Mattiello’s new PawSox plan will cost more, lower risk; team silent

News

PROVIDENCE, R.I. (WPRI) – House Speaker Nicholas Mattiello’s revised proposal for a new Pawtucket Red Sox stadium will cost more than the Senate plan approved earlier this year, but if the stadium is a bust it will be bondholders left holding the bag rather than taxpayers, lawmakers were told Thursday.

Mattiello, D-Cranston, announced earlier this week his aides had worked with Pawtucket Mayor Don Grebien to craft a new proposal for the long-discussed ballpark that Mattiello said would remove “all risk” for taxpayers. The House Finance Committee held its first hearing on the legislation Thursday, though Mattiello’s aides emphasized the bill text was only a “draft” to start the discussion.

It’s unclear if and when a vote on the bill will be scheduled.

Mattiello’s measure has the same goal as the Senate’s: to provide public support for a new, $83-million minor-league ballpark on the site of the Apex store in Pawtucket and spur development in the city’s downtown. Team funds would cover $45 million of the total, with state and city tax revenue covering the remaining $38 million. Almost all the money – $71 million – would be borrowed by the quasi-public Pawtucket Redevelopment Agency.

But the speaker – who strongly supported building a new stadium in Providence but has been far more resistant to one in Pawtucket – is suggesting significant changes to how the project is financed. Rather than have taxpayers backstop the borrowing, as the Senate envisioned, the Pawtucket agency would issue “special revenue bonds,” backstopped only from tax revenue collected at and around the new stadium.

“There is nobody who is going to pay it back, other than the revenues,” said Sharon Reynolds Ferland, the Rhode Island House’s top fiscal adviser. The bondholders who buy the bonds would only get paid back “if the money’s there,” she added.

The downside: without a deep-pocketed backer behind the debt, investors would demand more money to offset their higher risk.

John Simmons, executive director of the Rhode Island Public Expenditure Council think tank, said estimates suggest the increased annual cost could be anywhere from $300,000 to $800,000 above the $6 million projected under the Senate bill. (Simmons said he supports the new plan as “a shared investment in Pawtucket’s future.”)

Grebien acknowledged doing it Mattiello’s way will cost more. “There’s a price you pay for shifting that risk,” he said. But he argued Pawtucket needs the investment in its downtown. He also downplayed the possibility the city would wind up having to bail out its redevelopment agency if ballpark revenue comes up short.

“At the end of the day, if there’s too much risk there or we’re exposed, they’re never going to allow us to underwrite it, or to go out to bond – that’s the protection of it,” he said.

Dylan Zelazo, Grebien’s deputy director of administration, said the city was reviewing options that could make the bonds more affordable. He said officials are also “actively pursuing private placement opportunities with friendly buyers at below-market rates and EB-5 financing tools that could lower any projected interest rate increases.”

General Treasurer Seth Magaziner, who oversees state and local debt and has raised concerns about Pawtucket’s financial health in the past, declined to take a position on the Mattiello bill Thursday, though he emphasized he supports keeping the PawSox. Magaziner’s office said it would survey investors to gauge how much more expensive the speaker’s plan would be.

At the same time, it’s unclear if the PawSox owners themselves will be willing to accept the new, costlier proposal. The team said it was surprised by Mattiello’s plan when he announced it, and a spokesman again declined to comment on it Thursday. Dr. Charles Steinberg, a veteran Red Sox executive, attended the hearing but did not testify, saying he didn’t know enough about the plan.

The PawSox have simultaneously been engaged in talks with Massachusetts Gov. Charlie Baker’s administration and officials in Worcester about moving the team there. No details about that proposal have been made public, but Rhode Island leaders privately insist there is a real possibility the minor-league club could head north.

Commerce Secretary Stefan Pryor, a top aide to Democratic Gov. Gina Raimondo who helped negotiate the team’s initial deal for a new stadium, called the Mattiello bill “a promising framework” for financing a ballpark. But he said more details were needed on the exact sources of revenue and the viability of selling the bonds, as well as the effects on Pawtucket’s economy.

Senate leaders, who spent months crafting and passing their own ballpark bill, have been frustrated by Mattiello’s approach. Senate Finance Committee Chairman Bill Conley declined to take a position on the House bill Thursday, saying only that his colleagues are “grateful” for the speaker’s efforts and are “committed to workable legislation.”

Republicans have been generally united in opposition to a new PawSox stadium since the team was purchased in 2015, and continued to speak out against the idea this week. GOP Chairman Brandon Bell and House Minority Leader Patricia Morgan, a candidate for governor, both warned the new plan was too risky.

Cranston Mayor Allan Fung, another GOP gubernatorial candidate, joined Bell and Morgan in opposition to the Mattiello plan on Thursday. “Revitalizing Pawtucket is one thing, bailing out billionaires is another,” Fung said in a statement. “The state is still on the hook for bailing out a quasi if things went wrong. Plus the financing costs will likely be higher.”

“Here’s a deal I could get behind: the owners pay for the stadium, and we’ll heavily invest in the surrounding infrastructure and aggressively help to grow small businesses in the community,” Fung added.

Republican National Committeeman Steven Frias, who nearly defeated Mattiello in his Cranston House district in 2016 and is publicly flirting with a rematch this fall, testified against the speaker’s bill at the hearing. Like others who testified, he noted that the bill does not specify how large a section of Pawtucket would be classified as part of the stadium district where tax revenue could go toward bond repayment.

“Nobody knows how large this area is going to be,” Frias said. “This area could encompass businesses and other economic activity that is not particularly related to the ballpark.”

Asked whether Mattiello’s new openness to a state-backed stadium has made him more likely to run against the speaker again, Frias smiled and said, “I believe that the way things are headed here at the State House, I’m starting to think I’m going to have a busy summer ahead of me.” He said he has been canvassing voters in their district and found public opinion running two-thirds against a ballpark.

Mattiello’s bill also changes state law on eminent domain, which Ferland said would make the process of acquiring the Apex land for the stadium “more practical.”

Grebien pleaded with lawmakers – and the public – to look past the debate over financing specifics and examine what he sees as the bigger picture.

“Forget all the other stuff, right?” the mayor said. “It’s about moving Pawtucket forward.”

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

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