District officials and D.C. United executives are close to finalizing an agreement to build a 20,000-seat soccer stadium at Buzzard Point, according to two people with direct knowledge of the discussions.
The deal will face a number of political hurdles on a frenzied time frame if it is to be approved by the D.C. Council before Mayor Vincent C. Gray (D), a key booster, leaves office at the end of the year.
Despite delays and missed deadlines, the basic framework of the deal remains in place 10 months after it was tentatively announced, said the individuals, who spoke on condition of anonymity because the discussions are not yet public.
As previously agreed, the District government would provide up to $150 million for the estimated $300 million project through infrastructure improvements. D.C. United would be responsible for building the stadium, which would be a few blocks southwest of Nationals Park, but the club would receive property and sales tax breaks.
A hang-up in the discussions has been how to replace an original provision for the District to share in team profits. In the end, the two parties agreed to replace it with a combination of sales tax payments and a future $2 surcharge on tickets — an outcome that City Administrator Allen Y. Lew first vetted privately with members of the D.C. Council.
Under the terms of the deal, the District would pay to build utility and road infrastructure for the project. Its costs are capped at $150 million, a provision aimed at avoiding the cost of overruns like the ones that made Nationals Park far more expensive than originally envisioned.
D.C. United would lease the land for 30 years at no cost, with an option to extend. The individuals with knowledge of the deal said the team would pay no property taxes for the first five years, then would pay 25 percent of its tax bill for the next five years, 50 percent for five years, 75 percent for five years and finally its entire property tax bill.
D.C. United would also pay no sales taxes for the first five years, then 50 percent of the sales tax for five years and finally full sales taxes. At that point, the team would begin collecting a surcharge on tickets that would begin at $2 and increase with the consumer price index. Proceeds from the surcharge would go to the District.
Lew declined to comment through a spokesman. Jason Levien, the team’s managing partner, also declined to comment.
Lew has reached agreements with two owners of Buzzard Point land needed for the deal: developer Akridge and Pepco Holdings. But the Akridge deal requires trading the Reeves Center municipal office building on U Street in exchange for land and cash. Akridge plans to build an apartment or condominium tower in its place.
D.C. Council members Muriel Bowser (D-Ward 4) and Jim Graham (D-Ward 1) have criticized the idea of trading the Reeves Center. Bowser, who chairs the council’s Economic Development Committee and is the Democratic nominee for mayor, is likely to play a central role in the council’s consideration of the legislation.
Lew has not secured two other valuable properties on the northern end of the site, along Potomac Avenue, owned by the Super Salvage scrap metal yard and Washington Kastles tennis team owner Mark Ein.
According to two people with knowledge of the talks, Ein, who has been negotiating on behalf of both parties, has asked for substantially more than what Akridge and Pepco agreed to be paid, though Akridge will be left with land to build on after the stadium is completed. Lew has repeatedly said he would use eminent domain to take the properties if he cannot negotiate a deal.
“We have sought from the beginning to find a fair deal for the city and also a fair deal amongst the parties involved,” Ein said.
The idea of helping D.C. United build a stadium has received mixed reviews from District residents. A Washington Post poll found that six in 10 D.C. residents opposed the idea of helping “finance” the stadium, although the mayor’s office argued that the questions unfairly described the deal. The team has since launched an effort to build support for its plans and says more than 5,000 residents have written to city officials supporting a new stadium.
Lew plans to send the land deals and the agreement with D.C. United to the council in one legislative package this week. The council will go on recess in mid-July.
Should the stadium get built, the earliest the team could play in it would be 2017.