[House Report 104-227]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-227
_______________________________________________________________________


 
 DISTRICT OF COLUMBIA CONVENTION CENTER AND SPORTS ARENA AUTHORIZATION 
                              ACT OF 1995

                                _______


 August 2, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2108]

      [Including cost estimate of the Congressional Budget Office]
    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 2108) to permit the Washington 
Convention Center Authority to expend revenues for the 
operation and maintenance of the existing Washington Convention 
Center and for preconstruction activities relating to a new 
convention center in the District of Columbia, to permit a 
designated authority of the District of Columbia to borrow 
funds for the preconstruction activities relating to a sports 
arena in the District of Columbia and to permit certain 
revenues to be pledged as security for the borrowing of such 
funds, and for other purposes, having considered the same 
report favorably thereon without amendment and recommend that 
the bill do pass.
                                CONTENTS

                                                                   Page
  I. Background and Need for the Legislation..........................6
 II. Legislation and Committee Actions...............................10
III. Committee Hearings and Written Testimony........................11
 IV. Explanation of the Bill.........................................12
  V. Compliance with Rule XI.........................................15
 VI. Budget Analysis and Projections.................................17
VII. Cost Estimate of the Congressional Budget Office................22
VIII.
     Inflationary Impact Statement...................................18
 IX. Changes in Existing Law.........................................18
  X. Committee Recommendations.......................................23
 XI. Congressional Accountability Act: Public Law 104-1; Section     19
     102(B)(3).
Appendix.........................................................    21
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``District of 
Columbia Convention Center and Sports Arena Authorization Act 
of 1995''.
  (b) Table of Contents.--The table of contents of this Act is 
as follows:

Sec. 1. Short title; table of contents.

                       TITLE I--CONVENTION CENTER

Sec. 101. Permitting Washington Convention Center Authority to expend 
          revenues for convention center activities.

                         TITLE II--SPORTS ARENA

Sec. 201. Permitting designated authority to borrow funds for 
          preconstruction activities relating to Gallery Place sports 
          arena.
Sec. 202. Permitting certain District revenues to be pledged as security 
          for borrowing.
Sec. 203. No appropriation necessary for arena preconstruction 
          activities.
Sec. 204. Arena preconstruction activities described.

                TITLE III--WAIVER OF CONGRESSIONAL REVIEW

Sec. 301. Waiver of Congressional review of Arena Tax Payment and Use 
          Amendment Act of 1995.
                       TITLE I--CONVENTION CENTER

SEC. 101. PERMITTING WASHINGTON CONVENTION CENTER AUTHORITY TO EXPEND 
                    REVENUES FOR CONVENTION CENTER ACTIVITIES.

  (a) Permitting Expenditure Without Appropriation.--The fourth 
sentence of section 446 of the District of Columbia Self-
Government and Governmental Reorganization Act (sec. 47-304, 
D.C. Code) shall not apply with respect to any revenues of the 
District of Columbia which are attributable to the enactment of 
title III of the Washington Convention Center Authority Act of 
1994 (D.C. Law 10-188) and which are obligated or expended for 
the activities described in subsection (b).
  (b) Activities Described.--The activities described in this 
paragraph are--
          (1) the operation and maintenance of the existing 
        Washington Convention Center; and
          (2) pre-construction activities with respect to a new 
        convention center in the District of Columbia, 
        including land acquisition and the conducting of 
        environmental impact studies, architecture and design 
        studies, surveys, and site acquisition.

                         TITLE II--SPORTS ARENA

SEC. 201. PERMITTING DESIGNATED AUTHORITY TO BORROW FUNDS FOR 
                    PRECONSTRUCTION ACTIVITIES RELATING TO GALLERY 
                    PLACE SPORTS ARENA.

  (a) Permitting Borrowing.--
          (1) In general.--The designated authority may borrow 
        funds through the issuance of revenue bonds, notes, or 
        other obligations which are secured by revenues pledged 
        in accordance with paragraph (2) to finance, refinance, 
        or reimburse the costs of arena preconstruction 
        activities described in section 204 if the designated 
        authority is granted the authority to borrow funds for 
        such purposes by the District of Columbia government.
          (2) Revenue required to secure borrowing.--The 
        designated authority may borrow funds under paragraph 
        (1) to finance, refinance, or reimburse the costs of 
        arena preconstruction activities described in section 
        204 only if such borrowing is secured (in whole or in 
        part) by the pledge of revenues of the District of 
        Columbia which are attributable to the sports arena tax 
        imposed as a result of the enactment of D.C. Law 10-128 
        (as amended by the Arena Tax Amendment Act of 1994 
        (D.C. Act 10-315)) and which are transferred by the 
        Mayor of the District of Columbia to the designated 
        authority pursuant to section 302(a-1)(3) of the 
        Omnibus Budget Support Act of 1994 (sec. 47-2752(a-
        1)(3), D.C. Code) (as amended by section 2(b) of the 
        Arena Tax Payment and Use Amendment Act of 1995).
  (b) Treatment of Debt Created.--Any debt created pursuant to 
subsection (a) shall not--
          (1) be considered general obligation debt of the 
        District of Columbia for any purpose, including the 
        limitation on the annual aggregate limit on debt of the 
        District of Columbia under section 603(b) of the 
        District of Columbia Self-Government and Governmental 
        Reorganization Act (sec. 47-313(b), D.C. Code);
          (2) constitute the lending of the public credit for 
        private undertakings for purposes of section 602(a)(2) 
        of such Act (sec. 1-233(a)(2), D.C. Code); or
          (3) be a pledge of or involve the full faith and 
        credit of the District of Columbia.
  (c) Designated Authority Defined.--The term ``designated 
authority'' means the Redevelopment Land Agency or such other 
District of Columbia government agency or instrumentality 
designated by the Mayor of the District of Columbia for 
purposes of carrying out any arena preconstruction activities.
SEC. 202. PERMITTING CERTAIN DISTRICT REVENUES TO BE PLEDGED AS 
                    SECURITY FOR BORROWING.

