District of Columbia:
Status of the Proposed New Convention Center Project
AIMD-97-148, Sep 25, 1997
Pursuant to a congressional request, GAO reported on the progress of the proposed new convention center project for Washington, D.C., focusing on the project's: (1) approval process; (2) building design; (3) estimated costs; (4) dedicated revenues; and (5) financing plans.
GAO found that: (1) the Washington Convention Center Authority (WCCA) is faced with the challenge of obtaining sufficient financing for the construction of the new convention center project; (2) the total cost--predevelopment and construction, including contingencies--is now estimated to be about $650 million, excluding $87 million of borrowing costs and certain reserve requirements; (3) WCCA already has sufficient funds from dedicated taxes for the $40 million in projected predevelopment costs of which a reported $15.6 million was expended as of July 31, 1997; (4) however, funding for the entire estimated $610 million in construction costs is uncertain; (5) WCCA plans to issue revenue bonds backed by dedicated taxes to finance a portion of the construction cost of the project; (6) however, WCCA would need to have its authority to use the taxes currently dedicated to the project expanded to include using them for construction and would have to adopt and submit for City Council review a resolution authorizing the issuance of revenue bonds; (7) the current stream of existing annual dedicated tax revenues is not sufficient to support the debt required to fund the project's estimated construction cost; (8) the current earmarked tax collections are estimated to support a revenue bond issuance of $423 million; (9) WCCA estimated that if $51 million of interest earnings from bond proceeds as well as $30 million of cash on hand from dedicated taxes as of July 31, 1997 are added to the estimated $423 million, total estimated revenues would amount to $504 million; (10) however, this would leave a shortfall of approximately $106 million; (11) assuming estimated costs are accurate, WCCA would need about $114 million ($106 million plus an estimated $8 million to satisfy an operation and maintenance reserve) if it were to enter the market in October 1997, as originally contemplated, to obtain bond financing; (12) WCCA, with the assistance of financial advisors, has been exploring options such as additional funds from the District, federal funding, and sale of the existing convention center to supplement the dedicated tax revenues; (13) also, before the project can move forward, the National Capital Planning Commission (NCPC), the central agency for conducting planning and development activities for federal lands and facilities in the National Capital Region, including the District of Columbia, must approve the concept design as well as address community concerns regarding the project; and (14) since GAO's December 1996 report, WCCA's estimated completion date has slipped 1 year to December 31, 2000, and based on the delays and approvals required, this date is uncertain.