GAO-02-182R Status of New Convention Center

United States General Accounting Office

Washington, DC 20548

November 30, 2001

The Honorable Constance A. Morella

Chairwoman

Subcommittee on the District of Columbia

Committee on Government Reform

House of Representatives

Subject: District of Columbia: Status of the New Convention Center Project

Dear Madam Chairwoman:

You asked us to provide information on the status of the new convention center

project. The Washington Convention Center Authority (WCCA) Act of 1994 authorizes

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

maintain and operate the existing convention center. As agreed with your office, we

reviewed information related to (1) the status of the new convention center project as

of July 20011

 and (2) the Guaranteed Maximum Price (GMP) agreement.2

Specifically, our objectives were to provide information regarding the status of (1) the

new convention center project and GMP negotiations, (2) estimated costs through July

2001 and how they compare to the original budget, including information on the

completion schedule and any change in project contingency amounts, (3) ongoing

construction, including the effect of the April 2001 steel collapse on the estimated costs

and project schedule, and (4) financing sources. In order to meet those objectives, we

• held discussions and obtained information from WCCA officials;

• reviewed WCCA and construction manager (CM) progress reports, visited the

construction site, and compared WCCA’s current estimates for the project with the

original cost estimates of September 1998;3

• reviewed budget documents and held discussions with WCCA officials to obtain

reasons for variations in the most recent cost estimates and the original estimates;

and

• reviewed the financing plan to determine whether it covers the remaining estimated

project costs.

 1

This was the most recent information available at the time of our review.

2

The most recent information available for the GMP agreement was from September 2001.

3

WCCA considers the September 1998 estimate to be the original estimate.
Page 2 GAO-02-182R Status of New Convention Center

We conducted our work from April through October 2001 in accordance with generally

accepted government auditing standards.

On September 18, 2001, we briefed the staff of your Subcommittee on the preliminary

results of our review. We agreed to provide you the briefing materials along with a

formal transmittal letter and to update the briefing document with any available

additional information. This letter transmits material from that briefing, with data

updated through July 31, 2001, the most recent information available at the time we

prepared this report. The updated briefing slides are included in enclosure 1.

Results in Brief

The revised GMP has not yet been set due to lack of agreement between WCCA and the

CM on the project schedule and the estimated costs of pending changes. The GMP—

which covers most of the hard costs of actual construction such as masonry, carpentry,

and metals, but excludes what are referred to as soft-cost items4—is based on a set of

agreed-upon assumptions regarding work quantities and unit costs of performing such

work. The GMP amount of $500.6 million will be adjusted to reflect scope of work

differences from the baseline assumptions as the project progresses. WCCA and the

CM are continuing to negotiate the adjustment to the GMP.

As of July 2001, WCCA’s monthly report shows that the total estimated construction

cost5

 for the project is approximately $778.2 million, including a $14.6 million

contingency amount as a cushion against unforeseen future increases. This represents

a $64.2 million, or 9 percent, increase over the original September 1998 estimate of $714

million and an increase of $21.4 million since we reported to the Subcommittee last

year.6

The increase in the total construction project estimate results from the following. The

estimated hard costs have increased by $57.8 million since project inception due to

increases in the metro station upgrade, vendor-provided equipment, utility work costs,

removal of contaminated soil, and items within the GMP. The estimated other costs

have increased by $24.9 million due to design fees, consulting and inspections, the

metro station upgrade, and other project costs. The estimated project contingency,

discussed later in this letter, has decreased by $15.8 million and estimated additions to

the WCCA project budget have decreased by $2.7 million.

WCCA included a project contingency of $30.5 million in the September 1998 cost

estimate. This original project contingency amount, earmarked for cost increases both

inside and outside of the GMP, has been used for known cost increases. As of May

 

4

Soft costs are construction-related costs such as design fees, legal costs, and consulting and inspections.

5

Includes (1) the GMP, (2) hard costs managed outside of the scope of the GMP, and (3) other costs as of July 2001.

