Worcester Business Journal

6 Worcester Business Journal | February 3, 2020 | wbjournal.com Economists: e WooSox stadium rising costs and surrounding development delays make it harder for the city to fulfill its promise of the project paying for itself Odds increase against Polar Park breaking even BY GRANT WELKER Worcester Business Journal News Editor W hen news broke in January about the costs for the new stadium for the Worcester Red Sox being more than $30 million over bud- get, city leaders were virtually uniform in their response: ese things happen in a complicated project. Sports economists who study these types of municipal projects had the same response – except with a far different tone. e more than half dozen economists interviewed by WBJ said the cost overruns will make Polar Park far less likely to come close to paying for itself aer it opens in 2021, a claim Worcester officials have been steadfast in making, but one economic experts have steadfastly said will never come to fruition. And the city's proposed expansion of a special tax district will only further affect the rest of the city's finances, they said. e tax district will enable Worcester to collect new taxes and direct them toward paying off the park, but it'll also take new tax revenues away from the city's general coffers, which help pay for services throughout the city. "A lot of the time, these things just draw businesses away from other areas," said Michael Leeds, an economics professor at Temple University in Philadelphia. e city has said all along that the ballpark will pay for itself through new tax revenue generated in a special tax district surrounding Polar Park, along with additional revenue like parking fees. e ballpark wouldn't exist if not for planned new development and vice versa, City Manager Edward Augustus said at a City Council meeting Jan. 14. "at's why they're building hotels across the street," he said of the ballpark's impact. "at's why they're building housing across the street, and office buildings and retail." Augustus called using revenue from new development to pay for the park "the magic of the deal," and predicted people would come from around New England to spend the weekend in Worcester to see a game. "e people of Worcester get it," he said. "ey get how consequential it is." Reaching for a high bar But the threshold for a ballpark truly paying for itself is high, industry experts say. First, related development needs to take place as hoped for, and on schedule. at ensures new revenue that's relied on to help pay for the stadium costs comes in as expected. Second, that development would have to be proven to have become reality only because of the ballpark, and not because of broader economic factors. In other words, if a new project next door were likely to have taken place anyway, the public funding wasn't necessary. ird, people would need to spend money in or around the ballpark in addition to their usual leisure spending, and not simply as part of it. Going to a game, economists say, almost always takes place instead of, say, going bowling or spending a night at a brewery. Leisure dollars, therefore, are simply moved around, meaning the money spent at the ballpark would have been spent elsewhere anyway. "And ballparks create crowds and congestion that requires a net increase in emergency services and transportation infrastructure," Roger Noll, an economist at Stanford University, said. Lastly, creating a special tax district can't come at the expense of other city needs. is, in the eyes of economists, may be the hardest task, if not an impossible one. e city will not be taxing these properties at higher rates but instead take extra tax revenue in the coming decades and devote that toward paying off the stadium bond. "is is not a victimless increase," Worcester City Manager Edward Augustus: "The people of Worcester get it." Polar Park is exepcted to open on Madison Street in Worcester in April 2021 to host the Worcester Red Sox. RENDERING COURTESY OF WORCESTER RED SOX

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