Tuesday, March 15, 2005

Gandhi's Green Light

DC's CFO has signed off on two of the private financing schemes that Chairman Linda Cropp required as a conditition of approving the stadium financing package many months ago.
According to a report prepared by Natwar M. Gandhi, the city could expect to lower its financial commitment using a proposal by Deutsche Bank, which has offered as much as $493 million in exchange for control of some revenue sources related to the ballpark, or one from the Cleveland-based Gates Group, which offered up to $175 million in exchange for revenue generated by a special parking district....

Gandhi's study found that the Deutsche Bank plan could eliminate the business tax after three years. The international banking giant would provide $493 million up front in exchange for control of many of the revenue streams related to the stadium . The bank would assume the risk that the concessions tax might not make as much money as projected, but the bank can more easily leverage the concessions revenue on the bond market than the District can because such money, based on consumer spending, is not guaranteed.

The Gates Group's plan could reduce the gross receipts tax collected from businesses to $6.9 million a year over a 24-year period by giving the District an up-front payment of $100 million, an amount that Gandhi determined was most feasible. The plan would reduce the amount of bonds the city would seek, and the District would pay the Gates Group about $10.6 million a year from the parking revenue.

The article says that the ones he didn't sign off on entailed development surrounding the park, which would have forced DC to float more bonds to buy more land.

I've linked to this piece from Nationals Pastime, from very early in the discussion. It's just as right now, as it was then. Private financing doesn't actually solve anything. DC pays less for the stadium, but they'll generate less revenue. That ain't much of a solution.


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