STATE OF RHODE ISLAND KENT, SC.

Girard Bouchard, in his capacity as President of the Board of Directors of The Central Coventry Fire District, Plaintiff, v. Central Coventry Fire District, Defendant. : : : : : : : : : : :

SUPERIOR COURT

K.B. No. 12-1150

CENTRAL COVENTRY FIREFIGHTERS POSITION STATEMENT IN OPPOSITION TO LIQUIDATION On October 21, 2013, this Court advised that any party interested in commenting on the Boards recommendation that the Central Coventry Fire District (CCFD or District) be liquidated and closed may file position statements to this Court by the close of business on October 29, 2013. Coventry Professional Firefighters, Local 3372 (Union) hereby submit this Statement in support of its position that this Court should decline to adopt the Boards recommendation. The Boards recommendation is based not on the Districts finances and certainly not on public safety, but rather on its ideological belief that the District, and the Union that serves it, should cease to exist. However, consideration of the relevant factors, including 1) the ability of the District to continue to operate, 2) the rights of the District taxpayers who voted for a particular tax levy and 3) the profound and irreparable negative impact to public safety should the District liquidate, clearly do not warrant liquidation and closure. The Union respectfully requests an evidentiary hearing at this Courts earliest convenience to provide testimony in support of its allegations, below. In addition, there exist questions about 1)

whether the District even has the authority to liquidate and close and 2) whether liquidation of a fire district violates State law and the Separation of Powers doctrine. Relevant Facts On or about October 15, 2013, the Union, through its President, Executive Board and Attorney, and the Board, through its attorney, Vice President Marie Baker and Board Director Cynthia Fagan-Perry, reached a tentative agreement by which the Union agreed to provide over $1,000,000.00 in concessions for the 2013-2014 budget year. See Exhibit 1. The concession agreement does not defer $1 million in payments to firefighters down the road. It eliminates them. Statements made by the Boards President to the contrary are blatantly false. At hearing on October 16, 2013, the Court heard testimony from the Boards CPA regarding the proposed budget. The budget was based on the aforementioned concessions offered by the Union, exceeding $1,000,000.00. MR. KREKORIAN: Well, we skinnied it down to the point where, you know, I feel that we can generate enough revenue to pay the bills. It won't include the lights and there are some provisions for some line items that, you know, it may be less it; it may be more. I mean there are certain things you just can't predict. What I am hoping is that by the end of next year, assuming this budget is passed, that a year from now, you know, based on on my budget and my working capital and my uses of working capital, that a year from now we're probably going to have a million two in cash -- excuse me, not cash, but cash in receivables, and, hopefully, through aggressive collections we will be able to turn those into cash by the middle of November. See Exhibit 2 at pp. 4-5. Mr. Krekorian further testified: We're coming up with $1.7 million available funds. From those available funds, I had planned as part of the budget to pay severance pay, which is going to be paid throughout the course of the year. There are about five individuals. Pay the Town of Coventry; pay the special master $125,000. That would leave us with about $1.2 million in working capital. Based on that premise, if we have a balanced budget and everything that we collect, everything that we bill in the budget we collect, and every expense in the budget we pay, then a year from now we should wind up with that balance approximately.

See Exhibit 2 at 9-10. In response to a question from the Court, the Boards attorney, David DAgostino, stated that the proposed budget is based on the assumption that the agreement between the Board and the Union would be ratified. Id. at p. 10. In response to questions from the Special Master, Mr. Krekorian admitted that he had not finalized the debt issues, yet. Id. at 14. The Court ordered the Board to meet with the Union to finalize a concession agreement for ratification by Tuesday, October 15. The Court also offered to appoint a mediator to assist the parties in their discussions. The offer was rejected by the Boards attorney at that time. In the event the Board failed to ratify the concession agreement, the Court ordered the Board to vote on the following question: whether or not the voters approve or reject the Boards proposed tax levy and assessment at the Special Meeting on October 21, 2013, if the resulting budget is not balanced (expenses greater than revenue) does the Board recommend that this Court authorize the Special Master to close and liquidate the CCFD. The next day, although the Board knew that its proposed budget was based upon the Unions concessions and, with the concessions, the budget would adequately fund the District, the Board voted unanimously to reject the concessions agreement and to close and liquidate the CCFD. Upon information and belief, at least some of the Board members, including the President, did not even review the concession agreement prior to summarily rejecting it. Nor was there any motion to continue negotiations so that the Board could make proposals to the Union for further concessions. Further, upon information and belief the vote to liquidate was invalid because it was not seconded.

The Board also voted to present a budget to the voters that, absent Union concessions, would likely not fund the District.1 Authority to Liquidate The source of this Courts authority to authorize liquidation and close the District, if any, is unclear. It is well-settled that a Court has no jurisdiction to appoint a receiver to exercise power over a municipality. Rather, the sole authority to return a municipality to solvency is vested in a budget and review commission. See R.I.G.L. 45-9-3. The reason for this is that [m]unicipal insolvency affects a matter of statewide concern. Further, municipal insolvency may only be addressed via state legislation, rather than through the judicial appointment of a receiver because (1) the state has consistently exercised oversight over municipal budgets and debt obligations; (2) the insolvency of even a single city or town sufficiently threatens the credit of those outside a home-rule city or town; and (3) the uniform regulations provided by 45-9-3 are desirable and necessary to ensure the state's objectives of fiscal stability essential to good government. Marran v. Baird, 635 A.2d 1174 (R.I. 1994) citing Town of East Greenwich v. O'Neil, 617 A.2d at 111. Admittedly, the Central Coventry Fire District is a quasi-municipal corporation so it is not clear whether the Fiscal Stability Act, 45-9-3, applies.2 However, the purposes behind the Act are as applicable to a fire district, as to a municipality or school committee. Closure and liquidation of CCFD would clearly have a major financial and public safety impact not only on the Town of Coventry, its other fire districts and the surrounding communities, but could
1

The Boards actions over the last several months create serious questions as to whether it has been acting in the best interest of the Districts taxpayers and creditors. The existence of a fiduciary duty to creditors appears to be well-settled in Rhode Island. See Peck, citing Nat'l Hotel Assocs. v. O. Ahlborg & Sons, Inc., 827 A.2d 646, 657 (R.I.2003); Olney v. Conanicut Land Co., 16 R.I. 597, 599, 18 A. 181, 181-82 (1889); 15A Fletcher 7369. Further, there are potential unfair labor practice charges that could be levied against the Board for its failure to bargain in good faith with the Union
2

The Act by its terms does not specifically apply to fire districts, although it does not exclude them. 4

threaten the credit of the State as a whole. Consequently, arguably, the Fiscal Stability Act would prevent liquidation and closure of the District without State oversight and approval. The State of Rhode Island made it clear that it does not want the District shutdown when it added Chapter 5.2 to Title 44 of the General Laws. As this Court knows, in the event the District fails to adopt a budget, under the new law, the District must operate in accordance of the most recent adopted budget, thereby permitting the District to continue operating. Further, closure of a municipality by a Court would clearly violate separation of powers; it stands to reason that closure of a fire district created by an act of the General Assembly would also violate the doctrine. 3 The so-called separation of powers amendments, approved by the General Assembly in November of 2004, ushered in fundamental changes to the Rhode Island Constitution and, for the first time in Rhode Islands history, clearly and explicitly established three separate and distinct departments of government. See In re Request for Advisory Opinion from the House of Representatives (Coastal Resources Management Council), 961 A.2d 930 (R.I. 2008). The doctrine of separation of powers, which is now expressly established in the Rhode Island Constitution, declares that governmental powers at the state level are divided among "three
3

