More Water P3s to Follow Rialto, Calif., Deal – Lawyer
An attorney who served as legal advisor to Veolia Water West Operating Services, the company that, along with Table Rock Capital, recently reached financial close on a 30-year water and wastewater concession in Rialto, Calif., has said more of these transactions could be in the offing.
“The US hasn’t seen many water and wastewater P3s,” said Corey Boock, a partner at Nossaman. “There haven’t been many, in comparison to transportation P3s.”
The TIFIA loan program, which has helped launch major transportation projects, including some are P3s, is one explanation for the preponderance of transportation P3s, Boock said. But with a pressing need to update aging water infrastructure, cities in California and across the US are having a difficult time finding the money through traditional funding sources, such as money generated through existing sewer and water rates or through the tax-exempt bond market, he said.
The Veolia-Table Rock consortium, called Rialto Water Services, will invest USD41m in capital improvements in the first five years of the concession, as well as additional funds over the life of the contract. Money from the concession will also be used to help Rialto pay down some of its debt.
Looking at Deals
Some cities have already granted concessions similar to the deal in Rialto, while other cities are examining possible concessions.
In August, a partnership between KKR and United Water signed a 40-year concession agreement with the Bayonne Municipal Utilities Authority (BMUA). KKR and United Water agreed to make an upfront payment of USD150m and annual payments of USD500,000 to BMUA.
In November, Allentown, Pa., issued an RFP to seven bidders for a proposed lease of the city’s water and sewer plants. Proceeds from a lease would help Allentown meet its unfunded pension liabilities for its fire and police departments.