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BUDGET AND FINANCE AGENDA 06-03-13
Jl Central Contra Costa Sanitary District SPECIAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT BUDGET AND FINANCE COMMITTEE Member Nejedly Member Pilecki (Alternate) Monday, June 3, 2013 3:00 p.m. Middle Conference Room 1470 Enea Circle, Second Floor Concord, California INFORMATION FOR THE PUBLIC ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA BOARD OF DIRECTORS: JAMES A. NEJEDLY President DA V7D R. 97LLIAMS President Pro Tem PA UL H. CA USEY MICHAEL R. MCGILL TAD J. PILECKI PHONE: (925) 228 -9500 FAX.- (925) 676 -7211 www.centralsan.org Anyone wishing to address the Committee on an item listed on the agenda will be heard when the Committee Chair calls for comments from the audience. The Chair may specify the number of minutes each person will be permitted to speak based on the number of persons wishing to speak and the time available. After the public has commented, the item is closed to further public comment and brought to the Committee for discussion. There is no further comment permitted from the audience unless invited by the Committee. ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA In accordance with state law, the Committee is prohibited from discussing items not calendared on the agenda. You may address the Committee on any items not listed on the agenda, and which are within its jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be referred to staff for action or calendared on a future agenda. AGENDA REPORTS Supporting materials on Committee agenda items are available for public review at the Reception Desk, 4849 Imhoff Place, Martinez, and on the District's website at www.centralsan.org. Not every agenda item is accompanied by written supporting material. Reports and information relating to agenda items distributed within 72 hours of the meeting to a majority of the Committee are also available for public inspection at the Reception Desk. During the meeting, information and supporting materials are available in the meeting room. AMERICANS WITH DISABILITIES ACT In accordance with the Americans With Disabilities Act and state law, it is the policy of the Central Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require special accommodations to participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925) 229 -7303. Budget and Finance Committee June 3, 2013 Page 2 Call Meeting to Order 2. Public Comments *3. Discuss with Andrew Brown of HighMark Capital Management and Mitch Barker of Public Agency Retirement Services (PARS) the report from Schultz Collins Lawson and Chambers Investment Counsel regarding the District's Governmental Accounting Standards Board (GASB) 45 Other Post - Employment Benefits (OPEB) PARS Trust Staff Recommendation: Discuss the report and provide input if needed. *4. Old Business a. Review staff's response to the Committee's request for information regarding the following expenditures at a previous meeting: Check Date Amount Vendor #194930 4125113 $4,351.32 Thermo Environmental Inst Staff Recommendation: Review staff's response. 5. Risk Management *a. Review Loss Control Report and discuss outstanding claims Staff Recommendation: Review the report, discuss outstanding claims and provide direction if needed. 6. Review Position Paper authorizing the General Manager to execute an agreement for installment payment of capacity fees for Oyama Sushi (restaurant) located at 1519 N. Main Street in Walnut Creek for a period not to exceed two years (Item 8.a. in Board Binder) Staff Recommendation: Review and recommend Board authorization. 7. Review Position Paper conducting a hearing to consider an appeal by Mr. Richard Price of the staff decision to assess a capacity fee and related fees and charges for his property located at 4221 Blackhawk Meadow Court in Danville (APN 220 - 230 -021) (Item 8.b. in Board Binder) Staff Recommendation: Review Position Paper and recommend that the Board deny the appeal. Budget and Finance Committee June 3, 2013 Page 3 *8. Update on Installment Payment of Capacity Fees Staff Recommendation: Receive the update and provide input if needed. 9. Discuss presentation ideas for the June 20, 2013 public hearings to consider 1) adopting FY 2013 -14 Operations and Maintenance (O &M), Debt Service Fund and Self- Insurance Fund Budgets; 2) establishing FY 2013 -14 (and FY 2014 -15) Sewer Service Charge (SSC) rates; and 3) adopting FY 2013 -14 Capital Improvement Budget (CIB) and 2013 Ten -Year Capital Improvement Plan (CIP) Staff Recommendation: Discuss and provide input to staff. 10. Review April 2013 Financial Statements and Investment Reports (Item 4.c. in Board Binder) Staff Recommendation: Review and recommend Board approval. 11. Expenditures a. Review Expenditures (Item 4.b. in Board Binder) Staff Recommendation: Review and recommend Board approval. *b. Review Legal Expenditure Summary Staff Recommendation: Review Legal Expenditure Summary. 12. Announcements 13. Suggestions for future agenda items 14. Adjournment * Attachment �d V 30 IN i �N I a A M HIGHMARK® CAPITAL MANAGEMENT May 17, 2013 Thea Vassallo Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553 -4392 Dear Thea, This letter, and attached report is in response to the OPEB Plan review performed by Schultz Collins. In their comprehensive report, they touch on a variety of topics. In an email from you dated April 19, 2013, you mentioned that the Budget and Finance Committee was interested in looking at possibly updating the investment guidelines, as well as looking into possibly lowering the related expenses incurred by the Plan. Highmark Capital Management as well as PARS has reviewed the consultant's report, and we have prepared the following report. Our report focuses on the following themes: 1. Strategic direction of Highmark Capital Management 2. Investment guidelines 3. Investment related issues raised by the consultant 4. Fees /expenses incurred by the Plan 5. Document related matters We look forward to presenting the following materials to the Budget and Finance Committee on June 3, 2013. Best regards, Andrew Brown 3, 0 HIGHMARK@ CAPITAL MANAGEMENT May 17, 2013 Thea Vassallo Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553 -4392 Dear Thea, This letter, and attached report is in response to the OPEB Plan review performed by Schultz Collins. In their comprehensive report, they touch on a variety of topics. In an email from you dated April 19, 2013, you mentioned that the Budget and Finance Committee was interested in looking at possibly updating the investment guidelines, as well as looking into possibly lowering the related expenses incurred by the Plan. HighMark Capital Management as well as PARS has reviewed the consultant's report, and we have prepared the following report. Our report focuses on the following themes: 1. Strategic direction of Highmark Capital Management 2. Investment guidelines 3. Investment related issues raised by the consultant 4. Fees /expenses incurred by the Plan 5. Document related matters We look forward to presenting the following materials to the Budget and Finance Committee on June 3, 2013. Best regards, Andrew Brown 1. Strategic direction of Highmark Capital Management — HighMark Capital Management has made several decisions over the last two years that reflect our desire to focus on managing assets for our wealth management and institutional investment advisory clients. Our recent decision to discontinue sponsoring a mutual fund family was based on a strategic review to understand the investment necessary to achieve scale and success in this extremely competitive environment. Even though many of our funds have performed well over the long term, in today's competitive mutual fund environment, scale is also very important and we have not achieved the scale necessary to compete effectively. We are completely committed to the investment management business, inclusive of this is the investment role we maintain for the District within the PARS GASB 45 OPEB Trust program. 