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The City of Pawtucket, the Pawtucket Red Sox (‘PawSox’), and the State of Rhode Islandhave partnered to propose the construction of a ‘Ballpark at Slater Mill’ (‘Ballpark’). The estimated cost of building the Ballpark is $96 million, which includes site preparation costs ($10 million), the actual construction of the Ballpark ($73 million), and $13 million in additional financing costs. The vast majority of this cost (all but $12 million in equity that the PawSox will be contributing up front) will be covered by selling bonds, which is how public infrastructure projects are typically financed. As a result of financing through bonds, the state will need to allocate $1.5 million every year for the duration of the 30-year bond, while the expectation is that the state will recover more than enough through additional tax revenues to cover this obligation.
The state would only be directly responsible for the bond payments of its partners if it chooses to ‘backstop’ their bond issues (meaning they would enter a legally binding agreement to honor their bond financing payments in the event the other parties weren’t able to). Even without a formal ‘backstop’ on Pawtucket’s bond issue, the state could find itself responsible for the city’s payments in extreme circumstances.1
Investing in public infrastructure is generally a positive thing for governments to do, supporting good jobs and contributing to economic recovery.2 This proposed public private partnership (PPP) investment in publicly owned infrastructure raises many important questions, which this policy brief addresses.
The following discussion outlines the range of issues that policy makers need to consider before proceeding with an investment of public money in a new stadium for the Pawtucket Red Sox: