Council hearing paints D.C. United stadium picture that’s as clear as mud

The D.C. council held its promised hearing on the D.C. United stadium plan yesterday, and I tuned in for a while before even watching the U.S. men’s soccer team seemed more exciting by comparison. Fortunately, DCist watched so we didn’t have to:

Just how far-reaching the city’s commitment in the deal is perhaps best demonstrated in a graph provided by John Ross, an official with the office of the Chief Financial Officer:

Yes, that’s, um, okay, I have no idea what any of that is supposed to indicate, but somebody put a lot of work into those icons, so give them props for that, okay?

So what else you got?

The Council heard testimony from dozens of witnesses. Some expressed fervent support for the agreement and took a seat at the witness table sporting the black and red colors of the team they’d come to support. Others expressed reservations about the deal, raising a handful of questions about its mechanics. And still others expressed their disdain for the deal as a whole.

If you’re starting to get the sense that this was just a bunch of people talking past each other while reciting things that everyone’s already heard before, that was pretty much my experience as well. D.C. administrator Allen Lew did indicate that the land swap that is at the heart of the United deal is a gimmick to get around the city’s borrowing cap; he sees that as a plus, while Ed Lazere of the D.C. Fiscal Policy Institute complained that the Reeves Center is “being treated in this legislation like a Monopoly property, to be traded for cash,” with no public process or community input over how it will eventually be developed. Plus, noted Lazere, “the plan calls for creating a new Reeves Center east of the Anacostia River, yet it offers no details and no financing. With the city very close to its debt cap, it is not clear how or when a new municipal center will be completed.”

There were a few more hints of things to come — one neighborhood organization pushing for a Community Benefits Agreement, for example, something that in the past has often served more as a smokescreen for developers than an actual benefit to communities. But the most interesting question is where the councilmembers stand on the project, and most of them are still hedging their bets. Reading tea leaves, you have to wonder if the council may not just try to drag this out until Mayor Vincent Gray is out of office at the end of the year, then start over with a new mayor — something that Gray and United both desperately want to avoid, but if the council digs in its heels, there’s not much they can do about it.

Nothing says chillaxing like watching a D.C. council soccer stadium hearing

As of 9:38 am Eastern time, the “Brooklyn Wars” Kickstarter is fully funded! Huge thanks to everyone who chipped in — and if you want to get in on preordering (this will be your only chance to get rewards like the bonus zine), you still have until tomorrow at 5 pm to do so.

Meanwhile, this means I get to spend a couple of hours this morning watching the D.C. Council hearing on the proposed D.C. United stadium, and its accompanying $178 million or so in public subsidies. Right now, the manager of a soccer program funded by D.C. United is testifying. Let’s watch and see which side he comes down on!

Anyone who wants to play along, watch here and join me in discussing the proceedings below in comments.

Council hearing tomorrow on D.C. United’s $178m-plus stadium subsidy plan

So, there’s this World Cup thing, which involves soccer, and which lots of people in the U.S. are watching. There are also soccer teams in the U.S., one of which is D.C. United, which has a hearing coming up Thursday on its request for a bunch of public money to help build a new stadium. How do you report on this, if you’re the Washington Post?

Will that enthusiasm carry over to D.C. United as the team pushes for approval of a new stadium?

Because of course rooting for your nation’s team to win an international soccer match is something that could “carry over” to rooting for your city’s team to get a bunch of your tax dollars. Nobody could possibly love soccer but hate the way soccer stadiums are funded!

Anyway, back in the world of real journalism, the Washington City Paper offers a breakdown of the D.C. United deal, based on a handout from D.C. administrator Allen Law, that provides our clearest picture yet of who would be paying for what, though it’s still pretty convoluted. In brief:

      • The city will spend $84.9 million on buying land for the stadium, plus another $34.6 million in infrastructure, for a total of $119.5 million.
      • Of this, $48 million will come out of the city’s capital budget, while the rest will be raised by selling two existing city properties — one of which, the Reeves Center, the city is selling to Akridge (one of the current owners of part of the stadium site) for $55 million, though the city’s official assessment of the land’s value earlier this year was $129 million, while an independent appraiser hired by the city valued it at $69 million.

D.C. United would received 20 years of property tax breaks and 10 years of sales tax kickbacks, which as previously discussed here would be worth about $63.6 million to the team. The team will pay a $2 per ticket fee to the city starting ten years from now, which at roughly 300,000 tickets sold per year, discounted to present value, amounts to about $4.6 million that the city will be getting back.

Total cost to D.C. taxpayers, then: $178.5 million, plus whatever discount D.C. is giving to Akridge on the Reeves Center property. In other words, still pretty darned close to $200 million.

Tomorrow’s hearing is set for 9:30 am, just two and a half hours before the start time of the U.S. team’s must-tie match against Germany; the mayor’s office says a TV will be set up in a briefing room for fans who want to attend the meeting while still watching the game. There will likely be another hearing in September following the delivery of an independent cost-benefit analysis commissioned by the council, so don’t expect any decisions anytime soon.

 

D.C. councilmember opposes United stadium plan without streetcar funding

One of the 13 members of the D.C. Council has come out against Mayor Vincent Gray’s D.C. United stadium plan unless the council restores money to build a streetcar line to the site. No, really:

In an ominous change of heart for Gray and the soccer team, [Councilmember Tommy] Wells tells LL that he’s leaning towards voting against the stadium now that Council Chairman Phil Mendelson‘s budget cuts streetcar funding. With Mendelson’s detractors saying that the streetcar line to Buzzard Point and the stadium is endangered by the switch, Wells says he can’t back the stadium if it lacks new public transit, even though it would be close to Metro’s Green Line.

