District of Columbia: Status of the Proposed New Convention Center Project
Published: 1997-09-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reported on the progress of the proposed new convention center project for Washington, D.C., focusing on the project's: (1) approval process; (2) building design; (3) estimated costs; (4) dedicated revenues; and (5) financing plans.
section_title: What GAO Found
paragraphs: GAO found that: (1) the Washington Convention Center Authority (WCCA) is faced with the challenge of obtaining sufficient financing for the construction of the new convention center project; (2) the total cost--predevelopment and construction, including contingencies--is now estimated to be about $650 million, excluding $87 million of borrowing costs and certain reserve requirements; (3) WCCA already has sufficient funds from dedicated taxes for the $40 million in projected predevelopment costs of which a reported $15.6 million was expended as of July 31, 1997; (4) however, funding for the entire estimated $610 million in construction costs is uncertain; (5) WCCA plans to issue revenue bonds backed by dedicated taxes to finance a portion of the construction cost of the project; (6) however, WCCA would need to have its authority to use the taxes currently dedicated to the project expanded to include using them for construction and would have to adopt and submit for City Council review a resolution authorizing the issuance of revenue bonds; (7) the current stream of existing annual dedicated tax revenues is not sufficient to support the debt required to fund the project's estimated construction cost; (8) the current earmarked tax collections are estimated to support a revenue bond issuance of $423 million; (9) WCCA estimated that if $51 million of interest earnings from bond proceeds as well as $30 million of cash on hand from dedicated taxes as of July 31, 1997 are added to the estimated $423 million, total estimated revenues would amount to $504 million; (10) however, this would leave a shortfall of approximately $106 million; (11) assuming estimated costs are accurate, WCCA would need about $114 million ($106 million plus an estimated $8 million to satisfy an operation and maintenance reserve) if it were to enter the market in October 1997, as originally contemplated, to obtain bond financing; (12) WCCA, with the assistance of financial advisors, has been exploring options such as additional funds from the District, federal funding, and sale of the existing convention center to supplement the dedicated tax revenues; (13) also, before the project can move forward, the National Capital Planning Commission (NCPC), the central agency for conducting planning and development activities for federal lands and facilities in the National Capital Region, including the District of Columbia, must approve the concept design as well as address community concerns regarding the project; and (14) since GAO's December 1996 report, WCCA's estimated completion date has slipped 1 year to December 31, 2000, and based on the delays and approvals required, this date is uncertain.

section_title: Letter
paragraphs: You requested that we monitor and periodically report on the progress of the proposed new convention center project for Washington, D.C. This report, our fourth on this issue, discusses the project’s approval process, building design, estimated costs, dedicated revenues, and financing plans.
The Washington Convention Center Authority (WCCA), an independent authority of the District Government, is responsible for the management and development of the new convention center.
subsections: section_title: Background
paragraphs: Plans for the new convention center were initiated in 1993 by the District’s Hotel and Restaurant Associations, the Convention and Visitors Association, and the District of Columbia government. The Washington Convention Center Authority Act of 1994 (1994 Act) authorizes WCCA to construct, maintain, and operate the new convention center, as well as maintain and operate the existing convention center. The current design calls for a total of 2.1 million gross square feet, which includes approximately 730,000 square feet of prime exhibit space compared to the existing convention center which has a total of 800,000 gross square feet, including 381,000 gross square feet of exhibit space. According to the 1997 Market Demand Update for the Washington, D.C., Convention Center, the proposed new convention center is projected to rank eighth, based on the gross square feet of prime exhibit space, in the United States when completed, and the size of the proposed new convention center should remain highly marketable into the 21st century.
In August 1994, when the District created WCCA, it also earmarked additional revenues to finance the project. Section 301 of the 1994 Act amended the District of Columbia Income and Franchise Tax Act of 1947 (1) to decrease the tax on the privilege of corporations, financial institutions, and unincorporated businesses to do business in the District from 10 percent of taxable income to 9.5 percent of taxable income and (2) to impose a surtax of 2.5 percent on the 9.5 percent tax. Amounts collected from the surtax are to be transferred to the WCCA.
