2018 -- S 2193

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LC003664

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO EDUCATION - FOUNDATION LEVEL SCHOOL SUPPORT

     Introduced By: Senators Pearson, DiPalma, Gallo, Metts, and Seveney

     Date Introduced: February 01, 2018

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 16-7-41, 16-7-41.1 and 16-7-44 of the General Laws in Chapter

16-7 entitled "Foundation Level School Support [See Title 16 Chapter 97 - The Rhode Island

Board Of Education Act]" are hereby amended to read as follows:

     16-7-41. Computation of school housing aid.

     (a) In each fiscal year the state shall pay to each community a grant to be applied to the

cost of school housing equal to the following:

     The cost of each new school housing project certified to the commissioner of elementary

and secondary education not later than July 15 of the fiscal year shall be divided by the actual

number of years of the bond issued by the local community or the Rhode Island Health and

Educational Building Corporation, or the Rhode Island Infrastructure Bank in support of the

specific project, times the school housing aid ratio; and provided, further, with respect to costs of

new school projects financed with proceeds of bonds issued by the local community or the Rhode

Island Health and Educational Building Corporation, or the Rhode Island Infrastructure Bank in

support of the specific project, the amount of the school housing aid payable in each fiscal year

shall not exceed the amount arrived at by multiplying the principal and interest of the bonds

payable in each fiscal year by the school housing aid ratio and which principal and interest

amount over the life of the bonds, shall, in no event, exceed the costs of each new school housing

project certified to the commissioner of elementary and secondary education. If a community fails

to specify or identify the appropriate reimbursement schedule, the commissioner of elementary

and secondary education may at his or her discretion set up to a five (5) year reimbursement cycle

for projects under five hundred thousand dollars ($500,000); up to ten (10) years for projects up

to three million dollars ($3,000,000); and up to twenty (20) years for projects over three million

dollars ($3,000,000).

     (b) Aid shall be provided for the same period as the life of the bonds issued in support of

the project and at the school housing aid ratio applicable to the local community at the time of the

bonds issued in support of the project as set forth in § 16-7-39.

     (c) Aid shall be paid either to the community or in the case of projects financed through

the Rhode Island Health and Educational Building Corporation or the Rhode Island Infrastructure

Bank, to the Rhode Island Health and Educational Building Corporation or the Rhode Island

Infrastructure Bank or its designee including, but not limited to, a trustee under a bond indenture

or loan and trust agreement, in support of bonds issued for specific projects of the local

community in accordance with this section, § 16-7-40 and § 16-7-44. Notwithstanding the

preceding, in case of failure of any city, town or district to pay the amount due in support of

bonds issued on behalf of a city, town, school or district project financed by the Rhode Island

Health and Educational Building Corporation or the Rhode Island Infrastructure Bank, upon

notification by the Rhode Island Health and Educational Building Corporation or the Rhode

Island Infrastructure Bank, the general treasurer shall deduct the amount from aid provided under

this section, § 16-7-40, § 16-7-44 and § 16-7-15 through § 16-7-34.3 due the city, town or district

and direct said funding to the Rhode Island Health and Educational Building Corporation or the

Rhode Island Infrastructure Bank or its designee.

     (d) Notwithstanding any provisions of law to the contrary, in connection with the

issuance of refunding bonds benefiting any local community, any net interest savings resulting

from the refunding bonds issued by such community or a municipal public buildings authority for

the benefit of the community or by the Rhode Island health and educational building corporation

or the Rhode Island Infrastructure Bank for the benefit of the community, in each case in support

of school housing projects for the community, shall be allocated between the community and the

state of Rhode Island, by applying the applicable school housing aid ratio at the time of issuance

of the refunding bonds, calculated pursuant to § 16-7-39, that would otherwise apply in

connection with school housing projects of the community; provided however, that for any

refundings that occur between July 1, 2013 and December 31, 2015, the community shall receive

eighty percent (80%) of the total savings and the state shall receive twenty percent (20%). In

connection with any such refunding of bonds, the finance director or the chief financial officer of

the community shall certify such net interest savings to the commissioner of elementary and

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secondary education. Notwithstanding § 16-7-44 or any other provision of law to the contrary,

school housing projects costs in connection with any such refunding bond issue shall include

bond issuance costs incurred by the community, the municipal public buildings authority or the

Rhode Island health and educational building corporation or the Rhode Island Infrastructure

Bank, as the case may be, in connection therewith. In connection with any refunding bond issue,

school housing project costs shall include the cost of interest payments on such refunding bonds,

if the cost of interest payments was included as a school housing cost for the bonds being

refunded. A local community or municipal public buildings authority shall not be entitled to the

benefits of this subsection (d) unless the net present value savings resulting from the refunding is

at least three percent (3%) of the refunded bond issue.