6

District of Columbia: Status of the New Convention Center Project (GAO/AIMD-00-262, Aug. 30, 2000).
Page 3 GAO-02-182R Status of New Convention Center

2001, $28.3 million of the original $30.5 million contingency had been used, leaving a

contingency balance of $2.2 million. The project contingency was increased by $15.7

million in June 2001. In July 2001, $3.3 million of the estimated contingency was used

for hard-cost and soft-cost line item increases resulting in a net balance of $14.6 million.

As discussed later in this letter, estimated financing sources still exceed WCCA’s

estimated project costs by $37.5 million as of July 2001.

The estimated project cost of $778.2 million as of July 2001 does not include ongoing

negotiations between WCCA and the CM regarding their cost estimates for pending

changes and different estimates for the substantial and final completion dates of the

new convention center. Substantial and final completion dates for the new convention

center range from early 2003 at earliest to mid-2004 at latest, respectively. The CM is

reporting that the estimated pending changes are $135.2 million as of July 2001. These

items are subject to negotiations between WCCA and the CM. WCCA told us that as of

July 2001, the additional cost to the GMP could be a 2 to 3 percent increase over the

existing GMP estimate ($519.4 million), which could result in a $10.4 million to $15.6

million increase.

In response to a draft of this briefing, WCCA’s Managing Director/Development stated

that the CM has agreed in principle to withdraw approximately $109 million associated

with pending changes recently shown in the CM’s job status reports when the GMP is

reset. According to WCCA, the remaining $26 million will be resolved with the

subcontractors in due course, and the reset GMP will include funding reserves for those

pending amounts that were not released. To the extent that pending changes are settled

for more than the reserves in the GMP, WCCA will be responsible for such increases.

WCCA has stated that based on the status of negotiations and WCCA’s current estimate,

it is believed that the project’s total budget after being adjusted to reflect the reset GMP

will be within the funding sources available to WCCA for this project.

According to WCCA officials, the April 2001 collapse of steel roof trusses was caused

by improper stabilization of one truss, coupled with a strong wind. WCCA has reported

that the collapse will have little or no impact on the costs or the project schedule

because the builders’ insurance covered the costs of the damaged and replacement

steel and the schedule acceleration necessary to overcome any delays. According to

WCCA officials, the facility is 46 percent complete versus the 51 percent expected by

September 2001. In response to a draft of this briefing, WCCA’s Managing

Director/Development stated that the variance is the result of the following two issues:

(1) the CM deferred the construction of the middle building until the north building was

completed and (2) for various reasons that WCCA could not control, the metro station

upgrade work was started later than anticipated.

Finally, WCCA’s estimated financing sources available to complete the new convention

center project are $815.7 million. As of July 31, 2001, WCCA has received $770.9 million

in funding and anticipates receiving an additional $44.8 million. The majority of the

anticipated funding consists of three components: vendor reimbursements not yet

negotiated, federal highway funds, and equity contributions from dedicated tax

revenues. Equity contributions not yet received represent the estimate of dedicated

taxes to be collected in fiscal year 2002 above the amounts needed to fund operations

of the existing convention center and debt service on the bonds of the new facility. In
Page 4 GAO-02-182R Status of New Convention Center

response to a draft of this briefing, WCCA’s Managing Director/Development stated that

WCCA will make the equity contribution of $10 million in November 2001, which would

increase funding received to $780.9 million and decrease the remaining anticipated

funding to $34.8 million.

WCCA officials acknowledge that recent events, such as the terrorist attacks of

September 11, could adversely affect the amount of dedicated taxes collected if any

period of national and international economic uncertainty is prolonged. In response to

a draft of this briefing, WCCA’s Managing Director/Development stated that the District

of Columbia’s Office of Tax and Revenue is responsible for estimating WCCA’s share of

the dedicated tax receipts. A new forecast, reflecting the impact of the events of

September 11, has not yet been submitted to WCCA. As of July 31, 2001, estimated

financing sources were $815.7 million and total estimated project costs were $778.2

million, which left an estimated residual of $37.5 million. WCCA officials told us that

they remain confident that the $815.7 million in financing would be sufficient to cover

the currently estimated construction costs of $778.2 million. As stated earlier,

negotiations between WCCA and the CM about the pending changes were ongoing at

the time this report was being finalized.

