Former Indy mayor among Providence’s advisors on water supply deal

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PROVIDENCE, R.I. (WPRI) – The former mayor of Indianapolis and deputy mayor of New York City is one of several individuals advising the Elorza administration on its attempt to monetize Providence’s water supply.

Stephen Goldsmith, a Republican who served two terms leading Indiana’s capital city, testified before the Senate Judiciary Committee Tuesday in favor of a bill that would restrict the R.I. Public Utilities Commission or the Division of Public Utilities and Carriers from having “any jurisdiction, authority, or other power to approve, reject, review, or in any way affect” transactions involving water systems.

The goal of the bill is to create a cleaner process for Providence or other communities to enter into a sale or lease agreement for their water supply systems. A separate bill introduced in the Senate would allow the quasi-public Narragansett Bay Commission to purchase water systems.

“The possible value to both Providence ratepayers, Providence taxpayers and Rhode Island ratepayers is a more effective operation of an integrated system,” Goldsmith told the committee, referring to a transaction’s potential to improve efficiency with the water supply. “And when these systems come together, the savings, I’ve never seen one less than 10% on annual basis and I’ve seen some that are up to 40%.”

The website UpriseRI was first to report that Goldsmith is advising the city.

Goldsmith, who serves as director of the Innovations in American Government program at the Harvard Kennedy School of Government, is considered one of the nation’s leading experts on operations within municipal government. He served as a deputy mayor of New York City under then-Mayor Michael Bloomberg in 2010 and 2011, and has been labeled a “pioneering privatizer of city services” by The Wall Street Journal.

The city is not directly paying Goldsmith, but it has hired Faegre Baker Daniels LLP, a prestigious international law firm with an expertise in utility transactions. Goldsmith is a former partner at the firm and is working as an advisor. City records show the firm was paid $29,000 between last August and March.

The city has also hired Partridge Snow & Hahn LLP as an advisor on a potential water transaction. The Providence-based firm was first hired when former Mayor Angel Taveras was exploring a water deal and then retained by the Elorza administration. The city has paid the firm $85,000 since last April.

Elorza has repeatedly said any proceeds generated from a water transaction would be directly deposited into the city’s ailing pension system, which was just 25.28% funded as of June 30, 2017. The mayor has said the water supply is worth between $400 million and $700 million.

But the city has faced pushback from Democratic and Republican lawmakers, environmental activists and financial experts on its proposal. Some have labeled a transaction a bailout for Providence that would increase rates. Others have raised concerns about water quality. And even Elorza acknowledges the question of who actually owns the water system – Providence or Rhode Island ratepayers – is unclear.

But Elorza maintains the current bill, sponsored by Sen. Maryellen Goodwin and Rep. Scott Slater, would include many of the protections critics seek. The legislation stipulates that any rate increases in the first five years of a transaction could be no more than the average increase in the previous five years and the PUC oversight of the water system would be restored in year six.

Elorza has also said he has no interest in privatizing the city’s water supply, and city officials acknowledge they’ve been in talks with Narragansett Bay Commission regarding a transaction.

The bill is not expected to come up for a vote in the House or Senate 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

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