There is also a legitimate question as to whether this Court has the authority to appoint a special master at all, given that lack of statutory criteria governing the receivership of a fire district. The exercise of legislative power by municipal authorities rests on the same principles and is controlled in the same way as the legislative power of the state and the prohibitions against delegations of municipal legislative authority are substantially the same as those prohibiting the delegation of state legislative authority. 62 C.J.S. Municipal Corporations 154(b) at 316 (1949). See also DePetrillo v. Coffey, 376 A.2d 317 (1977) (Just as, under former R.I. Const., Art. IV, 2 (see now R.I. Const., Art. VI, Sec. 2), the General Assembly cannot unconditionally delegate any of the legislative power to municipal corporations, so municipal corporations cannot unconditionally delegate their legislative power.) Neither the Petition for Receivership, nor the Business Corporation Act, contains criteria and limitations to govern the actions of the special master. Thus, the appointment of a receiver likely constitutes an unconstitutional delegation of legislative power. The fact that a Superior Court judge may set criteria and limitations on the receivers power does nothing to salvage the Receivership Order given that the only criteria governing the judges discretion is equity.

separate and distinct departments." In practice, this doctrine operates to confine legislative powers to the legislature, executive powers to the executive department, and judicial powers to the judiciary, precluding one branch of the government from usurping the powers of another. R.I. Const. art. 5. "Functionally, the doctrine [of separation of powers] may be violated in two ways. One branch may interfere impermissibly with the other's performance of its constitutionally assigned function. * * * Alternatively, the doctrine may be violated when one branch assumes a function that more properly is entrusted to another." City of Pawtucket v. Sundlun, 662 A.2d 40, 58 (R.I. 1995) (quoting I.N.S. v. Chadha, 462 U.S. 919, 963, 103 S. Ct. 2764, 77 L. Ed. 2d 317 (1983) (Powell, J., concurring)). The Rhode Island Supreme Court has implicitly recognized that the coordinate branches of government should ordinarily defer to the General Assembly's exercise of its plenary legislative powers. See, e.g., Chang v. University of Rhode Island, 118 R.I. 631, 375 A.2d 925 (1977) (emphasis added). In the areas where the General Assembly possesses plenary power, "all * * * determinations [are left] to the General Assembly's broad discretion to adopt the means it deems 'necessary and proper' in complying with the constitutional directive." City of Pawtucket, 662 A.2d at 56 (emphasis in original); see also Chang, 375 A.2d at 928-29. Here, the General Assembly has deemed it appropriate to create, and later consolidate, several fire districts within the Town of Coventry. It has also approved the Charter of the Town of Coventry which provides the only mechanism for dissolution of a fire district in Coventry: through agreement by the Town of Coventry to provide fire services. Finally, the aggregate

indebtedness of a city or town has been historically regulated by the legislature. See Marran, 635 A.2d at 1179. The General Assembly has determined that the fiscal collapse of a municipality can affect the entire state's financial interests, see G.L. 1956 (1991 Reenactment)

chapter 52.1 of title 45 (insolvency of Central Falls threatens credit, health, and welfare of entire state), necessitating the uniform regulations of 45-9-3. See Marran, 635 A.2d 1174. Arguably, the General Assemblys discretion extends to Fire Districts. C.f. Rhode Island State Labor Relations Bd. v. Valley Falls Fire Dist., 505 A.2d 1170, 1171-72 (R.I. 1986)(Finding that the Firefighters Arbitration Act applies to fire districts, even though, by its terms, it only applies to municipalities, because to exclude fire district would be against the purpose and policy of the statute.). This Courts interference with General Assemblys broad discretion to adopt the means it deems necessary and proper to regulate a fire districts indebtedness may violate the separation of powers amendment. Liquidation and dissolution may also interfere with the Town of Coventrys right under its Charter and may, consequently, violate the Home Rule Amendment. If the District is dissolved, the Town of Coventry would ultimately be responsible for providing fire services to the residents of Central Coventry whether it wants to or not. In the event the Fiscal Stability Act does not prevent judicial appointment of a receiver over a fire district, the Court must look elsewhere for its jurisdiction to liquidate and/or dissolve a municipal corporation. The Court cannot, however, look to principles of equity. While equity may permit this Court to appoint a receiver in non-dissolution matters, an equity court has no inherent power to dissolve a corporation, since the creation and dissolution of a corporation is governed by statute. See 16 Fletcher 7667.50; Clark on Receivers 700(a). In the absence of a statute, no court of equity can dissolve or take away the corporate right to be a corporation which has been granted by the legislature, although a law court may try the validity of a corporate organization existing under the forms of law. Clark on Receivers 700(a) (footnotes omitted). This Court has also held that it has no inherent equitable power to dissolve a

