The City Council couldn’t say “no” Monday night to improving roads – and doing it with practically free money.
By a vote of 8-1, the council approved what has been dubbed by the administration as “Mayor Solomon’s Roadway.”
A major part of the plan to spend $16.4 million over the next three years involves a $10.2 million, 10-year loan from the Rhode Island Infrastructure Bank at a projected rate of 1.3 percent. The city would borrow an additional $3.2 million from the bank at the same loan rates to install cost-effective LED lights throughout the city for a projected annual savings of $725,000 in electric and maintenance expenses. The final trench of funds would come from $3 million in bonds earmarked for drainage but never issued by the city.
The savings on street lights coupled with the low cost of the loan and what the city wouldn’t budget in general revenue funds for paving would yield what the administration sees as a “revenue neutral” program to address the city’s deteriorating roads.
That’s not exactly how City Council President Steve Merolla sees it. Merolla cast the sole negative vote on the borrowing program.
Merolla has issues with borrowing to pay for improvements that may not last for the term of the note. He compared it to borrowing money to pay for the electric bill. Also, he has trouble with justifying the borrowing on the premise that it frees up money for other budgetary expenditures.
“Why don’t we use savings that we have in other areas to justify this? I mean, we could justify spending interest on money for paving, when it should come out of our annual budget,” he said as the Finance Committee deliberated on the proposal.
“Everybody knows that two percent interest is a great interest rate, but we don’t borrow to pay our electric bills, we don’t borrow to buy tires. Those are ordinary expenses. I think a red light should be going off, because if you’re going to borrow for necessary expenses, we should be thinking about why we need to borrow money,” he said.
Michael D’Amico, financial consultant to the mayor, offered another take, one that resonated with a council accustomed to constituent complaints over potholes and deteriorating roads.
“Everyone knows that if you have a short-term expense you shouldn’t borrow money. You shouldn’t borrow money to buy clothes, or groceries, because you will go through them. Most people would say it’s a wise decision to borrow money for things like this, to expand the life of a road, or if you’re completely making a new road. It’s an asset,” he said.
“There is a time to borrow money, and it’s never all or nothing. You shouldn’t never borrow, and you shouldn’t always borrow,” D’Amico said.
He estimated the total cost of interest payments, exclusive of the principal, at $200,000 for the street light program and $670,000 for the roads. He predicted the roads would last the 10 years it takes to repay the loans and suggested the city should have borrowed in the past to address the roads.
“I think sometimes they did it right and sometimes they missed an opportunity. I think it’s a wise decision for the city. It’s a sign of good financial planning,” he said.
The day following the vote, D’Amico said the city has been in discussions with the RIIB and that he is hopeful a vote on the city’s request could come before the board next month. Assuming the loan is approved and the financing is in place, actual road work could start in the spring.
Chair of the Finance Committee Ed Ladouceur said he opposed a road bonding proposal advanced by former Mayor Scott Avedisian but favored this one. The difference, he said, is that the Avedisian plan called for the bonds to be repaid over 20 years and the repairs were extended over a longer period.
D’Amico reasons the three-year project could save money, as the inflationary cost of asphalt – which he put at 4 to 5 percent – would outpace interest rates on the bond. Thus, spending the money in three years allows the city to get more roads paved for its buck now instead of spreading the work over a longer period.
Lucas Murray of the Planning Department said Wednesday the city received eight bids to replace more than 9,000 city streetlights with more efficient light-emitting diodes (LEDs), and that list has been narrowed down to three potential vendors. He said several considerations need to go into making a selection, revolving around the opportunities made available by the latest technology. The least expensive system would be photo controlled. However, there are options for network controls and a full network system that would include cameras and provide the city with data that could be useful to police and the Department of Public Works and even have the potential of water meter reading.
Murray suggests the city could look at the benefits of a network system in a test area and then expand upon it. What he finds unique is that the transition to LEDs will not only offer the city new technologies, but also improve lighting all at a savings.
He is hopeful of identifying a preferred vendor by next month and coming before the council in March. With such a schedule, he thinks retrofitting the lights could start next summer and be completed by the fall.
He said the process calls for the removal of the light fixtures, not the poles that are largely owned by National Grid. Each of the lights to be replaced would be evaluated for safety and whether it floods neighboring properties, which can be an annoyance to residents. He said the lights could be adjusted. The plan would also evaluate “red capped” lights that were taken off the system to reduce costs during the prior administration. Some of those lights may be reactivated.
Solomon said Wednesday he is very happy with council approval of the loans. He said he would like to see the road repaving program fully completed in three years.
Reflecting, he said, “Things are going in the right direction in this city.” He said he is receiving positive feedback.