D.C. council unanimously approves $183m for United, in largest MLS stadium subsidy ever

The Washington, D.C. city council made it official yesterday, voting 12-0 to approve spending $140 million in city money on a new D.C. United soccer stadium at Buzzard Point, plus a 20-year property tax abatement worth $43 million. Of that, $33 million will come from money shifted from other, unspecified capital projects, while $106 million will come in the form of new city borrowing, to be repaid via … something. See, it’s all settled!

What is officially the “District of Columbia Soccer Stadium Development Emergency Act of 2014” — presumably called so because it had to be in order to get enacted on short notice, but it still betrays a certain irony deficiency among D.C. politicians — breaks the record for the largest MLS stadium subsidy ever. (The previous record holder depends on who’s counting, though it’s likely either the Colorado Rapids stadium in Commerce City, which got $120 million according to Judith Grant Long, or the Chicago Fire stadium in Bridgeview, which collected $98 million according to Robert Baade and Victor Matheson.) Though apparently irony isn’t the only thing the bill’s authors are deficient in: One clause extends the deadline for acquiring the stadium land to “September 31, 2015,” which is a pretty neat trick.

But forget all those “numbers” and that “money” — the important thing, as the Washington Post notes, is that the soccer stadium approval gives outgoing mayor Vincent Gray a “legacy” and a “signature economic development project, one that neither of the two preceding mayors were able to accomplish.” Or, looked at another way, Gray finally gave in to the demands for $183 million in subsidies for a private soccer team that earlier mayors had refused to cough up. Isn’t it great how in politics, everything has two equally valid sides?

NY Times real estate section says exactly what it always says about everything, everywhere

The New York Times real estate section has a long piece up today about plans for a new D.C. United stadium, because … actually, I’m not sure why. The New York Times real estate section usually focuses on, you know, New York, and even if the D.C. council is voting on the United stadium plan today, it seems a bit outside the usual bounds, but, you know, whatever.

The article itself interviews the owner of D.C. United, the owner of the development company that owns the stadium land, D.C.’s planning director, D.C.’s incoming mayor, and one woman who lives in the planned stadium neighborhood, presumably for local color. My Vice Sports colleague Aaron Gordon has put together a Storify detailing all the flaws in this piece, but seriously, people, it’s a New York Times real estate section article. This is not, and never has been, journalism; it’s a service provided to realtor advertisers that dutifully identifies which neighborhoods real estate professionals are trying to hype as up-and-coming, enabling them to sell more housing there at inflated prices, and thus plow more money back into ads in the Times real estate section. It’s a win-win! Unless you 1) rent in a neighborhood thus targeted or 2) prefer to have news in your newspaper, but those people will be crushed like grapes by the tide of history, right?

Anyway, if you insist on reading the article beyond the “Real Estate” slug at the top, Gordon’s Storify is a worthwhile corrective. But really, you have better uses for your time. How about this article on how economic inequality is helping to drive the Uber economy? Or one about how ground squirrels are accelerating global warming? I never did like the look of those guys.

D.C.’s old and new mayors agree to find $150m for United stadium by taking it from somewhere or another

Outgoing D.C. mayor Vincent Gray and incoming mayor Muriel Bowser have reached an agreement on how to raise cash to fund land and infrastructure for the new D.C. United stadium, and it’s … “take the money from somewhere else and figure it out later”:

The details remain vague, but Gray announced on Thursday that he will send to the council a supplemental budget and a series of so-called “reprogrammings” — funding shifts from one pot to another — to cover the District’s anticipated $139 million share of the $300 million project.

(The council actually approved $150 million in spending, which should cover any additional money that developer Akridge wants for its property, unless it doesn’t.)

Sure would be nice to know what’s getting deprogrammed to find money for the stadium, but that’s one of the details Gray hasn’t revealed yet. The council holds its final meeting of the year on Tuesday, so presumably he’ll announce it by then, but maybe not much before then.