corporation or to appoint a receiver to wind up a corporation for purposes of dissolution. See Petrovics, 56 R.I. at 501, 188 A. at 515 (citations omitted) (noting that [g]enerally speaking a court of equity has no jurisdiction[,] in the absence of statute, to appoint a receiver and dissolve a corporation); 16 Fletcher 7671, 8198. The grounds described in the relevant statutes are the sole grounds for appointing a receiver in order to dissolve a corporation. See discussion supra. Peck v. Jonathan Michael Builders, Inc., 2006 WL 3059981 (R.I. Super. Oct. 27, 2006) aff'd, 940 A.2d 640 (R.I. 2008). Accordingly, this Courts authority to liquidate and/or dissolve the Central Coventry Fire District may only come from statute. The Central Coventry Fire District Charter, created by statute, contains no provisions for liquidation or dissolution. However, because the District was created by an act of its General Assembly, it stands to reason that it may only be dissolved by act of the General Assembly. Likewise, Chapter A260 of the Town of Coventry Charter, P.L. 1948, Ch. 2147, 6, attached hereto as Exhibit 3, permits the Town to take over any or all of the assets [of its fire district] and to assume any or all of the liabilities of such districts or district upon such terms as the contracting parties may agree upon, and the said several fire districts are authorized to enter into any such contract or contract or contracts with the Town of Coventry. (Emphasis added). It appears, then, that the only statutory authority for the dissolution of the Central Coventry Fire District is accompanied by the concomitant duty of the Town of Coventry to assume the Districts liabilities but only if the Town and District agree. Absent such an agreement, or a further Act of the General Assembly, the District must continue. Part 13 of the Rhode Island Business Corporation Act (BCA), titled Dissolution and Revocation, contains the only statutory provisions for dissolution and liquidation of a

corporation. G.L.1956 7-1.2-1301 to 1325. However, even if the BCA applies4 (or if this Court looks to the BCA for guidance), liquidation should not be permitted, here. First, it is important to note the distinction between certain terms used in the statute. Liquidation is the process of marshalling a corporation's assets, selling them, and distributing those assets to the corporation's creditors and shareholders. See 1316. Dissolution is the act that terminates the existence of the corporate entity, and may be accomplished either at the behest of the corporate principals (voluntary) or by court decree (involuntary). See 1301-1303, 1308-09 (providing procedures for a voluntary dissolution); 1320-21 (providing for an involuntary dissolution by court decree). Liquidation and dissolution are not equivalent-liquidation is merely one step in a process that terminates with the dissolution of a corporation. See 16 William Meade Fletcher et. al., Cyclopedia of the Law of Private Corporations 7667.50 (perm.ed., rev.vol.1998) (hereinafter Fletcher). See Peck, supra (emphasis added). Further, the appointment of a receiver is also distinct from both liquidation and dissolution. Id. Insolvent is defined by the BCA as the inability of a corporation to pay its debts as they become due in the usual course of its business. 106(8). Sections 1314 and 1316 of the BCA give the Court power to appoint a receiver when the Court is supervising the liquidation of a corporation. Section 1314 enumerates grounds for a shareholder, creditor, or the Attorney General to petition for liquidation, while 1316 provides for the appointment of receivers in liquidation proceedings. It may liquidate, however, [only] as long as the corporation passes a resolution to dissolve under 1302 or 1303, and the court may supervise that liquidation with a receiver. Section 1302(b)(4). Peck, 940 A.2d 640 (emphasis added). Under the BCA, a corporation may be voluntarily dissolved by its incorporator (which, in this case would be the General Assembly), the consent of its shareholders (the Districts taxpayers), or by act of the corporation. Here, the General Assembly has not authorized CCFD

