Pooling Your Leg Ballpark finances are more precarious than you think

Hitting the Books: Catania keeps pounding Gandhi, line item by line item.
Darrow Montgomery

For all the hundreds of millions of dollars that the District of Columbia has spent on a new baseball stadium for the Washington Nationals, there’s been one line of argument holding off a taxpayer mutiny: The only people who have to pay for it are folks who buy tickets or ballpark concessions or big-business owners. Joe Taxpayer doesn’t have to spend a dime directly out of his own pocket.

Right?

As recently as August, when LL wrote about land-acquisition costs that had ended up twice the $73.7 million originally estimated, Chief Financial Officer Natwar M. Gandhi said in a statement, “The stadium has been built and the funds necessary to pay for all of the eventual costs will be available from stadium produced revenues.…This is the result of careful and successful planning.”

He assured LL that enough money was coming in to cover the $30 million yearly payments on the stadium construction bonds, which are due in August and February. A top Gandhi aide, John Ross, chimed in, “We have plenty of money to make these payments. No one’s in danger of not getting paid.”

Weeks before that, the CFO’s office released a set of numbers at odds with officialdom’s rosy view. In mid-July, At-Large Councilmember David A. Catania—long a Gandhi gadfly, on the ballpark in particular—asked the CFO’s office for an accounting of the stadium funds. Documents provided on July 25 showed funding projections coming from authorized sources, including the famous “ballpark fee” levied on local business and stadium sales-tax receipts. But then there was a $12.3 million line item for something called “pooled cash.”

Why is “pooled cash” fishy? Because it’s essentially a slush fund.

In the July numbers, the ending balance for fiscal 2008 was projected to be $22.1 million. Take out the pooled cash, and there wouldn’t be enough money in the ballpark account to cover the $18.5 million due in February for the bond payment. (Between the beginning of the fiscal year on Oct. 1 and when the payment is due, only a few million makes its way into ballpark coffers, barring a Nats postseason run—ha!) Also, there’s nothing about “pooled cash” in the legislation authorizing the ballpark construction.

Lasana Mack, the District’s treasurer, explains to LL that pooled cash is “cash on hand in the general fund. It is funds that do not have a particular allocation.” Their purpose, Ross says, was to solve “basically a cash-flow problem”—they would cover the February payment, then be repaid next year.

In a July 31 meeting with Gandhi and Ross, Catania pushed hard on the “pooled cash” maneuver. He holds that Gandhi can’t spend any money not collected though approved mechanisms—even to solve cash-flow problems—unless he went back to the council for permission, and that’s a face-losing move if ever there was one. Gandhi didn’t seem to be too concerned about those concerns, deferring to aides on the matter.

Ross says there’s nothing untoward about the “pooled cash.” His office disputes Catania’s claim that temporarily tapping the general fund is illegal. “Not only do we disagree with that,” he says, “our lawyers disagree with that.”

After the meeting, Catania decided to hold his tongue, since the council was in recess.

Then, last Friday, Washington Post reporter David Nakamura reported that sales tax revenues at the ballpark had fallen below expectations, though he reported that “D.C. financial officials said they have enough money to cover the debt service”—no mention of pooled cash. And, on Monday, the council had a hearing planned to discuss a proposed cap on the city’s debt level, which would be the first time since recess that CFO staffers would be in front of the council.

Catania pounced. At around 11 a.m. on Monday, he broached the pooled cash issue and generally pounded the unreliability of the CFO’s ballpark performance. “Far from being an engine of growth, [the stadium] is a drain. These bonds aren’t paying for themselves,” he said, later adding, “This thing is a house of cards, and it’s too bad our CFO isn’t here today to account for it.” Gandhi had begged out of the hearing, explaining that he was sick.

But not too sick to put pen to paper: Unbeknownst to Catania, a letter from Gandhi had been delivered to the councilmember’s office a half-hour prior, after the hearing had already started. “We will no longer need to use pooled cash,” Gandhi wrote, because revenue from the ballpark business fee had been unusually good, representing a nearly 30 percent jump over what had been projected in July. Furthermore, Gandhi explained, interest proceeds represented another $6 million or so in added revenue. And, because the Nationals haven’t paid their rent, he wrote, the District was free to put off a $1.5 million reserve payment till next year. In addition, a line item for ballpark costs shrunk from $1.6 million to $68,000 without explanation.

Ross attributes the pumped-up ballpark fund revenues to increased enforcement by the Office of Tax and Revenue. “We think that bump…is primarily stuff that was late, interest that was owed, penalties that were owed.” The shrink in this year’s ballpark costs, he says, can be attributed to late invoices from stadium vendors that won’t be paid till the next fiscal year. (That’s not reflected in next year’s cost projection.)

Catania says he has no faith in the latest ballpark numbers—an attitude, he says, informed by history. “Tell me one thing [Gandhi]’s been right on,” he says. “He’s been wrong on attendance, wrong on revenue, wrong on environmental remediation, wrong on land.”

