Ten-year tax treaty struck with Pawtucket Water Supply Board

Ten-year tax treaty struck with Pawtucket Water Supply Board

PAWTUCKET - The Pawtucket Water Supply Board's eight-year-old lawsuit over property tax bills from Cumberland ended this month with a 10-year tax treaty that calls a truce between the two communities until at least the year 2022.

That's true no matter how the real estate market fluctuates over the decade or even if the PWSB buys or sells land in Cumberland.

Moreover, there's a mechanism for extending the treaty another 10 years following independent property assessments by both sides a year before it expires.

Under the agreement, worked out with the help of a mediator, Pawtucket will pay Cumberland $4.6 million over the next 10 years according to an annual schedule of quarterly payments that begins this year with a $682,000 payment and concludes in 2022 with a $350,000 payment.

The treaty covers all the city's assets in Cumberland.

Pawtucket first established Cumberland as its water source more than 100 years ago and currently provides water directly to Cumberland households south of Marshall Avenue and wholesales water to Cumberland's system.

In addition to the two reservoirs, Pawtucket today owns about 2,000 acres of watershed land in Cumberland contained in 51 pieces of property. It also owns four buildings, including the purification plant, plus fencing, sheds and garages, four dams, a pump station, hydrants, water mains and service connections.

In Cumberland, Mayor Daniel McKee termed the agreement "a fair and equitable way to move forward" after years of uncertainty.

"This gives us consistency," he said.

Town Solicitor Tom Hefner said the settlement is especially "beneficial to the town in light of what can happen in these cases." The town's annual audit has been making note of this pending possible litigation without pinning a number on the amount at risk.

Pawtucket Mayor Donald Grebien hailed the agreement, saying, "Cumberland originally set high unreasonable values on the property owned by the PWSB." In an email Monday, he noted, "Cumberland has an advantage over Pawtucket because they are not the host community."

Grebien said he commends Chief Engineer James DeCelles, PWSB Attorney Joseph Keough and the members of the PWSB "for being persistent and making sure they protected the ratepayers."

"This settlement is a compromise of many years and a lot of hard work," he said. "It represents a phase-down and a reduction of the assessed value of 24 percent."

Cumberland's attorney on this case was Michael McElroy of Providence, a lawyer who specializes in public utilities and cut his teeth at the Tennessee Valley Authority where he spent four and one-half years in the trials and appeals section of the TVA legal department handling litigation and regulatory matters.

Clients today include a laundry list of Rhode Island area water, wind and telecommunications firms as well as major corporations.

McElroy told The Breeze that appraising property "is an art, not a science" and the settlement relieves Cumberland of the risk of losing in court to Pawtucket's appeal of the valuation Cumberland set.

Since Pawtucket, by law, has paid the full bill of $682,000 since 2005, even a small rebate could have been costly, particularly when the 12 percent interest rate is factored in.

"Pawtucket firmly believed Cumberland was over-collecting," he said, and had properly filed appeals each year.

"The only outcome that could happen is that Cumberland could lose and we'd have to give some back at a 12 percent interest rate.

"From Cumberland's standpoint," he said, "we now know how much is guaranteed with no litigation.

"And we don't have to pay Pawtucket a penny."

On Pawtucket's side, the agreement gives the city a fixed number to take to the Public Utilities Commission during rate hearings.

And for both sides, the meter is stopped on growing attorney fees.