Section 1 of the Central Coventry Fire District Charter provides that the district may enjoy the other powers generally incident to a corporation. 9

to be dissolved, nor have the taxpayers voted to dissolve the District. Accordingly, the only other way the District may be voluntarily dissolved is by act of the District pursuant to R.I. Gen. Laws 7-1.2-1303, which provides: A corporation may be dissolved by the act of the corporation, when authorized in the following manner: (1) The board of directors adopts a resolution recommending that the corporation be dissolved, and directing that the question of the dissolution be submitted to a vote at a meeting of the shareholders, which may be either an annual or a special meeting. (2) Written notice is given to each shareholder entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders, and, whether the meeting is an annual or special meeting, states that the purpose, or one of the purposes, of the meeting is to consider the advisability of dissolving the corporation. (3) At the meeting a vote of shareholders entitled to vote at the meeting is taken on a resolution to dissolve the corporation. The resolution is adopted upon receiving the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the resolution, unless any class of shares is entitled to vote on the resolution as a class, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class and of the total shares entitled to vote on the resolution. (4) The corporation shall immediately deliver notice of the adoption of such resolution by a vote of the shareholders to each known creditor of the corporation. (5) The corporation shall proceed to collect its assets, sell or otherwise dispose of those of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the corporation distributes the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests. (6) The corporation, at any time during the liquidation of its business and affairs, may apply to a court of competent jurisdiction within the state and county in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in this chapter. (7) Upon the completion of actions set forth in subsections 7-1.2-1303(1)-(6) above, the corporation shall execute and file articles of dissolution in accordance with the provisions of 7-1.2-1308 and 7-1.2-1309. R.I. Gen. Laws 7-1.2-1303 (emphases added).

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The District has taken only the first step towards closure under the BCA; it has adopted a resolution to close and liquidate.5 As discussed above, it can only begin liquidation proceedings after it satisfies the requirements for dissolution. Before it can begin liquidation, which, under the Act, may be supervised by this Court, its taxpayers must vote to dissolve. Then, the District must satisfy all its obligations to its creditors.6 See id. Only then may it dissolve. To the extent this Court has jurisdiction to liquidate the District, it may do so only after the corporation satisfies the criteria for dissolution set forth in R.I. Gen. Laws 7-1.2-1301, 1302 or 1303. Once that occurs, the Court may assist with liquidation if it finds that dissolution would be beneficial to the shareholders, i.e. the taxpayers. R.I. Gen. Laws 7-1.2-1314. Finally, the Superior Court has the authority to liquidate the assets of a corporation [in certain limited situations], but the language of the [authorizing] statute is not mandatory. DiStefano v. Capital Ventures, Ltd., M.P. 82-2776, 1983 WL 486853 (R.I. Super. Mar. 31, 1983). For the reasons stated below, even if this Court has the authority to close and liquidate the District, it should decline to do so because dissolution would not be beneficial to taxpayers or the surrounding communities. This Court Should Decline to Close and Liquidate the District This Court ordered the Board to consider a vote to liquidate only if the resulting budget is not balanced (expenses greater than revenue). Testimony by the Boards own account ant and attorney reveal that, with the Unions concessions, the budget would be within $21,000 of
5 6

