Mayor Elorza presses his case for monetizing Providence Water in Senate Judiciary Committee hearing

Providence Mayor Jorge Elorza is still trying to “monetize” the Providence Water Supply, including Scituate Reservoir. At issue is Senate bill S2838 and House bill H8123 which would “authorize any municipal water supply system and any regional water quality management district commission to enter into an agreement called a ‘transaction’ enabling certain water supply systems to merge and be deemed a public utility.”

Elorza testified before the Senate Judiciary Committee Tuesday evening.

“Any money that this transaction would yield would allow the city to permanently shore up our pension system, which is currently less than 30 percent funded,” said Elorza, putting the potential privatization of the water supply in stark economic terms. “It’s no secret that if this legislation passes, the City of Providence will be one of the first to explore options to lease our water supply system, or enter into an operation and management agreement.

“To be clear, Providence Water will not and cannot continue to operate under the city and provide water for a majority of state residents forever. Failure to resolve our fiscal challenges will eventually result in adverse consequences for all customers of Providence Water.”

“There has been a lot of concern and a lot of just concern over the threat, or concern, of privatization,” said Elorza. “However, we in Providence and myself, strongly believe that water is a public utility and there should always be public oversight. This legislation maintains regulation and oversight, and upon the completion of any transaction, the resulting entity will be a fully regulated public utility.”

This regulation and oversight, assures Elorza, will ensure water quality and rate stabilization. But Elorza’s “enabling legislation” says nothing about ownership or about the water not being owned by the ratepayers, or not being managed by entities like the City of Providence, which is answerable to voters. Privatization is not ruled out by this legislation, it’s just that the legislation seeks to rule out the worst effects of privatization were that to be the end result.

Taking on the question as to whether Providence Water is owned by the City of Providence or by the ratepayers, as has been the consistent opinion of the Rhode Island Public Utilities Commission, Elorza said, “We believe we own the asset, others believe we don’t own the asset. But what is clear, is that Providence owns some significant asset here, the extent of which, perhaps that’s in doubt. But what is also clear, is that there is nothing preventing us from entering into a lease and operations management agreement.”

[See: Unraveling Providence Water no sure bet for Providence solvency issues for more]

This is not a bailout, said Elorza. “Providence is seeking authorization to utilize an asset that we have created, we have managed and operated since its inception to address one of the most pressing financial challenges we face as a capitol city, and by extension, we face as a state.”

Jillian Kiley, who wrote a terrific piece on the privatization of Providence Water here, testified:

Steve Goldsmith is advising the City of Providence on this deal. As Mayor of Indianapolis, Goldsmith did a water privatization deal there. 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).

Jack Partridge attempted to put the issue into historical perspective:

John Simmons of RIPEC (Rhode Island Public Expenditures Council) opposes the legislation:

Amy Moses of the Conservation Law Foundation (CLF) had two main concerns; that the watershed around the reservoir be protected and that the transaction is exempted from PUC oversight.

Greg Gerritt is a providence resident opposed to the legislation.

Randall Rose opposes the bill.

Sheila Dormody of The Nature Conservancy also opposed the bill, saying that though the bill looks different than it has in previous years, both the opportunities it presents and our objections are the same.”

One of the expressed concerns is that the lands around the reservoir, the watershed, will be sold off to enable profitability. This will have the effect of seriously eroding water quality.

Jeff Dana, an attorney for the City of Providence, testified last.

All photos (c)2018 Selene Means


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About Steve Ahlquist 597 Articles
Steve Ahlquist is a frontline reporter in Rhode Island. He has covered human rights, social justice, progressive politics and environmental news for half a decade. Uprise RI is his new project, and he's doing all he can to make it essential reading. atomicsteve@gmail.com

3 Comments

  1. Heather Marie Harvey writes of Goldsmith, Bloomberg’s deputy mayor who was dismissed after being accused of domestic violence. Goldsmith seems not so much a “traditional Democrat” as a neoliberal Democrat, aka compassionate conservative Republican, not much different than the Bloombergian “Progressive Democrat”, e.g. Elorza and Raimondo. Her analysis of Activist Coalition Frameworks(ACF) as a neoliberal tool is insightful:

    https://scholarworks.iupui.edu/bitstream/handle/1805/14007/Heather%20Harvey%20Thesis%20Final%20Approval.pdf?sequence=1&isAllowed=y

    Hudnut’s successor, Stephen Goldsmith carried on this smaller-government, local level responsibility style of politics. According to an article in the Wabash Magazine, Leading from the Grassroots (Goldsmith 1998, 2), he built his political career by,

    “…adhering to a set of principles called the Benjamin Rogge Ideas. Their initiatives were driven by the idea that small government produces more value because it encouraged residents and community organizations to tell city officials how services should be delivered in their neighborhood.”
    However, as we see today, rather than representing the democratization of neighborhood governance, in many cases, these initiatives have placed the power to approve or deny development into the hands of only a few. Based on the principles laid out by Hudnut, the effort to devolve authority to states and cities resulted in more power being shifted from City Hall to dozens of neighborhood-level organizations. (Goldsmith 1998, 3).