  (a) In General.--The District of Columbia (including the 
designated authority described in section 201(c)) may pledge as 
security for any borrowing undertaken pursuant to section 
201(a) any revenues of the District of Columbia which are 
attributable to the sports arena tax imposed as a result of the 
enactment of D.C. Act 10-128 (as amended by the Arena Tax 
Amendment Act of 1994 (D.C. Law 10-315)), upon the transfer of 
such revenues by the Mayor of the District of Columbia to the 
designated authority pursuant to section 302(a-1)(3) of the 
Omnibus Budget Support Act of 1994 (sec. 47-2752(a-1)(3), D.C. 
Code) (as amended by section 2(b) of the Arena Tax Payment and 
Use Amendment Act of 1995).
  (b) Exclusion of Pledged Revenues From Calculation of Annual 
Aggregate Limit on Debt.--Any revenues pledged as security by 
the District of Columbia pursuant to subsection (a) shall be 
excluded from the determination of the dollar amount equivalent 
to 14 percent of District revenues under section 603(b)(3)(A) 
of the District of Columbia Self-Government and Governmental 
Reorganization Act (sec. 47-313(b)(3)(A), D.C. Code).

SEC. 203. NO APPROPRIATION NECESSARY FOR ARENA PRECONSTRUCTION 
                    ACTIVITIES.

  The fourth sentence of section 446 of the District of 
Columbia Self-Government and Governmental Reorganization Act 
(sec. 47-304, D.C. Code) shall not apply with respect to any of 
the following obligations or expenditures:
          (1) Borrowing conducted pursuant to section 201(a).
          (2) The pledging of revenues as security for such 
        borrowing pursuant to section 202(a).
          (3) The payment of principal, interest, premium, debt 
        servicing, contributions to reserves, or other costs 
        associated with such borrowing.
          (4) Other obligations or expenditures made to carry 
        out any arena preconstruction activity described in 
        section 204.

SEC. 204. ARENA PRECONSTRUCTION ACTIVITIES DESCRIBED.

  The arena preconstruction activities described in this 
section are as follows:
          (1) The acquisition of real property (or rights in 
        real property) to serve as the site of the sports arena 
        and related facilities.
          (2) The clearance, preparation, grading, and 
        development of the site of the sports arena and related 
        facilities, including the demolition of existing 
        buildings.
          (3) The provision of sewer, water, and other utility 
        facilities and infrastructure related to the sports 
        arena.
          (4) The financing of a Metrorail connection to the 
        site and other Metrorail modifications related to the 
        sports arena.
          (5) The relocation of employees and facilities of the 
        District of Columbia government displaced by the 
        construction of the sports arena and related 
        facilities.
          (6) The use of environmental, legal, and consulting 
        services (including services to obtain regulatory 
        approvals) for the construction of the sports arena.
          (7) The financing of administrative and transaction 
        costs incurred in borrowing funds pursuant to section 
        201(a), including costs incurred in connection with the 
        issuance, sale, and delivery of bonds, notes, or other 
        obligations.
          (8) The financing of other activities of the District 
        of Columbia government associated with the development 
        and construction of the sports arena, including the 
        reimbursement of the District of Columbia government or 
        others for costs incurred prior to the date of the 
        enactment of this Act which were related to the sports 
        arena, so long as the designated authority determines 
        that such costs are adequately documented and that the 
        incurring of such costs was reasonable.

               TITLE III--WAIVER OF CONGRESSIONAL REVIEW

SEC. 301. WAIVER OF CONGRESSIONAL REVIEW OF ARENA TAX PAYMENT AND USE 
                    AMENDMENT ACT OF 1995.

  Notwithstanding section 602(c)(1) of the District of Columbia 
Self-Government and Governmental Reorganization Act, the Arena 
Tax Payment and Use Amendment Act of 1995 (D.C. Act 11-115) 
shall take effect on the date of the enactment of this Act.
                      SHORT SUMMARY OF LEGISLATION

    H.R. 2108, The District of Columbia Convention Center and 
Sports Arena Authorization Act of 1995, is designed to further 
two projects: The development of a new convention center and 
the construction of a new indoor sports facility. It achieves 
two specific objectives for the convention center. First, it 
authorizes the Washington Convention Center Authority to spend 
funds from its dedicated, escrowed revenue stream without going 
through the annual appropriations process. Second, it 
authorizes a dedication of revenue.
    In August of 1994 the D.C. City Council enacted D.C. Law 
10-188, the Washington Convention Center Authority Act of 1994. 
This act established a Convention Center Authority and directed 
a dedicated tax into an escrow account to fund its activities. 
H.R. 2108 permits the Washington Convention Center Authority to 
spend this revenue for a narrow range of clearly specified 
activities as described in the bill.
    The bill also authorizes a designated City agency, in this 
case the Redevelopment Land Agency (RLA) to utilize a dedicated 
stream of revenue as debt service to carry out the City's 
obligation to National Capital Development Corporation (now 
assigned to Mr. Abe Pollin) in regard to the construction of 
the downtown sports and entertainment complex to be known as 
the MCI Arena at Gallery Place. The RLA is responsible for 
specific, well defined, pre-construction costs. This bill 
allows the RLA to use the proceeds of the Arena Tax to secure 
these borrowings. The Arena tax is a dedicated tax that is 
already being collected and placed in an escrow account. The 
bill makes it clear that this debt is neither general 
obligation debt nor is it to count against the City's annual 
debt limit since it is secured by a special tax and not by all 
the revenues of the District. The activities for which the RLA 
may borrow funds are carefully specified. The use of the arena 
tax to pay debt service is not subject to annual appropriation 
because debt service is, an automatic, must- pay obligation.
    Finally, the bill waives the congressional review period 
for the Arena Tax Payment and Use Amendment of 1995 (DC Act 11-
214). This legislation directs the arena tax revenues to the 
RLA, directs the use of the funds to secure and pay for the 
borrowing, and enacts an automatic escalation clause to insure 
sufficient funds for debt service.

