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  1. 1. Making Everyday Possible Orange County Sanitation District 2005/06 Annual Report
  2. 2. Table of ContentsLetter from the General Manager 1Caring for your Neighborhood 3Protecting your Environment 7Serving your Business 11Looking to the Future 15OCSD Financial Results 18Looking Ahead 21OCSD Board of Directors 22
  3. 3. Letter from the General ManagerThe Orange County Sanitation District has spent the past 50 years making everyday possible by protectingthe health and the environment of the people we serve. This year, with the support and leadership of the Boardof Directors, we added to an impressive list of accomplishments.■ We were awarded the prestigious 2005 Governor’s Environmental and Economic Leadership Award in Ecosystem and Watershed Management.■ We celebrated the completion of the first of seven major milestones when our massive trickling filters began operations as part of our commitment to move to full secondary treatment by 2012.■ Through our creative resourcefulness, staff implemented 67 new proposals resulting in savings of $10 million.We also reaffirmed our $2.4 billion capital improvement program and reduced the proposed capitalimprovement budget by $490 million by deferring, rescoping or eliminating various projects. This changeallowed us to reduce next year’s proposed sewer rate increase from 20 percent to 9.8 percent.We’re proud of these and many other accomplishments because we strive every day to work in the best interestsof the community while continuing to maintain our fiduciary responsibility.Our future offers many challenges, but that’s what brings out the best in us. There’s no question the SanitationDistrict can and will meet those challenges. We’ll continue to focus on protecting the environment, researchingnew technologies, looking for ways to increase productivity and investing in our work force to prepare themfor what lies ahead.Combined, these efforts will allow us to play an important role in making every day possible for the peopleof Orange County. James D. Ruth General Manager, Orange County Sanitation District OCSD - Making Everyday Possible 1
  4. 4. Caring for“ There have been lots of changes in Orange County over the years and although things here are bigger and more complicated than it used to be, we still wouldn’t want to live anywhere else. There’s always something to do all the time, every single day of the year. That makes this a great place to be for people like us and our family. ” Larry and Margaret Murphey Fountain Valley
  5. 5. your Neighborhood OCSD - Making Everyday Possible 3
  6. 6. Working for you every single day Every single day, much of what we do goes by with little fanfare. But without fail, we work hard to protect the lives and lifestyles of the 2.5 million people we’re charged with serving. Quite simply, we do that by treating about 240 million gallons of wastewater – enough to fill Anaheim Stadium three times – every day. Nearly 80 percent of that water comes from homes – sinks, toilets, showers, laundry and dishwashers. The rest comes from businesses, retail stores, hotels, offices, restaurants, manufacturers and other industries.“ What we do is real important for everybody who lives in the areas that we take care of. Things would not be as nice as they are if we didn’t do the best job we could all the time. That’s why I take pride in my work, knowing that I’m helping make the lives of other people better every day. Ray Navarro ” OCSD Maintenance Worker
  7. 7. For over 50 years, we’ve made We work hard, we work smart and we’re efficient in whatsure this essential system works we do. We reclaim up to 10 million gallons of treated24 hours a day, seven days water every day, which is ultimately used for landscapea week. That’s no small task, irrigation and injection into the seawater intrusion barrier.considering we safely collect, We operate our own central power plant that generatestreat and dispose of wastewater more than 14,000 kilowatts of energy every day fromfrom 470 square miles in central burning natural gas and methane gas. We also recycleand northwestern Orange County. It’s a big job covering more than 230,000 tons of biosolids every year fora big area, making us the third largest wastewater agency agricultural uses.west of the Mississippi River. Our rate payers benefit from the efforts of our Board andOur 644 employees maintain a complex system of pipes, staff. Residential user fees average less than $14 perpumps stations and processing facilities so that people month, one of the lowest rates in the state. That is quite ancan go about living, working and playing without giving accomplishment since the average Californian spendsus more than a passing thought. But the reality is that more than double that amount for sewer service. In short,Orange County’s sewer system is a multi-billion dollar we have dedicatedpublic investment that must be constantly monitored to ourselves to taking carepreserve the public’s health and the quality of life. We of you every single day,oversee a large and diverse network of facilities including doing our part in making581 miles of pipelines, 16 pumping stations, treatment everyday possible forplants in Fountain Valley and Huntington Beach and a the people we serve.58-foot ocean monitoring boat out of Newport Harbor. OCSD - Making Everyday Possible 5
