Lead Investor In Pawtucket Stadium Specializes in "Risky Bonds" for Charter Schools and Energy

Lead Investor In Pawtucket Stadium Specializes in "Risky Bonds" for Charter Schools and Energy

The lead private investor in the controversial minor league soccer stadium in Pawtucket has a track record of investing in “riskier state and local government bonds.”

The stadium is scheduled to be completed years late and at nearly twice the cost that was first promised. The first game is scheduled for May. The project was first proposed more than five years ago.

Rhode Island taxpayers are on the hook for more than $143 million in bond payments.

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Taxpayers started making payments in June of 2024, and taxpayers will be making annual payments of between $4 million and $5 million a year until June 15, 2053. The payments include both principal and interest.

Governor Dan McKee pushed the state's funding scheme forward despite warnings from the City of Pawtucket's advisory firm.

In November of 2023, GoLocal unveiled the warning.

In a letter to Pawtucket Mayor Donald Grebien and Bianca Policastro, the executive director of the Pawtucket Redevelopment Agency, three top Hilltop Securities executives notified the city of the firm's resignation.

“As you know we have detailed concerns about the proposed stadium transaction and bond offering. As a fiduciary to the City of Pawtucket and its development agency…we must do what we believe is in the City’s and PRA’s best interest,” said the letter.

Despite the massive investment into the stadium. The stadium will be owned 100% by private interests led by Brett Johnson.

 

Investment Group - Rosemawr Management

The lead investment firm in the stadium is Rosemawr Management, founded by Greg Shlionsky, a former managing director at the failed Lehman Brothers.  In 2008, Lehman filed for bankruptcy, which was a seminal moment in sparking The Great Recession.

According to a report in Bloomberg in 2023, “Rosemawr Management, an investment firm that focuses on riskier state and local government bonds, is repackaging a $500 million pool of unrated debt backed by charter schools into new securities, marking a rare effort to bring the practice to one of the bond market’s safest havens.”

“The firm is bundling bonds from 26 charter schools in 11 states and reselling them as new debt through a Wisconsin agency, the Public Finance Authority. The sale borrows a technique frequently used in other corners of Wall Street, where banks routinely bundle and resell pools of lower-rated debt to insulate investors,” added Bloomberg.

For years, developer Johnson repeatedly refused to release the names of investors in the project despite receiving tens of millions in public subsidies.

In August of 2023, GoLocal asked who the additional investors were in the newly announced round of capital. Johnson's spokesman, Michael Raia, said, "We’re not releasing the names of private investors."

When asked by GoLocal in 2023, "If the taxpayers are investing the majority of the money for this project, shouldn't the public know who the investors are?" Raia refused to respond.

The stadium has been delayed repeatedly. The construction site was shut down in June of 2023 due to a lack of funding.