2023 -- H 6211

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LC002617

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     STATE OF RHODE ISLAND

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 RELATING

TO SCHOOL CONSTRUCTION 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

State of Rhode Island (the "state") and the Rhode Island general assembly to promote public

schools as the diffusion of knowledge is essential to the preservation of the rights and liberties of

the Rhode Island people; and

     WHEREAS, It is the duty of the state and the Rhode Island general assembly to adopt all

means which they deem necessary and proper to secure to the people, the advantages and

opportunities of education and guarantee adequate public school housing for all public school

children in the state; and

     WHEREAS, School facilities provide more than a place for instruction. The physical

learning environment contributes to the successful performance of educational programs designed

to meet students' educational needs, and good educational outcomes depend on safe healthy

school buildings. Every student needs a safe, healthy, and sanitary learning environment that

promotes student learning and development; and

     WHEREAS, School buildings in the city of Pawtucket (the "city"), Rhode Island are in

need of major repairs and upgrades, presently interfere with the effective operation of schools,

and negatively affect the health, safety, and welfare of the children of Pawtucket; and

     WHEREAS, At the general election held on November 8, 2022, the electors of the city

approved a project consisting of the ‎acquisition, ‎construction, improvement, furnishing

and ‎equipping of a new ‎high ‎school and school facilities and all expenses incident

thereto ‎including, but ‎not limited to, costs of design, demolition, ‎athletic ‎fields, ‎landscaping and

parking and costs of financing (the "project"); and

     WHEREAS, Due to financial hardships of the city of Pawtucket, increases in interest

rates, and post-supply chain issues, the city is not currently able to finance the construction,

renovation, improvement, alteration, repair, furnishing and equipping of schools and school

facilities [without certain legislative changes and support from the state]; and

     WHEREAS, The state currently provides state housing aid reimbursement to the city of

Pawtucket at a rate of approximately 83.7%; and

     WHEREAS, The state's reimbursement costs are directly related to the interest rates the

city pays on its general obligation school bonds; and

     WHEREAS, The state is able to issue appropriation-backed bonds at lower interest rates

than the city is able to obtain on its general obligation bonds; and

     WHEREAS, It is less costly for the state to finance its share of the project at lower

interest rates than for the city to finance the project at higher interest rates and seek state housing

aid reimbursement from the state; and

     WHEREAS, The project will be financed through bonds issued by the Rhode Island

Health and Educational Building Corporation (the "corporation") under its school financing

revenue bond program, with an expected term of not to exceed thirty (30) years and it is

anticipated that the state will be a signatory to the financing agreement with the corporation (the

"financing agreement"); and

     WHEREAS, It is anticipated that the state's payment obligations to the corporation under

the financing agreement will be subject to appropriation therefor by the general assembly in each

budget year; and

     WHEREAS, The Rhode Island public corporation debt management act (defined below)

requires the general assembly to provide its consent to the issuance or incurring by the State of

Rhode Island of certain obligations, including financing guarantees or other payment agreements;

and

     WHEREAS, The total project costs covered by the financing agreement are expected to

be $330,000,000 plus original issue premium, if any, and such additional amount as is required to

finance costs of issuance, funding of debt service reserves, if required, and capitalized interest.

Debt service payments will be supported by revenues received by the corporation under the

financing agreement which include annual appropriations for debt service made by the state and

payments from the city of Pawtucket under the financing agreement. Total debt service on the

bonds issued by the corporation (the "corporation bonds") in not expected to exceed $22,201,000

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annually and $435,652,875 in the aggregate based on an average interest rate of five percent

(5.00%).

     SECTION 1. NOW THEREFORE, be it resolved and enacted by the general assembly as

follows:

     RESOLVED AND ENACTED, That this act shall serve as the joint resolution required

pursuant to chapter 18 of title 35 of the Rhode Island General Laws ("Rhode Island public

corporation debt management act"); and be it further

     RESOLVED AND ENACTED, That this general assembly hereby approves the

financing for the project in an amount up to $330,000,000, plus original issue premium, if any,

and such additional amount as is required to finance costs of issuance, funding of debt service

reserves, if required, and capitalized interest thereon; and be it further

     RESOLVED AND ENACTED, That the state, acting through the governor and the

general treasurer, may execute the financing agreement as contemplated herein and any other

agreements necessary to effectuate the purposes of this act; and be it further

     RESOLVED AND ENACTED, That the corporation bonds will be special obligations of

the corporation payable from funds received by the corporation under the financing agreement

and other revenues received by the corporation, in any combination or priority as may be

designated in the proceedings of the corporation authorizing the issuance of such debt. The total

debt service on the corporation bonds is estimated to average approximately twenty-two million,

two hundred one thousand dollars ($22,201,000) per year or approximately four hundred thirty-

five million six hundred fifty-two thousand and eight hundred seventy-five dollars

($435,652,875) in the aggregate, at an average interest rate of approximately five percent (5%)

and an approximately thirty (30) year maturity; and be it further

     RESOLVED AND ENACTED, That the corporation bonds will not constitute

indebtedness of the state or any of its subdivisions or a debt for which the full faith and credit of

the state or any of its subdivisions is pledged; and be it further

     RESOLVED AND ENACTED, That the state's authority to incur the obligations set forth

herein will expire within five (5) years of the date of passage of this act if such financing

transaction is not executed prior to that date; and be it further

     RESOLVED AND ENACTED, That from and after the date that the governor and the

general treasurer enter into such financing agreement, that the project shall not be eligible for

state housing aid reimbursement calculated pursuant to § 16-7-39 but shall be eligible for state

housing aid "bonus" incentives pursuant to § 16-7-40 and foundational aid offered on a pay-as-

you-go basis pursuant to § 45-38.2-4; and be it further

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     RESOLVED AND ENACTED, That no corporation bonds shall be issued unless the

project shall be approved by the Rhode Island department of education; and be it further

     RESOLVED AND ENACTED, that the governor, the general treasurer, on behalf of the

state are hereby authorized to execute such documents or other papers as either of them deem

necessary or desirable to carry out the intent of this act and are also authorized to take all actions

and execute all documents or agreements necessary to comply with federal tax and securities

laws, which documents or agreements may have a term coextensive with the maturity of the

corporation bonds authorized hereby, including Rule 15c2-12 of the Securities and Exchange

Commission (the "rule") and to execute and deliver a continuing disclosure agreement or

certificate in connection with the corporation bonds in the form as shall be deemed advisable by

such officers in order to comply with the rule.

     SECTION 2. This act shall take effect upon passage.

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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 RELATING

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

the Rhode Island general laws ("Rhode Island public corporation debt management act")

authorizing the State of Rhode Island to finance the ‎acquisition, ‎construction, improvement,

furnishing and ‎equipping of a new ‎high ‎school and school facilities and all expenses incident

thereto, ‎including but ‎not limited to costs of design, demolition, ‎athletic ‎fields, ‎landscaping and

parking.

     The project would not be eligible for state housing aid reimbursement calculated pursuant

to § 16-7-39 but would be eligible for state housing aid "bonus" incentives pursuant to § 16-7-40

and foundational aid offered on a pay-as-you-go basis pursuant to § 45-38.2-4. No bonds would

be issued under the act unless the school projects have been approved by the Rhode Island

Department of Education.

     This act would take effect upon passage.

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