Over Our 12 Years of Operation, WCP has Developed a Concession Agreement Process that is Transparent, Thorough, and Collaborative
Our goal is to develop an agreement that balances the interests of the government entity, the community, the water system operator, and investors. Our 5-step process, built on the experience of having led and managed complex water systems, ensures all stakeholder needs are addressed and a clear path is outlined to a more resilient, cost-effective, and reliable water and wastewater system.
Project Identification and Feasibility Assessment
- By engaging with the government entity, we identify the benefits that private sector involvement can bring to the municipal/regional water system including building needed infrastructure, updating operations, improving human resource management, defeasement of system related debt, financing capital projects, and creating on-going access to capital.
- We conduct a preliminary due diligence to assess the technical, financial, and legal aspects of the project. In addition, we review the legal and regulatory framework for PPPs in the water sector, including any necessary legislative changes and environmental standards.
- We develop a variety of infrastructure development and funding scenarios, carefully considering the impact on rates.
Stakeholder Engagement
- It is critical to engage with various stakeholders, including government agencies, city council members and local communities to explain the concession deal framework, seek input and listen to any concerns. We have found that many concerns go away once the community understands that a concession agreement is a true public-private partnership and does not involve the privatization of the water system.
- Seek input and address concerns to ensure transparency and public buy-in for the PPP arrangement.
Project Structuring
- Define the scope of the project, including the services to be provided (e.g., water treatment, distribution, billing), the service area, and the duration of the concession.
- Assemble a private partner team including system operator, design and build firms and investment companies. As an independent management firm, we work with various regional and local water operators, engineering design firms and construction companies as well as source capital from a variety of sources, including global investment houses, boutique infrastructure focused investment firms, MBE investment firms and public sources.
- Identify the allocation of responsibilities and risks between the government entity and private sector partners.
- Determine the revenue model, including rate structures and revenue-sharing mechanisms.
- In addition to private funding options, explore options for government grants or subsidies including funding from the Water Infrastructure Finance and Innovation Act of 2014 (WIFIA).
Negotiation and Contracting
- Negotiate the concession agreement or contract terms with the selected private partner(s), addressing critical issues such as investment commitments, revenue sharing, performance standards, and risk allocation.
- Ensure that the contract aligns with the public interest and regulatory requirements.
- Define the performance standards, key performance indicators (KPIs), and reporting requirements.
- Ensure the contract includes dispute resolution mechanisms and a clear termination process.
Creation of Management Company and Operating Committee
- Upon the signing of the concession agreement, a Special Purpose Entity Company (the concession) is formed as a Joint Venture between WCP, the water service company, and the investment firm. WCP executives serve as the chairman of the board and as treasurer of the Joint Venture. The role of the JV is to manage the operation and financing of the water system, including reporting and adherence to the contract terms.
- An Operating Committee is formed which includes members of the JV concession company and representatives from the government entity. The role of the Operating Committee is to review the operation of the water system, insure contract specified metrics are met, obtain governmental priorities for ongoing capital spending and review contract specified revenue requirements. WCP provides executive oversight of the operating committee.