2023 -- H 6211
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LC002617
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S TATE OF RHODE IS LAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2023
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J O I N T R E S O L U T I O N
A N D A N A C T
AUTHORIZING THE STATE TO ENTER INTO A FINANCING AGREEMENT RE LATING
TO SCHOOL CONSTRUCTI ON IN THE CITY OF PAWTUCKET
Introduced By: Representatives Messier, Alzate, Kazarian, Cruz, Henries, Stewart, and
Shallcross Smith
Date Introduced: March 24, 2023
Referred To: House Finance
WHEREAS, Pursuant to Article XII of the Rhode Island Constitution, it is the duty of the 1
State of Rhode Island (the "state") and the Rhode Island general assembly to promote public 2
schools as the diffusion of knowledge is essential to the preservation of the rights and liberties of 3
the Rhode Island people; and 4
WHEREAS, It is the duty of the state and the Rhode Island general assembly to adopt all 5
means which they deem necessary and proper to secure to the people, the advantages and 6
opportunities of education and guarantee adequate public school housing for all public school 7
children in the state; and 8
WHEREAS, School facilities provide more than a place for instruction. The physical 9
learning environment contributes to the successful performance of educational programs designed 10
to meet students' educational needs, and good educational outcomes depend on safe healthy 11
school buildings. Every student needs a safe, healthy, and sanitary learning environment that 12
promotes student learning and development; and 13
WHEREAS, School buildings in the city of Pawtucket (the "city"), Rhode Island are in 14
need of major repairs and upgrades, presently interfere with the effective operation of schools, 15
and negatively affect the health, safety, and welfare of the children of Pawtucket; and 16
WHEREAS, At the general election held on November 8, 2022, the electors of the city 17
approved a project consisting of the acquisition, construction, improvement, furnishing 18
and equipping of a new high school and school facilities and all expenses incident 19
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thereto including, but not limited to, costs of design, demolition, athletic fields, landscaping and 1
parking and costs of financing (the "project"); and 2
WHEREAS, Due to financial hardships of the city of Pawtucket, increases in interest 3
rates, and post-supply chain issues, the city is not currently able to finance the construction, 4
renovation, improvement, alteration, repair, furnishing and equipping of schools and school 5
facilities [without certain legislative changes and support from the state]; and 6
WHEREAS, The state currently provides state housing aid reimbursement to the city of 7
Pawtucket at a rate of approximately 83.7%; and 8
WHEREAS, The state's reimbursement costs are directly related to the interest rates the 9
city pays on its general obligation school bonds; and 10
WHEREAS, The state is able to issue appropriation-backed bonds at lower interest rates 11
than the city is able to obtain on its general obligation bonds; and 12
WHEREAS, It is less costly for the state to finance its share of the project at lower 13
interest rates than for the city to finance the project at higher interest rates and seek state housing 14
aid reimbursement from the state; and 15
WHEREAS, The project will be financed through bonds issued by the Rhode Island 16
Health and Educational Building Corporation (the "corporation") under its school financing 17
revenue bond program, with an expected term of not to exceed thirty (30) years and it is 18
anticipated that the state will be a signatory to the financing agreement with the corporation (the 19
"financing agreement"); and 20
WHEREAS, It is anticipated that the state's payment obligations to the corporation under 21
the financing agreement will be subject to appropriation therefor by the general assembly in each 22
budget year; and 23
WHEREAS, The Rhode Island public corporation debt management act (defined below) 24
requires the general assembly to provide its consent to the issuance or incurring by the State of 25
Rhode Island of certain obligations, including financing guarantees or other payment agreements; 26
and 27
WHEREAS, The total project costs covered by the financing agreement are expected to 28
be $330,000,000 plus original issue premium, if any, and such additional amount as is required to 29
finance costs of issuance, funding of debt service reserves, if required, and capitalized interest. 30
Debt service payments will be supported by revenues received by the corporation under the 31
financing agreement which include annual appropriations for debt service made by the state and 32
payments from the city of Pawtucket under the financing agreement. Total debt service on the 33
bonds issued by the corporation (the "corporation bonds") in not expected to exceed $22,201,000 34