Sections 302 and 303 of the 1994 Act amended the District of Columbia Sales Tax Act and the District of Columbia Compensating Use Tax Act, respectively (1) to decrease the tax rate from 11 percent to 10.5 percent on hotel gross receipts and to add an additional tax of 2.5 percent on hotel gross receipts and (2) to add an additional tax of 1 percent to the 9 percent tax on the gross receipts from the sales of food or drink (including alcohol) to be consumed on the premises and from the rental of vehicles and trailers. Amounts collected from the additional taxes are to be transferred to the WCCA.
Section 304 of the 1994 Act amended the Hotel Occupancy and Surtax on Corporations and Unincorporated Business Tax Act of 1977 to provide 40 percent of the $1.50 tax already being collected on the occupancy of each hotel room to the WCCA and to allocate the remaining 60 percent as follows: 50 percent to the Washington Convention and Visitors Association, 37.5 percent to the Mayor’s Committee to Promote Washington, and 12.5 percent to WCCA for advertising and promotion.
The fourth sentence of section 446 of the Home Rule Act, D.C. Code Ann. 47-304 (1981), as amended, provides that “...no amount may be obligated or expended by any officer or employee of the District of Columbia government unless such amount has been approved by an act of Congress, and then only according to such act.” Section 101 of the District of Columbia Convention Center and Sports Arena Authorization Act of 1995, (Public Law No. 104-28, 109 Stat. 267 (1995), D.C. Code sec. 47-396.1 (1981, 1996 supp.)), authorized WCCA’s use of the revenues attributable to sections 301-304 of the 1994 Act to financing the operation and maintenance of the existing convention center and for the preconstruction activities relating to the new convention center.
According to WCCA officials, the proposed 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, which has about 381,000 gross square feet of exhibit space, is small compared to the convention centers of other cities such as Atlanta, New York, Chicago, and Philadelphia.
The original proposal from the 1993 feasibility study called for building a new convention center in two phases with the first phase to be completed at the end of 1997 with approximately 554,000 gross square feet of exhibit space and the second phase to be completed at the end of 1999 with another 254,000 gross square feet of exhibit space. Since that study was completed, WCCA has ruled out a two-phase development project because the first phase essentially would not provide enough exhibit space to compete with cities with larger convention centers. The cost of both phases was estimated at $521 million.
In addition, the 1993 feasibility study, which was projected through the year 2003, estimated that direct and indirect economic benefits to the District from the construction of the project would include 560 new jobs, $4 million in increased revenue, and $260 million in other economic output such as spending related to convention center operations and development. For the Washington metropolitan area, the study projected 1,600 jobs, $28 million in incremental taxes, and $558 million in economic activity. Projected long-term benefits by the fifth year of operation of the new convention center included 2,500 permanent jobs, $44 million in incremental taxes, and $640 million in incremental economic output for the District. WCCA contracted with a management consulting firm to update the 1993 feasibility study, which will include an update of the economic benefits to the District. The study is expected to be completed by September 30, 1997.
The current master plan calls for constructing a new convention center at Mount Vernon Square, the legislatively preferred site, located at Ninth Street and Mount Vernon Place, North West. In the 1993 feasibility study, eight potential sites were identified and evaluated against certain criteria such as physical and location characteristics, historic preservation, parking, and cost, including land acquisition and construction. As a result of this analysis, the Mount Vernon Square site was determined to be the preferred site due to its close proximity to the District’s downtown businesses and because the District owns the majority of the land, thus, minimizing the cost of land acquisition.
section_title: Objectives, Scope, and Methodology
paragraphs: To determine the status of the proposed new convention center project, we interviewed WCCA officials, contractors, regulatory agencies (National Capital Planning Commission and the Advisory Council on Historic Preservation), and District officials to determine and assess WCCA’s progress toward meeting critical milestones.
