Providence City Council wants control over proposed $40M infrastructure bond

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City Council Finance Comm 7-14_330483

PROVIDENCE, R.I. (WPRI) – The Elorza administration’s plan to ask voters to borrow $40 million for an infrastructure bond hit a snag Thursday when the City Council introduced its own proposal that would give individual councilors more control over how the money is spent.

Tempers occasionally flared during the two-hour City Council Finance Committee meeting as Chairman John Igliozzi, D-Ward 7, made it clear he wants each of the city’s 15 councilors to control $1.5 million from the bond proceeds. His proposal would set aside $17.5 million for special projects selected by the mayor’s office.

The council is tasked with approving an ordinance that would put the $40-million general-obligation bond question – for Providence voters only – on the Nov. 8 ballot. In order for the question to appear on the ballot, the council must approve the ordinance by Aug. 10. No action was taken Thursday.

“This leadership and this council doesn’t want to repeat the mistakes of the past,” Igliozzi said Thursday, referring to what he and other council members claim was an unfair handling of the $40-million road-paving bond initiative by former Mayor Angel Taveras in 2012.

Under that plan, the mayor’s office conducted a comprehensive study that ranked streets by condition and attempted to address the worst streets first. While the Taveras administration committed to spending at least $1 million in each of the city’s 15 wards, it did not allow councilors to have the final say over which streets were paved. When councilors proposed they control $20 million, Taveras threatened to veto the ordinance.

Igliozzi said he would rather approve an ordinance similar to one the council passed in 2001 under former Mayor Vincent A. “Buddy” Cianci Jr., which laid out how the city would spend $50 million that was approved by voters the year before. In that case, each councilor controlled $2.2 million and another $13 million was set aside for 13 specific projects.  The rest of the money was used for insurance and capitalized interest.

Although some councilors often argue that no one knows their wards’ needs better than they do, critics say taking such a parochial approach can disrupt the process. In the case of the 2002 bond, some ward accounts still had unused money a decade later.

During one particularly heated exchange Thursday, Councilman Sam Zurier, D-Ward 2, asked if Igliozzi’s proposal could lead to a council member choosing to not have a political rival’s road paved. Although Igliozzi scoffed at the question, the answer was clear.

“If you can’t be fair and partial in your ward, that’s on you,” Igliozzi said.

Igliozzi said he isn’t focused on roads and sidewalks and would rather the Elorza administration use its half of the bond money to address those projects. He said he would like to tackle recreation centers and playgrounds with the $1.5 million his ward would receive under his proposal.

“There will be millions of dollars for the administration to start outlining what streets, per their list, they want to have done,” he said.

Tony Simon, the mayor’s chief of staff, explained that the administration wants to work collaboratively with the council, but “that doesn’t mean we need to set aside ward-specific accounts.”

The administration’s version of the ordinance is significantly more vague than Igliozzi’s proposal, only explaining that the $40 million would be set aside for street and sidewalk repairs, bridge and sewer improvements, parks infrastructure and city buildings. Simon did not provide a list of projects to the council Thursday, but an allocation breakdown shows about half the money would be designated for streets.

“This is an opportunity to invest in our future but the administration is firmly opposed to the City Council’s proposal which would literally return us to the irresponsible practices of the past,” Simon told WPRI.com. “We are committed to working with the council in the coming days to change the ordinance and produce a plan that will objectively, transparently, and responsibly make the necessary investments the city needs.”

The administration didn’t put forth its plan to borrow $40 million until last Thursday, when a proposed ordinance was submitted to the City Council off docket. A bond was never discussed during the weeks-long vetting process of the city budget that took effect July 1, but the administration briefed reporters on its plan the morning it introduced the ordinance to the council.

Although voters would be asked to approve the $40 million bond in November, the city does not intend to spend the money all at once. About $20 million would be used during the 2017 construction season and the rest would be set aside for 2018, the same year Elorza and every member of the council would appear on the ballot for re-election.

Under a financing timeline provided to the council Thursday night, the administration said it would first seek a $20-million bond anticipation note that would allow the city to borrow $20 million at a projected interest rate of 2%. The note would close a year later, when the city would prepare a $40-million bond issue at a projected rate of 4.95%. (Only $20 million would actually be borrowed in the second year.)

Simon said the process of seeking a bond anticipation note for one year and the full bond the next year is a common practice that saves municipalities money and would give the city time to hire the appropriate contractors. A repayment schedule submitted by the administration shows the city would end up paying $63.6 million if the 20-year bond is paid off by 2038.

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. If the city stopped borrowing altogether, it would be down to $100 million in total debt by 2025.

Neither the administration nor the council is proposing to use any of the $40-million bond for school improvements because the city is already borrowing about $21 million through a state program to repair school buildings over the next two summers. Those construction projects are already underway.

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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