Agenda - 02-18-1999 - Attachment 10

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V: ' Public/Private Partnership Model as Basis for MRF Development The last key issue covered in this white paper is the basic "business" arrangement or "public/private partnership" to be used for the MRF project which must be clearly identified prior to releasing the RFP. This will define what kinds of companies are being targeted by the RFP, what kind of responses the RFP is looking for and how those companies should price out their proposals to cover the risks that they are being asked to bear. THE RANGE OF OPTIONS FOR PUBLIC /PRIVATE MRF PROJECTS Successful MRFs are operating today that represent a broad range of these public/private partnership models. The following chart illustrates this spectrum. On the left side is the private sector dominant model characterized by the "merchant facility". On the right side is the public sector dominant model characterized by publicly owned and operated MRFs. In between are variations that represent a balance between public and private sector interests unique to the varying circumstances of communities across the country. PRIVATE PUBLIC OWN/FINANCE PUBLIC OWN/FINANCE "MERCHANT" PRIVATE PUBLIC DESIGN/BUILD MRF DESIGN/BUILD /OPERATE PUBLIC OPERATION "MERCHANT" MRF PUBLIC LAND PUBLIC OWN/FINANCE PUBLIC OWN/FINANCE W/MAJOR HOSTING PUBLIC DESIGN/BUILD PUBLIC DESIGN/BUILD PUBLIC CONTRACTS PRIVATE MRF PRIVATE OPERATION NON- PROFIT OPERATION There are many variations off these basic alternatives. For example, a simple variation of the Public Own/Finance and Private Design/Build/Operate Model is for the private sector to finance the equipment, thus taking on the risk of short and long term maintenance, renewal and replacement of that equipment. RECOMMENDED PUBLIC/PRIVATE MODEL To date with the MRF Project, assessments have been completed of private and public sector capabilities, strengths and weaknesses that impact what the best business arrangements are for a successful MRF to serve the Orange County communities. There are a number of private sector firms that are capable of and interested in partnering in development of recycling capacity to service the area. We expect a strong response to any RFP that would be released for an Orange Regional MRF. The public sector also brings significant strengths and capabilities to its side of the potential partnership. Through effective use of the RFP process, the Approach D: Public Ownership and Financing with Private Sector Design, Build and Operate becomes our recommended 'baseline" approach to the Orange Regional MRF Project. Such an approach would allow the public side of this partnership to optimize public/private strengths, accept risk for the public sector if it will lower costs and fees, accept risk for the public sector if it provides valuable control, and accept risk for the public sector if it builds off public sector strengths. This recommended "baseline" approach to the Orange Regional MRF Project takes advantage of private sector capabilities to design, build and operate a MRF, access recycling markets under all types of market conditions, apply their knowledge and experience with technology, provide.their operational experience and capabilities and use their flexibility in managing staff resources. Financing of equipment by the private sector may also be desirable to consider. Such an approach also take advantage of the private firms ability to attract regional tonnage, spread all costs across that tonnage and make some of those savings available to the public sector -- if the public sector can approach the bidding process correctly. 2/5/99 Orange Regional MRF LOG Workshop Materials 15