743 Aug-22 $713,163 $3,379,580 Sep-22 $912,305 $2,467,275 Oct-22 $1,003,341 $1,463,934 Nov-22 $686,518 $777,416 Dec-22 $366,504 $410,912 Jan-23 $125,314 $285,598 Feb-23 $131,975 $153,624 Mar-23 $153,624 $0 TOTAL $135,000,000

(1) Preliminary, subject to change. (2) The remaining project fund balances assume no additional interest earnings.

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Exhibit B

Orange County Water District – Permitted Investments [To Come]

ADM.07.c.Request for Proposals for Investment Advisory Services.docx Page | 6 WIFIA Loan Structuring Opportunity

Administration/Finance Issues Cte. February 14, 2019 Overview • The District secured a WIFIA loan in July 2018 for the partial funding of the GWRS Final Expansion (GWRSFE) Project – The District can draw up to $135 million – Interest rate on the WIFIA Loan is 3.06% – WIFIA allows the District to draw on the loan as needed and accrue interest during construction or use the WIFIA Loan proceeds to pay off interim funding that is used for the GWRSFE Project during construction • Currently, interim funding offers the District an estimated lower interest rate at ~2.25% to finance the GWRSFE

construction versus the WIFIA loan at 3.06% 2 WIFIA Loan GWRSFE Financing Options Net Fiscal Year Ending 2019‐2023 2024‐2027 2028‐2058 Payments Option 1 Draw on Draw on WIFIA Loan during WIFIA Loan WIFIA Loan WIFA Loan construction during Deferral @ repayment $249,099,235 construction 3.06% @ 3.06% @ 3.06% Option 2 Issue short‐ Draw on Issue short‐term notes term notes WIFIA Loan & WIFIA Loan during construction during retire short‐ repayment $239,739,423 construction term notes @ @ 3.06% @ ~2.25% (1) 3.06%

Gross Interest Cost/(Savings) $(9,359,812) $(2,511,659) (1) Rate estimated and subject to change Net Present Value Cost/(Savings) 3 Quantitative Analysis

Fiscal Year WIFIA Loan WIFIA Loan Difference Project Fund Net Ending w/o Notes with Note Cost/(Savings) Earnings Cost/(Savings) with Notes 2019 $0 $0 $0 $0 $0 2020 $0 $3,240,000 $3,240,000 $3,063,121 $176,879 2021 $0 $3,240,000 $3,240,000 $3,051,932 $188,068 2022 $0 $3,240,000 $3,240,000 $1,434,906 $1,805,094 2023 $0 $3,240,000 $3,240,000 $78,428 $3,161,572 2024 $0 $0 $0 $0 $0 2025 $0 $0 $0 $0 $0 2026 $0 $0 $0 $0 $0 2027 $0 $0 $0 $0 $0 2028 – 2058 $8,035,459 $7,561,542 $(473,917) $0 $(473,917) Total $249,099,235 $247,367,810 $(1,731,425) $7,628,387 $(9,359,812) Short-Term Obligation Benefits

• Estimated short-term tax-exempt rates are lower than WIFIA Loan rate • Issuing short-term tax-exempt obligations to fund up to $135 million of GWRSFE project costs creates an opportunity to save approximately $9.3 million in interest expense or ~$2.5 million net present value versus drawing on the WIFIA Loan during construction 5 Recommendation

Agendize for February 20 Board meeting: 1. Authorize issuance of Request for Proposals for investment banking/underwriting services for the issuance of tax-exempt short-term obligations; 2. Authorize issuance of Request for Proposals for investment advisory services; 3. Authorize engaging Stradling, Yocca as Bond Counsel and Fieldman, Rolapp as Municipal Advisor; and 4. Authorize the preparation of documents for future issuance of tax-exempt short-term notes pending further action by the Board. End of Presentation 8

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: No Budgeted Amount: $0 To: Administration/Finance Committee Cost Estimate: 124,646 Board of Directors Program/Line Item No.: R17034 Funding Source: R&R From: Mike Markus General Counsel Approval: N/A Project Report Approved: N/A Staff Contact: P. Bouyounes / R. Bouley CEQA Compliance: N/A

SUBJECT: CONTRACT NO. FV-2018-1, VIDEO MONITORING SYSTEM AMEND ENGINEERING SERVICES AGREEMENT WITH TRC COMPANIES

SUMMARY

The District’s Video Monitoring System (VMS) is obsolete, cannot be fully integrated and not functioning in some locations. In December 2017, the District hired TRC Companies, Inc. for consulting services to assess OCWD’s existing VMS, make replacement recommendations, and prepare the project plans and specifications for the first phase of the Video Monitoring System Replacement Project, including replacement of the VMS at OCWD’s Fountain Valley campus. Staff recommends issuing an amendment to Agreement No. 1281 with TRC Companies, Inc. for additional construction document preparation and engineering support services during project bidding and construction.

RECOMMENDATION

Agendize for February 20 Board meeting: Authorize issuance of an Amendment to Agreement No. 1281 with TRC for Video Monitoring System Replacement Project Consulting and Construction Support Services for the amount not to exceed $124,646.

BACKGROUND/ANALYSIS

The Joint Exercise of Powers Agreement for the Development, Operation, and Maintenance of the GWRS and the Green Acres Project (GAP) governs the operation, maintenance, and ownership responsibilities associated with the GWRS project. OCWD’s GWRS plant and Orange County Sanitation District’s (OCSD) plants are a joint campus since there are no physical fences or barriers between the two organizations. The agreement includes a provision calling for a joint security vulnerability assessment of the joint campus. Pinkerton completed an assessment of OCWD’s facilities. Based upon the results of the report and discussions with OCSD, the following four recommendations were made to the Board in August of 2016:

1. Man the guard shack at the District’s Ward Street entrance during working hours. 2. Provide campus security patrols during non-working hours. 3. Increase the height of the security wall around the GWRS treatment plant from six feet to eight feet. 4. Upgrade the Video Monitoring System (VMS) and lighting capability of the District.

Items 1 and 2 have been implemented. Item 4 was initially addressed in December of 2017, when the Board authorized an agreement with TRC Companies, Inc. (TRC). The scope of OCWD’s agreement with TRC included the following tasks:

• Evaluate OCWD’s existing VMS • Recommend levels of security & VMS performance needed for all OCWD facilities based upon risk & vulnerability • Provide recommendations for proactive measures to potentially stop vandalism in progress • Prepare plans and technical specifications for the installation of the VMS at OCWD’s Fountain Valley campus

TRC security assessment recommends OCWD utilize a VMS at a total of thirteen OCWD facilities, including the Fountain Valley Campus (Administration, Laboratory, and GWRS); Field Headquarters (FHQ); Kraemer/Miller, Santiago, La Jolla, Mira Loma, and La Palma Basins; Burris Pump Station; Imperial and Five Coves Dams; Prado Wetlands Office; Mills Pond; and Anaheim Lake. TRC’s assessment also recommends completely replacing OCWD’s existing VMS with a new digital VMS. The existing VMS mostly consists of analog cameras and recorders that cannot be integrated to allow multiple recorders to communicate with each other, cannot send alarm notifications, and cannot provide a single video feed that can be easily remotely monitored. Because of this, OCWD currently relies on its roving security to patrol a route covering approximately 150 miles every shift. The size of this coverage area makes it cost prohibitive for the roving security to provide full-time coverage at all OCWD facilities. The proposed VMS would utilize cameras and motion sensors that send alarms when motion from intrusion is detected, and all OCWD sites would be linked via computer network to send these alarms to one central location. The alarms could even be sent to mobile devices so roving security personnel can notify police and respond immediately when intrusions are detected at any of the protected sites.

