Guest MINDSETTERS™ Sen. Crowley, Nesselbush: Ballpark Proposal is Good for City & State
Tuesday, December 12, 2017
Though neither of us is a member of the Senate Finance Committee, we both participated in the hearing process, carefully listening to and reviewing key testimony. There are risks and benefits to any proposal, but on balance, we believe the evidence points to this being a good deal for taxpayers.
According to most experts who opined, public investment in the ballpark would be revenue neutral (or positive), meaning that the public investment would be completely recouped through various taxes paid by the PawSox or those attending the games and using the ancillary restaurants and businesses. The proposal is designed to pay for itself. Even under the most conservative estimates, the state would gain more in tax revenue directly from the Pawtucket Red Sox than it would expend in debt service. In other words, if the state were to forego this opportunity and the team were to leave, the state would have less tax revenue to fix our roads and school buildings. That’s why we believe the proposal is a net gain for taxpayers.
Vigorous debate is a hallmark of democracy, and it has indeed served to improve the proposal. One of our Senate colleagues recently raised some issues, and we want to address some misperceptions cited by him and opponents, in general, of the proposal.
We all love Pawtucket and Ben Mondor. Mr. Mondor’s story tells of the International League’s commitment to its team here in Pawtucket. He was chosen by the League to revitalize a flagging Pawtucket franchise, ensuring that no International League team would go defunct.
It was suggested that Mr. Mondor would have sought a different path than what is currently being proposed. But this ignores the fact that he secured a similar partnership at McCoy some 75 years ago. McCoy Stadium, current home to the PawSox, is a public park. The key difference as we seek to continue this partnership is that this time around the PawSox organization will be responsible for $45 million in private funds.
To suggest that Pawtucket won’t have the ability to pay its portion of the debt service ignores the significant changes made to the legislation to address this concern. Under the revisions introduced December 7, half of the naming rights revenue would go to the city, and the surcharge on premium tickets, initially going to the state, has been redirected to Pawtucket. These changes will help ensure that, even before additional ancillary development, Pawtucket will have the means to pay its debt service through revenue generated by the project.
The ballpark proposal has been thoroughly vetted, probably more so than any public-private partnership in the state’s history. There were seven Senate Finance Committee hearings at locations around the state, amounting to 28 hours of public input and testimony. The leadership and finance committees of both chambers and other officials, like the General Treasurer, have dedicated themselves to getting this right. That’s why we are confident that the proposal before us is mutually beneficial for the team and the people of Pawtucket and Rhode Island.
Where Finance Committee members had concerns, they have been addressed. Where public officials or the public at large had good ideas, they have been incorporated. The team’s finances have been independently reviewed, and the legislation has been revised to further reduce Pawtucket’s exposure to risk.
We don’t have a crystal ball, but by the same token, we cannot be stymied by our past. For Rhode Island to grow and thrive, we must be bold and willing to take calculated risks that are well vetted and designed to succeed. The revised legislation is just that: bold, well vetted and designed for success. It is designed to completely pay for itself. It keeps the PawSox where they belong: in Pawtucket. It creates a highly visible, beautiful ballpark (a replica of Fenway) right at the gateway to Rhode Island for all who enter to see. It would be a source of pride for all Rhode Islanders, and it gives economic development efforts in Pawtucket a nice shot in the arm.
We join with our colleagues in the Pawtucket delegation, the state’s mayors including Pawtucket Mayor Donald Grebien and Central Falls Mayor James Diossa, chambers of commerce, builders, and many, many more in urging the General Assembly to pass this proposal, for the health and welfare of our city and state. We encourage members of the public to let their state senators and representatives know that they don’t want to lose the PawSox to another state.
Elizabeth A. Crowley is a Democratic State Senator representing District 16, which includes Central Falls and a portion of Pawtucket. Donna M. Nesselbush is a Democratic State Senator representing District 15, which includes portions of Pawtucket and North Providence.
