Before the Committee on Economic Development
District of Columbia City Council
December 13, 2005
Members of the Council, thank you for giving me the opportunity to present testimony. I would ask that my testimony be made part of the official record of this hearing.
In the Sunday, December 11, 2005 Washington Post, an unnamed city official admitted to low-balling stadium costs in an effort to gain approval from the DC Council prior to the vote on stadium financing last year. “The source,” wrote the Post, “who spoke on condition of anonymity because the project is at a sensitive stage, said officials also added relatively small contingency costs because they knew it would be hard to persuade the council to approve a larger budget.”
Neil deMause, an expert on stadium deals and author of Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit, wrote the following in a FieldofSchemes.com news brief on December 11, 2005 regarding the above confession: “If you want an explanation for why stadiums invariably generate huge cost overruns from initial proposal to final cost, there’s your answer. It’s long been speculated that stadium boosters lowball cost estimates in order to make stadiums sound cheaper, but to my knowledge this is the first time that a city official — even an anonymous one — has admitted to it in print.”
Today the DC Council is dealing with one of the most costly stadiums ever, and still has no idea of the true costs. The stadium costs are so out of control — and the Council oversight so lacking — that District Chief Financial Officer Natwar Gandhi was able to sneak through a $54 million increase in the stadium budget by both insisting that amendments which changed the financing deal were only “technical” (a common corporate law firm euphemism), and refusing to be forthcoming about the consequences of those changes.
In another scheme that shows how completely out of control are the stadium costs, city planners actually declared recently that some of the stadium costs no longer count as stadium costs. But as Councilmember David Catania has correctly pointed out, such budget changes violate the law that authorized the stadium financing. Indeed, the financing law (47-2002.05) states that the stadium includes “facilities functionally related and subordinate thereto and the accompanying infrastructure including office and transportation facilities including parking adjacent to or serving the stadium.” It is a clear breach of the law to place these costs in a separate category, and this matter may be addressed through litigation if allowed to stand by the Council.
But even if these infrastructure costs are separated from the stadium project and Mayor Williams is able to convince the Federal Government to pay for some of those costs, a full Environmental Impact Statement (EIS) for the project would be required by the use of federal funds, with costs of remediation likely born by the District. As yet, no mention has been made of this additional potential cost beyond what is budgeted for clean-up as a result of the inadequate Phase One environmental study currently planned for the site. Why is the Mayor allowed to get away with saying the Federal Government will pick up the costs without addressing the ramifications of such a maneuver? The last thing the Mayor wants is an EIS on the current stadium site, with its varied industrial history, its location near an old Superfund site at the Navy Yard, and obvious watershed issues because of the site’s proximity to the Anacostia River.
What these actions — and many other appalling examples — boil down to is that Council members, and the District residents and taxpayers they represent, have been intentionally deceived in an effort to circumvent prudent public scrutiny. It is important that the Council stop at this juncture and provide the public an adequate amount of time to review the 108-page lease and its attachments.
Last year, against the polled opinion of the people and a mobilized citizenry, the DC Council voted to subordinate the life necessities of District residents by approving a stadium deal based on misinformation specifically tailored to gain Council approval. Today the stadium deal has grown much worse, based on intentional underestimates and outright fabrications.
The lease is now before you with little time for analysis and deliberation. A “yes” vote would mean the Council approves this stadium regardless of the real open-ended costs to the District, and its taxpayers and residents. A “yes” vote would also signal to those responsible for providing the Council with budget estimates that Council members are not entitled to the unveiled truth. If this boondoggle moves forward, as presented, be assured that many more legal and financial problems will emerge, and the stadium deal will deservedly collapse under its own bloated weight. To those on Wall Street who are contemplating issuing the bonds, the ooze and bile from this deal will flow well into 2006.
This is the time for the DC Council to use its leverage, overcome its inhibitions and resist Major League Baseball’s ever-burgeoning corporate greed. The Nationals are not going anywhere. How could they, with several ownership groups falling all over themselves to give Major League Baseball $450 million for the team? The RFK option awaits reasonable people. Capitalists should behave like capitalists, not corporate socialists freeloading on taxpayers risks and costs while pocketing their profits.
I urge each member of the DC Council to vote “NO” on this lease. A “NO” vote will potentially save taxpayers hundreds of millions of dollars, and prevent Major League Baseball from running roughshod over city officials and the awakening taxpayers. One prediction is certain, there is no putting this Major League Baseball power-grab behind you, the DC Council, after December 20. It will return again and again as more facts come out.
I’d like to thank the Council again for the opportunity to testify today.
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