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Support for baseball team fails to extend to stadium tax
(Published October 4, 2004)
By KATHRYN SINZINGER
Contrary to assertions by Williams administration officials, some segments of the District's business community appear to be balking at the prospect of paying for a new $440 million baseball stadium.
While there appears to be almost unanimous support for the return of Major League Baseball after a 33-year absence from the city, interviews during the past week indicate that support for baseball does not necessarily translate into agreement with the mayor's plan to increase business taxes to pay for what many believe to be expenses that the team's owners should bear.
"We obviously do support having a baseball team in the District," D.C. Chamber of Commerce spokesman Bryan E. Boyer told The Common Denominator on Oct. 1, two days after the announcement that the Montreal Expos will play in Washington next season.
"We really feel this is a great thing for the city economically, and it once again puts D.C. on the map. Unfortunately, we can't say anything on a financial package until we've seen it, but we would like it to be as business-friendly as possible."
City officials, including the mayor, continue to assert that the District's 2,000 largest businesses – defined as those with gross annual income of at least $3 million – have agreed to a deal that would tax their gross receipts to pay the lion's share of industrial revenue bond debt expected to be created to build a new stadium near the Washington Navy Yard.
"We have crafted this with the businesses. … All of them have agreed that they would be paying this directly. … This has not been done behind closed doors," Chris Bender, a spokesman for the city's Office of Planning and Economic Development, responded to reporters' questions Oct. 1 during WAMU-FM's live radio broadcast of "The Kojo Nnamdi Show."
But Boyer told The Common Denominator that a briefing by city officials on Sept. 28 "was the first time in a while" that anyone from the D.C. government had discussed baseball with the D.C. Chamber of Commerce, the city's largest business membership organization.
"We have not had a lot of contact with the mayor's office, which was discouraging," Boyer said.
Other large business organizations, including the Hotel Association of Washington D.C. and the Restaurant Association of Metropolitan Washington, also have expressed concern to city officials about a proposed stadium tax being imposed on their members.
"We're in discussions now," hotel association President Reba Pittman Walker, the mayor's former chief of staff, told The Common Denominator. "We're going to look at the legislation to see what the impact would be. … We're in support of baseball, so we want to make this work."
D.C. City Council members said they were visited by representatives of the restaurant association on Sept. 28, the day before the deal with Major League Baseball was announced, and were told that the proposed tax could affect about 70 of the organization's members.
Many of the District's largest restaurants and hotels already are paying additional business taxes to support Business Improvement Districts and to pay construction costs of the new Washington Convention Center, which opened last year. A "gross receipts tax," as proposed by the mayor, would tax business income before expenses are deducted.
"D.C. is an expensive place to do business – I think more taxes is just too much," said Larry Friedman, general sales manager at Curtis Chevrolet on Georgia Avenue NW, the only new car dealership in the metropolitan area that has kept all of its business operations in the District.
"I think the only people who are going to profit from [baseball] are people who are very close to the stadium or in the food retail business," he said.
Steuart Martens of Martens Volvo Volkswagen on Wisconsin Avenue NW, the District's only other new car dealership, said the proposed stadium tax "would probably do me in." He said the recently retired "arena tax" on gross receipts to pay for MCI Center cost his business about $150,000, for which he received no benefit. He noted that the projected cost of a new baseball stadium is much higher than the approximately $100 million that the business community helped to cover for constructing MCI.
"There's absolutely no benefit to my business from baseball," Martens said. "Why would we stay here, paying triple what Maryland and Virginia [businesses] are, when we're going to get a gross receipts tax that could be up to the millions, which we have no way of covering?"
Konrad Murrer, who owns five Exxon gas stations in the District, was among business owners who e-mailed council members to express opposition to a stadium tax, based upon experience from the arena tax. "MCI was of no benefit to us and neither will be a baseball stadium," a council aide said Murrer wrote. Murrer could not be reached for comment.
Councilman Adrian Fenty, D-Ward 4, who has been leading opposition on the council to a publicly financed stadium, said his e-mail indicates that the mayor's proposed financing structure "does not enjoy popular support among residents or the business community."
"You don't pay to subsidize somebody else's business and that's what's being asked here," Fenty quoted one small businessman's e-mail message.
Fenty said he supports refurbishing Robert F. Kennedy Stadium, where the American League's former Washington Senators played and where the Expos have agreed to play for the next three years.
Councilwoman Carol Schwartz, R-At-Large, was one of seven city council members who flanked the mayor as he announced Major League Baseball's decision to move the Montreal Expos to Washington. But she said her support for a baseball team does not indicate full support of the mayor's proposed stadium-financing package.
"I'm going to look at the deal and try to negotiate different components," Schwartz said. "I think the $3 million threshold [for taxing business receipts] should be raised. When you're talking about ‘big business,' you should be talking about ‘big business.'"
Councilman David Catania, I-At-Large, said he believes the mayor and other promoters of returning baseball to the District are "low-balling" expenses to build a new stadium on the proposed site.
"It's probably going to be $700 million. … They haven't even included the cost of acquiring all of the property," Catania said, noting that a Metrobus maintenance facility also will need to be relocated.
Councilman Jim Graham, D-Ward 1, said he is withholding support for building a new stadium until he reviews the mayor's economic impact analysis to see "whether baseball is going to contribute to the overall economic prosperity of the District."
"The mayor says an economic impact analysis exists, but no one to my knowledge outside of the mayor's inner circle has seen it," Graham said.
The Common Denominator has requested a copy of the Williams administration's economic impact analysis. Mayoral spokeswoman Sharon Gang said Chief Financial Officer Natwar Gandhi's fiscal impact statement, mentioned in legislation that the mayor sent to the city council on Oct. 1, was not yet available.
Councilwoman Kathy Patterson, D-Ward 3, said she believes any new taxes should be used to support "more pressing public needs, chief among them our deteriorating public schools."
"I would welcome Major League Baseball to the District of Columbia … and I recommend that they pay for it," Patterson said in a written statement. "They'd get their money back, because the District is a good investment."—Staff writer Michael Hoffman contributed to this story.
Copyright 2004, The Common Denominator