TRC’s original scope of work includes providing construction plans and specifications for replacing the VMS server and installing cameras and motion detectors at OCWD’s Fountain Valley Campus. However, upon review of TRC’s security assessment, staff recognized that it would be beneficial to complete construction documents for all thirteen facilities to assure the system is fully compatible once installation is complete. Staff recommends phasing the VMS installation, with the first phase including installation of the VMS server hardware and software, and prioritizing camera and motion detection hardware installation at the following facilities:

1. Fountain Valley Campus – OCWD’s main headquarters, and the highest employee population. Staff has recorded more than ten occurrences of transients sleeping or wandering onto OCWD’s campus. A few of these incidents involved interaction with District staff, and the police were called after one incident when the transient acted violently toward OCWD employees. There have also been more than three incidents of damage to OCWD property or personal vehicles. The responsible parties could not be identified due to insufficient video monitoring. 2. FHQ – OCWD’s office, maintenance shop, and warehouse are located immediately adjacent to the Santa Ana River and have the second highest employee population of OCWD’s three main locations. Many of OCWD’s heavy machines are housed and

maintained at FHQ. Since 2014, staff has reported over 100 incidents including: backflow preventors that were stolen, fences that were cut, and copper wire theft, broken lights, graffiti and stolen maintenance equipment. Repairs and replacements from some of these incidents cost OCWD more than $30,000. Lately, there has also been an increase in the reports of transients wandering onto District property around the FHQ office and shop buildings. A video monitoring system at FHQ could identify these incidents in real time and result in a timely response from security and authorities. 3. Santiago Basin – OCWD’s security personnel frequently reports trespassing and fishing at this basin. In 2015, vandals set fire to the power cables at Santiago Basin causing approximately $450,000 in damage. The existing video monitoring system at Santiago does not function, so those responsible were never identified. 4. Burris Pump Station – This facility is critical for conveying water from the Santa Ana River to Santiago Basin. Staff has reported transients sleeping around the facility and using water from the surge tanks causing the pump station to shut down. Backflow preventor theft at Burris Pump Station would result in a station outage and could cost OCWD up to $250,000 per day in lost water value. Video monitoring at the site would allow staff to alert authorities when intruders are detected and greatly decrease the likelihood of this type of incident. 5. Kraemer/Miller Basins – OCWD’s main fiber optic communication hub between Fountain Valley and FHQ is located at this facility. There have not been any reported incidents of theft or vandalism to this hub. However, one incident could require costly repairs and disrupt phone and network communication between Fountain Valley and FHQ; disrupt business network and internet communications between the Administration Building and FHQ; and disrupt communication between GWRS and the recharge basins.

Staff recommends completing the construction drawings for all facilities now and completing installation as one construction contract, sequenced over 2-3 years. Due to the complexity of the new VMS, staff will require construction support services from TRC during VMS Installation. Installations in the first year would include approximately half of the recommended cameras at the Fountain Valley Campus, and full installation at FHQ, Santiago Basin, Burris Pump Station, and Kramer/Miller Basins. VMS installation would be completed at Fountain Valley and the remaining OCWD facilities in subsequent years. Spreading the project installation over 2-3 years will give the District time to use the VMS; allow the District to assess its functionality and optimize how the system works; and allow District personnel to level resources that will be required to support the installation.

The total cost of the VMS is estimated to be $1.2 million. The VMS assessment and design of the Fountain Valley VMS replacement were budgeted in FY 2018/19. An amendment to OCWD’s agreement with TRC is required to finalize construction drawings for the remaining sites, revise the construction drawings for Fountain Valley Campus, and include support services during construction. Staff recommends issuing an amendment to Agreement No. 1281 with TRC for Video Monitoring System Replacement Project Consulting and Construction Support Services for the amount not to exceed $124,646.

PRIOR RELEVANT BOARD ACTION

12/20/17 R17-12-162 – Authorize Agreement with TRC Companies, Inc. for Video Monitoring Design Services 3

09/20/17 M17-133 – Authorize RFP for Video Monitoring Design Services Authorize issuance of a Request for Proposals (RFP) for VMS Replacement Project consulting services.

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: No Budgeted Amount: $0 To: Administration/Finance Issues Cte. Cost Estimate: $23,200,000 Board of Directors Funding Source: Gain on Sale of Property Program/Line Item No. From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A Staff Contact: R. Fick CEQA Compliance: N/A

Subject: AUTHORIZE PROPOSED USE OF FUNDS RECEIVED FROM SALE OF BALL ROAD BASIN

SUMMARY

The District declared Ball Road Basin property in Anaheim surplus to the District’s needs. As a result, the property was recently sold, and the District received a net gain on the sale of the property of $23.2 million. Staff recommends that the proceeds be used for two purposes: (1) $15 million would be contributed to the District’s Public Agency Retirement Services (PARS) Other Postemployment Benefit (OPEB) Trust, and (2) the remaining $8.2 million would be used to reduce the District’s outstanding taxable commercial paper debt.

Attachment: Presentation

RECOMMENDATION

Agendize for February 20 Board meeting: Authorize the District CFO/Treasurer to contribute $15 million to the District’s PARS OPEB trust by December 31, 2019, and paydown the outstanding taxable commercial paper debt by $8.2 million.

BACKGROUND/ANALYSIS

The District declared the Ball Road Basin property located at 1200 and 1204 South Phoenix Club Drive in the City of Anaheim as surplus to the District’s needs. As a result, the property was sold, and the District received a net gain of $23.2 million.

Staff is recommending the District pay down its liabilities to avoid or reduce future costs and assist in maintaining the District’s credit ratings rather than using this one-time gain on the purchase of a capital asset or for recurring operating expenditures.

OCWD Retiree Healthcare Benefit Liability

As of June 30, 2017, the District’s net OPEB liability was $18.9 million ($28.7 million total OPEB liability less $9.8 million plan assets = $18.9 million net OPEB liability) and the District’s OPEB Plan was 34% funded ($9.8 million plan assets / $28.7 million OPEB liability = 34% funded). The District’s actuary-Bartel Associates, LLC

recommends a funding ratio of 80%. In order to achieve an OPEB that is approximately 80% funded, the District would need to contribute an estimated $15 million into the District’s PARS OPEB Trust. Prefunding the District’s OPEB Trust improves the District’s balance sheet, shows rating agencies that long-term obligations are being funded, and management is aware of and responsive to the OPEB liability.

The District should consider the 80% funded ratio versus a greater funding ratio to reduce the risk of overfunding the Plan due to the following: (1) funds in an irrevocable trust are permanently dedicated and cannot be pulled back to use for other purposes, and (2) a change in accounting or actuarial standards could reduce the District’s total OPEB liability and lock up the funds in the Trust.

The District’s most recent Orange County Water District Retiree Healthcare Plan Actuarial Valuation report as of June 30, 2017, was completed on July 31, 2018. The Actuarially Determined Contribution (ADC) for the next 10 years, based on a 34% funded ratio as of the July 31, 2018, Actuarial Valuation is seen in Table 1 – “Actuarially Determined Contribution”. The ADC is the recommended contribution to the District’s PARS OPEB Trust that is projected to result in assets equaling the actuarial accrued liability within a period of time. The ADC is comprised of the normal cost (the cost for OPEB benefits attributable to current year service) and an amortization payment (the past service cost to fund the unfunded actuarial accrued liability over the next 25 years).

Table 1 Actuarially Determined Contribution (Amounts in 000’s) Amortization Full ADC from Fiscal Year Normal Cost Payment Full ADC if 80% Previous (25 Year Funded Report (approx. Amortization) 34% Funded) 2019-20 $972 $497 $1,469 $2,523 2020-21 $977 $497 $1,474 $2,524 2021-22 $981 $497 $1,478 $2,529 2022-23 $985 $497 $1,482 $2,533 2023-24 $986 $497 $1,483 $2,537 2024-25 $990 $497 $1,487 $2,538 2025-26 $993 $497 $1,490 $2,542 2026-27 $999 $497 $1,496 $2,545 2027-28 $1,005 $497 $1,502 $2,551 2028-29 $1,012 $497 $1,509 $2,557

If approximately $15 million is contributed to the District’s PARS OPEB Trust by December 31, 2019, the revised ADC drops from $2,523,000 in Fiscal Year 2019-20 to $1,469,000 as calculated by the District’s Actuary (Table 1 above).