We provided WCCA a copy of the transmittal letter and slides for comment. WCCA

generally agreed with the contents of the briefing slides. WCCA also provided some

technical comments and clarifications which we have incorporated as appropriate

throughout the briefing slides.

As you have requested, we will continue to keep you apprised of information on (1)

changes in cost estimates and the adequacy of project financing to cover any increases,

(2) progress of WCCA efforts toward reaching agreement with the CM on the GMP, (3)

the final settlement amount for the value of potential change orders reported by the

CM, (4) determination of the actual completion date for the new convention center, and

(5) any ongoing differences between WCCA and the CM regarding the above.

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

Senator Richard J. Durbin, Senator Mary Landrieu, Senator Joseph I. Lieberman,

Senator Ted Stevens, Senator Fred Thompson, Senator George V. Voinovich,

Representative Dan Burton, Representative Chaka Fattah, Representative Joe

Knollenberg, Delegate Eleanor Holmes Norton, Representative David R. Obey,

Representative Todd R. Platts, 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.

This letter will also be available on GAO’s home page at http://www.gao.gov.
Page 5 GAO-02-182R Status of New Convention Center

If you have any questions, please contact me at (202) 512-9450, or by e-mail at

steinhoffj@gao.gov or Jeanette M. Franzel, Acting Director, at (202) 512-9471. Key

contributors to this letter were Keith A. Thompson, Terrell G. Dorn, Arkelga L. Braxton,

Maria D. Edelstein, Julia J. Ziegler, and Bridget A. Skjoldal.

Sincerely yours,

Jeffrey C. Steinhoff

Managing Director

Financial Management and Assurance

Enclosure
Page 6 GAO-02-182R Status of New Convention Center

Enclosure I

1

District of Columbia Government: Status of the

New Convention Center Project

Financial Management and Assurance

Team

Briefing for the Staff of the Subcommittee

 on the District of Columbia
Page 7 GAO-02-182R Status of New Convention Center

Enclosure I

2

Introduction

• You asked us to provide periodic status reports on the

construction of the new convention center. As agreed with

your staff, this update on the new convention center’s status

will include:

• the status of the Guaranteed Maximum Price (GMP),

• the changes in Washington Convention Center Authority

(WCCA’s) estimated project costs,

• the change in project contingency amount,

• the status of ongoing construction, and

• the status of financing sources.
Page 8 GAO-02-182R Status of New Convention Center

Enclosure I

3

Objectives

• Our objectives were to:

• Determine the status of the new convention center project

and GMP negotiations.

• Provide information on estimated costs through July 2001

and how they compare to the original budget, including

information on the completion schedule and project

contingency amounts.

• Provide information on the status of ongoing construction,

including the effect of the April 2001 steel collapse on the

cost and project schedule.

• Provide information on whether the financing plan will, in

all likelihood, cover estimated project costs.
Page 9 GAO-02-182R Status of New Convention Center

Enclosure I

4

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.

• The WCCA’s Managing Director/Development oversees the

contract and the construction with the assistance of the

program manager, which is made up of primarily three

consulting groups and several subcontractors.

• The construction manager (CM) is responsible for the

construction of the new convention center.
Page 10 GAO-02-182R Status of New Convention Center

Enclosure I

5

Background

• The architect/engineering team is composed of three

principal architectural firms and several subcontractors that

designed the new convention center.

• The new convention center plans call for a total of 2.3 million

gross square feet, including about 730,000 square feet of

prime exhibit space. The current convention center has

800,000 square feet, with 381,000 square feet of prime

exhibit space.

• Based on the amount of prime exhibit space, the new

convention center is projected to rank sixth in size in the

United States when completed.
Page 11 GAO-02-182R Status of New Convention Center

Enclosure I

6

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.