2. Investment guidelines — The consultant raised some reasonable suggestions in regards to updating the guidelines. Given that these guidelines were established prior to the U.S. Bank transaction, this document should be updated to reflect this change. In addition, the consultant offered several other reasonable considerations that we are happy to institute within the document if it pleases the District. We are attaching a draft document (Section 1) for your review, and we would be happy to discuss these potential amendments either during our June 3`d meeting, or prior to the meeting. 3. Investment related issues — The consultant's report looked at a variety of issues related to investments. The consultant provided commentary on asset allocation, analysis of the individual funds in the Plan, offered considerations on suggested methodology for manager selection, as well as he provided a fee related breakdown on the individual funds in the Plan. Below, we provide some thoughts on these topics. a. Asset allocation considerations: The consultant did not seem to have concerns related to asset allocation. The Plan has been managed under the Moderate HighMark Plus investment objective since inception of the Plan, and has not deviated from the asset allocation ranges of the objective. The objective was selected in consideration of the long -term goals and objectives of the District, while also recognizing the risk tolerance levels maintained by the District. 1. Analysis of the individual funds: The consultant produced much in the way of commentary, as well as provided numerous colorful charts and graphs. On page 7 of his report, the consultant offers, "for the most part, the portfolio manager has shown modest skill in selecting actively managed funds, used over the past three years. Three of the funds have positive trends, and only one fund has a negative trend; all the other funds have relatively flat trends." In a portfolio of 19 individual funds, a perfect batting average is never obtained. However, we believe that the managers that we have selected have for the most part performed within our expectations. There have been occasions when managers have underperformed, and we have replaced several managers over our tenure of managing the Plan. For the most part though, we believe we have added value to the Plan in our selection of active managers. 2. Methodology considerations: In our initial discussions with the District in 2008, we reviewed our methodology regarding selecting, retaining, and removing investment managers. While most of our semi - annual investment review meetings have been more focused on presenting the investment returns for the Plan, it might be worthwhile to spend some time reviewing some of the considerations that we utilize in managing the managers of the Plan. We are attaching an overview of HighMark's Manager Research Group (Section 2). This team of analysts serve as our internal consulting group and they provide comprehensive and objective analysis on mutual funds. In the presentation we describe our fund selection process, an overview of on -going manager review, and a case study on a recent manager removal. Additionally, we offer some thoughts on certain mis- perceptions on fund and manager selection criteria. 4. Fees and expenses — On page 10 of the consultant's report, the author offers that, "The Trust's weighted expense ranks in the top quartile, consistent with our low cost expectations." That said we do recognize that management of fees and expenses are an important component for any Plan committee. On page 42 of the consultant's report, the consultant presents an overview of the three categories of Plan related fees /expenses incurred. The first category of related expenses is mutual fund level fees. This is the largest category of Plan related expenses. The other two categories relate to both the PARS related fees for record keeping services, as well as the Trustee related investment management expenses. While further discussions could look at some type of fee modifications, our analysis will look at several scenarios that could possibly reduce the impact of fund related expenses. In section three, we compare the corresponding fees and expenses of the current investment program with four alternative investment structures. In the examples provided, we show five unique portfolios, all complying with the Moderate investment objective. The portfolio allocations cover actively managed portfolios, a passively managed portfolio, and a hybrid portfolio that has both passive and active components. We present an overview that depicts the estimated "All -in" fees /expenses to the Plan based on each one of these alternatives. We would be happy to discuss the pros and cons of each prototype portfolio. 5. Document related matters — The consultant raised concerns about documents not clearly articulating the relationship between the various parties servicing the Plan. A variety of notification letters were sent out related to the US Bank/Union Bank transaction that may not have made their way to the consultant. We have attempted to clarify the roles of the parties involved on the first page of the Investment Guidelines Document (IGD). At our meeting, we can discuss other documents that may require revisions as well. J HIGHMARKO CAPITAL MANAGEMENT Investment Guidelines Document Central Contra Costa County Sanitary District GASB 45 / Other Post - Employment Benefits Trust .,� SD June 2013 Investment Guidelines Document Scope and Purpose The purpose of this Investment Guidelines Document is to: • Facilitate the process of ongoing communication between the Plan Sponsor and its plan fiduciaries; • Confirm the Plan's investment goals and objectives and management policies applicable to the investment portfolio identified below and obtained from the Plan Sponsor; • Provide a framework to construct a well- diversified asset mix that can potentially be expected to meet the account's short- and