The city has used tax incentives to spur the development of office towers and corporate headquarters, but the revelation that Olympic bid leaders proposed public financing to fund land and infrastructure costs for an Olympic stadium has inflamed critics and renewed questions about the committee’s commitment to a privately funded Games.
Mayor Martin J. Walsh sought to tamp down the alarm Thursday, saying he would not allow the city to borrow money to build a stadium, but — as he has consistently said — he would be open to using public financing for roads, sidewalks, and other infrastructure for the Olympics that would provide lasting benefits after the Games.
Walsh was responding to published reports showing that the bid committee, Boston 2024, redacted a section of its bid documents that proposed that the city of Boston finance land and infrastructure costs in Widett Circle, the site of a proposed temporary Olympic stadium, by issuing tax increment financing bonds.
Boston 2024 submitted the proposal to the US Olympic Committee last December and released the edited form of the documents to the public in January. The committee said at the time that it had withheld information that could put the bid at a competitive disadvantage in the worldwide contest for the 2024 Summer Games. The reference to public financing was part of a section that included figures on projected land and venue costs, according to copies of the documents obtained by several news organizations.
Boston 2024 leaders, who were traveling Thursday from a meeting with the International Olympic Committee in Switzerland, did not respond to request for comment.
Olympic opponents seized on the reports to suggest Boston 2024 has been disingenuous in its longstanding promise of a privately funded Olympics. Boston Business Journal and Boston Magazine reported on the redacted documents this week.
“These documents make clear that Boston 2024 has one message when it meets privately with the . . . USOC, and an entirely different message when it speaks to the Massachusetts public about who will bear the costs of the Games,” an opposition group, No Boston Olympics, said in a statement.
Walsh said Thursday that he is looking ahead to the future redevelopment of Widett Circle, after the Games.
“We do tax financing all the time for developments in the city of Boston, some of our largest developments we have now,” Walsh said in an interview Thursday in Jamaica Plain, after a meeting with constituents.
He cited the construction of the Vertex headquarters on the South Boston waterfront and the New Balance headquarters in Allston as examples of projects for which the city helped finance infrastructure.
“In some cases it works,” he said. “You need to see the individual deals. You can’t just do it blanket across the board.”
Tax increment financing can involve the city or state borrowing money to build infrastructure needed for future development, with the understanding the money would be paid back by increased tax revenues generated by that development. Cities across the country have argued that the incentives are needed to lure or jump-start development. In 2010, for example, Boston approved a $16 million TIF, in the form of a tax abatement, to help Liberty Mutual build a new office tower in the Back Bay.
The risk to taxpayers depends on how the deals are structured, said Rachel Weber, an associate professor of urban planning at the University of Illinois Chicago. Across the country, she said, there have been very few instances of default.
“If the project is generally successful and the property values in the area increase at the rate that was projected, these are not innately risky,” Weber said. But if the project falters or a recession hits, most municipal borrowing arrangements require the city or state to step in and pay down the debt, by shifting money from other parts of its budget or by raising taxes, Weber said.
One of the routes that Boston 2024 would consider, however, would have the group pursuing tax-exempt bonds issued by the Boston Industrial Development Financing Authority, a city agency launched in 1971 to promote construction and job creation. The bonds the authority issues are typically worth more than $3 million and must be approved by MassDevelopment, a state agency.
That type of bond is backed by the borrower’s credit, so the developer must show the financial strength to repay the debt, according to the Boston Municipal Research Bureau, a business-backed city watchdog group. That arrangement could potentially provide more protection to taxpayers.
But Samuel R. Tyler, the bureau’s president, said Boston 2024 has not provided enough detail to assess whether any type of public backing for the Olympics would be a safe bet for the city.
“We’re working on a couple of paragraphs here as to what the plan is,” Tyler said. “It’s incumbent on the part of Boston 2024 to make it much clearer, with more detail, as to how this process would work. There are too many questions still as to whether this is well advised or not.”
George W. McCarthy, president of the Lincoln Institute of Land Policy, a Cambridge think tank, said granting tax incentives forces other taxpayers to pick up the cost of schools, parks, and other services. The Widett Circle property is also in such a hot real estate market, next to Interstate 93 and booming South Boston, that it could probably attract development without public financing, he said.
Governor Charlie Baker has said he is open to using public funds for infrastructure projects that are already in the pipeline and would also benefit the Olympics. He draws the line at public money to build venues or run the Games, spokesman Tim Buckley, said.
“Boston 2024 has proposed a privately funded Olympic bid,” Buckley said. “The governor looks forward to reviewing a detailed plan that does not rely on public investment to host the Olympic Games.”
Boston 2024 filed the bid book as part of a domestic contest to become the US bid city for the 2024 Games. The USOC in January selected Boston over Washington, San Francisco, and Los Angeles.
The bid committee has promised to release a new venue plan by June 30, which the organization has said will include more detail on how the committee intends to deliver the stadium and Olympic village.
In an ironic move, the bid committee, which has been under pressure to be transparent, also apparently redacted a paragraph vowing an open process: “To ease concerns about making this a Games hosted by the whole city, not just parts of it, we are committed to a transparent and open conversation with community groups and have dedicated resources to fostering a dialogue that is fact-based and takes into consideration the needs of the community.”