WASHINGTON -- A House committee will review next week two proposed projects that would use a municipal finance technique that is new to the District of Columbia.
The proposals, to build a $200 million sports arena and a $521 million convention center project, would involve issuance of taxable and tax-exempt revenue bonds by two newly created authorities, the Sports Commission and the Washington Convention Center Authority. The district has never used authorities to finance facilities, a technique commonly used by other jurisdictions.
The financings would require changes to the Home Rule Act, which grants the district limited authority over its affairs, subject to congressional oversight. A pending bill sponsored by the district's Democratic delegate, Eleanor Holmes Norton, would allow the district to grant authority to the enterprises to issue bonds and collect revenues.
The House Committee on the District of Columbia plans hearings next week on the bill and on two General Accounting Office status reports on the projects that were released yesterday by committee chairman Rep. Pete Stark, D-Calif. But committee aide Brigid Quinn said yesterday that a specific day for the hearings has not yet been set.
The GAO said both projects are in the early development stage and that therefore specific cost and revenue information is fuzzy.
The sports arena proposal shows that enough direct revenue should be generated to cover expenses, but "a number of unanswered questions could significantly affect the projection," the GAO said. For example, no formal feasibility, environmental impact, or design studies have been completed, and current cost projections do not include infrastructure changes.
Under the proposal for the 23,000-seat arena, which is expected to be built by September 1997, the sports authority would issue $92 million of tax revenue bonds backed by a new gross receipts tax on district businesses.
The tax first was passed this year and called a public safety fee for the purpose of balancing the fiscal 1994 budget, but revenue collections have fallen short of projections, the GAO said.
In addition, the National Capital Development Corp., a nonprofit entity formed last March by local business interests to build and own the arena for 20 years, would issue $80 million of taxable project bonds backed by revenue generated by the arena and a pledge of additional revenue from Abe Pollin. Pollin owns the professional Bullets basketball team and Capitals hockey team, which would be housed under long-term agreements at the arena.
For the convention center, the newly created Washington Convention Center Authority would issue $364 million of tax-exempt revenue bonds backed by hotel sales and occupancy taxes, restaurant sales taxes, and a business franchise tax. In a second phase, the authority would issue $157 million of tax-exempt and/or taxable revenue bonds backed by sale or lease of the existing center.
Both projects are strongly supported by Mayor Sharon Pratt Kelly and district council members Marion Barry, who won the mayoral Democratic primary on Tuesday, and William Lightfoot, who entered the mayoral race on Wednesday as an independent.