It is recommended that the one-time contribution to the PARS OPEB Trust of $15 million be contributed to the District’s PARS OPEB Trust over the coming year so as not to try and time the market. Staff recommends contributing $1.5 million per month for

the next 10 months in to the District’s PARS OPEB Trust on top of the recommended $1.469 million ADC assuming an 80% funded ratio for FY 2019-20.

Increasing the funded ratio to approximately 80% from 34% reduces the previous calculated ADC from an estimated $2.5 million to $1.5 million per year. This will decrease the projected Replenishment Assessment by about $3 per acre foot for the next 25 years.

OCWD Commercial Paper Debt Program

The remaining $8.2 million of the $23.2 million from the net proceeds received from the sale of Ball Road Basin would be used to pay down the $36 million outstanding taxable commercial paper debt the District incurred as a result of purchasing 60,000 acre-feet of in-lieu water from MWD in fiscal year 2017-18. Commercial paper debt can be paid down at anytime unlike fixed rate bonds.

Currently, the rate on the District’s taxable commercial paper debt is 2.58%. Paying down $8.2 million will reduce annual interest expense by about $211,600 per year or result in about a $1 decrease in the projected annual Replenishment Assessment. Also, only $21.1 million is currently available of the total $70 million commercial paper program for the District to borrow against should the District wish to purchase, for example, more water or capital equipment. If the District pays down $8.2 million of the taxable commercial paper outstanding, this would increase the commercial paper borrowing capacity to $29.3 million for future needs.

PRIOR RELEVANT BOARD ACTION(S) N/A

Proposed Use of Funds Received from Sale of Ball Road Basin

Administration/Finance Issues Cte. February 14, 2019 Overview

• The District declared Ball Road Basin property in Anaheim as surplus to the District’s needs. • The property was recently sold and the District received ~$23.2 million. • Staff recommends paying down two liabilities with the one- time gain – $15 million contribution towards the District’s Other Postemployment Benefit (OPEB) Trust (Retired Employees Health Insurance Benefit) – $8.2 million to reduce the outstanding commercial paper (CP) debt Contribution to OPEB Trust

• A $15 million contribution to the District’s Public Agency Retirement Services (PARS) OPEB Trust will: –Increase the funded ratio from current 34% to an estimated 80% – Reduce the Actuarially Determined Contribution (ADC) from ~$2.5 million/year to ~$1.5 million/year – Reduce the projected Replenishment Assessment by ~$3/acre-foot, – Improve the District’s balance sheet, – Assist in maintaining the District’s credit rating Contribution to OPEB Trust

• The District’s actuary – Bartel Associates, LLC recommends a funding ratio of 80% over 100% as funds in an irrevocable trust are permanently dedicated and cannot be used for other purposes • The $15 million contribution to the District's PARS OPEB Trust would be contributed at $1.5 million per month from March – December 2018 Projected ADC (Amounts in 000’s) Fiscal Year Normal Cost Amortization Full ADC if 80% Full ADC from 6/30/17 Payment (25 Years) Funded Report (34% Funded) 2019‐20 $972 $497 $1,469 $2,523 2020‐21 $977 $497 $1,474 $2,524 2021‐22 $981 $497 $1,478 $2,529 2022‐23 $985 $497 $1,482 $2,533 2023‐24 $986 $497 $1,483 $2,537 2024‐25 $990 $497 $1,487 $2,538 2025‐26 $993 $497 $1,490 $2,542 2026‐27 $999 $497 $1,496 $2,545 2027‐28 $1,005 $497 $1,502 $2,551 2028‐29 $1,012 $497 $1,509 $2,557 Paydown Outstanding Commercial Paper Debt

• The District currently has $48.9 million outstanding on it’s CP Program - $36 million taxable and $12.9 million tax-exempt • Paying down $8.2 million of the taxable CP will reduce future interest payments by ~$211,600 per year based on the most recent interest rate of 2.58% and ~$1/acre-foot on the RA • Paying down $8.2 million of CP debt increases our CP borrowing capacity from $21.1 million to $29.3 million for future needs Recommendation

Authorize the District CFO/Treasurer to contribute $15 million to the District’s PARS OPEB Trust by December 31, 2019, and paydown the outstanding taxable commercial paper debt by $8.2 million. End of Presentation 10

AGENDA ITEM SUBMITTAL

Meeting Date: February 14, 2019 Budgeted: N/A Budgeted Amount: N/A To: Administration/Finance Issues Cte. Cost Estimate: N/A Board of Directors Funding Source: N/A Program/Line Item No.: N/A From: Mike Markus General Counsel Approval: N/A Engineers/Feasibility Report: N/A Staff Contact: R. Fick /M. Ochoa CEQA Compliance: N/A

Subject: BUDGET TO ACTUAL REPORT FOR SECOND QUARTER FY 2018–19

SUMMARY

Attached is a copy of the Budget to Actual Report for the second quarter year-to-date fiscal year 2018–19. General Fund operations expenditures are $4.3 million under budget. Debt Service expense is $774,000 less than planned, Refurbishment and Replacement costs are $1.6 million less than planned and Water Purchases are $130,000 more than budget.

Attachment(s): • Attachment A – Operating Costs Budget to Actual • Attachment B – Cost Center Budget to Actual Summary • Attachment C – Cost Center Budget to Actual Details • Attachment D – Revenue Budget to Actual Summary

RECOMMENDATION

Agendize for the February 20 Board meeting: Receive and file the Budget to Actual Report for Second Quarter of Fiscal Year 2018-19 ending December 31, 2018.

BACKGROUND/ANALYSIS

Attachment A provides an overall summary of the District’s various operating costs for the second quarter. Attachment B provides a budget to actual summary of the 21 cost centers that comprise the general fund and attachment C provides the details of these 21 cost centers. The District’s revenue performance is summarized in attachment D.

General Fund

General Fund costs are $4.3 million under budget due primarily to lower costs for Water Production, Forebay Operations and Hydrogeology. Specific details on the expense categories that make up this variance can be found in the footnotes to the reports in attachments B and C.

Water Purchases

Water purchases are $130,000 more than budget. For the second quarter 2018-19, the District budgeted 32,500 acre-feet of water (six months of 65,000 acre-feet) and purchased approximately 40,345 acre-feet of MWD water. The District budgeted and plans to purchase a total of 65,000 acre-feet in fiscal year 2018-19.

Debt Service

Debt service is under budget by $774,000 due to lower than planned interest rates on variable rate debt.

Refurbishment and Replacement Fund

Refurbishment and Replacement costs are $1.6 million less than budget due primarily to the Talbert Barrier Pipeline Improvement Project and the Santiago Pipeline Repair is less than planned for the first six months.

Revenue Summary

Operating and non-operating revenues were $5.2 million more than budget for the first six months of FY18-19. This variance represents a 2.8% increase from the original annual budget as shown in attachment D. Majority of this variance is due to the Replenishment Assessment revenues being more than budget by $2.4 million ending December 31, 2018 and the District received $2.6 million for annexation fees in the first six months of the year. Budgeted pumping was 161,150 acre-feet and actual pumping was approximately 167,244 acre-feet for the period ending December 31, 2018.

PRIOR RELEVANT BOARD ACTION(S): Quarterly

2 ORANGE COUNTY WATER DISTRICT Operations Budget to Actual Report

For the Second Quarter Ending December 31, 2018 Attachment A

Budget Items Annual Budget YTD Budget YTD Actual Difference

General Fund 71,241,777 35,620,889 31,329,876 4,291,013 1 Small Equipment 272,500 136,250 153,075 (16,825)

Debt Service 36,901,837 20,056,681 19,282,476 774,204

Replacement & Refurb. 22,604,600 11,302,300 9,725,943 1,576,357 2 Water Purchases 61,574,002 30,787,001 30,916,826 (129,825)

Totals $ 192,594,716 $ 97,903,120 $ 91,408,197 $ 6,494,923

For the Second Quarter of FY 2018/19

$250,000,000

$200,000,000 $192,594,716

$150,000,000

$97,903,120 $100,000,000 $91,408,197

$50,000,000

$- Annual Budget YTD Budget YTD Actual

1.) Expenses were lower than planned in Water Production, Forebay Operations, and Hydrogeology.

