City continues to borrow through Infrastructure Bank, saves big money

City continues to borrow through Infrastructure Bank, saves big money

PAWTUCKET – Last week’s announcement that the city will receive another $1.9 million loan through the Rhode Infrastructure Bank to resurface local roadways marked another milestone in a partnership between the two entities.

Jeffrey Diehl, CEO and executive director of the Infrastructure Bank, says the quasi-public agency has now invested $158.7 million in financing and investments for Pawtucket over the past 30 years, including $18.5 million to pave roads over the past few years.

The estimated interest savings on that $18.5 million because the city went through the agency is $2 million, making dollars stretch further.

In addition to the road money, the city has also borrowed $135.4 million to improve drinking water, $3.9 million for energy efficiency upgrades, and $865,000 in other projects.

That’s part of a $302 million investment in local communities by the agency statewide over that same period, he said, and the Infrastructure Bank continues to expand its reach. When agencies/communities such as Providence Water, Narragansett Bay Commission and Newport and Warwick are factored in, that number climbs to $2.1 billion.

The city received a $1.9 million loan to resurface their roadways, including major thoroughfares such as Pawtucket Avenue, Main Street, Beverage Hill Avenue and Walcott Street. The city will save another $224,188 in debt service payments by borrowing through the Infrastructure Bank.

The Infrastructure Bank will also be doing lending for green infrastructure work around a coming new transit hub off Main Street in Pawtucket, said Diehl, a project he and others are excited about as they try to encourage more of this type of investment in the environment.

The Infrastructure Bank is also looking at refinancing some outstanding bonds in the coming weeks, said Diehl, and with Pawtucket included as one borrower in those investments, the savings to the city from that move could reach another $200,000.

The Infrastructure Bank model works for a variety of reasons, said Diehl. The agency receives limited amounts of capital and is able to leverage state road and bridge capital in the bond market. When the Infrastructure Bank lends to municipalities, everyone is pooled into a larger pot and that pot is pledged in the bond market. Highly rated water programs are better than the state’s, he said, and the agency recently started leveraging private sector capital for road and bridge projects.

With great ratings come attractive rates in the market, he said. The agency can lend below market because it has the capital and “can access the bond market at a very attractive level,” he said, much lower than it would be if cities went on their own.

The nonprofit agency uses a formula that works, he said, reducing the absolute transaction cost of going to market and reducing fixed costs overall by bundling borrowing together.

The Infrastructure Bank is a component unit of the state, but is not guaranteed by the state, he said. It has a board appointed by the governor, and General Treasurer Seth Magaziner sits on that board.

Last week’s announcement was for $18.5 million in financing of road and bridge projects and Pawtucket, Central Falls and Westerly. The three communities will save a combined $1.4 million in that borrowing.

“The Infrastructure Bank is proud to partner with our local communities to make significant investments in their roads and bridges,” said Diehl.

“The Rhode Island Infrastructure Bank has been essential to saving Pawtucket taxpayer dollars,” said Mayor Donald Grebien. “This partnership between the state and local municipalities is exactly the type of success story that taxpayers need and deserve. We are proud to continue working with the bank to upgrade Pawtucket infrastructure in a cost effective manner.”