District of Columbia: Status of Sports Arena and Convention Center Projects

GAO discussed the proposed new sports arena and convention center projects in the District of Columbia, focusing on: (1) the District's predevelopment costs for the arena project; and (2) what revenues have been generated by new dedicated taxes. GAO noted that: (1) the District's estimated predevelopment costs for the sports arena project total $56 million; (2) the District plans to finance the project by borrowing up to $53 million from a syndication of banks and using about $9 million annually in tax revenues to repay the loan over 7 to 10 years; (3) other financing proposals involve issuing a combination of tax-exempt and taxable bonds at various interest rates over a period of up to 20 years; (4) the arena tax should provide sufficient revenue to repay the loan if the District's key tax projection assumptions are achieved; (5) if the District is successful in obtaining a federal grant to construct subway connection to the arena, the amount it would need to borrow would be reduced by almost $11 million; (6) the District has received and deposited $16.2 million in new taxes dedicated to the convention center project as of July 11, 1995, which amounts to about 53 percent of the $30.8 million projected for fiscal year 1995; and (7) the District cannot contract for the various studies necessary to better define the new convention center project proposal or expend funds for the operation of the existing convention center until Congress permits the District to use the dedicated tax revenues.