               I. BACKGROUND AND NEED FOR THE LEGISLATION

A. Background

                   1. SPORTS AND ENTERTAINMENT ARENA

    The District of Columbia does not have a modern indoor 
sports/entertainment arena. As a result, the nation's capital 
in not the home of any major league indoor professional sports 
franchise. It is indisputable that a modern, well run arena 
which combines professional sports franchises, entertainment, 
and retail (either on-site or nearby) adds considerable 
economic activity in urban areas. It is also true that such 
development projects spur considerable collateral economic 
development or redevelopment in the area surrounding such a 
development. In the case of a properly sited facility, a 
blighted or underdeveloped urban neighborhood can experience 
considerable revival and enhancement. Such associated 
development improves the neighborhood of the facility, the 
entire city, and results in revenues for the city that 
otherwise could not have been realized.
    Slightly more than 20 years ago, Mr. Abe Pollin, owner of 
the Washington Bullets, a National Basketball Association 
franchise, needed a new arena in which to base his team. He 
wanted to locate the arena in Washington, DC proper but was 
prevented from doing so by his need for speed and by the 
District government's inability to get such a project through 
all of the many regulatory hurdles in a timely manner. Mr. 
Pollin then built, at his own expense, what is now known as the 
US AIR Arena in Landover, Maryland. This facility, constructed 
in 16 months, houses the Washington Bullets basketball team 
and, more recently, the Washington Capitals, Mr. Pollin's 
National Hockey League franchise. The US AIR Arena is no longer 
a state-of-the-art facility and Mr. Pollin has been examining 
other options for housing his teams for some time.
    For more than two years a renewed effort has been underway 
by various civic leaders and the D.C. city government to 
develop a sports and entertainment arena project in downtown 
Washington, DC which would attract Mr. Pollin's two 
professional franchises. The initial proposal was inspired by 
the Federal City Council which is a non-profit organization 
working for the improvement of the nation's capital. In 
essence, the Federal City Council and a subsidiary organization 
it created for this project called the National Capital 
Development Commission (NCDC) served as a broker between the 
Pollin organization and the District government. Progress was 
being made towards an agreement when the full measure of the 
District's fiscal crisis became apparent (see Committee Report 
104-96, to accompany H.R. 1345, the District of Columbia 
Financial Responsibility and Management Assistance Act of 
1995).
    The initial proposed agreement between the District of 
Columbia, NCDC and the Pollin organization called for the 
District to acquire and develop the Gallery Place site (an area 
around 6th and G Streets, NW) and construct the arena which it 
would lease to NCDC. NCDC would operate the facility and had an 
agreement with Mr. Pollin for him to base the Washington 
Bullets and the Capitals in the arena for 30 years. This site 
was already largely owned by the City under the control of the 
Redevelopment Land Agency (RLA), which was designated to be the 
lead District government body in the project. In the latter 
half of 1994, Mr. Robert Johnson of Black Entertainment 
Television (BET) came forward with a proposal to build an arena 
with his own money on the District's site, but he did not have 
and could not negotiate an arrangement with Mr. Pollin to 
guarantee that the Bullets and Capitals would move to such an 
arena (Mr. Johnson was seeking partial ownership or a right of 
first refusal to purchase one or both of the teams).
    The RLA Board decided in December, 1994 to accept the NCDC 
proposal which guaranteed the presence of the professional 
sports teams with the additional incentive that Mr. Pollin 
agreed to finance the construction of the arena himself. Under 
the terms of the RLA proposal, since fleshed out through 
negotiations into an approved Exclusive Rights Agreement (ERA), 
the District is obligated to pay for pre-development and 
development activities estimated by the General Accounting 
Office (GAO) to total $56 million. Mr. Pollin has secured 
private construction financing of up to $175 million and has 
assumed the costs for engineering and design of the arena.
    Also in 1994, the District Council had amended a special 
``Public Safety Fee'' gross receipts tax to convert it into the 
``Arena Tax'' (DC Law 10-152). The Arena Tax is a special 
dedicated tax to be placed into a ``lockbox'' escrow account 
which can only be used by a designated agency and only for the 
purposes for which it was levied--the development of the sports 
and entertainment arena. The Arena Tax is not paid into the 
General Fund, is not available for use for any other purpose 
and cannot be subjected to an interfund transfer whereby it 
could be ``hijacked'' for other uses. The receipts of this tax 
must be deposited directly into the escrow account. GAO has 
found that this requirement is being met by the District.
    Because the District's $56 million in activities called for 
in the ERA (site acquisition, demolition, grading, utilities, 
Metro construction) are up-front costs, the Arena Tax cannot 
pay for them as they are conducted. Therefore, the Arena Tax's 
estimated $9 million in annual revenues will be used to secure 
and pay debt service for financing the District's costs. 
Because of the District's cash crisis and below investment 
grade debt rating these costs cannot be financed with normal 
operational or capital borrowing by the District. In this case, 
the RLA with its dedicated revenue source is in a far better 
position than the city as a whole to borrow funds, either 
through a bank loan or the issuance of revenue bonds. The RLA, 
together with the Financial Responsibility and Management 
Assistance Authority (the Authority) have agreed on a financing 
package in conjunction with a group of banks and a Wall Street 
financial firm. The Arena Tax revenues are more than adequate 
to cover the debt service on the proposed financing.
    The arrangement between the District government (RLA) and 
the Pollin organization is an example of the most cost 
efficient way for a city to host professional sports 
franchises. Since Mr. Pollin will be the owner of the arena and 
the franchises, he will have no incentive to move the teams in 
a few years as others have done. If this happened, Mr. Pollin 
would be leaving his own arena in trouble while housing his 
teams in someone else's arena. In this case the District of 
Columbia will receive the economic and prestige benefits of the 
arena and its professional sports teams as well as the 
collateral development of what would otherwise remain an 
underdeveloped neighborhood. Considering the fact that the 
companion project of a new convention center (see below) is 
only 4 blocks north of the arena, the District of Columbia 
stands to reap major benefits in direct and indirect revenues 
and thousands of the jobs.
            2. Convention center
    The District of Columbia opened the Washington Convention 
Center in 1984 after considerable time had been spent in the 
planning and authorization process. At the time of its opening 
the Washington Convention Center was the eighth largest such 
facility in the country and could accommodate virtually all 
conventions and exhibitions then undertaken. Unfortunately, the 
District of Columbia found itself on the wrong end of the curve 
in an ongoing expansion in convention center/exhibition hall 
construction and a similar growth in the size of national 
conventions and exhibitions. Within a few short years, the 
Washington Convention Center was only the 30th largest in the 
country and could accommodate only about 55% of national 
conventions and exhibition shows.
    The inability of the Washington Convention Center to host 
so many conventions and shows is unfortunate both for the 
District of Columbia and the metropolitan region, but also for 
the organizations and exhibitors who can no longer have the 
nation's capital on their regular schedule of meeting sites. In 
1993, the Washington Convention Center generated $656 million 
in spending from its activities. In 1995, that spending is 
expected to be reduced to $558 million. The serious blow to the 
District's economy caused by the slowdown in activity at the 
Convention Center is obvious and needs to be reversed. A new, 
state-of-the-art Washington Convention Center of the size 
necessary to host 90% of the national level conventions and 
shows (approximately 1,000,000 square feet of space) will 
generate up to $1.5 billion of spending in the District of 
Columbia. Obviously, such increased economic activity will not 
only stop the current reduction in District tax revenue caused 
by the reduction in economic activity, but will generate 
considerable additional revenues that cannot otherwise be used 
by the District.
    In order to gain these economic benefits, the City needed 
to find a way to finance a new convention center. It was clear 
to everyone that the City's general fund could not afford to 
continue to pay the operating subsidy for the current 
convention center or the up-front costs for a new one. As part 
of an effort to address this problem, the City Council enacted 
the Washington Convention Center Authority Act of 1994 (DC Law 
10-188). This act established a special convention center tax. 
It took effect on October 13, 1994. This tax is composed of a 
fixed percentage of several existing taxes. The convention 
center tax is a dedicated tax which the City places in an 
escrow account. It can be used only to pay the operating 
subsidy for the current convention center and for expenses 
associated with the development and construction of a new 
convention center. It is currently being collected at the rate 
of $30 million per year. In the same act, the D.C. City Council 
created the Washington Convention Center Authority (WCCA). The 
WCCA is a corporate body with a legal existence separate from 
the City government. Although it has the power to issue bonds, 
the debt thereby created is not general obligation debt. The 
WCCA is governed by a nine member Board of Directors. The 
District's Chief Financial Officer and the Director of Tourism 
are ex-officio, voting members of the board. The remaining 
seven members, one from the tourism industry and another from 
organized labor, are appointed by the Mayor with the advice and 
consent of the Council. The Directors are responsible for 
managing the current convention center, developing plans for a 
new convention center, managing the new facility, and 
appointing a general manager for the convention center. The 
Board is empowered to develop a personnel system for convention 
center employees.
    H.R. 2108 does not authorize the financing or the 
construction of a new convention center. In order for the City 
to proceed beyond the planning and design phase, explicit, 
affirmative congressional action is necessary. Representatives 
of the City's government acknowledge this fact (The testimony 
of council member Charlene Drew Jarvis is summarized in Section 
III).
    A new convention center will bring a wide range of new, 
private sector jobs to the metropolitan Washington economy. In 
1994, the economic impact of the current convention center was 
around $850 million, $275 million of which was spent in the 
surrounding area. According to a 1993 Deloittle & Touche 
feasibility study, the new convention center is projected to 
generate $1.475 billion dollars in the District alone by the 
third full year of its operation. After the new center becomes 
fully operational, it is projected to generate annual spending 
in the range of $2.1 billion, of which approximately $700 
million will be spent in Virginia and Maryland.
B. Need for legislation

