Summary: Jefferson Parish retained IMG to investigate the legal and financial feasibility of conducting a design-build-operate (DBO) procurement of a consolidated wastewater treatment plant to replace the Parish’s existing West Bank operations.
Issue: Jefferson Parish was contemplating the development of a consolidated wastewater treatment plant and wanted to explore the potential benefits of structuring the project as a DBO. IMG analyzed associated legal constraints, potential user rate impacts resulting from different financing options, possible permitting issues, and procurement process options.
Solution: IMG established the feasibility of the project and recommended that the Parish proceed with the project using a DBO structure including such features as: the Parish Industrial Development Board as the public entity in a public-private partnership; a two-stage procurement which would require firms to pre-qualify before submitting proposals; a DBO contract with single source guarantor; a performance-based contract with a formula service fee; capital costs funded primarily through revenue bonds issued by the Industrial Development Board and ultimately supported by user rates collected by the Parish; and a minimum operating term of 20 years.
Value Created: IMG established a procurement path and a project structure that would allow for DBO project delivery under Louisiana law, as well as identified pre-planning and early coordination activities to reduce permitting risk and leverage the resources of the private sector to secure permits. IMG calculated a conservative estimate of 15% capital cost savings for the DBO over a design-bid-build project structure, and recommended a financing plan that phased in user rate increases in accordance with EPA guidelines and provided rates competitive with neighboring jurisdictions.