Meanwhile, as the ballpark flirts with the distinction of being the least-attended new ballpark in 25 years, it continues to eat up taxpayer money. For one thing, there are the lawyers. The D.C. Sports and Entertainment Commission has engaged the firm Seyfarth Shaw to hash out the rent dispute with the Nationals. And in the coming months and years, expect many more dollars to be spent fixing the problems of a hastily built stadium and making the upgrades required by a lease with a “keeping up with the Joneses” clause.

And even with the revised numbers, the ballpark cash-flow problem isn’t out of the woods. At the end of the next fiscal year, Gandhi estimates there will be only $17.9 million in the ballpark account—shy of the $18.5 million bond payment due in February 2010. After that, according to projections, stadium costs should shrink to nothing and the cash-flow problems should go away.

So why keep fighting this battle?

“Eventually we’re going to have to get past it, but this was a shitty deal,” Catania says. “If you’re going to play games with shit that really doesn’t matter,” he says, “what are you going to do with the shit that really does matter?”

The Chairman and the Club

Earlier this month, LL detailed the lengths to which nightlife impresario Marc Barnes has gone to court the District’s political class—including ordering his employees this summer to donate to the re-election campaign of At-Large Councilmember Kwame R. Brown (“Cash Bar,” 9/12).

Barnes’ entreaties have targets bigger than Brown. Last week, councilmembers were each handed dozens of invitations to a reception this Wednesday (after LL’s deadline) hosted by Council Chairman Vincent C. Gray for attendees of the Congressional Black Caucus Foundation’s annual legislative conference. The venue is none other than Barnes’ four-story downtown temple of Cristal, the Park at Fourteenth.

The invites—which were offered to LL by a half-dozen council offices as he made his Wilson Building rounds last week—are snaz-zy. Inside a matte black card-stock envelope is a foldout jacket bearing the names of the 13 councilmembers—Gray’s is on the outside; the other 12 are within, beside official council portrait—which in turn contains a three-color invitation, with Gray’s name at the top.

The invites were dished out by Gray’s office; multiple councilmembers LL consulted had no idea the reception was in the offing until invites landed in their offices.

So who footed the bill for all this? Rest assured, taxpayers—it’s all Barnes, says Gray spokesperson Doxie McCoy. No campaign or constituent service money is being expended on the shindig; even the invites were printed by Barnes.

Not a surprise—there’s only one other name that earned lettering as large as Gray’s on the invite: the Park at Fourteenth. McCoy says Gray approached Barnes about the reception, which she says is one of several that Barnes is hosting for the CBC crowd this weekend. “He was looking for a way to promote his business, develop his company; the council was looking for a way to get the word out about things it’s working on—voting rights, things like that,” she says.

Barnes says his interest is in putting his hometown in the best light possible. “There are a lot of people coming in from out of town,” he says. “We like to see the city shine.” As for the financial arrangements behind it, “If we can team up with people who bring people in who pay for themselves to drink, it works for me.”

McCoy puts the reception in the context of Gray’s other big-picture, “capacity-building” initiatives—upgrading the council tech infrastructure, for instance, even printing up brochures about the council. “The chairman has looked for different ways to market the council as an institution,” she says. “He sees this as just another example.”

In other news: The Barnes connections now extend into the executive branch, too. Last week, Mayor Adrian M. Fenty named Gloria Nauden the new executive director of the D.C. Commission on the Arts and Humanities. Nauden has worked for Barnes’ Influence Entertainment Inc., since 2004, though a bio provided by the mayor’s office last week made no mention of it.

Nauden, who has sat on the arts commission since December, says she’ll be giving up her work for Barnes, as well as her own marketing firm, once she enters government service in October. “Of course,” she says, “I can’t do both.”

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Our Readers Say

When a few corrupt councilmembers repeatedly say with cleverly premeditated spin that "Joe Taxpayer doesn’t have to spend a dime directly out of his own pocket", it is a red herring and a lie. DC created a special precious ballpark tax on businesses and an added utility tax, both of which could be used for other more worthy broad DC-wide social, public safety, or neighborhood economic development purposes, especially now that times are tight. The Council and the Mayor squandering this hard-to-find kind of incremental excise taxation in order to benefit one family/team was corrupt. Now while other jurisdictions seek added revenue sources, DC has been wasteful. Thus Mr. Evans lies when he twists his language in this manner to make is seem as if no public dollars were used. Most DC business leaders I've talked to are still livid about the special ballpark the tax. The added prospect it might never sunset in order to help fund even more sports boondoggle-giveaways like a Redskins freebie is anathema to them. Just ask anyone charged with paying that tax at a local business or law firm. Mr. Evans should get the boot. Or resign to save himself the misery of being run out of office during the next 4 years.
There's a "keeping up with the Joneses" clause in the lease that will demand more upgrades by the city? What's the deal with that?
Maybe someone can expaain to me. If the National's owners are not paying their rent on this new ball park. Why then are they still allowed access to the park? The city should enforce the rights of the public and change the locks and not allow the National's and their owner to get in and play or practice until the rent is paid.
We have a real lack of honest leadership on this issue and others. Much of which is clearly coming out of the Chief Financial Offiers office. Ghandi continues to play games with the District's finances. I don't understand why is even still on our payroll. It's beyound me to understand why this continues to plague our city, our council and our finances
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