PFM Financial Advisors told the Pawtucket City Council on Nov. 10 that the city is in the midst of one of the state’s largest school construction portfolios and will face a near-term spike in school-related debt service unless borrowing and cash flows are tightly coordinated with the school department.

Xi Comstivaravong, director at PFM, said Pawtucket’s existing outstanding school debt of about $165 million will rise to roughly $435 million because of the unified high school projects. After state reimbursement — which PFM said covers roughly 80% of school debt service but begins only after certificate of occupancy — the city will still carry roughly 20% of the debt service burden in the meantime. PFM’s spreadsheet and presentation identified a bottom-line increase of $4,275,000 in annual debt service tied to current projects if borrowing is not phased.

Comstivaravong said the city can smooth the projected spike by coordinating draw schedules with the school department and project managers, breaking big borrowings into smaller issuances and delaying draws on proceeds until needed. "The idea here is what you try and do by coordinating with the schools is get that to about a million…a million and a half a year increase over the next several years," he said. He warned the city would carry interest on roughly $300 million in debt until reimbursements begin, which PFM projects around 2029 when the unified high school is complete.

Council members pressed on tax implications. PFM noted that, "a 1% increase in taxes…is going to generate about an additional million dollars," and said, absent phasing, the school projects alone could imply several percentage points of tax rate pressure for a short period. Councilors repeatedly urged monthly coordination and close project monitoring; PFM said it already chairs monthly coordination meetings among the city, school finance and project teams to align cash flows, avoid holding unspent bond proceeds and reduce interest costs.

Public comment preceding the presentation raised separate concerns about the high school project’s budget and property acquisitions. Michael Pompeli said the project was already $12–13 million over budget before major construction and raised concerns that the city was negotiating acquisitions along South Bend Street that could remove affordable housing. PFM’s presentation did not directly address those specific acquisitions.

PFM’s recommendations to the council included: use monthly cash-flow monitoring to detect overruns early, phase borrowing and delay draws when feasible, maintain coordinated communications to preserve market confidence, and plan now for projects that would realistically begin after 2029. The presentation prompted a council consensus that close coordination with the school committee and administration is necessary to limit immediate tax impacts.

What happens next: PFM and city staff will continue monthly coordination meetings with the school project manager and the school department; the council and school committee were urged to work together to phase future borrowing and align project timing to reduce short-term tax pressure.

Sources: PFM presentation and council Q&A (transcript SEG 323–SEG 1199).