Nearly three decades ago the administration of Providence, Mayor Buddy Cianci, worked out a deal for managing the Port of Providence. Here’s a quick and dirty overview: A nonprofit, in the form of a 501c3 was established to oversee the city-owned land in the Port. This 501c3 contracted with Waterson Terminal Services to run the Port, extracting rent from tenants and sharing a percent of the revenue with the city.

[I’ll note here that the same people who privatized the Port of Providence also helped to establish the first private prison in Rhode Island, the problematic and racist Wyatt Detention Center. See: ProvPort’s Managers Tied to Creating Wyatt Detention Center’s Financial Failure]

This early stab at privatization in Providence has yielded mixed results. While the city no longer had to worry about the day-to-day operations of ProvPort, something city officials were not necessarily good at, they also lost the much of their ability to monitor and regulate activities in the Port. This has led to the Port being the largest emitter of toxic emissions in the region, which has the effect of burdening the abutting communities of Ward 10 and 11 – Washington Park and South Providence – with some of the highest child asthma rates in New England as well as other, less well understood medical issues.

In fact, the area around the Port, said Julian Rodriguez-Drix, who chairs the Providence Sustainability Commission, “is one of the biggest environmental justice communities in the whole state and and highly ranked, in terms of environmental justice issues, around the entire country.”

It is into this context that Providence City Council President John Igliozzi has introduced resolutions authorizing a lease extension and bond indenture for ProvPort, Inc, as well as a Tax Exemption Agreement.

What does this mean?

It means 30 more years of the same old stuff at the Port, with some small, mostly cosmetic concessions to the abutting communities. The resolutions are being fast tracked by a lame duck City Council to prevent incoming city councilmember from having input into the direction of the Port. Whatever deals are made now will impact the city, for better or worse, for the next three decades.

At a meeting of the Providence Sustainability Commission held on Monday, Keith Stokes, Director of Business and Development for the City of Providence, who also oversees the Office of Economic Opportunity, sat down to answer questions about the tax exemption, lease extension and bond indenture for the Port.

The Political Reality:

The Providence City Council, thanks to term limits, is dramatically changing in January. City Council President John Igliozzi (Ward 7) is out, and the inside bet is that Rachel Miller (Ward 13) will be elected to his position. In addition, Nirva LaFortune (Ward 3), Nicholas Narducci Jr (Ward 4), Michael Correia (Ward 6), Carmen Castillo (Ward 9), Katherine Kerwin (Ward 12) and David Salvatore (Ward 14) were all term limited or did not seek re-election. Seven new city councilors are expected to be sworn in come January, shifting the age, demographics, political alignment and potentially the direction of the legislative body.

Fear that a new city council might not be receptive to a deal that preserves the status quo at the Port necessitated a special meeting of the city council, called by Council President Igliozzi, to assign the resolutions he sponsored to the City Council Committee of Finance on November 15. Finance Committee Chair Jo-Ann Ryan (Ward 5) dutifully scheduled a public hearing on the resolution for the Monday following Thanksgiving, November 28th at 5:30pm.

After this public hearing, the bill can be voted out of committee, sent to the entire City Council, and passed twice before Christmas – an apparent gift for those who run the Port, and more pollution in the lungs of the children who live in Wards 10 and 11.

Director Stokes would not acknowledge the politics at work in fast tracking the Port legislation. During the Sustainability Commission meeting, Uprise RI asked about their accelerated timeline.

Uprise RI: What is the timeline? How fast would you see the contract/lease being approved? Before the end of the year, early next year? What does that look like?

Director Stokes: [That is] entirely up to the council.

Uprise RI: I understand that, but I’m wondering, from a political point of view – you understand that next year is very different from this year and it seems like this is happening a little fast.

Director Stokes: No, the timing of it was the timing. Again, it’s entirely up to the council and a council has to deliberate. The current council, if they defer to the next council, that’s entirely their decision. The timeframe should be based upon what they’re comfortable with and what they’re willing to move forward.

Earlier, Director Stokes had stated that, “My humble perspective is that the beginning of the public process is to have a contract agreed upon by both parties to be brought before the city council because they are elected to represent the people and they are set up to do the oversight and to provide the input.”

The “New” Deal

According to Director Stokes, negotiations between the City and ProvPort, Inc. have been going on for about two years, with the Director’s involvement being over the last nine months. The existing deal does not end until December 31, 2024, so there is still over a year to explore options before the lease is up.

