Cropp Supports Plan On Stadium Funding
Thursday, July 14, 2005
D.C. Council Chairman Linda W. Cropp said yesterday she supports a plan from Deutsche Bank that would provide $246 million in private money for a baseball stadium because the funding would reduce the tax burden on local businesses by $6 million a year.
Cropp's position, a change from her ambivalence toward the plan as recently as last month, means the District could soon enter into an agreement with the German banking giant, she said.
"I think it could very well happen," Cropp (D) said. "It's more than likely."
The city's search for private funding seemed to have ended fruitlessly last month when the council did not vote on eight private offers submitted in the spring, including one from Deutsche Bank. But under the stadium financing legislation, Mayor Anthony A. Williams (D) still can enter into a private financing agreement if he chooses. City government sources have said Williams would do so only if Cropp supports one of the plans.
In separate meetings yesterday, Natwar M. Gandhi, the city's chief financial officer, briefed Cropp and City Administrator Robert C. Bobb on changes in the details of the financing structure proposed by Deutsche Bank.
Bobb could not be reached yesterday for comment, but sources familiar with the meeting said he appeared to have no major objections to the Deutsche Bank plan.
Vincent Morris, a spokesman for Williams, said yesterday he was unaware of Cropp's most recent stance on the financing package.
"Everybody is trying to get the best deal for the city," Morris said. "If the chairman has new information that suggests she has a better plan than the one we saw earlier, the mayor will absolutely give it full consideration."
Administration sources said the mayor is to be briefed today on the bank's latest plan. If the mayor agrees to enter into a financing agreement with Deutsche Bank, Gandhi will start negotiations as soon as the next few weeks, officials said.
Under the city's current plan, the $535 million stadium project on the Anacostia waterfront in Southeast Washington would be funded by a gross receipts tax on city businesses; a utility tax on businesses and federal buildings; a concessions tax; and an annual rent payment by the Washington Nationals.
Deutsche Bank has offered to give the city the upfront payment in exchange for the revenue stream from taxes on in-stadium concessions, such as food, beverage and merchandise sales.
Under the most recent terms of the bank's deal, Gandhi has estimated that the District would need a maximum of $8 million a year -- or a minimum of $6.3 million, depending on interest rates -- in gross receipts taxes from city businesses.
That is a significant reduction from the estimated $14 million a year that the city would need under the current financing package.
"What [Gandhi] said was that it could show immediate relief to businesses, and that's what I wanted," Cropp said.
The first installment of the business tax was due July 1. All companies in the District that grossed at least $5 million had to pay fees ranging from $5,500 to $16,500, depending on each company's size.
Some smaller companies complained to Cropp that they believed the burden was too great. She agreed to revisit the issue to try to find a way to reduce the tax.
Gandhi has favored the Deutsche Bank plan for several months. He recommended it over the city's public financing plan because the bank's proposal reduced the amount of capital borrowing the city would need from Wall Street.
But some council members said the Deutsche Bank plan stipulated that if the revenues generated by the concessions tax failed to hit $18 million annually, the city would be required to pay the difference. The tax is considered unreliable because it is based on how many people come to games and buy concessions.
Other city government sources said yesterday that the bank is not making such a demand.