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Community Based Partnership

A Community Based Partnership Model is where a local government or public utility aggregates multiple improvement projects together into single, integrated procurement, creating one point of private sector accountability for linear type projects that support environmental, social and governance goals for a community through-out its lifecycle. It uses a performance-based contract, linking the partner’s payment to specific, measurable goals. The private partner assumes both short and long-term budget and schedule risks, incentivizing best value and a whole life compliance solution. The public sector can also require its private partner to achieve specific Key Performance Indicators to create jobs and engage with minority and women owned enterprises to create resilience solutions that create green space and achieve other community and economic development goals. Additionally, the private partner can also source best fit capital to invest “at risk” portion of development work to provide an earlier start to a program which the government partner can refinance with lower cost of capital upon completion and certification of the projects that make up the program.

BLUEFIELD RESEARCH: CRUMBLING PUBLIC WATER INFRASTRUCTURE SIGNALS LARGER ROLE FOR PRIVATE PARTICIPATION

by Bluefield Research | Thu, 08/04/2016 - 00:00

Private participation in U.S. municipal water markets is poised for expansion. Municipalities and local authorities are showing an increasing reliance on investor-owned utilities and private players for the ownership, management, and operations of public water and wastewater systems.

BOSTON--(BUSINESS WIRE)--

Private participation in U.S. municipal water markets is poised for expansion, according to a new report, from Bluefield Research. Municipalities and local authorities are showing an increasing reliance on investor-owned utilities and private players for the ownership, management, and operations of public water and wastewater systems.

This market shift comes amidst a growing water infrastructure investment gap exceeding US$532 billion over the next decade. “Municipalities are approaching a breaking point as utility assets reach the end of their useful lives. They must now seek-out alternative solutions for funding and technical expertise,” says Keith Hays, Vice President of Bluefield Research. “Federal funding for municipal water has declined steadily in the past 40 years to barely 4%, leaving municipalities to finance infrastructure projects locally,” adds Hays.

A more attractive regulatory landscape in key states is shaping new opportunities for companies looking to invest strategically in U.S. water. The lion’s share of investment activity will be focused on New Jersey, California and Pennsylvania, but increased M&A activity in Illinois, North Carolina, and Virginia highlights a transition toward new markets for growth.

Private ownership of a highly fragmented network of 49,000 systems represents 15% of the current market, but recent M&A activity signals a larger role for investor-owned utilities going forward. While American Water and Aqua America have been the most aggressive of investor-owned utilities, more than 19 deals (completed and pending) totaling US$384 million are on the books for the first half of this year.

Public-private partnerships (PPP) beyond O&M contracts have been employed sparingly in the U.S., according to Bluefield’s analysis. But pending PPPs in California, Florida, Indiana, and Texas for desalination, water treatment, and wastewater reuse plants indicate more acceptance.

“Many of the hurdles to private participation, including public pushback, asset bankability and debt financing remain, however, the broader, national focus on infrastructure upgrades is opening the door to more private participation,” says Hays. “There is no silver bullet to solving the infrastructure challenge. Stakeholders must deploy a range of solutions including alternative financing, operations management, and innovative technologies."

These findings are found in Bluefield’s new report, U.S. Private Water Utilities, Market Trends, Strategies and Opportunities, 2016. Bluefield Research provides data, analysis and insights on global water markets.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160803005463/en/

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