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Cost of Wizards practice facility rises $10 million before construction can even begin

Gregory A. O’Dell, president and chief executive of Events DC, was on hand when Mayor Muriel Bowser and Ted Leonsis announced plans to build a sports arena at St. Elizabeth’s East in Ward 8, on September, 16, 2015 in Washington, DC. (Photo by Bill O’Leary/The Washington Post)

The District”s sports and convention arm, Events DC, is proposing a series of upgrades to a planned Washington Wizards practice facility and entertainment center in Southeast that would  likely reduce the total number of seats but add $10 million to the original $55 million price tag.

Last fall, D.C. Mayor Muriel E. Bowser announced plans to build the facility on the campus of the former St. Elizabeths hospital in the Congress Heights neighborhood, calling the project “bigger than basketball” and saying it would bring economic development to one of the poorest areas of the city.

Wizards owner Ted Leonsis pledged to move the team’s practices there as well as home games for the Washington Mystics and a future Wizards’ NBA D-League affiliate team. His company, Monumental Sports & Entertainment, agreed to pay $4.46 million — or 8 percent of the original $55 million cost.

[Mayor releases details of arena plan, hops in excavator amid protests]

But in a July 26 letter to D.C. Council Chairman Phil Mendelson, Gregory A. O’Dell, president and chief executive of Events DC, wrote that the original $55 million budget was “based on a preliminary estimate, as development and analysis of the program and concept design had not yet been performed.”

O’Dell provided Mendelson (D) with a revised budget of $65 million, including $7.5 million to reconfigure the arena to have a “split-bowl” design — meaning two levels of seating rather than a single bowl — and $2.5 million for contingencies such as meeting historic preservation guidelines and variable construction costs.

The 118,000-square-foot venue, designed by D.C.-based architects Rossetti and Marshall Moya, would have a minimum of 4,200 seats, down from 5,000 originally planned.

In an interview, O’Dell said the changes reflected a more realistic estimate of what it would take to build an entertainment venue capable of attracting concerts and other performances.

“When we first started out and there was an initial estimate, there was not an architect on board and we had not had any time to work through the design,” O’Dell said.

After analyzing the market for entertainment venues in the region, O’Dell said D.C. would get a better return on its investment by adding a second tier of seats that could bring the audience closer to the performance stage. 

“This will allow us to move seats more close in and more vertical to a concert stage. If, in the final design, we can eek out a few more seats we will do that as well,” he said. 

The new spending would be paid for by Events DC, which is funded by a percentage of hotel occupancy taxes. It does not require approval by the D.C. Council but will have to be voted on by the Events DC board Aug. 11.

Board chair Max Brown also backed the proposed changes.

“Until you really dig down into the design and the program, the budget is just an initial number that was out there. It’s like building a house — you have to really dig into the details to really understand the cost,” Brown said.

“We can’t build a glorified rec center, and that’s what you would get would with that [$55 million] budget,” Brown said.

Mendelson raised concerns last year about the cost. Events DC may be on the hook for any unforeseen cost overruns during construction. Another council member, Elissa Silverman (I-At large), proposed a spending cap for the facility, which the council did not pass.

Speaking from Philadelphia where he is attending the Democratic National Convention, Mendolson said he was still supportive.

“I’m slightly disappointed. Not surprised. I believe we should continue to support the project. While Events DC’s money is public dollars it’s not general fund dollars so that’s some consolation,” he said. 

Silverman said she wasn’t sure what action the council could take but was disappointed.

“My concern was making the best investment possible in Ward 8, and now we’re getting a project that has fewer seats, which means fewer fans, fewer jobs and less economic benefits to Ward 8,” she said.

[D.C. Council member proposes spending cap for Wizards facility]

O’Dell said he did not ask Monumental to pay more of the costs because the changes were made to upgrade the venue for entertainment purposes, not for the Wizards. “The training facility side really hasn’t changed,” he said. 

Mendelson said he wasn’t surprised Monumental wouldn’t be paying more because “that was the deal” from the get-go.

“People see it as a facility for one team — that they are going to be getting all the benefit and paying nothing. That perception is unfortunate because it is not accurate. But they are clearly a primary beneficiary,” he said.

NBA teams in other cities are opening new practice venues as well, part of an arms race to provide the best facilities to attract star players. When it opens in 2018, the Wizards facility is to feature two practice courts, swimming pools, training rooms, a players’ lounge and a kitchen for the team.

The D.C. facility differs from many of the others in that it would be owned, operated and mostly paid for by the District, instead of by the teams that would make use of it.

O’Dell said the facility would still provide good value to the District and taxpayers.

In the scheme of things, given the other economic development projects in the city, this is still the right size investment. This will act as a catalyst for the city and for Congress Heights…there are multiple benefits and we still think this is the right investment,” he said. 

This story has been updated to included comments from Silverman.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz