Raimondo’s Close Friend Sen. Booker Pushing Federal Bill that Would Kill PawSox Deal
GoLocalProv News Team
Raimondo’s Close Friend Sen. Booker Pushing Federal Bill that Would Kill PawSox Deal
Booker and U.S. Senator James Lankford (R-OK) are sponsoring the bipartisan legislation that would prohibit teams from using municipal bonds - whose interest is exempt from federal taxes - to help finance stadium construction.
Booker and Raimondo were college classmates and have been strong supporters of one another. And, Pryor -- who drafted the PawSox’s $83 million financing scheme -- worked as head of economic development for Booker when he was Mayor of Newark New Jersey.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTOn Thursday of last week, the Rhode Island State Senate held its first of six public hearings. The first four hours of speakers were loaded with supporters of the draft legislation that would provide $38 million in bond financing by the State of Rhode Island and the City of Pawtucket. Opponents were first allowed to speak at the hearing, which started at 6 p.m. - after 10:00 p.m.
Federal Legislation
“Professional sports teams generate billions of dollars in revenue. There’s no reason why we should give these multi-million-dollar businesses a federal tax break to build new stadiums,” said Booker. “It’s not fair to finance these expensive projects on the backs of taxpayers, especially when wealthy teams end up reaping most of the benefits.”
Despite billions of dollars of federal funding flowing toward these projects, stadiums have proven to have limited to no impact on local economic development. In fact, twenty years of research finds that “there is no statistically significant positive correlation between sports facility construction and economic development,” particularly across income growth or job creation," said the Senators.
For definition purposes, “A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools (or baseball stadium)."
For the two U.S. Senators, their complaint zeroes in on the loss of federal tax revenue, which they estimate to be more than half a billion annually.
No Positive Economic Impact of Sports Stadiums
The Brookings Institution’s report found that, in part sparked the federal legislation, “The evidence for large spillover gains from stadiums to the local economy is weak. Academic studies consistently find no discernible positive relationship between sports facility construction and local economic development, income growth, or job creation.”
The report goes on to say, “Articles published in peer-reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.”
Booker is considered to be a leading Democratic contender for President in 2020.
7 Questions the PawSox Need to Answer in Hearings
Who is responsible for the environmental clean-up costs?
As GoLocal exclusively reported in May, the owners of the Apex site in Pawtucket and the previous owners are battling in Superior Court over indemnification provisions from more than $6.4 million in environmental clean-up costs tied to the land being eyed for the new PawSox Stadium.
The two parties include Andrew Gates of Apex Development Company who purchased the property for $24 million and a number of members of the prominent Fain family, who previously had ownership interest in the property.
Gates’ entity purchased the property in December of 1998 according to city tax records and the property is now assessed at just under $4.3 million — a drop of nearly $20 million in value.
Who is on the hook for the public subsidy (and the entire Stadium cost)?
Critical to the proposal gaining approval by legislators and building public support is that financing costs are not backstopped by taxpayers. Presently, that is in question.
Seth Magaziner, RI's General Treasurer, has raised the red flag about the proposed legislation, “The debt study that we did, no surprise, the liabilities of the City of Pawtucket are pretty high. That being said, the legislation as introduced does suggest that there’s a state backstop.”
He made the comments in an interview with WPRI.
Why should a group of billionaires receive a public subsidy for their sports team?
The owners of the PawSox have a combined personal wealth that makes them among the most wealthy ownership groups in all of professional sports.
READ MORE ABOUT THE OWNERS HERE
Their fortunes are linked to CVS, Providence Equity, Fleet Bank, TJX, and the Boston Red Sox. Unlike the previous owner, the late Ben Mondor, this group has refused to meet the public or speak to the media.
Can Pawtucket support the debt obligation?
While bond rating agency Moody's ranks Pawtucket's future outlook as stable. Moody's flags factors:
Credit Challenges:
Large unfunded pension liability
High fixed costs (combined pension, OPEB costs and debt service)
Low wealth and income indicators
Increasing debt
Weak tax base growth
They Have Political Support - Will Raimondo Flip Again?
Proponents, including the ownership group, must feel that Rhode Island is moving quicksand. Governor Gina Raimondo supported the Providence stadium plan until she didn't.
She supported the initial financing structure for the Pawtucket location, negotiated by her Secretary of Commerce Stefan Pryor, then flipped on that proposal and announced her opposition.
Now, she is supportive of the pending stadium deal. Is she willing to bet her re-election on it?
38 Studios, St. Joseph Pension Fund Bankruptcy, and Wrong Track RI
There may only be one Rhode Islander who loves RI's inability to properly review critical financial deals -- Attorney Max Wistow who sued to recover 38 Studios assets and now has been engaged to investigate the largest pension fund (St. Joseph Health Services) collapse -- just three years after the RI Attorney General Peter Kilmartin gave the sale of St. Joseph's assets the green light.
The 38 Studios deal under minded confidence and now the recent failure of St. Joseph's bankruptcy has only fueled the concern that RI cannot properly review financial deals.
Opposition - can they be mollified?
From Libertarians to Republicans to Progressive Democrats -- there is a sweeping array of opponents to the proposed public subsidy. See VIDEO