     (e) Any provision of law to the contrary notwithstanding, the commissioner of

elementary and secondary education shall cause to be monitored the potential for refunding

outstanding bonds of local communities or municipal public building authorities or of the Rhode

Island Health and Educational Building Corporation or the Rhode Island Infrastructure Bank

issued for the benefit of local communities or municipal public building authorities and benefiting

from any aid referenced in this section. In the event it is determined by said monitoring that the

net present value savings which could be achieved by refunding such bonds of the type

referenced in the prior sentence including any direct costs normally associated with such

refundings is equal to (i) at least one hundred thousand dollars ($100,000) and (ii) for the state

and the communities or public building authorities at least three percent (3%) of the bond issue to

be refunded including associated costs then, in such event, the commissioner (or his or her

designee) may direct the local community or municipal public building authority for the benefit

of which the bonds were issued, to refund such bonds. Failure of the local community or

municipal public buildings authority to timely refund such bonds, except due to causes beyond

the reasonable control of such local community or municipal public building authority, shall

result in the reduction by the state of the aid referenced in this § 16-7-4.1 § 16-7-41 associated

with the bonds directed to be refunded in an amount equal to ninety percent (90%) of the net

present value savings reasonably estimated by the commissioner of elementary and secondary

education (or his or her designee) which would have been achieved had the bonds directed to be

refunded been refunded by the ninetieth (90th) day (or if such day is not a business day in the

state of Rhode Island, the next succeeding business day) following the date of issuance of the

directive of the commissioner (or his or her designee) to refund such bonds. Such reduction in the

aid shall begin in the fiscal year following the fiscal year in which the commissioner issued such

directive for the remaining term of the bond.

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     (f) Payments shall be made in accordance with § 16-7-40 and this section.

     (g) For purposes of financing or refinancing school facilities in the city of Central Falls

through the issuance bonds through the Rhode Island Health and Educational Building

Corporation or the Rhode Island Infrastructure Bank, the city of Central Falls shall be considered

an "educational institution" within the meaning of subdivision 45-38.1-3(13) of the general laws.

     16-7-41.1. Eligibility for reimbursement.

     (a) School districts, not municipalities, may apply for and obtain approval for a project

under the necessity of school construction process set forth in the regulations of the board of

regents for elementary and secondary education, provided, however, in the case of municipality

which issues bonds through the Rhode Island Health and Educational Building Corporation or the

Rhode Island Infrastructure Bank to finance or refinance school facilities for a school district

which is not part of the municipality, the municipality may apply for and obtain approval for a

project. Such approval will remain valid until June 30 of the third fiscal year following the fiscal

year in which the board of regents for elementary and secondary education's approval is granted.

Only those projects undertaken at school facilities under the care and control of the school

committee and located on school property may qualify for reimbursement under §§ 16-7-35 -- 16-

7-47. Facilities with combined school and municipal uses or facilities that are operated jointly

with any other profit or non-profit agency do not qualify for reimbursement under §§ 16-7-35 --

16-7-47. Projects completed by June 30 of a fiscal year are eligible for reimbursement in the

following fiscal year. A project for new school housing or additional housing shall be deemed to

be completed when the work has been officially accepted by the school committee or when the

housing is occupied for its intended use by the school committee, whichever is earlier.

     (b) Notwithstanding the provisions of this section, the board of regents shall not grant

final approval for any project between June 30, 2011 and May 1, 2015 except for projects that are

necessitated by immediate health and safety reasons. In the event that a project is requested

during the moratorium because of immediate health and safety reasons, those proposals shall be

reported to the chairs of the house and senate finance committees.

     (c) Any project approval granted prior to the adoption of the school construction

regulations in 2007, and which are currently inactive; and any project approval granted prior to

the adoption of the school construction regulations in 2007 which did not receive voter approval

or which has not been previously financed, are no longer eligible for reimbursement under this

chapter. The department of elementary and secondary education shall develop recommendations

for further cost containment strategies in the school housing aid program.

     (d) Beginning July 1, 2015, the council on elementary and secondary education shall

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approve new necessity of school construction applications on an annual basis. The department of

elementary and secondary education shall develop an annual application timeline for LEAs

seeking new necessity of school construction approvals.

     16-7-44. School housing project costs.