• Reviewed WCCA and CM progress reports, visited the

construction site, and compared WCCA’s July 2001

unaudited cost estimates for the project with the cost

estimates as of September 1998.1

1WCCA considers the September 1998 estimate to be the original estimate.
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Enclosure I

7

Scope and Methodology

• Reviewed budget documents and held discussions with

WCCA officials to obtain reasons for variations in the

most recent cost estimates and the original estimates.

• Reviewed the financing plan to determine whether it

covers the remaining estimated project costs.

We conducted our work from April through October 2001

in accordance with generally accepted government

auditing standards and considered the results of our most

recent work, which were reported to you last year.2

2District of Columbia: Status of the New Convention Center Project

(GAO/AIMD-00-262, Aug. 30, 2000).
Page 13 GAO-02-182R Status of New Convention Center

Enclosure I

8

Results in Brief

• As of November 13, 2001, WCCA and the CM were

continuing to negotiate the project schedule and estimated

costs.

• As of July 2001, the GMP estimate, which includes most but

not all of the hard costs related to the facility, was

approximately $519.4 million. The current estimate

represents a $18.8 million increase over the original GMP

amount of $500.6 million.

• The CM has identified an additional $135.2 million in potential

changes to construction costs that are subject to negotiation.

WCCA has estimated that after negotiations, these costs

could result in an additional 2 to 3 percent increase to the

GMP costs ($10.4 million to $15.6 million).
Page 14 GAO-02-182R Status of New Convention Center

Enclosure I

9

Results in Brief

• As of July 2001, WCCA’s current total estimated construction

cost, which includes the GMP, hard costs, and other costs,

was approximately $778.2 million. This represents a $64.2

million increase over the September 1998 estimate of $714

million and an increase of $21.4 million over the estimate at

the time of our August 30, 2000, report.

• Based on information provided by WCCA officials, the April

2001 collapse of steel roof trusses was caused by improper

stabilization of one truss coupled with a strong wind.

• WCCA has reported that the collapse of the steel roof trusses

will have little or no impact on the costs or the project

schedule because it is largely covered by insurance.
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Enclosure I

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Results in Brief

• WCCA and the CM have different estimates for the

 substantial and final completion dates.

• WCCA’s July 2001 report shows substantial and final

completion dates will be February 4, 2003, and May 7,

2003, respectively.

• The CM report3 shows dates about 5 to 6 months later,

and 13 to 14 months later, respectively, depending on the

effect of design delays.

3

This information was contained in the CM’s July 2001 report, which indicates that these dates are based on information as of March 2001.
Page 16 GAO-02-182R Status of New Convention Center

Enclosure I

11

Results in Brief

• As of July 31, 2001, estimated financing sources of $815.7

million were available to complete the new convention center

project. WCCA officials said they believe this amount will be

sufficient to cover estimated construction costs of $778.2

million as of July 2001.

• As of July 31, 2001, WCCA had received $770.9 million in

funding and anticipated receiving an additional $44.8 million.

• WCCA stated that it will make an equity contribution of $10

million in November 2001, which will increase the funding

received to $780.9 million and decrease the future

anticipated funding to $34.8 million.
Page 17 GAO-02-182R Status of New Convention Center

Enclosure I

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Results in Brief

• The WCCA acknowledges that in light of recent events, such

as the terrorist attacks of September 11, the amount of

dedicated taxes estimated to be collected could be adversely

affected during a prolonged time of national and international

economic uncertainty.

• We requested comments on a draft of these briefing slides

from WCCA’s Chief Financial Officer and Managing

Director/Development, who generally agreed with the

contents of the briefing. They also provided technical

comments and clarification which we have incorporated

throughout the briefing slides.
Page 18 GAO-02-182R Status of New Convention Center

Enclosure I

13

Status of the Guaranteed Maximum

Price (GMP) • As of November 13, 2001, the GMP had not yet been set, and

WCCA and the CM are continuing to negotiate. Under the terms

of the construction management services agreement between

WCCA and the CM, the CM originally submitted a GMP proposal

to WCCA in the amount of $500.6 million on May 22, 1998.

