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CITY OF HIALEAH CITY OF HIALEAH REVERSE OSMOSIS WATER REVERSE OSMOSIS WATER
TREATMENT PLANTTREATMENT PLANT
Honorable Julio Honorable Julio RobainaRobaina
Mayor Mayor
City of Hialeah, FLCity of Hialeah, FL
Eric PetersenEric Petersen
PartnerPartner
Hawkins Delafield Hawkins Delafield & Wood LLP& Wood LLP
New York, NYNew York, NY
United States Conference of MayorsUnited States Conference of Mayors
Mayors Water Council 2008 Water Mayors Water Council 2008 Water SummitSummit
Palm Beach, FloridaPalm Beach, Florida
November 19-20, 2008November 19-20, 2008
THE HIALEAHTHE HIALEAHREVERSE OSMOSISREVERSE OSMOSIS
WATER TREATMENT PROJECTWATER TREATMENT PROJECT
Honorable Julio Robaina Honorable Julio Robaina
City of Hialeah, FloridaCity of Hialeah, Florida
33
THE PROJECTTHE PROJECT
10 MGD, Expandable to 17 MGD10 MGD, Expandable to 17 MGD
14 Wells14 Wells
Brackish GroundwaterBrackish Groundwater
Floridan AquiferFloridan Aquifer
44
DRIVERSDRIVERS
Develop Newly Annexed AreaDevelop Newly Annexed Area
Joint Effort With Miami – Dade CountyJoint Effort With Miami – Dade County
SFWMD Water Supply PolicySFWMD Water Supply Policy
Alternative to Biscayne AquiferAlternative to Biscayne Aquifer
Top City PriorityTop City Priority
55
CITY/COUNTY ROLESCITY/COUNTY ROLES
Joint Participation AgreementJoint Participation Agreement
50-50 Project Ownership50-50 Project Ownership
City Procures and Contracts City Procures and Contracts
Joint Board OverseesJoint Board Oversees
66
FUNDINGFUNDING
50-50 Capital Contribution50-50 Capital Contribution
Bond FinancedBond Financed
50-50 O & M Share50-50 O & M Share
$6 Million State Grant$6 Million State Grant
77
CITY/COUNTY TEAMCITY/COUNTY TEAM
Mayor – Julio RobainaMayor – Julio Robaina
Public Works Director – Armando VidalPublic Works Director – Armando Vidal
OMB Director – Alex VegaOMB Director – Alex Vega
City Attorney – Bill GrodnickCity Attorney – Bill Grodnick
County Liaison – Ralph Terrero County Liaison – Ralph Terrero
88
CONSULTANT TEAMCONSULTANT TEAM
R.W. Beck – ProcurementR.W. Beck – Procurement
Parsons – TechnicalParsons – Technical
First Southwest – FinancialFirst Southwest – Financial
Hawkins – Legal (Contract)Hawkins – Legal (Contract)
Holland & Knight – Legal (Permitting)Holland & Knight – Legal (Permitting)
99
PROCUREMENTPROCUREMENT
Request for Expressions of Interest Request for Expressions of Interest (RFEI) – Issued(RFEI) – Issued
Request for Qualifications (RFQ) – Request for Qualifications (RFQ) – IssuedIssued
Request for Proposals – PlannedRequest for Proposals – Planned
““Best Value” Proposal Will Be SelectedBest Value” Proposal Will Be Selected
1010
BLUE RIBBON COMMITTEEBLUE RIBBON COMMITTEE
Five Members from PublicFive Members from Public
Varied ExpertiseVaried Expertise
Evaluates RFQ, RFP ResponsesEvaluates RFQ, RFP Responses
Ranks FirmsRanks Firms
Assists Mayoral Recommendations to Assists Mayoral Recommendations to CouncilCouncil
1111
RFQ RESPONDENTRFQ RESPONDENT
Five TeamsFive Teams
Industry LeadersIndustry Leaders
Ambient Technologies (Israel)Ambient Technologies (Israel)
American Water (US) – Pridesa (Spain)American Water (US) – Pridesa (Spain)
Befesa (Spain)Befesa (Spain)
Inima (Spain) – AECOM (US)Inima (Spain) – AECOM (US)
Veolia (US) – CDM (US)Veolia (US) – CDM (US)
1212
SELECTED FIRMSSELECTED FIRMS
Highest Ranked by CommitteeHighest Ranked by Committee
Mayor Recommended, Council Mayor Recommended, Council ApprovedApproved
American – PridesaAmerican – Pridesa
Inima – AECOMInima – AECOM
Veolia – CDM Veolia – CDM
1313
STATUSSTATUS
Preliminary Permitting ActivityPreliminary Permitting Activity
Test Well Drilling ImminentTest Well Drilling Imminent
Pilot Testing PlannedPilot Testing Planned
RFP Being DevelopedRFP Being Developed
1414
JPA TIMETABLEJPA TIMETABLE
RFP Issuance – Spring, 2009RFP Issuance – Spring, 2009
Proposals Due – Summer, 2009Proposals Due – Summer, 2009
Contractor Selected – Fall, 2009Contractor Selected – Fall, 2009
Construction Commences – Early 2010 Construction Commences – Early 2010
Operation Commences – February, Operation Commences – February, 20112011
WHY DESIGN BUILD OPERATE WHY DESIGN BUILD OPERATE FOR HIALEAH?FOR HIALEAH?