We reviewed the master plan, which contains the concept design and requirements for the new convention center, and compared the design to the existing facility to determine if the new convention center will provide additional exhibit space. We also compared the new convention center exhibit space to facilities in other cities, based on the 1997 Market Demand Update, to determine the ranking in terms of prime exhibit space once the project is completed.
We analyzed the current predevelopment and construction cost estimates for the project as of May 31, 1997, to determine how they compare to the previous cost estimates prepared by WCCA. We reviewed documents and held discussions with WCCA officials to obtain reasons for variations from previous cost estimates for the proposed new convention center.
We reviewed financial records and current balances to determine the amount of dedicated taxes reported as collected and transferred to WCCA. In addition, we reviewed the lockbox procedures that were established to collect the dedicated taxes.
We also reviewed WCCA’s plans for financing the new convention center project to determine whether adequate funding is available to finance the project. In addition, we reviewed alternative sources of financing proposed by WCCA.
We conducted our review between March 1997 and July 1997 in accordance with generally accepted government auditing standards. Also, we considered the results of previous work. While we reviewed transactions to determine the reasonableness of the dedicated taxes collected, deposited, and transferred to WCCA, we did not audit the reported taxes collected and deposited for the new convention center project to determine if the District government accurately calculated and transferred all dedicated taxes to WCCA’s escrow account.
We requested written comments on a draft of this report from the Mayor of the District of Columbia or his designee. These comments are discussed in the “District’s Comments and Our Evaluation” section and are reprinted in appendix I.
section_title: Status of Approval Process for the Proposed New Convention Center
paragraphs: The project has reached the regulatory review phase which involves the WCCA obtaining necessary permits, reviews and approvals from federal and local regulatory agencies.
NCPC is reviewing the design of the project as provided by law. During its approval process, NCPC is also considering the environmental impact of the conceptual design on the construction site and neighborhood. The environmental impact study (EIS) is complete and was reviewed by the federal Environmental Protection Agency (EPA). According to WCCA’s Manager of Contracts, NCPC did not receive comments from EPA within the comment period.
Also, NCPC, WCCA, the Advisory Council on Historic Preservation, the District of Columbia State Historic Preservation Officer, the Mayor, and the Chair of the D.C. City Council, entered into a Memorandum of Agreement (MOA) on September 12, 1997, following consultations under section 106 of the National Historic Preservation Act. The MOA contains a plan to mitigate a number of community, business, civic, and historic preservation concerns regarding the project. As a result of the signing of the MOA, NCPC has resumed consideration of the project and has scheduled hearings on the proposed convention center for September 22 and 25, 1997.
Another critical phase in the development process of the project is obtaining authority to use the dedicated revenues attributable to section 301-304 of the 1994 Act to finance the construction of the project. Next, WCCA would have to adopt a resolution to issue the revenue bonds (subject to the City Council review). As part of the financing phase, WCCA would be required to obtain a credit rating for revenue bond financing from rating agencies. Based on WCCA’s current schedule, the financing phase is scheduled for completion in late Fall of 1997, and groundbreaking is planned for late 1997 or early 1998. When we last reported in December 1996, WCCA estimated that the project would be completed by December 31, 1999. The estimated completion date is now December 31, 2000. However, if more delays occur in the regulatory process and the finalization of a financing plan, this project could be further delayed.
WCCA has to acquire 15 remaining parcels of land for the Mount Vernon Square site. According to WCCA officials, the District does not anticipate any problems in acquiring the remaining properties, either by negotiated sale or, if necessary, by exercise of its power of eminent domain.
section_title: New Convention Center Master Plan
paragraphs: According to requirements in the master plan, which WCCA officials told us are still the current thinking, the proposed new convention center will almost double the exhibit space for conventions and expositions available at the existing convention center. The current convention center has 800,000 gross square feet consisting of 381,000 gross square feet of exhibit space on two levels. The upper level has three exhibit halls with 276,000 square feet of exhibit space; the lower level contains 105,000 square feet of exhibit space.
The master plan for the proposed new convention center calls for a partially below-ground facility with approximately 2.1 million gross square feet that includes 730,000 gross square feet of prime exhibit space. The master plan organizes the new facility into three buildings with the approximate height ranging from 35 feet on the northern end to 130 feet on the southern end of the complex consistent with the Building Height Act restriction.
The proposed new convention center would have four levels with a completely below ground exhibit level containing 500,000 square feet of contiguous exhibit space and adjacent loading docks. The street level would consist primarily of lobby/registration space, meeting rooms, service/support space with some retail and community space on the perimeter. The upper level has additional meeting rooms and 230,000 square feet of column free exhibit space. The ballroom level (the fourth level) also includes the central kitchen.
The current convention center is ranked 30th, in terms of prime exhibit space, among competing convention centers in the United States, and the proposed new convention center is expected to be ranked eighth after completion, as shown in table 1.
According to WCCA officials, the current master plan contemplates a state of the art facility with technology, including fiber optics and improved telecommunications capabilities to meet future District demands for convention exhibit space. To compete with other convention centers, WCCA’s proposed plan would increase the number of loading docks, column spacing, ceiling heights, and floor loads in the exhibit space to attract some of the major trade shows.
WCCA must obtain NCPC’s and the City Council’s approvals before the project can move forward. In addition, WCCA’s Board of Directors has determined that the “design build method” for the proposed new convention center would best meet WCCA’s cost and scheduling requirements for the new convention center.
The design/build approach combines the responsibilities for designing and constructing the project in a single entity rather than separating the responsibilities among a number of entities. To mitigate development risks, WCCA’s design/build contract would need to include performance clauses with specificity to prevent cost overruns and construction delays.
section_title: Estimated Project Costs
paragraphs: The estimated total predevelopment and construction costs, including contingencies, of the proposed new convention center have increased by a net of $100 million to approximately $650 million from the $550 million that was last reported. The increase is caused by several factors, primarily a $118 million increase in construction cost, now estimated to be about $534 million, excluding contingencies, compared to the previous estimate of $416 million and offsetting declines in predevelopment costs. Table 2 highlights the total estimated project costs for the new convention center. The increase in the construction costs are primarily associated with (1) additional steel necessary to construct the facility, (2) excavation and slurry wall costs from lowering the building 50 feet below ground to reduce the building height above ground, (3) shifting the building mass south, (4) providing retail and community space on the perimeter, (5) reducing construction across L Street which requires finished elevations on both sides of the street, and (6) allowing M Street to remain open for local traffic, which requires creating an overpass over the street and reinforcing the street over the below ground exhibit space. The majority of these revisions are in response to NCPC’s concerns, the section 106 mitigation plan (required by the National Historic Preservation Act), and community concerns.
Estimated contingencies are up approximately $6 million over the previous estimate of $70 million. The increase is due primarily to Section 106 mitigation and other regulatory issues, such as the implementation of the transportation management plan.
Predevelopment costs, down $24 million from the previous estimate of $64 million, fell largely because certain costs previously budgeted for bond insurance and investment banking services will now be paid from future bond proceeds. As of July 31, 1997, WCCA incurred predevelopment costs of approximately $15.6 million, which are primarily for program management services, architect/engineering design, environmental impact study, land acquisition, and legal services.
section_title: Dedicated Tax Revenue Collections
paragraphs: WCCA receives a portion of the District’s hotel sales and use taxes, hotel occupancy tax, corporation franchise, and unincorporated business taxes to help fund operations of the existing convention center and the predevelopment costs of the proposed new convention center. Since October 1994, taxes have been collected monthly, and based on audited financial statements, WCCA had received approximately $33 million and $35.5 million in tax revenues for fiscal years 1995 and 1996, respectively. The District projects tax revenues to WCCA of about $35 million for fiscal year 1997 and average annual amounts of about $36 million for fiscal years 1998 to 2002.