• The GMP proposal includes actual construction costs such as site

work, concrete, and metals but excludes soft-cost items.4 It is

based on a set of agreed-upon quantity and unit price

assumptions. The original GMP amount of $500.6 million will be

adjusted to reflect quantities and costs that differ from the

baseline assumptions as the project progresses.

4Soft costs are construction costs that are not related to the physical structure of the facility,

such as design fees, legal costs, and consulting and inspections.
Page 19 GAO-02-182R Status of New Convention Center

Enclosure I

14

Status of the Guaranteed Maximum

Price (GMP) • The GMP provides the basis for WCCA and the CM to negotiate

the final price. As of July 2001, the GMP estimate had been

adjusted to $519.4 million. WCCA and the CM continue to

negotiate the effect of revisions on the GMP.

• The delay in resetting the GMP is mainly due to lack of

agreement between WCCA and the CM on the project schedule

and total estimated cost.
Page 20 GAO-02-182R Status of New Convention Center

Enclosure I

15

Status of the Guaranteed Maximum

Price (GMP)

• WCCA and the CM monthly reports for July 2001 show the

following:

• As of July 2001, the CM had approximately $135.2 million in

submitted and unsubmitted change orders pending, which

were not included in the July 2001, $778 million construction

cost estimate. These items are subject to WCCA and the CM

negotiating a reset GMP.

• As of July 2001, WCCA told us that there could be an

additional 2 to 3 percent risk factor of potential increase to the

GMP cost. Those percentages applied to the July 2001 GMP

amount ($519.4 million) could result in a $10.4 million to $15.6

million increase.
Page 21 GAO-02-182R Status of New Convention Center

Enclosure I

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Status of the Guaranteed Maximum

Price (GMP)

• In response to a draft of this briefing, WCCA’s Managing

Director/Development stated that the CM agreed in principle

to withdraw $109 million of the pending changes when the

GMP is finalized. The remaining $26 million in changes will

be resolved with the subcontractors in due course. The final

GMP will include funding reserves for pending amounts that

were not released.

• WCCA’s Managing Director/Development stated that to the

extent that changes are settled for more than the amount

included in the GMP, WCCA will be responsible for such

increases. Based on the status of the negotiations, WCCA

believes that the project’s total budget, after being adjusted to

reflect the reset GMP, will be within the funding sources

available to WCCA for this project.
Page 22 GAO-02-182R Status of New Convention Center

Enclosure I

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Estimated Cost

• As of July 2001, WCCA’s current total estimated construction cost

was approximately $778.2 million, which represents a $64.2

million increase over the September 1998 estimate of $714

million (see tables 1 and 2). Also, this represents a $21.4 million

increase since our August 30, 2000, report.
Page 23 GAO-02-182R Status of New Convention Center

Enclosure I

18

Estimated Cost Table

 as of September 1998 and July 2001

(Dollars in thousands)

Project component Estimate as 

of 9/1998

Estimate as 

of 7/2001

Increase 

(decrease)

Percent 

of change

WCCA-estimated hard costs5 $505,600 $563,422 $57,822 11.4 

WCCA-estimated other costs 118,903 143,815 24,912 21.0 

Contingency 30,497 14,634 (15,863) (52.0) 

Estimated additions to WCCA project budget 59,000 56,338 (2,662) (4.5) 

Total estimated construction costs 714,000 778,209 64,209 9.0 

Table 1: Comparison of WCCA's Unaudited Estimated Costs for the New Convention Center

5Hard costs are construction costs related to the physical structure of the facility,

such as masonry, concrete, and structural steel.

Source: WCCA records.
Page 24 GAO-02-182R Status of New Convention Center

Enclosure I

19

Table 2: Changes in Estimated Construction

Costs

$500,000

$540,000

$580,000

$620,000

$660,000

$700,000

$740,000

$780,000

$820,000

1998 1999 2000 2001

Years

Dollars in 

thousands

Total estimated

construction

costs

Source: WCCA records.
Page 25 GAO-02-182R Status of New Convention Center

Enclosure I

20

WCCA’s Total Estimated Project Costs

and Changes

• The estimated hard costs6 have increased by $57.8 million since the project’s inception.

