The office of library and information services may cause to be paid to a city or town treasurer, or to any free public library in the state, a grant-in-aid for the construction and capital improvement of any free public library as the chief of library services may determine is necessary and desirable to provide better free library services to the public, which shall be paid in accordance with the following provisions:

(1)  No grant-in-aid shall be made unless the city or town receiving the grant-in-aid shall cause to be appropriated for the same purpose an amount from its own funds and not from any federal grant or other federal financial assistance equal to, or more than, the state grant-in-aid, or unless funds from private sources are dedicated for the same purpose in an amount equal to, or more than, the state grant-in-aid, or unless the total of the city or town appropriation and the funds from private sources for the same purpose is equal to, or more than, the state grant-in-aid.

(2)  The state grant-in-aid may be paid in installments over a period of years up to a maximum of twenty (20) years, beginning in the fiscal year during which the project is accepted by the office of library and information services. Whenever a grant-in-aid is paid on the installment basis permitted herein, there shall be included in the state grant-in-aid the interest cost actually incurred by the city or town, or any free public library, as a result of its having to borrow the state’s portion of the total cost of the library project. The amount of this interest cost shall be computed on the actual interest cost paid by the city or town, or free public library, less any applicable accrued interest, premiums, and profits from investments, over the period of time elapsing between the date borrowed funds are made available and the date of the last installment payment of the state grant-in-aid. Interest cost incurred by the city or town, or any free public library, as a result of having to borrow its portion of the total cost of the library project shall not be considered a part of the total cost of the project for the purposes of matching provided for in subdivision (1) of this section. Nothing contained herein shall prohibit the office of library and information services from accelerating the schedule of annual installments, or from paying the balance due of the state’s grant-in-aid in a lump sum; provided, however, that the state grant-in-aid in any fiscal year shall include no less than one-twentieth (???) of the state’s total reimbursable principal obligations.