As of July 31, 1997, WCCA had received about $97 million in dedicated tax revenues. WCCA had invested approximately $67.6 million of the $97 million in Fannie Mae and Freddie Mac discount notes, which are earning an average of about 5.5 percent annually. Table 3 highlights the receipts and disbursements from the dedicated tax revenues collected since inception in fiscal year 1995.
In our December 1996 report, we stated that WCCA is considering the use of revenue bonds, backed by the dedicated taxes, to finance the construction cost of the project. Also, during our discussions with rating agencies officials, they informed us that the rating might be improved if the collection process for the dedicated taxes were separated from the District’s tax collection process. Since that time, the District has separated the dedicated taxes from the District’s tax collection process by having businesses send the dedicated tax payments directly to lockboxes under the control of the banks. As of February 1997, lockboxes have been established at Signet Bank and First Union Bank for the collection of all the dedicated convention center taxes, and the banks will now be responsible for transferring these tax revenues to WCCA.
Further, based on a report by the District of Columbia Auditor, which discusses the convention center dedicated tax revenues, WCCA was entitled to approximately $1 million in additional dedicated tax revenues from the District. The District subsequently transferred the $1 million to WCCA. The dedicated tax revenues became effective as of fiscal year 1995, and, according to the District of Columbia Auditor, the shortfall in tax revenues transferred to WCCA occurred primarily in the early months of fiscal year 1995. Based on the audit, the underpayment occurred primarily due to the Department of Finance and Revenue’s (DFR) failure to calculate the additional dedicated taxes owed the WCCA based upon reconciliations of sales and use tax payments that were completed 60 to 90 days after DFR’s initial reporting period. Based upon these reconciliations, additional dedicated taxes should have been transferred to the WCCA. Thus, the establishment of lockboxes for the collection of the dedicated tax revenues could result in more timely and accurate receipt of revenues as well as improve the likelihood for an investment grade rating should WCCA decide to issue revenue bonds to finance the construction cost of the project.
section_title: Financing Plans
paragraphs: WCCA plans to issue revenue bonds backed by dedicated taxes to finance the construction cost of the project. Section 490 of the Home Rule Act (Public Law No. 93-198, as amended) was recently amended to authorize the District to issue revenue bonds backed by a pledge of dedicated taxes to finance various capital projects or other undertakings, including convention facilities. In addition, the fourth sentence of section 446 of the Home Rule Act was recently amended to, among other things, authorize the District to disburse dedicated tax revenues to pay the principal of, interest on, or premium for any authorized revenue bond without further action by the Congress. However, the 1997 Act did not expand the authority to use the tax revenues attributable to sections 301-304 of the 1994 Act to construct the new convention center. In addition, section 204 of the 1994 Act provides that WCCA may not adopt a resolution to authorize a bond issuance without submitting the resolution to the City Council for a 30-day review period during which the Council may adopt a resolution disapproving the bond issuance. Assuming that WCCA receives authority to use the revenues attributable to sections 301-304 of the 1994 Act for constructing the project and that the City Council does not disapprove the bond issuance, current projections of future dedicated tax revenues are not sufficient to support debt service costs for the full amount of the estimated construction cost.
In March 1997, WCCA engaged a financial advisory services firm to provide various financial services related to the convention center finances. In its proposal dated May 15, 1997, as well as subsequent proposals since May, the financial advisory services firm outlined several financing options for WCCA such as the issuance of revenue bonds, federal grants, lease arrangements, sale of the existing convention center, vendor participation/naming rights, and reallocation of a portion of the hotel occupancy tax. Table 4 depicts a financing option that WCCA is considering, assuming that all necessary approvals are granted regarding the use of currently dedicated revenues. As stated previously, the total cost of the project is estimated at $650 million—$610 million is estimated for construction costs, including contingencies, and $40 million is estimated for predevelopment costs. WCCA already has sufficient funds from dedicated taxes for predevelopment activities. However, the funding for the construction cost is uncertain at this time. Based on WCCA’s estimate, table 4 shows a financing gap of $106 million that must be addressed before WCCA can enter the bond market. We have projected the estimated shortfall to be about $114 million since WCCA will need an additional $8 million to satisfy a $30 million operation and maintenance reserve, which is required by the rating agencies before WCCA can enter the bond market.
