Providence’s Director of Sustainability, Leah Bamberger, and Providence City Solicitor Jeff Dana gave a presentation to the Environmental Council of Rhode Island (ECRI) on Mayor Jorge Elorza‘s plan to “monetize” Providence Water. They also took questions from the over three dozen people present, representing environmental groups from across the state. As part of the presentation an RFQ (Request for Qualifications) was made available. This RFQ is slated to go live on January 19, 2018.
The RFQ seeks to find some well moneyed private or public entity interested in taking over the management of the Providence Water Supply, in exchange for which the City of Providence is to receive enough money to stabilize its underfunded Employee Retirement System.
The RFQ, said Dana, was developed with the help of outside counsel. The RFQ also serves as a statement as to the intentions of the City of Providence, said Bamberger. The RFQ has built into it a series of protections or stipulations guaranteeing water quality, consumer rates, environmental protections and labor protections. Dana noted that because of these stipulations, it’s “not the most attractive RFQ.”
Dana also noted that the entire plan would “probably” require enabling legislation at the state level.
During the question and answer session (15m52s in the video below) I asked Dana what he sees as the difference between ‘monetization’ and a public-private partnership.
“I’m not even sure how to answer,” began Dana. “There’s all different kinds of public-private partnerships. There are communities that use public-private partnerships to build schools. Monetization is, I guess, in a general sense, utilizing an asset to derive some revenue. Whereas a public-private partnership is a public entity working with a private entity to achieve some end goal.”
So this would be the same then, I replied. We are reaching out to a private entity to achieve a goal, which would be monetization.
“Yeah. It doesn’t have to be a private entity. It could be another public entity. It could be a public-public partnership, it could be a public-private partnership, we don’t know where it will end up.”
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Still later (37m43s in the video below) I asked about one of Mayor Elorza’s advisors on this monetization plan, Steven Goldsmith, former Mayor of Indianapolis, who successfully privatized that city’s water system only to have the City spend millions to take the water back under city control over a decade later. Goldsmith is associated with the Manhattan Institute for Policy Research, a conservative think tank that promulgated privatization and supply-side economics (aka trickle down) in the 1980s. The Manhattan Institute was very influential in developing ideas on school choice (aka the privatization of public schools).
Goldsmith testified in favor of the enabling legislation for the monetization plan before the Rhode Island Senate Judiciary Committee in May.
“He was one of our consultants, but he is no longer one of our consultants,” said Dana.
I asked Dana why Goldsmith was let go.
“We just decided to go a different direction,” said Dana.
According to the RFQ, the City’s objectives include:
- To solicit, identify and evaluate Respondents that possess the qualifications, including experience, capital, credit, environmental compliance history, corporate philosophy and vision consistent with the City’s stated criteria… for a long-term Lease.
- To responsibly monetize the value of the System through a Lease that allows the City to invest a lump sum payment or annual revenue stream into the City’s Employee Retirement System.
- To ensure long-term, economically efficient operation and environmentally responsible management of the System that will ensure continued safe and reliable service.
- To transfer full-risk asset management responsibility to achieve life-cycle cost savings and long-term rate stabilization while ensuring maximize capital investment in the system.
- To ensure no disruption in the employment of and collective bargaining rights of all System employees who are assigned to the System on the closing date.
- To provide assistance programs for customers who do not have the ability to pay rates for service.
- To ensure the long-term protection of land and water bar bodies currently owned, used or affected by the System.
- To ensure the System is maintained for the public interest.
According to the RFQ concerning the scope of the project: “Respondents shall be prepared, if awarded the Lease, to provide full-risk asset management, operations, finance, repair, replacement and capital improvements necessary to continue the System’s provision of services to wholesale and retail customers. Project responsibilities shall generally include:
- Management, oversight, planning, scheduling, auditing and development of the physical, financial and human resources that comprise the existing System.
- Develop, design, engineer, procure, permit, construct and commission all capital improvements and repairs necessary for continued System operation or System expansion.
- Perform routine, predictive and preventive maintenance including the ordinary maintenance of the machinery, equipment, structures, improvements and all other property constituting the leased facilities to keep them in good working order, condition and repair, in accordance with any contract performance standards and prudent utility industry practices; and maintain the aesthetic quality of the leased facilities.
- Perform major maintenance, repair and replacement (“MMR”) including the major maintenance, repair and replacement of the machinery, equipment, structures, improvements and all other property constituting the leased facilities as required to maintain compliance with applicable regulatory requirements, contract standards or prudent utility industry practices during the term of the Lease.
- Perform all required capital repairs, replacement and modifications, including system expansion, required by any approved capital plan or as required to maintain compliance with applicable regulatory requirements, contract standards or best management practices (“BMPs”).
- Provide metering, billing, collection, review, customer service, rapid-troubleshooting for retail customer interfaces and equipment and 24 hour emergency response.
- Perform detailed auditing for state, federal and required industry standard compliance and self- reporting, including providing sufficient internal staff, procedures and equipment/technology to support these functions as well as adequate systemic interfaces to support third-party billing, audits or service as authorized under the Lease.
- Provide virtual interfaces with the wholesale and retail customers to ensure timely, accurate and efficient customer communication, real-time information and rapid resolution of customer inquiries and disputes.
- Recognize and negotiate in good faith with existing collective bargaining representatives for employee unions, including maintenance of status quo benefits during the transition period and until successful completion of a successor collective bargaining agreement.
- Develop short and long-term Capital Improvement Plans (“CIP”).
- Plan, procure, manage, monitor, discharge and balance appropriate debt financing to support the CIP and any other full-risk asset management responsibilities required by the Lease.
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