Future Uncertain for R.I. Fire District; State Takes Over

May 12, 2014
The district returned a Pierce aerial because it couldn't afford the $97K annual payments.

May 11--COVENTRY, R.I. -- Until last summer, Tower 3 was the pride of the Central Coventry Fire District fleet. The red-and-white Pierce Aerial Platform fire truck had a 100-foot-long ladder with a platform that could carry four people to safety. It could pour up to 2,000 gallons of water a minute on a fire.

It's gone now, returned to the dealer last July because the district's board decided it could not afford the $97,000-a-year payments.

It wasn't the district's only casualty. Three of five fire stations closed and a shrunken staff concentrated into the two remaining stations in the eastern and western parts of the district.

Until Governor Chafee ordered a state takeover last week, the district's governing board and its firefighters union were locked in what looked like a fiscal battle to the death. A Superior Court judge had ordered the district's property be sold and its employees laid off by May 16 in an effort to pay off its debts. The state police financial crimes unit was even called in to find out if the collapse was due to criminality or incompetence.

Instead, the district now faces a reorganization by a state-appointed receiver with the power, should he decide to use it, to take the district into federal bankruptcy.

Chafee chose his policy director, former Westerly Town Manager Steven T. Hartford, for the job. Hartford will be stepping into a district where the governing board wants to create a new department without a firefighters union. At the same time, the union is trying to oust the governing board, whose members are elected by district residents. The residents are so enraged at past mismanagement that they voted to simply let the whole fire district die.

The last time Central Coventry Fire District voters approved a budget it was a $5.6-million package that Hartford said is about $1 million short of the district's current operating costs and debts. Hartford said that package would be his initial target as he sits down with the district's board, the union, town officials and residents to cobble together a consensus.

"It's a number," he said, "and we have to find a way to get to the same number."

Paring staff

The Central Coventry district of today came into being in 2006, when four of the town's then-seven fire districts voted to merge. It covers about 26 square miles, most of it in the center of town.

Fire Chief Andrew Baynes said the liquidation threat forced him to pare a five-station, 48-member fire and ambulance department down to two stations and 38 firefighters. The goal is to get to a call within four to six minutes, but now, he said, there are spots in the district eight minutes out.

Like virtually every department in the state, emergency medical service is their main job. In 2013, for instance, the district had 16 structure fires (there were 67 smaller types of fires, such as chimney blazes and burning brush and trash) and 2,289 rescue or other medical calls.

For a year and a half, a court-appointed receiver, Richard J. Land, has been trying to broker a reorganization of the department's finances. But because state law didn't give him the authority to impose a settlement, and the board and its union couldn't agree, the liquidation was ordered.

But as a state-appointed receiver, the state Fiscal Stability Act gives Hartford the power to act as any elected or appointed official in the district. The law also gives him the ability to take the district into federal bankruptcy, which would give him the ability to impose conditions on all sides.

"I will have that tool," he said. "I think everyone understands that."

He has declined to predict how long the financial reorganization will take, but noted the district appears to have enough money to get through September.

Opposing interests

He was careful to acknowledge the interests of both sides. The district board has upset the union with talk of a "new paradigm" of fire protection without the current union contract. Hartford said he preferred a continuation of the current setup, a paid fire department.

But, in a nod to the board, he added, "the fire service cost has outgrown the taxpayers' ability to pay for it."

Hartford has been monitoring the Central Coventry situation on Chafee's behalf since January. He said that familiarity with the issues and the players, plus the extensive work already done by Land, made the job more solvable than it might seem from the outside.

"We are probably closer than most people think," he said.

Bookkeeping mistake

Fire districts are a remnant of mill-town Rhode Island, where villages created them to provide local fire protection. Today, Rhode Island has 42 fire districts in 14 towns. Of those, 33 have fire stations, 5 contract fire protection from neighboring districts and the rest provide other services, such as water or even running beaches. They have the power to levy taxes in their districts and bill for services.

One lesson from the Central Coventry case is that, along with firefighters and trucks, a fire district needs good accountants.

Central Coventry's trouble went public in October 2012, when, after the district's governing board missed multiple payrolls, Superior Court Associate Justice Brian P. Stern appointed Land, who oversaw the 38 Studios bankruptcy, to sort things out.

Land said the district's financial collapse was triggered by a bookkeeping mistake that built a $790,000-annual-shortfall into two successive budgets.

He said when the district's 2010-11 and 2011-12 budgets were submitted to voters, they overestimated the value of commercial real estate in the district by $217 million. If it had existed, the property would have brought in about $790,000 in revenue. But that property didn't exist, and the $790,000 didn't come in. By 2011-12, it was a $1.58-million deficit.

At the same time, the board made the financial problem worse by leasing a new fire truck, hiring more firefighters and signing a new contract with its union.

Liquidation order

In his Feb. 24 liquidation order, Stern denounced the district as "an elaborate Ponzi scheme." Rather than reveal the deficit, he said that "the board resorted to what has been quintessentially the 21st-century American thing to do. It took out a loan for a credit line with Centerville Bank to pay operating expenses and cut corners on its obligations to its employees."

"What brought down this fire district was not being open, honest and confronting a problem head on," he said.

Former board chairman Girard Bouchard Jr. could not be reached for comment.

Land and Stern persuaded the members of that board to resign and they were replaced in a special district election last spring. Fred Gralinski, the current board president, said the new board blames the district's union contract more than the old board's bad budgeting.

He said about 80 percent of the budget pays for too many firefighters who are paid too much for a small-town district such as Central Coventry.

Gralinski said the union has resorted to "bullying tactics" and has, through the contract, taken over too much of the management of the department. He said the board's difficult relationship with the firefighters union has evolved because the board is willing to stand up to them.

Board versus union

On its website, the board talks of replacing the district's ambulance crews with a private contractor and the current firefighters with a group of "paid to go" firefighters augmented by volunteers.

"There is going to have to be fundamental changes" if the district is to continue, Gralinski said.

David Gorman, president of the firefighters union and who started in the department 22 years ago as a volunteer, said the problem is that the board doesn't understand how a fire district is run and is coming at its job with eliminating the union as the main goal.

He said the union has offered concessions that would have fixed the budget, but the board rejected them without making counterproposals. Gralinski says the offers didn't go far enough.

"The problem is they have shut us off, Gorman said. "They have a different philosophy, a concept of how it should be done."

The union has filed unfair labor practice charges against the board, accusing it of not honestly considering the union's proposals. It has filed notice of an intended state ethics complaint against the board, seeking its removal on the grounds the members are violating their oaths of office by taking actions that could force the district into liquidation.

Hartford said that besides reconciling the books, Chafee has charged him with getting the two sides reconciled to working with each other.

"The governor was clear with me that he wants me to play some kind of role as peacemaker," Hartford said. "Everyone has a role to play."

Copyright 2014 - The Providence Journal, R.I.

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