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CHAMBER OF COMMERCE The Voice of Business in DC
STATEMENT OF BARBARA B. LANG
Joint Hearing of "Ballpark Omnibus Financing and Revenue Act of 2004" Good morning, Mr. Evans, Mr. Brazil and members of the Committee. I am Barbara Lang, President and CEO of the District of Columbia Chamber of Commerce. We are the largest Chamber of Commerce in the region with over 2000 members representing small and large businesses from all major industries. I am here with a Chamber member business. We are here today to support the unique opportunity of bringing a major league baseball tear (back to the nation's capital. The civic pride and having Washington seen, not just as a government town, but also as an international city, will do much for our city's public persona. The business community believes that a professional baseball team and a new stadium will promote business and economic development by bringing people into the city to eat in our restaurants, shop and visit other attractions. We need only look at the impact of locating the MCI Center in the east end of our downtown or the thriving areas around ballparks from San Diego to Denver as illustrations of the positive impact of sports facilities on local communities. We commend the efforts of the Mayor, his staff, the Sports Commission, and others who helped secure the commitment for a major league baseball franchise in the District of Columbia. We share the Mayor's excitement about having a team back in the nation's capital after 33 years. The CEO's represented in the DC Chamber of Commerce membership - make decisions everyday that impact the survival of their businesses; and are expected to make good, sound, reasonable judgments. It is in the spirit of that sense of responsible management that we are compelled to raise the following questions and concerns and offer suggestions. Mr. Chairman, last year when the business community was asked to support attracting a baseball team to the District, a broad cross section of businesses came forward to offer support. They did so based on a belief that having a major league baseball team in Washington would generate long term economic and public relations benefits for the City including creating jobs, revitalizing the surrounding neighborhood, accelerating the Anacostia Waterfront development, and increasing the national and international visibility of a city hosting a major league baseball team. Those businesses believed then as we do now, that a new team and stadium will promote business and economic development. Last year when I testified on bringing baseball to the District, I indicated it was reasonable to expect the business community to play some role in funding a stadium project. However, many Chamber members expected a more equitable level of investment for DC businesses that would not negatively impact the cost of doing business in the City and the cost of goods and services to our customers that will ultimately result as businesses try to recoup their costs. The business community expressed support for baseball last year to give the Mayor and his staff the tools necessary to negotiate with Major League Baseball. To enhance the City's bid for a team, we sent a signal to the leadership of Major League Baseball that we were serious and that the City, in partnership with the business community was willing to support stadium development. At the time we did not know that a financing plan that would double the costs and more than double the ballpark fees originally proposed would be introduced. We are concerned that the legislative proposal under consideration now will have a significantly negative impact on new business location and retention in the District. Mr. Chairman, as you know, the Chamber has consistently opposed new taxes on the business community because we currently pay some of the highest taxes in the region. A large contingent of businesses support baseball and would not oppose a financing arrangement where the tax is limited and the potential economic benefits to the City are measurable. We believe that the current plan as proposed is inequitable, and the ultimate business risk exposure for our members is too uncertain. We are also concerned that the District is obligating the business community for a considerable financial burden and the District is assuming a significant risk of cost overruns on this project. Mr. Chairman, we encourage you to work with the Administration to minimize the impact of this ballpark fee on the cost of doing business in our City. We are pleased that the Administration is willing to consider alternatives to this financing plan as we feel there are several provisions that should be amended. First, we hope that the City and its tax experts will restructure this financing proposal to lessen the impact particularly on businesses with lower gross revenues ($3-$6 million) and businesses in industries with lower profit margins, such as advertising firms, wholesale suppliers and others. Second, the legislation before you offers an open-ended commitment and allows the Mayor to increase the tax to a level greater than the $24 million a year estimated to cover the debt service and pay off the bonds. We ask that this authority be structured similar to the MCI Center legislation and limited to allow the ballpark fee to be raised to a level no greater than $24 million and only when the revenue collected in a particular year does not yield $24 million, and that such an increase be capped at no more than 25% greater than the original rate. To address this concern specifically, the Chamber proposes that the bond financing be structured so that the baseball fee be applied at the proposed level for the first 5 years only, and dedicated entirely to the payment of the baseball stadium debt service. According to information presented by the Administration, in subsequent years, other revenues, including the owner lease payment ($5.5 million), on-site taxes ($11-20 million), and new annual tax collections ($24-30 million) would be sufficient to continue to pay off debt service. This financing structure would generate approximately $120 million over a 5-year period, and represent 40 percent of the total ballpark. Such an approach provides major capitalization from the business community, but at the same time ensures that business taxes are not being collected over a 30-year period to fund other non-stadium government programs. The business community is also concerned about the community component to baseball in Washington. Since the Administration is forecasting increased development around the stadium, we see no reason why the economic benefits cannot be used to pay off the ballpark debt earlier and to provide support specific community or social programs, such as scholarships for students to attend college in the District of Columbia. Finally, the Chamber is concerned about the commitment to local businesses, since they will be asked to pay to build this stadium, we urge you to include strong language to require the participation of local, small and disadvantaged businesses in the design, pre construction, post construction and equipping of RFK and the new stadium and associated projects. A commitment of more than 50% threshold for LSDBE and District business participation would be similar to the experience of the convention center project and will send a powerful message that the local dollars being spent to build this ballpark are being reinvested in the community and with local businesses. Since local businesses are being asked to foot the bill, the DC based businesses - particularly the small and minority businesses -- should be afforded the opportunity to receive a bigger share of the benefits. We are delighted that Allen Lew will be the new Director of the Sports Commission, as we know that he is committed to LSDBE participation. We will urge him to include as much District business participation as reasonable. The Chamber recognizes that there are many issues that the City needs to address including improving the schools and providing better services to residents. The business community is already helping in these areas through partnerships, social service and charitable contributions, scholarships and millions of dollars in business taxes that go into the general fund each year. Through the various business taxes, retail taxes, and corporate franchise taxes already collected, DC businesses contribute over $800 million to the general fund that support schools and city services. But make no mistake, the business community's commitment. to supporting baseball does not translate into "found" money or new money that would otherwise be available for other government programs or services. Mr. Chairman, as you know -- District residents and our business community carry the highest tax burden in the region. We certainly do not want to see our business tax base dwindle as the costs of doing business in the District causes businesses to relocate to the less expensive suburbs. No one wants to see companies driven out of business or businesses driven out of the city because they cannot handle this additional tax burden. The gross receipts tax proposed in this legislation would be an enormous burden on some companies that have narrow profit margins. Let's be clear, no business association serving the best interests of their members will sit before you and say "tax me", but we understand that the economic spin off of a new sports complex will generate additional revenue to enhance commerce, help revitalize a neighborhood and improve services, and we hope that this hearing will completely lay out the business case for this huge investment. We also want to insure that this is not the beginning of additional taxes on the business community for other projects in our City. In conclusion, we ask that the City and the Council support efforts to endorse local ownership of the baseball team. We believe that it is critical that the owners have a vested interest in the economic progress of this City, and hope that the Washington Baseball Club is the victor. They have for several years made a real commitment to this City. The D. C. Chamber of Commerce stands ready to work with you and the Mayor to shape this proposal in a way that does not impose an undue financial burden on businesses, and we hope that you will expeditiously convene a group of small and large businesses" with the Chief Financial Officer's tax experts to craft a financing plan that is fair to all. Thank you for this opportunity to testify. I am available to respond to your questions. |
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