  8. 8. Protecting“ I love going out to the beach whether its for a long quiet walk, or to do some sketching or to just play in the surf. For me the beach is one of the most beautiful, natural advantages about living in Orange County and that’s why I try to come here ” as often as I can. Yuri Campbell Newport Beach
  9. 9. your Environment OCSD - Making Everyday Possible 7
  10. 10. Reaching out to the community We think the best way to protect our environment is by partnering with other agencies and the public to keep Orange County clean and safe. Our employees actively work at forming strong coalitions for the sole purpose of ensuring our beaches, ocean waters and wildlife are protected. For more than 30 years, we’ve partnered with the United States Environmental Protection Agency and the California Regional Water Quality Control Board in an extensive ocean monitoring program. Our ocean monitoring vessel, the 58-foot Nerissa, crisscrosses 35 square miles of ocean“ The environmental protection work we do must be complemented by teaching others to protect the environment as well. Taking care of special places like our beaches and the oceans at our back door is a big job and we can’t do it alone. The more people get involved, the easier it is to preserve and protect a place we all call home. ” Jeff Armstrong OCSD Senior Scientist
  11. 11. along 11 miles of coastline, from Seal Beach to Corona information cards wereDel Mar. Sampling locations include 17 shoreline distributed to pharmacies.water quality stations, 17 offshore water quality stations, We also contacted 30049 stations to assess bottom-dwelling organisms and home-owner associations,sediment chemistry, and nine trawl stations to evaluate and worked with thefish and macro-invertebrate communities. media to raise awareness about this growing environmental concern.We participate in special regional studies that cover amuch broader area ranging from Point Conception, Another way we educated the public was through thewest of Santa Barbara, to Mexico. We also work closely creation of our Fats, Oils and Grease Program, becausewith the University of Southern California Sea Grant one of the largest causes of beach closures are sewerProgram, Scripps Institution of Oceanography, the overflows caused by fats, oils and grease.University of California, Los Angeles and other universities. We also think it’s important for the public to understandPublic education is a critical part of our outreach efforts. the importance of wastewater treatment in protectingBy educating the public, they help us by becoming public health and the environment. To accomplish this,ambassadors for cleaner air, land and water. With that we conducted 70 tours of our treatment plant facilities forin mind, this year we launched close to 1,000 people over the past year. More thana pharmaceutical outreach 70 employees also volunteered 635 hours of communityprogram called “No Drugs service by participating in speaking engagements andDown the Drain” to teach working on events such as Earth Day, Arbor Day andpeople the right way to dispose the Children’s Water Festival.of their prescriptions andmedications. Almost one million OCSD - Making Everyday Possible 9
  12. 12. Serving“ Orange County is a great place to own a restaurant because the opportunities for success are everywhere. Part of that success comes from wanting to do your part for the community by taking the right steps to ensure this is a better place for all of us at the end of the day. So we appreciate the checks, the balances and safeguards put in place to protect our families, our homes and our businesses. ” Zov Karamardian Owner, Zov’s Bistro, Tustin
  13. 13. your Business OCSD - Making Everyday Possible 11
  14. 14. Our scientific approach protects the public A big part of our job at OCSD is protecting the public’s health by closely monitoring treatment processes at our plants and working with businesses to prevent problems before they occur. Our award-winning source control program closely regulates the amount of toxic pollutants that can enter the sewer by issuing permits to businesses to ensure that pollutants are eliminated or significantly reduced in the sewer system. Businesses that“ We are always working towards finding better ways to balance protection of public health with the business needs and the lifestyles of the people of Orange County. Two of our current goals include developing ways to test for previously undetectable levels of contaminants in recycled water, and same-day bacteria testing methods for beach water. Charlie McGee ” OCSD Lab Supervisor
  15. 15. release wastewater into our six miles offshore. We also test ocean sediments to assesssewers must meet strict bottom-dwelling organisms and sediment chemistry. Theregulations and are routinely combined analysis from these samplings gives us a clearsampled and inspected. If picture of the health of the ocean on a daily basis andviolations occur, the District helps us protect people and marine life from potentialresponds swiftly with warnings, harmful situations.fines and criminal charges. Research projects are currently under way to improve ourAn integral part of our compliance and monitoring efforts operations by identifying new or different processes orare centered around OCSD’s state-of-the-art Environmental equipment that can be used. For example, laboratorySciences Laboratory. It is staffed by highly qualified and processing methods currently require 24 hours to complete.experienced professionals to ensure businesses meet all During this time, swimmers may be exposed to poorregulations for water quality as well as monitoring OCSD’s water quality, placing their health in jeopardy. To alleviateair emissions and the processing of biosolids. that, OCSD is working with the Southern California Coastal Water ResearchEach year, our lab analyzes more than 100,000 samples, Project Authority totesting for bacteria and over 100 other compounds that develop new, more rapidcan be harmful to people and the environment. That assessment methods thatmeans we can guarantee only highly treated wastewater would allow for same-dayis released through our 200 foot deep, five mile long water quality warnings.ocean pipeline.As part of our compliance and testing efforts, we alsotake samples from the ocean at 17 sites extending up to OCSD - Making Everyday Possible 13
