Mattiello’s PawSox Plan May Increase Cost by $25 Million
GoLocalProv News Team
Mattiello’s PawSox Plan May Increase Cost by $25 Million
According to John Simmons of the Rhode Island Public Expenditure Council (RIPEC), if the new bond structure proposed by Mattiello is adopted the additional borrowing cost could increase by as much as $800,000 a year for the term of 30 years. The very complex financing structure will also drive additional costs.
The premise of the Mattiello financing structure is an unusual funding structure leveraging tax incremental financing, but the use of this structure raised questions for nearly every speaker who testified before House Finance Committee.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTTestifying in favor of the new legislation were Pawtucket Mayor Don Grebien, Commerce Secretary Stefan Pryor, and a number of Rhode Island union leaders including the AFL-CIO's George Nee.
Mattiello is pushing this more costly structure because he claims it will remove the obligation to Rhode Island taxpayers if the bonds fail. Sharon Reynolds Ferland, the House Fiscal Advisor, testified that the bonds would be “non-recourse” and therefore the bondholders would have no action or claim against the state.
A similar scenario came true in 2014.
Newly elected Speaker Mattiello announced in mid-April of 2014 that Rhode Island should repay bonds that financed the failed 38 Studios deal. A large number of Democrats and Republican lawmakers said the state should default as the bonds were revenue bonds, investors knew the risk and the bonds carried a rider insurance policy that could be triggered in case there was a threat of default.
Mattiello, who had been House Majority Leader, came to the speakership that spring after then-Speaker Gordon Fox's office was raided by federal authorities. Ultimately, Fox pled guilty to multiple federal crimes including bribery and was sent to Federal prison. He was released in 2017.
"We need to pay to protect the credit rating of Rhode Island," he said after a caucus with fellow Democrats. "I am not going to put Rhode Island on the default list. The reputation of the state will not be harmed any further."
Mattiello came to the conclusion for the need to backstop the 38 Studios’ bonds after he and then-Majority Leader John DeSimone drove to New York City earlier that week and met with representatives of Moody's and Standard & Poor’s.
The two rating agencies had warned state officials of downgrades to state bonds, possibly by multiple notches, if the state defaulted.
The lower the bond rating, the higher the cost of borrowing. No state official or legislators could answer how if the Mattiello bond structure being run through the Pawtucket Redevelopment Agency failed who would be responsible.
In 2014, the scenario was that while there was no legal requirement to repay so-called moral obligation bonds — the type used in the deal that gave 38 Studios a $75 million state-guaranteed loan — Mattiello said: "a moral obligation is your commitment to pay.”
Other twists in the ever-changing PawSox deal is who did and who did not attend House Finance Committee hearing to testify. First, neither Larry Lucchino nor any of the other owners or leadership of the PawSox attended the hearing. It was unclear if they are still analyzing the new financing scheme or if they were told by House leadership to stay away.
The other wildcard in this is Steve Frias, the GOP leader who narrowly lost to Mattiello is 2016 by less than 100 votes. Frias testified that he has been going door-to-door in the district and says that more than two-thirds are opposed to public financing of the proposed stadium and that he has more than 250 signatures of residents who are urging state leaders to reject a public subsidy to the private PawSox ownership. Frias has refused to say if he is running again against Mattiello.
GoLocal: Benchmark Poll, October 2017
Sponsor: GoLocalProv
Sample: N=403
Rhode Island General Election Voters Margin of Error: +/- 4.9% at 95% Confidence Level
Interviewing Period: October 9-11, 2017
Mode: Landline (61%) and Mobile (39%)
Telephone Directed by: John Della Volpe, SocialSphere, Inc.
Are you registered to vote at this address?
Yes: 100%
When it comes to voting, do you consider yourself to be affiliated with the Democratic Party, the Republican Party, Moderate, or Unaffiliated with a major party?
Unaffiliated: 49%
Democrat: 32%
Republican: 15%
Moderate: .4%
Next year, in November of 2018, there will be a statewide general election for Governor and many other state offices. How likely is it that you will vote in this election?
Will you definitely be voting, will you probably be voting, are you 50-50...
Definitely be voting: 78%
Probably be voting: 13%
50-50: 9%
In general, would you say things in Rhode Island are headed in the right direction or are they off on the wrong track?
Right track: 39%
Wrong track: 45%
Mixed: 10%
Don't know/Refused: .6%
What would you say is the number one problem facing Rhode Island that you would like the Governor to address?