“This isn’t something they’re going to negotiate for two years, three years,” said Director Stokes. “If they wait two years, three years, there’ll be other ports and other operations that will come forward. It’s a highly competitive environment.”

That said, negotiations have been ongoing for two years already, with no public input, so the sense of urgency seems to be rather new.

Director Stokes has considerable background in the operation and financialization of Ports. “I ran a state development agency and I was involved in that agency for almost 20 years overseeing and creating what is the Quonsett Development Corporation,” said Director Stokes. “I sat on that board, I chaired that board, and then worked on the early stages of Deepwater Wind and initiating that as a demonstration process. Clearly we were successful in that.

“This began almost two years ago as ProvPort was beginning to think through not only its short term, but long term operations, largely tied to the changing nature of northeast port facilities, driven by the offshore wind industry which is creating what we believe is a significant opportunity to not only meet our renewable energy goals, but also to begin to change the shape and operations of urban seaports from Maine down into the Carolinas,” said Director Stokes, “ProvPort would very much like to position themselves to further expand operations and have the physical capacity to meet the needs of the offshore wind industry.

Director Stokes continued:

“There are a number of offshore wind development projects, including phase two here in Rhode Island. The challenge is that for the most part, the large components of offshore wind – the stanchions, the towers, the turbines – are going to be manufactured in Europe and then transported largely by barge, by shipping lanes, to ports here in the Eastern Seaboard where they’ll be assembled, tested, and then barged out for installation in the offshore wind areas. ProvPort, the Port of Davisville at Quonsett, are two viable locations for that.

“One of the challenges we’ve had in Rhode Island is, Does the Port of Davisville, does the Port of Providence, and now, the South Quay project which is East Providence Waterfront – Will they have the land area available to take these components, lay them out, do the work they need to do, and send them out? Every port is going through this issue.

“I think one of the positive consequences of this, from a community perspective, is that we’re starting to see these ports get out of what we call the bulk cargo business, the things that sit there that are not the most environmentally sensitive and community compatible, and getting into more containerized activity and such. Clearly when you’re bringing in the multimillion dollar components of an offshore wind system, you don’t want it sitting next to trash piles, tire piles, coal, salt, I mean, all those things that aren’t congruent.“

In other words, the promise of wind energy money has incentivized the ports in Rhode Island to clean up their environmental impacts not because children were suffering from asthma, but because wind energy developers want cleaner facilities.

The Deal

An unusual aspect of ProvPort is that it was established as a 501c3 and as such, is a private nonprofit. For comparison, the Port in Quonsett if a quasi-public entity and therefore subject to the requirements of the Open Meetings Act and the Access to Public Records Act. ProvPort has decided unilaterally to hold open meetings, but is under no obligation to do so and of course, that could change at any time.

The deal under consideration by the Providence City Council does nothing to change the legal structure of ProvPort. It will continue as a 501c3 if this lease extension and resolution are passed.

ProvPort, said Director Stokes, “was created in the nineties as a 501c3 organization, not for profit organization, which is different than other ports that have publicly created port authorities. I used to sit on the state’s Department of Economic Development Port Authority Board in the nineties and the Almond Administration statutoryly changed that and created the Quonsett Development Corporation when I went on that board. That is a quasi state authority created by statute, but is required to follow all public notice, public open meetings laws and such as a public entity. As a 501c3, [ProvPort is] not as clearly obligated as a public entity. I think those are the issues of a 501c3, but that was the organization structure that was in place.”

There is nothing in the new agreements to change to nature of ProvPort’s organization into something more clearly responsive to the public.

The Master Planing Process

A key point Director Stokes leaned on in selling this deal to the Sustainability Commission was the creation of a “Master Planning Process.”

“I will tell everyone that as I came to be involved in the process, it was very important to me, representing the Office of Economic Opportunity and my background, that we build into this process opportunities where we had significant investments in the master planning process,” said Director Stokes. “I was surprised that this port had never operated under a master plan process. Nearly all competitive quality ports operate under a master plan.”

A Master Planning Process would involve a long process of public involvement in determining aspects of how ProvPort acts and operates, though it is unclear how this master planning process can be fully realized after the Port is locked into a legal contract.

A master plan, said Director Stokes, “takes years in some cases. It’s a very comprehensive process… I felt very passionate that if we’re going to agree upon putting before the city council an opportunity for lease extension and a tax exemption agreement, we have to build in a master planning process and that master planning process would require significant public participation and oversight. It would require significant inclusion of operations that meet environmental sustainability, social justice, and community engagement processes. It would be a very important process and that’s been agreed to by all parties.

