GAO

United States General Accounting Office

Report to the Chairman, Subcommittee 

on the District of Columbia, Committee 

on Government Reform, House of 

Representatives

August 2000 DISTRICT OF 

COLUMBIA

Status of the New 

Convention Center 

Project

GAO/AIMD-00-262

Page 1 GAO/AIMD-00-262 DC Convention Center

Contents

Letter 3

Appendixes Appendix I: Status of Prior Year’s Recommendations 18

Appendix II: Comments From the District of Columbia 19

Appendix III: Comments From the Washington Convention Center 

Authority 20

Tables Table 1: Comparison of WCCA’s Unaudited Estimated Costs

for the New Convention Center as of June 30, 1999,

and April 30, 2000 10

Table 2: Comparison of WCCA’s June 1999 and April 2000

Unaudited Financing Plans 13

Table 3: Status of Recommendations Contained in District of

Columbia: Status of the New Convention Center 

Project (GAO/AIMD-99-258) 18
Page 2 GAO/AIMD-00-262 DC Convention Center
Page 3 GAO/AIMD-00-262 DC Convention Center

United States General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-285838 Letr

August 30, 2000

The Honorable Thomas M. Davis, III

Chairman, Subcommittee on the 

District of Columbia

Committee on Government Reform

House of Representatives

Dear Mr. Chairman:

You requested that we provide periodic status reports on the construction 

of the new Convention Center project. When we last reported to you on 

September 28, 1999,1

 construction at the new convention center site was 

underway and the guaranteed maximum price (GMP) construction 

contract was being renegotiated between the Washington Convention 

Center Authority (WCCA) and the construction manager (CM). This report 

highlights the status of the convention center project, changes in WCCA’s 

estimated project costs and financing plan since our last report, and actual 

expenditures and collection of dedicated taxes.

Results in Brief While project costs continue to rise, construction at the new convention 

center site is still scheduled to meet the estimated completion date of 

March 2003, and WCCA’s April 30, 2000, estimated project costs are within 

the projected funding level stated in its financing plan. According to 

information provided by WCCA officials, total estimated project costs 

increased $22.9 million (2.8 percent) from $791.1 million to $814 million 

from June 30, 1999, to April 30, 2000. The net changes include a 

$17.4 million increase in total estimated construction costs, a $25.1 million 

increase in estimated other costs, a $.3 million increase in additions to 

WCCA’s project budget, and a $19.9 million cost savings in financing-related 

costs. WCCA’s records indicated that about $162.5 million had been 

disbursed on the project with $404 million under contract as of April 30, 

2000.

1

District of Columbia: Status of the New Convention Center Project (GAO/AIMD-99-258, 

September 28, 1999).
B-285838

Page 4 GAO/AIMD-00-262 DC Convention Center

From June 30, 1999, through April 30, 2000, WCCA’s estimated total funding 

from sources listed in its financing plan increased by $11.2 million. With the 

$22.9 million increase in estimated project costs, the excess of total 

estimated funds over estimated project costs has been reduced to 

$8.3 million. The increase in WCCA’s financing plan included more than 

$6 million of additional committed federal grants and another $4.9 million 

of administrative costs funded by WCCA’s operating budget. However, 

WCCA’s contingency (reserve funds) may be reduced if (1) vendor 

contracts do not fund the $10 million cost of certain equipment or (2) the 

$10 million included in the District of Columbia’s capital budget request for 

fiscal year 2001 is not approved. WCCA’s contingency can absorb the 

$20 million if the capital budget funds and equipment financing do not 

materialize.

WCCA’s records indicated that $40.5 million of dedicated taxes were 

collected for the first 9 months of fiscal year 2000, which on an annualized 

basis is slightly higher than the $51.8 million assumed in the District’s 

Fiscal Year 2001 Proposed Operating Budget and Financial Plan.

In our September 1999 report,2 we identified five issues related to the 

District’s lockbox operations. As of April 30, 2000, the District has 

implemented corrective actions that appear sufficient to address all five 

recommendations that we made to the District’s Chief Financial Officer 

(CFO). Appendix I lists our prior recommendations and the status of the 

actions taken by the CFO to respond to them.

