1 / 34

Water supply task force January 28, 2o16

Water supply task force January 28, 2o16. TODAY’S PANEL. Russ W. Prekwas, PE Robinson Engineering, Ltd. Aaron E. Fundich, PE Robinson Engineering, Ltd. Robert J. Schillerstrom Ice Miller, LLP James Snyder Ice Miller, LLP Dan Donahue JDSS, LLC. Presentation overview.

kchan
Télécharger la présentation

Water supply task force January 28, 2o16

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Water supply task force January 28, 2o16

  2. TODAY’S PANEL • Russ W. Prekwas, PE Robinson Engineering, Ltd. • Aaron E. Fundich, PE Robinson Engineering, Ltd. • Robert J. SchillerstromIce Miller, LLP • James Snyder Ice Miller, LLP • Dan Donahue JDSS, LLC

  3. Presentation overview • SSJAWA Concept Plan • Project Implementation Plan • JAWA Formation as Legal Entity • Required Member Commitments • Financing / Bonding Considerations • SSJAWA Takeways

  4. CHICAGO RATE HISTORY • As recently as 2006, Chicago wholesale rate was $1.33/1,000 gal • Double-digit annual increases in 2007-09, and again in 2012-15, nearly tripled the rate over past decade to $3.82/1,000 gal in 2015 • Rate increases prompted formation of the SSJAWA in 2011, and this SSMMA Task Force in 2015 • From 1980-2015, Chicago wholesale water rate increased an average of 6% annually. For 35 years.

  5. SSJAWA CONCEPT PLAN • Construction of independent water system from Lake Michigan to south suburbs • New Lake Michigan intake structure in Hammond • Raw water pump station & transmission to Illinois • New water treatment facility in Illinois • Finished water transmission system to towns • Independent system controlled by SSJAWA • Rates independent of Chicago & Hammond • SSJAWA legally formed in 2011-12 by seven south suburban municipalities • Member Communities / Water Usage • Project Elements / Costs • Project Implementation Plan • Hammond Deal Structure • Projected User Rates

  6. 15 Towns, Total Average Usage: ~22 MGD SSJAWA CONCEPT PLAN • Village of Alsip • City of Blue Island • Village of Calumet Park • City of Harvey • City of Markham • Village of Midlothian • Village of Robbins Serves Homewood, Flossmoor, Hazel Crest, East Hazel Crest, Dixmoor & Posen Serves Palos Heights & Crestwood

  7. april 2014 AMENDED JAN 2016 FOR SSMMA TO DEMONSTRATE EXAMPLE OF A JAWA OPTION FOR REGIONAL WATER SUPPLY

  8. Presentation topics • Expected Member Benefits • Hammond Water Supply Agreement • Project Delivery Plan • Short-Term Financing • Milestones Critical to Agency Continuation • SSJAWA Status 2013-14

  9. EXPECTED Member benefits • Complete independence from water sources controlled by others • Water rate equal or less than Chicago rate in Year 1 • Water rate at end of financing term (Year 34) projected to be less than half of Illinois customers of Chicago or Hammond* • Economic development advantages for Southland communities * Presuming future Chicago increases of 3% annually (half of annual rate since 1980)

  10. EXPECTED Member benefits

  11. EXPECTED Member benefits What does this mean to average customer? EXAMPLE: Savings for typical family using 8,000 gal/month If Chicago increases 5% annually

  12. EXPECTED Member benefits $6.22 $3.25

  13. Ssjawa TIMELINE

  14. Hammond water agreement • Long negotiation process [2013-14] • SSJAWA to own all infrastructure in perpetuity • For negotiated Transfer Fee, Hammond to allow SSJAWA access to Lake, City rights-of-way, waive permit fees and assist in all SSJAWA efforts to complete project Year 11 $0.33 CPI Year 33 $0.46 200% Year 34 $0.92 CPI Year 43 $1.06 125% Year 44 $1.32 CPI Year 53 $1.52 125% Year 54 $1.90

  15. Member benefits Hammond pre-paid first 10 years Hammond Fee +200% +125% +125% $6.22 $3.25

  16. Hammond water agreement • Upon agreement execution, Hammond prohibited from negotiating with SSJAWA Members or Customers for 24 months • Critical for SSJAWA to secure project financing • Hammond non-compete becomes moot when long-term supply contracts executed by members and customers • SSJAWA remits $1 million Cooperation Fee within 60 days of agreement date (non-refundable)