Related Slideshow: New PawSox Deal—December, 2017
Here are the provisions of the legislation according to the Senate Finance Committee,
Compliance with Public Corporation Debt Management Act: The legislation was amended to better conform to the requirements of the State’s Public Corporation Debt Management Act, or “Kushner Act.” The Budget Office’s fiscal note indicated that the bill as originally written did not meet these requirements. The statute requires that financing leases to which the state is a party must be authorized by the General Assembly through resolution. The resolution must include the maximum possible obligation of the state. The original language only listed the value of the principal to be borrowed and not the cost of issuance and total debt service. The amended language more clearly identifies the maximums as $41.0 million, $26.0 million, and $18.0 million for the Series A, B, and C bonds respectively.
Naming Rights: Based on the fact that the Pawtucket’s redevelopment agency will be the owner of the new ballpark and the determination that Pawtucket will experience a gap between new revenue and its annual debt obligation until sufficient ancillary development has taken place, S-0989 was amended to direct 50 percent of the ballpark naming rights revenue to the City of Pawtucket to assist with its annual debt service payment. This revenue is estimated to be $250,000.
Ticket Pricing: Based on the determination that Pawtucket will experience a gap between new revenue and its annual debt obligation until sufficient ancillary development has taken place, S-0989 was amended to reflect the transfer of the premium ticket surcharge revenue from the state to the city. The bill clarifies the definition of a “ticket” and was amended to include language memorializing the team’s commitment not to raise ticket prices for five years.
50K sq. ft. Ancillary Development: The legislation requires any future lease to include a provision that the team develop a minimum of 50,000 sq. ft. of real estate contemporaneously with the construction of the ballpark.
Maintenance and Capital Improvement: S-0989 was amended so that any future lease must contain a requirement that the team is responsible for the daily, operational maintenance of the ballpark and its costs. The lease must also explicitly make clear that the state is not responsible for operational maintenance. The lease shall require that the team be responsible for a minimum 50 percent of annual capital expenditures and that the city, state, and team must contribute a minimum of $150,000 in total per year into a capital expenditure fund to finance capital expenditures. The parties will be required to develop a multi-year capital improvement plan detailing expected, future capital projects and outlays. No capital expenditure funds shall be used for operational maintenance.
Construction Costs: The $12.0 million of equity pledged by team owners is required by the legislation to be the first funds expended towards the construction costs of the new ballpark. In the event that land acquisition and ballpark construction costs come in less than $83.0 million, the savings shall be distributed on a pro-rata basis to the team, city, and state at a rate of 46.5 percent, 32.4 percent, and 21.1 percent respectively. Lastly, any construction cost overruns that exist will be paid by the team.
Public Park: The bill memorializes the commitment by the parties of making the new ballpark available as a public park facility. The bill requires the lease to contain a provision directing the city to provide planning and operational assistance on public park aspects of the park. The lease must also specify that the facility will be operated year-round in and around the ballpark, separate and apart from the ballpark’s baseball-related uses, in order to create public recreational, social, and communal benefits.
Green Design & RIIB Financing: S-0989 was amended to encourage the use of energy efficient and sustainable design, construction, and operations at the new ballpark. It encourages the use of financing programs available through the Rhode Island Infrastructure Bank, including, to the extent practicable, the State Revolving Funds and the Efficient Buildings Fund, which provide low cost financing for eligible renewable and energy efficiency, stormwater abatement, water conservation, and other sustainable infrastructure projects.
Fair Labor Standards Act Compliance: The legislation was amended to affirm the requirement that the team comply with fair labor standards. Employers associated with the business of the ballpark, including the team, would be required to adhere to state and federal Fair Labor Standards practices, including provisions that prevent labor misclassification by incorrectly designating workers as “independent contractors.”
Lease Conditions: The lease is required to be for 30 years and must be reviewed and approved by the State Properties Commission prior to the issuance of bonds.
Eminent Domain: Based on the concerns expressed during public testimony and a subsequent determination that the need for this expansion was overstated, S-0990 was amended to eliminate the expansion of eminent domain powers under the Redevelopment Act and to restore the definition of “blighted and substandard” throughout the bill.
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