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Sources: D.C. United and District government finalizing stadium deal

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Nearly 10 months after announcing a tentative deal to build a 20,000-seat soccer stadium on Buzzard Point, District officials and D.C. United executives have nearly finalized an agreement, according to sources familiar with the discussions.

Despite months of delays and missed deadlines, the basic framework of the deal remains in place, according to the sources, who spoke on the condition of anonymity because the discussions have not been made public.

As previously agreed upon, the District government would provide up to $150 million for the estimated $300 million project through land  infrastructure improvements. D.C. United would be responsible for building the stadium, which would be located a few blocks southwest of Nationals Park, but would also receive property and sales tax breaks.

A hang-up in the discussions has been how to replace an original provision in which the District would have shared in any profits the team made. After vetting the profit-sharing provision with members of the D.C. Council, City Administrator Allen Lew, the District’s chief negotiator for D.C. Mayor Vincent C. Gray (D), agreed with the team to replace it with a combination of sales tax payments and a future $2 surcharge on tickets.

In 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 preventing overruns that made construction of the 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 it. According to sources, the team would pay no property taxes for the first five years, 25 percent property taxes for the next five years, then 50 percent for five years, 75 percent for five years and finally full property taxes.

United would also pay no sales taxes for the first five years, then 50 percent sales tax for five years and then 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.

Once the team and Gray finalize the agreement, the deal still faces a number of political hurdles and a frenzied time frame if it is to be approved by the D.C. Council before Gray leaves office at the end of the year.

Lew has agreed to deals with two owners of needed Buzzard Point land, 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 a tower of apartments or condominiums in its place.

D.C. Council members Muriel Bowser (D-Ward 4) and Jim Graham (D-Ward 1) have criticized the idea to trade the Reeves Center and Bowser, who chairs the 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 still not secured two more valuable properties on the northern end of the site, along Potomac Avenue, owned by the Super Salvage scrap metal yard and Washington Kastles owner Mark Ein. 

According to two sources, 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 the team build a stadium has received mixed reviews from District residents. A Post poll found that six in 10 D.C. residents opposed the idea of helping “finance” the stadium,  though the mayor’s office argued the questions unfairly described the deal. The team has since launched an effort to build support for the team’s 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 goes on recess in mid-July.

Should the stadium get built, the earliest the team could play in it is the 2017 season.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz