- The Washington Times
Sunday, August 26, 2012

Good defense and timely hitting have been a boon this year for the Washington Nationals, and officials who mind the city’s balance sheet are hoping for a share of the good fortune.

The surging interest that comes with having a winning team is projected to boost sales-tax revenue from purchases at the ballpark and put the city in a better position to pay down the massive debt it took on to build the stadium on the bank of the Anacostia River, officials say.

For Nats fans, the prospect of playoff baseball in the District marks a promising turnaround after six consecutive losing seasons. Games at the ballpark this year have drawn an average of 30,407 fans — an increase of 24 percent compared with the first 59 home games of last season, Nats officials said. They said it is the second-highest percent increase in the major leagues after the Miami Marlins, a franchise that rebranded itself this year with a new name, new logo and new stadium.

For those who mind the city’s coffers, the success is welcome news.

“The more successful they are, the more money we make,” said D.C. Council member Jack Evans, Ward 2 Democrat, who led efforts to bring baseball to the District in 2005. “It just comes down to that.”

The D.C. Office of the Chief Financial Officer estimated that sales-tax revenue from purchases inside Nationals Park would increase by $150,000 in fiscal 2012 from $9.5 million generated the previous year. But the office made its projections in February, when no one could have known that the Nationals’ pitching rotation would quickly earn the nickname “K Street,” that four of the team’s players would be named to the all-star roster and a playoff berth would be in sight by late August.

“One would think [the final tally] will be higher, given the rise in attendance,” CFO spokesman David Umansky said.

Ticket sales and merchandise purchases at the ballpark are subject to a 10.25 percent sales tax — 6 percent sales tax plus a 4.25 percent specialized tax — and concessions are taxed at 10 percent, team officials said.

Preliminary data show that through the end of May the city had brought in $7.5 million in ballpark sales taxes for fiscal 2013, which includes games from last September. An updated tally of this season’s collections is due next month.

The ballpark sales tax is not the most significant funding stream to paying down the stadium bonds, yet it is the one most closely tied to renewed interest in skipper Davey Johnson’s squad.

The construction of Nationals Park, which opened in 2008, has been a lightning rod for criticism and political wrangling from the start. Its financing included a substantial contribution from the District, mostly through $535 million in bonds that the city committed to repay in 30 years. Any true acceleration of the pay-down of stadium debt will take years of sustained interest in the team and the ballpark’s comforts, officials said.

The District is paying down the bonds through a “ballpark fee” assessed on city businesses, sales taxes on purchases within the ballpark, utility taxes and rent from the team. The revenue streams contributed to a total haul of $58.5 million in fiscal 2011 that was more than enough to pay a debt service of slightly more than $31 million on the stadium bonds. As it stands, the CFO estimates the bonds could be paid down by 2026 and must be paid by 2036.

Ballpark sales taxes brought in $8.5 million in fiscal 2005 when the team arrived from Montreal, hit a high-water mark of about $12 million in fiscal 2008 — when the team hit the field in its brand-new stadium — and then toggled in the $9 million to $10 million range for the next three seasons.

Mr. Evans said increases in sales taxes from the regular season might be “marginal” this year, but revenue projections “are not based on going to the playoffs.” Any October baseball, be it a single-division series game or a fruitful run to the World Series, would increase sales-tax revenue dedicated to paying down the stadium while ostensibly boosting the general fund through taxes derived from hotel and restaurant bookings, he said.

Mr. Evans, chairman of the Committee on Finance and Revenue, also is keeping an eye on what happens to funds that go into the Ballpark Revenue Fund beyond what is necessary to service the bond debt.

Multiple city officials said that Adrian M. Fenty, while mayor, used the excess revenues to balance the District’s operating budget. But the council under Chairman Vincent C. Gray, now mayor, passed a budget bill in December 2010 to phase out the practice by fiscal 2015.

Mr. Evans is steadfast in his belief that the city should use the excess revenue to prepay the ballpark bonds instead of raiding the fund once more. Paying down the bond debt quickly would allow the city to one day eliminate the ballpark fee, an assessment of $16,500 per year for business that generate $16 million or more in gross receipts.

“My predisposition is to try to get these things paid off as fast as possible and then the ballpark fee would go away,” Mr. Evans said, noting the remaining revenue sources then could go into the general fund. “That’s the deal we made with them and businesses recognize that.”

Barbara Lang, president of the D.C. Chamber of Commerce, said the city’s business community “of course looks forward to the end of the ballpark fee.”

“But we recognize that one good season is not enough for it to be rescinded,” she said. “Unfortunately, the bond market doesn’t work that way.”

City officials said that businesses theoretically could obtain rebates for their fees but the amount of the fee cannot be lowered because it is written into the bond covenants.

Meanwhile, development around the ballpark near Southeast also has been slower than many fans anticipated, leaving few viable dining and entertainment options before and after games. Mr. Evans said critics should look at the decade-long growth of the Gallery Place area after Verizon Center opened in the late 1990s.

“I knew baseball would be successful in the District,” Mr. Evans said. “I said at the time, and I say it again today — it was a 10-year project of which we’re only five years into it.”

Ms. Lang said the business community realizes it made a commitment to transforming the community around the ballpark “for the long haul.”

• Tom Howell Jr. can be reached at thowell@washingtontimes.com.

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