  16. 16. Looking“ Clean air, nice beaches and parks, and lots of outdoor activities all year round. Those are some important reasons why we live in Orange County. It’s very important to my husband and I that this area stays that way for my children as they grow up. We care deeply that everything possible is being done to ensure that they’ll have a healthy place to call home for many years to come. ” Erin and Mathew Baxter La Habra
  17. 17. to the Future OCSD - Making Everyday Possible 15
  18. 18. Making tomorrow possible Our commitment to preserve a healthy way of life for the people of Orange County extends well into the future with an aggressive, ongoing series of capital improvements, programs and partnerships. More than $2.4 billion in projects are already being built or in the planning stages over the next several years as part of our Capital Improvement Program. This includes almost 140 projects at both of our treatment plants, 16 pump stations and 44 large sewer trunklines. We also have a number of cooperative projects underway to help local cities upgrade their sewers.“ My children are my world and their future means everything to me. That brings special meaning to my work because I make sure emissions we’re releasing from generators are within health and safety standards. By doing my job, I’m doing my part to make sure my children grow up in a clean and healthy environment, and that keeps me motivated to do my job well every day. Chloe Dao ” OCSD Engineer
  19. 19. During the past year alone, we completed 16 capital agreement with fourimprovement projects and laid 20,000 feet of new 5-year options calls forpipe. These accomplishments were highlighted by the OCSD to supply EnerTechcommissioning of a new trickling filter facility, the first in with 200 daily tons ofa series of milestone events as part of the district’s move biosolids that will beto full secondary treatment. recycled into a high-grade renewable fuel to augment a nearby cement plant’sAnother important project that will protect our future is power supply. Ash from the fuel will be used as a cementin the final phases of construction. The Groundwater additive resulting in zero solid waste. EnerTech is buildingReplenishment System, a jointly funded project of OCSD a facility in Rialto, and they expect to begin convertingand the Orange County Water District, is slated to begin biosolids to fuel by early 2008.operation in Fall 2007. It will produce 70 million gallonsof purified water every day and return it to the Orange Complementing this new energy efficient effort is ourCounty Groundwater Basin, either by injection along the ongoing program of generating electric power from gasescoast to protect the basin from seawater intrusion, or by produced by the wastewater treatment process. Recyclingpercolation in ponds in Anaheim. As a result, Orange captured methane generates more than 14,000 kilowattsCounty will have a quality, reliable, local water supply of energy daily, roughly the equivalent of enough powerfor decades to come. to supply the needs of a city the size of Brea or Cypress. Instead, we use this power to run our central generationOur ability to effectively protect power plants. This year, OCSD saved $8.3 million inthe region’s environment well into power that would otherwise have to be purchased fromthe future was also strengthened Southern California the creation of a partnershipwith EnerTech Environmental, Inc.this past year. The 10 year OCSD - Making Everyday Possible 17
  20. 20. OCSD Financial Results ■ The Capital Improvement Program (CIP) is a series of large construction improvements in progress or planned over the next several years that will allow the District to provide an appropriate level of service to our rate payers. The CIP provides for the management and implementation of these improvements. The outlay for the CIP in FY 2005-06 was $260.8 million. ■ Debt Service is the cost of repaying long-term debt. Long-term debt financing allows the District to complete large multi-year capital projects by providing funds not always immediately available. The outlay for debt service in FY 2005-06 was $41.9 million. ■ Operating Expenses allocates resources to operate, maintain and manage our sewage collection, treatment and disposal system and any associated administrative or technical requirements. Operating expenses for FY 2005-06 were $109.7 million. ■ Intradistrict Transfers are expenditures related to other affiliated agencies. Intradistrict Transfers for FY 2005-06 were $9.3 million. ■ The District’s “AA” Rating is one of the highest for a government agency. To maintain this rating, the District adheres to its 2001 Debt Policy and coverage ratios requirements. This Board-adopted policy serves as a guide in the management of existing debts and in the issuance of future debt.18 Making Everyday Possible - OCSD