    The federal role in each of these projects is very narrow. 
Over the years Congress has removed itself from the direct 
involvement in routine land use decisions. The National Capital 
Planning Commission (NCPC) is charged with protecting the 
Federal interest in local planning matters in the District of 
Columbia as well as in parts of northern Virginia and suburban 
Maryland. The NCPC is composed of a presidentially appointed 
chair and eleven other commissioners. The commission is 
composed of appointed and ex-officio members. There are three 
presidential appointments, and four Mayoral appointees. There 
are five ex-officio members: the Secretary of the Interior, the 
Secretary of Defense, the Administrator of the General Services 
Administration, Chairman of the Committee on Governmental 
Affairs, and the Chairman of the Committee on Government Reform 
and Oversight.
    Although Congress retains its plenary power to legislate 
for the District of Columbia, there has been a tendency to 
leave most land use decisions at the local level. In the case 
of the arena and new convention center, Congress does not have 
to approve each of the details. The NCPC, as the lead federal 
agency responsible for these projects looks out for the federal 
interest in matters of site selection, design, and 
construction. By allowing DC Law 10-188 to take effect, the 
103rd Congress consented to the governance of the convention 
center by an independent City agency, the Washington Convention 
Center Authority. Currently, the RLA is the lead City agency 
for the new sports arena. They were selected because they own 
most of the arena's site. The RLA has done an exemplary job in 
promoting the City's best financial interest in this project. 
However, DC Law 10-152 established an eleven member Sports 
Commission which is composed of two ex-officio members (the 
Chief Financial Officer and the Commanding General of the 
District of Columbia National Guard) and nine members appointed 
by the Mayor with the advice and consent of the City Council. 
It is possible that the Sports Commission will replace the RLA 
as the lead City agency for the sports arena. In any case, this 
legislation does not address the details of the daily operation 
of these projects.
    Congressional action is necessary for both the convention 
center and the arena projects to go forward. The revenue from 
the convention center tax is accumulating in an escrowed 
account. This legislation permits the WCCA to spend these 
revenues for two specific purposes: first, the pay the 
operating subsidy for the current convention center; and, 
second, to carry-out land acquisition, environmental impact 
studies, architecture and design studies, and surveys related 
to a new convention center. Because of the independent status 
of the WCCA, its self supporting revenue stream, and legal 
accountability, their spending is not subject to an annual 
appropriation.
    This legislation is also necessary for completion of the 
sports arena project. It permits the RLA to borrow money to 
carry out specific City responsibilities related to site 
acquisition, site preparation, and infrastructure and Metrorail 
improvements necessary to the project. It also permits the RLA 
to pledge specific revenues for the repayment of this debt. 
These expenditures are exempted from the annual appropriations 
process. Finally, this legislation is necessary to waive the 
congressional review period for the Arena Tax Payment and Use 
Amendment Act of 1995. This waiver allows the lenders to have 
the necessary collateral to secure their loan to the City.

                 ii. legislation and committee actions

    On July 25, 1995, Ms. Norton introduced H.R. 2108, which 
consisted of both the text of and amended language for H.R. 
1843, the District of Columbia Sports Arena Financing Act of 
1995, and H.R. 1862, the District of Columbia Convention Center 
Preconstruction Act of 1995. H.R. 2108 was cosponsored by all 
of the members of the Subcommittee on the District of Columbia 
along with Rep. James Walsh, Chairman of the Appropriations 
Subcommittee on D.C.
    H.R. 2108 was referred to the Committee on Government 
Reform and Oversight. The Subcommittee on the District of 
Columbia held a hearing on July 12, 1995. The bill was marked-
up in the Subcommittee on the District of Columbia on July 26, 
1995. There were no amendments offered. The legislation passed 
the Subcommittee on a 5-0 recorded vote, with all members 
present voting in the affirmative.
    The Government Reform and Oversight Committee met on July 
27, 1995, to consider H.R. 2108. There were no amendments 
offered. The bill was favorably reported to the House 
unanimously by voice vote.
             iii. committee hearings and written testimony

