13 replies to this topic

[Patrick Ward]

Anybody think this is a bad idea? Anybody think the City Council might be moving too fast on this?
I do.

PROVIDENCE — The city is considering selling the Providence Water Supply Board and the network of reservoirs and treatment plants it controls in order to pay down the huge debt in the city's pension system.

City Council members hope that they can rake in a one-time payment of $400 million to $600 million for the water system, which includes the Scituate Reservoir. They plan to form a special committee to obtain an appraisal of the system, and hope that they can line up a private buyer by the end of the fiscal year in June.

The Providence system serves about two-thirds of the state's residents, has more than 900 miles of pipes, and operates 6 reservoirs covering 4,600 acres.

http://www.projo.com...12.38e6b8b.html

[JimmyGreaves]

This is probably more suited for a political board but, yes, it is a bad idea.  Our electricity and natural gas companies are now privately owned.  Deregulation was supposed to be good for consumers.  In fact the opposite has happened.  We have a monopoly in the state for electricity and natural gas and rates keep climbing.

We need to learn from history.  When he was mayor of Cleveland, Dennis Kucinich refused to sell the city owned electricity company to a private competitor when the city was facing similar financial hardship.  Thirty years later, that decision is credited with saving Cleveland residents close to $200 million in rate payments.

The gain with selling Providence Water would be very short-term if any.  We as city residents need to propose solutions in addition to reacting to what we perceive as bad decisions.  How do you pay your debts in a receding economy with state help dwindling?

Councilman Lombardi was quoted in the paper in saying that the deal would be a lot more complicated than as is currently being presented.  I will make my feelings known to the council that this should not go forward.  Hopefully, reason will prevail.

[yossarian]

JimmyGreaves, on Apr 1 2008, 05:03 PM, said:

This is probably more suited for a political board but, yes, it is a bad idea.  Our electricity and natural gas companies are now privately owned.  Deregulation was supposed to be good for consumers.  In fact the opposite has happened.  We have a monopoly in the state for electricity and natural gas and rates keep climbing.

We need to learn from history.  When he was mayor of Cleveland, Dennis Kucinich refused to sell the city owned electricity company to a private competitor when the city was facing similar financial hardship.  Thirty years later, that decision is credited with saving Cleveland residents close to $200 million in rate payments.

The gain with selling Providence Water would be very short-term if any.  We as city residents need to propose solutions in addition to reacting to what we perceive as bad decisions.  How do you pay your debts in a receding economy with state help dwindling?

Councilman Lombardi was quoted in the paper in saying that the deal would be a lot more complicated than as is currently being presented.  I will make my feelings known to the council that this should not go forward.  Hopefully, reason will prevail.

FWIW, the natural gas and electricity companies for the most of this state have always been privately owned.  The change has been the consolidation of those companies - first on a statewide level and then more recently regionally/nationally.  Likewise, utitlities in RI, as in most of the country, have always been monopolies - that is why their rates have been and continue to be regulated.  Our problem has been a string of republican governors who have appointed pro-utility types to the PUC instead of more consumer oriented people.

This is not to say I favor the sale of the Board.  Somebody needs to due a thoroughgoing analysis of the costs and benefits.  For some reason, I just don't see the council stepping up to the plate on this one.  

One benefit that comes to mind, is that with a smaller unfunded pension liability, the City's bond rating should improve, thereby lowering the cost of futuring borrowing - key for all those folks clamoring for a waterfont ballpark.

[jencoleslaw]

what happens to all the people who work there, though? Does the city just absorb them elsewhere (thus the payroll and pension liability issue is moot) or do they get laid off?

[Patrick Ward]

jencoleslaw, on Apr 2 2008, 03:12 PM, said:

what happens to all the people who work there, though? Does the city just absorb them elsewhere (thus the payroll and pension liability issue is moot) or do they get laid off?

No the city does not absorb them. Since the private buyer will need people with institutional knowledge to run the whole thing most of them would go to work for the new owner. Having been through 2 acquisitions myself thats my best, and I think fairly accurate, guess anyway. With fewer people on the payroll thats good for the city. Bad for politicians because PWSB has always been a source of patronage jobs. (Again, another good thing for the city) But the pol's are also seeing a big payday with this sale and thats enough to make them take a good hard look at this.

I have been thinking about this for the last few days and can see some of the advantages to it. If you look around the country, especially out west where they don't have as much of a historical perspective as we do you see that other municipalities are doing it. I still need some time to figure out if this is a good or bad thing.

BTW - Kucinich did not sell the power company and Cleveland became the first American City to default on its financial obligations since the Great Depression. They eventually had to raise the income tax. And he lost his re-election campaign.

Edited by Patrick Ward, 03 April 2008 - 11:24 AM.

