PAWTUCKET, R.I. — The city, state, and a private developer have closed on the financing for the Tidewater Landing soccer stadium here, setting the project on a path for completion in 2025 even amid continued cost hikes, the parties said Thursday.
In the year and a half since the state first approved public borrowing on the deal, the cost to pay off the state’s biggest portion of support for the project has more than doubled, from about $60 million to about $132 million over 30 years. But the deal, after delays and controversies and questions, is done.
“We are all extremely pleased to reach this important milestone and further accelerate the construction of The Stadium at Tidewater Landing,” the city, state, and private parties in the development said in a joint statement.
The roughly $130 million, 10,000-seat stadium — where construction is already underway — will be the future home of Rhode Island FC, an expansion team in the second-tier USL Championship. The city of Pawtucket, the state of Rhode Island, and developer Fortuitous Partners are paying for the stadium, and the private developer will own it in the end. The complicated financing deal has seen multiple delays, but on Thursday, the parties said they’d closed on “all aspects of funding” for it, including public and private borrowing and private fundraising.
For Rhode Island taxpayers, the biggest ticket item is tens of millions in publicly funded borrowing going into the project. That borrowing has gotten significantly more expensive than initial estimates, even in the past few months.
To put about $27 million into the project, the state’s economic development agency in 2022 agreed to sell bonds to investors. Investors would pay money upfront for stadium construction, and they’d be paid back with interest through state tax revenue raised in a broad swath of Pawtucket.
But interest rates ended up coming in significantly higher than when the deal was approved in 2022, and the project’s bankers had to borrow more upfront to raise the same amount of money for construction. Upfront costs for borrowing include things like legal fees, capitalized interest, and debt service reserves — basically an emergency fund to pay back investors in case something goes wrong.
Back in 2022, the state estimated it would take about $36 million in borrowing to raise $27 million to put into the project. When the state went out to market to sell the bonds in October 2023, it was planning to sell $48.5 million in bonds to raise that same $27 million. And by the time the city actually closed on the bonds Thursday, the project’s backers said they had issued $54 million in bonds.
The borrowing costs are higher upfront, and also in the long term: The state in 2022 estimated that the interest rate to pay back investors for the bonds would be 5.5 percent. They’ll actually pay an interest rate of 7.5 percent. The project’s sponsors say they’ll have the chance to refinance the bonds.
The cost to pay off the bonds over the long term has also risen. When the state authorized borrowing $36 million for the project, it estimated that it would cost $59 million in state tax revenue to pay them back in the decades to come. When the project’s bankers were marketing $48.5 million in bonds, it was estimated to cost $110 million in state tax revenue to pay them back.
It will take some $132 million in state tax revenue to pay off the bonds over 30 years, more than doubling that initial cost. The project’s backers emphasize that the bonds could be refinanced or paid down early.
The higher upfront costs come amid changing market conditions familiar to anyone who’s tried to take out a mortgage lately. And it comes after already well publicized increases in construction costs.
Governor Dan McKee was the decisive, tie-breaking vote in allowing the project to move forward in 2022. He acknowledged the costs had gone up, like interest rates elsewhere in the economy, but pointed out that the state has the ability to refinance or pay down the bonds early.
“I think it is going to have a strong economic benefit for not only the Blackstone Valley but the state,” McKee said in an interview Thursday, pointing to planned later phases like a pedestrian bridge and housing he said will revitalize the area.
Though the state Commerce Corporation voted to approve the borrowing, and state tax revenue will pay back the bonds, it was actually the city of Pawtucket’s redevelopment agency that issued the bonds in collaboration with the state.
The city’s own support for the project is $10 million in COVID relief money. The city originally said the money wouldn’t be available until all the financing closed, but it changed course and has already made all of it available. Half of that money has already gone into the ongoing stadium construction.
In the joint statement issued Thursday by the state, the city and the private developer, the state said its own dollars won’t go into the stadium until construction is complete. Rhode Island’s economic development agencyhas approved $14 million in tax credits for the project.
The private developer, Fortuitous Partners, said it has raised $50 million in private capital, investing $33.9 millionso far into the stadium’s construction.
“We all look forward to cutting the ribbon on the stadium, taking our seats for the opening Rhode Island FC match in this world-class venue that will provide people and families across our state with opportunities to enjoy for years to come,” the private and public parties to the deal said.
Rhode Island FC won’t play at Tidewater until 2025, but it’s actually kicking off in March at its temporary home at Bryant University’s Beirne Stadium. Single match tickets went on sale Thursday. The project’s sponsors say the new Pawtucket stadium will also be able to host “concerts, festivals, collegiate and professional sports (including soccer, American football, lacrosse, rugby, and other sports), and other community activities.”
This story has been updated.