PROVIDENCE, R.I. (WPRI) – With Providence’s proposed $40-million infrastructure bond all but dead, Elorza administration officials now say they are considering borrowing funds through an obscure city agency that does not require voter approval to issue a bond.
It remains unclear how much money the city would seek to borrow through a revenue bond issued by the Providence Public Buildings Authority (PBA), but the administration considers the agency a “viable alternative” to obtain funding for infrastructure projects, according to Emily Crowell, a spokesperson for Mayor Jorge Elorza.
“The PBA can finance public facilities and public equipment,” Crowell told Eyewitness News. “There is an opportunity for those funds to be used to fund infrastructure projects if necessary.”
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Crowell said a “window is still open” for the administration and the City Council to reach an agreement over a spending plan for the $40-million bond question that will appear on the Nov. 8 ballot, but council chief of staff Cyd McKenna reiterated Tuesday that council leadership no longer supports the bond.
Even if voters approve the bond, the city would not be eligible to actually borrow the $40 million if a spending plan is not approved by the council before Election Day.
The $40-million bond proposal collapsed last week after City Council President Luis Aponte and members of the Council Finance Committee held a press conference to announce they were withdrawing their support for the plan. The group cited the city’s poor finances as their reason for backing away from the bond, but the announcement came weeks after Elorza refused to support their request to give individual councilors more control over how the proceeds would be spent.
Borrowing through the PBA would give the administration more time to prioritize certain infrastructure projects, but it would still take council approval, according to Crowell. It would also cost more than a bond backed by the voters.
“Lease revenue bonds have a high cost of issuance and bear higher interest rates than general obligation bonds,” she said.
McKenna said she doesn’t believe the Finance Committee would support borrowing through the PBA, noting that several school infrastructure bonds previously issued by the agency were recently downgraded to Baa2 by Moody’s Investors Service. (Other bonds from the PBA were already at Baa2.) Crowell was unaware of the downgrade.
Founded in 1987 “for the purpose of maintaining and repairing city-owned assets and for the construction of new facilities through alternative financing techniques,” the PBA is one of several avenues the city can use to borrow funds without voter approval. The city can also use the quasi-public Providence Redevelopment Agency (PRA) for urban renewal projects or tax-increment financing (TIF) for other development projects.
The PBA holds title to all city buildings and works with the state on construction or renovation projects involving public schools. (A state program reimburses municipalities for the vast majority of school-related construction projects.) Its five-member board can approve bond issues, but they must also be approved by the City Council.
The PBA’s board is chaired by developer Stanley Weiss and also includes state Rep. Scott Slater, James McLoughlin, Vincent Killbridge and Ron Crosson. Although the board meets regularly, it has not publicly published meeting minutes in more than a year, according to an Eyewitness News review of filings with the R.I. secretary of state’s office.
Records show $288 million of the city’s $424 million in taxpayer-backed debt in 2016 came from 15 bonds issued through the PBA. One of those bonds was a controversial 2011 green energy bond that involved the agency issuing a 15-year, $35-million bond where just $5 million of the proceeds went toward upgrading energy efficiency in city buildings and the rest was used plug a massive budget deficit.
About $90 million in debt is projected to come off the city’s books by 2019, but that assumes no new borrowing will occur.