Category: DC United

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?

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.

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.

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.

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.

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?

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.

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:

I believe we can get a new soccer stadium deal done by the end of the year – and de-link the Reeves Ctr swap from the deal.

— Muriel Bowser (@MurielBowser) November 18, 2014

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.