     School housing project costs, the date of completion of school housing projects, and the

applicable amount of school housing project cost commitments shall be in accordance with the

regulations of the commissioner of elementary and secondary education and the provisions of §§

16-7-35 -- 16-7-47; provided, however, that school housing project costs shall include the

purchase of sites, buildings, and equipment, the construction of buildings, and additions or

renovations of existing buildings and/or facilities. School housing project costs shall include the

cost of interest payment on any bond issued after July 1, 1988, provided that such bond is

approved by the voters on or before June 30, 2003, or issued by a municipal public building

authority or by the appropriate approving authority on or before June 30, 2003. Except as

provided in § 16-7-41(d), those projects approved after June 30, 2003, interest payments may

only be included in project costs provided that the bonds for these projects are issued through the

Rhode Island Health and Educational Building Corporation or the Rhode Island Infrastructure

Bank. School housing project costs shall exclude: (1) any bond issuance costs incurred by the

municipality or regional school district; (2) demolition costs for buildings, facilities, or sites

deemed surplus by the school committee; and (3) restrictions pursuant to § 16-7-44.1 below. A

building, facility, or site is declared surplus by a school committee when the committee no longer

has such building, facility, or site under its direct care and control and transfers control to the

municipality, § 16-2-15. The board of regents for elementary and secondary education will

promulgate rules and regulations for the administration of this section. These rules and

regulations may provide for the use of lease revenue bonds, capital leases, or capital reserve

funding, to finance school housing provided that the term of any bond, or capital lease shall not

be longer than the useful life of the project and these instruments are subject to the public review

and voter approval otherwise required by law for the issuance of bonds or capital leases. Cities or

towns issuing bonds, or leases issued by municipal public buildings authority for the benefit of a

local community pursuant to chapter 50 of title 45 shall not require voter approval. Effective

January 1, 2008, and except for interim finance mechanisms, refunding bonds, borrowing from

the school building authority capital fund, and bonds issued by the Rhode Island Health and

Educational Building Corporation or the Rhode Island Infrastructure Bank to finance school

housing projects for towns, cities, or regional school districts borrowing for which has previously

been authorized by an enabling act of the general assembly, all bonds, notes and other forms of

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indebtedness issued in support of school housing projects shall require passage of an enabling act

by the general assembly.

     SECTION 2. Section 24-18-7 of the General Laws in Chapter 24-18 entitled "Municipal

Road and Bridge Revolving Fund" is hereby amended to read as follows:

     24-18-7. Procedure for project approval.

     (a) By September 1, 2013, the department shall promulgate rules and regulations

establishing the project evaluation criteria and the process through which a city or town may

submit an infrastructure plan. By December 31, 2013, the agency shall promulgate rules and

regulations to effectuate the provisions of this chapter which may include, without limitation,

forms for financial assistance applications, loan agreements, and other instruments. All rules and

regulations promulgated pursuant to this chapter shall be promulgated in accordance with the

provisions of chapter 35 of title 42.

     (b) Cities and towns shall submit infrastructure plans to the department in accordance

with the department's rules and regulations promulgated pursuant to subsection (a) of this section.

     (c) The department shall evaluate all submitted infrastructure plans and, in accordance

with the project evaluation criteria, identify all eligible projects, and after a public hearing, the

department shall finalize and provide the agency and statewide planning with a project priority

list. The agency shall not award financial assistance to any project not listed on the project

priority list.

     (d) The agency shall not obligate more than fifty percent (50%) of available funding in

any calendar year to any one city or town unless there are no other eligible projects on the project

priority list.

     (e) Upon issuance of the project priority list, the agency shall award financial assistance

to cities and towns for approved projects. The agency may decline to award financial assistance to

an approved project that the agency determines will have a substantial adverse effect on the

interests of holders of bonds or other indebtedness of the agency or the interests of other

participants in the financial assistance program, or for good and sufficient cause affecting the

finances of the agency. All financial assistance shall be made pursuant to a loan agreement

between the agency and the city or town, acting by and through the officer or officers, board,

committee, or other body authorized by law, or otherwise its chief executive officer, according to

terms and conditions as determined by the agency, and each loan shall be evidenced and secured

by the issue to the agency of city or town obligations in fully marketable form in principal

amount, bearing interest at the rate or rates specified in the applicable loan agreement, and shall

otherwise bear such terms and conditions as authorized by this chapter and/or the loan agreement.

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     SECTION 3. Section 46-12.2-4.2 of the General Laws in Chapter 46-12.2 entitled

"Rhode Island Infrastructure Bank" is hereby amended to read as follows:

     46-12.2-4.2. Establishment of the efficient buildings fund.