“Now that the Council has gutted that, I can’t in good conscience support a 20,000-seat venue with no new transit infrastructure,” Wells says.

I haven’t been seen any head counts of likely votes on the United stadium plan, but given that Gray was already facing an uphill battle with the council, this can’t be a good sign for the mayor.

D.C. United deal now includes selling city land for less than half assessed value

The Washington Post has thrown at least a thimbleful of cold water on D.C. Mayor Vincent Gray’s D.C. United stadium plan, noting that “with about seven months remaining in a lame-duck term, persuading a majority of the council to support the plan could take every ounce of political capital that Gray (D) still has. It may not be enough.” Not only is the council wary about the $200 million in cash and tax breaks required, but there’s a mayoral election coming up, and both candidates have expressed opposition to the stadium deal.

The Post also notes a recent twist in the stadium funding scheme, which is that, contrary to the original plan to sell the city-owned Reeves Center government office building for $100 million and use the proceeds for the stadium, Gray has now agreed to trade the Reeves Center to the owner of part of the proposed soccer stadium site for $34.5 million plus $21.1 million in stadium land — less than half its assessed value, and less than a third of what a 2011 city report found the Reeves site to be worth. I can’t for the life of me figure out whether this means D.C. will now have to come up with additional cash or land beyond its original $150 million investment — the land swaps are so convoluted that apparently even the Post has thrown up its hands at trying to describe them — but I’ll report back here if the fog ever clears.

D.C. United, Mayor Gray propose $200 million in public stadium subsidies

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.

D.C. United fans click on team website a lot to support stadium, film at 11

More than 2,000 D.C. United fans, who, being fans of D.C. United, cheer for D.C. United, have clicked an average of more than 10 times apiece on a website set up by D.C. United to send emails to Mayor Vincent Gray and the city council in support of a new city-subsidized stadium for D.C. United, according to D.C. United, reports Tucker Echols of the Washington Business Journal’s People Clicking on Things Bureau. In unrelated news, most people in D.C. are actually against the stadium plan.

Council development chair opposes D.C. United land swap, could block stadium deal

When last we checked in on D.C. Mayor Vincent Gray’s D.C. United stadium plan, three city councilmembers were anonymously griping about the tax breaks and city-subsidized land swaps that would help fund construction. Now one of the three — or maybe a fourth, who can tell since they were anonymous? — has gone public with her complaints:

D.C. Council member and mayoral candidate Muriel Bowser (D-Ward 4) said Wednesday that she wouldn’t support Mayor Vincent C. Gray’s proposal to trade away the Frank D. Reeves Municipal Center in order to help pay for a new D.C. United soccer stadium on Buzzard Point.

Bowser, who chairs the council’s economic development committee, said she would rather see the city’s capital dollars go to improving the city’s middle schools.

It’s a reasonable enough argument, considering that D.C. is totally capable of selling the Reeves Center property and using the proceeds for anything it wants to, not just a soccer stadium. (It’s also worth noting that Bowser has made the “let’s give money to schools first” argument before, albeit in not such strong terms.) Bowser’s opposition could be key, as her role as development chair means that she can block any land use legislation from even coming up for consideration, so Gray seemingly needs to make her happy if he wants to get this deal through.

In other D.C. stadium news, meanwhile, the council is considering (or at least holding a hearing on) councilmember Vincent Orange’s plan for a 100,000-seat NFL stadium and Marvin Gaye-themed music venue and “nationally recognized” chain restaurants and a whole mess of other stuff on the site of RFK stadium, which would only cost a billion jillion dollars and be impossible in umpteen other ways. You can watch live here (click on Room 120) if you want to join in the hilarity.

Poll shows D.C. residents opposed to soccer stadium 59-35%, mayor gripes that it’s just badly worded

The Washington Post may be getting beaten up for letting Ezra Klein go to the Seattle Mariners Vox Media, but at least they should know how to conduct a poll, right? So when the Post reported Sunday that six out of ten D.C. residents oppose Mayor Vincent Gray’s D.C. United stadium deal, including opposition across “virtually every demographic and political group,” that should be big news.

And it is, but both Gray and United supporters immediately called foul, noting that the poll asked if people “favor or oppose using city funds to help finance a new soccer stadium,” and complaining that this isn’t a fair cop:

“The poll question is, do you support public financing for a stadium in general?” says spokesman Pedro Ribeiro. “Not even the mayor supports that, because what the mayor has proposed is not public financing for a stadium.”

Um, yes, that is what he’s proposed, to the tune of about $200 million in city-funded land costs and tax breaks. It’s not financing of the whole project, no, but the question does say “help fund,” which is a reasonable shorthand for what Gray is proposing, even if obviously it would have been nice if the Post had spelled out the details of the funding plan in their poll. (Hopefully without putting any of the respondents to sleep.)

In any event, the Post poll shows D.C residents opposing the project by 59-35%, which is probably a way bigger margin than you’re going to erase by a mere tweak in wording. And it’s certainly not going to change the minds of respondents like this woman:

Rosalind Jackson-Lewis, a 57-year-old Riggs Park resident, said she is “absolutely, positively against it.”

“There are more pressing problems in the city, and soccer is not going to add value to the city,” said Jackson-Lewis, a retired accountant. “Any extra money the city gets should go into education. . . . We need a better education system.”

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!