The Value Of Public-Private Partnerships In Water And Wastewater: Part 2
By Michael Deane, executive director, National Association of Water Companies (NAWC)
Across the nation, community leaders face major water challenges. Specifically, how do they update water and wastewater infrastructure for their citizens without over-extending tax-funded budgets? Leaders want efficiency and quality from their water and wastewater systems while being responsible environmental stewards. The problem is all of these things seem expensive and out of reach to elected officials concerned about taxpayers reaction.
Taxes is the one word that makes elected leaders and voters alike cringe. There never seems to be enough money from taxes to address public concerns, from water infrastructure to education. There are many municipalities across this nation that see the value of stepping outside conventional thinking to consider new ways to recruit needed expertise and technology and manage limited financial resources. In doing so, they can make their limited dollars from taxes go further and still solve the challenges they face.
So how are they doing this? Through public-private partnerships, municipalities are experiencing ways to stretch their financial resources as they address immediate infrastructure needs, achieve operational efficiency, streamline facilities management and apply new technologies like the reuse and recycling of resources.
Let’s take a look at some of these projects.
Pima County, Arizona
Pima County, AZ, is the second largest county in Arizona and, like much of the state, has seen unprecedented growth in an arid climate that experiences less than an average 12 inches of rain annually. As they have had to contend with little rainfall and increased drought conditions, Pima County leaders embarked on a mission to serve their community and their environment by constructing a water reclamation facility. The water reclamation facility they had in mind though had to be world class.
CH2M was chosen by Pima County officials and it built what has become one of the world’s most advanced water reclamation facilities: the Agua Nueva Water Reclamation Facility.
The facility, which was designed, built and now operated by CH2M, is an award-winning wastewater treatment process that saves taxpayers money and conserves resources in Arizona’s water-starved climates.
While the completed project has been praised by the Design-Build Institute of America, the American Academy of Environmental Engineers & Scientists, and most recently the American Council of Engineering Companies, the true winners have been the residents of Pima County.
CH2M delivered a facility that came in $77 million below the county’s $240 million design-build budget, eight months early and one year ahead of the compliance schedule, saving $2 million in annual operating costs.
Pima County residents also received a facility that produces 32 million gallons of reclaimed water every day through the implementation of state-of-the-art technology. The county can now maximize the use of its high-quality reclaimed water to irrigate parks, golf courses, and other turf-based facilities, reducing the diversion of water from its sensitive habitats.
Another benefit of this project is that, due to significantly reduced nitrogen levels, water discharged into the Santa Cruz River is safe for aquatic life and recreational needs alike — with restored flora and fauna already returning to the river.
Bayonne, New Jersey
The City of Bayonne, NJ, wanted to develop a new model to address water infrastructure needs, eliminate debt, improve its finances, and provide stability for the residents of their community. In 2012, it addressed these challenges through a public-private partnership with the city and United Water and the private investment firm KKR.
In this partnership, United Water, a subsidiary of Suez North America, and KKR immediately accomplished some of the needs of Bayonne and set in place a structure to accomplish the rest of the goals outlined by the city.
Under the agreement, the joint venture made an initial payment to the Bayonne Municipal Utilities Authority (BMUA) of $150 million, used to eliminate the BMUA’s existing debt and improve its finances. They committed to funding another $157 million in the water system over the life of the contract. KKR, which made the investment through its infrastructure fund, is funding 90 percent of the joint venture with United Water. Another important aspect of this agreement is that the BMUA maintains ownership of the water and wastewater system and will provide oversight of the partnership and its adherence to high-quality standards and customer service performance.
As for stability for residents of Bayonne, that too was accomplished as the BMUA maintains control of rates charged to users, guided by a formula in the agreement. United Water operates the system for a 40-year term under an operations and maintenance agreement.
This long-term investment in Bayonne’s infrastructure will lead to improved service reliability and water quality while maintaining rate stability. The funds will be used to upgrade water systems and to help ease pressure on municipal balance sheets, freeing the city to invest in other services.
These results have been a source of pride for local leaders. “The partnership among Bayonne, KKR, and United Water is a responsible and innovative transaction that paid off more than $130 million in Bayonne’s debt, thereby cutting our municipal debt burden in half,” said Tim Boyle, executive director of the BMUA. “The partnership invests in our aging infrastructure and provides resources that the BMUA could not otherwise deliver. Simply put, this transaction results in a more efficient and reliable water and sewer system for today and future generations.”
This innovative model was recognized as a featured innovation at the 2012 Clinton Global Initiative Annual Meeting in New York City for its commitment to providing cities with an opportunity to address their long-term water and wastewater infrastructure needs. It was also recognized as Partnership Performance of the Year at the 2012 American Water Summit.
Battery Park City, New York
Battery Park City is a 92-acre planned community located on the southwest tip of Manhattan Island, built on land reclaimed from the construction of the original World Trade Center, the New York City Water Tunnel and other construction projects. In other words, it is built on recycled land.
The foundation of this extension of Manhattan was completed in 1976, but the spirit of innovative recycling lives on with current projects in the city that have resulted in prestigious honors being bestowed on those involved.
American Water's Applied Water Management Group’s contribution to this environmentally conscious effort was the development of a state-of-the-art system that recycles water at five buildings in Battery Park City. It worked on the system concept with developers and the Battery Park City Authority. The company designed, procured, oversaw construction and is operating systems for the individual building owners under the authority's pioneering Residential Environmental Guidelines.
The result has been astonishing.
An apartment building called The Solaire is generating 25,000 gallons of usable water daily. It is the first of its kind in the nation to receive a Gold LEED rating from the U.S. Green Building Council, and that honor has since been elevated to LEED Platinum.
The state-of-the-art recycling system, located in the basement of the Millennium Towers Residences, reclaims wastewater and treats it to acceptable levels for a variety of non-potable uses including toilet flushing, park irrigation, and HVAC cooling.
The Tribeca Green wastewater system reduced the demand for potable water in the building by nearly half, providing a sustainable long-term environmental advantage. Recycling equipment located in the basement treats and reclaims water for toilet flushing and air conditioning, plus irrigation of an adjacent park. An additional unit collects and processes storm water for reuse in the building's roof gardens.
Together, along with recycling systems at the residences of River House and Visionaire, these projects capture about half of the wastewater produced by the buildings and return it as reusable water.
These are just three examples of many successful public-private partnerships that are having a positive impact on the life and environment around these communities. I look forward to sharing more such examples with you in the next part of this series.