This was the title of the column in the Telegram the other day, here are our thoughts:
Bill doubles Worcester’s borrowing capacity for DCU Center http://t.co/wemMyjucBD
— Telegram & Gazette (@telegramdotcom) December 31, 2014
First, What is the DCU Finance District?
It enables the City of Worcester to keep the hotel, meal and sales taxes generated by these 9 parcels versus having to send them to the Department of Revenue (Commonwealth of Massachusetts). The argument is that these fees can be used to pay off any bonds that are taken out within this district to finance improvements without having to use any tax-levy money. This is, in fact, true if the district generates enough fees to cover the debt payments, but if it does not then tax-levy monies will have to be used.
Lets look at the current DCU Finance District consists of four parcels:
- Hilton Garden Inn
- Residence Inn on Plantation
- DCU Center and Convention Center
- Major Taylor parking garage
The new additions to the district include
- Gateway Park parcel that will contain the proposed Hampton Inn
- City Square parcel that will contain the proposed Renaissance by Marriott
- Former Worcester Courthouse
- Worcester Memorial Auditorium
- Parcels in Washington Square that have been set aside for future development
City officials now say we have double the borrowing capacity from 30 million, which we have already done per this Worcester Mag column about 3 months ago, to 60 million by expanding the district with these 5 new parcels. We do not see one penny of fees, however, generated by these 5 new parcels in 2015 and maybe some, we hope, will be generated in 2016.
Before the City of Worcester borrows any more money for the DCU, they need to see actual hotel, meals and sales taxes generated from these new parcels. If we do not then we will need to use tax-levy money to pay these bonds when the DCU Finance District comes up short.
Although we may have doubled our capacity we should not borrow any monies until fees are being generated from these additional parcels that will cover the bond payments.