  21. 21. Where the money comes from Where the money goes Other $4.3M >1% Debt Proceeds CIP $200M $260.8M 22% 29% InterestBeginning $10.4M EndingDesignated 1% Designated Reserves Reserves $472M Property Tax $490M 52% $40M Debt 53% 4% $41.9M 5% Fees Operating $185M 20% $109.7M Intradistrict 12% $9.3M 1% OCSD - Making Everyday Possible 19
  22. 22. OCSD Financial Results (continued) In FY 2005-06, total revenues increased $41.5 million, or a 22.7 percent increase over the prior year, primarily due to the $33.4 million in service charges. District total expenses increased $18.6 million, or 10.6 percent primarily due to increases of $7.5 million in depreciation, $7.3 million in non-operating expense, and $3.8 million in operating expenses. The increase in depreciation is due to the recent completion of $141.9 million in construction project assets that have entered their first year of depreciation. Operating expenses alone have increased only 3.7 percent over the prior year. Net assets increased $47.9 million, or 4.6 percent, to $1,089 million in FY 2005-06 over the prior year. Net capital assets increased $189.5 million, or 16.1 percent, due primarily to the continuing Capital Improvement Program that includes construction of the Groundwater Replenishment System. The Groundwater Replenishment System project continued to move forward with an estimated commissioning slated for Fall 2007. This joint project with the Orange County Water District will be the largest water reclamation project in the nation and divert up to 70 million gallons of water a day from the District’s ocean discharge during peak winter storms. The District has budgeted $248.6 million for this project through FY 2007-08. Through FY 2005-06, $150.9 million had been incurred including an additional $83.7 million in outlays for FY 2005-06. Long-term liabilities increased $186.4 million, or 30.6 percent due to the issuance of $200 million in bonded debt to assist in the financing of the District’s 10-year $2.4 billion Capital Improvement Program.20 Making Everyday Possible - OCSD
  23. 23. Looking AheadIn June 2006, the Board of Directors approved the District’s FY 2006-07 operating and capital improvementbudget at $545.1 million, or a 19.5 percent increase over the prior year. This overall increase is comprisedof a $6.5 million, or 5.1 percent increase in the operating budget, an $11.1 million, or 20.3 percentincrease in debt service requirements, and a $70.9 million, or 26.2 percent increase in cash outlays forconstruction projects.The increases in both debt service and CIP outlays is related to the completion of the District’s $2.4 billionCapital Improvement Program including the Board’s mandate to meet secondary treatment standards byDecember 31, 2012. Increases in the operating budget consist of the following:■ Salaries and Benefits, $4.8 Million – Costs will increase $1.8 million as a result of existing collective bargaining agreement impacts, including health and welfare increases. The other significant impact is a $2.4 million, or 25 percent increase in retirement premiums. Our rising retirement premiums are consistent with increased costs throughout California.■ Operating Materials and Supplies, $1.4 Million – As the requirement for better quality effluent increases, so does the need for chemicals (primarily bleach) to treat the region’s wastewater. These chemical increases reflect price increases of 34 percent partially offset by staff’s optimization of treatment facilities.■ Repairs & Maintenance, $2.2 Million – Various repairs at the OCSD operation plants, including diffuser replacement and digester cleaning, will increase the repairs and maintenance budget.■ Contractual Services, $2.9 Million – The major component of this category are biosolids removal and transportation costs. These costs continue to increase as acceptable locations for biosolids disposal become less accessible.■ Utilities, $2.7 Million – Despite reductions by using natural gas, total utilities costs will increase due to rising electricity costs. OCSD - Making Everyday Possible 21
  24. 24. OCSD Board of Directors Fiscal Year 2005-06 Steve Anderson Don Bankhead Charles Antos Chair, Board of Directors City of Fullerton City of Seal Beach City of La Habra Bill Dalton David Shawver James M. Ferryman City of Garden Grove City of Stanton Vice Chair, Board of Directors Dave Sullivan Doug Davert Costa Mesa Sanitary District City of Huntington Beach City of Tustin Harry Sidhu Sukhee Kang Rich Freschi City of Anaheim City of Irvine City of Westminster Roy Moore Mark Waldman Michael Duvall City of Brea City of La Palma City of Yorba Linda Patsy Marshall Ken Parker Joy L. Neugebauer City of Buena Park City of Los Alamitos Midway City Sanitation District Phil Luebben Tod Ridgeway Darryl Miller City of Cypress City of Newport Beach Irvine Ranch Water District Larry Crandall Carolyn Cavecche James Silva City of Fountain Valley City of Orange Orange County Board of Supervisors Norman Z. Eckenrode City of Placentia Alberta Christy City of Santa Ana22 Making Everyday Possible - OCSD
  25. 25. District Officials James D. Ruth General Manager Dr. Robert P. Ghirelli Assistant General Manager Nicholas J. Arhontes Director of Operations and Maintenance James D. Herberg Director of Engineering Edward M. Torres Director of Technical Services Lorenzo Tyner Director of Finance and Administrative ServicesOrange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 962-2411