Testimony of Ed Lazere, Executive Director, At the Public Hearing on B 20-805, The District of Columbia Soccer Stadium Development Act of 2014

Chairman Mendelson, Chairman Evans, Chairman McDuffie and members of the Council, thank you for the opportunity to testify today. My name is Ed Lazere, and I am the executive director of the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on how policies impact low-and-moderate income families.

I am pleased to testify here about legislation to develop a new soccer stadium for DC United. The DC Fiscal Policy Institute is part of a coalition, the Winning Goal Coalition, which believes that professional soccer is an important part of the quality of life in our region, and that DC United needs a new home. The DC Fiscal Policy Institute also understands that virtually all professional sports stadiums are built with some level of public financial support, and so we accept that the DC United stadium will need some public support.

The question then becomes whether the legislation and associated documents represent a god deal for the District and the best way to bring a new soccer stadium to the District. It is important to remember that while a new stadium will be a great cultural benefit, the most direct financial benefits will go to the owners of DC United. A new stadium will allow the team to sell more tickets, get naming rights, control concessions, and develop entertainment venues on land adjacent to the stadium. The value of the team to the owners will jump dramatically the minute the team has a new stadium. Given the team’s financial stake, DCFPI believes the team should bear a greater share of the costs and risks than the District.

It also is important to remember that the legislation offers only one financing mechanism that will cover only a small part of the District’s costs, which means almost every dollar going into the stadium from the District is a dollar that could be going to build a library or school or recreation center.

Finally, the DC Council has commissioned a study to look at a cost-benefit analysis of the real estate transactions and to provide expert advice on the terms of the proposed transactions. The Council should wait for the completion of this work before making any decisions on this legislation.

I believe that this deal should be examined and improved in three keys ways:

  • Support for the immediate community:  One set of questions revolves around making sure the stadium development is helpful and not harmful to the surrounding community and to the people who will work to build it and operate it each game day.
  • Redevelopment of the Reeves Center: The proposal to redevelop the Reeves Center is, in my opinion, as important as development of a soccer stadium. Yet the Reeves Center is being treated in this legislation like a Monopoly property, to be traded for cash.  The District would transfer the Reeves Center to Akridge and allow the company to re-develop the site any way it wants. Yet the re-development of public property usually involves planning and community input that leads to some guidelines for the property’s future use.  In addition, the legislation would trade the Reeves Center to Akridge at a price below the value from at least one of the appraisals, which suggests that putting it up for sale could generate a better return to the city.  Finally, the plan calls for creating a new Reeves Center east of the Anacostia River, yet it offers no details and no financing.  With the city very close to its debt cap, it is not clear how or when a new municipal center will be completed.
  • Subsidy details: The legislation and agreements set a cap on the District’s investment at $150 million. While it is good that the city’s costs would be capped, but we believe this is too high.  District officials now believe the costs to buy and prepare the land will be close to $120 million, which suggests the cap should be set there, with DC United accepting any cost-overrun risks. In addition, the legislation provides substantial property and sales tax breaks to the team owner, especially in the early years.  District officials explain this is needed because the team is likely to lose money for the first few years.  Yet given the fact that the team stands to benefit financially in multiple ways from a new stadium, the District does not need to provide tax breaks to further help DC United’s bottom line.  DCFPI believes that DC United should pay all sales and property taxes from Day One.  In a week when the Council affirmed the value of broad tax bases, offering special tax exemptions to DC United does not make sense.

To read the complete testimony, click here.