PROVIDENCE, R.I. (WPRI) – Rhode Island taxpayers are now expected to pay at least $60 million to build the minor league soccer stadium in Pawtucket, though there remains uncertainty among state and local officials about the exact details.
Questions have been swirling about exactly how much public money will go toward the stadium ever since Gov. Dan McKee cast the tie-breaking vote Monday to approve a new public-financing plan for the project that supporters say is required if the facility is going to get built.
Yet nailing down the answer has revealed that state and local officials, along with the developer, were either uncertain or unable to explain how much taxpayers are now on the hook to spend, after the price tag for the stadium recently increased by 50% to $124 million.
“I did hear and see reported $60 million of support,” Dan Kroeber, director of development and managing partner at Fortuitous Partners, told reporters on a conference call Tuesday. Fortuitous is building the 10,000-seat stadium, slated to anchor a larger development dubbed Tidewater Landing.
Yet Kroeber went on to question that figure. “The public support is $45.5 million for the stadium,” he said. “So, I’m not sure where the $60 million came from.”
Information obtained and analyzed by Target 12 shows Kroeber is correct that Fortuitous is receiving $45.5 million in public support. What he’s missing is how much it will cost taxpayers to provide that support.
According to documents presented to the R.I. Commerce Corp. board before its vote on Monday, taxpayers will spend about $60 million in total to yield $47 million for the project. The lion’s share of that money — $45.5 million — will go toward the actual stadium, with the remainder spent on stadium-related infrastructure improvements.
The roughly $13 million gap between the cost to taxpayers and the yield for Fortuitous is due to ancillary costs that come with financing big development projects. Those are detailed in footnotes of a Commerce document breaking down private and public spending on the project.
For example, the state expects to finance $14 million through its Rebuild RI tax credit program, which will result in a net payment of $10 million for Fortuitous, according to the document. Adams Isaacs-Falbel, a Commerce spokesperson, indicated Fortuitous expects to be able to borrow $10 million backed by the promised future tax credits.
The tax credits will not be paid out until a certificate of occupancy has been issued.
In addition, Commerce’s plan calls for issuing a $35.5 million tax-increment financing bond through the Pawtucket Redevelopment Agency, which will result in $25.5 million for the stadium and $1.5 million for infrastructural improvements.
Another $3.1 million of the borrowed money will be for capitalized interest, in order to cover early payments on the debt. An additional $1.8 million will go toward issuance costs, such as fees charged by bond lawyers. The other $3.6 million in bond money will be put into a reserve account, Isaacs-Falbel said.
Isaacs-Falbel was unable to immediately provide a draft schedule of debt-service payments, but said the money is expected to be borrowed toward the end of this year, and the first year of payments on the bond will be about $2.1 million.
Once interest payments are included, Commerce expects a total of $59 million to be spent paying off the stadium bond over the next 20 years.
Pawtucket is also expected to contribute $10 million toward the stadium, but city leaders don’t yet know how they will fund their share. The city is currently exploring different options, including amending the city’s existing tax-treaty with Fortuitous or finding a federal grant to help with the cost. The developer said they are also considering whether to add a surcharge to ticket prices to help cover the higher-than-expected development costs.
“There will be no existing Pawtucket taxpayer money that will go into the $10 million,” Pawtucket spokesperson Emily Rizzo said Wednesday. “We will make the best decision to protect the taxpayers when it is time to spend the money and make sure that they reap the benefits of this project with more and more development and opportunity in the community.”
The taxpayers costs together amount to $60 million. When presented with the gross figures earlier this week, Kroeber said the large number reflected the “nuances” of what reporters were examining. He also noted that the developer’s financial contribution toward the stadium would also be higher if it included the total cost of financing as part of their estimates.
Documents presented to Commerce suggested Fortuitous’ $78.5 million net private contribution is the greatest amount spent on a minor league soccer stadium “to date.” The comparisons provided to the board also suggested the $45.5 million net contribution from the government would also be the most spent by taxpayers.
Stadium advocates argue the project is effectively cost-free to taxpayers, as payments on the bond are slated to come from tax revenue generated at and around the stadium. That stipulation is baked into the state’s newly created tax-increment financing program. However, sports economists dispute whether that represents new tax revenue, as opposed to a shift in revenue that would have been generated elsewhere.
Hidden costs associated with major development projects isn’t a new concept.
For example, when the Pawtucket Red Sox owners sought $38 million in taxpayer support to pay for a new $83 million minor league baseball stadium in 2017, R.I. General Treasurer Seth Magaziner estimated the total proceeds needed for the deal from the state increased from $23 million to $26 million, and from $15 million to $18 million for Pawtucket.
State officials ultimately rejected the proposal and the team relocated to Worcester, opening the door for Fortuitous to pitch the Tidewater project.
The Commerce vote earlier this week effectively shifted $27 million of public financing that had been previously approved to support housing development at Tidewater to help fund the stadium itself. Developers say the projected cost has ballooned because of inflation and supply-chain issues.
The approval means there is currently no public money allocated for the development of hundreds of new housing units proposed as part of Tidewater, leading to criticism from some of McKee’s political opponents, who argue new units are desperately needed amid the state’s ongoing housing crisis.
State officials have acknowledged the decision to shift public money toward building the stadium itself could lead Fortuitious to seek additional public funding as soon as next year to build the rest of the Tidewater development, including the housing units.
Appearing last month on WPRI 12’s Newsmakers, former Commerce Secretary Stefan Pryor — who led negotiations with Fortuitous before stepping down to run for treasurer — said the developer would “likely but not definitely” need more state funding down the road.
“If there’s a gap to be filled that’s a reasonably sized gap, we should fill it,” Pryor said. “But we don’t know yet. The developer is still working on the fully fleshed-out plans for that second phase, so we don’t actually know. If the economy is strong, maybe that project can stand on its own two feet.”
“Probably not,” he added. “But we don’t know the exact sizing of that subsidy.”
Fortuitous partner Brett Johnson has said he remains committed to the housing component, but declined to speculate on what type of additional public support might be needed. His team estimates it will take another nine months before they complete new design and cost estimates for the housing side of the project.
As for the name of the team and the price of a ticket?
Johnson said Fortuitous plans to announce a name in the next couple months, but he declined to say how much at this point it’ll cost to watch a soccer game at the Pawtucket stadium.
Ted Nesi contributed to this report.