long -term needs that is consistent with the account's investment objectives, liquidity considerations and risk tolerance; • Identify any unique considerations that may restrict or limit the investment discretion of its designated investment managers; • Help maintain a long -term perspective when market volatility is caused by short-term market movements. • Assist the Plan Sponsor in formulating an Investment Policy Statement ( "IPS ") for the account. Key Plan Sponsor Account Information as of April 22, 2013 Plan Sponsor: Central Contra Costa County Sanitary District Governance: Board of Directors of the Central Contra Costa County Sanitary District Plan Name ( "Plan "): Central Contra Costa County Sanitary District GASB 45 /Other Post - Employment Benefits Trust Trustee: US Bank Contact: Fran Schoenfeld, 949 - 224 -7204 fran.schoenfeld @usbank.com Account Number ("Account"): 6746030600 Type of Account: GASB 45 /Other Post - Employment Benefits Trust ERISA Status: Not subject to ERISA Market Value of Account: $28,390,075 Investment Manager: US Bank, as discretionary trustee, has delegated investment management responsibilities to HighMark Capital Management, Inc. ( "Investment Manager"), an SEC - registered investment adviser Contact: Andrew Brown, CFA, 415 - 705 -7605 Andrew.brown@highmarkcapital.com Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cls) 11 Investment Authority: Except as otherwise noted, the Trustee, US Bank, has delegated investment authority to HighMark Capital Management, an SEC - registered investment adviser. Investment Manager has full investment discretion over the managed assets in the account. Investment Manager is authorized to purchase, sell, exchange, invest, reinvest and manage the designated assets held in the account, all in accordance with account's investment objectives, without prior approval or subsequent approval of any other party(ies). Investment Objectives and Constraints The goal of the Plan's investment program is to generate adequate long -term returns that, when combined with contributions, will result in sufficient assets to pay the present and future obligations of the Plan. The following objectives are intended to assist in achieving this goal: • The Plan should earn, on a long -term average basis, a rate of return equal to or in excess of the target rate of return of 6 %. • The Plan should seek to earn a return in excess of its policy benchmark over the long- term. • The Plan's assets will be managed on a total return basis which takes into consideration both investment income and capital appreciation. While the Plan Sponsor recognizes the importance of preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. To achieve these objectives, the Plan Sponsor allocates its assets (asset allocation) with a strategic, long- term perspective of the capital markets. Investment Time Horizon; Long -term Anticipated Cash Flows: Approximately $300,000- 375,000 in monthly contributions and $4,000 in monthly distributions Target Rate of Return: 6% annual target Investment Objective: The primary objective is to maximize total Plan return, subject to the risk and quality constraints set forth herein. The investment objective the Plan Sponsor has selected is the Moderate Objective, which has a dual goal to seek moderate growth of income and principal. Risk Tolerance: Moderate The account's risk tolerance has been rated moderate, which demonstrates that the account can accept average, or moderate, price fluctuations to pursue its investment objectives. Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cis) 7 Strategic Asset Allocation: The asset allocation ranges for this objective are listed below: Strategic Asset Allocation Ranges Cash Fixed Income Equity 0 -20% 40 % -60% 40 % -60% Policy: 5% Policy: 45% Policy: 50% Market conditions may cause the account's asset allocation to vary from the stated range from time to time. The Investment Manager will rebalance the portfolio no less than quarterly and /or when the actual weighting differs substantially from the strategic range, if appropriate and consistent with your objectives. Security Guidelines: Equities With the exception of limitations and constraints described above, Investment Manager may allocate assets of the equity portion of the account among various market capitalizations (large, mid, small) and investment styles (value, growth). Further, Investment Manager may allocate assets among domestic, international developed and emerging market equity securities. Total Equities 40 % -60% Equity Style Range Domestic Large Cap Equity 15 %45% Domestic Mid Cap Equity 0 % -10% Domestic Small Cap Equity 0 % -15% International Equity (incl Emerging Markets) 0 % -15% Real Estate Investment Trust (REIT) 0 % -15% Fixed Income In the fixed income portion of the account, Investment Manager may allocate assets among various sectors and industries, as well as varying maturities and credit quality that are consistent with the overall goals and objectives of the portfolio. Total Fixed Income 40 % -60% Fixed Income Style Range Long -term bonds (maturities >7 years) 0 % -25% Intermediate -term bonds (maturities 3 -7 years) 25 % -60% Short-Term bonds (maturities <3 years) 0 % -25% High Yield bonds 0 % -10% Convertible bonds 0 % -10% Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cls) Performance Benchmarks: The performance of the total Plan shall be measured over a three and five -year periods. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance shall be compared to the return of the total portfolio blended benchmark shown below. Total Portfolio Blended Benchmark 26.50% S &P500 5.00% Russell Mid Cap 7.50% Russell 2000 3.25% MSCI EM FREE 6.00% MSCI EAFE 1.75% Wilshire REIT 33.50% BC US Aggregate 10.00% ML 1 -3 Year US Corp /Gov't 1.50% US High Yield Master II 5.00% Citi 1 Mth T -Bill Asset Class /Style Benchmarks Over a market cycle, the long -term objective for each investment strategy is to add value to a market benchmark. The following are the benchmarks used to monitor each investment strategy Large Cap Equity S &P 500 Mid Cap Equity Russell MidCap Index Growth Russell MidCap Growth Value Russell MidCap Value Small Cap Equity Russell 2000 Index Growth Russell 2000 Growth Value Russell 2000 Value REITs Wilshire REIT International Equity MSCI EAFE Investment Grade Bonds BarCap US Aggregate Bond High Yield Credit Suisse High Yield Security Selection Investment Manager may utilize a full range of investment vehicles when constructing the investment portfolio, including but not limited to individual securities, mutual funds, and exchange - traded funds. In addition, to the extent permissible, Investment Manager is authorized to invest in shares of mutual funds in which the Investment Manager serves as advisor or subadviser. Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cls) E Investment Limitations: The following investment transactions are prohibited: • Direct investments in precious metals (precious metals mutual funds and exchange- traded funds are permissible). • Venture Capital • Short sales* • Purchases of Letter Stock, Private Placements, or direct payments • Leveraged Transactions* • Commodities Transactions Puts, calls, straddles, or other option strategies* • Purchases of real estate, with the exception of REITs • Derivatives, with exception of ETFs* *Permissible in diversified mutual funds and exchange- traded funds Duties and Responsibilities Responsibilities of Plan Sponsor The Finance Committee of the Central Contra Costa Sanitary District is responsible for: ■ Confirming the accuracy of this Investment Guidelines Document, in writing. ■ Advising Trustee and Investment Manager of any change in the plan /account's financial situation, funding status, or cash flows, which could possibly necessitate a change to the account's overall risk tolerance, time horizon or liquidity requirements; and thus would dictate a change to the overall investment objective and goals for the account. ■ Providing Trustee and Investment Manager with an approved IPS for the account and providing any updates to the IPS. ■ Monitoring and supervising all service vendors and investment options, including investment managers. Avoiding prohibited transactions and conflicts of interest. Responsibilities of Trustee The plan Trustee is responsible for: ■ Valuing the holdings. ■ Collecting all income and dividends owed to the Plan. ■ Settling all transactions (buy -sell orders). Responsibilities of Investment Manager The Investment Manager is responsible for: ■ Assisting the Finance Committee with the development and maintenance of this Investment Policy Guideline document annually. • Meeting with Finance Committee semi - annually to review portfolio structure, holdings, and performance. • Designing, recommending and implementing an appropriate asset allocation consistent with the investment objectives, time horizon, risk profile, guidelines and constraints outlined in this statement. • Researching and monitoring investment advisers and investment vehicles. ■ Purchasing, selling, and reinvesting in securities held in the account. • Monitoring the performance of all selected assets. Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cls) Me ■ Voting proxies, if applicable. ■ Recommending changes to any of the above. ■ Periodically reviewing the suitability of the investments, being available to meet with the committee at least once each year, and being available at such other times within reason at your request. ■ Preparing and presenting appropriate reports. ■ Informing the committee if changes occur in personnel that are responsible for portfolio management or research. Acknowledgement and Acceptance I=e being the Plan Sponsor with responsibility for the account(s) held on behalf of the Plan Sponsor specified below, designate Investment Manager as having the investment discretion and management responsibility indicated in relation to all assets of the Plan or specified Account. If such designation is set forth in the Plan /trust, I/We hereby confirm such designation as Investment Manager. have read the Investment Guidelines Document, and confirm the accuracy of it, including the terms and conditions under which the assets in this account are to be held, managed, and disposed of by Investment Manager. This Investment Guidelines Document supersedes all previous versions of an Investment Guidelines Document or investment objective instructions that may have been executed for this account. Plan Sponsor: Central Contra County Sanitary District Plan Sponsor: Central Contra County Sanitary District Date: Date: Date: Investment Manager: Andrew Brown, CFA, Senior Portfolio Manager, (415) 705 -7605 Central Contra Costa County Sanitary District — GASB 45 /Other Post - Employment Benefits Trust Investment Guidelines Document — HighMark Capital Management, Inc. (v. 4/26/2013 - cls) 11 AN OVERVIEW OF HIGHMARK'S MANAGER RESEARCH GROUP Baie Netzer, CFA, CFP Vice President Director, Manager Research Chair, Alternatives Working Group One -on -One Presentation ©2012 Union Bank, NA Member FDIC FOR INTERNAL USE ONLY t) UnionBank'- The Private Bank 12 We choose the right ' We determine whether or We use strategies to strategies for our clients not patience is warranted build portfolios (not lists) -We go beyond performance and category ranking to identify managers with a sustainable edge -In depth research focuses on people, philosophy and process -Access to institutional share classes with lower expense ratios -Ongoing monitoring of over 100 strategies -Focus on spotting red flags that can threaten a successful manager's track record -Emphasize understanding the key drivers of returns and markets where they are most effective -Select strategies best suited to clients' risk and return objectives -Understand how the strategies within a portfolio can complement each other -Design portfolios using strategies that boost risk - adjusted returns Fund Screening, Analysis and Selection FOR INTERNAL USE ONLY ©2012 Union Bank, NA Member FDIC UnionBank The Private Bank 15 FUND SELECTION PROCESS Define the appropriate manager universe and benchmark Data • • . Access all publicly available data via the internet and other sources • Utilize state of the art systems such as: — Morningstar Direct — eVestment —Wilshire Compass —Thomson Portfolio Analytics (TPA) Develop a more informed opinion via two -step process Quantitative and *Quantitative performance ranking looks at margin and frequency of outperformance within time periods • _ Review and consistency of outperformance across time periods on rolling 12- month, trailing and calendar year basis. *Candidate managers with top performance rankings are then further screened on various criteria including alpha, volatility, risk - adjusted returns, expenses, upside /downside capture, market cap and style across time periods, etc. *Qualitative review of Philosophy, Process and People: In -depth research used to evaluate investment strategies and team. Outcome should be a clear idea of strategies' return drivers and ability to sustain outperformance over a market cycle. -Qualitative review includes portfolio manager interview Determine a strategy's role in our clients' portfolios Asset Allocation Analysis "I • What space in the style box does this offering fill? • What differentiates this strategy? • What level of risk can we expect? • In what type of portfolio would this offering work best? • How is the fund correlated to other offerings? • Recommendation write up synthesizes all research FOR INTERNAL USE ONLY � UnionBank The Private Bank i[: FUNDS ADDED TO APPROVED LIST IN 2012 EQU ITY 1 US Large Cap Core 2 Mid Cap Growth 1 Small Cap Core FIXED INCOME 1 Convertible Bond 1 Stable Value Fund ALTERNATIVES 2 Inflation Protection Multi Asset FOR INTERNAL USE ONLY UnionBank The Private Bank 18 Fund Monitoring and Review FOR INTERNAL USE ONLY 02012 Union Bank, NA Member FDIC 14 UnionBank The Private Bank 19 UNDERPERFORMING MANAGERS: WHEN IS PATIENCE