A Nov. 11 Business article incorrectly described D.C. Council Chairman Linda W. Cropp's position on a plan for financing a baseball stadium. Cropp has said she would support Mayor Anthony A. Williams's plan if it included the possibility of some private financing. (Published 11/12/04)
On Monday, D.C. Mayor Anthony A. Williams stood in front of the press to make his pitch for a publicly financed baseball stadium, flanked by leaders of some of the city's largest companies -- Pepco, Verizon and Bank of America among them.
The image was clear: Businesses stand behind baseball in Washington, even though they will have to pay a new tax on revenue to help pay for it.
But behind the scenes yesterday, a far more complicated mix of business views was apparent, as various groups launched last-ditch lobbying efforts to shift the brunt of a $26 million annual tax onto other companies. Confusion over which plan would emerge and the fast-evolving debate over the issue led some groups to move more aggressively to state their positions to make sure they weren't ignored.
Many mid-size businesses, especially those with low profit margins, complain that the mayor's plan puts too much of the load on them, and they are pushing to get more of it shifted to large companies. Major real estate developers, among the most stalwart supporters of baseball, are upset that the mayor's plan would treat each building they own as a separate enterprise, raising the total baseball tax burden the developers would face. They want that provision changed.
Meanwhile, business leaders who have embraced the baseball tax worry about the possible long-term impact of the confusion that resulted after D.C. Council Chairman Linda W. Cropp proposed a rival plan for a stadium at a different site, withdrew that proposal and then put forth a new idea on Tuesday for private financing. By yesterday, Cropp had backed away from the private financing proposal and said she was more amenable to the mayor's original plan.
Williams has also revised his original plan and shifted some of the burden from smaller to larger firms, and has said he would be willing to consider further changes. Under Williams's most recent stadium financing plan, businesses in the District would pay a fee based on their total revenue. Those with less than $4 million in revenue would pay no tax; the maximum, for businesses with more than $30 million in annual revenue, would be $48,000 each year until the stadium debt is retired -- perhaps 20 years, depending on how financially successful the team is.
Cropp has scheduled a meeting to vote on a plan in two weeks, although the vote could be moved to next week. Williams has said he has the seven council votes needed to pass the plan. Nevertheless, his staff expects to spend the time before the vote meeting with business and other groups, said Chris Bender, a spokesman for the deputy mayor for planning and economic development. Bender, too, said the mayor is open to further changes in the baseball tax.
Some companies with relatively high revenue but low profit margins say that the tax would be unfair to them.
"The way this tax is structured, it may drive businesses such as ours out of the city entirely," said Kenneth Goldstein, an oncologist at Washington Oncology/Hematology. His three-doctor medical practice has $5 million in annual revenue from sales of cancer drugs to patients, but he merely buys and dispenses the medications and makes no profit on them, he said. The pharmaceutical sales are enough to push his business's ballpark tax obligation to about $10,000 per year, which might make moving the practice to the suburbs more attractive, he said.
The Medical Society of the District of Columbia has come out against the ballpark financing act because of its impact on members like Goldstein, said the trade group's executive director, K. Edward Shanbacker. He has met with D.C. Council staff and representatives of the mayor seeking some provision in the law to make it less onerous to small medical practices and remains hopeful that changes might be made.
Other mid-size businesses, especially those with low profit margins, have similar objections.
"I don't think I'm going to sell many vegetables to a baseball team," said Charlie Coiner, president of Cooseman's D.C., a Northeast Washington wholesaler of organic produce with between $10 million and $20 million in annual revenue. "Seems like people eat more hot dogs and Cheez Whiz at a game. So I'll be paying a lot for something that doesn't benefit my business."
"Some have suggested the tax is an inconsequential amount of money for us to pay," said J.L. "Rusty" Meadows, managing principal of the $15 million-per-year design firm Ai Architecture. "To those who say that, I'd like to know how many of them ever had to make a payroll."
The D.C. Building Industry Association, which represents 400 developers and others in the real estate industry, said it supports the mayor's baseball proposal, but its members, especially landlords of office buildings, are concerned about being hit multiple times. Each building they own is typically structured as a separate limited partnership, meaning that one landlord with a dozen large buildings might have to pay the baseball tax 12 times.
"We want the tax to be equitably administered," said James S. Williams, current president of the trade group and a senior executive at CarrAmerica Development. "We want to make sure that no one group bears an unfair burden."
But many larger businesses, including those that lead the Greater Washington Board of Trade and the Federal City Council, have been strong supporters of a team. "Having a baseball team in Washington is good for the city on a lot of different levels," said Bob Pinkard, chief executive of real estate service firm Cassidy & Pinkard, who is active in the Board of Trade. "Looking at it as just dollars and cents will ultimately be frustrating. There's a lot of civic pride and quality of life issues that are part of this decision."
And others say that their biggest concern is the dispute over how the deal should be structured.
"The District has to be concerned about giving mixed signals to the national market," said Raymond A. Ritchey, executive vice president at Boston Properties Inc. "The people responsible for making decisions, they have to make their word and commit as opposed to being equivocal. The city can't make a position and then go back and renegotiate."
John E. "Chip" Akridge III, chairman of the Akridge real estate services company, said the debate between Cropp and the mayor is sending the message, "Who's making the rules?"
"You can't go through a development process when the rules change," he said. "You make commitments and you have to stick to those commitments."
Staff writer David Nakamura contributed to this report.