Case Studies. Mark Wehmeyer and Neil Callahan

Transcription

1 Case Studies Mark Wehmeyer and Neil Callahan

2 Allentown Concession Case Study Unfunded police and fire pension plan Within 3 years minimum contribution > 25% of City budget Would require a 35% tax increase Economic development concerns suburbs have lower tax rates Population: 120,000 Ongoing (Bids just submitted) 2

3 Allentown Concession Case Study Unfunded police and fire pension plan Within 3 years minimum contribution > 25% of City budget Would require a 35% tax increase Economic development concerns suburbs have lower tax rates Process RFI and Short List Operating standards (125 page technical doc) Lease agreement (142 page legal doc + attachments) RFP w/ BAFO Status Bids submitted 3/27/13 Selection based on best present worth value of initial consideration + annual payments ($500k - $2.5M) Goal: Minimum of $100M upfront payment 3

4 Atlanta Contract Operations Gone Bad Rapid growth the excuse for deferred maintenance & underfunded programs 1998 Consent Decree for violation of Clean Water Act CSO s Savings from water system privatization was to pay for sewer improvement Population Served: 1.2M 4

5 Atlanta Contract Operations Gone Bad Rapid growth the excuse for deferred maintenance & underfunded programs 1998 Consent Decree for violation of Clean Water Act CSO s Savings from water system privatization was to pay for sewer improvement Water O&M cost Atlanta $50-M/yr. UW bid $22M/yr over 20 yrs City highly unaware of its infrastructure. UW wanted system warranty but city refused. Contract negotiated in 97, UW started 1/1/99 UW reduced employee count from 700 to about UW notified of non-compliance based on staffing levels, repair rates, meter installation and alleged inappropriate billing At the same time UW wanted an $80M change order City claims only $3M/yr savings, UW billed only $20M/yr. Where s the rest? Jan 2003 Atlanta municipalized UW agreed to pay city $6M to settle all claims. 5

6 Tulsa Concession Concept Rejected New Pro-P3 mayor elected in Needed to immediately cut $10M from budget. KPMG reviewed entire city FTE s, $420M/yr cost. Identified hundreds of cost savings & revenue generating suggestions Survey showed citizens support privatizing government functions. City implemented several P3 s zoo, museums, Performing arts center, golf courses others City formed new department focused on W/WW from PW. Consultant assessed MUA and recommended improvements focused on stronger planning, better processes, asset management Population: 0.5M Served Study Completed in

7 Tulsa Concession Concept Rejected New Pro-P3 mayor elected in Needed to immediately cut $10M from budget. KPMG reviewed entire city FTE s, $420M/yr cost. Identified hundreds of cost savings & revenue generating suggestions Survey showed citizens support privatizing government functions. City implemented several P3 s zoo, museums, Performing arts center, golf courses others City formed new department focused on W/WW from PW. Consultant assessed MUA and recommended improvements focused on stronger planning, better processes, asset management MUA set to raise water rates 5% and sewer rates 9% due to cost increases and capital requirements. MUA working to improve processes and procedures in accordance with assessment.very similar to Ft. Worth Water. 7

8 Rialto Concession Case Study Revenue shortfalls due to City Council not supporting rate increases Utility had no bonding rating Couldn t retain staff - Poor O&M and management Infrastructure upgrades required Population: 100,000 Contracted June 2012 Financial Close Nov

9 Rialto Concession Case Study Revenue shortfalls due to City Council not supporting rate increases Utility had no bonding rating Couldn t retain staff - Poor O&M and management Infrastructure upgrades required Table Rock and Veolia formed Rialto Water Services 30 year concession $41 M infrastructure upgrades over five years $35 M upfront cash payment to City from RWS Financing: $25M equity & 146 M debt at 5.5% Initial 8% rate increase Annual increase linked to CPI City employees and managers transitioned to Veolia City keeps ownership of assets Three year process 9

10 SPU Tolt River DBO WTP Case Study Regulatory requirements forced building a surface water plant Wide seasonal turbidity swings. Needed water source predictability. SPU had no experience with water treatment Preliminary Engineering showed DBO scenario created 10 15% lower initial and lifetime cost, based on 25 years of O&M. Population served: 1M+ Plant start-up in 1997 (check) 10

11 SPU Tolt River DBO WTP Case Study Regulatory requirements forced building a surface water plant Wide seasonal turbidity swings. Needed water source predictability. SPU had no experience with water treatment Preliminary Engineering showed DBO scenario created 10 15% lower initial and lifetime cost, based on 25 years of O&M. City had overall PM, financing, minimum performance specifications and ongoing public health and regulatory responsibilities. Consortium of American Water Services and CDM selected to design, build and operate the facility Traditional DBB estimated to be $171M present worth AWS/CDM bid $101M or 40% savings So successful that city repeated with Cedar River WTP 11

12 Tampa Bay Water DBO WTP Case Study Ground Water Mitigation required building a surface water plant Needed new alternative (non groundwater) water supply. TBW had no experience with water treatment Preliminary evaluation projected DBO Delivery offered 10 20% lower Capex and additional on lifecycle cost basis Population served: 3.1M Plant start-up in

13 Tampa Bay Water DBO WTP Case Study Groundwater mitigation required a new 66 mgd surface water plant Needed alternative (non groundwater) water new supply TBW had no experience with surface water treatment Preliminary evaluation projected DBO Delivery offered 10 20% lower Capex and additional on lifecycle cost basis TBW had overall PM, financing, minimum performance specifications and ongoing public health and regulatory responsibilities. Veolia led Consortium of CDM, Clark Construction, and Veolia NA., selected to design, build and operate the facility Life Cycle Cost savings of $85 Million - 21% First Year Savings of $3.4 Million So successful that TBW repeated with WTP Expansion to 120 MGD 13

14 San Diego Carlsbad SWRO DBFOOT Reliance on single supply source (MWD SWP and Colorado River) MWD Rates 10-year cumulative annual growth rate of 7.5% Diversify Water Supply improve supply reliability Private project developer Counter party risk transfer Awaiting info from SAIC Population: 3.1 Million Contracted Nov Financial Close Dec

15 San Diego Carlsbad SWRO DBFOOT Reliance on single supply source (MWD SWP and Colorado River) MWD Rates 10-year cumulative annual growth rate of 7.5% Diversify Water Supply improve supply reliability Private project developer Counter party risk transfer Privately-held Development Company to Deliver Project Developing a 54 mgd Desalination Plant in Carlsbad, California Developer Permitted Project At-Risk Term Sheet of Principle Agreed to July, 2010 Financed by: Project Finance $733 M Tax Exempt Water Bonds & $167 M Private Equity Blended Cost of Capital % Cost of Product Water $2,041 - $2,290 $/AF Currently in Design with Projected Summer Start to Construction 15