WARRANTED? • Ongoing monitoring of approximately 100 strategies • Most active equity managers who beat their benchmarks by a significant margin over the long term (e.g. 10 years) also experience 3 -year periods of significant underperformance. The challenge for manager research organizations is determining when patience is warranted. • Given the market environment, is performance consistent with the managers' style? • Have the manager(s)' process or philosophy changed in a way that would cause us to doubt their edge? • Have there been key departures or a significant increase in turnover? • Are the managers accessible and providing enough information for us to make an informed judgment? • Is there asset bloat? • Some benchmarks are impossible to beat (and also to index!) ® Understand manager's style, portfolio constraints and mandate to set expectations on performance in various market cycles FOR INTERNAL USE ONLY to UnionBank The Private Bank 411 CASE STUDY: U.S. LARGE CAP CORE FUND Rolling 3 -Year Returns Jan. 2008 through Dec. 2011 20.00 15.00 10.00 Fund held up fairly well vs benchmark and category 5.00 through late 2009. By 11t qtr. of 2011, fund's returns starting to lag benchmark and category by growing margin. 0.00 -5.00 -10.00 -15.00 -20.00 ,Z�b Ab o% ob p� o`� A� p°' o� o� o� o� ti° ti° ti° �° ti° ti° titi titi titi titi titi titi 1a" lac �a� ,J� �eQ aa� lac ��� �aa ,�� ���, �o� ,ac ���, ��� ,�� ���. ��, lad et`a� ��� V\ Previous LC Core Fund — Mornngstar Large Blend Category Russell 1000 Index Total Return FOR INTERNAL USE ONLY to UnionBank The Private Bank 21 CASE STUDY: U.S. LARGE CAP CORE FUND • Large Cap Core Fund: Consistent management since mid -1990s and good performance until 2008. Rolling performance beat category and benchmark on and off from 2008 through mid -2010. ° Used in our model portfolios for clients ® The fund had been underperforming but so were many very good large cap core managers in a difficult equity environment. Worth while to stick it out or sell? • Concerns: As fund grew in size, two portfolio managers transitioned from joint decision making to managing independent "sleeves." (So less stock -level vetting between the two.) One manager chose to reduce his sleeve to 40% and he allocated 5% of his portfolio to two different analysts. Red flags on sell discipline: stocks bought on thesis of management execution would be held as "just too cheap to sell" if management didn't execute and stock price tanked Financials and Energy: Fund managers had built up a lot of expertise in these sectors and it had paid off in 1990s and early 2000s. Mid -2011, fund had double the weight in financials vs. benchmark and energy bets were detracting from performance. • Asset bloat: Firm managed about $70 billion and most was domestic large cap core. • Conclusion: the managers' ability to add value over the fund's benchmark was compromised. FOR INTERNAL USE ONLY to UnionBank The Private Bank 22 Asset Allocation and Portfolio Construction FOR INTERNAL USE ONLY ©2012 Union Bank, NA Member FDIC UnionBank The Private Bank 24 Strategies as building blocks for a portfolio • Choosing the right combination of funds is just as important as choosing any single fund • Portfolio Construction Considerations • What space in the style box does this offering fill? • What differentiates this strategy from others we already know and /or use? • In what type of portfolio would this offering work best? • How is the fund correlated to other offerings? Can it help avoid synchronized underperformance? • 2012 Changes to Model Fund Portfolio • Large Cap Blend Fund replacement • Floating rate note allocation added • Emerging Market Fund replacement FOR INTERNAL USE ONLY UnionBank The Private Bank 25 MANAGER RESEARCH BIOGRAPHIES • Ken Copa, CFA, CFP, Senior Analyst — Joined HighMark Capital Management in 2004; covers US and Foreign Equity and Alternative Investments — Previous experience with Bechtel /Fremont Investment Advisors including performance evaluation, quantitative portfolio management and manager search and evaluation — BA in Portuguese and MBA in Business Administration from Brigham Young University — CFP since 1990, CFA since 1994 • Howard Harband, Senior Analyst — Joined HighMark Capital Management in 2004; covers US and Foreign Equity and Taxable Fixed Income — Previous experience with California Bank & Trust, Farmers Insurance, L.F. Rothschild, Smith Barney, and First Chicago — BA from University of California at Berkeley and MBA from Northwestern University • Bale Netzer, CFA, CFP, Director — Joined HighMark Capital Management in 2010; Generalist and Chair, Alternatives Working Group — Prior experience with Litman /Gregory, Intuit, Money magazine, Goldman, Sachs — BA with Honors and Distinction in International Relations from Stanford University — CFA since 2004, CFP since 1991 • Christine Weiss, Senior Vice President — Joined HighMark Capital Management in 2002; Generalist — Prior experience with GT Global and Burgess Capital Management — BA in Business Economics from University of California at Santa Barbara and MBA from Golden Gate University FOR INTERNAL USE ONLY 14 UnionBank The Private Bank 26 Appendix FOR INTERNAL USE ONLY 02012 Union Bank, NA Member FDIC ') UnionBank The Private Bank 27 3 Misperceptions about Fund and Manager Selection Criteria Trailing period returns Category ranking Manager Tenure FOR INTERNAL USE ONLY to UnionBank , The Private Bank 28 Trailing Period Returns • Trailing returns capture 1 distinct period in time • Trailing returns can be deceiving due to: Large short term outperformance at beginning of period could mask persistent but smaller underperformance during remainder of period Period examined may capture a single market environment that doesn't favor manager's strategy • We believe rolling period returns (12 months, 3 years and 5 years) can shed more light on the consistency of a strategy's returns through various market cycles FOR INTERNAL USE ONLY UnionBank The Private Bank 30 Large short term outperformance at beginning of period could mask persistent but smaller underperformance during remainder of period 2.26 2.13 2.00 1.88 0 1.75 a 1.63 t 1.50 a 1.38 ~ 1.25 1.13 1.00 0.88 Growth of a Dollar April 30, 2003 - April 30, 2013 Morningstar ranked this fund 29th among large can core peers for the 10 Jul 2004 Nov 2005 Mar 2001 Jul 2008 Nov 2009 Mar 2011 Jul 2012 I — Large Cap Core Fund — S &P 500 FOR INTERNAL USE ONLY to UnionBank The Private Bank 31 Large short term outperformance at beginning of period could mask persistent but smaller underperformance during remainder of period 28.00 213.00 20.00 16.00 12.00 c 8.00 4.00 tv 0.00 -13.00 -8.00 -12.00 -16.00 -20.00 36 -Month Rolling Return April 30, 2003 - April 30, 2013 Jul 2004 Oct 2005 Jan 2007 Apr 2008 Jul 2009 Oct 2010 Jan 2012 Apr 2013 Large Cap Ogre Fund S &P 500 FOR INTERNAL USE ONLY UnionBank The Private Bank 32 Period examined may capture a single market environment that doesn't favor manager's strategy Fund A Fund B • 3 Year