Five Questions With: Robert Donovan

Robert Donovan is the executive Director of the R.I. Health and Educational Building Corp., which is celebrating its 50-year anniversary. / COURTESY R.I. HEALTH AND EDUCATIONAL BUILDING CORP.
Robert Donovan is the executive Director of the R.I. Health and Educational Building Corp., which is celebrating its 50-year anniversary. / COURTESY R.I. HEALTH AND EDUCATIONAL BUILDING CORP.

Robert Donovan is the executive Director of the R.I. Health and Educational Building Corp., which is celebrating its 50-year anniversary. Donovan talks with Providence Business News about the economic impact the quasi-governmental organization has had in Rhode Island.
PBN: Congratulations on the 50-year anniversary. For our readers that may be unfamiliar with the organization, could you briefly explain what RIHEBC does?
DONOVAN:
The R.I. Health and Educational Building Corporation was initially created by the General Assembly as an agency whose mission is to help the state’s nonprofit educational and health care institutions gain access to capital to grow and better serve our communities. Many people may not be familiar with RIHEBC, but probably know the institutions we’ve assisted with finance for their projects. From major organizations like Rhode Island Hospital, Brown University and the University of Rhode Island, to small community health centers around the state, RIHEBC has been a partner in their growth. We also assist municipalities to obtain financing for their construction and repair projects of school facilities. We are very proud to be celebrating 50 years of providing our state’s health and education sectors our financial expertise and help them obtain low-cost financing for their projects.
PBN: From where does RIHEBC receive its funding and what sort of budget are you working with on an annual basis?
DONOVAN:
The annual operation of RIHEBC is supported by fees charged for the financing we provide to the various nonprofit institutions – we do not receive any appropriations from the state. In terms of the amount of financing we can provide each year, since we obtain funding from investors in the municipal bond market, there is not necessarily a limit.
PBN: RIHEBC recently commissioned an economic impact study. What’re some of the highlights from that report?
DONOVAN:
Over the last 49 years, RIHEBC has issued $5 billion in financing for construction projects, which has annually supported 1,376 jobs, $115 million in gross domestic product and $80 million in wages. In just the past 10 years, we’ve issued $2.3 billion in financing for construction projects that have annually supported 1,091 direct jobs, $134 million in wages and $193 million in gross domestic product. Also, had it not been for these construction projects between 2006 and 2015 when the construction sector was losing 500 jobs a year on average, job loss could have increased another 1,100 jobs a year.
PBN: Was there anything in it that surprised you? Why or why not?
DONOVAN:
What was surprising was the extent of the economic impact that these projects have had in the state. It was an exciting opportunity to see the total economic impact of our work. Day to day when we are working on a particular financing for a new school project, hospital addition or community health center, your focus is on getting the financing completed so they can begin the project. When we step back and take a look at this work as a whole, we are reminded why we are here and why it is so important to help these institutions.
PBN: Why should medical or educational entities consider working with RIHEBC rather than other – more traditional – financing resources? What’s the competitive edge?
DONOVAN:
RIHEBC is able to access the municipal bond market through the issuance of tax exempt bonds. Since the interest paid on these bonds is exempt from taxes on both the state and federal levels, investors are willing to buy bonds with a lower interest rate. Because the rate is lower than the interest rate charged on traditional financing, the nonprofit is able to use the savings in providing more services. As the largest and most frequent issuer of tax exempt bonds in the state, RIHEBC has developed the expertise and a process to obtain the financing so even smaller nonprofit institutions are able to obtain funding and not be overly burdened by the complexity of issuing tax exempt bonds. With the increasing financial challenges for these nonprofit institutions to provide important health and educational services to the state’s citizens, we believe it is vital that RIHEBC helps them access the lowest cost capital for their projects to continue and expand.

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