Tuesday, July 15

CATANIA SEEKS TO RAISE SALES TAXES AT STADIUM BECAUSE IT CAN'T PAY ITS WAY

David Catania and seven co-sponsors have introduced a bill racing the sales tax at Nationals Stadium by 50% because it doesn't look like the ball team can pay its way. The bill will increase the current tax on the gross receipts from the sale of tickets, concessions, vending, and parking from 10 percent to 15 percent. Catania produced data indicating that Nationals Stadium may not generate enough revenue to meet the city's debt obligation.

The measure comes in the wake of the refusal of the Nationals owners to make their first rent payment, but it also reflects a more realistic look at income projections than previously have been available.

Said Catania, "Despite the rosy scenarios we hear from the CFO and others, the District will likely need the revenue from the team's rent payment to cover the debt service on the Ballpark Bonds. In other words, if this dispute turns into a protracted legal fight, the city may not be in a position to pay its debt to the bondholders.

"Last year, total stadium tax collections $37.8 million - short of the $39 million needed to pay back the bonds. This means that without a substantial increase in tax collections at the new stadium, we are completely dependent on the revenue from the team's rent payment to inch us over the $39 million mark.

"We have been told repeatedly that the new stadium was going to produce a windfall in tax revenue. But the National's home season is well past the halfway point and it appears that these predictions are wrong.

"In November 2005, the CFO testified before the Council that stadium and business taxes alone at Nationals Stadium would produce an average of $52 million annually. He said further that rent from the Nationals would account for another $6 million. We were promised that the extra funds beyond what is needed to pay the debt service could be used in any number of ways, including most recently, to finance a new soccer stadium.

"To make these claims the CFO relied on a 2005 study commissioned by his office and performed by a group called Economics Research Associates. The study predicted that the Nationals would sell 3.12 million tickets this year, an average of 39,131 per game, and collect $16 million in tax proceeds from the sales of tickets, concessions, merchandise, and parking.

" Unfortunately, these predictions are turning out to be pure fantasy. Through 49 of 81 home games, the Nationals are on pace to sell 2.4 million tickets, not 3.12 million as predicted. That's nearly 25 percent fewer tickets sold. In fact, of the 7 new stadiums constructed since 2000, only the Great American Ballpark in Cincinnati averaged fewer attendees per game in its first year than Nationals Stadium thus far."

A more sensible projection of ballpark revenues "assumes that ticketed attendance continues at its current level through the remainder of the season and reflects an equivalent reduction in the CFO's estimate for stadium-related taxes."

Added Catania, "It is even more concerning when one considers the paying back the bonds will not be our only obligation. Currently, there are two remaining parcels of land yet to be settled. These will likely cost millions more. The District is also required to maintain property damage insurance, which will require another $1.5 million each year. It is not clear at all where the money to pay these obligations will come from.

In conclusion, this government is facing a perfect storm of increasing costs, declining attendance, and a national economy on the brink of recession. Thus far, we have relied to our detriment on unrealistic projections from our CFO. This bill will provide us with the extra revenue we are going to need to do that."

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