Mayor to propose $200m in city spending on land, tax kickbacks for D.C. United stadium

And now, the story you’ve all been tweeting me about since it broke late last night:

D.C. United executives and District officials have reached a preliminary $300 million deal to build a 20,000-seat stadium for the team on Buzzard Point in Southwest Washington.

The agreement, team and city leaders said, could end a decade-long search by the Major League Soccer franchise for a new venue that would allow it to leave RFK Stadium, where D.C. United has played since its founding in 1996 but where its investors say the team loses money every year.

Plans for a Buzzard Point stadium for D.C. United, you may recall, were first floated more than two years ago, and then the team said it would want to get a share of tax revenue kicked back to help pay for construction, and then nothing happened, and then more nothing happened. But now it appears that something has happened, or at least D.C. Mayor Vincent Gray has scheduled a press conference for today to announce that something has happened, which is something in its own right.

So, what would this stadium look like, how would it be paid for, and how would the site be pieced together? The last one is the one where new progress has apparently been made: The idea is for some of the current property holders to get land elsewhere in the city in exchange, though it doesn’t look like everyone whose approval would be needed has yet signed on to that.

As for cost, the Washington Post reports that “the District and United would split the costs for the project, with the city providing about $150 million to assemble land and prepare the site and the team spending a similar amount building the stadium.” The Post also notes that those tax kickbacks are on the table as well, though, with a “sales and use tax abatement worth as much as $2.6 million in its first year” — if you assume that it’ll go up with inflation, over 30 years that could be worth between $40 million and $70 million in present value, putting the District’s total cost at more like $200 million.

That’s a whole heck of a lot of dough, and with D.C.’s bonding capacity limited, the District is instead proposing to raise the cash by selling off city-owned properties, including the Reeves Center office complex, for development. The Post rosily notes that the Reeves Center is “increasingly obsolete” and “allowing a private company to develop it would bring the city new tax revenue,” though if so, D.C. could sell the Reeves Center right now and use that new tax revenue (plus whatever it got for the land) on something other than a new soccer stadium if it wanted.

It’s all still a bit nebulous, especially since no one really knows how much the city will have to pay for the stadium land, how much it will get for the Reeves Center and other land it hopes to sell, or even how big a stadium D.C. United wants to build. (Team managing partner Jason Levien says they could either go for a 25,000-seat stadium, or a 20,000-seater with room for expansion.) It’s exactly the kind of “here’s the rough framework, we can haggle over the rest” plan that teams and mayors like to propose, though, especially when the mayor in question may not be mayor for much longer. Expect a big public battle over the next few months to a year — and if the Nationals stadium throwdown was any indicator, this could be quite the entertaining battle indeed.

8 comments on “Mayor to propose $200m in city spending on land, tax kickbacks for D.C. United stadium

  1. Or, you know, you could just let DC United build their little 25,000 seat stadium in the RFK parking lot. Cost to the city, somewhere around $0.

  2. I don’t think DC owns the land under RFK

    Question to the author…does DC being so close to both MD and VA make the numbers any different when calculation the potential economic benefits to the city (if there are any actual benefits)

    I know studies show that when sports teams leave a city, people don’t stop spending “entertainment money” but does DC see any greater benefit in attracting people from VA/MD/WV to DC to see a sporting event? I don’t think most people would bother driving into DC to go bowling or see a movie.

  3. I looked into this a little bit when the Nationals arrived. I think the short answer is “Yeah, a little, but not $200 million worth.” Especially when D.C. United is already in D.C., so most of the fan spending wouldn’t be new.

  4. DC may own the stadium but the Federal Government owns the land it sits on. Also, they would have to clean up the site, a problem that was discovered when they were thinking about building Nationals Park there..

  5. In a place like DC, “…the potential economic benefits to the city…” aren’t as important in deals like this as are the benefits for those in power there.
    Looks like a great spot, farther from the Metro, bounded to the west by Fed property and to the east by the river. Overlap dates with the g’Nats should be fun too, where’s the highway access to the parking gonna be?
    Cleanup for the storage tanks and moving the power substation should go off without a hitch, right? Just ask the folks in St. Paul Minn. about that.
    Industrial businesses end up in places like Buzzard’s Point like US Hazardous Materials because nobody else wants to be there – same as the Queens Iron Triangle. That should be a tip-off that it may not be a spot to settle or have an open-ended financial hook “…no one really knows how much the city will have to pay for the stadium land, how much it will get for the Reeves Center and other land it hopes to sell, or even how big a stadium D.C. United wants to build…”.

  6. @Keith above, re: RFK ownership.

    The District owns the stadium and land that RFK sits on. The operator is Events DC, which schedules many different types of entertainment there. I believe the other agency involved is the District’s own DC Sports & Entertainment Commission, which oversees all the stadiums and other venues owned by the District.

    DC United has no ownership of any venue, and they’ve continuously reported that they’re actually losing money on the deal due to DC not being willing to cut them slack. This is what fueled the entire threat of leaving DC for Baltimore or NoVA.

  7. And D.C. United probably wouldn’t have ownership of a new venue, either, since that would mean having to pay property taxes. But you can bet they’ll control the operating rights, and all the revenue.

  8. @webadia: the District only owns the stadium, and not the land it sits on.

    The land is owned by the National Park Service and per Congress can only be used by the District for the operation of a stadium and the Armory If RFK was to come down the control of land not needed for the Armory reverts back to NPS and it would literally take an act of Congress to reassign for another purpose.