D.C. council unanimously okays $177m subsidy for United stadium, all over but shouting

Not only did the D.C. council approve the revised $177 million subsidy package (I know I said $168 million yesterday, but I added wrong, sorry) for a D.C. United stadium yesterday, they did it unanimously, which I didn’t think D.C. politicians were even allowed to do. The council still needs to vote on the deal a second time on December 16 before it receives the final okay, but that’s a mere formality at this point, unless Erick Thohir kills somebody in the next two weeks.

As for where to come up with the $99 million needed to buy the land for the new soccer stadium, the council still hasn’t quite figured that out, kicking the can down the road to future budgets. For the initial payment, since outgoing mayor Vincent Gray had a hissy fit and decided not to send in a revised budget for the new stadium plan since it wasn’t his plan, dammit, council president Phil Mendelson instead resurrected an old budget bill Gray has submitted in June but which was never passed. Gray cried foul, but said he’ll now submit a new budget bill that includes stadium funds, so everyone is happy, anyway. Unless you’re unhappy with giving $177 million in public money to an MLS team owned by a billionaire Indonesian media mogul, of course, but only naysayers would say nay to that, right?

The Washington Post’s coverage gave credit to Gray, Mendelson, and incoming mayor Muriel Bowser for “deft dealmaking” in crafting a stadium plan that “had changed considerably” from the original version, but really it’s almost identical to the original plan: The way that D.C. will come up with its money has changed (just raiding the capital budget instead of selling the Reeves Center), but the amount that it’s spending on the stadium is virtually unchanged, and still a record public subsidy for any MLS venue. D.C. United fans will at least now get the soccer-only stadium they’ve been waiting for pretty much forever, but D.C. residents will be doing without whatever else the District would have been spending its capital budget money on if not for this deal. Hope you guys really like soccer.

D.C. council to vote today on revised United stadium bill that cuts subsidies from $180m all the way to $168m

So we now know what the D.C. council is going to vote on as its revised D.C. United stadium funding plan today:

  • Instead of swapping the city-owned Reeves Center office building for stadium land, the District would spend $37 million out of its existing capital budget, borrow an additional $62 million, and repay that … somehow. That bit would need to be figured out in a supplemental budget request, either by current mayor Vincent Gray, or by new mayor Muriel Bowser when she takes over in January.
  • D.C. United would no longer get sales-tax kickbacks worth $7 million, but would still get property-tax breaks worth $43 million. “Cutting all of the abatements might be a wonderful idea, but what is before us is the result of negotiations,” explained council president Phil Mendelson, if you have a lenient definition of “explained.”

This, then, is pretty similar to the fairly crappy deal that the D.C. council was considering earlier this year: The city would still be spending $90 million on land, plus $35 million on infrastructure, plus $43 million on property-tax breaks, for a total public cost of $168 million, which unless I’m mistaken would be the biggest MLS stadium subsidy in history. And all of the risks of the old deal would remain in place, plus the added risks of what happens if an eminent-domain court rules that the city has to pay more than $90 million for the stadium land, plus how this would constrain D.C. in future uses of its capital budget.

That said, it may still be a crappy deal, but it’s this council’s crappy deal now, so expect that it will likely be voted in. (Then the council will have to vote on it again later this month, because that’s how they do things in D.C.) Watch the council debate live here way at the end of the hearing that starts at 11 am, once they’re done with the Marion S. Barry, Jr., Ceremonial Recognition Resolution of 2014 and the D.C. Rocks, So We Need One Act of 2014.

Bizarro World WashPost criticizes tax breaks for D.C. United stadium, calls for slowdown on vote

Check it out! The Washington Post editorial board, which usually has a hard time finding a stadium deal it doesn’t like, has actually called for the D.C. council to slow down on its D.C. United stadium plan and rethink the tax breaks that are set to go along with it:

Before blithely rubber-stamping the breaks, as has been the council’s tendency when it comes to providing this benefit to developers, council members should determine if there is a real need. As the D.C. Fiscal Policy Institute pointed out in a recent blog post, “Every dollar in tax breaks for DC United is a dollar not going into the city’s coffers that could be used for education, public safety, health care, or other services.”

