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City to divert wastewater cash to coffers

March 21, 2013

WOONSOCKET — On a split vote, the Budget Commission has approved new contracts with Bellingham, Blackstone and North Smithfield that compel those communities to pay the city millions in “host fees” for using the Woonsocket Regional Wastewater Treatment Plant.
The fees, which amount to more than $6.2 million over 20 years, mark the first time the city has taken money from outside ratepayers that will be deposited into the city’s general fund instead of a
self-sustaining, ratepayer-generated fund that supports all other wastewater operations.
City officials say that the city deserves the money to compensate for the aggravation of having the plant within its borders, including the diminution of property values, odors and regulatory problems associated with the Cumberland Hill Road facility.
Commission Chairman William Sequino, however, argued that the money should stay with the wastewater fund, where it can be used to pay down debt incurred as a result of plant improvements and lower rates for everyone.
Sequino cast the lone vote against a resolution establishing the fees Tuesday.
Under a cost-sharing schedule conceived by Councilmen Albert G. Brien and Daniel Gendron, the town of North Smithfield, the heaviest outside user of the plant, will pay the most – about $824,724 a year. Bellingham will pay $339,034 a year, and Blackstone, $199,261.
The agreements actually call for the three communities to kick in some $27 million in all for their share
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of ongoing plant upgrades ordered by the state Department of Environmental Management. Colorado-based CH2M Hill won an $80 million contract from the city last year to complete the work, which represents about half the worth of the pact, and operate the plant for 20 years.
With the exception of the host fees, the contributions the suburban communities are making to offset their share of project are going into a separate fund used to pay down the debt on the money the city intends to borrow to pay for the upgrades.
The host fees are to be deposited into the general fund, which means the city can use them for anything it wants.
Sequino didn’t take issue with the concept of host fees, but how the city intends to budget them. The town manager of East Greenwich said that in his experience, money generated by ratepayer-supported utilities should remain within the domain of those organizations. The wastewater division is supported by an autonomous budget known as an enterprise fund.
He also questioned whether funneling ratepayer generated money into the general fund is harmonious with standard accounting principles. In the water department, which is regulated by the Public Utilities Commission, the practice would not be allowed.
Capturing the host fees in the general fund marks a rare point of political agreement for Fontaine and Councilman Brien, who helped draft the resolution establishing the fees. Like Fontaine, Brien says the city should have some discretionary compensation for putting up with the burden of being the community the plant calls home.
“The plant is located in the city of Woonsocket and it’s been an annoyance to put it politely,” said Brien. “We put up with the added traffic, we put up with the stink and all the other negatives associates with having the facility located within our city.”
Brien said the host fees were based on traditional cost-sharing ratios that have been passed along to Bellingham, Blackstone and North Smithfield since the days of the now-defunct Regional Wastewater Commission, some 25 years ago.
The new terms will take effect immediately, according to Public Works Director Sheila McGauvran.
The pacts are also a milestone of sorts in the ongoing wastewater improvement project. Without approved intermunicipal agreements in place, the city cannot borrow the money needed for the upgrade from the Rhode Island Clean Water Finance Agency.
The upgrades are needed to comply with orders from the state Department of Environmental Management to reduce phosphates and nitrates in treated water discharged by the plant into the Blackstone River. The chemicals are commonly associated with household detergents and lawn fertilizers.
The next benchmark that will require approval from state regulators is to match up plans for the plant upgrades with those of Synagro, the privately-run sludge incinerator next door. Synagro is building a $10 million co-generation turbine that will convert waste heat from its operations into electricity. The city intends to buy that discount power to offset energy consumption at the new wastewater plant.
“We need to kind of marry their project with our project and it has to be done by the end of the year,” she said.
DEM, which has repeatedly pushed back the city’s deadline for completing the project, now says it must be finished by May 2017.

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