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City leaders disagree about how much the District should be on the hook for costs arising from the Wizards’ practice facility planned for the eastern portion of the St. Elizabeths campus in Ward 8 where a mental hospital once stood.
On Thursday, the D.C. Council will hold a hearing on a bill introduced earlier this month by At-Large Councilmember Elissa Silverman and cosponsored by five others that would cap the District’s contribution to the project at $50 million. That limitation, Silverman says, would protect D.C. taxpayers from cost-overruns associated with the development: The financial deal between the District, sports authority Events DC, and Wizards-owning firm Monumental Sports currently makes the former responsible for any such excesses. As structured, the deal accounts for $27 million from Events DC, which is partially propped up by hotel taxes, $23 million from the D.C. government, and a remaining $5 million from Monumental, headed by entertainment mogul Ted Leonsis.
Proponents of the project including Mayor Muriel Bowser have argued that the 5,000-seat venue will bring amenities, jobs, and economic development to a long-neglected area of the District. In addition to the Wizards, they note, the facility will be home to the Washington Mystics and host various concerts and community events. A projected $90 million in revenue will result over 20 years.
The Council was set to passively approve the deal this month, but a resolution by Silverman and Councilmembers David Grosso, Brianne Nadeau, and Mary Cheh extended the legislature’s review of the deal until April 7, two weeks after Thursday’s hearing.
“My goal is to bring more transparency about this project to the public and I remain concerned about cost overruns,” Silverman says. “I want to be very clear about what this project is going to cost, what the risks are of going above that cost, what measures we can take now to prevent those risks or reduce those risks. Then we’ll have a lot more information to hold Events DC accountable.”
Though Councilmembers don’t have the power to negotiate city contracts on the dais, they can vote up or down on them and press the administration to get better deals for its money. Silverman says she wants to hear residents’ thoughts on the practice facility in a common forum, not least because the project has largely avoided the typical legislative process for multimillion-dollar contracts the District is party to, other than a roundtable in December. She adds that she doesn’t want the facility to become the next streetcar or school-modernization project: Developments that “have value” to people but go over budget because of a lack of sufficient oversight.
When news of Silverman’s legislation broke, Bowser’s Chief of Staff John Falcicchio said in a statement to City Paper that it was “troubling that certain Councilmembers” would limit funding to “a job creating project in Ward 8.” Max Brown, the chairman of Events DC, echoed those remarks in an interview on Monday, arguing that “putting artificial caps on this project is wrong-headed.” The project will create 900 total jobs, according to Events DC: 600 related to construction and 300 long-term ones across vendors, facility management, sales, and other sectors. The sports authority will also engage residents in a job-training program, Brown said.
“In development, you take a snapshot in time [to estimate costs], you don’t know what you’re going to find, you don’t know what’s going to happen,” Brown continued, describing the team’s practice facility as “transformational” and “bigger than basketball.” “You wouldn’t place a cap on the work that D.C. Water [is] doing to fix pipes. You wouldn’t put a cap on things the city does all the time.”
The chairman said that while he appreciates the Council’s role as an oversight body, Events DC needs space to do its job well. “But to constrain our ability to be successful? It’d be like saying you could only submit three bills per session that only impacted $10 million of revenue. It doesn’t seem to be logical.” Tax revenue from the arena, Brown noted, would go towards education, housing, and other government initiatives, adding that Events DC is working to secure partnerships for local vendors, and community input.
Still, Silverman challenged what she called both a “moving-target” and “whatever-it-takes” approach to budgeting for city projects. She said her proposed cap isn’t “artificial” but rather a “budget allocation” of capital dollars. Significant cost overruns for the project aren’t “out of the realm of possibility,” the councilmember explained; overspending funds will not help create more long-term jobs.
“It boggles my mind that being responsible and disciplined with our budget is seen as an act of heresy in this city,” Silverman said.
The hearing on the legislation is scheduled to begin at 3 p.m. on Thursday. The facility’s site will start to get infrastructure in April.
Photo by Will Sommer