WASHINGTON - A plan that includes $150 million of bonds to build a professional soccer stadium in the District of Columbia could be presented to the District Council as early as tomorrow, sources said.
The bonds would be backed by excess tax revenues - expected to be about $20 million per year - collected from the Washington Nationals' ballpark tax, sources said.
The district's chief financial office, Natwar Gandhi, told Mayor Adrian M. Fenty and the council in a letter in February that the predicted excess revenues - which are above what the city would need to pay debt service on about $535 million of tax-exempt and taxable bonds issued for the ballpark - could possibly back bonds for a new project. Gandhi also said that the excess revenue could be used to pay down the debt or be transferred to the district's general fund.
The stadium for Major League Soccer's D.C. United team would be located on a site in Ward 8 of the district called Poplar Point, a $2.5 billion, 110-acre project aimed at transforming waterfront land into a mixed-use development.
D.C. United currently plays in the 47-year-old RFK Stadium. Councilman Marion Barry, who represents Ward 8, has been a vocal proponent of building a stadium on the site.
But using public funds to finance the stadium has gotten mixed reviews from other council members and the public, and Gandhi has been cautious about adding to the district's debt burden.
In a letter to council last year, the CFO recommended that the city's debt not top 12% of its expenditures. It is currently around 9.5% and Gandhi has said that by 2010 it could peak at 12%. The stadium bonds would push it above that. Gandhi has said that keeping below the 12% figure is important for the district's bond ratings.
Currently the city has the highest ratings it has ever had. Last spring it received upgrades from all three major rating agencies. Fitch Ratings and Standard & Poor's give the district an A-plus, and Moody's Investors Service rates it A1.
"Right now, there is no piece of paper, so we couldn't comment on" whether Gandhi would give the nod to a soccer stadium proposal, said David Umansky, public affairs officer for the CFO. Umansky said Gandhi generally does not express support of projects, and that "his job is to tell the council and the mayor what the financial facts are."
A government source who spoke on the condition of anonymity because details are still being fleshed out said this particular idea has been "floating around" for some time. "It's important for the council to first find out what public support it would have," the source said.
Council member David Catania's chief of staff, Ben Young, said Catania favors using the excess tax revenues to pay down the outstanding debt issued for the Nationals' ballpark or lower the tax.
"We recognize that we're meeting our bond obligations. We're meeting them largely because we're socking businesses with the taxes," Young said. "It was always implied that if we were collecting too much, we'd take it down and adjust."
Young said Catania is "skeptical" of a soccer stadium, adding: "I think that's a fair statement."
Council member Jim Graham'scommunications director Ronnelle Adams said Graham has not seen a proposal so he is undecided about whether he would support a stadium.
Other council members did not return requests for comment before press time.
The idea of building a new stadium for the soccer team has been in the works since the city was in talks last year with D.C. United's owner, real estate tycoon Victor A. MacFarlane.
MacFarlane wanted to build the stadium at the Poplar Point site and develop the property, and originally had agreed to pay $150 million for the 27,000-person stadium, if the district would provide $350 million to finance infrastructure. But Fenty pulled out of talks in August and opened it up for competitive bidding. MacFarlane has since said he would consider moving the team to the district's suburbs.
The district in February picked Clark Realty Capital as its development partner in transforming the site, and the developer included an option for a soccer stadium in its proposal.
Clark Realty was also in charge of the construction of the Washington Nationals baseball stadium, which opened in March.
The mayor has been under pressure from Ward 8 residents and public officials to move the Poplar Point project forward and to bring a D.C. United soccer stadium to the area. When Fenty was a member of the District Council he voted against using public funding for the $611 million ballpark.
In February the mayor said he was never against public funding for the Nationals stadium, but only opposed an "unfair" deal. Fenty said he would "never support a deal that was 100% city-funded."
After soccer stadium discussions were raised in February, he said: "I think most people understand it will require a public subsidy. What that public subsidy will be, we don't have one yet."
Following a briefing from Fenty in February, Barry said he was confident the District Council and the mayor were committed to the "concept of a stadium."
Fenty's office did not return phone calls for comment.
Sean Madigan, spokesman for the office of the deputy mayor for planning and economic development, which is heading the Poplar Point project, said officials are in the process of conducting an environmental impact study on the parcel. Clark Realty has proposed a mixed-use development for the project, including housing, retail, a 70-acre park mandated by the federal government, businesses dedicated to the environment, and a charter school.
Poplar Point is currently controlled by the federal government, but Congress authorized a site transfer to the city government, with the condition that a federal environmental impact study be done. Madigan said while the financing plan has yet to be set, the project will have some bond financing and involve payments in lieu of taxes and tax increment financing districts.
Poplar Point is a part of the $10 billion Anacostia Waterfront Initiative, aimed at transforming land along the Anacostia River in a fashion similar to Baltimore's Inner Harbor. Also included under the umbrella of the initiative is the $1.1 billion southwest waterfront project, which Madigan said will use a $200 million mix of PILOTs and TIFs. The details are still being figured out, but Madigan said it is moving forward.
"The $200 million is about 18% of the total development costs, which is really in line with what we do with public financing for these projects," Madigan said.
A project called the Hill East Waterfront is a mixed-use project likely to carry a multimillion-dollar price tag and be partially financed by bonds. The district is currently asking for developers to submit ideas.