D.C. councilmembers balk at tax kickbacks for United stadium

D.C. Mayor Vincent Gray’s office has finally started telling city councilmembers what the details would be for his proposed D.C. United stadium project, and while the specifics aren’t officially public yet, apparently some councilmembers were so disturbed by them that they ran to the Washington Post to gripe:

Three members of the council and a Gray administration official, who spoke on the condition of anonymity because the briefings were intended to be private and negotiations are ongoing, outlined the preliminary deal.

Two members were told that D.C. United would owe no sales tax on any commercial activity on the stadium footprint — including tickets, concessions and even such businesses as restaurants that might locate adjacent to the stadium — throughout the team’s 30-year lease.

Property taxes would also be abated on a rolling schedule, according to two council members. For the first five years of the 30-year lease, the team would pay no property tax. For each subsequent five-year period, the team would pay an additional 25 percent of the tax normally due, with 100 percent owed for the last 10 years of the lease.

A Gray administration official confirmed that the mayor’s stadium proposal includes a sales tax break and phased-in property tax break but said that in exchange, the city would be given 50 percent of the team’s revenue beyond a certain threshold, which is still being negotiated.

This isn’t entirely new: Gray had revealed a sales tax break worth $2.6 million in its first year back in July, and kicking back property and sales taxes in order to meet the team’s profit guarantee has previously been on the table as well. In fact, it sounds like this may just be the profit guarantee restated in new terms: Instead of “We’ll kick back sales and property taxes if you need it to turn a profit,” it’s “We’ll kick back sales and property taxes until you’ve turned sufficient profit, after which you’ll start giving us a cut.”

It’s really tough to say exactly how this iteration of the deal compares with those proposed earlier — normally I’d check with the D.C. Fiscal Policy Institute, but since Gray chose to start dribbling out information only during Christmas week, DCFPI is naturally enough on vacation. (It’s almost like he planned it that way!) And in any event, one councilmember told the post that the tax kickback provision “remains in flux, with some pressing [City Administrator Allen] Lew to negotiate more guaranteed tax dollars for the city rather than engage in a revenue-sharing agreement whose benefits are more speculative and could be evaded through team accounting maneuvers.” At least somebody’s been reading their Paul Beeston!

2 comments on “D.C. councilmembers balk at tax kickbacks for United stadium

  1. An important detail is if they’re counting profits and losses on a yearly basis or on an “overall” basis. Seattle fell into that negotiating gaff with our Mariners.