Tough Questions Emerging for the PawSox Proposal
Tuesday, October 17, 2017
Not only are new questions emerging, but alternative financing structures and approval processes are taking hold.
SEE THE LIST OF QUESTIONS BELOW
RI General Treasurer Seth Magaziner said the financing structure may be underestimating the actual cost and suggested that there may be a better structure for the financing the deal - he warns that using Pawtucket’s Redevelopment Agency may be more expensive than financing the deal through the state. Magaziner voiced his support for keeping the PawSox in Rhode Island and for some structure to provide public financing, but his comments at one of the Senate Finance Committee's hearing was another bump in the road for the PawSox ownership group to secure public financing and to use the Pawtucket Redevelopment Agency as the conduit for the structure.
While the hearings have gone on, the PawSox ownership group has rallied business support for the proposal from Chambers of Commerce and most of the Mayors around Rhode Island have voiced support for their fellow Mayor Don Grebien of Pawtucket. Gubernatorial candidate and Cranston Mayor Allan Fung has not come out for the public financing structure.
But now, the PawSox ownership group -- a group that collectively have combined personal wealth of $6 to $8 billion -- are facing a growing list of tough questions about the completeness of the proposal and whether tens of millions of additional costs are being accounted for.
And, more and more questions have emerged. SEE BELOW
Related Slideshow: Tough Questions Emerging for the PawSox Proposal
Speaker of the House Nick Mattiello raised the question if Rhode Island would be better suited asking voters to approve the question -- should Rhode Island take on the moral obligation of $81 million in bonds to finance the Pawtucket Red Sox?
Or as RI General Treasurer Seth Magaziner questions -- an even higher price tag?
Now, GOP National Committeeman Steve Frias, who narrowly lost to Mattiello in the 2016 general election for House District 15, has been going door to door asking western Cranston voters to voice their opposition to the proposed legislation that would provide a financing scheme for the PawSox totaling $81 million.
Republican Frias went door-to-door with stadium opponent and progressive Democrat David Norton. Norton ran for the House of Representatives in 2016.
Cost of Financing
RI General Treasurer Seth Magaziner is raising questions about the cost of the proposed structure now being considered before the legislature. He says the costs are being underestimated. He said the $71 million bond number is more like $84 million.
According to the structure, he says the project could potentially save money if the project was financed by the State of Rhode Island versus the Pawtucket Redevelopment Authority as the state has a better bond rating and a lower cost of borrowing.
McCoy Stadium Costs
At the recent House Finance Committee hearing, House Minority Leader Patricia Morgan and fellow House Republican Representative Antonio Giarrusso raised significant concerns about the cost of rehabbing, demolishing or reusing McCoy Stadium if the new stadium moved forward.
Pawtucket city officials seemed to be caught off guard by the line of questioning and could not answer where millions would come from to pay for any of the potential future usages or if the old stadium was demolished. The questions raised significant concerns about if the existing proposal is underestimated the total project cost. A previous study said that to restore McCoy stadium would be more than $35 million.
Ongoing Maintenance Cost of New Stadium
One of the reasons PawSox officials cite for the need of a new stadium is the condition of McCoy Stadium and the lack of maintenance of the years by city and state officials.
But questions posed during the House Finance Committee hearing raised concerns that the ongoing maintenance and any significant improvement costs in the next 20 years is unsettled business again.
Moral Obligation for State to Repay the Bonds
If you thought the financing scheme that forced Rhode Island to pay-off the bonds for the 38 Studios guarantee loan bonds could never happen again in Rhode Island, guess again.
The legislation now pending before the Rhode Island legislature that would fund the $83 million for the privately owned Pawtucket Red Sox sports team has the same provision that forced the state of Rhode Island to pay-off the $75 million in bonds after Curt Schilling's 38 Studios went bankrupt.
Moral Obligation, Back Again
In May of 2014, right after now-Speaker of the House Nick Mattiello took office after the resignation of Gordon Fox, Mattiello and his Majority Leader John DeSimone traveled to New York City and met with Moody’s and Standard and Poor’s — the two largest rating agencies. Mattiello and DeSimone were told if Rhode Island did not stand behind the state’s moral obligation it would be more expensive and more difficult to borrow in the future.
A day after Mattiello and DeSimone’s trip, they told the House Democratic Caucus that RI had to pay-off the bonds.
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