Return = 12.5% • 3 Year Return = 16.6 • Benchmark= 13.5% • Benchmark= 13.5% • Fund A is a Relative Value • Fund B is a Deep Value Fund Fund (purchases higher (purchases cheapest stocks quality stocks with with more potential room temporarily depressed for upside if stock overly prices and less volatile punished) returns) FOR INTERNAL USE ONLY UnionBank The Private Bank 33 Period examined may capture a single market environment that doesn't favor manager's strategy 50.00 40.00 30.00 20.00 E 10.00 }3 0 ~ 0.00 - 10.00 -20.00 -30.00 36 -Month Rolling Return December 31, 2005 - April 30, 2013 Fijnrl d njifnnrfnrmc honr+hmnA- in RQO/ of all Nov 2006 Oct 2007 Sep 2008 Aug 2009 Jul 2010 Jun 2011 May 20112 Apr 2013 — Relative Value Mid Cap Value Fund A — Deep Value Mid Cap Value Fund D — iShares:Russ MCV Idx FOR INTERNAL USE ONLY �) UnionBank The Private Bank 34 Category Ranking FOR INTERNAL USE ONLY ©2012 Union Bank, NA Member FDIC t� UnionBank The Private Bank 36 Category Ranking • Category Ranking (whether from Morningstar, Lipper or any other data provider) shows a strategy's performance relative to peers • Category Ranking can be deceiving due to: ® Strategies that differ stylistically and are suited to different types of investors may be grouped into one category because they share the same benchmark. Category blends strategies with different benchmarks and very different return drivers so market returns rather than manager skill drive category ranking • But Category Ranking is sometimes useful: ® As an indicator of a strategy's change in basic positioning. If a strategy suddenly differs in ranking from stylistically similar peers, the manager may be window dressing to achieve a higher category ranking or may have decided a different positioning suits the current environment. Either way, important to understand the cause of the change in rank. • When a benchmark return is not achievable and no true passive vehicle (ETF) exists, category ranking becomes more meaningful. FOR INTERNAL USE ONLY to UnionBank The Private Bank 37 Strategies that differ stylistically and are suited to different types of investors may be grouped into one category because they share a benchmark. Over 2 year period, category ranking in each quarter is either top quartile or bottom quartile. There is no middle ground! • Fund is an equity income fund. Most equity- income funds have similar variations in quarter -to- quarter rankings in this period. • Equity income funds focus on dividend paying stocks. Those stocks are typically in the Russell 1000 Value Index. • Approx. 1/3 of Russell 1000 Value stocks do not pay dividends. • Changing category rank indicates investors' fluctuating interest in dividends and high quality stocks. FOR INTERNAL USE ONLY UnionBank The Private Bank 38 Category may blend strategies with different benchmarks so that market returns rather than manager skill drive category ranking • Emerging Markets Bond Funds typically buy bonds issued by the governments of emerging market countries • Bonds may be denominated in U.S. Dollars, Euros or countries' local currencies. • Morningstar groups funds investing in any type of emerging market debt together. • Category ranking winds up a byproduct of U.S. Dollar weakness or strength — not a measure of manager skill. FOR INTERNAL USE ONLY to UnionBank The Private Bank 39 MiNNEENNEEN MEN • - - :� 111 18 •' 91 8 81 19 23 23 81 3 7 • Emerging Markets Bond Funds typically buy bonds issued by the governments of emerging market countries • Bonds may be denominated in U.S. Dollars, Euros or countries' local currencies. • Morningstar groups funds investing in any type of emerging market debt together. • Category ranking winds up a byproduct of U.S. Dollar weakness or strength — not a measure of manager skill. FOR INTERNAL USE ONLY to UnionBank The Private Bank 39 A dramatic change in category rank away from stylistically similar peers can indicate a change in strategy's approach • Muni funds ranked highest in 2008 were positioned very conservatively with high quality bonds and short duration. • Managers with consistent positioning should now be ranked at the bottom of the category since longer duration, lower quality muni bonds have outperformed. Inten v late Term Mutt Bond Funds 2006 Category Rank 2012 Category Ri3n c Fund A 1 92 Fund B 2 82 4_ and C 2 8 Fund D 2 85 FOR INTERNAL USE ONLY What is going on with this fund? to UnionBank The Private Bank 40 A dramatic change in category rank away from stylistically similar peers can indicate a change in strategy's approach • Muni funds ranked highest in 2008 were positioned very conservatively with high quality bonds and short duration. • Managers with consistent positioning should now be ranked at the bottom of the category since longer duration, lower quality muni bonds have outperformed. Intermediate Teri K" Bond Funds ZOOS Category Fink 2012 Category Rink Fund Duration Fund A 1 92 4.91 Fund B 2 82 4.87 Fund C 1 2 8 6.20 Fund D 1 2 85 4.20 Momingstar Int. Muni Fund Cat. Avg. 4.93 FOR INTERNAL USE ONLY This fund manager is no longer conservatively positioned! unionBank, The Private Bank 41 Manager Tenure FOR INTERNAL USE ONLY ©2012 Union Bank, NA Member FDIC to UnionBank The Private Bank 43 Manager Tenure • It's consistency of process and discipline that drives competitive edge, not manager tenure • Determining Luck vs. Skill: • Luck: a manager who constantly "tweaks" his process and holdings and outperforms • Skill: outperformance due to a consistent process that is implemented with discipline by one manager, a succession of managers, a team or a fund family FOR INTERNAL USE ONLY to UnionBank- The Private Bank 44 A Fund to Fund Comparison 160.00 140.00 120.00 100.00 80.00 60.00 40.00 A 20.00 0.00 -20.00 -40.00 -60.00 -80.00 12 -Month Rolling Return March 31, 2003 - March 31, 2013 Jun 2004 Sep 2005 Dec 2006 Mar 1008 Jun 2009 Sep 2010 Dec 2011 Mar 2013 — Mid Cap Value Fund — iShares:Ruaa MCV Idx 70.00 60.00 50.00 40.00 30.00 20.00 m D 10.00 0 0.00 -10.00 -20.00 -30.00 -40.00 -50.00 12 -Month Rolling Retum March 31, 2003 - March 31, 2013 Manager departure. New Jun 2004 Sep 2005 Dec 2006 Mar 2008 Jun 2009 Sep 2010 Dec 2011 Mar 2013 — Small Cap Growth fund -- iShares :Russ 2000 Gr ldx ,) UnionBank The Private Bank 45 DISCLOSURES J HIGHMARK® CAPITAL MANAGEMENT HighMark Capital Management, Inc., a SEC registered investment adviser (HighMark), is a wholly -owned subsidiary of Union Bank, N.A (Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for - profit and non - profit organizations, public agencies, public and private retirement plans, and personal trusts. It also serves as investment adviser for individuals, mutual funds, common trust funds, and collective investment trusts and also sub - advises certain of Union Bank's collective funds. Union Bank, a subsidiary of UnionBanCal Corporation, provides certain services to HighMark and is compensated for these services. Investments in the funds and investments recommended by or employing HighMark strategies are not bank deposits, are not FDIC insured or guaranteed by any agency of the U.S. government, and involve risk, including the possible loss of principal. Past performance is not a guarantee of future results. Some information provided herein was obtained from third party sources deemed to be reliable; HighMark and its affiliates make no representations or warranties with respect to the timeliness, accuracy, or completeness of the information provided. Any information provided is subject to change without notice. The Russell 1000 Growth Index measures the performance of the large -cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price -to -book ratios and higher forecasted growth values. Each strategy represented as a Model Portfolio is a hypothetical portfolio only and does not reflect actual investment decisions or recommendations. It does not reflect the liquidity constraints of actual fund investing or the impact that material economic and market factors may have on an investment adviser's decision - making. © HighMark Capital Management, Inc. 2012. All rights reserved. FOR INTERNAL USE ONLY to UnionBank The Private Bank 47 Overview of Fee Scenarios 48 Moderate HighMark HighMark Moderate Moderate Moderate HighMark Plus (Ex- HighMark Plus with separately HighMark Plus Moderate Index Plus Name Plus (Current) Funds) Managed holdings Hybrid (Passive) This configuration would use separately managed stocks and bonds for the large Large cap core This portfolio would cap core, and for the equity would be be managed under Current configuration, fixed income index based and the same Moderate however this would positions, and mutual the rest of the Objective but the Current configuration, look to replace two fund holdings for the portfolio would portfolio would use 100% actively managed HighMark Funds with remainder of the be actively only index oriented Description mutual funds other alternative funds portfolio managed funds. PARS fee $ 52,003.00 $ 52,003.00 $ 52,003.00 $ 52,003.00 $ 52,003.00 HighMark Investment Fee $ 47,372.00 $ 55,521.00 $ 54,040.00 $ 47,324.00 $ 55,521.00 Embedded Mutual Fund expense $ 176,089.00 $ 174,281.00 $ 111,915.00 $ 129,887.00 $ 55,977.25 Total Estimated fee 12 -31 -2012 $ 275,464.00 $ 281,805.00 $ 217,958.00 $ 229,214.00 $ 163,501.25 Dollar Savings vs. Current NA $ (6,341.00) $ 57,506.00 $ 46,250.00 $ 111,962.75 $ 26,335,420.00 1.05% 1.07% 0.83% 0.87% 0.62% 48 Moderate HighMark Plus (Current) PAR$ Moderate HighMark Actively Managed Mutual Funds Embedded Plus Ticker Fund Name Fee Eauit Large Cap Blend 4.50% SMGIX Columbia Contrarian Core Z 0.91% 4.50% SICWX Sentinel Common Stock Fund 0.78% Large Cap Growth 4.25% HACAX Harbor Capital Appreciation Instl 0.66% High -Yield 4.25% PRGFX T. Rowe Price Growth Stock 0.70% Large Cap Value 5.75% LSGIX Loomis Sayles Value Y 0.74% Cash 5.75% PRFDX T. Rowe Price Equity Income 0.68% Mid Cap Value 2.75% TIMVX TIAA -CREF Mid -Cap Value Inst. 0.46% Mid Cap Growth 2.25% PNMFX HighMark Geneva Growth Fund 1.13% Real Estate 1.75% FARCX Nuveen Real Estate Securities Fund 1 1.02% Small Cap Growth 2.50% PRNHX T. Rowe Price New Horizons 0.81% Small Cap Value 4.00% NSVAX Columbia Small Cap Value II Z 1.06% International 1.50% HIOFX HighMark International Opportunities Fid 1.45% 1.25% DODFX Dodge & Cox International Stock 0.64% 1.25% MQGIX MFS International Growth 1 1.07% Emerging Markets 3.75% SEMNX Schroder Emerging Market Equity Inv 1.25% 50.00% Fixed Income Interm Term Bond 17.00% PTTRX PIMCO Total Return Instl 0.46% 17.00% HMBDX HighMark Bond Fid 0.79% Short Term Bond 10.25% VFSUX Vanguard Short-Term Investment -Grade Adm 0.11% High -Yield 2.00% PHIYX PIMCO High Yield Instl 0.55% 46.25% Cash 3.75% HMDXX HighMark Diversified Money Market Fund 0.48% TOTAL 100.00% 0.68% Weighted embedded expense ratio* 0.18% Weiahted investment manaaement fee ** *Represents the weighted embedded expense ratio for that fund (Source: Morningstar Direct) * *Represents the weighted investment management fee after any waivers in HighMark/UB funds; assuming the 12 -31 -2012 ending market value of CCCSD of $26,335,420 49 Moderate HighMark Plus (Ex- HighMark Funds) PARS Moderate HighMark Actively Managed Mutual Funds Embedded Plus Ticker Fund Name Fee Eauit Large Cap Blend 4.50% SMGIX Columbia Contrarian Core Z 0.91% HMBDX HighMark Bond Fid 4.50% SICWX Sentinel Common Stock Fund 0.78% Large Cap Growth 4.25% HACAX Harbor Capital Appreciation Instl 0.66% 46.25% 4.25% PRGFX T. Rowe Price Growth Stock 0.70% Large Cap Value 5.75% LSGIX Loomis Sayles Value Y 0.74% 5.75% PRFDX T. Rowe Price Equity Income 0.68% Mid Cap Value 2.75% TIMVX TIAA -CREF Mid -Cap Value Inst. 0.46% Mid Cap Growth 2.25% NBMLX Neuberger Berman Mid Cap 0.76% Real Estate 1.75% FARCX Nuveen Real Estate Securities Fund 1 1.02% Small Cap Growth 2.50% PRNHX T. Rowe Price New Horizons 0.81% Small Cap Value 4.00% NSVAX Columbia Small Cap Value II Z 1.06% International 1.50% UMBWX Scout International 1.00% 1.25% DODFX Dodge & Cox International Stock 0.64% 1.25% MQGIX MFS International Growth 1 1.07% Emerging Markets 3.75% SEMNX Schroder Emerging Market Equity Inv 1.25% 50.00% Fixed Income Interm Term Bond 17.00% PTTRX PIMCO Total Return Instl 0.46% 17.00% HMBDX HighMark Bond Fid 0.79% Short Term Bond 10.25% VFSUX Vanguard Short-Term Investment -Grade Adm 0.11% High -Yield 2.00% PHIYX PIMCO High Yield Instl 0.55% 46.25% Cash 3.75% HMDXX HighMark Diversified Money Market Fund 0.48% TOTAL 100.00% 0.66% Weighted embedded expense ratio* 0.21% Weiahted investment manaaement fee ** *Represents the weighted embedded expense ratio for that fund (Source: Morningstar Direct) * *Represents the weighted investment management fee after any waivers in HighMark/UB funds; assuming the 12 -31 -2012 ending market value of CCCSD of $26,335,420 50 HighMark Moderate Plus with separately Managed holdings PARS Moderate HighMark Actively Managed Mutual Funds Embedded Plus Ticker Fund Name Fee Equity Large Cap Blend 9.00% N/A Separately Managed 0.00% Large Cap Growth 4.25% HACAX Harbor Capital Appreciation Instl 0.66% 4.25% PRGFX T. Rowe Price Growth Stock 0.70% Large Cap Value 5.75% LSGIX Loomis Sayles Value Y 0.74% 5.75% PRFDX T. Rowe Price Equity Income 0.68% Mid Cap Value 2.75% TIMVX TIAA -CREF Mid -Cap Value Inst. 0.46% Mid Cap Growth 2.25% PNMFX HighMark Geneva Growth Fund 1.13% Real Estate 1.75% FARCX Nuveen Real Estate Securities Fund 1 1.02% Small Cap Growth 2.50% PRNHX T. Rowe Price New Horizons 0.81% Small Cap Value 4.00% NSVAX Columbia Small Cap Value 11 Z 1.06% International 1.50% HIOFX HighMark International Opportunities Fid 1.45% 1.25% DODFX Dodge & Cox International Stock 0.64% 1.25% MQGIX MFS International Growth 1 1.07% Emerging Markets 3.75% SEMNX Schroder Emerging Market Equity Inv 1.25% 50.00% Fixed Income Interm Term Bond 8.00% PTTRX PIMCO Total Return Instl 0.46% 26.00% N/A Separately Managed 0.00% Short Term Bond 10.25% VFSUX Vanguard Short-Term Investment -Grade Adm 0.11% High -Yield 2.00% PHIYX PIMCO High Yield Instl 