WCCA and the District, in general, agreed with this report’s contents. The 

District’s Chief Financial Officer stated that they will continue to monitor 

the Office of Tax and Revenue’s operations to ensure continued compliance 

with our recommendations.

2

GAO/AIMD-99-258, September 28, 1999.
B-285838

Page 5 GAO/AIMD-00-262 DC Convention Center

Background The Washington Convention Center Authority Act of 1994 authorizes 

WCCA to construct, maintain, and operate the new convention center as 

well as maintain and operate the existing convention center.3

 The WCCA 

Managing Director/Development oversees the contract and the 

construction, which is being performed by the CM. The construction of the 

new convention center is ongoing at Mount Vernon Square.4

Plans for the new convention center call for a total of 2.3 million gross 

square feet, including about 730,000 square feet of prime exhibit space. 

This compares with 800,000 square feet for the existing convention center, 

including 381,000 square feet of prime exhibit space. Based on the square 

feet of prime exhibit space, the new convention center is projected to rank 

sixth in the United States when completed. Its size is expected to make it 

highly marketable far into the 21st century.

The new convention center is intended to allow the District to compete for 

larger conventions and trade shows. A 1993 feasibility study by Deloitte & 

Touche, commissioned by the local hospitality industry, stated that even 

though the District is viewed as a desirable location, the existing 

convention center is small and cannot handle the larger conventions and 

trade shows.

Scope and 

Methodology

To determine the status of the new convention center project and its 

estimated costs and financing plan, we

• held discussions with and obtained information from various officials of 

WCCA and its representatives and the CM,

• reviewed WCCA’s and the CM’s progress reports,

• visited the construction site,

• compared WCCA’s April 30, 2000, unaudited cost estimates for the 

project with the June 30, 1999, estimates that were included in our 

September 28, 1999, report to the Subcommittee, and

3

WCCA was created by the Washington Convention Center Authority Act of 1994, DC Law 

10-188, Sept. 28, 1994, D.C. Reg. 5333,6823, D.C. Code Ann. Secs. 9-801 through 9-833, (1981, 

2000 Supp.)

4

Located in the blocks between 7th and 9th Streets, NW, and N Street and Mount Vernon 

Place, NW.
B-285838

Page 6 GAO/AIMD-00-262 DC Convention Center

• reviewed budget documents and held discussions with WCCA officials 

to obtain reasons for variations from the previous estimates.

To review the dedicated tax collection procedures and ascertain whether 

the proper amounts were calculated and transferred, we

• reviewed financial records and lockbox agreements,

• held discussions with officials of the District, WCCA, and the lockbox 

bank,

• compared the projections of the dedicated taxes for the period from 

July 1, 1999, through April 30, 2000, with actual collections reported for 

the same period, and

• reviewed WCCA’s external auditors’ fiscal year 1999 workpapers related 

to their audit of the reported taxes collected and deposited for the 

convention center project. 

To determine that expenditures for the new convention center project were 

valid, complete, and properly valued, we reviewed WCCA’s external 

auditors’ workpapers for fiscal year 1999 and examined statistically 

selected expenditures incurred for the period from April 1, 1999, through 

January 31, 2000.

We conducted our work from February 2000 through July 2000 in 

accordance with generally accepted government auditing standards and 

considered the results of our previous work, which were reported to you 

last year. We requested comments on a draft of this report from the Chief 

Financial Officer of the District of Columbia and the General Manager of 

WCCA or their designees. The Chief Financial Officer of the District and 

the Chief Financial Officer and Managing Director/Development of WCCA 

provided us with written comments. These comments are discussed in the 

“District’s Comments and Our Evaluation” section and are reprinted in 

appendixes II and III, respectively.

Status of Ongoing 

Construction

As of April 30, 2000, WCCA’s records indicated that approximately 

$162.5 million had been disbursed on the project. This includes $87.1 

million in construction costs, $69.7 million in other costs, and $5.7 million 

in project administrative costs. As of April 30, 2000, WCCA had obligated 

$404 million in contracts that were awarded and WCCA’s architectural and 

engineering team had issued fireproofing and doors, door frames, and 

hardware bid packages. WCCA provided the following information as of 

April 30, 2000, on the status of the site work:
B-285838

Page 7 GAO/AIMD-00-262 DC Convention Center

• Water and sewer utility relocation and slurry wall5 panel installation are 

substantially complete. The CM is currently completing WCCA’s 

punchlist6

 items.

• Excavation and contaminated soil removal is approximately 93 percent 

complete with 1.3 million cubic yards of soil removed from the project. 

This amount includes 550,000 tons of projected contaminated soil, of 

which approximately 508,548 tons have actually been removed. No 

additional contaminated soil has been found since April 2000. 

• Superstructure concrete work7

 and foundation concrete work that 

needs to be completed by the time the steel arrives on site is progressing 

on schedule.

The critical path method (CPM) schedule illustrates the CM’s plan and 

identifies critical activities that must be completed in order for the project 

to be finished within the GMP schedule. WCCA identified delays in the 

processing of contracts and contract modifications that must be addressed 

to ensure that the project’s construction stays on schedule and within 

budget. WCCA is awaiting the District of Columbia’s Financial 

Responsibility and Management Assistance Authority’s approval of 

approximately $18 million worth of construction contracts and the 

approval of the awarded thermal energy provider agreement.8

 Another 

critical activity in the CPM schedule is the procurement of mechanical 

electrical and plumbing (MEP) and building enclosure trades.9

The CPM schedule projects a potential 5-week delay in completing the 

project. This delay is the result of the steel subcontractor requesting 

additional time for WCCA’s incorporation of unit price allowance work that 

is currently in the subcontract. The subcontract contains unit price 

allowances to cover changes resulting from finalizing design changes. The 

5

The slurry wall is a concrete wall around the construction site that extends below the 

excavation and is a barrier to underground water flowing into the site.

6

The punchlist is a list generated by WCCA to identify items not yet completed. 

7

The superstructure concrete work is required to secure the steel.

8

Under the terms of this agreement, a vendor leases the central plant area from WCCA and 

agrees to finance, design, construct, operate, and maintain the central plant for the 

convention center and provide all hot and chilled water for convention center operations. 

9

Building enclosure trades are exterior items such as brick, pre-cast, and curtain wall. Precast is concrete used on the exterior of the building and curtain wall is a glass structure 

supported by steel.
B-285838

Page 8 GAO/AIMD-00-262 DC Convention Center

subcontractor contended that the changes covered by the unit price 

allowance work would increase the time duration of the contract. WCCA 

did not agree with the additional time request because the allowance work 

was originally included in (1) the CPM schedule, (2) the GMP, and (3) the 

CM’s subcontract. The CM, WCCA, and the steel subcontractor reevaluated 

the CPM schedule to reach a solution that would be acceptable to 

everyone. In response to a draft of this report, WCCA’s Managing 

Director/Development stated that the subcontractor has agreed to 

withdraw these time claims and that this agreement will keep the project 

on schedule with the estimated completion date of March 2003.

The metro station work is ongoing with the Washington Metropolitan Area 

Transportation Authority (WMATA) overseeing the work using $25 million 

appropriated by the Congress for that purpose. As of April 30, 2000, the 

estimated cost of the metro station upgrade was approximately $30.1 

million. Of this amount, $28.2 million was reported as the metro station 

upgrade project component of the “other costs” section and the other $1.9 

million is included in the additional estimated revisions project component 

not included in the revised GMP agreement. Also, WMATA is in 

negotiations with a subcontractor regarding the station entrance expansion 

contract. As of April 30, 2000, available funding for the metro station 

upgrade was $27 million, including $2 million of interest earned on the 

federal funds. The construction agreement specifies that WCCA is 

responsible for any costs in excess of the available funds. As of April 2000, 

estimated costs exceeded funds available for the metro station upgrade by 

$3.1 million. If actual costs exceed the funds available, WCCA will have to 

offset any excess costs by reallocating costs from other project 

components, reducing the project contingency or reserved amounts, or 

using available funding sources.

Proposed GMP 

Agreement

As of April 2000, the original GMP was still in effect and under the terms of 

the proposed revision to the GMP agreement, the GMP will be reset in 

accordance with an agreed upon formula when 90 percent of the 

purchasing activities have been completed.10 The proposed revision to the 

GMP agreement would also incorporate the costs associated with 

Authority-approved and pending change orders, and estimated revisions, as 

10 WCCA officials stated that the purchasing activities are approximately 75 to 80 percent 

completed and that they expect to be 90 percent completed by late November 2000, at which 

time the GMP will be reset. 
B-285838

Page 9 GAO/AIMD-00-262 DC Convention Center

well as potential cost decreases. The intent of the revised GMP agreement 

is to prevent future claims or disputes between the CM and WCCA for those 

incorporated activities that occurred from contract inception in August 

1998 through December 1999. The revised GMP agreement would also 

adjust the estimated cost of various components of construction to reflect 

the actual cost of services provided as of the date that purchasing was 90-

percent complete. 

On August 1, 2000, WCCA officials stated that once the GMP is revised, any 

unallocated GMP costs will be combined into the newly established funded 

owner’s adjustment account (OAA) and buyout reserve and will increase 

the CM’s contingency funds within the GMP. The buyout reserve is an 

estimate of the cost savings expected during construction. Once all of the 

construction contracts have been let, the buyout reserve will be adjusted to 

reflect the actual amount of money saved, if any. Any reserve that remains 

at the completion of the construction will be shared between WCCA and 

the CM, with WCCA getting 75 percent and the CM getting 25 percent. The 

newly established OAA is for WCCA. If there are cost overruns or 

expansions in the project scope, WCCA can use OAA to cover the shortfall. 

However, any cost savings will increase the amount of OAA. The CM’s 

contingency is for any unexpected costs and is included within the GMP 

agreement. 

Project Costs Have 

Increased

From June 30, 1999, to April 30, 2000, estimated project costs increased by 

a net amount of $22.9 million, to over $814 million. The construction and 

other costs increased from $714 million to $756.8 million. The $42.8 million 

increase included the $17.4 million in project construction costs that were 

outside of the GMP, $25.1 million in other costs, and $.3 million in additions 

to WCCA’s project budget. Financing-related costs decreased from 

$77.1 million to $57.2 million. The $19.9 million decrease resulted from the 

use of the minimum balance requirements for the reserve funds (the actual 

balance in the reserve accounts was $86.1 million)11 as per the bond 

document instead of the higher amounts reported in the final pricing 

information. In summary, offsetting the $42.8 million in construction cost 

hikes against the projected lower financing costs ($19.9 million) shows a 

net increase of $22.9 million since our September 1999 report.

11As of April 30, 2000, the actual balance in the Operating and Marketing Reserve account 

was $58.3 million, the Revenue Stabilization Reserve account balance was $12.3 million, and 

the Capital Renewal and Replacement Reserve account balance was $15.5 million.
B-285838

Page 10 GAO/AIMD-00-262 DC Convention Center

Table 1 compares WCCA’s cost estimates as of April 30, 2000, with its June 

1999 estimates, which are presented in our September 28, 1999, report. The 

last column of table 1 represents the difference in the estimated costs for 

each project component and each project category and the total for the 

project from June 30, 1999, through April 30, 2000. The project cost 

components are (1) the GMP, which consists of the CM’s construction 

costs, (2) changes to the GMP amount and WCCA estimate of the cost of 

those changes, which are the CM’s construction costs outside of the GMP, 

(3) WCCA’s other costs, which are principally overhead except for utility 

relocation and the metro station upgrade, (4) additions, which are 

administrative costs for the project and equipment that are expected to be 

funded by the vendor, and (5) financing costs related to the issuance of the 

bond and the establishment of reserves in accordance with the bond. 

Additional explanations of these estimates and the changes in the 

estimated cost of project components appear after table 1.

Table 1: Comparison of WCCA’s Unaudited Estimated Costs for the New Convention Center as of June 30, 1999, and 

April 30, 2000

(Dollars in thousands)

Project component

Estimate as of

6/30/1999

Estimate as of

4/30/2000

Increase

(decrease)

Guaranteed Maximum Price (GMP) $500,600 $500,600 0

Changes to GMP amount:

Reserve for hazard materials removal (change order 1) 9,000 16,683 7,683

Change orders 473 1,895 1,422

Subtotal changes to GMP amount $9,473 $18,578 $9,105

Subtotal GMP contract status $510,073 $519,178 $9,105

WCCA estimate of changes:

Pending change orders 123 593 470

Estimate revisions 16,013 24,971 8,958

Potential cost decreases (15,558) (16,657) (1,099)

Subtotal pending negotiation $578 $8,907 $8,329

Total WCCA-estimated construction costs $510,651 $528,085 $17,434

Other costs:

Land cost 5,488 5,364 (124)

Program management 14,232 16,103 1,871

Consulting and inspections 10,255 10,116 (139)

Permits and fees 1,799 1,649 (150)
B-285838

Page 11 GAO/AIMD-00-262 DC Convention Center

Source: WCCA records.

