Providence pushing regional board that would have power to buy, lease water systems

PROVIDENCE, R.I. (WPRI) – Providence’s quest to generate revenue from its water supply will begin by asking Rhode Island lawmakers to establish an 11-member regional board that would be given the power to manage water systems and borrow funds to purchase or lease property.

The legislation – which would create a new “Rhode Island Cooperative Water Authority” – will be sponsored by Rep. Scott Slater and Sen. Maryellen Goodwin, the two Providence Democrats confirmed this week.

“The authority will have broad powers necessary to fulfill its mission of producing, distributing, and selling water, including the power to acquire property by purchase or lease, to manage water systems, to fix rates and to borrow money,” states an advance copy of the bill obtained by Eyewitness News.

The initial board would be comprised of four gubernatorial appointees, three appointees chosen by the mayor of Providence and two appointees chosen by the mayor of Cranston. The mayors of North Providence and Johnston would also get one appointee each. The board would choose a chairman from among its members.

Then, once the authority is established as an official “public utility,” the board would be reconstituted with appointees picked by the governor and to reflect the communities serviced by the authority, according to the bill.

The establishment of the authority does not guarantee that it will acquire a specific water system. The board would have to negotiate with any local water utility it seeks to acquire.

The legislation comes nearly a year after a consultant hired by Providence Mayor Jorge Elorza’s administration to help with its financial woes suggested the city should consider a one-time asset transfer yielding 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 city use the proceeds from selling or leasing the water supply to improve the funding of its struggling pension system, which was just 25% funded with a shortfall of $985 million as of June 30, 2016.

A valuation firm hired by the city earlier this year is currently conducting an assessment of all of the Providence Water Supply Board’s assets. That report is expected to be completed by April 24, the same week Mayor Jorge Elorza will introduce his budget proposal for the 2017-18 fiscal year.

City officials said Wednesday the proposed bill is designed as a first step toward generating revenue from Providence’s water system, which includes the 37-billion-gallon reservoir in Scituate. There was no estimate for how much revenue Providence could eventually receive and no timeline for when the regional board would begin acquiring water systems.

Elorza, a Democrat, has repeatedly stated he has no interest in selling the water supply, but he has suggested he would be open to the creation of a regional water supply. He has spent the last several months meeting with officials in municipalities throughout the state seeking to drum up support for a regional board.

A spokesman for Cranston Mayor Allan Fung, a Republican, confirmed the mayor has met with Elorza, but said no concrete proposal was in place at the time of the meeting.

The city’s latest proposal is similar to legislation introduced in 2013 that would have established a regional water board, but quickly fizzled without getting a vote. The previous plan – advanced by Brett Smiley, who is now Gov. Gina Raimondo’s chief of staff – did not give the mayor of Johnston an appointee to the board.

Aside from having the ability to borrow money and acquire water systems, the authority would be required to maintain existing union contracts with municipal employees unless “amended to the extent required pursuant to any purchase and sale or lease agreement,” according to the bill. In those cases, the authority would have the ability to negotiate union contracts.

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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