Public-Private Partnerships: Let’s Put Them to Work to Solve Water Problems

Public-Private Partnerships: Let’s Put Them to Work to Solve Water Problems

By Laura Minton Young

In Florida, policymakers finally have water on their minds as they wrestle with the problem of how to preserve and distribute this valuable resource in a way that satisfies the competing demands in the 21st century from utilities, agriculture and the environment using a drainage system that was designed and constructed primarily in the 40-50’s. It’s a tough and complex job, and it was a shame that the Florida Legislature was unable to reach an agreement in May on the budget and health care issues as the comprehensive legislation that provided a long-term framework to address the water needs of all these stakeholders was a casualty of this gridlock.

It’s anticipated that lawmakers will revisit comprehensive water legislation next session, but all this discussion over the bills that stalled reminded us about another ambitious bill passed in 2013 that was designed, in part, to help water districts and communities build reservoirs and other regional water infrastructure projects. So far, its potential has remained largely untapped – pun intended!

2013 Law Encourages Public-Private Partnerships (P3s)

That 2013 bill was HB 85, known formally as the “Partnership for Public Facilities and Infrastructure Act,” and it streamlined the process for creating P3s that can be used in most any infrastructure project in Florida. It does this by facilitating various bond financing mechanisms and the raising of capital from other nongovernment sources.

While our current system places the impetus on government to initiate water projects, HB 85 encourages business to be innovative and put forth unsolicited proposals to local governments and other agencies. In other words, it taps into the creativity of private enterprise.

While the P3 model has long been used in transportation – think of the $1.8 billion expansion of I-595 and the Port of Miami tunnel – it remains largely untested in Florida for other infrastructure needs. The bill’s authors took a “kitchen sink” approach and cited everything from schools to parking lots as potentially qualifying projects, and it’s notable that they specifically listed wastewater, surface water management and water management facilities.

The Legislature rightfully recognized this was a new opportunity for funding non-transportation infrastructure. The legislation created a task force to make recommendations on just how P3s should work outside of transportation – everything from what qualifies as a project to best management practices and open records requirements.

The task force, appointed by Gov. Rick Scott, issued its final report to the governor, president of the Senate and speaker of the House last July. The report contains several recommendations for statutory changes that will streamline P3s, and it is optimistic about the future of this mechanism, noting that it promises to create jobs, leverage the efficiency and innovation of private enterprise and free public funds for other core services and programs.

To date, there are a few promising regional water supply P3s that are being investigated and developed throughout Florida.

To achieve a sustainable water supply that will serve the growing population, several water utilities in South Florida elected to collaborate in an investigation studying the potential of harvesting storm water currently lost to tide. The result of this study is the C-51 Reservoir, planned as a P3. The participating utilities include the City of Fort Lauderdale, acting as the contracting agency, along with Palm Beach County, Broward County, the City of Pompano Beach, the City of Sunrise, the City of Plantation and the City of Hollywood.

The C-51 Reservoir P3 would facilitate the development of the C-51 Reservoir as an alternative water supply project for South Florida. The parties involved in the P3 would be the South Florida Water Management District (SFWMD) and Palm Beach Aggregates, LLC (PBA) until completion, at which time Phase 1 would be transferred to a new not-for-profit special purpose entity (NFP Reservoir Entity).

Under this arrangement:

• PBA would design, permit, finance construction, construct and deliver the completed Reservoir in pre-determined phases.
• NFP Reservoir Entity would own the Reservoir upon completion and transfer of each phase.
• SFWMD would operate and maintain the Reservoir and provide for the conveyance systems to and from the Reservoir.

Participating utilities would commit to utilize water storage capacity in the Reservoir. Occupying 2,200 acres of the PBA property, the C5-1 Reservoir, when implemented, could store up to 61,000 acre-feet of raw water. The initial phase would hold approximately 16,000 acre-feet and supply 35 million gallons per day of raw water to participating utilities. Phase Two will add an additional 45,000 acre-feet of water storage. It is calculated that the reservoir could meet the future water demands for Palm Beach and Broward Counties for the next 50 years.

Another significant water project on the table is The Grove Land Reservoir and Stormwater Treatment Area Project designed to be built upon a 5,000 acre reservoir, and 2,000 acre water treatment area on property owned by Evans Properties Inc., the parent of Grove Land Utilities, in northern Okeechobee and south-western Indian River counties. The reservoir would capture water from SFWMD that would have been discharged to the Indian River lagoon, store water in the St. Johns River Water Management District and SFWMD, and discharge the water in part north through the St. Johns River, where much of it would have flowed normally before the drainage system designed in the 40-50’s was constructed.

The benefits of this project include recharging groundwater, supplementing supplies for both the St. Johns and South Florida Water Management Districts, reducing storm water discharges to estuaries and reducing nutrient levels in discharged water.

As a P3, however, the water districts and local governments could reap the benefit of this project with a much smaller investment of public money.

Dean Mead represents Evans Properties, but we have long regarded P3s as part of the solution to Florida’s water problems. We think there are opportunities for similar water infrastructure partnerships across the state, especially in the building of reservoirs and stormwater treatment areas on agricultural land. These large scale regional water projects often show up in water planning documents but don’t get built because of the lack of public funds.

While such projects necessarily require a lot of vetting and should be thoroughly discussed in the public arena, we think the concept is a good one, and it’s time for policy makers to ramp up their consideration of this tool for building the water infrastructure needed by this state for the 21st Century.

Laura Minton Young is a shareholder in Dean Mead’s Viera/Melbourne office and is Board Certified in Real Estate Law by The Florida Bar Board of Legal Specialization. She represents individuals, businesses and banks in various aspects of commercial and residential real estate and financing including development, acquisitions, sales, leasing, lending, work outs, land use and growth management and agribusiness matters. She may be reached at (321)259-8900 or by email at LYoung@www.deanmead.com.