Tax incentives key for PawSox stadium, land development in Worcester
WORCESTER — Three tax-relief deals are a central part of the financing plan brought forward by City Manager Edward M. Augustus Jr. for the redevelopment of the former Wyman-Gordon property near Kelley Square and building a minor league baseball stadium there.
As part of that plan, Mr. Augustus is recommending tax-increment financing incentives for the developer of two hotels being proposed and a tax-increment exemption incentive for the proposed market-rate residential development.
The incentives would provide Madison Downtown Holdings, LLC, the developer of the private portion of the redevelopment project, with property tax savings totaling $5.6 million over the life of the three deals.
At the same time, the city will be collecting $20.3 million in additional taxes on those properties that it otherwise would not have collected if they remained in their current state.
The property taxes generated by the new private development will be used by the city to help pay off the bonds that will be taken out to finance the public construction of the baseball stadium.
Mr. Augustus said the incentives have been included in the financing plan in return for the developer’s willingness to convey to the city, at no cost, the Wyman-Gordon parcels on the north side of Madison Street.
That is where the city plans to build a ballpark for the minor league baseball team to be known as the Worcester Red Sox, which has agreed to move here from Pawtucket for the start of the 2021 season.
Madison Downtown Holdings will be acquiring from Wyman-Gordon 18 acres of largely vacant and blighted land located on the north and south sides of Madison Street. It plans a mixed-use development there, with residential, commercial and office space components.
One of the hotels it is proposing would be located on the south side of Madison Street and have of about 150 rooms, while the second hotel would be built on the north side and have about 100-110 rooms.
Mr. Augustus said the hotel to be built on the south side of Madison Street is expected to have an assessed valuation after completion in the range of $14 million to $15 million.
For that building, he is proposing local property tax relief through a so-called “TIF” deal that would provide a 40 percent tax exemption for the first five years and a 35 percent tax exemption for five years after that.
That means the developer would continue to pay full taxes on the current assessed value of the property plus taxes on 60 percent of the increased incremental value during the first five years and on 65 percent of the increased value in the following five years.
The TIF schedule would begin on July 1, 2021, and run through June 30, 2031. The exemption will average 37.5 percent over 10 years.
Mr. Augustus said the dollar value of the tax savings for the developer is currently estimated to be about $1.9 million over the life of the TIF, while the incremental taxes to be received by the city is currently estimated at $3.3 million over that same time span.
The manager said the city expects that about 50 full-time jobs will be created at that property.
The second hotel, a boutique hotel to be constructed on the north side of Madison Street, is expected to have an assessed value after completion in the range of $11 million to $12 million.
Mr. Augustus is recommending a TIF with a 20 percent tax exemption for 20 years for that building.
The developer will continue to pay full taxes on the current assessed value of the property plus taxes on 80 percent on the increased value resulting from the construction.
The dollar value of the property tax savings for that deal is currently estimated at about $1.8 million over the life of the TIF, while the city expects to collect about $7.5 million in property taxes during that time.
The manager added that the city expects that about 35 full-time jobs will be created at that property.
That TIF will begin on July 1, 2021, and run through June 30, 2041.
Meanwhile, the 250-unit apartment complex that is being proposed for the southerly side of Madison Street is expected to have an incremental assessed valuation after completion of about $28 million, according to Mr. Augustus.
For that phase of the project he is recommending a 15-year, property tax-relief deal, known as tax-increment exemption.
It calls for an exemption of 15 percent for the first five years, 20 percent for the second five years and 25 percent for the last five years.
The developer would pay full taxes on the current assessed value of the property, and then pay taxes on 85 percent of the increased assessed valuation during the first five year, 80 percent of the increased value during the second five years and 75 percent during the final five years.
The tax exemption will average 20 percent over 15 years.
Mr. Augustus said the tax savings over the life of the TIE plan would be about $1.9 million, while the taxes received on the property during that time are estimated at $9.5 million.
That deal would run from July 1, 2012 and run through June 30, 2036.
The entire financing package will formally go before the City Council Tuesday night, at which time it will refer it to its Economic Development Committee for review and public hearings.