    On Wednesday, July 12, 1995, the Subcommittee on the 
District of Columbia, of the Committee on Government Reform and 
Oversight, met pursuant to notice. The purpose of the hearing 
was to solicit comments from interested parties on H.R. 1843, 
the District of Columbia Sports Arena Financing Act of 1995, 
and H.R. 1862, the District of Columbia Convention Center 
Preconstruction Act of 1995.
    Subcommittee Chairman Davis stated at the opening of the 
hearing that the MCI Arena at Gallery Place and the new 
convention center were important for the economic and cultural 
well being not only of our Nation's Capital but for the entire 
metropolitan region. He emphasized the cooperative nature of 
these projects. He called specific attention to the narrow 
focus of the proposed legislation. This is important because it 
is the Subcommittee's intention to authorize the City to move 
forward only on the two specific projects described in H.R. 
1843 and H.R. 1862. Ranking Member Norton, who introduced the 
legislation, also stressed the importance of her legislation to 
the City's economic recovery. She expressed appreciation for 
the way in which the City government and the private sector 
worked together to bring these projects to the point that 
Congressional action is appropriate.
    The first panel of witnesses consisted of representatives 
from the City government, the City Council and the RLA. Each 
witness expressed strong support for both projects. Mr. Barry 
Campbell, Mayor Barry's chief of staff, stressed that these 
projects will bring economic benefits not only to the City but 
to the entire metropolitan region. He stated that the proposed 
legislation would allow the City to keep these projects on 
schedule. Chairman David Clarke of the City Council testified 
that the City Council was on schedule to have the Arena Tax 
Payment and Use Amendment Act of 1995 passed by July 25, 1995. 
(This took place on schedule, Title III of this legislation 
waives the congressional review period). This legislation, 
which creates a permanent revenue stream for the arena project, 
is vital for the financial markets. It provides lenders with 
security for their loans. Council member Charlene Drew Jarvis, 
Chair of the Committee on Economic Development, emphasized the 
importance of Congress not restricting the City's ability to 
negotiate the best possible financing arrangement to cover its 
costs in the arena project. In her answer to a question from 
Chairman Davis, she stated that the City would need further 
congressional action to proceed from the planning to the 
construction phase of the new convention center. Ms. Michelle 
D. Bernard, chair of the RLA, spoke about the importance of 
each member of the RLA carefully scrutinizing each detail of 
the RLA's participation in the arena project. After providing a 
status report about the negotiation between the National 
Capital Development Corporation and the RLA, she joined Council 
member Jarvis in requesting that Congress not prematurely close 
off any legitimate financing option.
    Mr. Abe Pollin, the Chairman of the Center Group U.S. Air 
Arena, testified about his participation in the arena project. 
He pointed out that the fact that he would own both the 
professional sports teams and the new arena would ensure the 
City that the teams would not be subject to recruitment by 
other cities seeking professional sports franchises. He also 
explained the arrangement for financing his part of the 
project.
    The third panel was composed of the representatives from 
NationsBank and Crestar, the two lead banks in a consortium, 
that have offered to finance the City's participation in the 
project. Mr. Eugene Godbold, senior vice president of 
NationsBank, spoke for both institutions. He explained how the 
Barry Administration approached the local banks to finance the 
City's participation in the arena project. NationsBank and 
Crestar were willing, in spite of the City's grave financial 
crisis and low credit rating, to make these loans. Mr. Godbold 
thought that the banks would soon be in a position to offer a 
letter of committal to the City.
    The GAO, represented by Mr. Jeffrey C. Steinhoff, the 
Director of Planning and Reporting for the Accounting and 
Information Division, testified that the expected costs for the 
City's participation in the arena are approximately $56 
million. These costs appear to be reasonable. The City has two 
apparently legitimate offers to finance their costs. Mr. 
Steinhoff also testified that the City is collecting and 
escrowing the Arena Tax in an appropriate manner. The GAO 
expressed no reservations about the project. The GAO has also 
examined the convention center project. The City is also 
properly escrowing the convention center tax collections. He 
also explained how the City planned to use these funds. Mr. 
Steinhoff expressed no reservations about the convention center 
project. Chairman Davis requested that the GAO continue to 
monitor these projects and to report to him in writing on July 
26, 1995 (see appendix).
                      IV. EXPLANATION OF THE BILL

A. Overview

    The District currently has restricted authority to 
undertake projects such as the construction of an arena and a 
convention center. Congressional action is necessary for these 
particular projects because the District wants to use a method 
of funding and operation outside the scope of its existing 
authority under the Home Rule Act. The District has chosen to 
finance these projects by directing dedicated, escrowed taxes 
to semi-autonomous authorities for each project. The creation 
of these Authorities represents independence from the Mayor's 
and the City government's power to influence the daily 
operation of either project. In order to implement this new and 
more prudent method of finance and governance, the City is in 
need of congressional authorization. This legislation 
authorizes the City to use these dedicated tax funds only for 
these specific projects on these specific sites. This 
legislation does not authorize the City to build any other 
convention center or arena.
    This legislation is narrow in scope. It provides a detailed 
account of precisely what activities the RLA and the WCCA are 
permitted to undertake. Any other activity either authority 
wants to undertake requires either further congressional 
authorization or funding from the City's General Fund. In the 
latter case, both the Financial Responsibility and Management 
Assistance Authority and Congress retain control through the 
normal appropriations process.

B. Section by section analysis

               Section 1. Short title; table of contents

    Subsection (a) sets forth the short title of the bill to be 
the ``District of Columbia Convention Center and Sports Arena 
Authorization Act of 1995.''
    Subsection (b) sets forth the table of contents of this 
Act.

                       Title I--Convention Center

   Section 101. Permitting Washington Convention Center Authority to 
            expend revenues for convention center activities

    Subsection (a) waives the restriction on obligating or 
expending funds without Congressional approval which is set 
forth in section 446 of the District of Columbia Self-
Government and Governmental Reorganization Act (the Home Rule 
Act), in order to permit the District of Columbia to expend 
without specific appropriation any revenues collected pursuant 
to title III of the Washington Convention Center Authority Act 
of 1994 for activities described in Subsection (b). The subject 
revenues are derived from the following dedicated taxes which 
took effect on October 13, 1994: 2.5% of the 13% hotel sales 
tax; 40% of the $1.50 per day hotel occupancy tax; 1% of the 
10% restaurant sales and use tax; and 0.25% of a 1% increment 
of the business franchise surtax. Collections for fiscal year 
1995 are projected to be $30.8 million.
    Subsection (b) provides that the activities for which the 
above revenues may be expended are: the operation and 
maintenance of the existing convention center; and land 
acquisition, environmental impact studies, architecture and 
design studies, and surveys related to the new convention 
center.