The following information describes the above financing option in more detail.
Senior and Junior Lien Bonds. The foundation of WCCA’s financing plan is to generate the maximum amount of revenue bond funding for the construction cost of the new convention center project, which, according to the financial advisors, could be accomplished by using a senior lien and junior lien bond structure. As previously stated, WCCA collects approximately $35 million annually from the dedicated tax revenues. Of this amount, approximately $7.5 million is needed annually for operating expenses of the existing convention center, which leaves approximately $27.5 million as collateral for the issuance of revenue bonds. According to WCCA’s financial advisors, the $27.5 million in annual revenue would support approximately $423 million in bond proceeds, assuming an average interest rate of about 6.3 percent.
Senior lien bondholders will be provided higher coverage, and this financing will be based on historical tax collections of the dedicated tax revenues. Junior lien bondholders will accept some of the credit risk of projected growth in the dedicated revenues, and this financing structure will be predicated on a 1 percent growth per year in the dedicated tax revenues.
A critical component of financing costs involves the level of risk associated with the bond. Higher risk bonds generally have higher interest rates, may require insurance, or may require the issuer to set up large debt service reserves. Officials at bond rating agencies have indicated that a number of factors are important in their assessment of bonds that are backed by dedicated revenues. First, if the bond is backed by a tax, the collection history of the tax is important. Bonds backed by taxes that have a solid collection history are less risky than those backed by new or unproven taxes. Second, the tax backing for a bond is less risky if it is assessed on a broader range of goods, services, or population. Third, revenue streams that have some legislative risk (that is, revenues based on an appropriation) make the bond higher risk. Finally, the general economic strength of the area is critical to the bond assessment.
Since the majority of the funds, 69 percent ($423 million of $610 million), for the financing of the convention center is expected to come from bonds backed by the dedicated tax revenues, we have attempted to determine the collection history of the taxes and the District’s assumptions regarding future collections. As previously stated, the dedicated taxes are derived from portions of the District’s hotel occupancy, the corporation franchise, the unincorporated business franchise, and sales and use taxes (restaurant meals, rental cars, and hotel rates). These taxes are not new. The majority of the taxes was generated from rate increases of existing taxes (corporation franchise and unincorporated business franchise and sales and use taxes), and the rest (hotel occupancy tax) was diverted from taxes that previously went to the District’s general fund.
The majority of the dedicated revenues that WCCA receives, approximately 79 percent in fiscal year 1996, is derived from sales and use taxes (restaurant and rental cars and hotel rates), which are parts of the District’s general sales and use tax. Based on the District’s Comprehensive Annual Financial Report (CAFR), in fiscal year 1996, the District collected $467.5 million in total general sales and use taxes, and WCCA received $27.9 million, or about 6 percent, of this total. The District is unable to disaggregate the specific taxes that are dedicated to WCCA from the general sales and use tax category, and as a result, the District could not provide us with audited historical data for these specific taxes. Based on information received from the District, we compared information from the District’s Business Tax Information System to information reported in the District’s CAFR, and that information reflects different amounts for the taxes for the same reporting periods. For example, in fiscal year 1995, the District’s CAFR showed total general sales tax of $485.6 million and the Business Tax Information System showed $468.8 million, a difference of approximately $17 million. Therefore, it is difficult to discern how these specific taxes have performed over the past 5 years. In addition, the District could not provide us with projections for these specific taxes for the next 5 years.
Construction Fund Earnings. WCCA’s financial advisors project that WCCA could generate about $51 million in interest earnings from bond proceeds between 1997 and 2001. The bond proceeds would be deposited in a construction fund. During the construction period, funds that are not drawn from the account would be invested to generate the $51 million.
