6/5/2019 11:58:25 AM
5/31/2019 10:22:18 AM
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City Auditor, Stearns
madison properties ballpark series a bonds
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410SCBS2. CITY OF WORCESTER, MASSACHUSETTS <br /> Auditing Department <br /> r- <br /> i, <br /> ,F722 A y' <br /> Robert V.Stearns,CPA <br /> City Auditor <br /> June 4,2019 <br /> TO THE WORCESTER CITY COUNCIL <br /> RE: Request City Auditor provide City Council with a report reviewing whether the <br /> passage of time taken to develop the Madison Properties will have an impact on the <br /> solvency in terms of any payment on any loans or bonds. <br /> COLUNCILORS <br /> The passage of time taken to develop the Madison Properties would affect the timing of the receipt of <br /> revenues required to service Series A bonds. The $70M Series A bonds are to be repaid from new <br /> city revenue generated mainly from the Madison property developments in the ballpark district. <br /> Development is in two phases with several of the phase 1 developments expected to be completed <br /> prior to the opening of the ballpark in 2021. The original proforma assumed that the debt service not <br /> including capitalized interest on the Series A bonds would begin in fiscal 2022,thereby requiring that <br /> the revenues be available at that time to pay the debt. However, the debt strategy as it relates to the <br /> Series A bonds was changed and provides the city with flexibility as to when the Series A bonds are <br /> issued and when the first bond payment becomes due. <br /> The letter of intent between the city and Madison is non-binding and to serve as a guideline for the <br /> negotiations to the final agreement between the parties in the "Development Agreement", currently <br /> in progress. The letter of intent set a schedule for several of the properties with an occupancy date of <br /> not later than January 1, 2021. This date is relevant because it is when the Assessor will determine <br /> the taxable assessed value for fiscal 2022. The parties however acknowledge that this schedule <br /> represents a reasonable expectation and the scope and timing is subject to market forces and general <br /> economic conditions. If the project falls behind and the properties are not completed by January 1, <br />
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