WASHINGTON (Map, News) - The largely unused D.C. Armory might be transformed into a 10,000-seat concert hall and expo center by a District government agency as that agency struggles to avoid financial collapse, officials told the D.C. Council on Monday.

The 14-year-old D.C. Sports and Entertainment Commission could be insolvent as soon as this year unless the city government comes up with a public subsidy, its leaders said during an oversight hearing before the council’s economic development committee. As a long-term solution, the commission hopes to overhaul the 68,000-square-foot armory, home to the D.C. National Guard, as a revenue source.

“Currently, we are limited in the quantity and quality of events we can host at the armory as it lacks basic building improvements such as air conditioning, electrical upgrades and restroom facility upgrades,” said Gregory O’Dell, the commission’s chief executive officer.

The commission wants to spend $1.5 million to install air conditioning at the “underutilized” facility, to upgrade its electrical system and improve its bathrooms, O’Dell said. It will cost an additional $5 million to wall off a portion of the hangar floor and convert it into an exhibition and concert venue, complete with “acoustical ceilings.”

The plan immediately raised red flags with Ward 6 Councilman Tommy Wells, who represents the area.

“I’m not really interested in a 10,000-person nightclub,” Wells said.

O’Dell said the improvements haven’t been scheduled “because we don’t have the money for it yet.” There have been no negotiations with any promoter or club for future armory use, he said.

The quasi-independent commission manages RFK Stadium, the armory and construction of the Nationals’ new ballpark, fosters high school sports and promotes D.C. as an entertainment venue. With no baseball at RFK, its revenues are shriveling.

The agency faces a $500,000 shortfall for fiscal 2008, O’Dell said. Without a cash infusion, he told the panel, “the commission may potentially become financially insolvent and be forced to close operations near the end of fiscal year 2008.”

The commission will fire 13 employees and halve its grants to community organizations to ease its money woes, but the deficit remains.

Roughly $4 million of the commission’s budget is tied up in the administration of RFK. Committee Chairman Kwame Brown recommended shaking that money loose by turning over the management of that facility to the Office of Property Management.

mneibauer@dcexaminer.com