Providence Mayor Seeks TIGER Grant to Spur Streetcar Project

Providence Mayor Angel Taveras has requested $39 million from the federal Transportation Investment Generating Economic Recovery TIGER grant program to help fund a streetcar system, calling the project essential to the comeback of Rhode Island's capital city.

The project would cost $114 million overall, with Providence looking to establish a tax increment finance district along the streetcar route to subsidize operations. The city wants to use land opened up with the relocation of a part of Interstate 195, known commonly as the I-Way project.

The system would cover two miles and connect the hospital district with the College Hill neighborhood near Brown University - the two largest employment centers in Providence. Taveras cited the need to connect these two areas, and both of them to the technology-oriented Knowledge District.

"Our comeback plan is to continue to build on our competitive advantages," said Taveras, who cited the city's hospitals, universities, and arts and cultural centers in his May 31 letter to U.S. Transportation Secretary Ray LaHood.

LaHood's agency has received 568 applications for $9 billion of grants, but only $474 million is available.

Providence estimates annual operating costs at $3.1 million. Debt service payments for $54.3 million in bonding used for upfront capital costs would fund nearly half the project. According to Taveras, the Rhode Island Convention Center Authority could issue a $10 million bond to support project development. The city projects annual debt service payments would be about $600,000 over 20 years, based on a bond rate of 0.9%.

The city would then issue a $44.3 million TIF bond to support remaining capital needs. Providence projects annual debt service payments on this bond issue at $3.2 million over 20 years, based on a rate of 3.66%. Total project costs reflect $3.5 million in finance charges.

Providence used TIF bonds to support economic-development related infrastructure improvements in its Promenade District in 2008, and to support the construction of a power plant in 1995. The city envisions half of new tax revenues in the district to support streetcar project costs, while the other half will go to its general fund.

Additionally, the proposal seeks $15 million from the Rhode Island Capital Plan Fund, which the state legislature would have to approve.

Providence last year eliminated most of its $110 million structural deficit, after Taveras warned of bankruptcy and called the situation a "Category 5 fiscal hurricane."

The city crafted a series of pension and health care benefit reductions that Moody's Investors Service called a credit positive, reversing a trend of downgrades from the three major credit rating agencies.

Fitch and Standard & Poor's each rate the city's general obligation bonds BBB, while Moody's assigns a Baa1 rating.

Gov. Lincoln Chafee, meanwhile, has a competing request for TIGER grant money: $10 million for bypass roadways around the Apponaug business district in Warwick. Chafee was Warwick mayor from 1993 to 1999.

The project, known as Apponaug Circulator, consists of reconstructing roads near Warwick City Hall between Apponaug Four Corners and Williams Corner.

"The Apponaug business district is in great need of attention and upgrades," Chafee wrote in a letter to Michael Lewis, director of the Rhode Island Department of Transportation.

Warwick Mayor Scott Avedisian said traffic at the Apponaug Four Corners intersection could drop from 28,000 average daily trips to 4,000, making the business district more pedestrian- and bicycle-friendly.

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