WCCA’s total estimated construction costs increased by more than 

$17 million from June 30, 1999, to April 30, 2000. WCCA changed its 

estimates for the following construction costs of the CM that are outside of 

the GMP.

• Encountering more contaminated soil than anticipated increased the 

estimate of hazardous material removal from $9 million to $16.6 million. 

The projection of contaminated soil increased from about 300,000 tons 

to 550,000 tons, of which the actual amount removed as of April 30, 

2000, was 508,548 tons.

• The $9 million net increase in estimated revisions includes $2 million of 

additional costs for the metro station upgrade, certain utility relocation 

Environmental impact 1,550 1,550 0

Legal 5,177 6,188 1,011

Insurance 13,100 13,395 295

Design fees 39,748 43,035 3,287

Site development 200 200 0

Fixtures/furnishings/equipment 22,305 22,305 0

Other project costs 14,497 15,195 698

Portion of utilities relocation not included in building and site 10,000 7,200 (2,800)

Metro station upgrade 21,972 28,208 6,236

Project contingency 14,026 28,924 14,898

Subtotal other costs $174,349 $199,432 $25,083

Total WCCA project budget $685,000 $727,517 $42,517

Additions to WCCA project budget:

Project administrative costs 5,000 9,942 4,942

Vendor-provided equipment 24,000 19,350 (4,650)

Total additions to WCCA budget $29,000 $29,292 $292

Total estimated construction costs $714,000 $756,809 $42,809

Financing-related costs:

Bond issuance 11,486 11,486 0

Reserve funds 65,633 45,769 (19,864)

Subtotal financing-related costs $77,119 $57,255 ($19,864)

Total estimated project costs $791,119 $814,064 $22,945

(Continued From Previous Page)

(Dollars in thousands)

Project component

Estimate as of

6/30/1999

Estimate as of

4/30/2000

Increase

(decrease)
B-285838

Page 12 GAO/AIMD-00-262 DC Convention Center

costs of $2.8 million, and food service equipment costs of $5 million that 

were not included in the estimate as of June 30, 1999.

• The $1.1 million decrease in the potential cost decreases represents 

potential cost reductions to amounts originally estimated by WCCA.

WCCA also made a number of changes within the “other costs” category 

totaling more than $25 million and increasing the total estimated “other 

costs” category from $174.3 million to $199.4 million. WCCA increased the 

project contingency amount from $14 million to $28.9 million. The 

replenishment of almost the entire original contingency amount is based on 

WCCA receiving commitments for the federal grant revenue. Additional 

changes to WCCA’s other costs that were not covered by the revised GMP 

agreement include the following.

• The $1.87 million increase in program management costs is due to more 

traffic management, land use counsel, and WCCA staff costs than 

anticipated; the hiring of a consultant to prepare a food service Request 

for Proposal; and the review of third party mechanical electrical and 

plumbing permits.

• The $1 million increase in legal costs is attributable to additional time 

spent on legal issues to help reduce the risk of lawsuits and the 

processing of the thermal energy provider agreement. 

• The $3.3 million net increase in design fees is due to additional costs 

being estimated for an architect’s contract. Also, additional costs have 

been estimated for architects to carry out bid negotiation and redesign 

work associated with the revised design scope.12 Design fees for the 

metro station upgrade have been reclassified from the design fees cost 

component to the metro station upgrade project component.

• The $2.8 million decrease in utility relocation costs is due to WCCA 

reclassifying these costs and putting them in the estimated revisions 

project component of the estimated construction costs category.

• The $6.2 million increase in metro station upgrade costs is due to 

increased costs for station improvements, new elevators and escalators, 

and slurry wall work.

