Virginia’s PPEA and Water and Wastewater Partnerships The Future of Water Partnerships in Virginia NCPPP Water Institute Preston Bryant Christopher D. Lloyd June 9, 2010

Presentation Overview Legislative History of Public Private Partnerships How the PPEA Works Implementation of the PPEA Recent Project Examples Lessons Learned and Opportunities

PPEA Overview What is it? - An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer - Vehicle to use design-build practices What it is NOT? - A panacea that resolves all procurement issues - A way to get something for nothing - Privatization

Why Use PPP Alternative Procurement? Faster, better, cheaper (sometimes) through achieving benefits of design-build procurement Single point of responsibility Shift of risk away from public sector Distances rate making/price setting decisions from the politics Lack of faith in the public sector Easier framework for inter-governmental and multi-jurisdictional collaboration Ability to assemble “dream team”

PPEA: Process Governing body adopts PPEA guidelines Public entity solicits for proposals or accepts unsolicited proposals Minimum of 45 day open competition period for unsolicited proposals FOIA protections for confidential information are negotiated Conceptual proposal outlines team qualifications, proposed cost, proposed scope and public benefits Public entity may levy a proposal review fee on both solicited (rare) and unsolicited proposals (always) to cover project review costs

PPEA: Process All competing proposals are reviewed, followed by a downselect Detailed proposals are requested – often relies on recommendations of outside/inside advisors Detailed proposals start to lock in project scope, costs, schedule Leads to an interim or comprehensive agreement with one firm Significant requirements for public notification and hearings

Evolution of Virginia’s PPEA Creation of interim agreement concept Increased public input and transparency Development of “best practices criteria” Creation of legislative oversight panel Expansion to technology projects and services

PPEA Implementation Over 100 projects statewide Over 50 jurisdictions have adopted PPEA guidelines Project sizes from $800,000 to $1.5 billion Ideal project size no less than $5 million More frequent use in small-to-mid-sized communities Growing interest in water and wastewater projects

PPEA for Water and Wastewater Growing interest is the result of several factors: Increased regulation Technological advances Diversity of projects Growing acceptance among major water and wastewater authorities Growing acceptance among regulatory and funding agencies

PPEA: Project Examples - Utilities Bedford County Public Service Authority (completed) Prince William Service Authority (under construction) City of Fredericksburg WWTP (completed) Southampton County WWTP (under construction) Augusta County WWTP – Stuart’s Draft (under construction) Virginia Beach pump stations (rejected) Northampton County/Cape Charles (rejected as PPEA) Prince Edward County (pending) Petersburg pump stations (pending) Hampton Roads Sanitation District (under review) Caroline County (pending)

PPEA: Pros Many of the same benefits as design-build PPEA has a some “cachet” with state regulatory and funding bodies No state approvals of procurement process necessary Public entity retains right to reject, modify, expand, or contract proposals at any time Project review costs can be covered by proposers Staff augmentation and single point responsibility

PPEA: Cons Project scope and cost may not be defined until late in the negotiation process Learning curve for public officials and public Suspicions about “competitive negotiations” Did I get the best possible price? Negotiations can be lengthy and complex Potential issues with USDA funding

Lessons Learned PPEA should not be used as a “fishing expedition” PPEA should not proceed unless there is both board and staff buy in Public and other stakeholders must be included in the process Promises of “free money” never materialize PPEA is not right for every project

Opportunities Use of PPEA for O&M management services contracts Development of new capacity to address economic development needs or population growth Greater penetration into authority market Leveraging of private capital

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