Providence wants to know how much water supply is worth by end of April

PROVIDENCE, R.I. (WPRI) – Providence officials have told six firms interested in assessing the value of the city’s water supply they want a final report submitted no later than April 24, according to a request for proposal obtained by Eyewitness News.

The companies – Peter M. Scotti & Associates, Federal Appraisal & Consulting LLC, NewGen Strategies and Solutions, LLC, Ernst & Young Infrastructure Advisors LLC, Moelis & Company, and Poseidon – have until Wednesday to present a proposal to the city.

FirstSouthwest, a division of Hilltop Securities Inc., is handling the RFP process. The company held a mandatory conference call with the firms last Friday.

Elorza, a Democrat, is seeking a valuation of the city-controlled water supply in the Scituate Reservoir as his aides prepare to ask the General Assembly to consider legislation that would allow Providence to generate more revenue from the water. The mayor has already ruled out selling the water supply to a private company, but he has said he would support the creation of a regional water authority in the state.

Last year a consultant’s report outlining ways Providence could improve its finances suggested the city should consider a one-time asset transfer worth at least $372 million – the value of the water supply’s assets in 2015 – or smaller annualized payments over time that could come as a result of a sale or lease. The study recommended the proceeds be used to improve the funding of the city’s struggling pension system, which was just 25% funded and faced $985 million in liabilities as of June 30.

According to the RFP, the city is seeking to determine the actual value of the assets of the Providence Water Supply Board should it “decide to sell or lease the assets.” If the value of a sale or lease is determined to be different, applicants were asked to provide both values.

The final report is expected to include the total value of the water system as well as a detailed list of each water asset, including the acquisition cost, life expectancy, depreciation to date, replacement cost and savage value.

The initial RFP stated the city wanted a report within 30 days of selecting a firm, the city later issued an addendum stating the deadline was April 24.

While no legislation related to Providence Water has been introduced in the General Assembly to date, City Council President Luis Aponte said the April 24 deadline on the valuation “is absolutely too late” if the city wants lawmakers to approve a bill this year. He said lawmakers will need to know the true value of the water system before moving forward.

Providence Water sells water directly to approximately 75,000 retail customers throughout the state and provides water to eight other wholesale customers. The city owns the land in Scituate used for its water operations. The taxable value of the land itself was $260 million in 2016, according to the town’s annual audit.

The Providence Water Supply Board has more than 240 employees on the city payroll, most of whom are members of Local 1033 of the Laborers’ International Union. In 2015, the agency spent $10 million on a new building to move its headquarters from Academy Avenue to Dupont Drive. The move is expected to be completed later this year.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan