District of Columbia:

Status of the New Convention Center Project

AIMD-99-258: Published: Sep 28, 1999. Publicly Released: Sep 28, 1999.

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Pursuant to a congressional request, GAO provided a status report on the construction of the new Washington Convention Center, focusing on: (1) the status of the project; (2) changes in the Washington Convention Center Authority's (WCCA) estimated project costs and financing plan since GAO's last report; and (3) actual expenditures and collection of dedicated taxes.

GAO noted that: (1) in March 1999, work started on slurry wall construction, site excavation, and removal of contaminated soil; (2) based on information provided by WCCA officials as of June 1999, total estimated project costs decreased $55 million from $846 million to $791 million; (3) this decrease was due to reduced financing-related costs, which resulted primarily from the purchase of a surety bond covering debt servicing instead of funding the initially planned for Debt Service Reserve Fund; (4) WCCA estimated the total construction cost of the project at $714 million--$6.3 million, or less than 1 percent, more than the June 1998 estimate; (5) the $6.3 million increases to $24 million the estimated value of equipment that WCCA anticipates being provided by vendors at no initial cost to WCCA; (6) however, WCCA remains at risk for the cost of the equipment until contracts are executed with vendors; (7) within the $714 million construction cost estimate, WCCA made a number of changes, increasing the estimated cost of some project components and decreasing others to reflect more current data; (8) proceeds from the September 1998 bond sale covered about 66 percent of the $791 million June 1999 project cost estimate; (9) WCCA's financing plan covered the remaining cost through dedicated taxes over the 4-year construction period, anticipated interest earnings, anticipated federal grants, and reliance on vendors to provide without cost, equipment that WCCA estimates would cost $24 million--an amount for which WCCA is at risk until such time that there are executed contracts to cover these arrangements; (10) dedicated tax collections for the first 10 months of fiscal year 1999 were $42.2 million--a little higher than the amount assumed in the bond offering documents prorated for the same period; (11) in addition to the amounts already collected, WCCA may receive some portion of amounts in the lockbox exceptions account; (12) these amounts cannot be determined until all collections held in the lockbox exceptions account have been appropriately allocated by the District of Columbia and appropriate amounts transferred to WCCA; and (13) WCCA's share of interest earnings on amounts in the exceptions account cannot be determined until the District determines the appropriate allocation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a August 24, 1999 letter, the District's Chief Financial Officer stated that effective July 1999 transfers to the District will be based on the calculation of actual amounts collected in accordance with the lockbox agreement. Transfers to WCCA have been made on the basis of actual calculations since inception of the agreement.

    Recommendation: The District of Columbia's Chief Financial Officer should restrict further transfer out of the exceptions account on the basis of estimates.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

  2. Status: Closed - Implemented

    Comments: In an August 24, 1999 letter, the District's Chief Financial Officer stated that the Office of Tax and Revenue (OTR) is presently in process of completing a reconciliation of the exceptions account for the period from inception to June 1999 when the final estimated transfer was made. The analysis will take into consideration all estimated amounts wired to the District.

    Recommendation: The District of Columbia's Chief Financial Officer should determine actual amounts due to the District and make appropriate adjustments to the estimated amounts transferred from the exceptions account.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

  3. Status: Closed - Implemented

    Comments: In an August 24, 1999, the District CFO stated that OTR will resolve the remaining older amounts during the reconciliation of the exceptions account. The remaining older balance will be wired to the District and to WCCA as part of the allocation of the exceptions account balance as of June 30, 1999.

    Recommendation: The District of Columbia's Chief Financial Officer should resolve the remaining older amounts in the exceptions account and make appropriate transfers to the District and WCCA.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

  4. Status: Closed - Implemented

    Comments: In an August 24, 1999 letter, the District's CFO stated that effective July 1999, the OTR calculates amounts owed to both WCCA and the District monthly and submits wire requests on a monthly basis to the Office of Financial Operations and Systems. OTR also reconcile the month end cash balance per the bank in the exceptions account to the System of Accounting and Reporting (SOAR) balance.

    Recommendation: The District of Columbia's Chief Financial Officer should establish and enforce procedures for clearing the exceptions account and transferring funds to the appropriate accounts monthly.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

  5. Status: Closed - Implemented

    Comments: In an August 24, 1999 letter, the District's CFO stated that the District was in the process of determining the allocation of interest earned by the District and WCCA through June 30, 1999 and establishing procedures for the allocation of interest earned and the timing of the transfers. The District did not agree with us that the interest transfers should be done monthly.

    Recommendation: The District of Columbia's Chief Financial Officer should determine interest income on the exceptions account to be allocated to the District and WCCA, make appropriate transfers of the interest previously earned, and make future transfers of interest no less often than monthly.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

 

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