Verizon Center Ticket Tax to Rise to 10%
Friday, April 20, 2007
The tax rate on tickets and merchandise at Verizon Center will increase to 10 percent, part of a plan to pay for $50 million in renovations at the sports arena under a bill approved yesterday by the D.C. Council.
The plan increases the tax rate from 5.75 percent and includes the issuing of bonds to cover a $3 million makeover of luxury suites, a $5 million scoreboard, $400,000 worth of flat-screen TVs, and other major upgrades.
Washington Wizards owner Abe Pollin had requested the money, saying through direct meetings with council members and through aides that he could not afford to pay for the improvements himself. He still owes $110 million on the money he borrowed to build the $220 million arena.
There was little discussion before the final vote of 9 to 2 on the legislation, which received initial approval earlier this month. D.C. Council Chairman Vincent C. Gray (D), with council members Marion Barry (D-Ward 8) and Jack Evans (D-Ward 2), the sponsors of the legislation, said Pollin deserved the funding.
The council members praised Pollin for making an initial, private investment that helped to transform the once-desolate Chinatown area into a bustling district of restaurants and entertainment venues. Ownership of the arena changes to the city by 2047.
"I think it's very important that we keep the Verizon Center a first-class facility, and the $50 million will go a long way," Evans said.
Pollin has agreed to give the city a rent-free 24-seat luxury suite with numerous amenities and a clear view of the floor.
The tax increase will take effect 30 business days after the sale of the bonds, which could occur in September or October, depending on when Congress reviews the bill. Revenue from the tax increase will pay off the bonds, officials said.
Evans said the legislation would have an insignificant fiscal impact on residents because the majority of patrons at Verizon Center are from Maryland and Virginia. Evans, Barry and Gray had equated the tax on tickets to a "user tax."
The change places the tax on events at Verizon Center on par with the tax on Washington Nationals baseball games and merchandise. However, the deals for Verizon Center and the baseball stadium under construction differ. The city is contributing $611 million to the new stadium, but the city's involvement in Verizon Center was limited to a property tax exemption and $70 million to purchase the land.
The contrast between the two sports facilities led some council members who opposed the baseball stadium deal to agree to back the Verizon plan.
But council member Tommy Wells (D-Ward 6), who dissented, said borrowing $50 million would adversely affect the city's bond rating.
Council member Mary M. Cheh (D-Ward 3), who also opposed the bill, said she remained unconvinced that Pollin could not pay for the repairs and feared that other sports franchises will come looking for city dollars.
"I view this as a kind of stalking horse for other requests," she said.