By Liam Ford

Fort Lauderdale, Florida, and the IDE Ridgewood team building a new water treatment plant for the city are employing an unconventional public-private partnership arrangement after months of negotiations under a pre-development agreement.

The team, led by Ridgewood Infrastructure and IDE Technologies, originally proposed taking sole responsibility for financing the cost of the project in line with the traditional P3 model that places debt off the balance sheeting of the grantor.

But since Fort Lauderdale selected IDE Ridgewood’s bid in 2022, the city and IDE Ridgewood agreed to adjust the deal so that that the developer is responsible for just 25% of the cost of the Prospect Lake Clean Water Center project, which is now estimated to cost USD 485m.

“What's unique in this case . . . is, traditionally in a P3 the private sector both provides the equity and places the debt," said Michael Albrecht, a managing partner at Ridgewood who led the group's team in working with Fort Lauderdale. "In this transaction, the private sector is providing the equity, but the city is placing the debt."

Through this structure, the project secured a lower cost of funding than if the team had raised non-recourse project financing through a special purpose vehicle.

Fort Lauderdale plans to issue bonds in around six months to pay for at least a portion of its 75% share of the cost and a related USD 185m water infrastructure project. IDE Ridgewood will just use equity to cover its commitment.

The city also is looking at other ways to help fund or finance its portion of the project, including federal and state grants and federal WIFIA loans or state-run loan programs, officials said in a city commission board meeting recently.

Water infrastructure has been slow to enter the P3 market, but Albrecht told Infralogic that the Fort Lauderdale deal could help change that.

"My expectation is that other cities and private participants will try to emulate this, just given the collaborative and novel approach to it, which is exciting, because … the demand for capital to rehabilitate America's infrastructure well exceeds" the government funding for it, he said.

The structure of the P3 was the result of a months-long collaboration between the Ridgewood-IDE project team and the city. While the negotiations over the final agreement went smoothly, the agreement was delayed several times as parts of it were reworked and finalized.

"After we were selected unanimously among the parties, we worked very collaboratively with the city staff and I give them a tremendous amount of credit around this opportunity," Albrecht said.

Ridgewood has now been involved in two of the top three water P3s in the US, the other being the Vista Ridge Water Transmission Project in San Antonio, Texas. IDE and Kiewit were involved in building the Carlsbad Desalination Plant in California.

In a city commission meeting last week, officials said the project is moving forward, with Public Works Director Alan Dodd telling commissioners a 42-month timetable for construction of the plant now in effect.

"We're very excited to embark upon this new journey with the water treatment plant," City Manager Greg Chavarria told commissioners.

Groundbreaking will take place likely in late May, Dodd said.

City officials expect to look for federal and state grants and loans over the next few months, including whether the federal WIFIA loan program could help decrease city costs, Assistant City Manager Susan Grant told commissioners last week. The project finance team and the city's advisors are looking at putting forward a master bond resolution, possibly with two tranches of bonds, in October, and are examining "about six or seven different scenarios," Grant said.

There will be public meetings in the fall regarding the proposed new water rates needed to support the building of the plant, with officials looking at "a very even rate increase, so the rate increases are consistent over the 10-year period" that officials have said they expect to increase water rates, Grant said.

Officials are optimistic that they would be able to offset some of the costs of the project to the city through grants.

"We are what they call shovel-ready," Commissioner Steven Glassman said during last week's hearing.

The lawfirm White and Case advised the IDE Ridgewood team. Hazen and Sawyer are acting as owners' representatives on the project.