    This steady devolution of government to the neighborhood level has been highlighted as a main catalyst for the phenomenon of conflict within the Crooked Creek6neighborhood and policy subsystem. The emergence of the devolved social policies led to initiatives such as the ‘Front Porch Alliance’ (FPA)6, the Quality of Life plans7, and the Greater Indianapolis Neighborhood Initiative (GINI)8. Kennedy (2005, 2) argues that, “…the Indianapolis experiment under Goldsmith has been an attempt to remake government in the image of private business, where competitiveness and the ability to accommodate constant change are necessary.” More importantly, “The lesson of the Indianapolis experiments appears to be that such a paradigm operates to diminish social capital, discourage political participation, and seriously undermine the community of trust necessary for effective governance” (Kennedy 2005, 2).

    This shift in the community development and funding paradigms meant responsibility of improving community was shifted to the local level. As Terry M. Neal (1999, 1) argues, “Goldsmith’s philosophy meshes with Bush’s vision of ‘compassionate conservatism,’ which seeks to take the harsh edge off conservative ideology without straying from basic tenants of smaller government and personal responsibility.” These were the kinds of political principles and ideologies instilled by Indianapolis Mayors from Lugar to Hudnut, Peterson to Goldsmith which have directly shaped the current community development paradigm in Crooked Creek. In the city of Indianapolis, policies have been adopted that allow these neighborhood organizations the power to oppose any requests for rezoning decisions.

    (copied and pasted elsewhere in case this comment lands in the Uprise circular file)

    • If I may, I would like to add a few things to my comment above. First, this piece on Goldsmith’s privatization efforts in Indianapolis which has garnered him a reputation as an expert by so called Democrats such as Mayor Elorza:

      https://citylimits.org/2010/06/30/new-deputy-mayors-privatization-push-still-has-critics/

      “When Goldsmith moved from layoffs to actually privatizing services, his initiatives featured a common theme: City services would be farmed out to a private firm, which would then hike fees. If this raised issues of fairness for low-income residents who couldn’t afford the new rates, the fiscal results weren’t much more promising.”

      ” According to Indiana Alliance for Democracy president Jack Miller, writing in the 2001 anthology “To Market, To Market: Reinventing Indianapolis,” revenues indeed went up, but only for the private partners . .
      “At the same time, critics began alleging that rather that truly leveling the playing field for private contractors seeking to bid on public services, Goldsmith was favoring campaign donors and political allies.”

      “Asked in 1996 about the benefits of using ORS to do construction work in the city’s parks, Goldsmith’s parks director Leon Younger replied: “Oh, I wouldn’t say there was a savings … It’s strictly a business decision based on our ability to get it out of our operating budget and over to our capital improvement side.”?”

      . . . And very interestingly his giveaways to sports franchises:

      “Indeed, to some of his Indiana critics, Goldsmith’s greatest flaw was his reliance on debt financing. “One of the things they did was keep refinancing bonds and never paying them down,” says Andrews. The “poster child” for this, she says, was the Hoosier Dome, the home of the Colts football team: Originally financed with $50 million in bonds in 1984, multiple refinancings by Goldsmith and his successor Bart Peterson left it with $70 million in debt by the time it was demolished in 2008. At the same time, Goldsmith renegotiated the Colts’ lease to give them an out clause, one they ended up leveraging into a new $687 million stadium, 90 percent of which was paid for by taxpayers. (Goldsmith was also responsible for the city’s lease with the Pacers basketball team for the taxpayer-built Conseco Fieldhouse, in which the team pays just $1 a year in rent, while keeping all revenues from events there.)”

      Was the coalition that put Elorza in power a collection of Democrats or Republicans? Obviously, they weren’t Democrats. Do party distinctions really matter anymore where economic policy is concerned? This time around Goldsmith is suggesting a P3(“long term maintenance contract”). Did he actually say “non-profit oversight by elected officials”? Chosen by whom?

      Charles Brunie to Gina Raimondo at the Manhattan Institute:

      “On another big topic the timing seems ideal for somebody to take the ball on privatization and I look at the Eurozone ‘thing’ and I think those banks and countries are going to be selling off assets like crazy . . .”

      That’s the same Manhattan Institute founded by William Casey, the right wing think tank affiliated with the Kochs, ALEC and the Social Policy Network. These facts don’t seem to matter to some.

      Re: other aspects of our water system -The partial lead water line replacements are continuing on the East Side this summer. The issue is galvanic corrosion. That fact which has been known since at least 2011 when Washington University published its study on the problem was downplayed by CLAP and supporters of Marcus Mitchell in his 2014 bid to unseat Kevin Jackson, all of whom chose, instead, to focus on a study done at American University which never offered an explanation as far as the root problem of galvanic corrosion, and the EPA’s and Providence city government’s role in the matter but chose to focus on the end result at the tap. The city is offering loans, now, of up to $3,000.00 for private lead service replacements. Articles on what transpired around the Mount Hope neighborhood stated that at at least one house the cost would be $5,000.00. I know that a lead water service replacement done up the street from me ran about $10,000.00. For some, the choice may be poison or to sell your home at a discount. Is this the result of an unintended consequence? I don’t think so.

      • It was actually Virginia Tech that did the Providence lead pipe study. American University School of Communications only reported on it. “Toxic Taps” was a very slick film done on the problem. It was done by a local filmmaker. I wonder who funded it. However, the film was more a campaign advertisement done on behalf of Marcus Mitchell and not really his supporters, necessarily, but people who would resort to anything to get rid of Kevin Jackson.

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