Mayor Elorza’s first Community Conversation about monetizing Providence WaterProvidence Mayor Jorge Elorza held the first of three scheduled Community Conversations on his idea to “monetize” Providence Water, that is, to enter into a public-private partnership with a large company that will pay the City for the rights to manage and profit from the Providence Water system. The next Community Conversations are scheduled for: Thursday, March 21 6pm-7:30pm at
Published on March 12, 2019
By Steve Ahlquist
Providence Mayor Jorge Elorza held the first of three scheduled Community Conversations on his idea to “monetize” Providence Water, that is, to enter into a public-private partnership with a large company that will pay the City for the rights to manage and profit from the Providence Water system.
The next Community Conversations are scheduled for:
- Thursday, March 21 6pm-7:30pm at Nathaniel Greene Middle School, 721 Chalkstone Avenue, Providence
- Monday, March 25 6pm-7:30pm, Nathan Bishop Middle School, 101 Session Street, Providence
Over fifty people attended the meeting, which started off as being tightly controlled by the many members of the Mayor’s office who officiated the conversation, but things soon loosened up as the those attending began to push back against the rules established and demanded a conversation, not just having their pre-written questions answered from index cards.
Attending the meeting were Senator Ana Quezada (Democrat, District 2, Providence), Representative Scott Slater (Democrat, District 10, Providence), Providence City Councilor President Sabina Matos (Ward 15) and City Councilors James Taylor (Ward 8) and Michael Correia (Ward 6).
Both Matos and Correia are formerly members of the Providence Water Board. Not attending were Providence City Councilors Joann Ryan (Ward 5) and Luis Aponte (Ward 10), who are both presently members of the Providence Water Board.
Mayor Elorza has linked the issue of a pending pension crisis to monetizing the water. The City spent some time explaining the scope and depth of the City’s unfunded pension. If nothing is done to address the pension system, which ha gone underfunded for decades, Providence will be forced to raise taxes and make draconian cuts to City services, and may face bankruptcy.
“There is no ideal solution to this,” said Elorza. “There is no magic bullet that easily turns it all around… It’s really choosing what’s the best solution available to us. We have to be practical. We have to be pragmatic…
“This is an issue that, since it’s so weighty, we want to involve the entire Providence Community. We want to here from you, we want to take all your feedback into consideration…”
Elorza stressed that the City is doing well, “better than we have in a long, long time” but that the pending pension crisis threatens all that. He and his staff seemed to be walking a delicate line between sounding the economic alarm bells and maintaining that the present status of the City’s finances were better than ever.
Leah Bamberger, the Mayor’s Director of Sustainability and City Solicitor Jeffrey Dana gave a presentation on the scope of the pension problem and the beginnings of the plan to address the issue.
“If we can’t enter into any kind of partnership that would ensure water quality, long-term rate stability and protection of our labor, we just won’t do it,” said Dana.
That said, there is a question of what can be done if it becomes economically or politically impossible to monetize Providence’s “most valuable asset.”
The pension system issue is a “wicked problem” said Bamberger. “And this is not just a phrase. These are problems that have “not been fixed because all the easy problems have been solved.”
The questions began in an orderly, very controlled fashion. Dana and Bamberger were joined by Elorza’s Chief of Staff Nicole Pollock and the City’s Finance Director Larry Mancini. The rest of the videos below are of the sometimes contentious conversations between members of the public and the Mayor’s staff.
The first question was about the City’s potential liability as owner of Providence Water, and how those liabilities might change under the monetization plan.
The administration is asked for examples of cities or municipalities where a public-private partnership such as the one being suggested has worked well. There was an uncomfortably long pause before Dana suggested Allentown, Pennsylvania; Rialto, California and New Jersey.
A question as to what other potential solutions to the pension crisis have been proposed or implemented.
“How can you say you want input when you have already crafted state bills?” was the next question, referring to the legislation introduced in the Rhode Island General Assembly in both the House and the Senate that serves as enabling legislation to make the deals Providence wants to make possible.
“We have introduced the legislation in order to start the discussion with our legislative leaders,” explained Pollock.
Things began to break down when environmental activist Sally Mendzela asked if it would be possible to ask questions verbally, as a true conversation, rather than just have questions answered off of index cards.
“You’re controlling the meeting and not letting people talk,” said Christina Cabrera from Water Is Life – Land & Water Sovereignty Campaign, established to protect water in Rhode Island from corporate despoliation. Cabrera suggested that if the administration truly wanted a dialog with the community, they could have reached out to any number of environmental groups to do so.
Pollock acknowledged the criticism but countered that writing questions on cards is considered a “best practice” for community engagement.
“Yeah, best practice if you want to maintain power and shut people out of the public process,” said Sergio, a Providence resident attending the event.
Cabrera accused the panel of speakers to holding a meting that was contrary to the meetings stated intent. Rather than looking to the community for possible solutions, the meeting was intended to sell the public on a plan already decided.
