New estimates of the costs of building a baseball stadium in the District of Columbia have been released in recent weeks. The new figures show that some of the basic costs ‘ including land and stadium materials ‘ are now well over their original budget. At the same time, the initial budget included a substantial contingency reserve, and Major League Baseball appears to have agreed to make a $20 million contribution to the stadium in return for some concession.
This analysis reviews the original stadium budget and the recent changes to it. This review shows that the stadium is now at least $54 million above its original budget, and the overrun could be considered as high as $77 million. Moreover, the substantial contingency fund has largely been depleted. If the MLB contribution can be used to defray stadium costs, the District’s share of the cost overruns could be reduced by as much as $20 million ‘ or to $34 million to $57 million.
Table 1 highlights the original and current estimates of the costs of various stadium components.
|
DC Baseball Stadium Cost Estimates |
|||
| Original Fall 2004 |
Revised Fall 2005 |
Difference | |
| RFK renovations | $24 | $24 | $0 |
| Land | $65 | $97 | $32 |
| Stadium construction | $244 | $300 | $56 |
| Soft Costs | $35 | $53 | $18 |
| Parking | $17 | $21 | $4 |
| Infrastructure | $50 | $33 | -$17 |
| Contingency | $51 | $6 | -$45 |
| Bond Issuance Costs | $49 | $54 | $5 |
| TOTAL | $535 | $589 | $54 |
- Cost estimates for land acquisition, stadium construction, “soft” costs (architectural and engineering design, for example), and parking are well above the original estimates. Together, the cost of these components is $110 million higher than the budget developed in 2004 that served as the basis for stadium financing legislation.
- The cost of issuing stadium bonds also has grown. When this cost is included, the total cost overruns are $115 million.
Stadium development officials have addressed the higher costs in part by using $45 million of a $51 million contingency fund included in the original budget. Some $6 million in contingency funds remain.
In addition, stadium officials have attempted to find savings by shifting costs for stadium-related infrastructure outside the stadium budget. Last year, the stadium cost estimate developed by the DC Chief Financial Officer included $50 million to cover related infrastructure costs, such as upgrades to the Navy Yard Metro station. In March 2005, the CFO re-estimated costs for infrastructure, demolition of properties on the stadium site, and environmental remediation to $56 million.[1] Yet the recent budget revisions from stadium officials include just $33 million for these costs. This is $17 million lower than the amount in the original stadium budget and $23 million lower than the revised estimate from the CFO.
The infrastructure savings largely would come from moving such costs out of the stadium budget and not from real cost savings. For example, the new budget from stadium officials includes only $250,000 for Metro upgrades, even though the actual cost is expected to be $20 million. It is not clear how the necessary infrastructure upgrades will be completed if they are not funded as part of the stadium budget.
Taken together, these figures show that the stadium is well over its original budget.
- The current stadium budget is $589 million, or $54 million above the $535 million cost estimate for the stadium legislation adopted last year. Moreover, the budget now has only a $6 million contingency fund, compared with $51 million in the original budget.
- As noted, the $589 million budget assumes $17 million to $23 million in lower infrastructure costs that do not appear to be realistic. If these costs are added back to the stadium budget, it would be considered $71 million to $77 million over the initial budget.
Major League Baseball is expected to offer a $20 million contribution toward the stadium as part of lease negotiations. In return, MLB is seeking a concession from the city that has not yet been specified. It is not clear whether the concession will add to stadium costs. If not, it is possible that the MLB contribution could be used to address the cost overruns. If that occurs, the District’s share of current stadium cost overruns could fall, to somewhere between $34 million to $57 million.
End Notes:
[1] The March estimate actually reflected $84 million in such costs. This included $28 million for the cost of moving a major sewer line, but it now appears that the line will not need to be moved. The $56 million figure cited here is the CFO’s $84 million estimate less the $28 million sewer line cost estimate.