$41.6M bond issued for phase III of Combined Sewer Overflow project

WORKERS STAND IN FRONT of the boring machine in 2021 before starting the third phase of the Narragansett Bay Commission's Combined Sewer Overflow project. The Rhode Island Infrastructure Bank recently issued a $41.6 million bond to help finance the work. / COURTESY NARRAGANSETT BAY COMMISSION

PROVIDENCE – The Rhode Island Infrastructure Bank has issued a $41.6 million Clean Water State Revolving Fund bond, with $5.2 million in principal forgiveness through a grant from the Bipartisan Infrastructure Law.

The bond proceeds will help finance the construction of the Narragansett Bay Commission’s Combined Sewer Overflow Phase III project and other system infrastructure upgrades. The bank said the 30-year bond saw strong investor demand, which led to an overall borrowing rate of 3.93%. The bond is rated AAA by S&P Global Ratings and Fitch Ratings, the bank said.

“For the past 20 years, Rhode Island Infrastructure Bank has been providing low-cost financing for the Narragansett Bay Commission’s CSO project, and we’re pleased to continue that partnership with this $41 million bond to support Phase III construction and other system upgrade projects,” said William Fazioli, Rhode Island Infrastructure Bank executive director. “The CSO is one of the largest infrastructure projects in Rhode Island’s history and has produced dramatic improvements in the health of Narragansett Bay. It is an excellent example of what is possible through investing in infrastructure and utilizing Rhode Island’s Clean Water State Revolving Fund program.”

Vahid Ownjazayeri, the bank board chair, said the bank’s capital and below-market rate on the bond issue are allowing the Narragansett Bay Commission to save $24 million over the term of the bond when compared with traditional financing options. He said the bank has now provided about $900 million in Clean Water State Revolving Fund financing for Narragansett Bay Commission clean water infrastructure investments.

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“Our CSO project would not have been possible without the low-cost financing provided by the Rhode Island Infrastructure Bank,” said Narragansett Bay Commission Executive Director Laurie Horridge. “We thank the bank for their decadeslong partnership and for this latest $41 million Clean Water State Revolving Fund financing for CSO Phase III work, and other upgrades to our system infrastructure.”

Since 2003, the Narragansett Bay Commission has used the bank’s low-cost Clean Water State Revolving Fund program to complete Phase I and Phase II of the CSO project, diverting more than 1 billion gallons of combined water and wastewater that would have otherwise gone straight into Narragansett Bay, and is now treated at their Field’s Point Wastewater Treatment Facility each year. The project has helped to dramatically improve the health of Narragansett Bay, officials say.

Phase III of the Combined Sewer Overflow project, currently under construction, is a 2.2-mile-long, 30-foot diameter tunnel running beneath Pawtucket and Central Falls that is expected to reduce overflow volumes by 98% and treat more stormwater before it flows into Narragansett Bay.

The financing team that led the recent bond transaction included Ramirez & Co. as senior managing underwriter, Hilltop Securities Inc. as financial adviser and Hinckley, Allen & Snyder LLP as bond counsel.

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