Transcript CITY OF HIALEAH REVERSE OSMOSIS WATER TREATMENT PLANT

United States Conference of Mayors
Mayors Water Council 2008 Water Summit
Palm Beach, Florida
November 19-20, 2008
CITY OF HIALEAH
REVERSE OSMOSIS WATER
TREATMENT PLANT
Honorable Julio Robaina
Mayor
City of Hialeah, FL
Eric Petersen
Partner
Hawkins Delafield &
Wood LLP
New York, NY
THE HIALEAH
REVERSE OSMOSIS
WATER TREATMENT PROJECT
Honorable Julio Robaina
City of Hialeah, Florida
THE PROJECT
10 MGD, Expandable to 17 MGD
14 Wells
Brackish Groundwater
Floridan Aquifer
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DRIVERS
Develop Newly Annexed Area
Joint Effort With Miami – Dade County
SFWMD Water Supply Policy
Alternative to Biscayne Aquifer
Top City Priority
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CITY/COUNTY ROLES
Joint Participation Agreement
50-50 Project Ownership
City Procures and Contracts
Joint Board Oversees
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FUNDING
50-50 Capital Contribution
Bond Financed
50-50 O & M Share
$6 Million State Grant
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CITY/COUNTY TEAM
Mayor – Julio Robaina
Public Works Director – Armando Vidal
OMB Director – Alex Vega
City Attorney – Bill Grodnick
County Liaison – Ralph Terrero
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CONSULTANT TEAM
R.W. Beck – Procurement
Parsons – Technical
First Southwest – Financial
Hawkins – Legal (Contract)
Holland & Knight – Legal (Permitting)
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PROCUREMENT
Request for Expressions of Interest (RFEI) –
Issued
Request for Qualifications (RFQ) – Issued
Request for Proposals – Planned
“Best Value” Proposal Will Be Selected
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BLUE RIBBON COMMITTEE
Five Members from Public
Varied Expertise
Evaluates RFQ, RFP Responses
Ranks Firms
Assists Mayoral Recommendations to Council
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RFQ RESPONDENT
Five Teams
Industry Leaders
 Ambient Technologies (Israel)
 American Water (US) – Pridesa (Spain)
 Befesa (Spain)
 Inima (Spain) – AECOM (US)
 Veolia (US) – CDM (US)
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SELECTED FIRMS
Highest Ranked by Committee
Mayor Recommended, Council Approved
 American – Pridesa
 Inima – AECOM
 Veolia – CDM
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STATUS
Preliminary Permitting Activity
Test Well Drilling Imminent
Pilot Testing Planned
RFP Being Developed
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JPA TIMETABLE
RFP Issuance – Spring, 2009
Proposals Due – Summer, 2009
Contractor Selected – Fall, 2009
Construction Commences – Early 2010
Operation Commences – February, 2011
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Hawkin
s
WHY DESIGN BUILD OPERATE
Delafield & Wood LLP
FOR HIALEAH?
Eric S. Petersen
Partner
Hawkins Delafield & Wood LLP
New York, NY
HAWKINS PERSPECTIVE
Public/Private Partnership (P3) transaction
attorneys
Special Counsel to governmental owners
National public contracts and finance firm
Work actively with city and county attorneys
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TRADITIONAL CONTRACTING
Design-Bid-Build
Public operations
Governmental obligation municipal bonds
(revenue or tax secured)
Design, construction, operation and
financing all separate functions with
separate contracts
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DBO UNIFIES RESPONSIBILITY
DBO unifies responsibility
Comprehensive asset development and
management under a single contract
Strong parent company guaranty
One contractor deals with all subs and
equipment suppliers
Avoids the cost and risk of disputes between
the designer, builder and operator
Easier administration
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DBO INDUSTRY TRENDLINES
Extensive use in the private sector
Cooperation among participants
Life-cycle cost perspective
Consistent success
5-20% savings against “benchmark”
“Faster, better, cheaper”
Growing acceptance nationwide
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DBO ACHIEVES
Accelerated project delivery
Cost savings to the City and County
Price certainty
Guaranteed performance
Substantial risk transfer
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DBO SAVINGS
Sources of savings:
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Core competency
Competition as to design
Competition as to operation
Cooperative relationship between designer, builder,
and operator
 Smaller contingency allowances
 Bulk consumables buying power
 Broader technology access
Preventative v. breakdown maintenance
Optimized balance between capital and operating
costs
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PERFORMANCE GUARANTEES
Water treatment (quality)
Water delivery (quantity)
Production efficiency
Maximum electricity utilization
Price and schedule guarantees
Performance incentives
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RISKS RETAINED BY OWNER
Owner’s risk under any delivery
method:
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Changes in law
Force majeure
Unusual raw water parameters
Pre-existing site and environmental
conditions
 Buried infra structure conditions
 General price inflation
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RISK TRANSER
Design and construction risks:
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Design liability
Completion risk (delay and efficacy)
Construction cost overruns
Disputes between designer and builder
Operation and maintenance risks:
 O&M cost overruns
 Regulatory compliance
 Capital maintenance
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EARLY PRICE CERTAINTY
Traditional
 Owner design costs 8-10% of construction
cost
 Costs unknown until 100% design
 Bidder’s price may exceed engineer’s estimate
 Project may be delayed or re-designed
DBO
 Owner design costs 1-3% of construction cost
 Proposers design to level necessary to
guarantee price
 Owner obtains early price guarantee for low
cost
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CITY RETAINED RIGHTS
Ownership of assets
Ownership of water system revenues
Setting user rates
Capital planning
Bond financing (tax-exempt)
Securing site and rights-of-ways
Obtaining water rights
Obtaining grants and subsidies
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HIALEAH’S SELECTION OF DBO
Clear legal authority (state law, municipal code)
No existing water treatment plant workforce
Aggressive implementation schedule
Life-cycle cost perspective
Shifts performance risk
Lower NPV cost than traditional contracting
Viable in contractor market
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DB/DBO SUCCESSES - WATER
Seattle, WA (120 mgd)
San Diego County Water Authority (100
mgd)
Phoenix, AZ (80 mgd)
Tampa Bay Surface Water Project (80 mgd)
San Juan Capistrano, CA (Desalination) (10
mgd)
Santa Fe, NM (15 mgd)
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INGREDIENTS FOR SUCCESS
Initial strategic planning and development
Thoughtful, well developed RFQ/RFP
Creative and responsive proposals
Clear and comprehensive Service Contract
Full proposer due diligence opportunity
Fair and balanced risk allocation
Outstanding leadership
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THANK YOU
Honorable Julio Robaina
Mayor
Hialeah, Florida
and
Eric Petersen
Hawkins Delafield & Wood LLP
New York, NY 10005
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