PROVIDENCE – The push-and-pull of the business of government often seems to get caught in the imbalance between the extremes: managing the day-to-day regular chores, or responding to the next all-hands-on-deck crisis.

As a result, despite the best of intentions, innovative approaches tend to get crowded out by time demands of living in the chore-crisis-chore continuum.

No, this is not the cue for some aging quality improvement advocate with gray hair to point to a chart from their dog-eared copy of Stephen Covey’s “7 Habits for Highly Effective People,” to demonstrate this.

Rather, it is the starting point to a conversation with R.I. Treasurer Seth Magaziner on his pending proposal before the R.I. General Assembly to create the Rhode Island Infrastructure Bank, expanding the scope and renaming the existing Clean Water Finance Agency.

The plan seeks to leverage a $2 million investment in the FY 2016 state budget into $30 million in new private and federal investment in Rhode Island, focused on the financing of energy efficiency and small renewable energy projects to save money on energy bills for residents, businesses and municipalities while at the same time creating jobs.

Toward that end, Magaziner has built a coalition of business, labor and environmental organizations with state agencies and mayors to support the project.

ConvergenceRI sat down with Magaziner in his office in the State House on May 6 to talk about the R.I. Infrastructure Bank, how it will work, and its intersection with Rhode Island’s innovation economy.

“I’m very proud of the fact that this office was able to come up with a plan that can have a huge impact with a relatively small price tag,” Magaziner said. “There are millions of dollars in federal funds that Rhode Island is eligible for in terms of energy efficiency that have been just sitting on the sidelines. There’s private capital that has been put to work in other states that we have not taken advantage of here. I’m excited that we have found a way to finance a lot of projects without a lot of budget impact. That’s the bottom line. ”

Here is the interview with ConvergenceRI:

ConvergenceRI: How do you see your role as Treasurer? Is it like having one foot in one canoe, the other foot in another canoe, trying to keep a steady course?
MAGAZINER: I’m not sure I follow the analogy. But, I think, when you look at this office, it’s one where there is a lot of opportunity to do good.

Rhode Island has a more expansive Treasurer’s office than most other states. There is a great deal of influence you can have here. I tend to take an expansive view about what the role of the Treasurer should be.

We have to manage the day-to-day operations of the office, reconcile the accounts, and watch the investments. But, I also think this office can be a real center for innovation for how public finance works.

ConvergenceRI: Can you give me an example of what you mean?
MAGAZINER: The R.I. Infrastructure Bank. At the base level, we’re taking the Clean Water Finance Agency, we’re re-branding it, and we’re adding some new programs, especially programs that focus on energy efficiency.

Let me take a step back. We’ve got some big challenges in the state. Financial challenges, certainly. And, we have municipalities facing even greater financial challenges – municipalities that have a hard time raising their own capital at an affordable rate, in most cases, because they are financially stressed.

We’ve got very old infrastructure in the state; road and bridge infrastructure, water infrastructure, building stock that’s very old. We also have some of the highest energy costs in the country.

As of January, I believe, we had the second-highest electricity price in the country, after Hawaii.

So, we’re faced with a lot of challenges, and the old models of solving these challenges aren’t going to be enough.

Where I think the Treasurer’s office can add value is by using our financial expertise in creative ways to help finance projects that will address these challenges.

ConvergenceRI: How does the new Infrastructure Bank do this, specifically?
MAGAZINER: This is an example of using what I would say is creative, cutting-edge finance to address big problems at a very high level.

With the new energy retrofit programs, we think we can fund more than $30 million worth of projects over the next few years with only $2 million coming out the budget.

ConvergenceRI: The $2 million in the budget will leverage $30 million in private investment?
MAGAZINER: Private investment and federal funds. This is a perfect example of what I want this office to be; I want this office to be a place that finds creative financing solutions.

A lot of good work has been done at the Clean Water Finance Agency. This is an agency with a very good reputation, with a good staff, good board and a good track record.

That is why we chose this agency as the one to be transformed into the Infrastructure Bank. We’re not the first to realize the potential of this agency.

My predecessor and now governor started a Road and Bridge Revolving Fund [in addition to] the agency’s clean water finance function when she was in office.

Again, I think she recognized that this was an agency with deep financial expertise and a good track record. [As a result], we’ve seen the mandate of this agency expand from storm water and drinking water projects to now bridges and roads as well.

The name change [to the Infrastructure Bank] is really because the name is outdated. But now, we’re going to be taking the next step and adding programs aimed at energy efficiency.

This gets back to what I said earlier; we have some of the highest energy costs in the country, and it’s putting significant stress on businesses, on homeowners, and on municipalities.

We can put people back to work and make buildings more energy efficient; it will result in huge savings.

ConvergenceRI: Two questions. How does the ongoing green and healthy homes initiative in Rhode Island fit into these plans? Is it on your radar screen? It advocates that by investing in retrofitting existing homes and renovating existing housing stock, you can boost both educational attainment and economic opportunity by addressing public health issues. And, secondly, how does renewable solar technology and access to solar technology fit in with plans for Infrastructure Bank?
MAGAZINER: The answer is yes to both. The way that the programs were designed, renewable energy, like solar, would be eligible, as would environmental improvements, like lead abatement or cesspool remediation, those would be eligible.