12The design process has become more extensive due to value engineering performed on the 

exterior masonry, pre-cast concrete, and metal panels. As of April 30, 2000, construction 

documents have been completed for 18 trade packages.
B-285838

Page 13 GAO/AIMD-00-262 DC Convention Center

In the “additions to WCCA’s project budget” category are changes to project 

administrative costs and vendor-provided equipment project components 

that had a net effect of almost zero.

• The $4.9 million increase in project administrative costs is due to 

marketing, public affairs, and job-specific training for Shaw residents 

that were not originally anticipated. Also, additional rental and utility 

costs were incurred when the development staff, who were originally 

scheduled to be located at the construction site, moved to the Carnegie 

library.

• The $4.7 million decrease in vendor-provided equipment is due to the 

transfer of food service equipment costs to the estimated revisions 

project component of the construction cost category. WCCA is currently 

finalizing the Request for Proposal for food-service-related issues.

WCCA’s Financing Plan 

Covers Estimated 

Costs But Contains 

Some Uncertainties

As of April 30, 2000, the bond proceeds of $519.5 million provided 64 

percent of the $814 million estimated project costs. However, the financing 

plan covering the remaining 36 percent of estimated project costs contains 

uncertainties, including the equipment anticipated to be provided by 

vendors without initial cost and the $10 million in capital budget funds to 

be provided by the District. These uncertainties are discussed after table 2, 

which compares the April 30, 2000, financing plan with the plan as of June 

30, 1999.13

Table 2: Comparison of WCCA’s June 1999 and April 2000 Unaudited 

Financing Plans

13See GAO/AIMD-99-258, September 28, 1999.

Dollars in millions

Funding sources

Financing plan

as of 6/1999

Financing plan

as of 4/2000

Senior lien bonds $519.5 $519.5

Cash for preconstruction activities 37.2 37.2

Cash for reserves or construction 77.3 77.3

Construction fund earnings 53.1 53.1

Excess revenues through 2002 40.0 40.0
B-285838

Page 14 GAO/AIMD-00-262 DC Convention Center

Source: WCCA records.

From June 30, 1999, to April 30, 2000, the financing sources increased 

$11.2 million from $811.1 million to $822.3 million. The increase is the 

result of receiving commitments for federal grant revenue and additional 

reimbursable administrative costs. WCCA reflects the reimbursable 

administrative costs of WCCA staff whose time is dedicated to the 

proposed new convention center and other dedicated costs, such as 

marketing and public affairs. These costs are paid by WCCA from the 

operating budget it receives through dedicated tax collections for the 

existing center. Committed federal funds in the April 2000 financing plan 

were the $25 million appropriated by the Congress in fiscal year 1999, 

$1.78 million of interest earned on it, and $24 million in federal highway 

funds.

WCCA expects to receive an additional $10 million from the District’s 

Capital Budget Fund. The $10 million is included in the District’s Fiscal 

Year 2001 Proposed Operating Budget and Financial Plan, which is 

currently with the Congress awaiting approval.

WCCA anticipates that vendors will provide or fund the costs of a central 

heating and cooling plant, telecommunications, food service, and 

audiovisual equipment estimated at $24.3 million. WCCA has negotiated a 

20-year lease agreement with a vendor to provide central heating and 

cooling plant equipment estimated at $14.3 million. The agreement is at the 

Federal funds 55.0 61.0

Vendor participation 24.0 24.3

Funds for administrative costs 5.0 9.9

Subtotal $291.6 $302.8

Total funding sources $811.1 $822.3

Total funding required $791.1 $814.0

Estimated surplus $20.0 $8.3

Interest rate 5.2% 5.2%

Term of debt 30 30

Dedicated annual revenues to back bonds $50.3 $50.3

Revenue growth assumption 3.6-4.5% 3.6-4.5%

Maximum annual debt service $36.1 $36.1

(Continued From Previous Page)

Dollars in millions

Funding sources

Financing plan

as of 6/1999

Financing plan

as of 4/2000
B-285838

Page 15 GAO/AIMD-00-262 DC Convention Center

Authority waiting to be approved. WCCA still needs to solicit proposals 

from vendors to provide telecommunications, audiovisual, and food 

service.