Now, maybe this is just the Post going along with the current political winds in city government, what with the council president openly calling for pulling back $8.4 million in sales tax rebates, at least. And yeah, they did run the editorial on the day after Thanksgiving, when maybe 12 people total read it. (The council is set to vote on the revamped United stadium deal tomorrow, so today would have been a good day to run the editorial, you’d think.) Still, it’s a significant shift from last month’s “can’t afford to dawdle,” and it favorably quotes the D.C. Fiscal Policy Institute, of all people. Mr. Serious Concerns must have been out of the office for the holiday.

D.C. council presses ahead with eminent domain for United stadium, questions sales-tax breaks

Two D.C. council committees advanced a revised D.C. United stadium bill yesterday as expected, swapping in taking the stadium land by eminent domain in place of trading a city government building for it, also as expected. And no, the council, including councilmember and mayor-elect Muriel Bowser, still has no idea where it will get the money to buy the land:

The bill does not include a source of funding to replace the $37 million and land the city would have received through the Reeves swap. But Bowser said she was committed to finding money for the project through a combination of existing funds and new borrowing.

That’s not the only change to the plan being pursued, though, as it turns out: Council chair Phil Mendelson and government operations committee chair Kenyan McDuffie, according to the Washington Post, “have begun questioning whether the city ought to be providing $8.4 million in sales tax abatements to the team as part of a package of nearly $50 million in tax breaks.” Now there’s a question worth asking! Actually, it’s worth asking about the whole $50 million, but $8.4 million is a start, kinda?

D.C. proposes eminent domain for United stadium, money to come from cough, cough, hey look over there!

That didn’t take long: The D.C. council has a new plan for acquiring land for a D.C. United stadium, as promised by councilmember/mayor-elect Muriel Bowser just last week, and it’s a doozy: Instead of trading the city-owned Reeves Center office building for stadium land, the District will just up and take it by eminent domain:

The bill keeps much of a complex proposal to build a $300 million stadium on Buzzard Point in Southwest by Mayor Vincent C. Gray (D), but it removes a land swap with D.C. developer Akridge in which the District would have received cash and Buzzard Point land in exchange for the Reeves site.

With the changes, the use of eminent domain, which until now has been considered a Plan B option in stadium negotiations, becomes a very real possibility. After Mayor-elect Muriel E. Bowser is inaugurated in January, she could use eminent domain to take Akridge’s land on Buzzard Point at a price negotiated in court.

That’s much simpler, avoiding concerns that the District would be getting a lousy deal on the land swap, and that tearing down the Reeves Center would displace city jobs, and … it feels like something’s missing here. Let’s see, instead of the land swap, the city takes the land by eminent domain, and pays Akridge what a court determines (which could actually end up being more than the land owner agreed to in the land swap) — oh, hey, yeah, where does the money come from to pay Akridge now?

D.C. Council Chairman Phil Mendelson (D) said he expected both [committees] to hold votes Tuesday, but there are questions about how to pay for the stadium if the council agrees to retain the Reeves Center.

Um, yeah! Though at least if it keeps the Reeves Center, D.C. doesn’t have to find money to build a replacement for the Reeves Center, which it hadn’t yet begun to work on.

In terms of overall subsidies, then, this deal is pretty much exactly like the old one: D.C. would still be providing about $180 million in cash and tax breaks, just a chunk of the cash value will now come from “to be determined” instead of from handing over the Reeves Center. But it’s the new mayor’s $180 million subsidy plan now, instead of the old mayor’s, and in D.C., that’s often what makes the difference.

D.C. mayor-elect nixes United land swap, wants new public subsidy plan by year’s end

I’d been wondering if it was worth noting the report from over the weekend that D.C. councilmembers were considering reworking the D.C. United stadium deal to eliminate the controversial land swap portion, when late yesterday this happened:

That’s D.C. councilmember and mayor-elect Muriel Bowser, so it’s a pretty big deal that she’s throwing her weight behind this plan. Though “plan” is probably overstating it: The swap of the city-owned Reeves Center government office building to developer Akridge for part of the required stadium land is a key piece of the deal as concocted by outgoing mayor Vincent Gray, and won’t be unraveled so easily.

