Rhode Island weighs Pawtucket ballpark deal as Worcester flashes steal sign
Rhode Island lawmakers are in extra innings over a controversial bonding package for a minor-league baseball stadium in Pawtucket.
The full House of Representatives was scheduled late Friday afternoon -- on possibly the legislature's final day -- to debate a proposed $83 million, 10,000-seat Ballpark at Slater Mill, which Speaker Nicholas Mattiello backs and the finance committee passed Thursday night.
That bill and a version the Senate passed in January are both in play. Neither is part of the $9.6 billion fiscal 2019 budget that Gov. Gina Raimondo was scheduled to sign at noon Friday. Senate officials have been noncommittal about whether their members would sign off on any House changes.
Debating points have revolved around costs, financing mechanisms and backstops, interest rates, economic development and the possible loss of an iconic local franchise.
Passage would not necessarily assure the Pawtucket Red Sox would stay. About 40 miles northwest up Route 146, Massachusetts and Worcester officials are reportedly working on a financing arrangement for construction of a $75 million stadium in that city’s Canal District for the Boston Red Sox affiliate in the Class Triple-A International League.
“From what I hear, they’re rolling out bridge trucks to Pawtucket,” Rhode Island House finance committee Chairman Marvin Abney, D-Newport, said at a Tuesday hearing on the House legislation.
Notably, no PawSox officials attended that night.
The would-be Pawtucket park, at the site of the former Apex department store and nearby properties in the 71,000-population city along the Blackstone River, would replace 76-year-old McCoy Stadium. McCoy is baseball’s oldest Triple-A facility. The PawSox have played there since 1973.
Mattiello, a Cranston Democrat, wants to secure the bonds solely from revenue generated in and around the ballpark. In contrast with the Senate legislation, the state would not backstop the bonds. The team would still pay $45 million while state and city tax revenue would cover $38 million.
Mattiello and Pawtucket Mayor Don Grebien have said team officials, including chairman Larry Lucchino, are interested in the House bill and would discuss it with city officials if it passes.
Attendance has been down at McCoy and one report by the website GoLocalProv accused the team of inflating the attendance figures it reports to the International League. Actual attendance is a key component of the House financing model.
Mattiello’s plan would shift the burden to a widened tax-increment financing, or TIF district, that the city would establish.
To finance the project without a state guarantee, the House plan would dedicate both city property taxes and a plethora of state taxes -- such as sales tax, income tax and hotel tax -- to paying off 30-year bonds, essentially creating a “super TIF.”
“They moved the state and the city risk while moving the ancillary development around the ballpark pay for it,” Grebien said.
The special-revenue bonds would be secured only by the identified revenue stream, House fiscal advisor Sharon Reynolds Ferland told the finance panel. “These are non-recourse bonds, so if the revenues are inadequate to pay the revenue bonds, the issuer has no further obligation to pay the bonds,” she said.
Mattiello, hesitant about the stadium bill for several months, said he wants to shift risk from taxpayers to investors. His plan, though, would involve higher borrowing costs than the Senate’s estimated $14 million, which includes fees, capitalized interest and a debt reserve.
The contribution by the PawSox would feature $12 million upfront and $33 million in bonds. The city-controlled Pawtucket Redevelopment Agency would own the ballpark, issue the bonds and lease the stadium to the team.
Grebien called the move essential to Pawtucket’s economic development.
“My message to you is simple. Please pass this legislation,” he told the finance panel. “We are at the beginning of something great for the city, for the Blackstone Valley and for our state.”
By contrast, said Grebien, a departure by the PawSox – which Grebien called Rhode Island’s third-largest tourist attraction -- would cost the state $2.5 million annually, or $75 million over 30 years. In addition, he said, the city would lose $45 million in private investment.
“Please don’t subsidize Worcester,” Grebien said.
Moody’s Investors Service has taken a wait-and-see approach to regarding any effect of the stadium project on Pawtucket’s credit. “Future reviews will evaluate the city’s financial commitment and ability, if any, to absorb new costs associated with this project,” Moody’s said in a May 15 commentary.
Moody’s rates Pawtucket’s general obligation bonds A3, having upgraded the city two notches from Baa2 in September 2016. Grebien has frequently cited Pawtucket’s improved standing in the capital markets since he took office in fiscal 2011.
While Worcester and state officials have been secretive about particulars, local media reports have said the commonwealth and the city would cover $60 million of stadium construction costs, with PawSox ownership to kick in the remaining $15 million.
Members of Gov. Charlie Baker’s inner circle, including Lt. Gov. Karyn Polito, have ties to the Worcester region. "We'd love to hit this one out of the park," Polito said three weeks ago.
Meanwhile, the Rhode Island House bill includes tweaks that Grebien's legal advisors proposed Tuesday.
John Partridge, special counsel for the Pawtucket Redevelopment Authority, wanted fixed- and variable-rate bonds as options, depending upon financing mechanisms.
“Underwriters look to see whether you can use both fixed and variable in the enabling legislation,” Partridge said. “It’s a very valuable piece of information.”
Ted Orson, who is advising the city in eminent-domain matters, asked to reinsert findings-of-blight requirements. He cited constitutionality concerns.
“We think the safe thing to do here is to eliminate that exemption and require a finding of blight,” said Orson, who represented neighboring Central Falls in its 2011 bankruptcy filing. “We are very confident that we would find blight, so why allow for a challenge that would really be unnecessary?”
Orson also pushed for job creation and preservation goals.
Objections to the stadium plans range from cost concerns to spending priorities and include the stinging memory of the 38 Studios bond financing fiasco surrounding former Boston Red Sox pitcher Curt Schilling’s doomed video-game company by that name.
Rhode Island issued a $75 million loan in 2010 to lure Schilling's company to Providence from Maynard, Massachusetts. The company’s demise left Rhode Island stranded with debt that it backed with its moral obligation.
Stadium opponents named one Twitter account “38 Stadium.”
House Minority Leader Patricia Morgan, R-West Warwick, called the deal harmful and accused Grebien and Lucchino of fear tactics.
“Unfortunately, this latest proposal is worse than all the others – and they were bad,” said Morgan, who is running for governor.
“Pawtucket is already struggling under its own weight. The city has some of the worst funded pensions, one of the highest debt burdens in the state, and a 2018-2019 budget packed with tax increases.”