When the city was working on a financing plan for $160 million to back the 30-year bond, it turned to a formula familiar in the sports arena world: capitalizing on the increased revenue generated by projected development around a new ballpark. Worcester officials argued that the stadium would pay for itself, based on the assumption that the development would generate additional economic activity. Whether it’s a TIF area or a special tax area, it basically represents money that wouldn’t exist without the new stadium.
(This in itself is a controversial hypothesis, since economists say that a new venue kills spending elsewhere in the market. We won’t resolve that contention here, but we’ll point out that TIFs aren’t unique to sports venues: the midsize city of Madison , wisconsin, Supports at least 12 active TIF regions without sports entering the picture.) In the case of Worcester, a special tax district around Polar Park was expected to generate $2 million in fiscal year 2022, but instead generated just $655,374. The city ended up paying $3.9 million annually after selling a parcel of land near the ballpark for $3 million, with partial funding available for a $2.7 million financial payment for 2023.
That development issues are not necessarily surprising: These projections and financial plans were made before COVID in August 2018, turning many financial plans upside down. The question will be how Worcester deals with an economy that sees commercial developments planned around the stadium postponed or scaled back. And although the planned development has been pushed back and pushed back to 2023, two new projects have been proposed that could help make up for the slack. From the Worcester Business Gazette:
However, city officials like Batista and chief development officer Peter Dunn remain confident the plan will pay for itself because Madison Buildings has been bolstered by two other proposals from separate developers: The Cove, a seven-story tower of apartments and retail. From Worcester developer, Churchill James LLC; and a 400-unit apartment complex called Table Talk Lofts by Boston Capital Development LLC, on the former site of the Table Talk Pies manufacturing facility.
By adding these developments to the projected revenue plan, Dan said the city’s resident and chief financial officer has determined that the stadium district will generate more revenue than is needed over 30 years to cover the stadium’s debt, even using conservative estimates.
Dunn did not provide those calculations or figures showing revenue generation estimates over the 30 years to WBJ.
Some assertive calculations would be fine, of course. And stadium haters will seize the opportunity to take pictures in the development despite being unable to tell the difference between a TIF area and a hole in the wall. There are some worst-case scenarios in terms of future debt servicing that include money coming out of the city’s general fund or a tax hike, but things aren’t quite there yet. But no doubt some creative debt servicing thinking will be required for the new development to come online – and we’ll see if the ballpark actually pays for it.
Related stories: The WooSox and Worcester agree to a lease for Polar Park; Polar Park registration plates unveiled; Worcester developer sticking to Polar Park plan; Polar Park is still on schedule. Changing terms of development; Landmark in Polar Park construction: coronation ceremony; Resumption of construction work in Polar Park; Polar Park construction is on schedule – for now; Polar Park construction closures may affect the 2021 opening; Polar Park construction halted; Progress in the construction of Polar Park; Approval of the revised Polar Park financing plan; The cost of Worcester Confident Polar Park will not have another public increase; The committee endorses the revised Polar Park financing plan