0.55% 46.25% Cash 3.75% HMDXX HighMark Diversified Money Market Fund 0.48% TOTAL 100.00% 0.43% Weighted embedded expense ratio* 0.21% Weighted investment management fee *Represents the weighted embedded expense ratio for that fund (Source: Morningstar Direct) * *Represents the weighted investment management fee after any waivers in HighMark/UB funds; assuming the 12 -31 -2012 ending market value of CCCSD of $26,335,420 51 Moderate HighMark Plus Hybrid PARS Moderate HighMark Embedded Plus Ticker Fund Name Fee Equity 17.00% PTTRX PIMCO Total Return Instl 0.46% Large Cap Blend 9.00% IW !Shares S &P 500 Index 0.09% Large Cap Growth 8.50% IVW !Shares S &P 500 Growth Index 0.18% Large Cap Value 11.50% IVE !Shares S &P 500 Value Index 0.18% Mid Cap Value 2.75% TIMVX TIAA -CREF Mid -Cap Value Inst. 0.46% Mid Cap Growth 2.25% PNMFX HighMark Geneva Growth Fund 1.13% Real Estate 1.75% FARCX Nuveen Real Estate Securities Fund 1 1.02% Small Cap Growth 2.50% PRNHX T. Rowe Price New Horizons 0.81% Small Cap Value 4.00% NSVAX Columbia Small Cap Value II Z 1.06% International 1.50% HIOFX HighMark International Opportunities Fid 1.45% 1.25% DODFX Dodge & Cox International Stock 0.64% 1.25% MQGIX MFS International Growth 1 1.07% Emerging Markets 3.75% SEMNX Schroder Emerging Market Equity Inv 1.25% 50.00% Fixed Income Interm Term Bond 17.00% PTTRX PIMCO Total Return Instl 0.46% 17.00% HMBDX HighMark Bond Fid 0.79% Short Term Bond 10.25% VFSUX Vanguard Short -Term Investment -Grade Adm 0.11% High -Yield 2.00% PHIYX PIMCO High Yield Instl 0.55% 46.25% Cash 3.75% HMDXX HighMark Diversified Money Market Fund 0.48% TOTAL 100.00% 0.51% Weighted embedded expense ratio` 0.18% Weighted investment manaaement fee `Represents the weighted embedded expense ratio for that fund (Source: Morningstar Direct) `Represents the weighted investment management fee after any waivers in HighMark/UB funds; assuming the 12 -31 -2012 ending market value of CCCSD of $26,335,420 52 4 Central Contra Costa Sanitary District June 3, 2013 TO: BUDGET AND FINANCE COMMITTEE FROM: THEA VASSALLO, FINANCE MANAGER VIA: CURT SWANSON, PROVISIONAL GENERAL MANAGER SUBJECT: EXPENDITURE FOLLOW -UP At the May 14, 2013 Budget and Finance Committee meeting, staff was asked to provide additional information on the following: Check# Date Amount Vendor 194930 4/25/13 $4,351.32 Thermo Environmental Inst The invoice is for a 2 year repair service contract for the Thermo Total Hydrocarbons (THC) analyzer. Per Dave Robbins, Plant Maintenance Superintendent, and Bruce Lewis, Instrument Shop Supervisor, it is a regulatory required instrument that measures the THC exiting the stack of our two multi hearth furnaces. Regulations were adopted in 1995 under the Clean Water Act for the proper handling and disposal of sewage sludge (aka Biosolids). Sewage sludge incinerators are required to continuously monitor THC or Carbon Monoxide emissions as an indicator of acceptable combustion of organic compounds. The District prepares an annual report which includes the monthly THC average concentration and sludge metals concentration. Attached is a copy of the invoice for your review. ORIGINAL INS ICE Invoice Number Date Due Date Page 310167 4/02/13 5/02/13 1 Sales Rep. Order Number Payment Terms 210 CO 274231 Net 30 Da s PO Number PO Rev 40169 Bill To: CENTRAL CONTRA COSTA SANITARY PLANT OPERATIONS DEPT 5019 IMHOFF PL ACCOUNTS PAYABLE 013887 UMAARTINEZ CA 94553 Thermo Environmental Instruments Inc. a' Forge Parkw ranklin, MA 02038 GERMAN VAT TAX # DE251148570 IF TAX EXEMPT PLEASE FAX CERT TO 508 520 2808 REMITTANCE ADDRESS: THERMO ENVIRONMENTAL IN-ST 7INC.. P O. BOX 712099 CURRENCY: USD CINCINNATTI, OH 45271 2099 FED ID# 04- 2745178 WIRE TRANSFERS: EXPORT: N NEW YORK, NEWYORK THERMO ENVIRONMENTAL INST. INC. SELLER ID: 04-2745178 ACC 4426395230 ABA(ACH PMNTS) 111000025 ElFrunklin,kQ ABAIWIRE PMNTS) 026009593 SWIFT CODE BOFALIS3N Ship To: CENTRAL CONTRA COSTA SANITARY 5019 IMHOFF PLACE UMSARTINEZ CA 94553 For inquires on order Call: 508 - 520 -0430 Toll Free: 866 - 282 -0430 Fax: 508 - 520 -2800 ITN# Email: custom erservice,agi @thermofis her. corn CO. CUSTOMER # Additional instructions, Terms & Conditions on last page. SHIP NO. TRACKING NUMBER SHIP DATE SHIP WEIGHT 1 5288100 315194 4/02/13 LINE # .000 LB ITEM NUMBER /DESCRIPTION U/M QUANTITY /PRICE NET SALES AMOUNT Carrier : INVOICE ONLY CONTACT: PAM MCMILLIAN PHONE: 925 - 229 -7314 SIN 51CHT- 0517511842 N 51C- HT -EXRP2 (220) EA 51C -HT- EXPEDITED REPAIR 2 YR 1.000 4,029.000 4,029.00 Serial number: 51CH -0517511842 BY ACCEPTING THIS ORDER CUSTOMER AGREES TO THE TERMS AND CONDITIONS I CE k.'TRAL CONTRA CO OUTLINED IN THE SERVICE SANITARY I- ISTIR)f -° YIAINTENACE AGREEMENT AND tiC .GU(r'T fdUPruii4 Aa�t: ?ANY ASSOCIATED SERVICE ,p q 40 LEVEL DESCRIPTIONS. 06-046 —I 322.32 _ TOTAL :Pik ?t CE ACCURPCY CX'U By A'=i-, ,LIVED BY IV- NET SALES 4,029.00 +IMF ThermoFisher MISC. CHARGES 00 OO S C I E N T I F I C FREIGHT CHARGE _ 00 .00 TAXES 322.32 • • 4,351.32 r 0 Q. 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This memo provides the updated status for each installment payment agreement: Senro Sushi, San Ramon (Commercial) — Connection fees were approximately $31,800. The business owners proposed a two year agreement for paying the fees. Because the amount was substantial, staff asked for Board authorization to execute an agreement, and the Board authorized the agreement In March, 2011. The business owners made a substantial down payment and signed an installment payment agreement to make monthly payments for two years. The owners made timely payments of $1,200 per month until the entire amount was paid off in March, 2013. Pizza My Way, Pleasant Hill (Commercial) -- Capacity fees totaling $14,985.25 were due for a change in use of the location from yogurt shop to pizza restaurant. The business owner requested, and the Board approved, an installment payment agreement under which the business owner would pay the capacity fees and interest in five annual installments. The first installment payment was made in September 2012. Flex Personal Training & Pilates San Ramon (Commercial) -- Capacity fees totaling $17,669.26 were due for a change in use of the location from an office building to a health club. The business owner requested, and the Board approved, an installment payment agreement under which the business owner would make monthly payments of $341.60 for five years. The business owner made the first payment in January, 2013 and has not made any payments since then. When contacted by staff, the business owner indicated that there had been a death in the family and he was dealing with issues related to that. Staff is working with the business owner to bring his payments current, and he has indicated that he will send the late payments by the end of May. Staff continues to monitor receipt of payments on the above agreements closely and will report to the Budget and Finance Committee again in November 2013. 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