Verizon Center Operator Presents Case for D.C. Aid

Wizards owner Abe Pollin was unable to be at the committee hearing, but his agents, including attorney David Osnos, left, DC Arena President Susan O'Malley, center, and Vice President Marianne Niles, attended in his place.
Wizards owner Abe Pollin was unable to be at the committee hearing, but his agents, including attorney David Osnos, left, DC Arena President Susan O'Malley, center, and Vice President Marianne Niles, attended in his place. (By James A. Parcell For The Washington Post)
By Nikita Stewart
Washington Post Staff Writer
Tuesday, March 20, 2007

Washington Wizards owner Abe Pollin is asking for taxpayers' help because he still owes $110 million on Verizon Center and cannot easily raise ticket prices to pay for much-needed improvements to the downtown sports and entertainment arena, his attorney said yesterday.

David Osnos and other representatives for Pollin's company urged D.C. Council members to provide $50 million in public funding for upgrades to the arena, including a $5 million scoreboard and $3 million renovation of luxury suites.

Pollin, 83, was unable to appear before the council's Finance and Revenue Committee because he is recuperating from a broken pelvic bone, Osnos said.

Pollin, who built the $220 million sports arena in Chinatown with private financing, asked the city in January to provide the public funding. Yesterday was the first public appearance by executives of DC Arena LP, the company that operates the 20,674-seat Verizon Center, who explained why the city should step in. Pollin is the chairman of DC Arena.

The arena, which will have its 10th anniversary in December, "helped lift the city from insolvency through revenues arising both directly and indirectly from the success of the project," Osnos said.

Under legislation that Pollin requested in January, the District would issue $50 million in bonds and increase the tax on all tickets and merchandise at the arena to 10 percent from 5.75 percent to repay the bonds. As part of the deal, the city would take over ownership of the building in 2047. In the meantime, the city would get a rent-free, 24-seat luxury suite at the arena.

If voted out of committee this week, the legislation could go to the council for preliminary approval next month.

Critics have questioned why Pollin cannot find a way to finance the improvements himself. Osnos, flanked by DC Arena President Susan O'Malley and another attorney, Richard Newman, told council members that Pollin is still repaying the debt needed to build the arena.

Pollin expects to pay off the $110 million by 2017, Osnos said.

Raising ticket prices to cover the improvements is not a feasible option because Pollin can increase prices only for Wizards games. He cannot raise prices for the Washington Mystics, Washington Capitals and the many concerts and events held at the center because he does not control them, Osnos said. "He wouldn't be in a position of power to raise ticket prices," he said.

Verizon Center has been credited with spurring economic development in the once desolate Chinatown area. Osnos said businesses in the seven blocks surrounding Verizon Center generated $3.7 billion in construction, $161 million in tax dollars and 34,200 jobs from 1998 to 2006.

The arena "has created almost a Times Square for the metropolitan area," said council member Jack Evans (D-Ward 2), chairman of the Finance and Revenue Committee.

Some council members have said the loan would be payback for Pollin's initial investment -- saying the arena stands in stark contrast to the $611 million in public funding being poured into the new baseball stadium for the Washington Nationals.

But critics of the Verizon Center deal say Pollin has enjoyed public subsidies through the $70 million that the city paid for the land and through an exemption from property taxes. "These subsidies are more than enough to back the upgrades sought for the Verizon Center," said Ed Lazere, executive director of the D.C. Fiscal Policy Institute, who testified yesterday.

Debbie Hanrahan, who testified on behalf of the D.C. Statehood Green Party, said the financial package could set a "dangerous" precedent. "Where does it end? Who gets rewarded for the Dupont Circle boom?" she asked.

Council member Jim Graham (D-Ward 1) also raised questions. He said the bill does not offer specifics on what DC Arena would do with the $50 million. Although the company has given the council a list of upgrades and renovations totaling $53 million, the legislation is written to give the company authority over the money.

"The bill that is in front of us is totally ambiguous," Graham said. "Quite frankly, that isn't enough for me."

Osnos said the company knows how it is going to spend the first $12 million to $15 million based on priorities and permits but does not know how needs might change over the next 10 years. As written, the bill gives the company flexibility to keep up with technology, he said.

Verizon Center has become outdated, Osnos said. He said Pollin thought he had bought a "state-of-the-art" scoreboard for the arena's opening. "Now, 11 years later, it's hopelessly outmoded," Osnos said.

© 2007 The Washington Post Company