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annually and $435,652,875 in the aggregate based on an average interest rate of five percent 1
(5.00%). 2
SECTION 1. NOW THEREFORE, be it resolved and enacted by the general assembly as 3
follows: 4
RESOLVED AND ENACTED, That this act shall serve as the joint resolution required 5
pursuant to chapter 18 of title 35 of the Rhode Island General Laws ("Rhode Island public 6
corporation debt management act"); and be it further 7
RESOLVED AND ENACTED, That this general assembly hereby approves the 8
financing for the project in an amount up to $330,000,000, plus original issue premium, if any, 9
and such additional amount as is required to finance costs of issuance, funding of debt service 10
reserves, if required, and capitalized interest thereon; and be it further 11
RESOLVED AND ENACTED, That the state, acting through the governor and the 12
general treasurer, may execute the financing agreement as contemplated herein and any other 13
agreements necessary to effectuate the purposes of this act; and be it further 14
RESOLVED AND ENACTED, That the corporation bonds will be special obligations of 15
the corporation payable from funds received by the corporation under the financing agreement 16
and other revenues received by the corporation, in any combination or priority as may be 17
designated in the proceedings of the corporation authorizing the issuance of such debt. The total 18
debt service on the corporation bonds is estimated to average approximately twenty-two million, 19
two hundred one thousand dollars ($22,201,000) per year or approximately four hundred thirty-20
five million six hundred fifty-two thousand and eight hundred seventy-five dollars 21
($435,652,875) in the aggregate, at an average interest rate of approximately five percent (5%) 22
and an approximately thirty (30) year maturity; and be it further 23
RESOLVED AND ENACTED, That the corporation bonds will not constitute 24
indebtedness of the state or any of its subdivisions or a debt for which the full faith and credit of 25
the state or any of its subdivisions is pledged; and be it further 26
RESOLVED AND ENACTED, That the state's authority to incur the obligations set forth 27
herein will expire within five (5) years of the date of passage of this act if such financing 28
transaction is not executed prior to that date; and be it further 29
RESOLVED AND ENACTED, That from and after the date that the governor and the 30
general treasurer enter into such financing agreement, that the project shall not be eligible for 31
state housing aid reimbursement calculated pursuant to § 16-7-39 but shall be eligible for state 32
housing aid "bonus" incentives pursuant to § 16-7-40 and foundational aid offered on a pay-as-33
you-go basis pursuant to § 45-38.2-4; and be it further 34
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RESOLVED AND ENACTED, That no corporation bonds shall be issued unless the 1
project shall be approved by the Rhode Island department of education; and be it further 2
RESOLVED AND ENACTED, that the governor, the general treasurer, on behalf of the 3
state are hereby authorized to execute such documents or other papers as either of them deem 4
necessary or desirable to carry out the intent of this act and are also authorized to take all actions 5
and execute all documents or agreements necessary to comply with federal tax and securities 6
laws, which documents or agreements may have a term coextensive with the maturity of the 7
corporation bonds authorized hereby, including Rule 15c2-12 of the Securities and Exchange 8
Commission (the "rule") and to execute and deliver a continuing disclosure agreement or 9
certificate in connection with the corporation bonds in the form as shall be deemed advisable by 10
such officers in order to comply with the rule. 11
SECTION 2. This act shall take effect upon passage. 12
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
J O I N T R E S O L U T I O NJ O I N T R E S O L U T I O N
A N D A N A C T
AUTHORIZING THE STATE TO ENTER INTO A FINANCING AGREEMENT RE LATING
TO SCHOOL CONSTRUCTION IN THE CITY OF PAWTUCKET
***
This act would serve as the joint resolution required pursuant to chapter 18 of title 35 of 1
the Rhode Island general laws ("Rhode Island public corporation debt management act") 2
authorizing the State of Rhode Island to finance the acquisition, construction, improvement, 3
furnishing and equipping of a new high school and school facilities and all expenses incident 4
thereto, including but not limited to costs of design, demolition, athletic fields, landscaping and 5
parking. 6
The project would not be eligible for state housing aid reimbursement calculated pursuant 7
to § 16-7-39 but would be eligible for state housing aid "bonus" incentives pursuant to § 16-7-40 8
and foundational aid offered on a pay-as-you-go basis pursuant to § 45-38.2-4. No bonds would 9
be issued under the act unless the school projects have been approved by the Rhode Island 10
Department of Education. 11
This act would take effect upon passage. 12
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