RICHMOND - Virginia would create a new stadium authority empowered to issue $130 million of tax-exempt bonds under a plan laid out for state lawmakers Friday by Gov. L. Douglas Wilder and his top aides.
Bond proceeds would be used to fund infrastructure improvements at a proposed new football stadium to be built and financed by the owner of the Washington Redskins. The 1992 Super Bowl champions currently play at RFK Stadium in the District of Columbia.
"By voting to create a stadium authority that can issue bonds for site cleanup and transportation infrastructure, you will turn Potomac Yard from a waste-filled eye sore into one of the most desirable commercial properties in metropolitan Washington," the governor told members of the General Assembly's money committees.
Paul W. Timmreck, the state's finance secretary, said the proposed bonds would be repaid out of general fund revenues. The plan would require the General Assembly to appropriate an estimated $11.5 million annually to service the debt, he said.
Tim Mueller, a senior manager at KPMG Peat Marwick, said the debt service appropriations would be more than offset by an expected $19 million in taxes annually. He said the state would hit the break-even point in 1999.
Mr. Mueller, whose firm was recently retained, by the Wilder administration to analyze the economic viability of the proposed project, also said the development would create 16,300 multiple jobs. Potomac Yard, an old railroad switching yard, is owned by the RF&P Corp., a real estate firm. The corporation's largest shareholder is the Virginia Retirement System. RF&P has agreed to provide 155 acres for stadium use, and would retain a similar amount of space for mixed-use development.
Redskins owner Jack Kent Cooke will finance construction of the $160 million stadium himself. The state share would be used to fund a new station for the Metro transit rail system, parking lots, utilities, to within five feet of the stadium, and roadway improvements.
Cathleen A. Magennis, the state's economic development secretary, said the state's stake in the project would help leverage a total of $1 billion in spending. In addition to the $130 million of bonds and $160 million from Mr. Cooke, $725 million is expected to be spent by the private sector for mixed-use development at the site.
Ms. Magennis said that under the proposal before lawmakers, the stadium authority would hold title to the stadium, not Mr. Cooke. Ownership of the stadium and adjacent parking land would revert to RF&P in 65 years.
Mr. Timmreck said several state and local tax exemptions are part of the deal. For example, materials and supplies used in stadium construction would be exempt from the state sales tax.
Admissions, sky box revenues, and game-day parking revenue would be exempt from the local gross-receipts tax.
Members of the money committees appeared lukewarm to the proposal. Some, for example, asked the Wilder administration to provide them with a written explanation about why it is appropriate to offer tax breaks for the stadium project. while operators of King's Dominion and Busch Gardens, two theme parks in the state, do not get the exemptions.
Gov. Wilder and his cabinet members declined to say whether a special session of the General Assembly would be called to consider the proposal. If no special session is called state lawmakers would not act on the plan until early next year, possibly jeopardizing the planned opening of Jack Kent Cooke Stadium at Potomac Yard at the beginning of the 1994 football season.
Mr. Timmreck said the governor is awaiting guidance from legislative leaders on the best timing for a special session. But he added that if a special session is called in September, and lawmakers approve the plan, the state could sell bonds as early as December.
Noting the recent sale of $174 million of bonds by the Virginia Public Building Authority, Mr. Timmreck also said the proposed stadium authority could likely get low interest rates.
Two weeks ago, the building authority sold the double-A rated bonds at an average interest rate of 5.57%.
Gov. Wilder said the bonds "were priced at the same level as triple-A bonds of other states, and that is a clear indication of the overall credit strength of our commonwealth."
In other developments Friday, Gov. Wilder said Virginia finished fiscal 1992 on June 30 with a general fund revenue surplus of 47.9 million.
But while expressing satisfaction that the state ran a surplus, he added, "We must remember this marks the third consecutive year that our growth in general fund revenue has been less than inflation.
The total general fund balance at the end of fiscal 1992 was $195.1 million.
"Our large ending balance signifies a major improvement in our overall cash position at yearend," Gov. Wilder said. "The analysts on Wall Street who rate our bonds should be impressed."
Mr. Timmreck said the state is projecting fiscal 1993 growth, adjusted for inflation, of 2.7%. Projections for fiscal 1994 growth, also adjusted for inflation, are for a 2.4% increase.