Tampa’s changing fortune
- From: Vol 2, Issue 8 (August 2001)
- Category: General
- Region: Americas
- Country: United States
- Related Companies: ABN Amro, Covanta, Dexia, HVB Group, Parsons Brinckerhoff, Poseidon Resources, Schroder Salomon Smith Barney and Stone & Webster
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With a large harbour opening out onto the Gulf of Mexico, several rivers and a water table only 3.5m below ground, Tampa, Florida would not seem to be short of water. However, a prolonged drought and significant population growth over the past several years have made the shortage of potable water an acute issue for the city.
Although demand is great, the ability to reduce reliance on groundwater supplies and develop new water sources has not been without problems. The city has endured challenges from environmental groups and witnessed the bankruptcy of a private developer. However, Tampa’s luck appears to be changing. Its water problems will be lessened when Tampa Bay Water’s 25MGD, reverse osmosis Desal I project is completed in December 2002 and begins delivering affordable drinking water.
Desal I is expected to provide 10% of the region’s overall water supply by 2008. To meet Tampa’s water needs and serve the city’s population of nearly two million, Tampa Bay Water – the region’s tri-county water agency – will develop around $600 million worth of water facilities over the next seven years according to the agency’s master plan.
The plan calls for the creation of 53MGD of new capacity by 2003 and an additional 111MGD from sources other than groundwater. A reduction in the use of groundwater is called for at 11 facilities in the area, from current levels of 158MGD to 121MGD by 2003 and then down to 90MGD by 2008. Nevertheless, demand necessitates that new well water sites will still need to be developed.
In mid-June, Tampa Bay Water’s board of directors approved an additional half a dozen projects, which are expected to add 45 to 50MGD to the region and secure an adequate supply of water to 2014.
The $110 million Desal I project is being developed at Tampa Electric Company’s Big Bend power station and is sponsored by Tampa Bay Water under a 32-year water purchase agreement with Poseidon Resources. In February of this year, Covanta Water Systems, a subsidiary of Covanta Energy, replaced Stone & Webster Water (S&WW), and is serving as the EPC contractor on the project following the bankruptcy of S&WW’s parent Stone & Webster a year and a half ago.
PB Water, the water technology division of Parsons Brinkerhoff Quade & Douglas, is serving as an advisor to Tampa Bay Water and will provide engineering services during the design, construction and start up of the plant.
In late May, a $42 million interim financing closed on the first phase of Desal I consisting of a one-year bridge loan led by ABN Amro. HVB Group and Dexia Credit Local are co-underwriters on the loan. Although Salomon Smith Barney was mandated as the sole lead arranger on the long term financing in 1999, a legal challenge has stalled the deal. However, according to project sources, Salomon is likely to opt for private activity bonds wrapped by bond insurance over the life of the contract.
As GWI went to press, the project had obtained 20 out of the 21 permits needed to proceed with development and long term financing. Short of reaching a mediated settlement, an administrative hearing was set for 27 August to address a challenge by the local environmental group, Save Our Bays and Canals (Sobac) on the one remaining operational permit.
“We expect the Sobac protest to be resolved by October but until then we can’t sell our tax exempt bonds at a reasonable price,” said Poseidon’s president and CEO Walt Howard.
“The interim financing we set up allows the sponsors to advance engineering and construction while they wait for their discharge permit to be final and unappealable,” added Allen Broyles, project finance group vice president with ABN Amro.
Even without long term financing in place, the low projected cost of desalinated water, at $2.08 per thousand gallons ($0.55/m3) has captured the attention of several other municipalities across the US and overseas. A number have announced that they are considering development of similar projects. The Tampa cost figure compares to average costs per thousand gallons of desalinated seawater that range from $4.00 to $6.00 ($1.06/m3 to $1.59/m3).
In the US, where desalination plants are relatively few, the scheme has sparked interest in developing projects twice the size of Tampa Bay Desal I in Freeport, Texas, and three Californian cities – Huntington
Beach, Long Beach and Carlsbad.
“Co-location of the water plant with the power plant and being able to use existing intake and discharge structures saved us a tremendous amount of money and operating expense,” said Howard. The Big Bend
power plant already withdraws and discharges 1.4 billion gallons of salt water from Tampa Bay to use as cooling water. The desalination plant will siphon off 44MGD of this water to use as source water.
Stone & Webster’s bankruptcy and withdrawal from the project has not presented any notable problems to sponsors, according to Howard. “I think it illustrates the strength of the business structure we established for Desal I. We simply replaced S&WW with Covanta Water and that didn’t take any additional time, nor did our client ever see any additional costs,” Howard told GWI.
Scott Whitney, senior vice president at Covanta Water said the Sobac challenge is unlikely to hold the project up. “This project is part of a state mandate. We think the judge will review the process closely and reach the conclusion that Florida’s Department of Environmental Protection did, which is that the project is not going to have any measurable negative effect on the environment.”
Tampa Bay Desal I is being developed as part of a design, build, own, operate, transfer (DBOOT) scheme and is a key piece of Tampa Bay’s master water plan. Among future projects recently approved by Tampa Bay Water are:
* A 25MGD seawater desalination plant near the Anclote power plant. Plant design for intake, discharge and transmission may be expandable to 35MGD.
* Cone Ranch well field facility, capable of producing 10MGD.
* A 5MGD Pinellas brackish water desalination plant which will draw from wells in Pinellas Park.
* Cypress Bridge II, increased production and/or additional wells to withdraw 4MGD of groundwater near the Cypress Bridge well field.
* Around 3.5MGD from Crystals International, a food manufacturer that produces fruit crystals. Water is used in non-contact processes that can be recaptured and used for public supply.
* A combined 1MGD of water from two small facilities – Eagle Wells and Cargill Reclaimed Exchange.