“PropPort has agreed to set aside significant dollars that would go towards the master plan process, which would be initiated both by the city, led by the Planning and Development Department, working with the Sustainability Commission, my office, and others,” continued Director Stokes.

“A master plan process integrates all aspects of a port operation, but more importantly it is going to be a process that goes out to bid as an RFP and I would think it would be a national RFP,” said Director Stokes at another point. “The team who would be overseeing and managing the master plan would include engineers, environmentalists, community planners, community facilitators, architects and operators. I mean, a whole school of individuals will be looking at different aspects of that. The master plan process doesn’t happen in 60 days. It’s anywhere from six months to a year, as well it should be. There’s going to be a significant part of that, which is a community engagement process and that community engagement process will require a very formalized community facilitation process, which will be reviewed by the city and I would think by the council and approved by the council.”

Uprise RI asked about the limits of a master planning process being conducted after a contract between the city and ProvPort had been signed.

Uprise RI: After the contract is approved, there will be limits on what a master plan can and cannot do because they won’t be able to do things that violate a contract that’s been approved by the city. So putting the master plan afterwards limits what the master plan can do. Is that true?

Director Stokes: The master plan is issued and adopted both by ProvPort and the City of Providence. So any of the elements within the master plan as far as overseeing operations, investments, capital impacts, will be approved by both parties and will be incorporated into the operations of ProvPort going forward.

Uprise RI: Although it is hard to see [ProvPort] giving up any rights they have contractually obligated with the city within a master plan negotiation. I don’t see that [happening]. The contract will determine the limits of the master plan in real terms.

Director Stokes: Mm-hmm. It could, yes.

Taxes

The deal between the city and ProvPort is not a TSA (Tax Stabilization Agreement).

“Tax stabilization agreements provide a benefit to private developers where they defer or they reduce their tax liability in consideration for whatever they’re investing in,” said Director Stokes. “This is a tax exemption agreement. And in this agreement, it gives us the opportunity to create a revenue sharing partnership. In the revenue sharing partnership we’re looking for, at a starting point, 7% revenue sharing at the end of each year. 7% of the net revenues would come back to the city with a minimum of a half million dollars, regardless of the economic performance or the revenue in that year, a minimum would come back at a half million dollars.”

Director Stokes continued:

“On top of that, we also suggested two additional percents. 1% that would go to the creation of the community benefits fund and 1% to a sustainability fund at a minimum of $120,000 in each fund each year. Those two funds would replace the current neighborhood fund, which I think was at about $24,000,” said Director Stokes. “Our goal was to build in a master planning process that would guide operations and impacts to the port and have some of the best practices of oversight and community engagement. Also, to achieve additional capital dollars for the city’s general fund, but also targeted dollars for enhancing community benefits and sustainability. The way we drafted the community benefits, we defined that as benefits including, but not limited to, racial and environmental justice, economic and environmental impact, labor, job training, and port neighbor relations, as guided within the master plan.

“I looked very carefully at the sustainability report. I talked with a number of people to get a sense of what the value was in creating a community benefits project that really understood environmental justice and community needs. And then, under sustainability, the second $120,000 shall mean environmental sustainability projects that are provided by the master plan. And again, within that master plan process, we also state that Ward Councilmembers, whoever that might be in Ward 10 or 11 Providence, would participate as a part of the master plan and have a say and be consulted each year on how those community benefit sustainabilities are made.“

Bond Indenture

“The reason that there’s now a suggestion of going before the council to extend [the agreement] over 30 years within a company tax exemption agreement, is to begin to make significant capital investments in land acquisition opportunities, to begin to have ProvPort compete in this offshore industry,” said Director Stokes. “Tied to the decision making of why a 30 year tax exemption agreement, why a 30 year lease extension is, that as the part of the process the city would issue certificates of participation bonds, and ProvPort is willing to pay for those bonds over a 30-year period that would make both significant capital improvements support.

Director Stokes continued:

“Also, depending upon what the interest rates are, these bonds, which are terribly challenging in this market, would make anywhere from five to seven to nine million dollars available for dedicated public improvements inwards Wards 10 and 11, in the abutting communities.

