District of Columbia:
Final Status on the Sports Arena
AIMD-98-223: Published: Jul 27, 1998. Publicly Released: Jul 27, 1998.
- Full Report:
Pursuant to a congressional request, GAO reviewed the progress of the sports arena project in the District of Columbia, focusing on the project's predevelopment costs, revenue collections, and bond redemption status.
GAO noted that: (1) the District has spent $60 million, about 98 percent of the estimated total cost of predevelopment activities, for the sports arena; (2) as of April 30, 1998, the District estimated total predevelopment costs to be about $61.5 million, a net increase of about $2.9 million over its October 7, 1997, estimate, as reported in GAO's November 1997 report; (3) the increase is largely due to the final agreed upon price the District paid for a parcel of land included in the arena site; (4) the only known expense not under contract or agreement is the District cost for soil remediation and the removal of concrete structures below the surface for a parcel of land transferred to the Washington Metropolitan Area Transit Authority; (5) the District's project manager for the sports arena has budgeted $700,000 for this activity, which is included in the total estimated cost; (6) the District's $5 million in remaining available funds for predevelopment costs for the sports arena appears to be sufficient to meet all estimated remaining expenditures; (7) as of April 30, 1998, the District had spent about $60 million and an additional $1.5 million was budgeted for the remaining predevelopment activities that will soon be completed, leaving approximately $3.5 million to pay unanticipated expenses or to redeem term bonds prior to their redemption dates; (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 3 years, collections have exceeded the $9 million originally forecasted by the District, totalling about $1.6 million more than the District's forecast for the 3-year period; (10) as of April 30, 1998, the District had redeemed $6 million of the serial bonds and $2.5 million of the term bonds issued to finance the predevelopment expenses prior to their maturity date; (11) GAO's analysis shows that if the present level of collections are sustained, and revenues from the ground lease of the sports arena and the existing debt service reserve funds are used, all of the arena bonds would be paid by 2002, about 8 years before the 2010 maturity date; and (12) this redemption schedule would save the District about $16.4 million in interest costs, and allow about $7.7 million to be transferred to the District's General Fund.