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JOINT PUBLIC HEARING ON BILL 15-1028, “BALLPARK OMNIBUS FINANCING
AND REVENUE ACT OF 2004”
Before the Committee on Finance and Revenue and Committee on Economic Development
Council of the District of Columbia
The Honorable Jack Evans and The Honorable Harold Brazil, Chairmen
October 28, 2004, 10:00 a.m.
Council Chamber, John A. Wilson Building
Natwar M. Gandhi, Chief Financial Officer, Government of the District of Columbia
Good morning, Chairmen Evans and Brazil and members of
the Committees on Finance and Revenue and Economic Development. I am
Natwar M. Gandhi, Chief Financial Officer of the District of Columbia. I
am pleased to be here today to testify on the “Ballpark Omnibus
Financing and Revenue Act of 2004,” Bill 15-1028.
Funds are sufficient in the FY 2005 budget to implement
the Ballpark Act, as proposed by the Mayor. There will be risks,
however. The character of those risks will be discussed, but it is
difficult to quantify them at this time because 4 of the 6 necessary
agreements among the parties are not yet final and some of the costs are
not as yet determined. This bill provides the basis for a major new
construction project in the District. Bringing that project to
completion on time and within budget will require a strong, experienced
My testimony is based on the information we have as of
this time. It examines two central questions: (1) will the financial
structure proposed in this legislation raise sufficient funds to pay the
estimated costs of the project contained in the agreement between Major
League Baseball (MLB) and the District and (2) can the project be
completed within the proposed costs?
The findings are:
- We estimate that the fees and taxes
proposed in this legislation will raise more than enough money to pay
the debt service on $395.2 million, the
estimated costs of the project contained in the
District’s agreement with MLB.
- We estimate that bringing baseball
to Washington could cost about $486.2 million, or about $91 million more
than the budget in the agreement suggests, primarily because of the
unknowns associated with infrastructure costs outside the stadium and
other unforeseen contingencies. As a result of the increase in estimated
project costs, more money will have to be borrowed and debt service will
increase. Since the ballpark fees must cover about 80% of the debt
service, the funds collected from fees will have to increase from about
$24 million to about $26 million. Under current market conditions, the
District would have to issue bonds in the amount of about $500 million
to raise this amount of money.
- The $500 million bond issuance cap
should be removed. Rather than specifying the bond amount, the
legislation should fix the amount that can be spent on the project and
adjust the structure of the new ballpark fee to raise that amount plus
all associated financing costs and reserves as determined by the CFO.
The legislation would then authorize the District to issue an amount of
bonds sufficient to fund all of these items, as determined by the CFO.
Such a change would allow the CFO the flexibility to issue bonds in the
most efficient way possible.
- The Office of Tax and Revenue will have to spend
additional money to administer the new fees and taxes. The costs are
estimated to be about $800,000 in the first year and $500,000 each year
Thank you for the opportunity to testify today. My staff
and I are available to answer any questions you may have.