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Mon November 15, 2010
COMMENTARY: Reservoir an underutilized resource
By SCOTT MACKAY
PROVIDENCE, R.I. – The autumn dance of foliage color has faded at the Scituate Reservoir. The pastoral beauty of one of Rhode Island's greatest assets masks the economic importance of one of the nation's best drinking water supplies.
Begun in 1915, the reservoir by the mid-1920s flooded a great natural bowl at the headwaters of the North Branch of the Pawtuxet River, creating the state's largest body of fresh water. It was the source of clean drinking water for Providence's huddled urban masses and the fountain for development of the industry that defined our state in the years before World War II.
Now, more than half the state drinks from the reservoir, which forms a long crooked V across the belly of Scituate. Many studies over the years have shown this water supply to be one of America's purest and most reliable.
Providence has long owned and maintained the reservoir. The city pays the workers and covers their pensions and benefits.
But although the city owns and operates the reservoir, it is regulated by the state Public Utilities Commission, which is barred by state law from giving the city a modest profit -known as a rate of return in utility-speak for the sale of water to other communities.
Providence pays taxes to other communities - more than a half a million dollars annually to Cranston and almost $5 million to Scituate - for property in those communities owned by the Providence Water Supply Board, the city agency that manages the reservoir.
Other water agencies, such as the Kent County Water Authority, purchase water from the reservoir for a wholesale price, and mark it up to sell to other West Bay communities. But Providence doesn't get a penny of this.
Now is a time when Rhode Island's largest city faces huge financial challenges. The state has cut about $40 million in state revenue sharing and education aid to Providence over the past three years. Strapped home owners cannot be expected to make this up. And in a recession, to raise taxes in Providence defeats the purpose of trying to attract new jobs to a city where 40 percent of the children are raised in poverty.
About half the property in the city is tax-exempt, including such grand non-profit institutions that are used by the whole state, such as Rhode Island, Roger Williams and Miriam hospitals, Rhode Island College and the University of Rhode Island's city campus. It is these non-profits that are increasingly the job-generating institutions in the city. Everyone talks about leveraging the Jewelry District as an economic incubator, but without Brown University's huge investment in a new medical school in the neighborhood, how realistic are such grandiose visions?
There is no better time than the present for Governor-elect Chafee and the General Assembly to allow Providence to use its ownership of the reservoir to generate money for the city, either by privatizing some of its functions or allowing this crucial utility to earn a fair rate of return for city taxpayers.
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