District of Columbia:
Status of the Sports Arena
AIMD-98-26: Published: Nov 14, 1997. Publicly Released: Nov 14, 1997.
- Full Report:
Pursuant to a congressional request, GAO discussed the progress of the sports arena project in the District of Columbia, focusing on the project's predevelopment costs, revenue collections, and construction status.
GAO noted that: (1) as of October 7, 1997, the District of Columbia estimated total predevelopment expenditures to be about $58.5 million, a net increase of about $2.7 million over its October 18, 1996, estimate; (2) the increase is largely attributed to the extended time frames for soil remediation efforts, which in turn compressed construction schedules; (3) the subsequent negotiated settlement with the sports arena contractor on behalf of the subcontractors was to compensate them for premium labor rates to get back on construction schedule and to cover additional material costs; (4) the District's $61.9 million in available funds for predevelopment costs for the sports arena appears to be sufficient to meet estimated expenditures; (5) as of October 7, 1997, almost all the predevelopment activities had been completed, and the District had spent about $56.7 million, with an additional $1.8 million budgeted for activities that will soon be completed, leaving approximately $3.3 million to pay unanticipated expenses or to redeem term bonds prior to their redemption dates; (6) the only known potential risk to the sports arena budget is the price for property taken in a condemnation action, which is to be settled through court action scheduled for December 1997; (7) the difference between the funds on deposit with the courts to pay for the property and the owner's most recent asking price is $3.35 million; (8) collections from the dedicated arena tax have been more than sufficient to pay principal and interest of about $5.9 million annually on the bonds issued to finance the predevelopment expenses; (9) for each of the past two years, collections have exceeded $9 million, and it appears that 1997 collections will also exceed $9 million; (10) an analysis performed by the District's lead underwriter of the sports arena special tax revenue bonds shows that if future year dedicated tax collections remain in the $9 million range, and if revenues from the ground lease of the sports arena and existing debt service reserves funds were used, the bonds could be paid off by 2002, well before the last scheduled maturity date in 2010; (11) the analysis also revealed that the District would save about $15.6 million in interest costs if the bonds were redeemed in 2002; and (12) the sports arena is expected to be completed and available for use on December 2, 1997, 3 months behind the originally scheduled date of September 1, 1997.