We defined these programs as broadly as possible as having to do with energy efficiency and environmental improvements.

ConvergenceRI: Does the mandate also extend to expanding and preserving access to clean water in a time of global climate change, given the kinds of extreme drought that California is now experiencing? Could it include, as part of the renewable and efficiency projects, rain barrels controlled by solar panels to preserve potable water reserves, with a defined payback?
MAGAZINER: Yes, those kinds of projects could qualify under what we have here. The key word is what you said, payback.

Currently, we have some efficiency and environmental programs in the state. National Grid does energy retrofits and things like that. The issue is there’s a gap for those projects that would require longer payback periods.

Some of the small stuff, replacing light bulbs, or replacing windows, have a two- to three-year payback period, and there are programs available to help you do that, if you’re a homeowner or a business owner.

But the kind of thing you’re talking about, solar panels or geothermal, or at the local levels, improvements to buildings, those buildings may required a 10-year payback.

Or, maybe with an environmental improvement, where there isn’t a payback per se except in [quality of life] benefits, [you need] the longer-term financing to make it affordable.

And, that’s the gap that we’re trying to address here. We are really focused on environmental and efficiency projects that would require longer paybacks that what is currently available from state and utility programs.

ConvergenceRI: What are the targets? Single-family homes? Commercial properties? Urban areas?
MAGAZINER: We are launching two new programs. The first is called PACE; it stands for Property Assessed Clean Energy.

This is something that has worked in a number of other states. The target is both private residential and commercial. The way this program would work, private banks would make loans to private property owners for energy and environmental improvements, and the loan would then be paid back over time as a line on the property tax bill.

The benefit is that the loan stays with the building instead of moving with the owner. If the owner were to sell, so that if you were to sell the building and move to Alaska, the new owner who comes in and inherits the benefits of the lower energy costs or higher property values also inherits the responsibility of the principal of the loan.

It’s a very simple model. We believe it would be entirely privately financed. It’s worked in other states. In Connecticut, which has a very successful PACE program, there are more than $20 million PACE loans made every year in the state.

It’s worked elsewhere; it can work here, too. It would be targeted at private, commercial and residential properties, and it would include any number of environmental and energy improvements.

ConvergenceRI: And, the second program?
MAGAZINER: The second program [that we will be launching] is the Efficient Buildings Fund, and it will be directed at public buildings.

PACE is great for private property, but it doesn’t help public buildings, because public buildings don’t have property taxes.

ConvergenceRI: Can you define what you mean by public buildings?
MAGAZINER: We define it broadly. Any public building in the state could qualify under the working definition.

But, we discussed this at the agency, and the intent is really to focus as many of these dollars as possible on municipal and school projects, because that’s where we feel the need is greatest.

There are cities and towns in the state that have a much harder time raising financing on projects than the state does.

So, we defined it as public buildings broadly, but the intent is that it was meant to be used for local projects.

This is where we are getting a little creative; we are mixing some federal dollars, some state dollars and some private dollars to get this fund up and running for public buildings. We think we can get between $20 million and $25 million raised to put to work in the next couple of years on retrofits for public buildings.

And when those funds are paid back, there can be a revolving fund to support it, for projects funded in the long run.

ConvergenceRI: How does the strategy of social impact bonds fit in with the new Infrastructure Bank?
MAGAZINER: I think the model of social impact bonds is an interesting one, but it won’t be part of the Infrastructure Bank.

A related concept is green bonds. Some research out there suggests that if you float bonds just for environmental purposes, there are investors who are willing to buy those bonds at a discount.

For the Efficient Buildings Fund, as part of it, the Infrastructure Bank will be floating a bond, and I expect that we will want to market it as a green bond.

ConvergenceRI: Where is resistance, if any, going to come from for these programs. Will you have to do a good selling job?
MAGAZINER: So far, knock on wood, we haven’t run into any resistance. We had our legislative hearings last week. We had support there from the business community, the Greater Providence Chamber of Commerce is supporting it, among others, including labor groups, the building trades, who have very high unemployment. There is huge support from the environmental community. We had a dozen mayors and town administrators send letters to the committee, saying that they were supportive.

The Infrastructure Bank has very broad support; no one, not one person, showed up in opposition.

And, of course, the governor is very supportive; she put it in her budget.

We’re working hard to reach out to every stakeholder we can, to advance the cause.

So far, we haven’t run into any real opposition.

ConvergenceRI: Assuming that the new Infrastructure Bank is successful when it gets rolled out, do you already have some ideas of what you want to do next?
MAGAZINER: I think in the area of green finance, and in health finance in general, there’s a lot more we’ll want to do in the future. We’ve only been in office for what, four months now.

We know that there are huge needs, and huge opportunities, that still are not being addressed. We’re going to be coming back next year, and the year after, with more ideas, because that’s why we’re here.

On the PACE, which include private homes, there are a lot of states around the country that have done PACE for solar, and for energy efficiency. I’m not aware of any others that have done PACE for environmental improvements, which the [Rhode Island] legislation would allow for, broadly.

