Providence City Council backs revised $40M bond plan

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PROVIDENCE, R.I. (WPRI) – The Providence City Council on Tuesday gave first passage to a ballot question that would allow voters to decide whether they want city officials to borrow $40 million for infrastructure improvements beginning next year.

The council voted 11-0 to support a revamped ordinance that requires the Elorza administration and the city treasurer to agree on a slate of projects across the city before voters head to the polls on Nov. 8. Three members were absent. Councilman Sam Zurier abstained from voting, citing concern that a list of projects have not been released.

The council has scheduled another meeting for Thursday evening where it will likely approve the question for a second and final time. From there, it will be sent to the mayor’s desk for his signature and then submitted to the Providence Board of Canvassers and secretary of state’s office by Aug. 10.

Under the terms of the ordinance, the city would commit to spreading at least 50% of the amount borrowed evenly across Providence’s 15 wards, but councilors would not be given final say over individual projects. Instead, the ordinance requires the city finance director and city treasurer to submit a list of projects to the City Council prior to Election Day.

Although the question asks voters to allow the city to borrow $40 million, some councilors have said they think the city should consider borrowing less in order to begin paying down some of its long-term debt.

Records reviewed by WPRI.com show Providence had about $424 million in taxpayer-backed debt during the 2015-16 fiscal year, with about $88.6 million coming in the form of general obligation debt. More than $300 million in debt is scheduled to come off the books by 2025, although the city will likely take on new debt over the next decade.

The proposal approved Tuesday also prohibits the city from using bond anticipation notes (BANs) as short-term financing in 2017 before a full $40-million bond is issued in 2018. Instead, the city would issue a $40-million general obligation bond, possibly as soon as January.

If the bond comes with a 4.99% interest rate, the city would pay about $3.19 million a year in debt service over the course of 20 years, according to Adam Krea, a fiscal advisory from First Southwest.

Continue the discussion on FacebookDan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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