If the $10 million from the District’s capital budget is not approved by the 

Congress and the President and the remaining $10 million in equipment 

costs is not completely funded by vendors, then total estimated funding 

sources would decrease from $822.3 million to $802.3 million. This would 

reduce the estimated funding sources to $11.8 million less than the current 

$814 million estimated project costs. While the funds expected from the 

District’s capital budget and the remaining unexecuted vendor contracts, 

with equipment at no cost to WCCA, are included in WCCA’s financing plan 

and may be realized, they are treated as a reduction to WCCA’s project 

contingency reserve until they are finalized.

Collections of 

Dedicated Taxes

Certain District sales and use taxes (dedicated taxes) are to be transferred 

to WCCA to construct and operate the convention center and redeem the 

bonds. These taxes consist of a 4.45-percent hotel sales tax and a 1-percent 

restaurant tax and rental vehicle tax.14 These taxes, along with several 

other District sales and use taxes that are reported on the same tax form, 

are collected through what is referred to as a lockbox arrangement. Under 

this arrangement, the relevant District businesses file their tax returns 

along with their tax payments directly with a designated local bank 

(lockbox bank). Any such payments received by the District are forwarded 

directly to the lockbox bank without further processing. The bank then 

makes appropriate distribution of the tax payments.

The purpose of the lockbox is to provide bondholders with assurance that 

dedicated taxes for the convention center are provided to WCCA for use as 

specified in the bond agreements. The lockbox arrangement for collecting 

dedicated taxes for WCCA, as well as other taxes for the District, operates 

pursuant to the provisions of a number of agreements among the parties 

involved. For a more detailed discussion of the lockbox process, please 

refer to our September 1999 report.15

14The taxes identified for WCCA make up a portion of the District’s 14.5-percent hotel sales 

and use tax and 10-percent tax on restaurant meals, alcoholic beverages consumed on 

premises, and rental vehicle charges.

15See GAO/AIMD-99-258, September 28, 1999. 
B-285838

Page 16 GAO/AIMD-00-262 DC Convention Center

All five of the recommendations concerning the lockbox operations made 

to the District’s Chief Financial Officer in our September 1999 report have 

been implemented. Appendix 1 lists our prior recommendations and the 

actions taken by the District to respond to them.

Based on the analytical procedures performed, lockbox collections are 

slightly higher than projections. Actual dedicated tax collections were 

$40.5 million for the first 9 months of fiscal year 2000. If collections 

continue at the same rate, actual fiscal year 2000 collections would be 

about $54.1 million. The District of Columbia’s Fiscal Year 2001 Proposed 

Operating Budget and Financial Plan estimates restaurant sales and hotel 

sales tax at $51.8 million for fiscal year 2000. Therefore, dedicated tax 

collections would exceed projections by $2.3 million.

Conclusions With the current level of estimated funding sources from WCCA’s financing 

plan, there would be sufficient amounts to fund the estimated project costs 

as of April 30, 2000. In addition, WCCA has excess funding sources and 

funds in its reserve accounts plus sufficient contingency reserves to cover 

the District’s capital budget funds not approved or equipment not funded 

by vendors. Once the Authority approves pending contracts and the GMP is 

revised, WCCA expects to complete the construction of the new 

convention center on schedule. The District has implemented corrective 

actions to address the five lockbox-related findings identified in our 

September 1999 report.

The District’s 

Comments and Our 

Evaluation

WCCA and District officials generally agreed with the contents of our 

report. They also provided technical comments, which we have 

incorporated as appropriate. The District’s Chief Financial Officer stated 

that the Office of Tax and Revenue has implemented the five 

recommendations and that his office will continue to monitor operations to 

ensure continued compliance with our recommendations. In addition, 

WCCA provided explanations of events that occurred subsequent to our 

review and provided a more recent status of issues that are included in this 

report.

We are sending copies of this report to Senator Robert Byrd, Senator 

Richard J. Durbin, Senator Kay Bailey Hutchison, Senator Joseph I. 

Lieberman, Senator Ted Stevens, Senator Fred Thompson, Senator George 
B-285838

Page 17 GAO/AIMD-00-262 DC Convention Center

V. Voinovich, Representative Dan Burton, Representative Ernest J. Istook, 

Jr., Representative James P. Moran, Delegate Eleanor Holmes Norton, 

Representative David R. Obey, Representative Henry Waxman, and 

Representative C. W. (Bill) Young in their capacities as Chair or Ranking 

Minority Member of Senate and House Committees and Subcommittees. 