2.) Talbert Barrier Pipeline Improvement Project and the Santiago Pipeline Repair is less than planned year to date.

Attachment A ORANGE COUNTY WATER DISTRICT For the Second Quarter Ending December 31, 2018 Attachment B

Dept. Dept. Revised Department Projected Annualized Headcount Headcount Original Revised YTD Variance Variance Total Annual Budget % of Annualized Variance Description Budget Actual YTD Budget YTD Budget YTD Actual (Over)/Under % Budget Total Budget Actual (Over)/Under A B C D = B-C E F G H I = F-H

GENERAL MANAGER'S OFFICE 3 3 1,256,010 1,290,585 1,248,282 42,303 3% 2,581,170 3.6% 2,496,564 84,606

PUBLIC AFFAIRS 7 7 990,252 994,252 800,325 193,927 20% 1 1,988,503 2.8% 1,600,649 387,854

INFORMATION SERVICES 10 10 1,298,325 1,298,325 1,267,144 31,181 2% 2,596,650 3.6% 2,534,287 62,363

BOARD ADMINISTRATION 3 3 597,055 597,055 457,192 139,863 23% 1,194,110 1.7% 914,384 279,727

PURCHASING 6 6 379,156 379,155 353,081 26,074 7% 758,311 1.1% 706,163 52,148

FINANCE 13 13 1,027,362 1,027,361 1,036,128 (8,766) -1% 2,054,723 2.9% 2,072,255 (17,533)

HUMAN RESOURCES 7 7 563,375 613,769 533,215 80,555 13% 1,227,539 1.7% 1,066,430 161,109

SAFETY & RISK MANAGEMENT 2 2 777,117 805,583 689,916 115,666 14% 1,611,165 2.3% 1,379,833 231,333

WATER QUALITY 12 12 973,890 973,890 935,561 38,329 4% 1,947,780 2.7% 1,871,123 76,657

LABORATORY 30 29 2,854,605 2,854,605 2,624,930 229,675 8% 5,709,210 8.0% 5,249,860 459,350

RESEARCH & DEVELOPMENT 7 5 790,952 790,951 629,805 161,146 20% 1,581,903 2.2% 1,259,610 322,293

PLANNING & WATERSHED MGMT 4 3 869,145 942,225 719,078 223,147 24% 2 1,884,449 2.6% 1,438,156 446,294

LOCAL RESOURCES 1 1 163,399 163,399 159,008 4,391 3% 326,798 0.5% 318,017 8,781

HEALTH & REGULATORY 2.5 2.5 417,333 427,413 398,970 28,443 7% 854,826 1.2% 797,939 56,887

WATER PRODUCTION 64 60 15,719,570 15,896,073 14,420,168 1,475,905 9% 3 31,792,146 44.6% 28,840,336 2,951,811

FOREBAY OPERATIONS 20 19 2,095,902 2,219,733 1,737,716 482,017 22% 4 4,439,467 6.2% 3,475,433 964,034

PRADO 3 3 361,348 366,348 230,449 135,899 37% 732,695 1.0% 460,898 271,797

PROPERTY MANAGEMENT 1 1 124,433 212,983 128,557 84,426 40% 425,966 0.6% 257,114 168,852

ENGINEERING 8 8 554,092 554,092 602,812 (48,720) -9% 1,108,185 1.6% 1,205,624 (97,439)

HYDROGEOLOGY 13.5 13.5 2,415,096 2,463,302 1,858,841 604,461 25% 5 4,926,603 6.9% 3,717,681 1,208,922 NATURAL RESOURCES 3.5 3.5 729,789 749,789 498,698 251,090 33% 6 1,499,577 2.1% 997,397 502,181 220.5 211.5 $ 34,958,199 $ 35,620,889 $ 31,329,876 $ 4,291,013 $ 71,241,777 100%$ 62,659,751 $ 8,582,026

1.) Lower than planned due to the Children Water Festival held in March 2019. 4.) Electricity charges at Forebay was less than planned. 2.) Less than planned professional services for Santa Ana River Conservation and Conjunctive Project. 5.) Professional services Legal and Engineering for South Basin Litigation was 3.) GWRS Chemicals, Electricity and the Los Alamitos Barrier O&M expenses was less than planned. less than planned. 6.) Maintenance expense for Prado Basin was less than planned year to date.

Attachment B ORANGE COUNTY WATER DISTRICT 1 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference GENERAL MANAGER'S OFFICE A B C D C - D ACTUAL REG WAGES 620,130 639,281 319,641 326,857 (7,216) ACTUAL REG OT WAGES 0 0 0 (11) 11 RETIREMENT 103,252 103,252 51,626 39,764 11,862 HEALTH INSURANCE 55,091 55,091 27,545 27,132 414 WORKERS COMP 4,155 4,155 2,077 1,468 610 PAYROLL TAXES 11,271 11,271 5,636 4,541 1,095 MEMBERSHIP 314,069 314,069 157,035 52,817 104,217 SUBSCRIPTIONS 1,000 1,000 500 0 500 SPECIAL DEPARTMENT EXPENSE 21,500 71,500 35,750 38,450 (2,700) TECH TRAINING 250 250 125 0 125 EXPENSE CONTRA 0 0 0 (985) 985 TRVL/MILEAGE/CONFERNC 18,000 18,000 9,000 11,291 (2,291) OFF EXP-GENERAL 84,500 84,500 42,250 33,249 9,001 LOGO SHIRTS 300 300 150 0 150 RENT EQP-GEN 41,000 41,000 20,500 16,540 3,960 PRF SRVCS-GEN 39,500 39,500 19,750 23,628 (3,878) PRF SRVCS-LEGAL 600,000 600,000 300,000 198,408 101,593 INTER-AGENCY AGREEMENT 597,900 597,900 298,950 475,134 (176,184) MAINT EQ-GEN 100 100 50 0 50

$ 2,512,019 $ 2,581,170 $ 1,290,585 $ 1,248,282 $ 42,303

Attachment C ORANGE COUNTY WATER DISTRICT 2 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

CHILDREN WTR FESTIVAL 225,000 225,000 112,500 0 112,500 1 CHILDREN WTR FESTIVAL-REIMBURSEMENT (80,000) (80,000) (40,000) 0 (40,000) SPECIAL DEPT EXPENSE-O.C. WTR SUMMIT 82,000 82,000 41,000 2,838 38,162 O.C. WTR SUMMIT-MWDOC COST SHARE (6,000) (6,000) (3,000) 686 (3,686) O.C. WTR SUMMIT-SPONSER REIMBURSEMENT (70,000) (70,000) (35,000) 0 (35,000) TECH TRAINING 2,000 2,000 1,000 0 1,000 MISC. EXPENSES 2,500 2,500 1,250 967 283 EXPENSE CONTRA 0 0 0 (1,275) 1,275 TRVL/MILEAGE/CONFERNC 24,500 24,500 12,250 3,835 8,415 PUB INFO TOUR 27,100 27,100 13,550 6,100 7,450 OFF EXP-GENERAL 47,500 47,500 23,750 20,560 3,190 PRF SRVCS-GEN 480,500 480,500 240,250 207,534 32,716 INTR-AGNCY AGRMNT-GWRS 74,000 74,000 37,000 22,478 14,523 MISC REIMBURSEMENT - OCSD 0 0 0 (10,697) 10,697 $ 1,980,503 $ 1,988,503 $ 994,252 $ 800,325 $ 193,927 1.) Children Water Festival held in March 2019.

