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Infrastructure Bank outlines low‑cost sewer tie‑in loans for Lincoln; council presses town role and default exposure
Summary
The Rhode Island Infrastructure Bank presented sewer tie‑in and community septic loan programs allowing municipalities to take a line of credit residents can draw on; the bank said Rhode Island Housing will underwrite and administer loans, a 1% outstanding fee applies and foreclosure is a possible remedy if homeowners default; council members raised questions about administrative burdens and whether developers could access the funds.
The Rhode Island Infrastructure Bank described two loan programs to the Lincoln Town Council designed to help homeowners connect to sewer lines and to replace failing septic systems, and explained the municipality’s administrative role and potential financial exposure.
Greg Miller, development officer with the Rhode Island Infrastructure Bank, told the council the two products are the Sewer Tie‑in Loan Fund and the Community Septic System Loan Program. Under the model Miller described, the town would apply for a line of credit; the bank would make funds available in tranches, and Rhode Island Housing would perform underwriting and administer loans to qualifying homeowners.
Miller said the bank levies a 1% fee on the outstanding balance to cover program administration and that half of that fee supports the bank while the other half covers Rhode Island Housing’s administration. “We levy there is a 1 percent interest rate levied on the loan,” Miller said, and noted communities sometimes add a small local administrative fee. A bank representative clarified that the loan effectively carries 0% interest for the homeowner but that a 1% outstanding fee and a one‑time $300 closing cost are charged to support program administration.
On default risk, a bank representative said Rhode Island Housing enforces lender remedies under the mortgage, up to and including foreclosure, and that the bank has not historically asked municipalities to cover shortfalls. The bank explained that, if foreclosure proceeds do not fully satisfy the outstanding balance, the bank could petition the town for any remaining unpaid amount, and that it would be up to the town to appropriate funds to pay such a request.
Council members raised operational concerns: whether loans could be limited to homeowners rather than developers, whether loans are transferable or due on sale, and whether failed in‑house connections or new construction would be eligible. Bank officials said municipalities set underwriting criteria and could cap loan amounts or exclude developers; in many cases loans are structured as mortgage obligations that are due on sale.
Bank representatives also said that more complex cluster or on‑site wastewater plans require the Department of Environmental Management (DEM) facility approval and that DEM’s project priority list must be used before funding is released for certain connections.
No vote or formal enrollment in the program was taken at the meeting; council members requested follow‑up on administrative impacts and whether program rules should exclude developer projects or new construction.
If the council wishes to proceed, the next steps would be a town application to the Infrastructure Bank and coordination with DEM and Rhode Island Housing to set underwriting criteria and the project priority list enrollment.