“So the issue of why now was simply a case of taking the opportunity to have this public bond, which would make Port improvements and immediate community improvements. The requirements of the term of that bond would require that the port operator, Waterson Terminal Services, on behalf of ProvPort, would like to be able to know that they have a long term agreement in managing the Port. Most importantly, building revenue in that port that should in turn pay the bond debt service. That’s the issue.

“Now to speak candidly, the one thing that none of us control at this aspect is the markets and the markets right now are very challenging. There’s lots of disruptions and there’s no guarantee that anyone’s going out into the bond markets – either taxable or tax exempt bonds – anytime in the near future, because of the challenge of inflation, he uncertainty and such. From our perspective, getting the most competitive rate, the lowest rate, allows more dollars that can go towards public projects within the abutting neighborhoods. So if the rates are sky high and the cost of money is higher, then we’ll have less dollars available for those public investments. That’s the rationale and that’s the timing around it.“

2022 has been the worst year for bonds since 1976. Though they are likely to recover in 2023, there is no reason to believe that rushing into a bond deal in the next few months is a good idea. There is time to approve a bond indenture.

The Community’s Interest

“For many of us and folks in the community, this is the first time that we are hearing of it and are looking for information,” said Sustainability Commission Chair Rodriguez-Drix. “The city’s Climate Justice Plan, that was written through extensive community engagement over a couple of years, has a section on the Port of Providence as a key piece to our sustainability goal for the whole city, given that the Port of Providence is one of the biggest environmental justice communities in the whole state and and highly ranked, in terms of EJ issues around the entire country, is in Black, Latino and indigenous communities, and is also the place where there is the greatest concentration of polluters and fossil fuels coming into not Providence or Rhode Island, but the whole region.”

Chair Rodriguez-Drix continued:

“In terms of reducing fossil fuels and local emissions, the Climate Justice Plan prioritizes not reducing emissions in any part of the city, but particularly local point source emissions because of the health impacts of the harmful pollutants that come with carbon pollution. Also the Climate Justice Plan prioritizes the risk of climate change impacts in the Port of Providence area and the resilience goals, whether it be hurricane storm surge or other kinds of impacts.

“This negotiation for a new contract is a rare opportunity. The way it’s set up, there’s not a lot of opportunity for public oversight in the Port of Providence. Because of how it’s set up, there’s not a lot that is public information because it is a private non-profit. So this is a rare opportunity for the public to weigh in on that.

“What opportunities are there for public engagement? Who’s already been engaged? Who are those entities? How can the public be involved not in the public hearing coming up, but in the process, in the oversight? What is the timeline? My understanding of the lease is that it doesn’t expire for another year, so we’ve got some time and it seems like this is a rush thing that a lot of us are hearing for the first time.

“I understand that it’s been a two year process, but one that has been behind closed doors. And while I’m sure negotiations require a certain level of that, I wanted to open up with is, Is this the beginning of being able to have public involvement? What does that public involvement look like? How can people weigh in? How does this align with or not aligned with the climate justice goals and the things that this Commission is concerned about?“

Later, Chair Rodriguez-Drix added, “when we think about climate change timelines or what [industries] we need to phase out so we have space for things like offshore wind, we don’t have time to wait for another 30 year lease to be able to weigh in on that… We have already done a couple years worth of intensive community engagement around creating the climate justice plan that lays out what that is. It isn’t enough to say there’s more communication to be done in the future. Why can’t that be built into the agreement? [Why can’t we specify] types of industries that we want ProvPort to phase out and get rid of? … Why can’t that be written into the process?”

Trust and Harm

“There’s a trust issue here,” said Director Stokes. “I’ve heard from some of the people here, very rightfully so, there’s been ongoing concerns about trust and communication. Well, the same will go on the private sector side. They’re looking for a level of trust and obligation. Their feeling is that they’ve made years of contributions and investments here, which have value. Their current contract has created a value addedness… The goal is how do we create the best plan and best process going forward.”

“I have two children. We live in South Providence. My children have asthma, they have long seated, deep rooted asthma and it’s only getting worse. And it’s not just my children, it’s all the children,” said Commissionmember Chandelle Wilson who later added, “you can’t evaluate the value added without evaluating the harm that’s been done.”

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The Providence City Council Committee on Finance meets Monday, November 28, 2022 at 5:30pm in the City Council Chamber on the third floor of Providence City Hall. In person public testimony will be taken. Written testimony, due to the the Thanksgiving holiday, written testimony must have been presented by 3pm on Wednesday November 23.