Attachment C ORANGE COUNTY WATER DISTRICT 3 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference INFORMATION SERVICES A B C D C - D ACTUAL REG WAGES 1,271,194 1,271,194 635,597 643,851 (8,254) RETIREMENT 208,407 208,407 104,204 106,796 (2,593) HEALTH INSURANCE 172,891 172,891 86,445 86,540 (94) WORKERS COMP 8,517 8,517 4,259 2,919 1,340 PAYROLL TAXES 19,641 19,641 9,821 9,234 587 MEMBERSHIP 500 500 250 390 (140) TECH TRAINING 16,000 16,000 8,000 12,814 (4,814) TRVL/MILEAGE/CONFERNC 5,500 5,500 2,750 1,349 1,401 OFF EXP-GENERAL 2,000 2,000 1,000 1,857 (857) HARDWARE/SOFTWARE 289,000 289,000 144,500 102,942 41,558 VOICE COMM 175,000 175,000 87,500 109,162 (21,662) PRO SERVICE - GEN 20,000 20,000 10,000 0 10,000 MAINT EQ-GEN 408,000 408,000 204,000 189,291 14,709 $ 2,596,650 $ 2,596,650 $ 1,298,325 $ 1,267,144 $ 31,181

Original Revised Budget Budget YTD Budget YTD Actual Difference BOARD ADMINISTRATION A B C D C - D ACTUAL REG WAGES 305,934 305,934 152,967 154,730 (1,763) DIRECTOR FEES 328,320 328,320 164,160 107,262 56,898 RETIREMENT 105,604 105,604 52,802 43,072 9,730 HEALTH INSURANCE 225,466 225,466 112,733 104,124 8,609 WORKERS COMP 4,250 4,250 2,125 1,227 898 PAYROLL TAXES 9,196 9,196 4,598 3,515 1,083 LEGAL ADVERTISING 3,000 3,000 1,500 2,130 (630) ELECTION 133,000 133,000 66,500 0 66,500 MEMBERSHIP 440 440 220 580 (360) SPECIAL DEPT EXPENSE 35,000 35,000 17,500 15,226 2,274 TECH TRAINING 300 300 150 0 150 TRVL/MILEAGE/CONFERNC 26,300 26,300 13,150 15,689 (2,539) OFF EXP-GENERAL 17,300 17,300 8,650 9,637 (987) $ 1,194,110 $ 1,194,110 $ 597,055 $ 457,192 $ 139,863

Attachment C ORANGE COUNTY WATER DISTRICT 4 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference PURCHASING A B C D C - D ACTUAL REG WAGES 517,455 517,455 258,728 236,029 22,699 RETIREMENT 86,156 86,156 43,078 46,639 (3,561) HEALTH INSURANCE 104,204 104,204 52,102 46,267 5,835 WORKERS COMP 6,342 6,342 3,171 2,056 1,115 PAYROLL TAXES 7,503 7,503 3,752 3,340 412 MEMBERSHIP 500 500 250 260 (10) TECH TRAINING 500 500 250 0 250 OFF EXP-GENERAL 12,400 12,400 6,200 4,845 1,355 GAS & DIESEL 1,000 1,000 500 80 420 LOGO SHIRTS 150 150 75 0 75 SMALL TOOLS 100 100 50 0 50 INVENTORY ITEM ADJ 0 0 0 (68) 68 INVENTORY COST ADJ 0 0 0 (143) 143 INVENTORY FREIGHT 20,000 20,000 10,000 13,777 (3,777) MAIN-S&I-GEN 2,000 2,000 1,000 0 1,000 $ 758,311 $ 758,311 $ 379,155 $ 353,081 $ 26,074

Attachment C ORANGE COUNTY WATER DISTRICT 5 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference FINANCE A B C D C - D ACTUAL REG WAGES 1,436,805 1,436,805 718,403 743,722 (25,319) ACTUAL REG OT WAGES 1,388 1,388 694 305 389 RETIREMENT 234,697 234,697 117,349 119,605 (2,257) HEALTH INSURANCE 219,704 219,704 109,852 110,458 (606) WORKERS COMP 9,701 9,701 4,850 3,332 1,518 PAYROLL TAXES 22,627 22,627 11,314 11,308 5 MEMBERSHIP 3,400 3,400 1,700 1,079 621 SUBSCRIPTIONS 500 500 250 0 250 TECH TRAINING 4,000 4,000 2,000 0 2,000 TRVL/MILEAGE/CONFERNC 1,000 1,000 500 0 500 OFF EXP-GENERAL 16,000 16,000 8,000 5,348 2,652 GAS & DIESEL 4,800 4,800 2,400 2,585 (185) UNIFORM & SAFETY 200 200 100 67 33 PRF SRVCS-GEN 163,000 163,000 81,500 62,104 19,396 PURCHASE DISCOUNTS (70,000) (70,000) (35,000) (23,862) (11,138) REBATES-PURCHASING CARD (32,000) (32,000) (16,000) (7,548) (8,452) BANK CHRGS 38,400 38,400 19,200 7,623 11,577 MAINT EQ-GEN 500 500 250 0 250 $ 2,054,723 $ 2,054,723 $ 1,027,361 $ 1,036,128 $ (8,766)

Attachment C ORANGE COUNTY WATER DISTRICT 6 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference HUMAN RESOURCES A B C D C - D ACTUAL REG WAGES 625,623 681,699 340,850 327,443 13,407 ACTUAL REG OT WAGES 500 500 250 158 92 RETIREMENT 100,920 100,920 50,460 52,088 (1,628) HEALTH INSURANCE 125,394 125,394 62,697 67,577 (4,880) HEALTH INS. - RETIREE PREMIUMS 15,500 15,500 7,750 3,261 4,489 WORKERS COMP 4,194 4,194 2,097 1,540 557 TUITION REIMBURSEMENT 33,550 33,550 16,775 3,982 12,793 PAYROLL TAXES 10,319 10,319 5,160 5,033 126 MEMBERSHIP 450 450 225 105 120 SUBSCRIPTIONS 200 200 100 265 (165) SPECIAL DEPT EXPENSE 25,000 25,000 12,500 2,498 10,002 TECH TRAINING 6,000 6,000 3,000 249 2,751 TRVL/MILEAGE/CONFERNC 3,650 3,650 1,825 1,847 (22) OFF EXP-GENERAL 30,000 30,000 15,000 13,171 1,829 PRF SRVCS-GEN 70,450 74,564 37,282 24,111 13,171 TEMP WORKERS 75,000 115,600 57,800 29,887 27,914 $ 1,126,749 $ 1,227,539 $ 613,769 $ 533,215 $ 80,555

Original Revised Budget Budget YTD Budget YTD Actual Difference SAFETY & RISK MANAGEMENT A B C D C - D ACTUAL REG WAGES 265,613 265,613 132,806 134,955 (2,149) RETIREMENT 40,977 40,977 20,489 21,041 (552) HEALTH INSURANCE 50,358 50,358 25,179 25,205 (26) WORKERS COMP 2,124 2,124 1,062 742 320 PAYROLL TAXES 5,061 5,061 2,531 2,366 164 MEMBERSHIP 500 500 250 0 250 SUBSCRIPTION 5,700 5,700 2,850 1,450 1,400 SPECIAL DEPT EXPENSE 5,000 5,000 2,500 2,098 403 TECH TRAINING 47,900 47,900 23,950 12,556 11,394 SECURITY PROGRAM 429,400 434,972 217,486 132,927 84,559 TRVL/MILEAGE/CONFERNC 3,200 3,200 1,600 198 1,402 OFF EXP-GENERAL 2,700 2,700 1,350 1,872 (522) UNIFORM & SAFETY 29,500 29,500 14,750 14,186 564 SAFETY SUPPLIES 9,200 9,200 4,600 1,417 3,183 INSURANCE 639,500 639,500 319,750 302,915 16,835 INSURANCE REFUND 0 0 0 (1,225) 1,225 CLAIMS 5,000 5,000 2,500 2,200 300 PRF SRVCS-GEN 8,000 59,360 29,680 35,015 (5,335) MAINT EQ-GEN 4,500 4,500 2,250 0 2,250 $ 1,554,233 $ 1,611,165 $ 805,583 $ 689,916 $ 115,666

