Veolia Water to manage Rialto water, wastewater systems under $300M contract

The city of Rialto and Rialto Water Services (RWS) have awarded Veolia Water North America a 30-year contract valued at approximately $300 million to manage the city's water and wastewater systems...

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Veolia Water has been present in California for 40 years and has been operating the Rialto wastewater collection system and treatment plant for the past nine years.

RIALTO, CA, Feb. 2, 2013 -- The city of Rialto and Rialto Water Services (RWS) have awarded Veolia Water North America, a Veolia Water subsidiary, a contract to manage the city's water and wastewater systems. The 30-year contract is valued at approximately $300 million in revenues for Veolia Water.

The city of Rialto and Rialto Water Services (RWS) are using a public-private concession model -- one rarely seen in the United States -- to strengthen the city's financial position and improve infrastructure services. As part of that concession, RWS hired Veolia Water North America, a Veolia Water subsidiary, to manage the city's water and wastewater systems.

The financing mode is highly original, as the city of Rialto has received $35 million in an upfront cash payment and secured $41 million in funding for future water and wastewater system improvements through a concession contract signed with RWS, a special purpose company established by Table Rock Capital and an Ullico affiliate.

In a context where many municipalities are facing financial difficulties, this cash injection will enable Rialto to upgrade its water and wastewater systems and services, create jobs and benefit from the expertise of the world's leading water services and technology company.

RWS has responsibility for managing the 30-year contract with Veolia Water, which is estimated to be worth over $300 million in revenues for Veolia Water. RWS will oversee the infrastructure upgrade program that aims to improve the efficiency, level of compliance, water quality and reliability of Rialto's water and wastewater systems. The program will create 445 jobs in the construction sector. In addition, all affected municipal employees have accepted positions offered by Veolia Water.

The RWS concession will enable the aging facilities to be refinanced without being privatized. Public ownership, control and transparent public authority over rate setting are maintained by the city. The concession provides the capital needed to rehabilitate and replace the water mains and sewers, design new infrastructure and carry out seismic retrofits. The planned program will strengthen the city's finances with annual lease payments that can support economic development and local jobs.

The public-private partnership offers an example for other US cities. The partnership's "blue growth" strategy of sustainable water management and support for economic and social development can be emulated in cities faced with the problems of aging infrastructure, a slow-moving economy and reduced revenues.

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