Michael Neibauer, The Examiner
2008-07-16 07:00:00.0
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WASHINGTON -

The D.C. Council will consider tacking on another 5 percent sales tax to tickets and most items purchased at Nationals Park in an effort to close a potential shortfall in revenue needed to pay off the stadium debt.

Legislation introduced Tuesday by at-large D.C. Councilman David Catania, and co-sponsored by seven of his colleagues, would boost the gross sales tax charged on Nationals tickets, concessions, merchandise and parking to 15 percent. The District currently charges 10 percent — the city’s existing 5.75 percent sales tax plus an extra 4.25 percent.

If approved, the cost of a $5 bag of french fries would increase by 33 cents.

The justification, Catania claims: Underwhelming attendance at Nationals’ games and the team owner’s refusal to pay rent threaten collections for the Ballpark Revenue Fund, which the District created to pay down the stadium bonds.

The fund is comprised of baseball-related sales tax revenues, a fee on large businesses, utility taxes and Nationals rent.

The last-place Nationals have averaged only 29,700 tickets purchased per game through the first 50 home games, according to ESPN, ranking 16th among baseball teams and well below earlier estimates for the new 41,000-seat stadium.

Fewer fans mean less tax revenue, Catania said. Plus, he said, the Nationals have refused to pay $3.5 million in rent, claiming the stadium remains incomplete to this day. That issue is likely to go to arbitration, delaying rent payments for months at a minimum.

“Their decision not to pay rent is jeopardizing our ability to meet our debt obligation, so we’re left with little choice,” Catania said.

D.C. is unlikely to collect the $42 million it needs this year to pay the debt service, contribute to a capital reserve fund and maintain its property damage insurance, Catania claimed. The fund, the council member said, could fall $35,000 to $3.5 million short.

“I want to preserve our options,” said Ward 3 Councilwoman Mary Cheh, a co-sponsor of the tax increase measure. “We cannot have a shortfall and we have to be prepared to make sure that we don’t.”

David Umansky, spokesman for Chief Financial Officer Natwar Gandhi, said a 15 percent sales tax would be considered “excessive” by federal law. In a pair of letters to the council, Gandhi pledged to meet debt service requirements in full and on time.

Catania overshot the payment the District will have to make this year on the bonds by about $7 million, Gandhi said, and ticket prices are 20 percent higher than earlier projections, offsetting poor attendance.

Gandhi’s claims are “absurd,” Catania responded.

mneibauer@dcexaminer.com