Attachment C ORANGE COUNTY WATER DISTRICT 7 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference WATER QUALITY A B C D C - D ACTUAL REG WAGES 1,164,051 1,164,051 582,025 594,193 (12,167) ACTUAL REG OT WAGES 12,161 12,161 6,080 2,799 3,281 RETIREMENT 195,840 195,840 97,920 99,204 (1,284) HEALTH INSURANCE 184,027 184,027 92,014 94,305 (2,291) WORKERS COMP 33,547 33,547 16,773 11,307 5,467 PAYROLL TAXES 17,054 17,054 8,527 8,453 74 SPECIAL DEPT EXPENSE 8,000 12,500 6,250 7,380 (1,130) TECH TRAINING 2,000 2,000 1,000 1,998 (998) TRVL/MILEAGE/CONFERNC 2,500 2,500 1,250 517 733 OFF EXP-GENERAL 13,500 16,500 8,250 12,532 (4,282) GAS & DIESEL 15,500 15,500 7,750 8,293 (543) UNIFORM & SAFETY 1,500 1,500 750 33 717 SMALL TOOLS 49,000 46,000 23,000 14,394 8,606 LAB SUPPLIES 4,800 4,800 2,400 3,899 (1,499) LAB SAMPLE ANALYSIS 206,800 206,800 103,400 64,673 38,727 MAINT EQ-GEN 37,500 33,000 16,500 11,584 4,916 $ 1,947,780 $ 1,947,780 $ 973,890 $ 935,561 $ 38,329

Attachment C ORANGE COUNTY WATER DISTRICT 8 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference LABORATORY A B C D C - D ACTUAL REG WAGES 3,118,599 3,118,599 1,559,300 1,466,703 92,596 ACTUAL REG OT WAGES 62,199 62,199 31,100 13,449 17,650 RETIREMENT 504,061 504,061 252,031 229,715 22,315 HEALTH INSURANCE 466,838 466,838 233,419 221,540 11,879 WORKERS COMP 41,080 41,080 20,540 12,860 7,680 PAYROLL TAXES 55,632 55,632 27,816 24,221 3,595 SUBSCRIPTIONS 200 200 100 0 100 SPECIAL DEPT EXPENSE 40,000 40,000 20,000 16,512 3,488 TECH TRAINING 5,000 5,000 2,500 2,803 (303) TRVL/MILEAGE/CONFERNC 10,000 10,000 5,000 6,599 (1,599) OFF EXP-GENERAL 17,900 17,900 8,950 9,701 (751) UNIFORM & SAFETY 3,600 3,600 1,800 4,993 (3,193) SMALL TOOLS 3,500 3,500 1,750 26 1,724 LAB SUPPLIES 860,000 860,000 430,000 390,697 39,303 LAB SAMPLE ANALYSIS 2,000 2,000 1,000 353 647 RENT EQP-GEN 1,000 1,000 500 230 270 MAINT EQ-GEN 517,600 517,600 258,800 224,527 34,273 $ 5,709,210 $ 5,709,210 $ 2,854,605 $ 2,624,930 $ 229,675

Attachment C ORANGE COUNTY WATER DISTRICT 9 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference RESEARCH & DEVELOPMENT A B C D C - D ACTUAL REG WAGES 1,023,777 1,023,777 511,889 446,667 65,221 ACTUAL REG OT WAGES 0 0 0 300 (300) RETIREMENT 155,525 155,525 77,763 65,566 12,197 HEALTH INSURANCE 123,835 123,835 61,918 42,730 19,188 WORKERS COMP 11,588 11,588 5,794 3,017 2,777 PAYROLL TAXES 20,407 20,407 10,203 7,634 2,569 MEMBERSHIP 10,625 10,625 5,313 115 5,198 SPECIAL DEPT EXPENSE 1,000 1,000 500 21 479 TRVL/MILEAGE/CONFERNC 17,400 17,400 8,700 2,014 6,686 OFF EXP-GENERAL 5,200 5,200 2,600 2,703 (103) GAS & DIESEL 1,000 1,000 500 556 (56) UNIFORM & SAFETY 0 0 0 397 (397) LAB SUPPLIES 41,450 41,450 20,725 19,067 1,658 LAB SAMPLE ANALYSIS 8,000 8,000 4,000 1,701 2,299 RENT EQP-GEN 2,700 2,700 1,350 1,408 (58) PRF SRVCS-GEN 125,000 125,000 62,500 26,600 35,900 MAINT EQ-GEN 33,395 33,395 16,698 9,309 7,388 MAINT S&I-GEN 1,000 1,000 500 0 500 $ 1,581,903 $ 1,581,903 $ 790,951 $ 629,805 $ 161,146

Attachment C ORANGE COUNTY WATER DISTRICT 10 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference PLANNING & WATERSHED MGMT A B C D C - D ACTUAL REG WAGES 676,956 676,956 338,478 307,624 30,854 RETIREMENT 109,466 109,466 54,733 52,897 1,836 HEALTH INSURANCE 77,489 77,489 38,745 36,668 2,076 WORKERS COMP 4,536 4,536 2,268 1,422 846 PAYROLL TAXES 10,742 10,742 5,371 4,569 802 MEMBERSHIP 400 400 200 675 (475) SPECIAL DEPT EXPENSE 106,400 106,400 53,200 26,754 26,446 TRVL/MILEAGE/CONFERNC 9,200 9,200 4,600 8,704 (4,104) OFF EXP-GENERAL 1,900 1,900 950 1,857 (907) GAS & DIESEL 1,000 1,000 500 343 157 UNIFORM & SAFETY 200 200 100 0 100

PRF SERVCS-GEN 740,000 886,160 443,080 277,563 165,517 1 $ 1,738,289 $ 1,884,449 $ 942,225 $ 719,078 $ 223,147

1.) Lower than planned professional services for Santa Ana River Conservation and Conjunctive Use Program.

Attachment C ORANGE COUNTY WATER DISTRICT 11 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference LOCAL RESOURCES A B C D C - D ACTUAL REG WAGES 211,308 211,308 105,654 119,466 (13,812) RETIREMENT 35,183 35,183 17,591 19,197 (1,605) HEALTH INSURANCE 22,577 22,577 11,289 11,601 (313) WORKERS COMP 1,416 1,416 708 515 193 PAYROLL TAXES 3,064 3,064 1,532 1,648 (116) MEMBERSHIP 200 200 100 0 100 TRVL/MILEAGE/CONFERNC 1,950 1,950 975 277 699 OFF EXP-GENERAL 1,100 1,100 550 157 393 PRF SERVCS-GEN 50,000 50,000 25,000 6,148 18,852 $ 326,798 $ 326,798 $ 163,399 $ 159,008 $ 4,391

Original Revised Budget Budget YTD Budget YTD Actual Difference HEALTH & REGULATORY A B C D C - D ACTUAL REG WAGES 470,358 490,519 245,260 291,288 (46,029) RETIREMENT 78,315 78,315 39,158 43,310 (4,153) HEALTH INSURANCE 59,115 59,115 29,558 28,832 726 WORKERS COMP 3,151 3,151 1,575 1,292 284 PAYROLL TAXES 7,926 7,926 3,963 4,073 (110) MEMBERSHIP 800 800 400 144 256 SUBSCRIPTION 500 500 250 0 250 SPECIAL DEPT EXPENSE 36,000 36,000 18,000 26,631 (8,631) TRVL/MILEAGE/CONFERNC 10,000 10,000 5,000 3,217 1,783 OFF EXP-GENERAL 3,500 3,500 1,750 183 1,567 PRF SRVCS-GEN 165,000 165,000 82,500 0 82,500 $ 834,665 $ 854,826 $ 427,413 $ 398,970 $ 28,443

