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The San Antonio water P3 project has finally achieved the financial close by means of the US$923-million funding commitments arranged with a group of banks led by Sumitomo Mitsui Banking Corp.

Milbank, Tweed, Hadley & McCloy LLP has advised the lenders in the financing of the Vista Ridge Regional Water Supply Project, a well field and water pipeline that is expected to provide 20% more water to the City of San Antonio, Texas.

The water supply project is being built by Garney Construction after in March Abengoa S.A. signed an agreement to sell the P3 project to Garney, as part of Abengoa's business and restructuring plan.

The total project investment is estimated at US$844 million. The 30 year concession involves the design, build, finance and operate the infrastructure needed to deliver the water. 

The project will consist of the production, treatment, delivery and sale to San Antonio Water System (SAWS), the city’s public water utility, of up to 50,000 acre-feet of potable water each year for 30 years. Fresh water will be pumped from wells in the Carrizo-Wilcox aquifer to a collection pipeline system in Burleson County, Texas, where the collected water will be treated. From there, the water will be pumped through a new underground pipeline over 140 miles to north Bexar County, Texas, where it will connect to SAWS’ municipal water utility system.

All costs of construction and right-of-way acquisition are being covered by privately raised debt and equity capital.

The Milbank team was led by Allan Marks, who stated:

“Water has become the new oil,” said Mr. Marks. “With climate change and increased urbanization globally, clean drinking water will become a more scarce commodity. It is critical that communities get ahead of this challenge by finding more environmentally sustainable water supplies, by conserving to reduce per capita water use, and by adapting to recycled water where possible. The Vista Ridge pipeline project offers a new, safe and dependable fresh water source for San Antonio – reducing the City’s reliance on the environmentally sensitive Edwards Aquifer while maintaining the City’s water conservation policies.”

“This innovative project represents one of the largest public-private partnerships in the water sector in the United States. The transaction is an example of how shifting risk from the public to the private sector in financing, building and operating critical infrastructure benefits both the community and investors.”