City Paper is not for tourists
Premium seating. Acoustic panels. Glass railings. Broadcast equipment.
These will be some of the flashier features of the 4,200-seat Wizards practice facility being built at the St. Elizabeths East Campus in Ward 8, according to sports and convention authority Events DC. The facility, which District officials have branded the “Entertainment and Sports Arena,” is set to be mostly complete by Labor Day. The complex will host home games for the Mystics and the Capital City Go-Go, the Wizards’ affiliate in the NBA’s G League, in addition to Wizards practices.
The project’s partners—Events DC, Monumental Sports & Entertainment, and Mayor Muriel Bowser‘s administration—have billed it as “bigger than basketball,” alluding to the concerts, trade shows, and community events that are also expected to take place at the facility.
Another slogan for it could be “bigger than its budget.”
On Monday, Events DC confirmed to the D.C. Council’s committee on finance and revenue that the total budget for the project has grown to more than $68.8 million. That morning, At-Large Councilmember Elissa Silverman had shared this information on Twitter, citing numbers she’d learned during a meeting with the authority last week. Events DC President and CEO Greg O’Dell appeared before the committee at an oversight hearing to testify about the authority’s work and goals.
In 2015, when the project was first announced, the complex had a $55 million price tag. Now, that overall cost has risen 25 percent, and taxpayers are funding the lion’s share of it.
Bowser’s administration says the project will generate more than $90 million in tax revenue over two decades, draw more than 380,000 visitors annually, and create 900 construction and permanent jobs. Once, during a press conference, the mayor dubbed it a “BFD.”
Founded and owned by Ted Leonsis, Monumental has contributed $5 million toward the building and will have put an additional $10 million into community investments. But the District and Events DC, which is bankrolled by restaurant and hotel taxes, are funding the rest. That includes any cost overruns for development, per the terms of the deal among the parties.
Even before construction began, the project’s budget had ballooned to $65 million by mid-2016 because of design changes and contingencies. The latest increase derives from nearly $3.5 million in “program enhancements,” which is how Events DC characterizes the premium seating and other upgrades—including more mundane features like floor systems, drywall, and catwalks.
This surprise escalation sent Silverman smarting. She argued that the project’s initial budget should have accounted for the enhancements because they seem to be necessary for the arena to compete with other entertainment venues in the area, like The Anthem and MGM National Harbor.
In making her case, Silverman pointed to vaunted D.C. infrastructure projects where final costs exceeded budgets by tens of millions of dollars, such as the Duke Ellington School of the Arts renovation and the streetcar. She also noted that the original cost anticipated for Nationals Park—another taxpayer-funded project where Events DC was a partner—was around $500 million, but it increased significantly over time.
“So I guess the 25 percent increase that this Wizards practice facility is, I guess they consider thrifty?” Silverman said. “I don’t know.”
“The point I’m trying to make is that every dollar we overspend because we’re not planning correctly…we get so excited about doing things that we don’t do the necessary dotting the I’s and crossing the T’s, and actually saying, ‘This is what we’re going to do, we’re not going to change it,'” she continued. “And when we’re irresponsible or unrealistic, that means those dollars aren’t available.”
Her remarks resulted in a rare occurrence on the Council: Ward 2 Councilmember Jack Evans, who chairs the finance committee and is among the 13-member legislature’s most fiscally conservative members, concurred with Silverman, one of its most progressive. They’ve clashed on both sides of the Council dais.
“Councilmember Silverman, I agree with everything you said,” offered Evans, who was sitting next to her.
“Oh my gosh,” Silverman responded.
“This is the third time in two weeks that she’s, we’ve agreed on everything,” he added.
“I might have a heart attack,” Silverman said, chuckling. “That would cost us money on the ambulance service.”
Events DC’s O’Dell then gave his prepared testimony. He said the facility “is well positioned to attract diverse events while also serving the immediate community” through jobs and entertainment. He didn’t mention the rise in the cost of the arena—an omission that Silverman called out.
“Did you just hope no one would notice?” she asked O’Dell.
He replied that it was “an oversight,” and Events DC “want[s] to be transparent.” O’Dell explained that the enhancements planned for the arena are what the authority’s board determined would produce the “best building” possible.
“We could build a building for $65 million, but we felt like to put our best foot forward, particularly in Ward 8 with this building, that we want to make sure that we were going to actually increase our ability to do so, and so we added the additional enhancements,” O’Dell said.
Silverman harped on the fact that the facility will be a new building, not a converted or renovated one. She contended that the high-end features should have been budgeted from the start.
“I’m looking at this list here…[and it] means that either you really didn’t plan this facility well, or there’s a game being played here,” she said. “And that’s what a lot of District residents think and what I’m led to conclude, which is, there is a game, which was, we approve one cost, and then it’s we come back and revisit that cost and say, ‘Well, actually, we need these enhancements to truly make this a good facility.'”
“So what is it?” Silverman said. “Is it that we don’t budget and plan properly? …Or is it that this is an accepted way of doing business with capital projects in the District?”
O’Dell responded that when Events DC went to the marketplace to hire contractors for the project, the costs were bigger than anticipated. “We had to buy out the job,” he explained. “That’s just the market. …Unfortunately, those costs change.”
Noting that she’d considered the matter for “several days,” Silverman said she was mad. “I guess I just have to express my…it has risen to the level of anger about our capital projects, because I think they are continuously under-budgeted and then we are put in a position” of having to make difficult fiscal decisions.
The boxing match didn’t stop there. Silverman asked how many jobs the project has produced for D.C. residents. Using units common for the industry, O’Dell said D.C. residents worked 18,000 hours out of a total 60,000 hours, or 30 percent. Silverman said this wasn’t “a good return on investment” for a $69 million project financed on the taxpayers’ dime.
“I see all these cranes. We’re building all this stuff. Who’s getting the jobs out of them? It’s not D.C. residents,” she said. “But I think this is a moment…a turning point we need to take in District government, which is: We need to expect more, we need to get jobs out of the dollars that we spend, and we can’t go over budget, because when we go over budget on one thing, it’s going to be taken from something else.”
O’Dell said Events DC has tried to get District residents to fill half the jobs supplied by the project, but that there’s a “systemic” problem of not enough residents who are available as skilled laborers.
“I agree with you, we need to do better,” he told Silverman. “But it can’t be done in one job, and we’ve seen this challenge with skilled versus unskilled that we’re trying to account for and train for.” O’Dell added that Events DC would conduct community outreach for the permanent jobs at the arena.
Evans, the committee chair, diplomatically chimed in. “This has nothing to do with you guys, so I’m talking to the public now,” he began, delving into the more than $2 billion education budget settled on last year. “You know what the problem is? I said this to someone the other day. We have too much money. When I was here when we had no money, when we had to cut…when times were tough, people paid more attention. Now we have so much money, nobody pays attention.”
D.C.’s budget for the current fiscal year, which runs until October, is $13.9 billion. Mayor Bowser, who is running for re-election, is set to submit her budget request for the following fiscal year to the Council later this month.
“Everyone poses this either-or thing,” Silverman reflected after Evans’ comments. “But we can’t go willy-nilly on the budget. It’s just nuts!” She shook her head.
“This is our time,” Evans replied. “The budget’s coming down.”
Silverman went in for a fist bump. She got it.