Attachment C ORANGE COUNTY WATER DISTRICT 12 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

CHEM-CHLORINE 1,857,000 1,979,988 989,994 925,599 64,395 1

CHEM-PLYMR 35,000 35,000 17,500 14,503 2,997 1

CHEM-SLFRC ACID 301,500 321,468 160,734 127,380 33,354 1

CHEM-ANTISCALENT 700,000 700,000 350,000 257,542 92,458 1

CHEM-MF CLN CHEM 840,000 895,633 447,816 310,086 137,731 1

CHEM - GWRS RO CLEANING 211,500 219,508 109,754 59,732 50,022 1

CHEM-ALUM 6,000 6,000 3,000 5,742 (2,742) 1

CHEM-PST TREATMT HYDRATED LIME 840,000 997,576 498,788 350,201 148,587 1

CHEM-HYDROGEN PEROXIDE UV 385,000 410,498 205,249 132,754 72,495 1

CHEM-SODIUM BISULFITE 5,000 5,000 2,500 2,504 (4) 1

Attachment C ORANGE COUNTY WATER DISTRICT 13 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference B B C D C - D

CHEM - ANHYDROUS AMMONIA(TAX) 5,000 5,000 2,500 0 2,500 1 UTIL-ELEC 251,000 251,000 125,500 151,193 (25,693)

UTIL-POWER 13,139,737 13,139,737 6,569,869 6,224,072 345,796 2 UTIL-POWER-DEMAND CREDIT (1,000,000) (1,000,000) (500,000) (547,490) 47,490 UTIL-GAS 48,000 48,000 24,000 20,782 3,218 UTIL-WATER 60,000 60,000 30,000 33,247 (3,247) LADPW CURRENT EXP 810,000 810,000 405,000 241,081 163,919 MAINT-SUPPLS&MATRL-ELECTRICL 43,700 43,700 21,850 9,081 12,769 MAINT - SUPPLS&MATERIAL 248,450 248,450 124,225 136,968 (12,743) MAINT EQ-COMM 3,000 9,000 4,500 7,351 (2,851) MAINT EQ-CARTS 13,000 13,000 6,500 4,560 1,940 MAINT EQ-VEH 47,000 47,000 23,500 18,274 5,226 MAINT EQ-HEAVY 5,000 5,000 2,500 2,343 157 MAINT S&I-OUTSIDE SVC 650,000 650,000 325,000 281,361 43,639 MAINT S&I-MICROFILTRATION 159,300 159,300 79,650 57,862 21,788 MAINT S&I-REV OSMOS 180,700 180,700 90,350 33,739 56,612 MAINT S&I-GAP 49,500 49,500 24,750 13,666 11,084 MAINT S&I- INJECT 319,600 319,600 159,800 228,925 (69,125) MAINT S&I-UV 653,500 653,500 326,750 290,392 36,358 MAINT-INFLNT PMP STN 4,000 4,000 2,000 1,056 944 MAINT-SNT ANA RES 5,000 5,000 2,500 0 2,500 MAIN-S&I-SCREENINGS 20,000 20,000 10,000 4,424 5,576 MAIN-S&I-LIME SYSTEM 41,000 41,000 20,500 11,460 9,040 MAIN-S&I-PRODUCT WATR PUMP STN 31,500 31,500 15,750 2,890 12,860 $ 31,439,139 $ 31,792,146 $ 15,896,073 $ 14,420,168 $ 1,475,905

1.) Lower Chemical expenses than planned for GWRS.

2.) Lower than planned Electricity expenses for GWRS.

Attachment C ORANGE COUNTY WATER DISTRICT 14 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference FOREBAY OPERATIONS A B C D C - D ACTUAL REG WAGES 1,753,237 1,907,143 953,572 865,083 88,489 ACTUAL REG OT WAGES 148,488 148,488 74,244 15,242 59,002 RETIREMENT 316,637 342,262 171,131 150,593 20,538 HEALTH INSURANCE 329,207 354,644 177,322 168,840 8,482 WORKERS COMP 63,769 69,233 34,616 21,151 13,466 PAYROLL TAXES 27,575 29,807 14,903 12,719 2,184 MEMBERSHIP 590 590 295 441 (146) SPECIAL DEPT EXPENSE 4,500 4,500 2,250 4,665 (2,415) TECH TRAINING 8,750 8,750 4,375 3,746 629 TRAVEL 0 0 0 513 (513) OFF EXP-GENERAL 7,250 7,250 3,625 1,897 1,728 GAS & DIESEL 28,000 28,000 14,000 15,850 (1,850) FUEL - OFF ROAD 60,000 60,000 30,000 21,270 8,730 UNIFORM & SAFETY 10,000 10,000 5,000 5,028 (28) LOGO SHIRTS 800 800 400 0 400 SMALL TOOLS 13,000 13,000 6,500 473 6,027 SAFETY SUPPLIES 5,000 5,000 2,500 11,199 (8,699) RENT EQP-GEN 1,000 1,000 500 0 500 RENT EQP-HEAVY 6,000 6,000 3,000 3,003 (3) PRO SERVICE-GEN 2,500 2,500 1,250 3,450 (2,200) TEMP LABOR 0 35,000 17,500 0 17,500 CHEM-PESTI 1,000 1,000 500 0 500 UTIL-ELEC 870,000 870,000 435,000 202,932 232,068 1 UTIL-WATER 27,500 27,500 13,750 19,304 (5,554) MAINT EQ-GEN 5,000 5,000 2,500 235 2,265 MAINT EQ-COMM 3,000 3,000 1,500 0 1,500 MAINT EQ-VEH 30,000 30,000 15,000 19,141 (4,141) MAINT EQ-HEAVY 85,000 85,000 42,500 31,978 10,522 MAINT S&I-GEN 384,000 384,000 192,000 158,963 33,037 $ 4,191,803 $ 4,439,467 $ 2,219,733 $ 1,737,716 $ 482,017

1.) Lower Electricity expenses than planned due to less movement of water.

Attachment C ORANGE COUNTY WATER DISTRICT 15 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference PRADO A B C D C - D ACTUAL REG WAGES 345,763 345,763 172,881 94,956 77,926 ACTUAL REG OT WAGES 16,042 16,042 8,021 0 8,021 RETIREMENT 60,240 60,240 30,120 15,652 14,468 HEALTH INSURANCE 56,222 56,222 28,111 19,762 8,349 WORKERS COMP 12,181 12,181 6,091 2,253 3,837 PAYROLL TAXES 5,247 5,247 2,624 1,312 1,312 TECH TRAINING 250 250 125 0 125 MISC EXPENSE 500 500 250 0 250 OFF EXP-GENERAL 3,500 3,500 1,750 312 1,438 GAS & DIESEL 3,500 3,500 1,750 1,970 (220) FUEL - OFF ROAD 20,000 20,000 10,000 17,987 (7,987) UNIFORM & SAFETY 3,500 3,500 1,750 1,892 (142) LOGO SHIRTS 250 250 125 0 125 SMALL TOOLS 1,000 1,000 500 327 173 SAFETY SUPPLIES 500 500 250 48 202 RENT EQP-GEN 500 500 250 0 250 RENT EQP-HEAVY 40,000 40,000 20,000 0 20,000 TEMP LABOR 0 10,000 5,000 0 5,000 SECURITY 2,000 2,000 1,000 0 1,000 CHEM-FLOC 1,000 1,000 500 0 500 UTIL-ELEC 12,000 12,000 6,000 4,864 1,136 MAINT EQ-GEN 1,500 0 0 1,172 (1,172) MAINT EQ-VEH 3,500 5,000 2,500 1,518 982 MAINT EQ-HEAVY 25,000 25,000 12,500 10,537 1,963 MAINT S&I-GEN 108,500 108,500 54,250 55,887 (1,636) $ 722,695 $ 732,695 $ 366,348 $ 230,449 $ 135,899

