Aponte, Finance Committee Pull Support for Elorza's $40M Providence Infrastructure Bond

GoLocalProv News Team

Aponte, Finance Committee Pull Support for Elorza's $40M Providence Infrastructure Bond

City Council President Luis Aponte
Members of the Providence City Council Finance Committee introduced a resolution Tuesday night recommending withdrawal of support for Mayor Elorza’s $40 million infrastructure bond issuance.

"There are many needs in our city, but none can take precedence over the future economic viability of our entire city. The impact of borrowing now on a future bond rating, it impacts our budget flexibility and our ability to begin to address structural financial challenges," said Aponte of his decision. 

Aponte was joined at the announcement by Council President Pro Tempore Sabina Matos and Finance Chairman John Igliozzi. 

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Process Coming Up Short

The City of Providence had planned to seek a $40 million Neighborhood Infrastructure Bond to make investments and build stronger neighborhoods throughout Providence, Elorza announced on July 7. In August, the Elorza Administration and the City Council agreed to an ordinance to allow the bond question to be put on November's ballot. 

Both the Council and Mayor's office had been each working on a list of projects, to be signed off by the city before being placed on the ballot It is unclear how far those negotiations had come. 

Rushed from the Start

The Elorza administration was late in proposing the ordinance -- sending it to the council just before the state's deadline to get the question on the ballot. The Council and the Mayor battled over language from the beginning.  As GoLocal previously reported on July 22, 2016:

The proposed $40 million bond program by Mayor Jorge Elorza went down Thursday night before the Finance Committee. Members of the Providence City Council citing concerns about the "timing and potential risks included in the administration’s proposed $40 million bond referendum," unanimously decided to continue the ordinance for further analysis and deliberation -- which could be the death knell for the last minute Elorza plan.

The proposal was introduced just two weeks ago and faces a deadline to be placed on the November ballot. Included in the $40 million ask is a $20 million bond anticipation note (BAN), which Council members charge "lacks a clear and complete spending plan."

Council Members on Record

“I’ve been deliberating this since July, and as a member of the finance committee and as Council President Pro Tempore, I take this matter very seriously,” said Matos. “In recent months, I’ve grown more and more concerned about the city’s finances. Even Governor Raimondo has recently expressed concerns about the city’s finances and unfunded debt liabilities. Last week, Moody’s Investor Services stated that any further reductions to the city’s reserves ‘will result in strong downward rating pressure.’ The city’s bond rating is one investment grade above junk status, and at this time, it is not appropriate for the city to take on new debt.”

“With all the information that has come to light, we now know for certain that this is not a fiscally responsible time to pursue more debt,” said Igliozzi. “The city’s unfunded debt liability to retirees is close to $2 billion. Moody’s came in and said our bond rating hasn’t changed from one investment grade above junk. At the finance committee two weeks ago, administration admitted that if its precedent-setting five-year contract is approved, the fire department will still exceed its budget by $8.7 million in overtime in the near future. We also have an outstanding $12.4 million owed to firefighters. That’s $20 million that this administration has created all on its own. And now we know for certain that these are debts the people of Providence will have to pay.”
 


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