The D.C. Council plans to vote on a proposal to use about $47 million in excess cash generated by the Washington Convention and Sports Authority for priorities that include public housing repairs, resolving a standoff with the District’s chief financial officer that threatened to derail the city’s budget, according to officials familiar with the deal.
The two city officials, who spoke on the condition of anonymity to discuss sensitive negotiations, said that council members will vote on legislation redirecting the funds on Tuesday and that they expect Chief Financial Officer Jeffrey S. DeWitt will certify the resulting budget.
The deal is a victory for D.C. Council Chairman Phil Mendelson (D), who for weeks has refused to back down in the face of DeWitt’s warnings that he would not certify a budget that extracted money from the reserves of the convention authority.
DeWitt had argued that doing so could imperil the District’s credit rating by violating obligations to the bondholders whose investments funded the construction of Walter E. Washington Convention Center in 1998 and its hotel in 2010.
David Umansky, a spokesman for DeWitt, confirmed Monday evening that the money transferred from the convention center authority reserves “can now be legally accessed” by the council. Umansky said that earlier attempts by the council to remove money from the reserves would have violated agreements with bondholders but that the issue had been resolved. Mendelson did not respond to requests for comment Monday afternoon.
At a news conference Monday morning, Mendelson refused to discuss the details of the deal that was taking shape but said he was confident that a resolution would be reached and that the budget would be certified.
“By the end of the day, everything will be tied up in a neat bow,” he said.
Mendelson’s proposal would divert half of $47 million in excess revenue originally drawn from the convention authority’s reserves, using half to fund urgent repairs to the District’s dilapidated public housing units and half to upgrade the city’s 911 dispatch system.
It was not immediately clear whether an increase to the hotel room tax that would have otherwise funded the 911 system would remain in place or be repealed.
Mendelson’s budget amendments, if they garner enough support from other council members, will bring to a close a protracted dispute that could have long-term implications for lawmakers’ relationship to the city’s top fiscal watchdog.
The chief financial officer is a nonpartisan position appointed by the mayor with approval from the council. It was created after the District was put under a federal financial control board in the 1990s to remedy chronic budgetary mismanagement. The position has extraordinary power; no legislation can be enacted without analysis by the CFO, who must certify the city’s budgets before they can be sent to the mayor or Congress for approval.
However, Mendelson has argued in recent weeks that DeWitt has strayed into the realm of policymaking by exerting improper influence over some council spending decisions — culminating in the dispute over the convention authority reserves. DeWitt has rejected that criticism, saying through a spokesman that he is solely trying to protect the District’s hard-earned fiscal health.
The chief financial officer initially argued that any repurposing of those reserve funds would be improper. However, Mendelson and D.C. Attorney General Karl A. Racine (D) found documents showing that the authority’s reserves were being kept at too high a level and that the authority should have transferred nearly $47 million to the city’s general fund since the 2017 fiscal year.
DeWitt then said in a letter last week that he was placing that money in other reserves that offer a cushion of operating cash for emergencies, as well as accounts that fund the construction of affordable housing and other capital costs.
The council on Tuesday will vote on a proposal to remove the money from those funds. DeWitt is not expected to block that plan because it does not technically remove money directly from the convention authority reserves, but from the accounts into which DeWitt first transferred the excess reserve dollars.
In addition to the pending move to claim the $47 million, Mendelson introduced separate legislation Monday that would also dedicate half of any excess revenue held by the convention center authority at the close of the current fiscal year — which ends Sept. 30 — to public housing repairs.