McKee blames Pawtucket soccer stadium money woes on Fed's series of interest rate hikes
Gov. Dan McKee Tuesday blasted the U.S. Federal Reserve for interest rate increases he believes were too large, too rapid and hurt projects like the under-construction Pawtucket professional soccer stadium.
"I have taken a very strong position that what the Fed is doing accelerating interest rates is not in the best interest of the people of the state of Rhode Island," McKee said at the State House. "They need to stop the increases, halt any increases and start decreasing that interest rate."
Of the stadium specifically, McKee said, there is "no reason a project that has 80% of the funding either in cash or grants from the state should not be able to qualify for a 20% loan on a first position."
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The loan McKee was referring to is a $36-million bond public loan (netting $26 million to the developer) from Pawtucket and the state. This Tax Increment Financing bond would be repaid with state and local tax revenue generated around the stadium area.
Last week, McKee administration officials and Pawtucket Mayor Donald Grebien's office said that the public bond had not been issued because developer Fortuitous Partners has not come up with the rest of the money to complete the project and taxpayer dollars were being protected.
His comments Tuesday suggest even public borrowing is being curtailed by rising rates.
McKee said he spoke on the phone with Fortuitous Partners co-founder Brett Johnson last week about the stadium project and was reassured it will be completed.
"I have full confidence that that project is going to get done," McKee said. "[Fortuitous] are holding up their end of the bargain in terms of bringing equity to the table. They have actually exceeded it at this point in time. The state is ready to keep its commitments. I believe Pawtucket will keep its commitments."
Earlier on Tuesday, the Pawtucket Redevelopment Agency – the city agency slated to issue the public bonds – met but took no action on the $124-million stadium project.
"We've done all our approvals that we can do; the City Council has done theirs. We are just waiting," Larry Monastesse, chairman of the Pawtucket Redevelopment Agency, told reporters after coming out of a closed-door discussion. "It will fall one way or another, either they get financing or they don't. When that happens, that is when we will probably meet again to determine what to do, where we go from there."
The financing plan approved by the state Commerce Corporation last summer called for the developer to spend $45.5 million, take out a $31.5-million private loan, receive $26 million from the public loan, $10 million in state tax credits and $10 million in federal COVID aid from the city. (The tax credits, which are only awarded after construction is done, would cost the state $14 million total.)
Monastesse said he believes Fortuitous is still trying to raise capital apart from closing on the loans.
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Fortuitous Partners began building the foundation of the stadium this winter and construction workers continue to build at the stadium site on the west bank of the Seekonk River.
It is unclear how long work will go on without the rest of the financing package going through.
Asked if he is concerned about the city being stuck with a half-built stadium, Monastesse said he is, but "as long as they keep working, somebody is paying them."
Fortuitous spokesman Mike Raia wrote in an email Tuesday that the firm "has invested nearly $25 million of private capital to begin construction on the stadium."
"Work would not have started or advanced to this level if there were not complete confidence in the full capital stack being raised," he said. "The process remains ongoing and there is a pathway for completion in the near future."
House Speaker K. Joseph Shekarchi on Tuesday said neither Fortuitous nor McKee have asked the House for more state money. And he said he was uncertain whether the public would accept a larger state investment.
Stadium skeptics Tuesday saw McKee's appeal to Powell as a sign of desperation.
"Thank you, Chairman Powell. The Federal Reserve's job is to stop inflation, not to save idiotic projects like PawSoccer or the Superman Building," Republican National Committeeman Steve Frias tweeted. "Killing inflation for everyone is more important than saving these boondoggles for RI pols and insiders."
Over the weekend, Rhode Island FC, the team Fortuitous hopes will play in the second tier of U.S. professional soccer starting in 2024, said it was exploring alternative venues in case the stadium isn't ready.
Pawtucket Planning Director Bianca Policastro said she was unaware of any alternative locations in the city under consideration, and McCoy Stadium is not likely to be in a condition to host any events.
This article originally appeared on The Providence Journal: McKee blames Pawtucket soccer stadium woes on interest rate hikes