• Included in the increase is $27.2 million, which is

attributable to the following:

• Metro station upgrade,

• Vendor-provided equipment (audio-visual,

telecommunications, and food service), and

• Utility work costs that were not included in the original

scope of the project.

6This increase includes $18.8 million of settled and estimated changes thus far under the GMP

plus an additional $39 million which, while also managed by the CM, is controlled outside of

the scope of the GMP.
Page 26 GAO-02-182R Status of New Convention Center

Enclosure I

21

Estimated Costs

• Approximately $11.8 million of the hard-cost increase

resulted from the need to remove more contaminated soil

than was originally anticipated.

• The remaining $18.8 million in hard-cost increases to the

GMP represent WCCA’s estimate of potential cost

increases for changes and revisions to trade line items such

as concrete, masonry, metals, and carpentry.
Page 27 GAO-02-182R Status of New Convention Center

Enclosure I

22

Estimated Costs

• Estimated other costs have increased by $24.9 million

since the project’s inception and are attributable to

increases in:

• Design fees,

• Consulting and inspections, and

• Other project costs.

.
Page 28 GAO-02-182R Status of New Convention Center

Enclosure I

23

Change in Project Contingency Amount

• The project contingency is an estimate in the project’s budget

that is earmarked for cost increases both inside and outside

the GMP for which WCCA is responsible.

• As of May 2001, $28.3 million of the original $30.5 million

estimated contingency had been used for specific purposes,

leaving a contingency balance of $2.2 million.

• In June 2001, WCCA increased the contingency estimate by

$15.7 million. In July 2001, $3.3 million of the estimated

contingency was used for hard-cost and soft-cost line item

increases resulting in a net balance of $14.6 million as of July

2001.
Page 29 GAO-02-182R Status of New Convention Center

Enclosure I

24

Status of Ongoing Construction

• WCCA officials provided the following information about

the collapse of steel roof trusses:

• In April 2001, several steel roof trusses located in the

Middle Building on the M Street side of the

construction site collapsed (see figures 1, 2, and 3).

• The collapse has been attributed to improper

stabilization of a truss coupled with a strong wind.

• WCCA suspended construction for a day to perform

an assessment and investigation.
Page 30 GAO-02-182R Status of New Convention Center

Enclosure I

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Status of Ongoing Construction

• The insurer agreed to cover the costs of removing

damaged steel and installing replacement steel.

• WCCA reported that no time delays to the new

convention center have resulted from the collapse.

• WCCA also reported that its loss from the collapse

was the $10,000 deductible that the insurance policy

requires.
Page 31 GAO-02-182R Status of New Convention Center

Enclosure I

26

Figure 1: Steel Collapse--April 2001

A pictorial view of the collapsed steel with the North building in the background.
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Enclosure I

27

Figure 2: Steel Collapse--April 2001

 A pictorial view of the collapsed steel from the 9th Street side.
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28

 

Figure 3: Steel Collapse--April 2001

A close-up of one of the steel trusses involved in the collapse.
Page 34 GAO-02-182R Status of New Convention Center

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7

Substantial completion is defined as obtaining occupancy permits for all three buildings and having those

buildings available for operations, except for minor items identified by WCCA that have not yet been

completed.

8

Final completion is defined as the completion of all three buildings and minor items identified by WCCA.

Reported Status of Ongoing Construction • Date of completion

• WCCA’s July 2001 report shows that substantial7 and final8

completion dates for the Convention Center will be February

4, 2003, and May 7, 2003, respectively.

• The CM is reporting that the substantial and final completion

dates are July 8, 2003, and November 6, 2003, respectively.

The CM further states that if design delays continue, the

substantial and final completion dates could be March 12,

2004, and July 11, 2004. This information was contained in

the CM’s July 2001 report, which indicates that these dates

are based on information as of March 2001. See table 3 for a

comparison of completion dates.
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Enclosure I

30

Table 3: Comparison of WCCA and the CM

Estimated Completion Dates

Dates WCCA estimate CM estimate 1 CM estimate 2a

Substantial completion February 4, 2003 July 8, 2003 March 12, 2004

Final completion May 7, 2003 November 6, 2003 July 11, 2004

a

 Estimate 2 considers the impact of continuing design delays.
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Enclosure I

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Reported Status of Ongoing

Construction • WCCA has instructed the CM to prepare and forward to

subcontractors a schedule that would result in completion

of the new convention center within the WCCA-reported

milestone. The CM has notified its subcontractors but

has not entered into a contractual obligation with WCCA

for this schedule.

