PawSox, city reveal stadium financing framework

Pawtucket Red Sox Chairman Larry Lucchino and Pawtucket Mayor Donald Grebien say they've built the framework of an agreement for financing an $83-million baseball stadium at the Apex department store site -- the details of which they're giving to Gov. Gina Raimondo and General Assembly leadership Tuesday.

Here's how the team and city have structured the deal they're proposing, with taxpayers' contributions over 30 years paying down debt from bonds issued:

$45 million from the PawSox for ballpark construction, including an early $12-million cash outlay and $33 million from revenue generated over the next three decades at the ballpark.

$23 million from the state in the form of tax revenue generated in and around the stadium.

$15 million from the city, also in tax revenue generated in and around the stadium.

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Much of the financing is contingent upon the Pawtucket Redevelopment Agency issuing two or three bonds that would provide cash up front to cover stadium construction costs. It also depends on the city creating a tax-increment financing district around the stadium to set aside taxes generated by the ballpark and any new development built around it to pay off bonds.

The city has taken the lead on acquiring the land and is in negotiations with the owners of the Apex site, Grebien said. The city's $15-million portion would include fair-market value costs of the city accquiring the Apex site. That's in the range of $8 to $10 million, Grebien said.

The new stadium is expected to cost $73 million, but overall project costs are anticipated at $83 million because of the additional costs to buy the land. Lucchino said the team commitment would be 54 percent of the total costs -- or 61 percent if the real-estate purchase is excluded.

The team and city are still determining details of how such a plan could work, Lucchino and Grebien said. Plus, nothing is finalized, and state leaders may recommend ways the agreement would be tweaked, the two emphasized in an interview.

The team has agreed to cover any cost overruns for stadium construction costs, Lucchino said. PawSox vice chairman Mike Tamburro said such costs can be the "biggest surprise" in any construction project. "That's a big deal," Lucchino said.

Tuesday afternoon, Governor Raimondo said she thinks the plan put forth is a much better deal than what the PawSox proposed in 2015.

Asked what she's telling legislative leaders, Raimondo said, "I'm telling them I think it is a good deal for taxpayers."

She said she is excited about what this proposal means, that it appears as if the plan will pay for itself.

Raimondo said she's urging the legislature to consider the plan and fully vet it.

The $23 million the team and city are seeking in state help is less than the $35 million the consultants say would be needed just to repair McCoy Stadium, Raimondo said. In that case, she said, it would be state money repairing an old stadium, as opposed to investing in a new stadium that has the potential to advance the city's revitalization efforts.

Lucchino and Grebien said they expect to ask the General Assembly to consider how the state might assist in any Pawtucket Redevelopment Agency bond transaction so the agency can get better interest rates for the bonds it would issue.

These would not be moral-obligation bonds, Lucchino said. Those were the kind the state issued to raise cash for Red Sox pitching ace Curt Schilling's 38 Studios video-game company, which collapsed and left the state to pay down the bonds.

For a new stadium, the Pawtucket Redevelopment Agency would issue "lease-revenue bonds," Lucchino said. If the Pawtucket Redevelopment Agency were to issue the bonds on its own without some state oversight, Grebien said, the interest rate would be higher.

The city would own this new stadium and lease it to the state, which would then sublease it to the team for $1 million a year in the first year, with the lease going up 2 percent annually, PawSox senior vice president and general manager Dan Rea III said. That's the same model now in place for McCoy. However, the team is now paying the state about $35,000 under the current lease arrangement.

The team also expects a $500,000 naming-rights deal would provide cash to help cover its costs to pay down the bonds, Rea said.

Although the team and its newly formed real-estate development firm have committed to building some kind of ancillary development around the ballpark near Slater Mill, Lucchino and Grebien did not yet release any details about such development.

One thing is clear: Paul J. Salem, senior managing director of the global private-equity firm Providence Equity Partners, is committed to personally investing in development surrounding a stadium at the Apex site. He will be joining the 10-member PawSox ownership group, Rea and PawSox President Charles Steinberg said.

The tax-increment financing district the city wants to create would capture taxes generated by the stadium and new development around it. It would not capture the taxes generated from current businesses around the site or the historic Slater Mill complex, Grebien said.

No new taxes are proposed to help cover the stadium costs, Rea said. And only taxes generated from the stadium and development around it would cover the bond payments, team executives stressed.

Rea called the proposal a "self-supporting project" because the estimates of what a new ballpark and new ancillary development would generate in taxes over 30 years is $58.7 million, according to a study the team and city released last week. That $58.7 million is about 2.5 times what the team and city are now asking the state to commit from that anticipated revenue.

Back in 2015, the team fought unsuccessfully to build a new stadium in Providence on about 9.5 acres of former highway land and property owned by Brown University. Since final negotiations broke down in September 2015, with state leaders saying such a stadium would be far too expensive, none of the parties has ever said how much the team's initial proposal changed, if at all, during negotiations.

Under the leadership of the late James J. Skeffington, the team had proposed it would pay $70 million to build the stadium, $5 million to relocate utilities underneath the land and $10 million to cover its share of a 750-car parking garage it would co-own. In return, the team had asked state legislators to authorize state payments of $5 million a year for 30 years -- or $150 million in all -- to lease the ballpark from the team. Also, the team wanted to pay no property tax for 30 years.

During those 30 years, the PawSox said the team would pay the state $1 million a year to sublease the stadium back. Skeffington also said the taxes the ballpark would generate would offset the state's payments. While he estimated a new ballpark would generate an annual $2 million to $2.4 million in state sales, income and hotel taxes, Skeffington declined to say what tax revenue McCoy was generating at the time.

Lucchino emerged as the team's key negotiator after the May 2015 death of Skeffington, who had been the team's co-principal owner with Lucchino.

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