Overview of District

The Portsmouth Water and Fire District is a quasi-municipal, governmental agency created in 1952 by act of the Rhode Island General Assembly. The District was created to obtain and maintain for the District a supply of water for the extinguishing of fire and for distribution to the inhabitants of the district, for domestic use and for other purposes. Essentially, the boundaries of the District’s service area include all of Portsmouth on Aquidneck Island with the exception of the area in the southwest corner of town, including Redwood Farms, Bay View Apartments and Condominiums, Raytheon, Melville Navy Housing and the Navy Base, all of which is serviced by Newport Water.

The District is governed by a seven-member Administrative Board, which is elected by the registered voters within the District. The District holds an annual election of officers on the second Wednesday in June. The Board meets on the third Tuesday of every month at 7:00 PM at the District’s main office.

Although the Portsmouth Water and Fire District is not affiliated legally or administratively with the Town of Portsmouth government, the District and Town work cooperatively to best serve their common constituents.

DISTRICT RATES AND CHARGES

Sources of Income

• Water Sales – Metered water sales account for 73.6% of total revenues.

• Property Taxes – Property taxes on real property account for 13.9% of total revenues.

• Service Charges – Miscellaneous customer service charges account for 2% of total revenues.

• Fire Charges – Fire hydrant charges to the Town of Portsmouth and contractors and private fire service charges account for 5.5% of total revenues.

• Miscellaneous – Miscellaneous revenue including space rental for cellular antennas, interest and other miscellaneous revenue sources account for 5% of total revenues.

Water Bills

The Water Service Bill is mailed quarterly and is due in 30-days. The District bills one-third of its water customers every month based on the following cycles (check your bill to see what cycle you are in):

Typical quarterly water bills for various amounts of residential water consumption are shown below:

Property Tax Bills

Property taxes are billed annually in late October and are due on December 1.

The District tax rate is $0.23 per thousand dollars of assessed value. The District property tax, although based on the Town of Portsmouth assessed property values, is separate from the Town of Portsmouth taxes. Typical tax bills for various assessed values are shown below:

The District’s property tax is treated like any other municipal property tax with regard to federal income tax deductions.

About the District Tax

The statutory authority for the Portsmouth Water and Fire District property tax lies in Section 10 of the District’s enabling legislation. In essence, like most other water and fire districts in Rhode Island, the District has been granted taxing authority to be used as necessary to create, operate and maintain a water supply system to supply water for domestic use and fire protection within the District.

While the property taxes provide only thirteen (13.9%) percent of the District’s total annual revenue, the tax is an important component of the District’s fiscal management plan and equitable rate making strategy. The rationale for maintaining a District property tax is:

• Bonding – Tax revenue allows the District to obtain capital funding through general obligation bonds. These bonds provide a lower interest rate and have lower bonding costs than revenue bonds, which are supported by variable water sales, and would otherwise be required without tax revenue. General obligation bonds supported by taxes can usually be obtained in a quicker time frame than revenue bonds, which require a detailed, pro forma financial analysis due to the variable nature of water sales revenue. The speed with which capital financing can be obtained is particularly important during a catastrophic emergency when public health and safety is paramount. Additionally, the District was assigned an AA- long term rating, which is extremely favorable for an entity of its size. The AA- long term rating allows the District additional debt service savings versus borrowing with no rating.
• Revenue Stability – Water sales revenue is significantly influenced by weather, whereas predictable tax revenue provides an element of stability to the District’s total annual revenue stream. The guaranteed tax revenue helps dampen the impacts of the variable nature of water sales, and results in more accurate budgeting and water rate stability from year to year.
• Rate Fairness – All properties within the District benefit from the public water system, whether or not they are water customers. The extensive system of pumps, tanks, pipes and fire hydrants provide water for fire protection throughout the District to all properties. In addition, undeveloped property values are positively impacted by the presence of the water system throughout the District and the potential to connect existing and future subdivided property thereto. Without the property tax, which is assessed to all properties within the District whether or not the properties receive water service, our water ratepayers would unfairly subsidize the benefits received by non-water using property owners.
• Water Conservation – Some argue that tax charges in lieu of water charges do not encourage water conservation. In order to address this, one must look at the overall picture. The District has had a successful, comprehensive water conservation plan in effect since 1988. The conservation plan includes leak detection, meter replacement, public education, school education and, most importantly, pricing. The District’s increasing block rate pricing structure, with significant increases between rate blocks, is one of the most aggressive conservation-oriented rate structures in Rhode Island. The District’s water rates, coupled with the other facets of the conservation plan, have resulted in an annual water demand that fluctuated over the past 30 years but remains nearly the same as water use in 1990, despite a 25% increase in the customer base.  In essence, the Administrative Board believes that it has achieved the best of both worlds by attaining significant water conservation results through its comprehensive plan, while retaining the overall, long-term fiscal benefits of a modest tax revenue stream.