                         Title II--Sports Arena

   Section 201. Permitting designated authority to borrow funds for 
   preconstruction activities relating to Gallery Place Sports Arena

    Subsection (a)(1) permits the ``designated authority'' to 
borrow funds through the issuance of revenue bonds, notes, or 
other obligations which are secured by revenues pledged in 
accordance with paragraph (2) to finance, refinance, or 
reimburse the costs of the arena preconstruction activities 
described in section 204, if the designated authority is 
authorized to borrow funds for such purposes by the District 
government.
    Subsection (a)(2) provides that the designated authority 
may borrow funds to cover arena preconstruction costs if such 
borrowing is secured by the pledge of revenues derived from the 
sports arena tax and transferred by the Mayor to the designated 
authority.
    Subsection (b)(1) provides that any debt resulting from the 
borrowing done by the designated authority shall not be 
considered general obligation debt of the District of Columbia 
for any purpose, including the annual debt limit of 14% of 
District revenues set by section 603(b) of the Home Rule Act.
    Subsection (b)(2) provides that this debt shall not 
constitute lending of the public credit for private 
undertakings which is expressly prohibited by section 602(a)(2) 
of the Home Rule Act.
    Subsection (b)(3) provides that this debt shall not be a 
pledge or involve the full faith and credit of the District of 
Columbia.
    Subsection (c) provides that the term ``designated 
authority'' means the Redevelopment Land Agency or such other 
District government agency or instrumentality designated by the 
Mayor to carry out arena preconstruction activities.

  Section 202. Permitting certain district revenues to be pledged as 
                         security for borrowing

    Subsection (a) provides that either the District government 
or the designated authority may pledge as security for any 
borrowing undertaken for arena preconstruction activities any 
revenues attributable to the sports arena tax.
    Subsection (b) provides that any revenues pledged as 
security by the District government or the designated authority 
shall be excluded from the determination of the dollar amount 
equivalent to 14% of District revenues under section 
603(b)(3)(A) of the Home Rule Act.

   Section 203. No appropriation necessary for arena preconstruction 
                               activities

    This section provides that section 446 of the Home Rule 
Act, which prohibits the District government from obligating or 
expending funds not approved by Congress, shall not apply with 
respect to the following: (1) borrowing conducted pursuant to 
section 201(a); pledging of revenues as security for such 
borrowing; the payment of principal, interest, premium, debt 
servicing, contributions to reserves, or other costs associated 
with such borrowing; or other obligations or expenditures made 
to carry out the preconstruction activity described in section 
204.

        Section 204. Arena preconstruction activities described

    This section describes arena preconstruction as the: (1) 
acquisition of real property to serve as the site of the arena 
and related facilities; (2) clearance, preparation, grading and 
development of the site of the arena and related facilities, 
including demolition of existing buildings; (3) provision of 
sewer, water, and other utility facilities and infrastructure 
related to the arena; (4) financing of a Metrorail connection 
to the site and other Metrorail modifications related to the 
arena; (5) relocation of employees and facilities of the 
District government displaced by the construction of the arena 
and related facilities; (6) use of environmental, legal, and 
consulting services for the construction of the arena; (7) 
financing of administrative and transaction costs incurred in 
borrowing funds, including costs incurred in connection with 
the issuance, sale, and delivery of bonds, notes, or other 
obligations; and (8) financing of other activities of the 
District government associated with the development and 
construction of the arena.

               Title III--Waiver of Congressional Review

 Section 301. Waiver of congressional review of Arena Tax Payment and 
                       Use Amendment Act of 1995

    This section provides that the 30-day period for 
Congressional review required by section 602(c)(1) of the Home 
Rule Act shall not apply with respect to the Arena Tax Payment 
and Use Amendment Act of 1995 (D.C. Act 11-115).
                       V. COMPLIANCE WITH RULE XI

    Pursuant to rule XI, 2(l)(3)(A), of the Rules of the House 
of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings from those 
oversight activities follow.

A. Recommendations

            1. New convention center
    The Committee notes that this legislation is very narrowly 
written and limits expenditure of the dedicated tax revenues to 
specific items listed in the Convention Center Authority 
chartering legislation (DC Act 10-188), such as paying the 
operating subsidy for the existing convention center, or for 
actions that must necessarily precede a final decision and 
authorization of a new convention center. These activities 
include such items as a site survey, environmental assessments, 
and design studies. Normally, a municipality would conduct and 
pay for such work out of operating funds and then be reimbursed 
from the project financing. In this case, the District of 
Columbia does not have monies available to fund this necessary 
work and may not have funds available for some time. Despite 
the fact that a new convention center is sorely needed in the 
nation's capital and would become an economic development 
engine of exactly the type needed to help the District overcome 
its fiscal difficulties; the prospects for this project moving 
forward without this legislation are doubtful.
    This legislation only authorizes pre-development work on 
the new convention center and is not an approval or 
authorization for construction. The Committee notes that the 
Convention Center Authority does not have the authority to 
spend its dedicated revenue for construction or lease purposes 
and hence this project will need further Congressional action 
before it may be undertaken.
    The Committee commends the success of the District of 
Columbia in reaching an agreement to have the new sports arena 
financed and constructed with private funds. The Committee 
encourages the city and the Convention Center Authority in the 
strongest possible terms to consider and encourage private 
development of the new convention center. The Committee will 
carefully examine any proposed financing mechanism in its 
review of this project when it comes back to Congress for 
further action.
            2. Sports arena
    The Committee is pleased that the new sports and 
entertainment arena will be constructed with private financing 
and congratulates the Redevelopment Land Agency and the 
District of Columbia for bringing this situation to fruition. 
In this time of financial crisis in the District of Columbia it 
would be difficult to justify public financing. The Committee 
notes a trend across the country of private development of 
arenas, which used to be primarily financed by public funds. 
This is a positive development which should be encouraged 
wherever possible. If a project is truly a good business 
proposition there is no reason that private developers should 
not be willing to come forward and finance the costs 
themselves. If such a project is not economically viable on its 
own then serious questions can be raised as to the true value 
of the project to the community.
    In this case, the owner of two professional sports 
franchises is so convinced of the viability of a downtown arena 
that he will finance the construction himself. Mr. Abe Pollin 
is to be congratulated for his civic mindedness and willingness 
to assume some of the risk inherent in any project of this type 
and size. The Committee feels that Mr. Pollin's backing goes a 
long way to dispel any lingering doubts or arguments that the 
project is unsound or not economically viable. The Committee 
notes that if the project does experience difficulties then the 
risks and burdens will be borne by Mr. Pollin and not by the 
District of Columbia. Further, the Committee believes that 
private development is more efficient than public development 
and construction. Private development, while subject to more 
rules and regulations than may be necessary, still has more 
freedom and flexibility regarding personnel rules, procurement 
practices, and efficiency in overcoming unexpected 
developments.
    The Committee is aware that there are certain actions which 
the District government must undertake on the arena before 
construction can begin. The Committee is also cognizant that 
the arena project is on a tight but reasonable time line. 
Therefore, the Committee encourages the government of the 
District of Columbia to complete all necessary actions for this 
project in a timely and legal manner. The arena project is 
important to the City's future and the City must move forward 
to ensure its success.
B. Findings

