CITY OF CRANSTON, RI
For additional information, contact: Peter Alviti, Jr. Director of Public Works City of Cranston 869 Park Avenue Cranston, RI 02910 (401) 461-1000 FAX (401) 461-9650
DESCRIPTION OF PARTNERSHIP ARRANGEMENTThe City of Cranston's municipal wastewater treatment plant has been operated and maintained by a private firm, Professional Services Group (PSG), since 1989. The original contract was renewed in 1993. In early 1996, the City decided to explore the potential financial, environmental and operational benefits afforded through long-term lease or purchase of the wastewater facility by the private sector. Initial bids were received in April, 1996 from three firms. Competitive negotiations began in May and continued until a Request for Resubmittals was issued in September. Final proposals were received in October. The City selected the joint venture team of Poseidon Resources and PSG and Metcalf and Eddy in November. Final agreements were approved by the City in March, 1997. Under the new 25 year service agreement, the City will retain ownership of the facility. In addition to operating and maintenance, Poseidon/PSG's obligations are expanded to include repair/rehabilitation and capital improvements the plant and collection system, as well as satisfying a consent decree to upgrade to advanced treatment. In May 1997 the transaction was approved by the U.S. Environmental Protection Agency under E.O. 12803. With this approval, the Agency also decided to forgive the City's repayment of undepreciated grant funds (over $5 million) pursuant to Section 586 (a)(2) of the Water Resources Development Act of 1996.
ESTIMATED/ACTUAL COST SAVINGS -- IMPACT ON RATES
The original 5 year O&M agreement was estimated to have saved the City over $4 million. Under the new contract, Cranston will receive $48 million cash up-front. The cumulative projected savings for the full 25 year contract term is $74 million (or $23 million net present value). These funds will be used to repay a loan from the general fund to the sewer enterprise fund, eliminate the City budget deficit and defease outstanding general obligation debt carried in the sewer fund. The City will also benefit from capital cost savings associated with compliance with the consent decree (PSG has proposed a plan to slash the estimated $40 million cost for the upgrade to $3 million). Rates will not increase over current levels beyond normal inflation and commodity price rises.
Under the original 1989 contract, PSG guaranteed employment to all City treatment plant
staff for one year, and assumed the union contracts and associated salary and benefit
packages. Since 1989, operations staff has been increased and union contracts have been