PAWTUCKET – The city will charge the Tidewater Landing developer nearly $10 million more in taxes on the soccer stadium to help pay back the additional debt the city has agreed to take on for the project.
An updated master plan agreement outlining the changes of the tax treaty and city revenue bonds for the mixed-use riverfront development was approved by the Pawtucket Redevelopment Agency on Wednesday.
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According to the agreement, which was shared with PBN, developer Fortuitous Partners will pay $10 million in property and tangible taxes on the stadium over the first 20 years, which will be used to pay off a $10 million city revenue bond fronted for the project amid recent price hikes.
The additional debt is on top of the $9 million in city bonds incorporated into a larger, $36.2 million tax-increment financing plan – with the remaining bond funds coming from the state – for the project. Originally, the TIF funding was allocated to cover public infrastructure included in later phases of the mixed-use development.
But after rising construction costs and supply chain slowdowns jacked up project costs, with a 50% spike in the stadium cost to $124 million, R.I. Commerce Corp. agreed to funnel nearly all of that bond money to the first-phase soccer stadium component.
Still, a funding gap remained, which is where the second city revenue bond comes in.
Under the updated agreement, the Pawtucket Redevelopment Agency will take on another $15 million in debt to help pay for the stadium.
The $10 million in net bond proceeds will be repaid using incremental property and tangible taxes generated from the stadium, with developer Fortuitous Partners paying $8.9 million in property taxes and $1.1 million in tangible taxes over the course of the next 20 years.
The $10 million tax bill is substantially higher than the original tax treaty, under which the city agreed to charge the developer just $35,000 for the first 20 years. However, it still represents a discount over the full property taxes, which are projected to reach $1.9 million after the development is finished, according to the agreement.
Similar to the prior treaty, the property will be taxed at the full rate after the 20-year tax treaty ends, according to the master plan agreement.
The Pawtucket Redevelopment Agency is aiming to sell the bonds by the end of the calendar year, pending the Pawtucket City Council’s approval of the new agreement, according to Dylan Zelazo, Pawtucket’s chief of staff.
The City Council is scheduled to take up the updated master plan agreement, as well as updates to separate documents about the tax treaty and project development plans, at its Nov. 9 meeting, although the vote will be at a later time, Zelazo said.
In addition to the flagship, United Soccer League stadium, the project is also slated to include 435 housing units along with retail and commercial space, an outdoor event plaza and a riverwalk connecting the two sides of the Pawtucket River.
How the rest of the $344 million project will come together remains in question, with some R.I. Commerce board members, lawmakers and other critics concerned about the financial risks to the state if the stadium proves less profitable than expected, or if the critical housing and infrastructure components never come to fruition. Proponents, including Gov. Daniel J. McKee who cast the tie breaking vote in the R.I. Commerce decision, counter by highlighting the economic benefits of the project.
The project is expected to create 474 direct construction jobs and 162 permanent ones, and generate $37 million in state tax revenue over the next 30 years, according to an analysis by an R.I. Commerce consultant.
On top of the city and state revenue bonds, the developer has agreed to put in another $45 million in private equity and $31 million in private debt investment to cover the higher costs of the stadium.
R.I. Commerce has also authorized $10 million in net state tax credits for the project.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