  17. Hammond water agreement • Similar ‘non-compete’ provision exists for SSJAWA with existing Hammond customers

  18. Hammond water agreement • SSJAWA expandable to other [non-Hammond water] area communities as customers • Upon agreement approval, time is of the essence to secure construction funding • First 10 years of $0.33/1000 gallon transfer fee due 15 months after agreement execution ($15,000,000) • Three 1-month extensions available @ $60K/mo. • Must proceed with engineering, land acquisition, water supply agreements & obtain construction bids ASAP

  19. Project DELIVERY • Hammond agreement sets schedule for project financing to occur within 15-18 months • Major bond issue planned Fall 2015 • IEPA has indicated potential for low interest loan funds for Illinois portion of project • Likely a multi-year loan beginning in 2016 • To meet Hammond agreement timeframe, work needs to begin immediately • Engineering contracts for consideration next month

  20. Project schedule 60 DAYS BOND RE-FI PROPERTY OPTIONS MARINE GEOTECH WATER SUPPLY AGREEMENTS

  21. project delivery Estimated Construction Cost: $300,000,000 \2016 IEPA Low Interest Loan Fall 2015 Bond Issue 60 MGD Peak Flow Capacity

  22. Project delivery • Numerous alternative delivery methods exist, including but not limited to: • Design – Build (DB) • Design – Build – Operate – Maintain (DBOM) • Construction Manager at Risk (CMAR) • Integrated Project Delivery (IPD) • Detailed discussion of delivery options reserved for future meeting

  23. SSJAWA STATUS 2013-14 • Initial soil borings and very preliminary engineering studies began per initial program approach in Jan 2013; suspended March 2013. • SSJAWA updated professional team Dec. 2013; improved project delivery approach delivered April ‘14 • Design & bidding for Marine Geotechnical investigations occurred April/May 2014 • Bids received late May 2014; low bid within budget, but contract never awarded due to other issues • SSJAWA short-term financing fell apart August 2014 • SSJAWA Board hasn’t formally convened since

  24. JAWA LEGAL ISSUES • Establishment under Intergovernmental Cooperation Act • Drafting and Negotiation of Intergovernmental Agreement among Agency and Members • Political Factors • Member Commitment

  25. JAWA LEGAL ISSUES • Agency Leadership • Indiana/Interstate Legal Issues • Discussions with Illinois and Indiana Departments of Natural Resources and the Great Lakes Commission. • DuPage Water Commission and South Suburban Joint Action Water Agency Examples

  26. JAWA Financing • Bonds issued by a Joint Action Water Agency are attractive to investors. • Water revenue bonds have lien on water revenues (favorable in post-Detroit bankruptcy era). • Each member of JAWA agrees to purchase from JAWA water requirements of its customers. • Obligation of JAWA member under water supply contract are revenue obligations, with a claim for payment limited to members of municipal water systems.

  27. JAWA Financing • Other requirements: • Debt Service Reserve Fund • Rate Covenant • Member Default Coverage • Construction Risk and Operation Risk • Bondholders want to know project will be built and operated so sufficient water revenues collected.

  28. JAWA Financing • Financing of Upfront Organization, Engineering and Initial Costs • Need financial commitment of Members • Agreement to Fund • Small Bond Issue supported by General Obligation of Members • South Suburban JAWA issued low floater bonds of $5,500,000 supported by bank letter of credit backed by general obligation of Member. • Low Interest • Efficient short term • Pre-payable at anytime

  29. SSJAWA TAKEAWAYS • A JAWA is the only feasible mechanism for south suburban communities to control their own destiny with respect to future water costs • The SSJAWA project is technically and financially viable, and a potential economic development driver for south suburban communities • The SSJAWA project was politically viable with the City of Hammond, with agreement framework in place for a 60-year period. This remained true as recently as May 2015. • The SSJAWA project failed due to ill-advised early planning, timing of short-term financing prior to source agreement, financial issues with its largest member, and political changes within its Member communities

  30. SSJAWA TAKEAWAYS • Establishing a JAWA is lengthy and expensive. It takes several years to actually get water through the spigot. • Long-term member commitment is essential • Water supply contracts must be executed prior to project design and financing • A JAWA requires considerable planning, legal, financial and engineering professional services at the onset. • Sufficient short-term financing is necessary • And then, hundreds of millions to construct. • A successful JAWA would require strong, effective leadership transcending 4-year election cycles • Regionally and within member communities

  31. Water supply task force January 28, 2o16

More Related