Finance directors lay out initial plan on how to pay for new EPHS

Outlines schedule of borrowing the city will likely undertake

By Mike Rego
Posted 11/20/19

EAST PROVIDENCE — Besides talking about the aid money owed by the city to the schools, a joint meeting between legislative bodies last week discussed the bonding schedule for the new $189 million …

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Finance directors lay out initial plan on how to pay for new EPHS

Outlines schedule of borrowing the city will likely undertake

Posted

EAST PROVIDENCE — Besides talking about the aid money owed by the city to the schools (see sidebar), a joint meeting between legislative bodies last week discussed the bonding schedule for the new $189 million East Providence High School.

Placed on the agenda by Ward 3 Councilor Nate Cahoon, he and his peers gathered with their School Committee counterparts Tuesday night, Nov. 19, to iron out a few financial matters pertaining to current and future district building projects.

Key to the new EPHS dialogue was the plan put together by the respective finance directors on both sides of the equation, the city’s Malcolm Moore and the school’s Craig Enos, on how to go about paying for it.

Mr. Cahoon expressed his appreciation for the document Mr. Moore provided to the council outlining his strategy, which as the former stated “relies on standard borrowing procedures.” That means the city will seek finances by way of Bond Anticipatory Notes (BANs) and Tax Anticipatory Notes (TANs).

According to Mr. Moore, in January 2020, the city expects to borrow some $77 million to pay for construction to date and that scheduled for the ensuing calendar year.

Next fall, the city finance chief said the schedule is to pay off what is owed at that point while seeking another $50 million on loan to account for the amount the project is expected to cost through June 2021. Then, the city will likely restructure its entire debt in an attempt to save on interest associated with the new EPHS, which is expected to be open for the start of classes late that summer.

In total, the city will have to borrow approximately $172 million to pay for the project. It’s guaranteed to receive at least 54.5 percent on about $135 million it spends on the school, a rate that could rise to 74.5 percent in the likely event the project meets building and curriculum mandates set forth by the Rhode Island Department of Education.

Of note, the state has already provided $16 million in upfront monies that helped launch construction this past summer.

In addition, Mr. Moore alerted both bodies of the need to potentially include upwards of $10 million more for other building project being considered by the school department, most notably the need to spend a considerable amount refurbishing Martin Middle School.

The state has required all school districts to submit long-term plans to improve their infrastructure. Following an outside review of all buildings last year, estimates given to the state and the district put the MMS project cost at between $40-$50 million. East Providence would be reimbursed at the 54.5 percent figure for work done at the 40-year-old school.

When asked about the need to include the $10 million in calculations, Superintendent of Schools Kathryn Crowley told the gathering, “Martin is going to be our area of concentration for the next four to five years…That’s our upfront money, what it will be used for.”

With that knowledge in tow, Mr. Cahoon queried Messrs. Moore and Enos if their plan “was sufficient to cover the cash flow situation” for the duration of the new EPHS project, specifically.

Mr. Moore, with agreement from Mr. Enos, answered with a “yes,” adding the administrators are working closely with the advisory firm HillTower “about the best way to do this.” Mr. Moore said whether the money is borrowed by means of BANs or TANs, through the Rhode Island Infrastructure Bank or the R.I. Health & Educational Building Corporation (RIHEBC) are elements to be determined.

“We still a few balls in the are on that one, but what we have right now will suffice,” Mr. Moore concluded, adding ultimately the total amount of the bond won’t change, but the city’s “liability will” depending on if it is reimbursed by the state at the 54.5 or 74.5 percentage.

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Mike Rego

Mike Rego has worked at East Bay Newspapers since 2001, helping the company launch The Westport Shorelines. He soon after became a Sports Editor, spending the next 10-plus years in that role before taking over as editor of The East Providence Post in February of 2012. To contact Mike about The Post or to submit information, suggest story ideas or photo opportunities, etc. in East Providence, email mrego@eastbaymediagroup.com.