1. 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

2. THE HIALEAH REVERSE OSMOSIS WATER TREATMENT PROJECT
Honorable Julio Robaina
City of Hialeah, Florida

3. THE PROJECT 10 MGD, Expandable to 17 MGD 14 Wells Brackish Groundwater
Floridan Aquifer

4. DRIVERS Develop Newly Annexed Area
Joint Effort With Miami – Dade County
SFWMD Water Supply Policy
Alternative to Biscayne Aquifer
Top City Priority

5. CITY/COUNTY ROLES Joint Participation Agreement
50-50 Project Ownership
City Procures and Contracts
Joint Board Oversees

6. FUNDING 50-50 Capital Contribution Bond Financed 50-50 O & M Share
$6 Million State Grant

7. CITY/COUNTY TEAM Mayor – Julio Robaina
Public Works Director – Armando Vidal
OMB Director – Alex Vega
City Attorney – Bill Grodnick
County Liaison – Ralph Terrero

8. CONSULTANT TEAM R.W. Beck – Procurement Parsons – Technical
First Southwest – Financial
Hawkins – Legal (Contract)
Holland & Knight – Legal (Permitting)

9. PROCUREMENT Request for Expressions of Interest (RFEI) – Issued
Request for Qualifications (RFQ) – Issued
Request for Proposals – Planned
“Best Value” Proposal Will Be Selected

10. BLUE RIBBON COMMITTEE Five Members from Public Varied Expertise
Evaluates RFQ, RFP Responses
Ranks Firms
Assists Mayoral Recommendations to Council

11. RFQ RESPONDENT Five Teams Industry Leaders
 Ambient Technologies (Israel)
 American Water (US) – Pridesa (Spain)
 Befesa (Spain)
 Inima (Spain) – AECOM (US)
 Veolia (US) – CDM (US)

12. SELECTED FIRMS Highest Ranked by Committee
Mayor Recommended, Council Approved
 American – Pridesa
 Inima – AECOM
 Veolia – CDM

13. STATUS Preliminary Permitting Activity Test Well Drilling Imminent
Pilot Testing Planned
RFP Being Developed

14. JPA TIMETABLE RFP Issuance – Spring, 2009 Proposals Due – Summer, 2009
Contractor Selected – Fall, 2009
Construction Commences – Early 2010
Operation Commences – February, 2011

15. WHY DESIGN BUILD OPERATE FOR HIALEAH?
Hawkins
Delafield & Wood LLP
WHY DESIGN BUILD OPERATE FOR HIALEAH?
Eric S. Petersen
Partner
Hawkins Delafield & Wood LLP
New York, NY

16. 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

17. 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

18. 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

19. 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

20. DBO ACHIEVES Accelerated project delivery
Cost savings to the City and County
Price certainty
Guaranteed performance
Substantial risk transfer

21. DBO SAVINGS Sources of savings: Preventative v. breakdown maintenance
 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

22. PERFORMANCE GUARANTEES
Water treatment (quality)
Water delivery (quantity)
Production efficiency
Maximum electricity utilization
Price and schedule guarantees
Performance incentives

23. RISKS RETAINED BY OWNER
Owner’s risk under any delivery method:
 Changes in law
 Force majeure
 Unusual raw water parameters
 Pre-existing site and environmental conditions
 Buried infra structure conditions
 General price inflation

24. RISK TRANSER Design and construction risks:
 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

25. EARLY PRICE CERTAINTY Traditional DBO
 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

26. 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

27. 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

28. 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)

29. 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

30. THANK YOU Honorable Julio Robaina Mayor Hialeah, Florida and
Eric Petersen
Hawkins Delafield & Wood LLP
New York, NY 10005