Attachment C ORANGE COUNTY WATER DISTRICT 16 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference PROPERTY MANAGEMENT A B C D C - D ACTUAL REG WAGES 88,473 88,473 44,237 26,968 17,269 RETIREMENT 14,731 14,731 7,365 3,715 3,651 HEALTH INSURANCE 12,740 12,740 6,370 1,970 4,400 WORKERS COMP 593 593 296 90 207 PAYROLL TAXES 1,283 1,283 641 384 258 MEMBERSHIP 270 270 135 0 135 SPECIAL DEPT EXPENSE 200 200 100 0 100 LICENSES & PERMITS 68,126 195,226 97,613 35,742 61,871 OFF EXP-GENERAL 500 500 250 0 250 GAS & DIESEL 250 250 125 0 125 PRF SRVCS-GEN 3,700 53,700 26,850 2,500 24,350 TAXES & ASSESMENTS 57,500 57,500 28,750 57,189 (28,439) MAINT S&I-GEN 500 500 250 0 250 $ 248,866 $ 425,966 $ 212,983 $ 128,557 $ 84,426

Original Revised Budget Budget YTD Budget YTD Actual Difference ENGINEERING A B C D C - D ACTUAL REG WAGES 1,015,553 1,015,553 507,777 570,568 (62,792) ACTUAL REG OT WAGES 3,000 3,000 1,500 0 1,500 CAPITALIZED SALARIES (271,908) (271,908) (135,954) (125,606) (10,348) RETIREMENT 166,343 166,343 83,171 92,511 (9,339) HEALTH INSURANCE 144,231 144,231 72,115 82,402 (10,286) WORKERS COMP 8,095 8,095 4,048 4,237 (189) PAYROLL TAXES 15,978 15,978 7,989 8,691 (702) CAPITALIZED BENEFITS (88,307) (88,307) (44,154) (44,443) 290 MEMBERSHIP 1,000 1,000 500 405 95 SUBSCRIPTIONS 5,100 5,100 2,550 900 1,650 TECH TRAINING 2,000 2,000 1,000 0 1,000 TRVL/MILEAGE/CONFERNC 5,000 5,000 2,500 3,300 (799) OFF EXP-GENERAL 7,900 7,900 3,950 2,252 1,698 GAS & DIESEL 3,500 3,500 1,750 1,073 677 LOGO SHIRTS 700 700 350 532 (182) PRF SRVCS-ENG 90,000 90,000 45,000 5,991 39,009 $ 1,108,185 $ 1,108,185 $ 554,092 $ 602,812 $ (48,720)

Attachment C ORANGE COUNTY WATER DISTRICT 17 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

Original Revised Budget Budget YTD Budget YTD Actual Difference HYDROGEOLOGY A B C D C - D ACTUAL REG WAGES 1,660,445 1,660,445 830,223 847,551 (17,329) ACTUAL REG OT WAGES 12,163 12,163 6,082 5,024 1,057 CAPITALIZED SALARIES (98,772) (98,772) (49,386) (43,559) (5,827) RETIREMENT 270,697 270,697 135,348 130,384 4,964 HEALTH INSURANCE 240,669 240,669 120,335 111,936 8,398 WORKERS COMP 25,600 25,600 12,800 8,171 4,629 PAYROLL TAXES 27,154 27,154 13,577 12,927 650 CAPITALIZED BENEFITS (34,665) (34,665) (17,333) (15,249) (2,083) MEMBERSHIP 1,500 1,500 750 1,180 (430) SPECIAL DEPT EXPENSE 271,000 271,000 135,500 150,299 (14,799) TECH TRAINING 2,500 2,500 1,250 525 725 TRVL/MILEAGE/CONFERNC 4,000 4,000 2,000 1,944 56 OFF EXP-GENERAL 12,000 12,000 6,000 6,303 (303) GAS & DIESEL 6,000 6,000 3,000 3,877 (877) UNIFORM & SAFETY 200 200 100 0 100 LOGO SHIRTS 100 100 50 0 50 SMALL TOOLS 14,000 14,000 7,000 1,456 5,544 LAB SUPPLIES 100 100 50 90 (40)

PRF SRVCS-LEGAL 1,310,000 1,310,000 655,000 414,601 240,399 1

PRF SRVCS-ENG 936,500 1,032,912 516,456 212,679 303,777 1 MAINT EQ-GEN 22,000 22,000 11,000 8,275 2,725 MAINT S&I-GEN 147,000 147,000 73,500 426 73,074 DEPARTMENT GRAND TOTAL $ 4,830,191 $ 4,926,603 $ 2,463,302 $ 1,858,841 $ 604,461

1.) Less than planned expense for profestional services and legal expenses for South Basin litigation.

Attachment C ORANGE COUNTY WATER DISTRICT 18 General Fund ( Cost Center ) Budgets For the Second Quarter Ending December 31, 2018 Attachment C

PRF SRVCS-GEN 360,000 400,000 200,000 79,199 120,801 1 SAWA REIMBURSEMENT (123,097) (123,097) (61,548) (44,417) (17,131) TEMP WORKERS 75,000 75,000 37,500 24,231 13,269 CHEM-FLOC 5,000 5,000 2,500 4,002 (1,501) INTER-AGENCY AGREEMENT 15,000 15,000 7,500 0 7,500 MAINT EQ-GEN 1,000 1,000 500 294 206 MAINT EQ-VEH 5,000 5,000 2,500 266 2,234 MAINT EQ-HEAVY 3,000 3,000 1,500 232 1,268

MAINT S&I-GEN 400,000 400,000 200,000 83,995 116,005 2 $ 1,459,577 $ 1,499,577 $ 749,789 $ 498,698 $ 251,090 1.) Lower than planned professional expense for mointoring of Prado Basin. 2.) Expenses for maintenance expenses of Prado Basin were lower than planned.

Grand Totals $ 69,916,401 $ 71,241,777 $ 35,620,889 $ 31,329,876 $ 4,291,013

Attachment C ORANGE COUNTY WATER DISTRICT ATTACHMENT D OPERATING BUDGET TO ACTUAL FOR THE SECOND QUARTER ENDING DECEMBER 31, 2018

Variance Revenue Sources Annual Budget YTD Budget YTD Actual (Over)/Under Replenishment Assessment (Including In-Lieu RA) $ 148,687,347 $ 74,343,674 $ 76,794,703 $ (2,451,029) 1 In-Lieu (Energy) $ - $ - $ - $ - Basin Equity Assessment$ 1,750,000 $ 875,000 $ 875,000 $ - Property Taxes$ 25,400,000 $ 12,700,000 $ 12,913,277 $ (213,277) Facility Revenue (GAP & LRP)$ 9,392,280 $ 4,696,140 $ 5,084,343 $ (388,203) Notes Receivable$ 457,778 $ 228,889 $ 13,065 $ 215,824 Investment Revenue$ 1,500,000 $ 750,000 $ 1,572,289 $ (822,289) Rent & Others$ 3,800,000 $ 1,900,000 $ 3,493,527 $ (1,593,527) 2 $ 190,987,405 $ 95,493,703 $ 100,746,204 $ (5,252,501)

1.) Replenishment Assessments were more than planned for the six months. Actual pumping is 167,244 acre-feet and budget is 161,150 acre-feet for the period ending December 31, 2018.

2.) The District received $2.6 million for annexation fees in the first six months.

1/23/2019 11:41 AM ORANGE COUNTY WATER DISTRICT Operations Budget to Actual Report

For the Second Quarter Ending December 31, 2018 Attachment A

Budget Items Annual Budget YTD Budget YTD Actual Difference

General Fund 71,241,777 35,620,889 31,329,876 4,291,013 Small Equipment 272,500 136,250 153,075 (16,825)

Debt Service 36,901,837 20,056,681 19,282,476 774,204

Replacement & Refurb. 22,604,600 11,302,300 9,725,943 1,576,357 Water Purchases 61,574,002 30,787,001 30,916,826 (129,825)