Eric S. PetersenEric S. Petersen
PartnerPartner
Hawkins Delafield & Wood LLPHawkins Delafield & Wood LLP
New York, NYNew York, NY
Hawkins
Delafield & Wood LLP
1616
HAWKINS PERSPECTIVEHAWKINS PERSPECTIVE
Public/Private Partnership (P3) Public/Private Partnership (P3) transaction attorneystransaction attorneys
Special Counsel to governmental Special Counsel to governmental ownersowners
National public contracts and finance National public contracts and finance firmfirm
Work actively with city and county Work actively with city and county attorneysattorneys
1717
TRADITIONAL TRADITIONAL CONTRACTINGCONTRACTING
Design-Bid-BuildDesign-Bid-Build
Public operationsPublic operations
Governmental obligation municipal Governmental obligation municipal bonds (revenue or tax secured)bonds (revenue or tax secured)
Design, construction, operation and Design, construction, operation and financing all separate functions with financing all separate functions with separate contractsseparate contracts
1818
DBO UNIFIES DBO UNIFIES RESPONSIBILITYRESPONSIBILITY
DBO unifies responsibilityDBO unifies responsibility
Comprehensive asset development and Comprehensive asset development and management under a single contractmanagement under a single contract
Strong parent company guarantyStrong parent company guaranty
One contractor deals with all subs and One contractor deals with all subs and equipment suppliersequipment suppliers
Avoids the cost and risk of disputes Avoids the cost and risk of disputes between the designer, builder and between the designer, builder and operatoroperator
Easier administrationEasier administration
1919
DBO INDUSTRY TRENDLINESDBO INDUSTRY TRENDLINES
Extensive use in the private sectorExtensive use in the private sector
Cooperation among participantsCooperation among participants
Life-cycle cost perspectiveLife-cycle cost perspective
Consistent success Consistent success
5-20% savings against “benchmark”5-20% savings against “benchmark”
““Faster, better, cheaper”Faster, better, cheaper”
Growing acceptance nationwideGrowing acceptance nationwide
2020
DBO ACHIEVESDBO ACHIEVES
Accelerated project deliveryAccelerated project delivery
Cost savings to the City and CountyCost savings to the City and County
Price certaintyPrice certainty
Guaranteed performanceGuaranteed performance
Substantial risk transferSubstantial risk transfer
2121
DBO SAVINGSDBO SAVINGS
Sources of savings:Sources of savings: Core competencyCore competency
Competition as to designCompetition as to design
Competition as to operationCompetition as to operation
Cooperative relationship between designer, Cooperative relationship between designer, builder, and operatorbuilder, and operator
Smaller contingency allowancesSmaller contingency allowances
Bulk consumables buying powerBulk consumables buying power
Broader technology accessBroader technology access
Preventative v. breakdown maintenancePreventative v. breakdown maintenance
Optimized balance between capital and Optimized balance between capital and operating costsoperating costs
2222
PERFORMANCE PERFORMANCE GUARANTEESGUARANTEES
Water treatment (quality)Water treatment (quality)
Water delivery (quantity)Water delivery (quantity)
Production efficiencyProduction efficiency
Maximum electricity utilizationMaximum electricity utilization
Price and schedule guaranteesPrice and schedule guarantees
Performance incentivesPerformance incentives
2323
RISKS RETAINED BY OWNERRISKS RETAINED BY OWNER
Owner’s risk under any delivery Owner’s risk under any delivery method:method: Changes in lawChanges in law Force majeureForce majeure Unusual raw water parametersUnusual raw water parameters Pre-existing site and environmental Pre-existing site and environmental
