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WORCESTER - City Auditor Robert V. Stearns has found that assumptions used in developing the financing package for bringing the Pawtucket Red Sox to the city support the assertion that a ballpark for the team can be constructed and paid for without having to use existing municipal tax revenue.

He said the proforma demonstrates a steady stream of revenue with a "comfortable margin" to support the debt for the $100.8 million worth of bonds that will be issued to finance the construction of a 10,000-seat ballpark, which is to be completed for the start of the 2021 season.

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That means the city would not have to take existing tax revenue currently used for municipal programs and services and reallocate it to pay the debt service on the bonds or raise property taxes specifically for that debt.

Mr. Stearns did caution, however, that there are some risks that are inherent with such projects.

He said one of the short-term risks has to do with completion timelines and the assessed property values in fiscal years 2021 and 2022 of the new buildings that will be constructed as part of the overall $240 million redevelopment of the Kelley Square area.

"In the short-term there is the risk that aid would be needed should the project be delayed beyond the assumed assessment dates," Mr. Stearns wrote. "The proforma assumes all seven (privately developed) properties will be 50 percent completed and assessed by Jan. 1, 2020, and the fully valued by Jan. 1, 2021.

"A lesser valuation outside of this time frame would reduce or eliminate the expected reserve balance of $2 million at the end of fiscal 2022," he added.

The auditor's report comes on the heels of an assessment done by one of the city's bond rating agencies, which concluded that the planned borrowing to finance the construction of the ballpark will not have a negative impact on Worcester's very favorable bond rating.

In advance of its meeting Wednesday night, at which time the City Council is supposed to take up the proposed PawSox deal and financing package, the council asked Mr. Stearns to review the plan and letters of intent for the project and offer his opinion on them.

In Worcester's form of government, the city auditor is an employee of the City Council and does not report to the city manager. The auditor serves as a check-and-balance between the city administration and council on financial matters.

In his nine-page report, Mr. Stearns pointed out that the proforma considers phase one of the proposed $90 million private development that is part of the Kelley Square redevelopment project.

That phase of the project calls for the construction of two hotels, a 225-unit apartment complex and retail and restaurant space on 17 acres owned by Wyman-Gordon Company that flank both sides of Madison Street.

The private development will be done by Madison Downtown Holdings, LLC, while the $86 million to $90 million ballpark, which will be built on the north side of Madison Street, will be city-owned and its construction overseen by the Worcester Redevelopment Authority.

City Manager Edward M. Augustus Jr. has said that the financing for the ballpark project has been designed in such a way so property taxes generated from the new private construction, along with ballpark lease revenues and other new revenues generated by the project will be used to pay off the bonds for the stadium.

Mr. Stearns said his review found that the proposed financing package and proforma supports that assertion.

Under the financing schedule that has been developed for the project, Mr. Stearns said, a surplus is projected at the end of each year for 30 years. Long-term, the proforma generally assumed 2 percent revenue growth for 30 years.

The auditor emphasized, however, that a planned phase two for the private development, as well as any spinoff development, would create additional revenue for the project because they have not been factored in the proforma.

Phase two of the private development calls for 200,00 square feet of residential, office and/or mixed-use development.

Mr. Stearns said construction of the ballpark, including capitalized interest and land takings, will cost $106 million to $110 million, depending upon whether an additional $4 million in ballpark construction costs is necessitated by the presence of the Mill Brook drainage conduit below the site.

He said the team will be responsible for ballpark design and construction costs in excess of those cost estimates, except for those that are caused indirectly or directly by the delay, negligence or failure of the city to act.

Mr. Stearns said the repayment of the city's bond obligation will be over 30 years, with interest only in the first two years and principal payments increasing annually.

The bonds will be issued in two series simultaneously - Series A up to $70.6 million tax-exempt bonds with a 4 percent estimated interest and Series B up to $32.2 million taxable bonds with 4.5 percent estimated interest.

The bonds are expected to be sold next month.

As part of the overall redevelopment project, the state will be providing the city with a grant to construct a parking garage that will be leased to Madison Downtown Holdings. It will be built on the south side of Madison Street and property owned by the private developer.

Mr. Stearns said the city will own the garage and assess real estate taxes on it to Madison Downtown Holdings under state law that allows for the assessment of city-owned property to a private-end lessee/user.

The auditor said real estate taxes on the parking garage are expected to make up 15 percent of total phase one revenue.

In addition, parking revenues at municipal-owned parking facilities for ballpark home games and other events held there are projected to be nearly $600,000 annually, or roughly 16 percent of total project revenues.

Meanwhile, hotel room taxes are expected to generate $517,000 during the first year the two new hotels are opened, based on 70 percent occupancy rates. Meals taxes at the ballpark are expected to generate $47,000 in revenue, while meals taxes at other restaurants in that are expected to generate another $27,000 in revenue.

Assumptions in the proforma also have daily in-park attendance for ballgames at about 6,300 for 66 home games, or close to 420,000 fans for the baseball season.

"According to team officials this represents a significant yet reasonable increase over in-park attendance in recent years in Pawtucket, and the team estimates the assumption is within the range of expectations for recent new Triple-A affiliates," Mr. Stearns wrote.

"This in-park projection also does not include non-game visitors which, according to the team are expected to far surpass the current in Pawtucket," he added. "New urban ballparks, with walkability to other entertainment venues, would expect to produce a spike in attendance."

Mr. Stearns said the ball club plans to meet its long-term rent obligation from revenues based on higher attendance and sponsorships.

"The team attests that all of the highest revenue teams in Triple-A have benefited from new facilities, and those that have moved to a new location have enjoyed some of the greatest success," he wrote.