Worcester struggles under Polar Park debt
As the city worked on a financing plan for the $160 million stadium to back 30-year bonds, it turned to a well-known formula in the sports venue world: unlock higher revenues generated by anticipated development around a new stadium can be generated. Worcester officials argued that the ballpark would pay for itself based on the assumption that the development would generate additional economic activity. Whether it’s a TIF district or a special tax district, it’s basically money that wouldn’t exist without the new ballpark.
(This is a controversial premise in and of itself, as economists say that a new venue merely cannibalizes spending elsewhere in the market. But we won’t resolve that disagreement here, but we will point out that TIF districts are unlikely to unique to sports venues are: the medium-sized city of Madison, Wisconsin, supports at least 12 active TIF districts without sport coming into play.) In the case of Worcester, a special tax district around Polar Park was expected to bring in $2 million in fiscal 2022, but instead brought in just $655,374. The city finally made its annual $3.9 million payment after selling a property near the stadium for $3 million while providing partial financing for a $2.7 million payment. dollars for the 2023 fiscal year.
That there are issues with development isn’t exactly surprising: these forecasts and financial plans were prepared prior to COVID in August 2018, which has turned many financial plans upside down. The question will be how Worcester will deal with an economy where proposed commercial developments around the stadium are being postponed or scaled back. And although planned development has been delayed and pushed back to 2023, two new projects have been proposed that could help bridge the gap. From the Worcester Business Journal:
Still, city officials like Batista and Chief Development Officer Peter Dunn remain confident in the pay-for-sitself plan, as the Madison buildings have been bolstered by two other proposals from separate developers: The Cove, a seven-story apartment and retail tower from the Worcester developer Churchill James LLC; and a 400-unit condominium complex called Table Talk Lofts by Boston Capital Development LLC on the former site of the Table Talk Pies manufacturing facility.
By including these developments in the projected revenue plan, Dunn said, the city’s appraiser and chief financial officer have determined that the ballpark will generate more revenue over 30 years than is needed to cover the stadium’s debt, even using conservative estimates.
Dunn has not provided WBJ with those calculations or the numbers showing the 30-year revenue generation estimates.
A few fixed calculations would of course be good. And the stadium haters will jump at the opportunity to jeopardize development despite being unable to tell the difference between a TIF district and a hole in the wall. There are some worst-case scenarios for future debt service involving money from the city’s general fund or increased taxes, but it’s not there yet. But no doubt it’ll take some creative thinking to service the debt by the time the new development comes online — and we’ll see if the ballpark actually pays off.
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