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CW: They will be taxed on the stadium even though the city will actually be the owner of the stadium?
ZIMBALIST: No. The stadium, because the city owns it, won’t be subject to property tax. The stadium will yield some local-option sales taxes to the city. There will be property taxes on personal property that the team owns. The team will have furniture, computer equipment, and batting cages, and there’ll be a tax on all of that at the normal property tax rate, which would be about 3.2 percent. But the ballpark itself is not going to generate the bulk of the tax revenue. The bulk of the tax revenue is going to come from property taxes on the 12 acres that are part of the project and not part of the stadium. The stadium is going to be on six acres. There are two hotels, between 125 and 250 residences, a parking garage.
CW: You can say today’s taxpayers aren’t paying directly for the stadium, but it will be taxes generated through that development that will pay roughly two-thirds of the debt service.
ZIMBALIST: Correct.
CW: If there’s an economic rationale for that kind of development – hotels and apartments — wouldn’t it have happened anyway? Then we’d be looking at all that tax money going into the city coffers and not toward paying the debt service on the stadium.
ZIMBALIST: This is land that has sat fallow for 20 years and it’s close to City Hall in downtown. And Denis Dowdle of Madison Properties, who’s a very successful land developer in eastern Massachusetts, was looking at this property and he was thinking about making a small investment in the property. He hadn’t. He hadn’t entered discussions to buy the land yet. He hadn’t laid out what his plans would have been. And he says today that if there were no baseball team coming, that he probably would have gone ahead eventually and done a smaller development. But whether that would have happened and happened by the year 2021 or by the year 2028 or some other year is not something that he knew beforehand and it would’ve been a much smaller investment. The question you’re asking is, wouldn’t it have been developed eventually anyway? Sure. So other than Denis Dowdle, somebody else would have come along and there would have been development there. So the result of having the stadium and the team is that the investment and the development is happening much more rapidly and it’s happening on a larger scale. What you’d presumably want to do if you were just making a strict economic calculus is try to estimate how much time it would have taken for that development to come along, and what kind of incentives you would have had to give to have that development. We’re giving incentives to the team, obviously, and we’re giving incentives to Dowdle. If you want to get a commercial developer to build office space or to build hotels or to build residences, you’ve got to give them tax incentives. So there would have been a cost to the city also in those instances.
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