Government debt has taken a beating on the campaign trail this election season, but supporters of a $25 million state housing bond up for voter approval in November say it’s actually a great time for Rhode Island to borrow money.
With interest rates at record lows while consumer demand remains flat, Rhode Island builders, affordable-housing advocates and officials describe the proposed borrowing as not only sound social policy but a needed economic stimulus.
“We are trying to revitalize the economy and construction of housing is a way to stimulate an economy,” said Nellie Gorbea, executive director of HousingWorks RI, a nonprofit affordable-housing proponent. “Affordable housing is part of infrastructure and you have a long-term benefit if people working in clerical and hospitality are able to afford homes on their wages.”
General Treasurer Gina M. Raimondo said the low cost of capital and enthusiasm for Rhode Island debt displayed by investors when the state refinanced $122 million this summer is a great case for infrastructure spending.
“Obviously we have historic lows on interest rates and borrowing costs, so it is a good opportunity for Rhode Island to access the credit market to get capital and invest,” Raimondo said in a phone interview. “Infrastructure lends itself well to bonding and Rhode Island needs good infrastructure to get out of the economic doldrums.”
The $25 million housing bond, appearing on the ballot as Question 7, is the latest in a series of state borrowing measures to fund affordable-housing investments.
The last housing bond, approved in 2006, borrowed $50 million for projects in fiscal years 2007 through 2010. The current bond would cover two years at the same annual value of $12.5 million.
Traditionally Rhode Island has borrowed to fund public functions, such as highway repair, that many states pay for out of direct appropriations to avoid debt service.
This winter, ending the state’s longstanding practice of borrowing to match federal transportation aid was a highlighted facet of the budgets proposed by Gov. Lincoln D. Chafee and passed by the General Assembly.