It took a few months longer than expected, but D.C. Mayor Vincent Gray has finally finalized his stadium plan for D.C. United, according to the Washington Post. The city would still put up about $150 million of the cost of the project (which is now estimated at $300 million instead of $290 million, maybe to make for a nicer “going halfsies” image?), and would now also provide the team with sales and property tax breaks as well:
According to sources, the team would pay no property taxes for the first five years, 25 percent property taxes for the next five years, then 50 percent for five years, 75 percent for five years and finally full property taxes.
United would also pay no sales taxes for the first five years, then 50 percent sales tax for five years and then full sales taxes. At that point the team would begin collecting a surcharge on tickets that would begin at $2 and increase with the Consumer Price Index. Proceeds from the surcharge would go to the District.
The Post doesn’t specify how much the tax breaks would be worth, though it earlier estimated a sales tax abatement alone as being worth $2.6 million a year, if we use the District’s 1.85% property-tax rate and a valuation of $300 million, that’d be an additional $5.5 million a year in property-tax breaks, for a total tax break present value of … I get $63.64 million (at a 5% discount rate), but let’s wait for the D.C. Fiscal Policy Institute to do a full assessment to determine the precise value.
Property and sales tax breaks were previously planned as part of the team’s profit guarantee (if D.C. United wasn’t turning a “reasonable profit” it would get the tax abatements), so it looks like this new system would wipe out that one, with United just getting a fixed tax subsidy, and the District getting back that ticket surcharge (which with MLS teams selling about 300,000 tickets a year would amount to maybe $600,000 a year in revenue, or only a few million in present value) starting ten years in. It’s hard to tell whether that’s better or worse than the original deal, but it’s still right around $200 million in public cost, which would be easily the most expensive public subsidy for an MLS stadium in history.
Anyway, now that Gray and United’s shifty web of owners have agreed on a deal, it only has to be okayed by the D.C. city council, where there’s significant opposition. Not to mention that most city residents hate the deal, and Gray is out of office at the end of the year. All of which I’m sure will mean an agreement that will be rushed through and then have to be amended later when it turns out to have giant holes in it, because that’s how things get done around there.