Jobs and economy: 21%
Education: 12%
Taxes: 12%
Roads: 12%
State budget: 9%
Corruption/Public integrity: .8%
Healthcare: 3%
Governor: 3%
Homelessness: 2%
Immigration: 2%
Other: 7%
Don’t know: .9%
Over the past three years or so, would you say the economy in Rhode Island has improved, gotten worse, or not changed at all?
Changed for the better: 35%
Changed for the worse: 16%
Not changed at all: 43%
Don't know/Refused: 5%
Over the same time, has your family's financial situation improved, gotten worse, or not changed at all?
Changed for the better: 26%
Changed for the worse: 19%
Not changed at all: 54%
Don't know/Refused: 1%
Recently, a proposal has been made to permit the issuance of $81 million in bonds by the State to build a new stadium for the Pawtucket Red Sox. If there was an election today on this issue, would you vote to approve or reject issuing $81 million in financing supported moral obligation bonds to build the stadium?
Net: Approve: 28%
Definitely approve: 15%
Probably approve: 14%
Net: Reject: 67%
Probably reject: 19%
Definitely reject: 48%
Don't know: 4%
Could you please tell me your age?
18-24: 7%
25-34: 15%
35-44: 15%
45-54: 20%
55-64: 17%
65+: 25%
Don't know/refused: 1%
What was the last grade you completed in school?
0-11: 2%
High school grad: 16%
Technical/Vocational school: 1%
Some college: 23%
College grad: 34%
Graduate degree: 24%
Don't know/refused: 1%
The next question is about the total income of YOUR HOUSEHOLD for the PAST 12 MONTHS. Please include your income PLUS the income of all members living in your household (including cohabiting partners and armed forces members living at home).
$50,000 or less: 27%
More $50,000 but less than $75,000: 13%
More $75,000 but less than $100,000: 13%
More $100,000 but less than $150,000: 17%
$150,000 or more: 13%
Don't know/refused: 17%
What particular ethnic group or nationality - such as English, French, Italian, Irish, Latino, Jewish, African American, and so forth - do you consider yourself a part of or feel closest to?
American/None: 21%
English: 13%
Italian: 13%
Irish: 12%
Black or African American: 6%
Latino/Hispanic: 6%
French: 6%
Portuguese: 3%
Jewish: 3%
German: 1%
Would you say that Donald Trump has done an excellent good, fair or poor job as President?
Excellent: 13%
Good: 12%
Fair: 14%
Poor: 57%
Never heard of: 0%
Cannot rate: 3%
Would you say that Jack Reed has done an excellent good, fair or poor job as a United States Senator?
Excellent: 22%
Good: 29%
Fair: 23%
Poor: 15%
Never heard of: 6%
Cannot rate: 6%
Would you say that Sheldon Whitehouse has done an excellent good, fair or poor job as a United States Senator?
Excellent: 17%
Good: 22%
Fair: 21%
Poor: 28%
Never heard of: 6%
Cannot rate: 7%
Would you say that David Cicilline has done an excellent good, fair or poor job as a Member of Congress?
Excellent: 9%
Good: 29%
Fair: 21%
Poor: 27%
Never heard of: 6%
Cannot rate: 8%
Would you say that James Langevin has done an excellent good, fair or poor job as a Member of Congress?
Excellent: 7%
Good: 30%
Fair: 20%
Poor: 18%
Never heard of: 13%
Cannot rate: 11%
Would you say that Gina Raimondo has done an excellent good, fair or poor job as Governor?
Excellent: 6%
Good: 28%
Fair: 30%
Poor: 31%
Never heard of: 1%
Cannot rate: 3%
Would you say that Daniel McKee has done an excellent good, fair or poor job as Lieutenant Governor?
Excellent: 3%
Good: 16%
Fair: 21%
Poor: 8%
Never heard of: 26%
Cannot rate: 25%
Would you say that Peter Kilmartin has done an excellent good, fair or poor job as Attorney General?
Excellent: 3%
Good: 20%
Fair: 28%
Poor: 17%
Never heard of: 13%
Cannot rate: 19%
Would you say that Seth Magaziner has done an excellent good, fair or poor job as General Treasurer?
Excellent: 4%
Good: 18%
Fair: 24%
Poor: 13%
Never heard of: 21%
Cannot rate: 21%
Would you say that Nellie Gorbea has done an excellent good, fair or poor job as Secretary of State?
Excellent: 5%
Good: 21%
Fair: 21%
Poor: 10%
Never heard of: 20%
Cannot rate: 23%
Would you say that Jorge Elorza has done an excellent good, fair or poor job as Mayor of Providence?
Excellent: 4%
Good: 24%
Fair: 24%
Poor: 22%
Never heard of: 9%
Cannot rate: 15%
