Providence officials pitch water transaction to skeptical crowd

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PROVIDENCE, R.I. (WPRI) – Providence Mayor Jorge Elorza’s plan to monetize the city’s water supply was met with deep skepticism during a public forum Monday, as opponents poked and prodded at a proposal that still lacks essential details.

Elorza, a Democrat who just started his second term as mayor, has repeatedly claimed a transaction involving the water system is the city’s best chance at stabilizing its severely underfunded pension system. He has asked state lawmakers to approve a bill that would allow public or private entities to purchase or lease water systems in Rhode Island.

“We have to be practical, we have to be pragmatic,” Elorza told around 50 people gathered in the cafeteria inside Dr. Jorge Alvarez High School. “But I hope to convince you we have to do something.”

Elorza’s proposed bill also prohibits the R.I. Public Utilities Commission or the Division of Public Utilities and Carriers from having a say over rate changes in the five years after a deal is made. During that period, any rate increases would be capped at the same percentage as in the five years prior to the transaction.

But city officials have acknowledged they don’t expect the legislation to be approved this year. Council President Sabina Matos has said she opposes the plan. A group of councilors have also introduced a resolution opposing the bill.

At Monday’s meeting, the mayor mostly sat and listened as his top aides delivered a presentation outlining the city’s goals – including protecting the quality of the water delivered to 60% of the state – although he rose at one point to urge the unreceptive crowd to keep an open mind.

Elorza has said he believes a lease deal involving the water system could fetch between $300 million and $400 million for the city, but his staffers declined to offer a potential price tag during the meeting. The presenters also didn’t discuss ongoing negotiations with the quasi-public Narragansett Bay Commission, whose leaders have said they are only interested in buying the water system outright.

The administration did outline the massive scope of the problem it is trying to address: Providence’s pension system had just 25% of the $1.2 billion it has promised current and future retirees as of June 30, 2016. The city will pay $83 million to the fund in the current fiscal year – the overall city budget is $745 million – a figure that is required to grow by 3.5% a year until 2040.  

“This is the only option capable of solving the problem at hand,” one slide from the city’s PowerPoint presentation read.

City solicitor Jeffrey Dana, who is functioning as the administration’s point person on the water system, warned that while Providence is currently “in a good place” financially, it won’t be long before the growing annual pension payments start to crowd out other investments. One slide from the PowerPoint suggested large tax increases coupled with decreases in city services, funding for schools and parks and recreation opportunities still wouldn’t solve the city’s problem.

“There’s no doubt there will be serious pain for all stakeholders” if the city doesn’t address the pension system soon, Dana suggested.

But residents voiced strong opposition to proposal, raising questions about whether a transaction would affect the quality and cost of the water. Others suggested the city has considered other options to address the pension challenge.

“You cannot marry the pension plan with water,” Cristina Cabrera, the environmental justice director for indigenous affairs of the Pocasset Pokanoket Land Trust, said. “Pension plan, you need creative solutions for that. Water is not that solution.”

Earlier in the day, the co-chairs of the Providence Republican City Committee issued a press release calling for the city to reduce the pensions of anyone earning more than active employees doing the same job, raise the minimum retirement age and move to a 401K-style plan for active and future retirees.

Monday’s meeting was the first of three scheduled community forums on the water system. The next meeting is March 21, at the Nathanael Greene Middle School at 6 p.m.

This report has been updated to reflect Cristina Cabrera’s correct title.

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

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