• The CM partially attributes the projected delays to design

changes, incomplete designs, and delays in shop

drawings. The CM reports that these issues may result

in increased costs and/or time delays.

• WCCA officials stated that they do not agree with the

CM’s assessment of the design delays or its estimated

substantial and final completion dates.
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Enclosure I

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Status of Ongoing Construction

• WCCA officials stated that as of September 2001, the

construction of the new convention center was 46-percent

complete as opposed to the planned 51-percent completion

as of this date.

• In response to a draft of this briefing, WCCA’s Managing Director/Development stated that the variance is the result of

the following two issues: (1) the CM deferred the construction

of the middle building until the north building was completed

and (2) for various reasons that WCCA could not control, the

metro station upgrade work was started later than

anticipated.
Page 38 GAO-02-182R Status of New Convention Center

Enclosure I

33

Status of Ongoing Construction

• Metro station

• As of July 2001, WCCA estimated project costs related to

the metro station were $33.4 million.

• In comparison, the Washington Metropolitan Area Transit

Authority (WMATA) estimated costs of approximately $29

million to $30 million. WMATA’s funding for the station is

solely from the congressional contribution ($25 million)

and interest earned from that contribution. The intent of

WMATA’s plans and estimates is to eliminate any

potential need for supplemental funds from WCCA.

• WCCA officials stated that the estimated $4 million

difference between the WCCA and WMATA estimates

was attributable to: (1) WMATA scope work that required

coordination with WCCA, such as slurry wall construction,

and (2) the external part of the station, which is outside of

WMATA’s scope but within WCCA’s plans.
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Financing

• WCCA’s estimated financing sources to complete the new convention center were $815.7 million as of July 31, 2001.

• As of July 31, 2001, WCCA had received $770.9 million in

funding and anticipated receiving an additional $44.8 million,

most of which is covered in three sources:

• $10 million of vendor reimbursements that have yet to be

negotiated. Accordingly, final amounts can not be

determined until these negotiations take place.

• $19.5 million of federal highway grants.
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Financing

• $10 million in equity contributions, which represents the

estimate of the amount of dedicated tax revenues that will

be collected in fiscal year 2002 above the amounts

needed for operations of the existing convention center

and debt service on the bonds of the new facility.

• In response to a draft of this briefing, WCCA’s Managing Director/Development stated that WCCA will make the equity

contribution of $10 million in November 2001, which would

increase funding received to $780.9 million and decrease the

anticipated future funding to $34.8 million.

• Dedicated taxes are certain District sales and use taxes that

are 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.
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Financing

• The WCCA acknowledges that in light of recent events, such

as the terrorist attacks of September 11, the amount of

dedicated taxes estimated to be collected could be adversely

affected during a prolonged time of national and international

economic uncertainty.

• In response to a draft of this briefing, WCCA’s Managing

Director/Development stated that the District of Columbia’s

Office of Tax and Revenue is responsible for estimating

WCCA’s share of the dedicated tax receipts. A new forecast

reflecting the impact of the events of September 11 has not

yet been submitted to WCCA.

• As of July 2001, estimated financing sources were $815.7

million and total estimated construction costs were $778.2

million, which leaves an estimated residual of $37.5 million.
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Financing

• WCCA has stated that the funding sources are sufficient to

cover its current estimated construction costs of $778.2

million to complete the new convention center. However, as

stated previously the negotiations are ongoing regarding the

pending changes and the GMP.
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Agency Comments

• WCCA generally agreed with the contents of our briefing

slides. WCCA provided some technical comments and

clarifications which we have incorporated as appropriate

throughout the briefing slides.

(194037)