Thursday, February 03, 2005

Gandhi's A Private Man

The Times reports that DC CFO is getting ready to certify at least two of the eight private financing proposals presented to the city. The stadium bill that eventually passed the DC Council requires 50% of the costs to come from private sources.

The one bantered around most often involves the sale of parking rights surrounding the stadium.

Nats Blog points out something that John at Nationals Pastime hit on months ago; the private financing schemes are just a way of shuffling around money. It doesn't really save the city any money.

John says it pretty clearly:
"Private financing" is something of a joke, because D.C. will end up paying the money out of its own coffers no matter what. It amounts to the district collecting money from industry now for something it could have gotten more money for later, because the investor ends up taking more risk if he spends the money now, and will therefore need a bigger return, which will come from money that could have been in the D.C. coffers.

It should be obvious that no private investor is going to cover part of stadium and construction for no gain. Whether it be a huge cut of parking revenues, land rights surrounding the stadium or rights to build tall buildings, "private financing" basically means that D.C. is going to sell something to a private investor in order to collect the 1/2 the stadium construction price. But if you look at all of the proposals, you will see that the District is selling assets it could have sold anyway. What it is looking to do is transfer short-term risk to an investor, but by doing so, the district comes out with less money in the long term.

If you didn't catch his analysis the first time around, go back and give it a read now. He lays it out very clearly and explains how all this is really much ado about nothing.


Post a Comment

<< Home