[jencoleslaw]

This is Providence. Do you really think the Union will want to lose all those employees? Do you think the employees will want to lose all their sweet sweet benefits?

I think that for the right reasons it might be a good idea, but if it is for a one time payment that will stop the city's budgetary hemorrhaging, what is going to happen next year? Do we sell Roger Williams Park?

[Patrick Ward]

jencoleslaw, on Apr 3 2008, 11:36 AM, said:

This is Providence. Do you really think the Union will want to lose all those employees? Do you think the employees will want to lose all their sweet sweet benefits?

I think that for the right reasons it might be a good idea, but if it is for a one time payment that will stop the city's budgetary hemorrhaging, what is going to happen next year? Do we sell Roger Williams Park?

I am not sure what power the Union might have to block a sale. As for the employees that would go to work for the new owner they would continue to get beneits. Maybe they would not be a sweet as what the city offers but still most big private sector employers have decent benefit packages.

Paying down the city's $600M unfunded pension liability is a damn good reason. Once thats done we won't need to sell the Park.

[TheAnk]

Here's a novel idea.. And maybe I'm just spitballing here.. How about we no longer use pensions?

Isn't every pension ever created simply a Ponzi scheme? Why do we keep supporting these failed entities? You show me one successful pension ever, and I'll say give it 20 years.. It will fail because it has to..

The one thing that never ceases to amaze me is the support for these things; pension, social security, etc.. Its almost like us as people enjoy living a lie if it gives us a false sense of comfort for the future..

The system is broke NOW.. Why band aid it when it will only get worse? Why would a city sell a sustainable income producing inflation protected asset to fund an ever increasing ad infinitum liability?????

I would really like to understand these things so I can make sense of them.. But my mind does not work this way...

[yossarian]

jencoleslaw, on Apr 3 2008, 12:36 PM, said:

This is Providence. Do you really think the Union will want to lose all those employees? Do you think the employees will want to lose all their sweet sweet benefits?

I think that for the right reasons it might be a good idea, but if it is for a one time payment that will stop the city's budgetary hemorrhaging, what is going to happen next year? Do we sell Roger Williams Park?

A condition of the sale will almost certainly be that the new owner recognize the existing collective bargaining unit and accept the existing contract (for the time being).  In the short term a sale would have little to no impact on the rank and file.  The higher ups and upple middle management would likely be gone in short order.  Over time the number of rank and file would probably shrink.  The biggest obstacle to a sale would be the council's willingness to give up a HUGE source of patronage jobs.

[Bd02909]

I  would think that whatever happened when the trash collection was privatized, might be a good indicator of what would happen to the employees of the water board, even tho it happened years ago.

Edited by Bd02909, 04 April 2008 - 04:26 AM.

[citygirl]

Patrick Ward, on Apr 3 2008, 11:06 AM, said:

No the city does not absorb them. Since the private buyer will need people with institutional knowledge to run the whole thing most of them would go to work for the new owner. Having been through 2 acquisitions myself thats my best, and I think fairly accurate, guess anyway. With fewer people on the payroll thats good for the city. Bad for politicians because PWSB has always been a source of patronage jobs. (Again, another good thing for the city) But the pol's are also seeing a big payday with this sale and thats enough to make them take a good hard look at this.

I have been thinking about this for the last few days and can see some of the advantages to it. If you look around the country, especially out west where they don't have as much of a historical perspective as we do you see that other municipalities are doing it. I still need some time to figure out if this is a good or bad thing.

BTW - Kucinich did not sell the power company and Cleveland became the first American City to default on its financial obligations since the Great Depression. They eventually had to raise the income tax. And he lost his re-election campaign.

How about if the city gets to sell its water?  Right now, the city supplies water to other jurisdictions who are then allowed to sell it!  But we can't!  It's been brought up in the General Assembly numerous times and this restriction on getting a reasonable return on the city's asset is always maintained!
So before it gets turned over to a private company to loot and pillage (and what --- do we think a company is going to NOT charge the other users?) let's see how the city can better manage the resource.  

But I despair of anyone on the City Council having the interest or attention span to pursue the economics of this issue.

[basachs]

citygirl, on Apr 6 2008, 02:06 PM, said:

How about if the city gets to sell its water?  Right now, the city supplies water to other jurisdictions who are then allowed to sell it!  But we can't!  It's been brought up in the General Assembly numerous times and this restriction on getting a reasonable return on the city's asset is always maintained!
So before it gets turned over to a private company to loot and pillage (and what --- do we think a company is going to NOT charge the other users?) let's see how the city can better manage the resource.  

But I despair of anyone on the City Council having the interest or attention span to pursue the economics of this issue.

