Jeremy Comment

Fitch Rating On Our Last Bond Sale Comments On Polar Park

 Link to rating

Worcester's new baseball facility, Polar Park, opened in May of 2021. Since January 2020, the city has been managing the construction of Polar Park as home for the Red Sox minor league team, the WooSox. New development planned for the areas adjoining the ballpark has been delayed, and, in certain cases, revised due to the pandemic. A new residential and retail development is underway and planned for completion in 2023; however, the originally planned office facility and hotel have been delayed to 2024 and 2025 respectively.

A proposed lab building is planned to be completed in 2026. The new parking garage (funded through state grants) will be completed this spring and the city will begin receiving annual lease payments from the developer. Management reports that other developers have provided proposals for future development in the available sites near the ballpark, with additional interest surfacing now that it is completed.

Debt service on borrowings associated with the ballpark are planned to be paid from revenues generated in the district improvement financing area (DIF) and include property, meals and use taxes, and parking and team lease payments. The bond structures included capitalized interest through 2024 which along with a DIF reserve funded in part from a sale of property, will help mitigate the delay in full receipt of expected property tax revenues from new development until it is completed. 

 Projected shortfalls, which Fitch considers to be manageable based on cashflows provided by management, would be subsidized by the operating budget and not result in a material financial impact to the city.

 

 

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Comment

The 016 and WBJ reported on the City's bond rating from Fitch yesterday. Fitch held the City's rating at the same level which is a good thing but if you read their report it seems like the City admitted to Fitch that they will have to subsidiize the ball park bond payment from the general fund but don't say how much but that it is manageable. 

Fitch was supplied spreadsheets depicting the subsidies. It looks like you and the WBJ have been correct in questioning the City's contentions that the project will pay for itself. Now the question is how much of a subsidy is required. The troubling part of this situation is how the City tells one story to the local media and the general public and a different story to a rating agency.



Comments

Anonymous said…
I just read a T&G article about Madison obtaining funding for the residential building. Should that have been done months ago? Could funding be why things are behind schedule? Do they have funding for the other buildings they have proposed constructing?
wormtown said…
Perhaps a once in a century pandemic has had some sort of impact on the timeliness of these projects.
Anonymous said…
ORH > LGA > DCA today

ORH > LGA was nearly empty. Only 6 of us on the plane.
Anonymous said…
A more troubling situation is the media reports what the City says without asking any questions. We need better reporting.
Anonymous said…
What about some transparency in government. Maybe the T&G should sue the City to get the financials on the ballpark instead.
Anonymous said…
The pandemic may have had an effect on the development but it may also be a convenient excuse. The ball park , the new Table Talk building and numerous housing units were completed during the pandemic. What I would be more concerned with is are a new office building, a hotel and a lab building realistic in a post pandemic world and if not what will be the replacements and when will they be done and generating tax revenues to make bond payments. I hope the City is developing a plan B. More housing is an option.