WCCA Cash-on-Hand. As of July 31, 1997, WCCA has on hand approximately $72.9 million in dedicated tax revenues, with $24.4 million earmarked for the remaining predevelopment costs, and about $2.5 million budgeted for additional operating subsidy of the existing convention center for the remainder of fiscal year 1997, leaving $46 million. WCCA plans to use $30 million of this money to help finance the construction cost of the project. The remaining $16 million as well as a projected $5.8 million in additional collection for the remaining months (August and September) of fiscal year 1997 is needed to establish an operation and maintenance reserve (O&M), which is required, by the rating agencies, to be available before WCCA enters the bond market. WCCA’s financial advisors estimate that about $30 million would be required for the O&M reserve. It is projected that about $22 million would be available at the end of fiscal year 1997 to be applied toward the reserve. Thus, assuming currently estimated costs are substantially accurate, WCCA needs about $114 million ($106 million plus an additional $8 million for O&M reserve) if it were to enter the market in October, as originally planned, to obtain bond financing.
WCCA is considering several financing options to close the shortfall, such as reallocation of the total amount of hotel occupancy tax from the District, sale of the existing convention center, and federal grants. However, it is uncertain at this time as to the outcome of these options. For example, the disposition of the existing convention center would not occur for some time, and it is uncertain how much WCCA would benefit from its disposition/sale, especially since there is an outstanding debt of $75 million on this center. In addition, section 304 of the 1994 Act, D.C. Code Ann. sec. 47-3206 (1981, 1996 Supp.), makes 40 percent of the dedicated hotel occupancy tax available to WCCA for financing the project while the remaining 60 percent (about $5 million annually) is allocated for other purposes. WCCA is actively seeking to gain control of the 60 percent allocated for other purposes to assist it in closing a portion of the funding gap of the project. Table 5 highlights some of the financing options that WCCA is considering to close the funding gap.
section_title: District’s Comments and Our Evaluation
paragraphs: On August 29, 1997, we provided the Mayor of the District Government with copies of a draft of this report for review and comment. In a September 9, 1997 meeting, WCCA officials, including the Project Director, General Counsel, and the Chief Financial Officer, generally concurred with our report and provided additional information. Written comments from the Mayor are reprinted as appendix I. We have incorporated changes as appropriate throughout the report.
WCCA provided updated information concerning its progress in obtaining the necessary regulatory approvals and developing a financing plan. Specifically, WCCA stated that it appears to have obtained consensus on an MOA that will be signed by the necessary regulatory agencies. Since the Mayor commented on this report, all parties have signed the MOA, and NCPC has scheduled hearings on the proposed convention center for September 22 and 25, 1997, to consider site and design approval for the new convention center at Mount Vernon Square, alley and street closings, as well as the urban renewal plan amendments necessary to allow construction to begin at Mount Vernon Square. These are key issues that must be resolved before WCCA can proceed with the project.
WCCA told us that it has a financing plan to eliminate the funding gap for the proposed convention center. This plan proposes to reallocate the Hotel Occupancy Tax revenues imposed by D.C. Code Section 47-3206—and now available to the Washington Convention and Visitors Association and the Mayor’s Committee to Promote Washington—for the payment of debt service for the new convention center. In addition, the term of convention center bonds would be authorized to mature in up to 40 years. Current law limits bond maturity to 30 years from issuance. WCCA is drafting legislation to authorize the above changes. Approval of these or alternative steps are key issues in moving ahead with the convention center project.
We are sending copies of this report to the Chairmen and Ranking Minority Members of the Senate and House Committees on Appropriations and their subcommittees on the District of Columbia; and the Senate Committee on Governmental Affairs, Subcommittee on Oversight of Government Management, Restructuring and the District of Columbia, and the Ranking Minority Member of your Subcommittee. Major contributors to this report are listed in appendix II. If you or your staff need further information, please contact me at (202) 512-4476.
section_title: Comments From the District of Columbia
section_title: Major Contributors to This Report
subsections: section_title: Accounting and Information Management Division, Washington, D.C.
section_title: Office of General Counsel
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