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CFO: D.C. ‘ballpark fee’ not going to increase

- The Washington Times - Sunday, December 9, 2012

The District's top budget minder says the city does not need to raise the "ballpark fee" it imposes on businesses to pay down the massive debt it took to build a home for the Washington Nationals, a long-term endeavor in the nation's capital as other sports-crazed cities grapple with the role of public funds in high-stakes stadium deals.

The city took in about $32.9 million in fiscal 2012 through collections of the fee, or about $18.9 million more than what is required by the 2004 law that established the levy, according to D.C. Chief Financial Officer Natwar M. Gandhi.

By law, the fee schedule cannot be altered downward, although by multiple accounts the city is focused on using the excess revenue to pay down the stadium debt earlier than planned. The city's target year is 2026, or a decade sooner than initially contemplated, CFO spokesman David Umansky said.

With optimism in hand, the D.C. business community — which at one time hoped for a rebate of their fees — wants to see the ballpark fee fade into the sunset.

"The chamber would like to see the additional revenue raised from this fee be used to pay down the bonds on the ballpark, so the fee can ultimately be lifted," D.C. Chamber of Commerce President and CEO Barbara Lang said Friday, noting that was the intent of the original deal they struck with former Mayor Anthony A. Williams.

Despite excess revenue, baseball economics often have sung a discordant tune in the District. Financing for the construction of Nationals Park, which opened in 2008, included a substantial contribution from the District through more than $500 million in bonds that the city committed to repay in 30 years.

Wrangling over the taxpayer costs — and the burden on city businesses from the fee — is still a sore point among some at city hall, although Mayor Vincent C. Gray has said the price of bringing baseball to the city has been worth it in light of Nationals' recent success at the ballpark on the Anacostia River. The initial deal almost fell apart in 2004 amid degrees of opposition from various city lawmakers, while supporters like longtime council member Jack Evans, Ward 2 Democrat, pushed hard for the deal and continue to root for the team's success.

Annual revenue from the ballpark fee has exceeded the $14 million floor during the team's eight years of existence, ranging from $15.4 million in fiscal 2006 to $33.3 million in fiscal 2011, according to data from the CFO. Mr. Gandhi told city lawmakers last week he will not alter the fee schedule, which ranges from $5,500 on businesses with at least $5 million in gross receipts each year to $16,500 on those that take in $16 million or more.

Multiple city officials have said that Mr. Fenty, while mayor, used the fee's excess revenue to balance the District's operating budget. But the council under then-Chairman Gray passed a budget bill in December 2010 to phase out the practice by fiscal 2015.

"Using additional income to pay off the bonds," Ms. Lang said, "is something we would expect the Gray administration to do."

From now until 2036, there are scheduled payments on the bonds of $934 million -- $508 million in principal and $426 million in interest, according to the CFO's office.

The District is not the only city to wrangle with the government's role in propping up pro teams as a spur for economic development and civic pride, raising the question of whether taxpayer money should be spent on a ballpark instead of other pressing needs.

Larry Lucchino, president and CEO of the Boston Red Sox , told the Harvard Kennedy School that the "stars were in perfect alignment" when he guided the public funding and construction of Camden Yards in Baltimore 1992, the Harvard Gazette reported in 2010. He later faced adversity in leading the charge to build Petco Park in San Diego.

In Florida, fans of the Miami Marlins franchise are bemoaning the loss of key players after a high-priced deal to open a new ballpark in Miami-Dade County. The park cost $515 million to construct, with public financing picking up the large percentage of the cost, USA Today reported in November.

The newspaper also cited a county-issued report that it will cost $2.4 billion to cover the bonds to build the ballpark by the time they are paid off in 40 years.

In the District, officials are hoping the surging Nats will ease their debt burden. The team grabbed the national spotlight this year through sterling pitching and its range of clubhouse personalities, picking up high-profile fans like CNN's Wolf Blitzer and testing the hometown loyalties of transient D.C. residents along the way. The controversy over whether to shut down ace pitcher Stephen Strasburg on the cusp of the playoffs only added to the intrigue.

Nationals Park saw its highest attendance in 2012, with an average of 30,010 attendees per game exceeding the average of 29,025 in 2008 — the inaugural season at the ballpark.

While the ballpark fee is not directly tied to how well the Nats perform on the field, an influx of sales tax revenue can be linked to the team's expanding fan base. Ticket sales and merchandise purchases at the ballpark are subject to a 10.25 percent sales tax — 6 percent sales tax plus a 4.25 percent specialized tax — and concessions are taxed at 10 percent, team officials said.

Estimates from midway through this year indicated the team was on track to exceed the previous year's sales tax revenue, and that was before the team clinched the National League East title and played three well-attended playoff games at the ballpark in Southeast.

Final sales tax figures will not be released until February as part of the city's comprehensive annual financial report, Mr. Umansky said. But with new fans flooding into the ballpark, conventional wisdom dictates this past season's revenue from tickets, beers, team tchotchkes and other purchases will exceed the previous year's haul.

On paper, the Nationals could come back even stronger for the 2013 season. The franchise recently signed a bona fide center fielder, Denard Span, from the Minnesota Twins and inked a deal with right-handed pitcher Dan Haren to solidify its prized starting rotation.

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