Copies will be made available to others upon request. 

If you have any questions regarding this report, please contact me at (202) 

512-4476 or by e-mail at jarmong.aimd@gao.gov or Steven R. Haughton, 

Assistant Director, at (202) 512-5999 or by e-mail at 

haughtons.aimd@gao.gov. Key contributors to this assignment were 

Arkelga L. Braxton and Jamie Sullivan. 

Sincerely yours,

Gloria L. Jarmon

Director, Health, Education, and Human Services

Accounting and Financial Management Issues
Page 18 GAO/AIMD-00-262 DC Convention Center

Appendix I

Status of Prior Year’s Recommendations ApApenednxidexiIs

Table 3: Status of Recommendations Contained in District of Columbia: Status of the New Convention Center Project

(GAO/AIMD-99-258)

GAO recommendation Action taken

Did the District respond 

to GAO's 

recommendation?

Restrict further transfers out of the exceptions 

account on the basis of estimates.

Effective July 1999, the District discontinued processing 

transfers out of the exceptions account to the District on 

the basis of estimates. All transfers out of the exceptions 

account to the District are based on calculated amounts.

Yes

Determine actual amounts due to the District 

and make appropriate adjustments to the 

estimated amounts transferred from the 

exceptions account.

The Office of Tax and Revenue (OTR) computed the 

actual amounts due to the District and compared this 

number with the estimated transfers received by the 

District as of June 1999 when the final estimated transfer 

was made. The difference was an overpayment that was 

adjusted with a subsequent transfer to the District.

Yes

Resolve the remaining older amounts in the 

exceptions account and make appropriate 

transfers to the District and WCCA.

OTR calculated a settlement of the remaining older 

amounts in the exceptions account as of June 30, 1999. 

The District's and WCCA's share of the remaining older 

amounts was calculated and the transfers were made 

out of the exceptions account to the District and WCCA.

Yes

Establish and enforce procedures for clearing 

the exceptions account and transferring funds 

to the appropriate accounts monthly.

Effective July 1999, OTR calculates amounts owed to 

both WCCA and the District monthly and submits the 

wire transfers to the Office of Financial Operations and 

Systems (OFOS) monthly for approval. Once OFOS 

approves the wire transfers, it submits the wire transfers 

to the Office of Finance and Treasury to initiate the 

payment.

Yes

Determine the interest income on the 

exceptions account to be allocated to the 

District and WCCA, make appropriate 

transfers of the interest previously earned, 

and make future transfers of interest no less 

often than monthly.

OTR calculated the interest earned on the funds in the 

exceptions account from inception through June 1999. 

WCCA's and the District's share of the interest was 

calculated and transferred out of the exceptions account. 

Also, the interest earned and funds unidentified by tax 

rate are allocated to WCCA and the District on a 

quarterly basis.

Yes
Page 19 GAO/AIMD-00-262 DC Convention Center

Appendix II

Comments From the District of Columbia ApendxiI
Page 20 GAO/AIMD-00-262 DC Convention Center

Appendix III

Comments From the Washington Convention 

Center Authority ApendxiI

Now on p. 7.

See comment 1.

See comment 1.

Now on p. 7.

Now on p. 10-11.

See comment 1.
Appendix III

Comments From the Washington Convention 

Center Authority

Page 21 GAO/AIMD-00-262 DC Convention Center
Appendix III

Comments From the Washington Convention 

Center Authority

Page 22 GAO/AIMD-00-262 DC Convention Center

The following is GAO’s comment on the Washington Convention Center 

Authority’s letter dated August 7, 2000.

GAO Comment 1. These reflect subsequent events and therefore no change to the report 

is necessary.

(916334) Letr
Ordering Information The first copy of each GAO report is free. Additional copies of 

reports are $2 each. A check or money order should be made out to 

the Superintendent of Documents. VISA and MasterCard credit 

cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are 

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and 

testimony. To receive facsimile copies of the daily list or any list 

from the past 30 days, please call (202) 512-6000 using a touchtone 

phone. A recorded menu will provide information on how to obtain 

these lists.

Orders by Internet:

For information on how to access GAO reports on the Internet, 

send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web home page at: 

http://www.gao.gov

To Report Fraud, 

Waste, or Abuse in 

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. GI00