Providence Hit with $1.3M in Unpaid Police Details

Friday, January 25, 2013

Stephen Beale, GoLocalProv News Contributor

 

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Providence is owed $1.3 million in past due payments for police details by businesses and other institutions, at a time when the city is facing a potential $15 million budget deficit, city records show.

GoLocalProv first reported that the city had significant delinquencies in police detail payments in June 2011, when the city was still in the throes of its budget crisis. The following year, the city council passed an ordinance mandating that any companies 60 days or more overdue provide evidence that they had entered into a payment plan before they could obtain any permits, licenses, renewals, or new police details.

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Despite the ordinance, the actual delinquent amount is up by about a third of a million from where it was two years ago. The delinquencies include owed payments for police, as well as some fire details.

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Overall, nearly one hundred and fifty companies are more than 30 days behind on payments, including companies like Verizon and 7-Eleven, city nightclubs like Colosseum and the Monet Lounge, a host of local construction companies, and a number of nonprofit community and cultural associations. The most delinquent institution is the Narragansett Bay Commission, a quasi-public state agency, which owes about $300,000 in past due payments. National Grid ranks second, owing nearly $100,000.

Nearly one hundred bills are more than 120 days late, totaling $656,000, as of December 2012.

City councilman calls for better enforcement

City Councilman Michael Correia, the author of the ordinance targeted at delinquencies, says he is pleased with the progress the city has made in enforcing police detail payments over the last year. He says the city has improved its collections rate from a dramatically low level before the ordinance passed to a current rate between 75 percent and 80 percent.

“I do have to say I am extremely satisfied with the collection rate and the progress we have made within the last year on this,” Correia said. “Like any system, nothing is perfect.”

He says the city can—and should—do more.

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“We need to do a better job of enforcement,” Correia added. “We still need to tighten up a few things on the communication part.”

In particular, he said the city Controller’s office needs to improvement its communication with the detail office in the Police Department. Likewise, there needs to be better coordination between the Controller and the various city departments that issues licenses and permits, Correia said.

One million dollars is no small amount for any city, especially one that is not quite out of the woods when it comes to its fiscal problems. Although the days when the city was veering towards bankruptcy appear to be behind it, the budget deficit has proved hard to kill, with Providence still saddled with a $15.2 million possible shortfall for the current year, according to a preliminary estimate based on a cursory analysis conducted by Internal Auditor Matt Clarkin.

In that context, ramping up collections on police details could wipe out a significant chunk of that deficit, Correia noted. “Every nickel and dime helps to bring this deficit down,” he said.

Companies say they are doing best to keep up

Some of the most delinquent companies did not dispute the city records, saying they are doing their best to keep up with their bills for police details and describing the delinquency as more of an accounting issue than anything else.

The top payer on the list, the Narragansett Bay Commission, is currently using police details for about $220 million worth of construction work scattered over a dozen sites in the City of Providence, according to spokesperson Jamie Samons. The work is part of the second phase of the Combined Sewer Overflow Project, meant to cut pollution in Narragansett Bay.

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So far, over the past 12 months, the commission has already issued $1.4 million in payments to the city for police details. Samons noted that this month the agency has issued two checks to Providence, totaling $108,022. A third check is scheduled to be cut on Feb. 11 in the amount of $227,323, according to Samons.

“As you can see the police details is a substantial part of our construction cost,” she said. “So we’re continually paying our invoices.”

She added that the CSO project is funded through borrowed funds, which could be another factor in possible delays in payments, since the checks to the city are issued by a third party trustee of the debt, which is U.S. Bank.

A regional spokesman for National Grid, David Graves, said he is not aware of any disputes over billing with the city. He indicated that his company is doing its best to keep up with the bills as well, noting that in Rhode Island alone National Grid manages hundreds of work sites. Graves also noted that National Grid switched to a new accounting system last November, which could be causing delays in processing payments.

City forgives most of detail cost for WaterFire

City records indicate that the second most delinquent account is actually WaterFire, at about $98,000. But the nonprofit organization has had a long-standing arrangement with the city that it would contribute just $25,000 towards its annual police detail costs, with the city eating the rest of the tab. That arrangement is currently spelled out in a five-year contract reached with the city last August, according to the Internal Auditor’s office and representatives of WaterFire.

In 2012, that meant that WaterFire paid $25,000 while the city shouldered the remaining $35,000, according to documents from the Internal Auditor.

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Under the terms of the contract, WaterFire isn’t really delinquent—even though the city accounting system still logs their account as delinquent and continues to send them the bills for the amounts, according to Barnaby Evans, the executive artistic director, and Peter Mello, the managing director.

“It shows on paper, but we’re entirely paid up,” Evans said.

“We’re a debt-free organization,” Mello added.

But Correia says that, if given the opportunity, the city should consider renegotiating the terms of the contract, flipping the arrangement so that the city would chip in a flat $25,000 with WaterFire responsible for the rest. “WaterFire is a very important thing that happens here in the city, but we really need to look at what it’s costing the taxpayers of the city,” Correia said.

Correia said the city could use the saved funds elsewhere, especially at a time when the budget is tight and manpower is down. “I would rather be spending this money on overtime in my neighborhood,” Correia said.

WaterFire economic benefit touted

Evans said that when the $25,000 flat-fee was originally negotiated, the amount covered the bulk of the annual cost. He said it was the city’s decision to bump up manpower and extend hours in recent years, while WaterFire hasn’t added any events. And the $25,000 figure doesn’t include payments for other permits WaterFire makes to the city. In all, the organization makes about $32,000 to $33,000 in payments to Providence.

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But the city also forgives other payments that would normally be required and makes other in-kind contributions to WaterFire.

The total value of forgiven payments and in-kind donations—including parks maintenance and permits, police details, traffic engineering, and public works maintenance—comes out to $146,680 for 2012, according to an analysis by the Internal Auditor’s office. Over the five-year period of the new contract, that would amount to a cost of $763,328 for the city.

Of course, such figures do not take into account the economic benefit WaterFire brings to the city, or the specific amount in tax revenues that stems from the economic activity it engenders. Clarkin said his office has not done a study of the economic value of WaterFire and would likely need to partner with state officials in order to do one.

But Evans and Mello pointed to a 2004 economic impact study done by the University of Rhode Island which showed that WaterFire generates $70 million in economic activity for the state, once the figures are adjusted for inflation. That translates into 531 jobs and $5 million in tax revenues for both the city and the state, according to Mello.

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