Although, as noted above, there remains a question as to whether that vote was valid. Statements made by Board members that they can pay creditors off using a payment plan over five or ten years are misguided. There is no support for this in law or equity absent the consent of the creditors. Once the District votes to dissolve, it can continue to operate only so far as necessary to wind down its operations and pay its creditors. Consequently, in the event the District votes to liquidate and close, and closure is permitted by law, it may only continue operating insofar as required to levy and collect its nearly $21 million in debt from its taxpayers, which would become immediately due. 11

balancing. With long-term planning and appropriate oversight, the District can continue to function. Further, upon information and belief there is additional revenue available to the District if it 1) exercised the authority to conduct tax sales on delinquent accounts and 2) implemented its right to recover monies other than taxes.7 Notably, on or about July 8, 2013, the Court entered an Order granting the Special Masters Petition to Authorize Tax Sales which authorized the Special Master to conduct tax sales of delinquent accounts. The Special Master communicated the need to conduct tax sales to recover delinquent tax account revenue to the Board and requested that the Board schedule the next District tax sale. The Board has declined to do so. See Third Interim Report at 24-25. Even setting aside the overwhelming factual evidence that the District can operate with a balanced budget this year,8 the Court should decline to adopt the Boards recommendation, which was made without consideration of the following facts: 1) There is absolutely no plan which would provide for adequate and sufficient fire and EMS services after liquidation and closure and 2) the taxpayers tax rate would quadruple because of the overwhelming debt that would become immediately due and payable upon liquidation and 3) there is additional revenue available to the District outside of taxing its residents. I. LIQUIDATION WILL CREATE AN IMMEDIATE PUBLIC SAFETY CRISIS Based on testimony and representation given to this Court in earlier proceedings by the Courts appointed public safety committee, there will be a public safety crisis should the District liquidate and close. As the Court will recall, the public safety committee was comprised of the Rhode Island State Fire Marshall, the CCFD Fire Chief, fire chiefs from neighboring districts,

The Union prepared to present further evidence of this at hearing, if necessary. The Union is prepared to present further evidence supporting its assertion that the adopted budget is adequate to fund the District at an evidentiary hearing.
8

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the Town of Coventrys EMA Director, representatives from the Rhode Island Emergency Management Agency, as well as numerous other subject matter experts. The committee found, and later reported to this Court, that all combined outside resources would only be able to provide adequate assistance to CCFD for a time period of approximately 72 hours. Likewise, the President of the Coventry Town Council, Gary Cote, testified that if the District liquidated, after the first 72 hours, which is three days, we will be playing Russian Roulette with the health, safety, and welfare of the taxpayers in the Town of Coventry Central Coventry Fire District supplies irreplaceable public safety services to the taxpayers that they serve within the Town of Coventry. There is no way on a long-term basis that the surrounding three districts can pick that up and be expected to cover all of those call through mutual aid. [I]f this liquidation is allowed to go forward, its not only going to put public safety at risk within the Central Fire District, its going to put public safety at risk within the entire Town of Coventry because if Hopkins Hill, Coventry Fire District, or Western Coventry Fire is responding to a call in Central Coventry and a call comes in in their own district, that call is going unanswered by them and their men and their apparatus has to be doled out to another surrounding district Who knows where the closest piece of equipment is coming from. Response time is everything when responding to medical emergencies.9 (Emphasis added). Thus, if the District liquidates, there will be no guaranteed coverage for the Central Coventry Fire District, nor any mutual aid assistance from CCFD to the neighboring fire districts. Moreover, the other three fire districts in Coventry are chartered for and responsible for covering their own independent districts, not Central Coventry. Even in the event that the other districts had adequate staffing and equipment, which, upon information and belief,10 they do not, the only way that the districts could provide any such service would be with the approval and vote of their respective taxpayers, and changes to their Charter. Setting aside such legal obstacles and viewing this matter solely from a functional and operational point of view, the other districts currently rely on CCFD and its manpower and