First off, Akridge would have to agree to take cash for its land instead of the valuable Reeves Center property. And second, D.C. would then have to come up with not just the bonding capacity to pay Akridge (which some councilmembers think they can now manage) but the cash to pay off those bonds — $10-15 million a year, according to the Post, though that sounds high for an estimated land purchase price of $94 million. Either way, though, it’s a significant chunk of change, and eliminating the land shuffle makes it way harder to hide the fact that D.C. would be shelling out a bunch of guaranteed money now for the promise of an economic benefit on Tuesday.

That part, though, doesn’t seem to bother Bowser. In her address to the Federal City Council, a local group of top business and political leaders, she made clear that her opposition to the Reeves Center swap doesn’t extend to the rest of the deal:

“I want to be very clear about this,” she told her audience, which included two former mayors and several of the key players in the stadium deal. “I support building a soccer stadium in the District of Columbia, and I support investing public dollars to get it done.”

And she supports doing it in the next seven weeks, while reworking a deal that was already hazy even after years of negotiations. There’s no possible way this can go wrong.

D.C. consultant: Oops, two-thirds of benefits from United stadium aren’t benefits at all

I’ve said a lot of nasty things about Convention, Sports & Leisure, the consultancy firm owned by the New York Yankees and Dallas Cowboys that has gotten flak for its outrageously high estimates of benefits, for doing economic impact reports for teams its concessions arm is already doing business with, and for being owned by the Yankees and Cowboys. But I’ve never accused them of being so grossly incompetent that they can’t even get the math right on their own 400-page reports.

Until now.

According to the Washington Post’s Jonathan O’Connell, CSL has sent a letter to D.C. council president Phil Mendelson, explaining that two-thirds or more of the promised $109 million in benefits from a $300 million D.C. United soccer stadium weren’t actually benefits at all, they were, in effect, a typo. O’Connell hasn’t written this up for the paper as of yet, but did take to Twitter to report it:

In case you’re having trouble following here: A big part of the District’s $180 million in subsidies for the stadium would involve selling public land and using the proceeds to buy other land that would be used for the United stadium. (This is both to get around the city’s bond cap, and to get around United’s desire not to have to put in much capital of its own, because jeez, they’re not even billionaires. Quite. Probably.) D.C. would be left with $71.4 million in extra cash at the end of the deal — but would be out $71.4 million worth of land. So this is effectively a wash, and shouldn’t be counted as a benefit of the stadium.

O’Connell also tweeted out the relevant section of the report where CSL just flat-out threw in this $71.4 million to make the benefit numbers look much, much bigger:

To its credit, CSL subsequently sent out a letter “clarifying” its numbers (very small scan of it here); less to its credit, it spent all summer and half the fall coming up with a 400-page report that completely botched the one number that anyone would care about, artificially inflating the projected benefits from $17.6-38.0 million up to $89.0-$109.4 million. Yes, the report still projects that the stadium would provide a small net profit to D.C. over 32 years, but given that this is based on questionable assumptions that are completely undocumented in the CSL report, it wouldn’t take much in the way of overoptimistic assumptions to put the District back in the red on the deal.

Of course, that might well have been the intent here: Throw in unrelated dollar figures and call it “profit” and hope nobody noticed until after the deal was already approved. (Or, more likely, give your employees the sense that looking too hard at where the positive numbers in your report come from is not the best way of earning future contracts, or job security.) Except that now it’s apparently backfired, with D.C. council members, who were already not real psyched to rush into a deal just because the mayor is getting kicked out of office and wants it done before year’s end, openly questioning whether this financing plan is a load of crap.

This doesn’t mean that a United stadium deal won’t ever get done — there’s plenty of haggling left to do, and the D.C. council has proven itself willing and eager to do so in the past — but it does mean it may not be in this round of negotations. Also, it means you should never ever take anything CSL says seriously. Not that you should have before, but now when you see their reports, there’s only one acceptable response.