The city of Worcester is selling properties to address Polar Park debt, as revenues generated by development at the home of the Worcester Red Sox (Triple-A; International League) are lower than projected.
When the city was working on a funding plan for the $160-million ballpark to back 30-year bonds, it turned to a familiar formula in the sports-venue world: Tap into increased revenues generated by anticipated development surrounding a new ballpark. Worcester officials argued the ballpark would pay for itself, based on the assumption the development would generate additional economic activity. Whether it be a TIF district or a special taxation district, it basically represents money that would not exist if it were not for the new ballpark.
(This is in and of itself a controversial premise, as economists say that a new venue merely cannibalizes spending elsewhere in the market. But we won’t solve that disagreement here, but we will point out that TIF districts are hardly unique to sports venues: the midsize city of Madison, Wisconsin, supports at least 12 active TIF districts without sports entering the picture.) In the case of Worcester, a special taxation district around Polar Park was anticipated to generate $2 million in fiscal 2022, but instead generated only $655,374. The city ended up making its $3.9-million annual payment after selling a parcel of land near the ballpark for $3 million, while also providing partial funding for a fiscal 2023 $2.7 million payment.
That there are issues with development isn’t necessarily surprising: these projections and financial plans were made pre-COVID in August 2018, which turned many financial plans topsy-turvy. The question will be how Worcester deals with an economy seeing planned commercial developments around the ballpark postponed or scaled back. And although planned development was delayed and pushed back to 2023, two new projects have been proposed that could help pick up the slack. From the Worcester Business Journal:
Yet, City officials like Batista and Chief Development Officer Peter Dunn remain confident in the pay-for-itself plan because the Madison buildings have been bolstered by two other proposals from separate developers: The Cove, a seven-story apartment-and-retail tower from Worcester developer Churchill James LLC; and a 400-unit housing complex called Table Talk Lofts from Boston Capital Development LLC, on the former site of the Table Talk Pies manufacturing facility.
By adding those developments into the projected revenue plan, Dunn said the city’s assessor and chief financial officer have determined the ballpark district will generate more revenue than is needed over the 30 years to cover the stadium debts, even using conservative estimates.
Dunn didn’t provide those calculations or the figures showing the 30-year revenue generation estimates to WBJ.
Some firm calculations would be good, of course. And the ballpark haters are going to take an opportunity to take potshots at development despite not being able to tell the difference between a TIF district and a hole in the wall. There are some worst-case scenarios in terms of future debt service that includes money coming from the city’s general fund or increased taxes, but things are not at that point yet. But undoubtedly there will need to be some creative thinking to service debt until the new development is online–and we’ll see whether the ballpark will indeed pay for itself.
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