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At noon on Thursday, American productivity will grind to a halt as the country’s soccer fans take to the nearest bar, office TV, or webcast to watch the U.S. soccer team fight to advance out of the group stage of the World Cup.
But for diehard D.C. soccer fans, the drama will begin two and a half hours earlier. That’s when the D.C. Council is scheduled to begin its hearing on the proposal to build a D.C. United stadium at Buzzard Point—-a plan whose complex land swaps would, among other things, send the Frank D. Reeves Municipal Center at 14th and U streets NW to the developer Akridge in exchange for a Buzzard Point parcel needed for the stadium site and cash.
And now, for the first time, we know just how much cash would be changing hands.
According to a document (reprinted below) circulated by City Administrator Allen Lew, who negotiated the deal on the city’s behalf, and first published by the Washington Post, the city would pay a net $85 million to assemble the land needed for the stadium, which is included in a total of $119 million for that, plus infrastructure, utility, and other costs. That’s less than the $150 million the city said it would likely need to contribute. The team would pay for the actual construction of the stadium.
But it’s not clear the city got the best deal possible. The Buzzard Point parcels it’s acquiring from Akridge and Pepco were evaluated by independent appraisers, who put their values at $28.83 per square foot of buildable density and $31.96 per square foot, respectively. On the other hand, the owners of the two parcels the city negotiated for without appraisals—-investor and Washington Kastles owner Mark Ein and the scrap yard Super Salvage—-will receive $50 per square foot, despite the fact that the parcels are all close together and should have similar values. Ein and Super Salvage (for which Ein owns an option) were the last holdouts in the deal. The city could have seized their land under eminent domain and possibly paid a lower price on it, but given that the process is already months behind schedule, the office of Mayor Vince Gray may simply have wanted to move it as quickly as possible, even at a slightly higher cost.
Except that the city won’t be paying the full $50 per square foot. Gray’s office set an upper limit for what it was willing to pay, and after the property owners wanted more, D.C. United and Akridge agreed to step in and make up the difference rather than see the process dragged out through eminent domain. As a result, the city will pay just $41.47 per buildable square foot for those two parcels, and the team and Akridge will chip in $4.9 million to round out the payment.
“While the District, Akridge and Pepco agreed to base the valuations of their respective properties on the values established by the Appraisal Panels, the Ein and Super Salvage valuations were the result of a negotiated transaction between the property owners and the District,” Lew spokesman Tony Robinson explains in an email. “In an effort to fully control the District’s land assembly costs in advance of Council submittal, and to avoid the costs and uncertainties of an eminent domain process, the District agreed to continue negotiations in good faith. The total dollars to be paid by the District in assembling the site, in its entirety, is $41.17 per FAR with the balance split between DC United and Akridge.”
The Reeves Center was valued at $55.6 million. That’s less than half the city’s assessment of the property’s value this year, $129 million, although of course the actual Reeves Center building won’t do Akridge much good if it plans to tear it down and replace it with a residential/retail building, as expected. It’s also lower than the $69 million valuation by an independent appraiser hired by the office of the D.C. Chief Financial Officer. Then again, the CFO’s appraiser also valued the Buzzard Point parcels slightly higher than the panel of appraisers whose determinations will govern the deal.
The mayor’s office is working to make the case ahead of Thursday’s hearing that the cost of assembling the stadium land and infrastructure will be far outweighed by the economic benefits of the project. According to the fact sheet circulated by Lew’s office, the project will generate $2.3 billion in economic activity over 30 years, 1,756 construction jobs, and 715 permanent jobs.
The team will be exempt from sales and property taxes for the first five years after the stadium opens. In years six through 10, it’ll pay half the usual sales taxes and a quarter of the usual property taxes. After the 10th year, D.C. United will pay full sales taxes, a fee of $2 per ticket sold, and half of the usual property taxes, rising gradually to full property taxes after 20 years.
Approval from the Council is no sure thing. Members of the Council have questioned various elements of the deal: Ward 4 Councilmember and Democratic mayoral nominee Muriel Bowser said she opposed the Reeves Center swap, Ward 1 Councilmember Jim Graham wants Reeves to remain office space, and Ward 6 Councilmember Tommy Wells has said both that he wants affordable housing on the Reeves site and that he’s leaning against voting for the deal now that the Council has decided to cut funding for the streetcar, which is expected to extend to Buzzard Point.
The team, like the mayor’s office, is working to persuade D.C. residents of the need to complete this deal and build a new stadium. According to D.C. United chief operating officer Tom Hunt, the team has lost money every year at RFK Stadium, its current home. “It’s not a sustainable business model at RFK,” he says. “Continuing to play at RFK in the long term is not an option. If we don’t get a new stadium soon, that becomes problematic.” The team, he says, has no Plan B if the deal falls through, but other cities could be on the table.
Hunt says team officials are meeting individually with every member of the Council to “educate” them on the deal. The timing of the hearing, coinciding with the U.S. World Cup match, might make it harder to turn out soccer fans, even though there’ll be a viewing room in the Wilson Building. Hunt also says some of the team’s most supportive fans are attending the World Cup in Brazil. But, he notes, there’s a silver lining: “People are talking about soccer.”
This post has been updated to include comment from Robinson and additional details on the deal.
Rendering by D.C. United