I agree completley with this. The effort should be spent on allowing Providence to realize some economic gain from this tremendous asset we have. Seeling it for a one time fix is easy.

We elect people so they can accomplish the hard things.

[taraohare]

[quote name='Patrick Ward' date='Apr 1 2008, 02:52 PM' post='957828']
Anybody think this is a bad idea? Anybody think the City Council might be moving too fast on this?
I do.

PROVIDENCE — The city is considering selling the Providence Water Supply Board and the network of reservoirs and treatment plants it controls in order to pay down the huge debt in the city's pension system.

City Council members hope that they can rake in a one-time payment of $400 million to $600 million for the water system, which includes the Scituate Reservoir. They plan to form a special committee to obtain an appraisal of the system, and hope that they can line up a private buyer by the end of the fiscal year in June.

The Providence system serves about two-thirds of the state's residents, has more than 900 miles of pipes, and operates 6 reservoirs covering 4,600 acres.

[url="http://www.projo.com/news/content/WATER_BOARD_03-25-08_E19G8MM_v12.38e6b8b.html"]http://www.projo.com/news/content/WATER_BO...12.38e6b8b.html[/url]


I know you had written this post some time ago, but the issue is coming closer to decision time.  Privatizing our most precious resource is an extremely bad idea for a number of reasons.  I have listed some great sites below that clearly describe the horror many communities faced world wide after selling their public drinking water to a corporation.  In my opinion, water is necessary for life; therefore, it should not be owned privately for the sole purpose of increasing shareholder's wealth. As of late we have all witness have corporations do business (AIG, Fannie & Freddie).  Currently, the Water Resource Board has authority over all public water sources in the state.  The Resource Board is a government agency.  They perform research on waste-water management, environmental concerns, allocating water fairly, maintenance issues and more.  The key word here is they have authority over PUBLIC water sources, not private.   You will see when you read through some of the websites below, this issue is larger than money (fixing pensions plans, reduced government salaries, etc..) it is an issue about our freedoms and what we own as citizens in this country. Keeping the water as a public owned resource, we can hold our government officials accountable, once it is privatized it becomes an increasingly difficult battle, as corporations have the money to spend on winning any legal battle (see how Bolivia, a developing nation with little money, was sued by the Bechtel Corporation).

[url="http://www.thirstthemovie.org/"]http://www.thirstthemovie.org/[/url]
[url="http://www.bluegold-worldwaterwars.com/"]http://www.bluegold-worldwaterwars.com/[/url]
[url="http://www.bizjournals.com/atlanta/stories/2002/08/12/story1.html"]http://www.bizjournals.com/atlanta/stories.../12/story1.html[/url]

and there are plenty more...

[taraohare]

Privatizing Water:


I  find it interesting  that the citizens of  this state are given the opportunity to vote on the decision to build a Casino  but do not have a say on whether or not to sell our public drinking water to a  private corporation.  The Scituate  Reservoir provides drinking water to nearly 70% of our state's population.  By privatizing this essential resource, you  will be handing over control of not only our state's most precious resource,  but you also will be entrusting a private corporation to the management of our  lands, our safety, our economic stability, our health, and the right to life of  every citizen in this state.  The recent  financial crisis has revealed the greed and incompetence of many of these  corporate giants.  Private corporations  have only one goal: to increase shareholder's wealth.  Public ownership, on the other hand, allows  citizens to hold our public officials accountable. We have the power to  challenge our representatives against rate hikes, failed systems, faulty fire  hydrants, waste-water pollution, wetland and estuary preservation, and  protection for union laborers.  I  understand that upgrades to our water systems are costly, and the need to  expand service can present an economic burden, but I am certain that  relinquishing control to a corporation is not the answer. Private water  companies have been tested in a number of cities all over the world, including  here in the United States. These cities were  promised improvements to infrastructure, lower rates, and reduced public debt, but  failed to deliver on these promises almost every time. Many of these corporations come with considerable  debt. Companies like Suez carried debt close  to 30 million dollars when it gained control of Atlanta's  waterworks. Thus, in order for them to make a profit, they must cut cost to pay  down their debt. This process usually translates into poor service and higher  rates. Some things should not be for sale, and water is one of them. Water is  not a commodity, but a necessity for life.   I am extremely concerned that this seems to be a deal that is happening  behind closed doors.  The citizens of this  state deserve the right to vote on such an important issue.   I implore everyone reading this letter to  research the numerous complications that other cities faced once they  relinquished power to these multinational, billion-dollar corporations. Not  only are you placing a price tag on our drinking water, but on our liberties as  well.  If you control the water, you can  control a people. Below are two links which provide detailed information about  the points I cited in this letter.  

    http://www.afsc.net/...ivatization.pdf

    http://www.tradewatc...ents/ACF9FB.pdf