    The RLA has represented the best financial interests of the 
City at every point. Its willingness to aggressively seek out a 
wide range of potential sources of financing has brought the 
benefits of competition into the arena project. The manner that 
the members of the RLA have carried out their responsibilities 
provides great encouragement for the future of the City. The 
Congress expects that the WCCA will carry out their 
responsibilities in a similar manner.
    The work of the General Accounting Office has been 
invaluable to the work of the Subcommittee on the District of 
Columbia. Without the many long hours of hard work the GAO 
audit team invested in its investigation of these projects, 
Congress would not have the confidence to permit the City to 
move forward with these projects. The Financial Responsibility 
and Management Assistance Authority has also examined these 
projects; their support also provides Congress with an 
additional level of comfort (see attached letter).
    The Committee finds these projects are timely and important 
for both the City and the entire metropolitan region. In the 
midst of a severe financial crisis, these projects will provide 
the City with a much needed boost. But, they are more than 
window dressing. They will each bring immediate and significant 
economic benefits to the entire region.

                  VI. BUDGET ANALYSIS AND PROJECTIONS

    This Act provides for no new authorization or budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a)(1) of the Congressional Budget Act are not 
applicable.
         VII. COST ESTIMATE OF THE CONGRESSIONAL BUDGET OFFICE

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 28, 1995.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has reviewed H.R. 2108, the District of Columbia Convention 
Center and Sports Arena Authorization Act of 1995, as ordered 
reported by the House Committee on Government Reform and 
Oversight on July 27, 1995.
    Based on information provided by the Council of the 
District of Columbia, CBO estimates that enactment of this bill 
will have no impact on the federal budget. Accordingly, the 
bill is not subject to pay-as-you-go procedures.

Purpose of the bill

    Convention center.--H.R. 2108 would eliminate the current 
requirement that the Washington Convention Center Authority 
receive appropriations from the District government to use tax 
revenues currently dedicated to the authority. These revenues 
may be used to pay for operating expenses of the existing 
convention center and preconstruction activities of a new 
convention center.
    Sports arena.--H.R. 2108 would amend the District of 
Columbia Home Rule Act to allow a governmental entity selected 
by the Mayor to develop a new sports arena to: (1) pledge tax 
revenues dedicated by local law as security for revenue bonds 
to finance the cost of sports arena preconstruction activities, 
and (2) spend these dedicated revenues without appropriations 
from the District government for both preconstruction 
activities and debt service. The bill further provides that 
bonds issued for arena development are not backed by the full 
faith and credit of the District of Columbia and that revenues 
dedicated to sports arena development are not to be included in 
the calculation of the aggregate debt limit of the District. 
The legislation also waives the requirement for any further 
congressional review of amendments to local law recently 
enacted by the District to perfect the dedication of revenues 
to the arena project.

Impact of the bill

    The financial transactions permitted by this legislation 
would not significantly affect the likelihood of repayment of 
Treasury advances or borrowing by the District of Columbia. 
Enactment of this bill also would not impose additional costs 
on state and local governments.
    Convention center.--H.R. 2108 merely permits the use of 
resources already dedicated to the convention center for 
intended convention center expenses without being subject to 
the appropriations process. Their use for this purpose will not 
alter the District's expected repayments of Treasury advances.
    Sports arena.--It is unlikely that the pledge of these 
receipts as security for authority debt will increase existing 
pressure on District finances. The yield of the sports arena 
tax, estimated at $9 million annually, is sufficient to provide 
for timely payment of debt service on the approximately $60 
million of bonds expected to be issued. As an additional 
measure of safety, the local law authorizing the tax includes a 
mechanism for an automatic rate adjustment to ensure an annual 
$9 million estimated yield. This structure will effectively 
eliminate this potential source of pressure on District 
repayment of federal advances.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Kowalski.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
                  viii. inflationary impact statement

    In accordance with rule XI, clause 2(l)(4) of the Rules of 
the House of Representatives, this legislation is assessed to 
have no inflationary effect on prices and costs in the 
operation of the national economy.

                      ix. changes in existing law

    Clause 3 of the rule XIII of the Rules of the House of 
Representatives requires that any change in existing law made 
by the bill, as reported, be shown with the existing law 
proposed to be omitted enclosed in black brackets, new matter 
printed in italic, and existing law in which no change is 
proposed shown in roman. This provision is inapplicable for the 
reported bill, which makes no change in existing law.

                      x. committee recommendation

    On July 27, 1995, a quorum being present, the Committee 
ordered the bill favorably reported.

