The public bank advantage for municipal finance

A public infrastructure bank offers several advantages over private bank or bond market finance for Massachusetts cities and towns, including…

  1. Significantly reduced project costs. Working with a public bank means fewer legal fees, no commissions paid to bond brokers, and fewer hours put in to complete financing.
  2. Less complexity. Applying for a loan is a simpler process than bond financing.
  3. Loans initiated on your schedule. Municipalities don’t have to wait for appropriations to be made to state lending programs. They don’t have to rush planning to try to obtain funds that might only appropriated annually, and that may not be consistently available in a prolonged economic downturn.
  4. Availability of pre-development loans, for more detailed planning or design phases of projects.
  5. The opportunity for direct conversation with the lender, to discuss needs, structure and timing. No intermediary.
  6. Loans available at the amount your town or city needs, including at smaller amounts than would normally be preferred by the bond market, or larger.
  7. The ability to impact the bank’s lending policies and procedures. As written, our bill sets up a bank with a statewide advisory committee, which will meet with the advisory board and with the bank’s managers to discuss lending protocols and goals. This board will solicit input from the bank’s municipal clients to make sure that the bank is fulfilling its mission.
  8. Loans do not preclude any other financing source, and can supplement local or state appropriations, Community Preservation funds, grants, or organizational fundraising.
  9. A municipality’s credit rating is not the deciding factor in loan eligibility. Your city or town’s cash flow analysis is more significant, and good infrastructure projects can lead to enhanced property values, local economic growth, and increased tax revenue.