     (a) There is hereby authorized and created within the Rhode Island infrastructure bank an

efficient buildings fund for the purpose of providing technical, administrative and financial

assistance to local governmental units for energy efficient and renewable energy upgrades to

public buildings and infrastructure, including, but not limited to, streetlights. The Rhode Island

infrastructure bank shall review and approve all applications for projects to be financed through

the efficient buildings fund.

     The office of energy resources shall promulgate rules and regulations establishing a

project priority list for efficient buildings fund and the process through which a local

governmental unit may submit an application for inclusion of a project on the project priority list.

Upon issuance of the project priority list by the office of energy resources, the project priority list

shall be used by the Rhode Island infrastructure bank to determine the order in which financial

assistance shall be awarded. The Rhode Island infrastructure bank shall promulgate rules and

regulations to effectuate the provisions of this section which may include, without limitation,

forms for financial assistance applications, loan agreements, and other instruments. All rules and

regulations promulgated pursuant to this chapter shall be promulgated in accordance with the

provisions of chapter 35 of title 42. Eligibility for receipt of this financial assistance by a local

governmental unit shall be conditioned upon that local governmental unit reallocating their

remaining proportional QECB allocation to the state of Rhode Island.

     (b) The Rhode Island infrastructure bank shall have all the powers necessary and

convenient to carry out and effectuate the purposes and provisions of this section including,

without limiting the generality of the preceding statement, the authority:

     (1) To receive and disburse such funds from the state and federal government as may be

available for the purpose of the fund subject to the provisions of this section;

     (2) To make and enter into binding commitments to provide financial assistance to

eligible borrowers from amounts on deposit in the fund;

     (3) To levy administrative fees on eligible borrowers as necessary to effectuate the

provisions of this section, provided the fees have been previously authorized by an agreement

between the Rhode Island infrastructure bank and the eligible borrower;

     (4) To engage the services of third-party vendors to provide professional services;

     (5) To establish one or more accounts within the fund; and

     (6) Such other authority as granted to the Rhode Island infrastructure bank under this

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chapter.

     (c) Subject to the provisions of this section and to any agreements with the holders of any

bonds of the Rhode Island infrastructure bank or any trustee therefor, amounts held by the Rhode

Island infrastructure bank for the account of the fund shall be applied by the Rhode Island

infrastructure bank, either by direct expenditure, disbursement, or transfer to one or more other

funds and accounts held by the Rhode Island infrastructure bank or maintained under any trust

agreement pertaining to bonds, either alone or with other funds of the Rhode Island infrastructure

bank, to the following purposes:

     (1) To provide financial assistance to local governmental units to finance costs of

approved projects, as set forth in subsection (a), and to refinance the costs of the projects, subject

to such terms and conditions, if any, as are determined by the Rhode Island infrastructure bank;

     (2) To fund reserves for bonds of the Rhode Island infrastructure bank and to purchase

insurance and pay the premiums therefor, and pay fees and expenses of letters or lines of credit

and costs of reimbursement to the issuers thereof for any payments made thereon or on any

insurance, and to otherwise provide security for, and a source of payment for obligations of the

Rhode Island infrastructure bank, by pledge, lien, assignment, or otherwise as provided in this

chapter;

     (3) To pay expenses of the Rhode Island infrastructure bank in administering the fund;

     (4) To provide a reserve for, or to otherwise secure, amounts payable by borrowers on

loans and obligations outstanding in the event of default thereof; amounts in any account in the

fund may be applied to defaults on loans outstanding to the borrower for which the account was

established and, on a parity basis with all other accounts, to defaults on any loans or obligations

outstanding; and

     (5) To provide a reserve for, or to otherwise secure, by pledge, lien, assignment, or

otherwise as provided in this chapter, any bonds of the Rhode Island infrastructure bank.

     (d) In addition to other remedies of the Rhode Island infrastructure bank under any loan

agreement or otherwise provided by law, the Rhode Island infrastructure bank may also recover

from a borrower, in an action in superior court, any amount due the Rhode Island infrastructure

bank together with any other actual damages the Rhode Island infrastructure bank shall have

sustained from the failure or refusal of the borrower to make the payments or abide by the terms

of the loan agreement.

     (e) The Rhode Island infrastructure bank may create one or more loan loss reserve funds

to serve as further security for any loans made by the Rhode Island infrastructure bank or any

bonds of the Rhode Island infrastructure bank issued to fund energy efficiency improvements in

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public buildings in accordance with this section.

     (f) To the extent possible, and in accordance with law, the infrastructure bank shall

encourage the use of project labor agreements for projects over ten million dollars ($10,000,000)

and local hiring on projects funded under this section.