In terms of process, I think that what has to happen is that after, hopefully, the legislation is approved, the budget article is approved, then the agency process will be to develop rules and regulations.

In this case, I think that the Infrastructure Bank staff, along with R.I. Department of Environmental Management, and the R.I. Office of Energy Resources, will need to collaborate over the summer to develop rules and to define things, such as environmental improvement.

ConvergenceRI: Is there a way for the programs and projects funded under the new Infrastructure Bank to collaborate with other renewable energy programs funded through the renewable energy fund at CommerceRI?
MAGAZINER: The renewable energy fund at CommerceRI? Yes, that’s a good program, it’s a small program, but it’s a good one. What they do is that they make grants to building owners who want to install solar panels on a roof, but the grant only covers a small portion of the cost.

Such a grant could, for example, be paired with a PACE loan, so that the owner would have to pay little or nothing up front, to get the solar installation. That would be the goal [of a potential collaboration.]

I think it’s a good program; we’re not looking to change it. But I think that there could be good synergy between the two programs. We want to make sure that there is good collaboration between the agencies.

ConvergenceRI: In the past, companies involved in the business of solar installation moved out of Rhode Island because they couldn’t find traction here. Instead, they set up shop in Connecticut or Massachusetts. Will the new programs now create a friendlier environment for such companies in Rhode Island?
MAGAZINER: New businesses focused on energy efficiency, or just in general.

ConvergenceRI: In general. If these program is successful, you’re going to need a small army of laborers to do the work.
MAGAZINER: Yes, I think there’s no doubt, we’ve got a workforce with the desire and the talent to work on these projects. Again, we have huge unemployment in the building and construction trades. The IBEW [International Brotherhood of Electrical Workers] has been calling for this for a number of years.

We have people who are ready to go to work.

But you’re right, in terms of businesses, you’re going to need contractors, you’re going to need people who can do the energy audits, you need people who can oversee the installation of the solar panels or geothermal well.

There’s a concept in economics called induced demand; if you make the funding available, then I think you could see an industry grow and expand in that regard.

ConvergenceRI: There is a also a new partnership between CommerceRI and the Slater Technology Fund to create a new public-private fund to invest in start-up and early companies in the renewable field in Rhode Island? Is this an industry sector where they could be some synergy?
MAGAZINER: Yes. I think so. If you are a start-up that has new technologies, those companies are going to want to be located in state that [is promoting the use] of these types of products, right?

You want to be in a state that incentivizes efficiency and renewables and environmental protection. You want to be in a state that does those things, if that’s part of your plan of business.

ConvergenceRI: Is there a broader need to change public perception around environmental issues?
MAGAZINER: I think Rhode Island is very fortunate. I think the public at large is understanding and supportive of the need to invest in a clean environment. Rhode Islanders tend to more environmentally aware than your average American, which is good.

Rhode Islanders are keenly aware of higher energy costs right now. So, I think we’re starting from a good place in terms of public awareness of the issues.

What we need to do, the hurdle we need to get over, is that we can’t be afraid of trying new things.

What we’re proposing here is new; Rhode Island hasn’t had a true Infrastructure Bank before. We haven’t had these types of programs before for energy efficiency.

Other states have done it, but it’s new to Rhode Island. I think that as Rhode Islanders, if we are dissatisfied with the status quo, then we need to be encouraged to try new things.

That’s the message we’re going to keep trying [to send].

ConvergenceRI: On a broader scale, when you look at how best to control higher energy costs, do you think it will require a similar kind of innovative approach to the electricity grid infrastructure and how it functions? Beyond new transmission lines to bring hydroelectric power down from Quebec, or new pipelines to bring more natural gas to the region, are there ways to strengthen local options to be more self-reliant to take advantage, for instance, of Tesla’s new storage battery?
MAGAZINER: There are two sides to energy equation; there is supply and demand. I think that, as a state, we have to look hard at where our supply of energy comes from. And we have to do everything we can to reduce our demand. This plan, the Infrastructure Bank that we’re pushing this year, is focused on the demand side. Both sides of the equation are important.

ConvergenceRI: What do you see as your biggest challenge moving forward?
MAGAZINER: This is an initiative that cuts across sectors – environmental, labor, business, our office, the Governor’s office, different agencies. We will have to work closely with everyone and make sure that there continues to be good collaboration and good communication between all the players. So fat, I think we’ve done a very good job on that.

That there is such broad support for this proposal shows that it pays off when you have a collaborative process that includes lots of stakeholders.

ConvergenceRI: I’ll give you the last word. Is there anything you’d like to talk about, that we might have missed?
MAGAZINER: We’ve covered a lot of ground in this interview. But let me emphasize again. I’m excited that we have found a way to finance a lot of projects without a lot of budget impact. There are millions of dollars in federal dollars that Rhode Island is eligible for in terms of energy efficiency that have been just sitting on the sidelines. There’s private capital that has been put to work in other states that we have not taken advantage of here. I’m very proud of the fact that this office was able to come up with a plan that can have a huge impact with a relatively small price tag. That’s our bottom line.