conditionsconditions Buried infra structure conditionsBuried infra structure conditions General price inflationGeneral price inflation
2424
RISK TRANSERRISK TRANSER
Design and construction risks:Design and construction risks: Design liabilityDesign liability Completion risk (delay and efficacy)Completion risk (delay and efficacy) Construction cost overrunsConstruction cost overruns Disputes between designer and builderDisputes between designer and builder
Operation and maintenance risks:Operation and maintenance risks: O&M cost overrunsO&M cost overruns Regulatory complianceRegulatory compliance Capital maintenanceCapital maintenance
2525
EARLY PRICE CERTAINTYEARLY PRICE CERTAINTY
TraditionalTraditional Owner design costs 8-10% of construction Owner design costs 8-10% of construction
costcost Costs unknown until 100% designCosts unknown until 100% design Bidder’s price may exceed engineer’s Bidder’s price may exceed engineer’s
estimateestimate Project may be delayed or re-designedProject may be delayed or re-designed
DBODBO Owner design costs 1-3% of construction Owner design costs 1-3% of construction
costcost Proposers design to level necessary to Proposers design to level necessary to
guarantee priceguarantee price Owner obtains early price guarantee for low Owner obtains early price guarantee for low
costcost
2626
CITY RETAINED RIGHTSCITY RETAINED RIGHTS
Ownership of assetsOwnership of assetsOwnership of water system revenuesOwnership of water system revenuesSetting user ratesSetting user ratesCapital planningCapital planningBond financing (tax-exempt)Bond financing (tax-exempt)Securing site and rights-of-waysSecuring site and rights-of-waysObtaining water rightsObtaining water rightsObtaining grants and subsidiesObtaining grants and subsidies
2727
HIALEAH’S SELECTION OF HIALEAH’S SELECTION OF DBODBO
Clear legal authority (state law, municipal Clear legal authority (state law, municipal code)code)
No existing water treatment plant workforceNo existing water treatment plant workforce
Aggressive implementation scheduleAggressive implementation schedule
Life-cycle cost perspectiveLife-cycle cost perspective
Shifts performance riskShifts performance risk
Lower NPV cost than traditional contractingLower NPV cost than traditional contracting
Viable in contractor marketViable in contractor market
2828
DB/DBO SUCCESSES - DB/DBO SUCCESSES - WATERWATER
Seattle, WA (120 mgd)Seattle, WA (120 mgd)San Diego County Water Authority (100 San Diego County Water Authority (100
mgd)mgd)Phoenix, AZ (80 mgd)Phoenix, AZ (80 mgd)Tampa Bay Surface Water Project (80 Tampa Bay Surface Water Project (80
mgd)mgd)San Juan Capistrano, CA (Desalination) San Juan Capistrano, CA (Desalination)
(10 mgd)(10 mgd)Santa Fe, NM (15 mgd)Santa Fe, NM (15 mgd)
2929
INGREDIENTS FOR SUCCESSINGREDIENTS FOR SUCCESS
Initial strategic planning and developmentInitial strategic planning and development
Thoughtful, well developed RFQ/RFPThoughtful, well developed RFQ/RFP
Creative and responsive proposalsCreative and responsive proposals
Clear and comprehensive Service Clear and comprehensive Service ContractContract
Full proposer due diligence opportunityFull proposer due diligence opportunity
Fair and balanced risk allocationFair and balanced risk allocation
Outstanding leadershipOutstanding leadership
3030
THANK YOUTHANK YOU
Honorable Julio RobainaHonorable Julio Robaina
MayorMayor
Hialeah, FloridaHialeah, Florida
andand
Eric PetersenEric Petersen
Hawkins Delafield & Wood LLPHawkins Delafield & Wood LLP
New York, NY 10005New York, NY 10005