10

See Exhibit 4. The Union can present testimony supporting this at an evidentiary hearing. 13

equipment to assist and provide fire and EMS services. To remove any portion of this already fragile, but integrated network will have a detrimental effect on the entire public safety infrastructure within the Town of Coventry. 11 As this Court stated at hearing on February 15, 2013, The health, safety, and welfare of the resident of the other three fire districts would also be at risk as the other districts may have to cover fire and emergency medical calls in Central Coventry and will not have the fire district available to cover automatic aid in their communities which communities depend upon.12 Additionally, because the District will have been liquidated and closed, there will be no assets available to pay firefighters and EMTs, or any other entity, for their services. Likewise, there will be no assets available to pay a private ambulance company from another State, as proposed by Representative Patricia Morgan.13 Simply put, there is no way for this Court to ensure the people and property with the current Central Coventry Fire District will be protected if the District dissolves. Nor will there be any incentive (or ability) for the surrounding communities to provide mutual aid without receiving the reciprocating aid from Central Coventry. Even if the other fire districts volunteered their time and resources to protect Central Coventry, leaving their own districts unprotected, the staffing and equipment would be woefully inadequate to protect the residents of the CCFD. The already insufficient staffing of the remaining three fire districts combined would further deteriorate the ability of CCFD and/or the other fire districts to comply with applicable industry standards and OSHA guidelines. See e.g. 29 CFR 1910.120. Nearly 20,000 residents would no longer have fire department response for
11 12

Again, the Union will present testimony supporting this statement at an evidentiary hearing. See Transcript at p. 19, attached hereto as Exhibit 5. 13 Further, upon information and belief, some of the Central Coventry Fire Stations were deeded to the Fire District so long as they are used as fire departments. Once they are no longer used as fire departments, they will revert back to their owners. 14

fire suppression or Emergency Medical Services. That number increases significantly when business consumers and visitors to the District are considered. Further, 7,301 housing units and an undetermined number of businesses would no longer be protected by ANY fire suppression or rescue apparatus at all, leaving a gaping hole in the community for which 39% of The Town of Coventry would be without any Fire Department protection. Not included in these staggering statistics are high hazard occupancies such as two 24-hour, multi-level skilled nursing facilities, the 3rd most populated High School in Rhode Island, multiple chemical processing facilities, four occupied Mill structures, and every vital infrastructure of the town to include the Town Hall, the Town Library, the Emergency Operations Center, the Police Station, the fire and rescue dispatch headquarters, the Senior Center, the school administration building, the Town Annex Building including all town offices and the town parks and recreation center, multi-story hotels and the states busiest and most densely populated freshwater recreational waterway, which is a major summer attraction to this town. Attached hereto is a Geographic Information System Emergency Services Response Capabilities Analysis showing the emergency response capabilities inside the boundaries of Coventry in the event CCFD is liquidated. The results are alarming. Any reduction of CCFD resources will dramatically worsen the current modeled poor performance of the District. This increases the risk of death or injury due to fire for nearly 50% of all residents in Coventry and significantly increases the risk of total property loss for approximately half of the housing units in the entire town of Coventry. Further, liquidation and closure of CCFD resources would clearly open the population, the housing they live in, and the business where they work to unprecedented risk of loss and property. Any delay in the initiation of fire suppression and rescue operations translates directly into a proportional increase in expected property, life, and

