SBJ/June 20 - 26, 2005/SBJ In Depth

Option would trim yearly ballpark fee

Businesses being asked to foot the bill for a chunk of the Washington Nationals’ new ballpark would get some short-term relief under one public financing option the city is considering.

The Office of the Deputy Mayor for Planning and Economic Development says it can reduce the money businesses would pay each year by more than 42 percent if the $581 million stadium’s cost is spread out over 30 years.

A plan would spread out the fee businesses will pay to help build a stadium for the Nationals.
The new proposal is essentially the same as a public financing plan passed by the D.C. Council in December, with only structural changes. Because of this, no hearings or vote would be needed for the city to adopt it.

“It’s the same plan, but it asks for a lower payment over a longer period of time,” said Steve Green, director of development in the deputy mayor’s office.

Under the proposal, revenue from a ballpark fee on businesses could be as little as $8 million a year. That compares with $14 million under the original plan, which called for the stadium to be paid off in 15 to 18 years.

How much each business would pay under the new proposal is still under discussion. But city officials say the fees would likely be reduced by the same proportion as the revenue needed.

For the largest business, this could mean a reduction in the annual ballpark fee to as low as $9,500 from $16,500. Smaller businesses could see their fee reduced from $5,500 annually to about $3,200. Only D.C. companies with $5 million in annual sales are subject to the fee.

“This creates the opportunity for the ballpark fee to be less,” Green said. “From the businesses’ point of view, it’s a better thing. This can lessen the burden.”

The rest of the stadium’s cost would be paid by a tax on ticket sales and concessions, rental payments from the team’s owner and a utility tax on businesses and federal buildings.

The new proposal comes as discussions to include private financing in the funding mix have stalled. Sources involved in those talks say private financing is all but a dead issue.

D.C. Council Chair Linda Cropp notoriously blocked a council vote on public funding in late December after insisting the city look at private financing options. The legislation that passed required the city to explore private financing options but allowed the council to adopt the original public financing plan if it did not like any of the private financing proposals.

Although the annual fees paid by businesses would be lower under the new option, the stadium’s total cost would increase because the city would have to pay more interest. The plan still does not address the concerns of some medium-sized businesses, which pay a higher percentage of their revenue toward the fee.

It’s tough to gauge how businesses feel about the new proposal because most were unaware it existed.

“Until we see it, we won’t comment on it,” said Ted Trabue, regional vice president for Pepco, one of the city’s largest businesses.

Others offered cautious support.

“It’s significant that the business community is endorsing the tax, so to the extent that it would be lessened, I’d think businesses would support it even more,” said Jerry A. Moore III, a partner with the Venable law firm, which would pay the maximum fee.

The D.C. Chamber of Commerce, while it has supported a lowering of the fees if possible, said it will stand by its long-held stance that businesses would do better if the stadium were paid off sooner.

Said chamber President Barbara Lang: “We want to get rid of the debt as quickly as we can.”

Tim Lemke writes for the Washington Business Journal.

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