Thursday, November 6, 2014

Cost-Benefit Analysis Released for Stadium Proposal

The long-awaited cost-benefit analysis commissioned by the DC Council for the proposed Buzzard Point stadium was released yesterday. The Council also held a hearing yesterday to go over the results of the report. Housing Complex has a run-down of the sparring between the Administration and the Council during the hearing. Here are some takeaways from the report: 
  • The proposed stadium cost of $286.7 million (including a roughly 46/54 split between the city and DC United) would be the most expensive MLS stadium built to-date, which compares to the average stadium cost of $160 million (adjusted for inflation and location). The report states that the higher costs for the Buzzard Point stadium are driven primarily by higher land acquisition, remediation, and horizontal development costs, and quality of stadium construction. 
  • The District’s contribution could increase from $131.1 million to the $150 million cap due to environmental remediation, or other cost overruns. However, there are no cost caps on cleanup of the Pepco or Akridge parcels – for instance, the District is responsible for relocating Pepco’s turbines and high voltage power lines, which can significantly increase the cost of remediation.
  • The public/private partnership cost split is consistent with the average MLS soccer-specific stadium, although the total dollar amount contributed by each entity is one the highest among MLS-specific stadiums, due in part to the high relative cost of the stadium itself. 
  • The Buzzard Point parcels have been overvalued by $19.4 million and the Reeves Center has been undervalued by $11.2 million, resulting in an overpayment by the District of $25.7 million (after a contribution committed by DC United and Akridge). 
  • As a result of the stadium, the Net Present Value (NPV) of new direct, indirect, and induced spending created in the city is estimated to be $2.6 billion over the next 31 years, which is estimated to support 1,683 new full-time equivalent jobs, generating personal earnings of $1.3 billion over the same time period. This includes activity at the stadium, the new hotel adjacent to the stadium, the redevelopment of the Reeves Center, and a new municipal center in Anacostia. 
  • Without the stadium, no significant development on Buzzard Point is anticipated for eight to 10 years at a minimum. If the Stadium Act is approved, the report estimates that between 300,000 and 700,000 square feet of development will occur within the next five to seven years near the stadium – mostly residential with some ground floor retail. The area is not as transit-friendly as the rest of Capitol Riverfront and Southwest and will need significant infrastructure improvements in order to generate developer interest. 
  • Operating income at the stadium would begin to be profitable at year six of operations (2022). Tax abatements provided to the team equal a NVP of $50 million, with $43 million in property tax abatements and $7 million in sales tax abatements. 
  • The fiscal benefits and land proceeds from the stadium deal will have a NPV of $365.2 million, minus the total costs of $255.9 million, results in a net benefit to the District (depending on whether the city makes a $131.1 million or $150 million contribution to the stadium) of anywhere between $89 - $109.4 million. 
  • Annual paid attendance of 561,000 people for 36 events is estimated for the stadium, which compares to between 2.5 million and 3 million annual visitors to Nationals Park for 81 home games plus the playoffs and additional events. 
  • The stadium has been designed to have 24 suites with 20 seats each for a total of 480 suite seats out of 20,000 total seats. 
  • Ticket prices are anticipated to range from $20 to $28 per game, depending on the match. In addition, the average club seat and suite ticket prices are estimated to be $50 per game, excluding premiums. 
  • Construction is anticipated to begin in November 2015 and conclude in 2017. 
  • The planned $45 million, 200-key hotel adjacent to the stadium would likely not start construction until 2020. 
Rendering courtesy of DC United

1 comment:

SWag said...

my thoughts:

1. why not just sell the Reeves Center @ market value. That will obviously generate the most $ for the deal

2. use that $ to buy the less expensive land in BuzzPo - use any EXTRA for ADDITIONAL infrastructure improvements

3. check DC United's books - if they have more to contribute - they should. they win the most from all of this

4. a 20,000 seat stadium that isn't transit friendly sounds like a traffic nightmare

5. with all that said - I really wanna see this thing built as quickly as possible - the potential for that area is obvious