A lot of backlash has erupted recently over the proposal to replace McCoy Stadium with a facility in downtown Providence as the new home to the Red Sox AAA affiliate.
As a fiscal conservative, I can appreciate the reluctance of the Rhode Island public to commit taxpayer money to assist private endeavors in any way, but I want to go on record to declare that once you wade through the fog of half-reporting, and get to the facts of this proposal, we've actually been handed a favorable offer with which to begin negotiations.
To begin, we should look at the basic facts, and we can build from there.
The new ownership of the team has requested use of two parcels of land freed up by the relocation of I-195, on which they propose to build a waterfront facility. The proposal would allow the owners to lease the facility to the state for five million dollars per year, and allow the state to sublease it to the team for one million dollars annually. They are also requesting to be exempt from property taxes to the city of Providence.
There are a great deal of items to pick apart here.
First, we should address the parcels in the cross-hairs. Up until this past year or so, the two parcels were a singular lot, destined to become a public park connecting to another park on the east side of the river via a pedestrian bridge. The western park was then divided into two parcels for the sake of either increasing the potential revenue to the state by creating an additional lot to sell, or to create a framing structure to buffer the park from noise from the adjacent street. One way or another, the original plans for the park were pared down to accommodate this plan. This was met with a some spirited debate within the "urban development/civil engineering" community, but very little uproar or fanfare in general.
Second, we should address that this was originally intended to be a public asset that would cost us more than it would generate in "direct" terms. That being said, we should establish that the original goal of this land was never to generate income for the city nor the state in any direct fashion, and would have had to have been maintained by taxpayer money.
Third, under the new ownership of the Red Sox affiliate team, the goal, like it or not, has apparently never been to stay at McCoy Stadium, and I can understand this reasoning to an extent.
Here's where we get into the details of the proposal.
The owners are seeking some public collaboration on the move to a prime location in downtown Providence. What they are building is a facility that can accommodate much more than a minor league baseball team alone can utilize fully. The plan is for a facility that is malleable enough to host football, soccer, rugby, lacrosse, live performances, etc. This opens up a range of potential programming that could oblige the desires of local colleges, public schools, or expansions of arts endeavors. This essentially becomes an amenity for the city and state at large. That being stated, the proposal to lease a space to the state for a seemingly initial loss of four million dollars a year takes on a new dynamic when we consider the other means of generating recuperating income, the first of which would be an, at least, fifty percent addition to subleasing revenue.
Our second means of income to consider is the state sales tax. The new ownership has tossed out a figure of two million dollars annually. While this may be an optimistic figure to throw out at the onset, this figure certainly swells to a larger figure when considering the potential added revenue encouraged by the other events to be held in such a venue.
Unlike McCoy stadium, this facility is located near countless other options to make for a complete day/night out, so not only would the state reap the rewards of additional spending in an immediate area, but this will also have a measurable impact on the employment possibilities of surrounding service establishments. Which takes us to another avenue of recuperating expenses, state income taxes. The projected annual revenue from state income taxes related to this project in isolation is certainly considerable if taken at a conservative reading of face value, but it extends well beyond the perimeter of the facility. When factored in, state income taxes may very well offset about half of the projected four million dollar state burden, and that's before factoring inflation over the time of this thirty year agreement.
This brings us to our last revenue source, the Keynesian predictability of inflation. Without a doubt, barring some national change in monetary policy, inflation will continue at some pace. Regardless of what that pace is, we are agreeing to a locked-in dollar amount over thirty years. As the cost of nearly everything increases, the state will only be beholden to four million dollars a year. That is while wages rise (along with state income tax revenue), while prices rise (along with sales tax revenue), and while the cost of holding functions rises (which allows greater charges on subleases). These things considered, the state stands to hold the sole lease on a money-generating asset that will likely far offset any public investment, especially when you consider it as an amenity to spur more ambitious development in the surrounding area, but if I were to have a qualm with this proposal, it would not involve the state.
At the end of the day, the primary facet that I would seek to amend in this proposal is the request to be exempt from property taxes paid to the city of Providence. So, as long as the current proposal maintains its plan to respect the river-walk and pedestrian bridge, my sole concern is that Providence will have to foot the bill for additional infrastructure or emergency services without any proper compensation. This being said, that would be my main focus on a negotiation over this proposal.
Aside from that, we keep a team, raise our profile, add amenities to our capital city, and make some money in the process.