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

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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)

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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