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economic losses. See GIS report at p. 19. For example, the National Fire Protection Association (NFPA) has concluded that fifteen firefighters are needed to initiate safe and effective operations at a fire occurring in a typical 2,000 sq. ft. single family dwelling and twenty-six firefighters are needed to initiate safe and effective operations at a fire occurring in a high hazard occupancy building, such as a schools, hospitals, nursing homes, plants, and highrise buildings. See NFPA 1710. Currently, twelve is the maximum firefighting force that can be assembled within the Town of Coventry with the relevant 8-minute response time parameter. Upon liquidation, six is the maximum amount of firefighters that could be assembled with the 8-minute response time which is nine to twenty firefighters short of NFPA recommendation. [T]he more firefighters available to respond and arrive early to a structure fire, the less time it takes to extinguish the fire and perform search and rescue activities, thus reducing the risk of injury and death to both firefighters and trapped occupants and reducing the economic loss to the property. See p. 18. As noted in the study, fires that are not contained before they reach the point of flashover (which generally occurs within eight minutes of ignition of fire) increase exponentially. Usually, at the time of flashover, windows break [which] further fuels the growth of the fire by increasing the fires temperature and spreading the fire beyond the room [and/or house] of origin. See p. 13. Conversely, by keeping the District running based on the budget adopted by the taxpayers, there would be no increased risk to the public or property. The Central Coventry firefighters would continue to provide fire suppression and emergency care. To the extent the Board believes that the firefighters should give up more than $1,000,000 in concessions they have already offered, the parties could continue to negotiate. The CBA expires in 18 months; at

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that point, the Board would be free to negotiate a contract it deems more acceptable to the taxpayers. II. LIQUIDATION WOULD CAUSE AN IMMEDIATE INCREASE IN THE TAX RATE WHICH WOULD VIOLATE THE EXPRESS WILL OF THE TAXPAYERS There is no dispute that, in the event the District closes, it will immediately owe at least $20 million to its creditors. See Exhibit 1 to Special Masters Third Interim Report. The $1,000,000.00 in concession offered by the Union would be off the table. In fact, the taxpayers would be responsible for paying firefighters salaries, health insurance and pension for the next eighteen months without obtaining any of the services. That amount would exceed $10,000,000.00. Further, as this Court noted in its Bench Decision on October 18, 2013, [t]he debt, at least with respect to M.E.R.S., will not go away merely because the fire district liquidates and sells their assets and does not have the funds available to pay this specific obligation. While the remaining debts were not before the Court at that time, assuming the Court treats the debt consistently, the taxpayers will be responsible for $20,000,000 in debt which will increase the tax rate from $2.50 to approximately $10.65 per thousand. See Exhibit 7. Further, absent an agreement from MERS and the other creditors permitting a payment plan, the debt will become immediately due and collectable. The taxpayers would be required to pay increased taxes, but will receive no emergency services in response. The Board seems to think that it has the ability to reorganize after it liquidates and dissolves. The two are mutually exclusive and such a notion is completely misguided. If the District dissolve (provided that is even permissible under State law, which, as discussed above, is highly questionable), it will cease to exist. It cannot reorganize and continue to operate. If the Town of Coventry agreed, it could assume the Districts liabilities. See Town of Coventry

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Special Laws, Chapter A260, P.L. 1948, Ch. 2147, attached hereto as Exhibit 3. At that point, the Town of Coventry could determine to immediately levy taxes against the former Central Coventry taxpayers in an amount necessary to satisfy the Districts estimated $20,000,000 of debt. However, upon information and belief, the Town of Coventry has no desire take over the District and begin providing fire protection. Conclusion Based on the evidence presented to this Court over the last year, liquidation of the Central Coventry Fire District would create a public safety emergency. Continued operation of the District, however, would create no harm. The Union submits, and is prepared to provide evidence at hearing, that the adopted budget can fund the District with the concessions offered by the Union. Consequently, there is no reason to put the residents of the Town of Coventry and its surrounding communities at risk simply to further the political agenda of certain members of the Board.

Respectfully submitted, Coventry Professional Firefighters, Local 3372, By its Attorneys,

/s/ Elizabeth Wiens Marc Gursky, Esq. (#2818) Elizabeth Wiens, Esq. (#6827) Gursky Law Associates 420 Scrabbletown Road North Kingstown, RI 02852 ewiens@rilaborlaw.com mgursky@rilaborlaw.com

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CERTIFICATION A true copy of the foregoing was served on Richard Land, Esq. via email on October 29, 2013. /s/ Elizabeth Wiens

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