By William C. Shelton

(The opinions and views expressed in the commentaries and letters to the Editor of The Somerville Times belong solely to the authors and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

Investments in a new high school, the Green Line extension, sewer improvements, and Union-Square and Boynton-Yards infrastructure will commit Somerville to borrowing a third of a billion dollars. A Massachusetts Infrastructure Bank could help ease the burden on the city’s taxpayers. And Somerville Representatives Denise Provost and Mike Connolly are cosponsoring a bill that would create such an institution.

Since Ronald Reagan’s “small-government revolution,” America has continually disinvested from the infrastructure that was the foundation of the nation’s post-World War II prosperity. The American Society of Civil Engineers reports that, “Deteriorating infrastructure is impeding our ability to compete in the thriving global economy.”

Every four years the Society grades U.S. infrastructure, from roads, bridges, rails, ports, transit, and airports, to dams, sewage treatment plants, schools, and electrical generation. It’s overall 2017 grade for American infrastructure is D+, or, “poor and at risk.”

Regarding Massachusetts in particular, it reports that, “driving on roads in need of repair costs each Massachusetts driver $539 per year, and 9.3% of bridges are rated structurally deficient….292 dams are considered to be high-hazard potential. The state’s schools have an estimated capital expenditure gap of $1.4 billion.” And so on.

The Boston Society of Civil Engineers agrees. It fact, it’s members produced much of the research to support the Massachusetts portion of the American Society’s report card.

Cash-strapped states and municipalities are often reluctant to borrow millions and billions in an uncertain economic environment in which the real wages of working-class taxpayers are stagnant or declining. To do so, they must issue bonds, paying interest for 10-to-30 years on not just the borrowed funds, but on the large fees charged by Wall Street investment banks.

Even if they’re willing to pay high fees and risk premiums, some Massachusetts municipalities are unable to obtain private-market financing for their highest priority needs. And others must pay inexplicably high interest rates. In a recent survey of mayors, one Massachusetts city with a AAA credit rating, reported paying 4.5 % for its bond financing and expects that to increase to 5.25 % in the near future.

The Commonwealth has some programs that can meet a small portion of municipalities’ infrastructure needs. And Somerville has been more successful than most in obtaining this aid. A $13 million MassWorks grant will reduce a portion of Union Square’s sewer improvement expenses.

Our city received the first of MassDevelopment’s Infrastructure Investment Incentive Program (I-Cubed) commitments to help pay for the Assembly Square Orange Line Station. And MassDevelopment’s District Improvement Financing bonds helped cover the Assembly Row infrastructure costs that Federal Realty had been contractually obligated to pay until the Mayor and Aldermen let them off the hook. But these programs meet only a tiny portion of the total need.

A number of states are exploring the creation of publicly capitalized infrastructure banks. They include California, Colorado, New Jersey, Pennsylvania, Rhode Island and…Massachusetts. House Bill 3543 proposes the creation of such an institution, which would provide a variety of benefits.

• Free of the need to deliver high profits for investment-banks, the Infrastructure Bank could charge lower interest rates to Massachusetts municipalities while employing better informed underwriting standards.
• Eliminating the obligation to pay lavishly exorbitant compensation to Wall-Street executives would further lower costs.
• Instead of interest payments accruing to bondholders beyond Massachusetts, they could recirculate within the Commonwealth, strengthening the economic cycle and the bank’s lending capacity.
• The bank would not advertise, accept individual deposits, offer checking accounts, or incur the various costs associated with competing against commercial banks or credit unions.

The Commonwealth would be the Infrastructure Bank’s sole shareholder, capitalizing it with a combination of some portion of the $63 Billion pension fund, current cash, cash equivalents, and short-term deposits.

Municipalities could deposit their cash as well. To avoid competition with the Massachusetts Municipal Depository Trust, the Infrastructure Bank would offer lower, but guaranteed and fully secured, interest rates.

The enabling legislation proposes that the Bank be governed by a nine-member board of directors, and an eleven-member advisory board. Both would be appointed by the Governor, Senate President, and Speaker of the House, and would have expertise in, economic development, banking, education, labor, construction, municipal planning, finance, agriculture, and environmental policy.

The bill authorizes the Bank to issue bonds, but forbids it to “compete for retail, mortgage or commercial loans with any other banks or credit unions doing business in Massachusetts, nor will it accept individual or commercial deposits.” But it allows the Bank to participate in loans originated by Massachusetts-based private banks.

The Commonwealth would capitalize the bank at a level of $50 million in equity from the pension fund or a direct legislative appropriation. It would then make deposits to the Bank in the amount of $350 million.

Despite Massachusetts’s cities’ and towns’ pressing need for such capital source, the bill doesn’t seem to be garnering a lot of attention from legislators. Those municipalities’ elected officials could change that by pressing the legislators who represent their constituents to sign onto and support the bill.