Worcester City Council Agenda Preview: November 19, 2024
Ballpark financing, WPI pays taxes on those hotels, pickleball
The City Council meeting is Tuesday at 6:30 p.m. The agenda is here.
This week: Ballpark financing, WPI pays taxes on those hotels, pickleball.
Zoom link: https://zoom.us/j/91727574825
Resident Permit Parking: There are requests to make parking on Kendig Street and part of Ward Street resident-only. These will go to the Parking Committee for discussion.
Pickleball: Former City Councilor Rick Rushton has a request that the city establish “at a minimum 30 pickleball courts.”
Boards and Commissions: The Manager has appointed Chizoma Nosike and Matthew Torrey to the Elder Affairs Commission.
WPI Buying Those Hotels: You will recall that WPI bought two large hotels to convert to student housing, angering the powers that be. Defying my expectations, the Manager has worked out a deal where WPI will pay some taxes it does not strictly have to pay. One of the hotels will become student housing in 2026, the other in 2030. Until then, both hotels will operate and pay taxes as hotels. According to the terms of this new deal, WPI will pay full taxes on the 2026 property for a few years even after it’s become student housing, and will pay 50% taxes on both properties for 5 years even after both are student housing. I’m guessing that WPI will end up paying the city $6 million more than it has to, maybe doubling its existing “payments in lieu of taxes” over the next decade.
The Latest Bad Ballpark News: The city’s CFO has a memo noting that this year the city will not be collecting as much money from Polar Park and related developments as it had projected, and will need to find an extra $792,000 to cover ballpark debt payments. Below, Nicole Apostola tries to explain exactly what is going on here.
Polar Park Notes
by Nicole Apostola
Since the beginning of the Polar Park project, the city administration has provided sporadic financial updates about Polar Park, none of which look like financial reports or statements, and the City Council periodically thinks about whether there should be real oversight (either by the Council or by the Ballpark Commission) and always decides against it.
In a different city, Worcester CFO Tim McGourthy’s memo (Item 9.30A) would be the impetus to asking for greater transparency into ballpark finances and the intricacies of the ballpark’s DIF (District Improvement Financing Plan) and debt payment schedule. Mr McGourthy’s memo is an “informational communication” that appears to say that the general fund needs to cover $792,000 for ballpark debt payments.
At the beginning of FY24, the DIF reserve balance was $954,487; rent revenue was $2,410,000, parking revenue $879,150, advertising/rental/event revenues $165,482, and DIF revenue $2,340,000. The debt service payments for FY24 were $6,200,000. They were expected to pull $319,194 from the DIF reserve; as things stand right now, the memo says the DIF reserve end balance is $235,000.
In July, the city was expecting that the DIF reserve end balance would be in the positive, “an anticipated increase in the DIF reserve of $135,000.” Now, it appears, they were off by nearly a million dollars.
Mr McGourthy says, “The DIF carries a balance owed back to the City’s General Fund that, over the course of the 30-year lifespan, will ultimately be reconciled. We still anticipate the DIF Reserve to generate nearly $50M through its completion by 2048.” However, the DIF Reserve is supposed to be used to pay off the debt associated with the ballpark and other development; it’s unclear how a nearly $800k “loan” now will repay the general fund with a white elephant in 30+ years’ time.
The memo leaves more questions than answers, and I hope that the Council will ask some of these questions at Tuesday night’s meeting:
The most important question is about what exactly is being communicated. This was sent to the council as an informational communication, not as a request to transfer funds. Is this an early notification of a payment that they’re going to have to make, but don’t have to make yet? When is the payment due? Note that the Council needs to approve any transfers of funds. The budget was voted by the Council in June. There were no allocations from the general fund to pay off the ballpark debt. If there is a request for general funds to pay off ballpark debt, there needs to be a formal request, and the Council needs to be told where the funds are coming from.
How were projections so wrong about the DIF reserve balance?
Why is the city administration unable or unwilling to provide actual financial statements (revenue/expense, asset/liability, debt payment schedule) when it comes to the ballpark?
If the DIF will be in the black by the end of the calendar year, why can this not be looked on as a loan that should be paid back to the general fund within the year, not within 30 years?
This year was an unusual year for the DIF and paying off debt. We were still riding high on the sale of a $3 million property in 2021. There are now no more properties we can sell. If we are having trouble with consistent revenues now, and the debt payment will continue to go up, what does that mean? Will the city need to cut services to subsidize the ballpark?