Committee on Government Reform and Oversight--104th Congress Rollcall

    Date: July 27, 1995.
    Final Passage of H.R. 2108.
    Offered By: Mr. Davis.
    Voice Vote: Ayes.

    xi. congressional accountability act; public-law 104-1; section 
                               102(b)(3)

    This provision is inapplicable to the legislative branch 
because it does not relate to any terms or conditions of 
employment or access to public services or accommodations.
                            A P P E N D I X

                              ----------                              

                                 General Accounting Office,
                                     Washington, DC, July 26, 1995.
Hon. Thomas M. Davis III,
Chairman, Subcommittee on the District of Columbia, Committee on 
        Government Reform and Oversight, House of Representatives
    Dear Mr. Chairman: This letter responds to your request for 
a status report updating our July 12, 1995, testimony \1\ on 
the proposed new sports arena project in the District of 
Columbia. Specifically, you requested an update on (1) the 
redevelopment project costs, (2) the status of the proposals to 
finance the costs, and (3) the revenues from the new Arena Tax.
    \1\ ``District of Columbia: Status of Sports Arena and Convention 
Center Projects'' (GAO/T-AIMD-95-189. July 12, 1995).
---------------------------------------------------------------------------

                      predevelopment project costs

    There have been no changes to the District's estimated 
redevelopment costs for the sports arena project discussed in 
our testimony. As shown in the enclosure to this letter, the 
District's estimated costs for the project still total $56.3 
million. Events and circumstances may occur, however, to change 
these cost estimates. For example, the final cost for the 
connection of the Gallery Place Metrorail Station to the sports 
arena could change after the design plans are completed. In 
addition, if the District receives approval for a $15 million 
Capital Assistance Grant under the provisions of the Intermodal 
Surface Transportation Act of 1991 \2\ to finance the 
construction costs of the Metrorail connection, the District 
would lower its financing requirements by about $10.8 million.
    \2\ Public Law 102-240, 105 Stat. 2090 (Dec. 18, 1991) authorizes 
the Secretary of Transportation to make grants or loans to assist 
states and local public bodies and agencies to finance the acquisition, 
construction, reconstruction, and improvement of facilities and 
equipment for use, by operation or lease, in mass transportation 
service in urban areas.
---------------------------------------------------------------------------

                          financing proposals

    To finance the predevelopment costs of the sports arena 
project, the District, through the Redevelopment Land Agency 
(RLA), is currently evaluating two proposals. The first is a 
July 21 1995, proposal from NationsBank and Crestar Bank to 
provide a $53 million loan. The second is a July 24, 1995, 
proposal from Morgan Stanley & Co., which would issue a 
combination of tax-exempt and taxable bonds. A meeting was held 
yesterday with the RLA Board, other District officials, and 
representatives from the banks and Morgan Stanley & Co. to 
discuss the two proposals. The RLA Board plans to make a 
decision shortly.

                           arena tax revenues

    As of July 24, 1995, the District reported that it had 
collected approximately $7.8 million from the Arena Tax, which 
included about 22,000 returns filed. This is an increase of 
$0.6 million since July 11, 1995. We will continue to monitor 
the collections of this tax to determine if it generates the $9 
million per year in revenues that the District estimated. 
Approximately 12,000 returns have not yet been filed, and the 
District's Department of Finance and Revenue plans to send out 
second notices in mid-August.
    As requested, we will keep you posted on the above matters, 
and others that may arise as the sports arena project 
progresses. If you have any questions, please call me at (202) 
512-9450 or Charles W. Culkin, Jr., Assistant Director, at 
(202) 512-9486.
            Sincerely yours,
                                      Jeffrey C. Steinhoff,
                                Director of Planning and Reporting.
    Enclosure.

THE DISTRICT OF COLUMBIA'S ESTIMATED PREDEVELOPMENT COSTS FOR THE SPORTS
                              ARENA PROJECT                             
------------------------------------------------------------------------
       Predevelopment costs          Original budget     Revised budget 
------------------------------------------------------------------------
Land acquisition:                                                       
    Appraisal/purchase price......  .................        $30,107,913
    Appraisal fees................  .................             33,500
                                   -------------------------------------
      Total.......................        $28,000,000         30,141,413
                                   =====================================
Metrorail connection:                                                   
    Construction costs for station                                      
     entrance/exit and mezzanine..          7,000,000         13,499,788
                                   =====================================
Relocation of District employees:                                       
    Lease commitments and rent                                          
     advances.....................  .................          1,985,907
    Lease appraisals and space                                          
     consultants..................  .................             70,000
    Leasehold improvements........  .................            972,370
    Furniture and equipment move..  .................            638,123
    Telecommunications equipment                                        
     move.........................  .................            875,133
                                   -------------------------------------
      Total.......................          7,000,000          4,541,533
                                   =====================================
Building demolition utility                                             
 relocation, legal and                                                  
 environmental consultants, and                                         
 bank fees:                                                             
    Building demolition...........  .................          1,393,401
    Utility relocations...........  .................          3,439,740
    Business relocaiton...........  .................             25,000
    Legal, environmental and other                                      
     consultants..................  .................          1,816,302
    National Capital Development                                        
     Corporaiton reimbursement....  .................            294,318
    Bank fees and costs...........  .................          1,161,250
                                   -------------------------------------
      Total.......................         11,000,000          8,130,011
                                   -------------------------------------
      Total Predevelopment Costs..         53,000,000         56,312,745
------------------------------------------------------------------------

      District of Columbia Financial Responsibility
                       and Management Assistance Authority,
                                    Washington, DC, August 1, 1995.
Hon. Tom Davis,
Chairman, Subcommittee on the District of Columbia, Committee on 
        Government Reform and Oversight, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Authority has received a briefing 
from the Chairman of the Redevelopment Land Agency and other 
District officials on the status of the proposal to build a 
downtown Sports Arena and has reviewed GAO products that have 
reviewed aspects of the proposal and financing. Based on this 
information the Authority supports the efforts to begin 
construction of this facility as soon as possible. We believe 
that the new Arena may not only prove to be an economic benefit 
to the District, but also provide a valuable impetus for 
further development of the ``Downtown'' area.
    One of the primary goals of the Financial Responsibility 
and Management Assistance Act of 1995 (P.L. 104-8) is ``To 
ensure the long-term financial, fiscal, and economic vitality 
and operational efficiency of the District of Columbia.'' 
Although improving the operations of the District government is 
an integral part of achieving operational efficiency, expansion 
of the private sector is essential to long-term economic 
development. The Arena project, which combines private 
development with government incentives, is a strong step to 
revitalizing private sector development in the District. In 
addition, the plans for financing the Arena appear to be 
reasonable.
    The Committee report that accompanied P.L. 104-8 noted the 
Committee's support for the Arena project. We agree with the 
Committee that the Arena Project should be completed at the 
earliest possible date.
            Sincerely yours,
                                 Andrew F. Brimmer,
                     Chairman, Financial Responsibility and
                                   Management Assistance Authority.