Finance Director Larry Mancini answered the question about the full extent of the financial woes facing Providence’s pension system. The part of the question that wasn’t answered is how much Providence might see from a water deal, only that the administration thinks it will be in the hundreds of millions of dollars.
Sally Mendzela said she “personally finds it hard to believe” that the monetization of Providence Water is the only feasible solution to the looming pension crisis. Chief of Staff Pollock insisted that no other solution, or combination of solutions, would come close to generating the kind of money needed.
The idea of somehow taxing the nonprofits in Providence is discussed. To get more money out of the nonprofit educational facilities would require state approval, said the administration, and would not generate the money needed.
“I find that this is unconscionable, Mayor,” said a Providence resident, “That you attach a pension plan to a water utility, which is the most vital utility we have. You are hijacking us into something that is wrong in all ways.”
Mayor Elorza rose to defend himself. “Please keep an open mind,” he said.
“No!” said a voice.
“It’s non-negotiable,” said the Providence resident.
“600 cities across the United States who have… terrible fiscal condition, terrible health for their children, terrible infrastructure situations… terrible rate hikes…” said Cabrera. “600 examples of horrific case of monetization and privatization.”
Even the cities mentioned as examples by Dana in the second question said Cabrera, “have had horrific horrific experiences as well, and we’d be happy to share.”
The basic economics of the plan were questioned by residents next. How does a private company make a profit on the water if they are unable to raise rates or take shortcuts on water quality? The answer, according to the administration, is that private companies can utilize ‘economies of scale.” That is, they can buy things cheaper.
Cabrera challenged the idea of economies of scale. “No,” she said. “Ratepayers are paying for it.”
“There are many places that have given protection to the natural world, protecting the water so that it could never be sold,” said Sister Mary Pendergast, Director of Ecology at Sisters of Mercy Northeast Community. “It is the duty of government to protect our water, our air, our soil, our climate.”
How will companies bidding to manage the water be vetted? Every company that has expressed an interest so far has serious problems elsewhere, say opponents. In Pittsburgh, according to one person who rose to speak, Veolia worked to push experienced workers out the door in an effort to make money by trimming and replacing staff.
Concerns were expressed about the watershed around the Scituate Reservoir. The watershed needs to be protected, said opponents of the water plan, and it should be increased in size and development on watershed land needs to be prevented, if water quality is to be maintained.
A man suggests that Providence go into business bottling and selling Providence Water. “We’ve explored that actually,” said Mayor Elorza. “The revenue that that generates is just so minimal.” Elorza said that his administration conferred with the City of Dallas, Texas and confirmed that it wasn’t nearly enough money to be worth the effort.
A Providence resident notes that there are few details about what exactly Providence is intending to do, that is, how the deal will be structured, what exactly is for sale, and how much money is expected to be made from this.
Pollock explained that right now, the administration is in the exploratory phase. She said that the lease agreement typically runs for between 30 to 50 years. (Though I’ve heard companies talk about 99 year leases when I sat in on Public-Private Partnership discussions at the Rhode Island State House. See here.)
Despite the administration’s effort, members of the public attending this event were still unclear about how exactly this deal could be profitable to a private company and generate “hundreds of millions” of dollars without raising rates, threatening water quality or massive workforce layoffs.
Holding any potential bidder to strict guidlines on water quality, rates and labor means the potential Providence Water deal would be “unattractive compared to Pittsburgh or many other places, where they’ve realized much larger amounts of revenue than we anticipate,” said Dana.
“The process seems to be very flawed. You already have legislation, you’ve been putting it in, and there hasn’t been deep conversations in the community…”
Cabrera rose again to list the issues with Veola and Poseidon, two of the companies that have expressed an interest in leasing the water system.
Chief of Staff Pollock explains the legislation submitted to the General Assembly.
A Scituate resident pushes back against the idea the administration is just beginning to explore the idea of monetization, given that there has been enabling legislation submitted three years in a row.
“We’re not suggesting that this is going to be great, and this isn’t fun,” said Dana. “We’re not really enthusiastic about the fact that we have to do this.”
Providence Water has $267 million dollars in a fund. Is that part of the projected $400 million Providence hopes to realize in this deal?
A request for a centralized web page for water information.
Providence Republican Party co-chair David Talan presented his plan for dealing with the pension system. These ideas include:
- No retiree should collect more money than current workers doing their old job, and their pensions should be reduced accordingly.
- No retiree should be able to collect a pension before the age of 60.
- The city should get out of the pension business entirely.
Cabrera tells the administration that over the course of the nearly two hour meeting, no actual monetization plan was presented, no plan to protect the watershed was presented, and no plan for community engagement was presented. She offered to have the Water Is Life – Land & Water Sovereignty Campaign to present information about similar water deals to groups throughout the City.
Mayor Elorza gets the last word.
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