     (g) Any financial assistance provided by the Rhode Island infrastructure bank to a public

entity for the purpose of retrofitting a school building shall not be subject to the match established

by Rhode Island general laws §§ 16-7-35 to 16-7-47, and shall be made subject to coordination

with the Rhode Island department of education. Any approved project as set forth in subsection

(a) of this section that is also an "approved project" as defined in § 16-7-6 shall be eligible for

school housing aid assistance under §§ 16-7-35 and 16-6-47.

     SECTION 4. Section 46-15.3-11 of the General Laws in Chapter 46-15.3 entitled "Public

Drinking Water Supply System Protection" is hereby amended to read as follows:

     46-15.3-11. Disbursements from the funds.

     (a) Only suppliers which withdraw water from wells, reservoirs, springs, or other original

sources of potable water shall be entitled to disbursements from the first of the two (2) mentioned

funds created under § 46-15.3-10 administered by the water resources board. From amounts

available from bond proceeds held by the water resources board, that board shall disburse to each

supplier contributing to the fund a proportional amount based upon each supplier's pro rata

withdrawal of water by volume from wells, reservoirs, springs, or other original sources of water

averaged over the three (3) calendar years preceding disbursement as determined by the water

resources board. Suppliers shall be required to expend this money as follows: for any eligible

expenditure as defined in § 46-15.3-4 including, but not limited to

     (1) Not less than fifty-five percent (55%) shall be spent for acquisition of land or rights in

land or physical improvements to acquired land required to protect the quality of raw water of the

water supply system. Expenditures for maintenance, administration, and payment of taxes on land

acquired under this chapter shall be included within this subdivision.

     (2) Any remaining funds may be used for any eligible expenditures as defined in § 46-

15.3-4.

     (b) The city of Providence shall make expenditures from amounts available in the fund

held by the city of Providence based on the same formula as in subdivisions (a)(1) and (a)(2)

requirements set forth in subsection (a) of this section above; provided, however, the city of

Providence shall be exempt from participating in the use of an alternate deicing mixture within

the Scituate watershed unless drinking water supply sodium levels exceed fifteen (15) ppm (parts

per million) for three (3) consecutive years or seventeen (17) ppm (parts per million) for one year.

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The city of Providence will monitor sodium levels and report sodium testing results to the Rhode

Island department of health and the public on a yearly basis. If drinking water supply sodium

levels exceed fifteen (15) ppm for three (3) consecutive years or seventeen (17) ppm for one year,

the city of Providence shall immediately participate in the use of an alternative deicing mixture

within the Scituate watershed. In December of 2008, the city of Providence will provide a three

(3) year report to the Rhode Island department of environmental management, the general

assembly and the public. Every three (3) years, the city of Providence will submit a report to the

general assembly on monitoring data for sodium levels within the Scituate watershed. This report

will include monitoring data from the previous three (3) year period.

     (c) In making decisions about the expenditure of money under the provisions of this

chapter, suppliers shall take into account the following factors:

     (1) The likelihood of development of the specific parcel proposed for acquisition;

     (2) The existing land uses, as well as the likelihood of development, in the watershed;

     (3) The potential threat to public drinking water sources posed by development in the

watershed including, but not limited to, the intensity of development, the types of land uses,

proximity to reservoirs and/or well heads, and the buffering and filtration capacity of the natural

systems;

     (4) Whether alternative protection measures are available and/or have been attempted,

including local land use regulations;

     (5) The number of persons who presently depend on the sources for their drinking water,

as well as the number of persons who may depend on it in the future;

     (6) The anticipated cost of the parcel proposed to be purchased, and whether less than a

fee interest may be acquired which would reduce the cost significantly while still providing

protection to the source;

     (7) Other cost effectiveness considerations, including whether protection of the source

can be provided by the construction of physical improvements;

     (8) Whether acquisition of the specific parcel, and the protection of the watershed of

which it is a part, is consistent with other planning considerations;

     (9) Proposed management techniques for the parcel proposed to be acquired which will

maximize its capacity to protect the source.

     (d) The costs of issuance of notes and bonds authorized by § 46-15.3-10 may be payable

from any monies in the water quality protection funds.

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     SECTION 5. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION - FOUNDATION LEVEL SCHOOL SUPPORT

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     This act would incorporate bonds issued by the Rhode Island Infrastructure Bank into the

computation of school housing aid assistance and school housing project costs. The act would

also remove certain requirements as to how suppliers must expend funds for certain eligible

expenditures related to conservation or improvements to watershed lands.

     This act would take effect upon passage.

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