The Washington Post reported last week that city officials were proposing a major compromise on plans to build a D.C. United soccer stadium at Buzzard Point, whereby the team would receive tax breaks in exchange for sharing stadium revenue with the city. “A planned new D.C. United stadium could receive extensive breaks on sales and property taxes over the next three decades,” begins the story, which relies heavily on anonymous sources, “and in return the team could share some of its revenue with the city, under a deal presented to District lawmakers.”
Big news, right? Well, no: This exact deal was already in the term sheet signed by the city and the team in July 2013.
According to that term sheet, if D.C. United revenue isn’t sufficient to fund its obligations, “the District will make the tax revenue related to the Annual Stadium Revenue available in order to facilitate the funding of the Stadium Project.” Annual Stadium Revenue is defined as “revenues generated from ticket sales, concessions, parking and merchandise.”
Likewise, the term sheet stipulated, “if the Annual DC United Revenue and the Annual Tax Revenues generated from Annual Stadium Revenue are collectively greater than the Annual DC United Expenses, then the District and DC United shall provide the District with a portion of the excess amount (the terms of which will be finalized in the Transaction Agreements).”
Ward 3 Councilmember Mary Cheh was among those briefed by City Administrator Allen Lew on the proposal. She says she’s unclear on why Lew went to the Council with information that was neither new nor complete: Lew told her the city is “not near a conclusion with at least some of the property owners” at Buzzard Point whose land the city needs to acquire to allow for the stadium to be built. “So I’m not sure exactly why it was presented at this time and what the point of it was,” she says.
A spokesman for Lew declined to comment, citing the ongoing negotiations.
In the best of worlds, the revenue-sharing-for-tax-breaks deal ensures that the stadium is neither wildly profitable nor wildly unprofitable. But it also means that if D.C. United claims financial hardship, it won’t be sharing any revenues with the city—-at least not in the short term—-and will be dodging substantial taxes.
Cheh proposed to Lew that he consider an arrangement like the one the city had with the Verizon Center, which was allowed to levy an extra sales tax on tickets and merchandise to help pay off the city’s investment in the arena. Cheh says Lew appeared open to the idea and promised to look into it.
“Sometimes,” says Cheh, “I think we have to be a little more careful about what we give away.”
Rendering via the Office of the City Administrator