Five prequalify in Santa Clara water purification P3

Without an expedited programme, the Californian region's Water District fears the current water extraction practices could lead to “irreversible subsidence”.

In an effort to stave off the potentially “irreversible” effects of current over-extraction of groundwater in California's Santa Clara Valley, the county's water district authority is mulling a potential P3 to expedite water recycling and purification processes. 

The Santa Clara Valley Water District said in its request for qualifications for the potential P3 project that “due to on-going drought conditions, the District has seen significant groundwater net extractions [and] the resulting lowering of the groundwater levels may lead to irreversible subsidence” or gradual caving in of the land.

According to the request for qualifications, the project will be delivered in two stages using a “progressive P3 method” with the private partner taking on the design, building, financing, operations and maintenance of the Expedited Purification Water Programme (EPWP).

Five pre-qualified consortia have applied to develop the potential project, including Silicon NEWater led by Table Rock Capital, with Goldman Sachs as the finance provider; a Fluor Enterprises-led consortium with finance support from Aberdeen Asset Management; Silicon Valley Water, which would rely on Stonepeak Infrastructure Partners for financing; Brookfield Infrastructure Partners' subsidiary Poseidon Water, which is leading and financing its own consortium; and an SJW Corp-led consortium with backing by Citigroup Global Markets.

The water district believes that the EPWP could provide up to 45,000 acre-feet annually of purified water to Santa Clara's North County. Project cost was estimated at $800 million last year.

The process has been met with interest from industry players, as shown by the original outreach list populated by the likes of Abengoa, Bank of America Merrill Lynch, Barclay's, Cintra, Ferrovial Agroman , Highstar Capital , IFM Investors , JP Morgan , John Laing Group, KKR Infrastructure, three separate Macquarie units, Meridiam , Oaktree Capital Management , OMERS /Borealis, RBC Capital , Sacyr Environment, Societe Generale, Star America, Wells Fargo and the West Coast Infrastructure Exchange. 

A minimum of three shortlisters for the first phase of the project will be notified of their selection by the water district on 23 May, and a request for proposals issuance is planned sometime in August or September. 

The progressive P3 is being procured alongside two progressive design-build projects. The water district has yet to determine which of the specific works it is currently tendering would be best delivered through P3 and which would be best delivered through a traditional design-build contract. 

The district will select a delivery method for the project by March in 2017, according to its most recent timeline.