Sewer authority seeks added $27M in bonding

Posted 3/1/23

The Warwick Sewer Authority is between a rock and a hard place. It is ready to move ahead with the repair of 2.5 miles of pipeline providing service to thousands of residents, in fact the temporary …

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Sewer authority seeks added $27M in bonding


The Warwick Sewer Authority is between a rock and a hard place. It is ready to move ahead with the repair of 2.5 miles of pipeline providing service to thousands of residents, in fact the temporary bypass allowing the work is in place and most visible on the Airport Road curb. Every month the bypass and the pumps to operate are in place, it’s costing $70,000.

That’s one end of the problem. The other is the authority doesn’t have the money to do the work, plus other structure improvements. Hence the authority will appeal to the council to increase the most recently approved bonding capacity from $7 million to $30 million.

On top of the authority list is the forced main pipe that transports waste water from the Cedar Swamp pumping station to a collection point near Helene Avenue and Airport Road. An examination of the pipe with cameras found it to be compromised by the corrosive effects of hydrogen sulfide gas that builds up when there is insufficient flow and improper ventilation. In addition the pipe is aging out at more than 65 years old.

Before the project to slip line the pipe – in effect building a pipe within the pipe -  was put out to bid, a rupture on Lake Shore Drive early last summer spilled more than 100,000 gallons of waste water into Warwick Pond. A section of bypass was hastily installed and the break was patched. The decision was made  to step up restoration of the 2.5 miles of pipe . Bids were solicited for the work that WSA engineers projected would cost about $4.6 million.

Then the bombshell hit. Two contractors submitted proposals.

The Green Mountain Pipeline, LLC bid $13,935,935. The bid of Insituform Technologies, LLC was $20,000 more.

The shocker was the bids were more than three times the estimated cost. The WSA doesn’t have the money to do the work, yet it can’t afford not to address the problem even though a bypass is in place should there be another break.

The immediate effort was focused on the bids and how the authority’s engineers could be so far off on their estimates. Had both contractors mistakenly read something in the specifications that would have put their estimates so far off from projections? Did they already have so much work that they would only take on the job if it meant a handsome return? Could the authority entertain another round of bids and expect to estimates significantly below $14 million?

WSA board chair Peter Ginaitt said the staff did their homework. They picked apart the bids item by item to verify cost projections. They had their own engineering firm, GM2 Associates, cost out the job. Given the impact of inflation on material and labor costs, the estimate came back at slightly more than $14 million.

Projecting the work that needs to be done to replace and upgrade pumping stations and failing infrastructure, the authority is looking at $23million in revenue bonds. Ginaitt hopes to gain City Council approval to borrow the funds from the Rhode Island Instructure Bank as soon as possible. He points out the authority is in the process of retiring bond debt and that will provide flexibility to assume the added costs.

“The faster (we address repair of the 2.5 miles of pipeline)  the better,” Ginaitt said. Yet nothing  is moving  quickly. Even if the $23 million bond made it before the council in March and was passed, it would require second passage, putting signature of a construction contract a minimum of two months away.

Fortunately, Ginaitt said, Green Mountain has agreed to hold its bid.

“They have been very good to deal with . At this point I don’t see an increase (above the $13.9 million),” he said.

Betty Anne Rogers, WSA executive director said Monday that Green Mountain is extending the bid on a month-to-month basis.

Will this work mean increased sewer rates and could the increase in bonding impair the city’s ability to bond and increase taxes?

In December Rogers said, “I feel we’re in very good shape.” On Monday she reaffirmed her position that because the authority is in the process of retiring bond indebtedness it can take on the additional borrowing without increasing user rates.

Mayor Frank Picozzi said Tuesday that the administration met Friday with bond counsel to review projected bonds including the issuance of $350 million in bonds to build new high schools. Picozzi is confident the sewer bond won’t have an impact on the city’s ability to issue general obligation bonds. He points out that the authority operates as an enterprise fund and  these would be  revenue bonds backed by rate payers.

Picozzi is hopeful the request to increase the bonding capacity is on the March docket.  

Meanwhile, the authority to continues to pay $70,000 a month for a bypass system that will be activated once the bonding has been approved and work to recondition the failing line has started. The one good thing, the contractor will be ready to move ahead with the project when given the green light. The bigger issue, as Ginaitt points out, is carrying out and financing  the upgrade to  a system that is showing its age and is starting to fail.

sewer, bonding


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