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GOVERNMENT OF THE DISTRICT OF COLUMBIA OFFICE OF THE CHIEF FINANCIAL OFFICER 1350 Pennsylvania Avenue, NW • Suite 209 • Washington, DC 20004 • (202) 727-2476 www.dccfo.com Natwar M. Gandhi August 19, 2003 Vincent H. Cohen Dear Mr. Cohen: I received your letter to me dated August 12, 2003. The Chief Financial Officer (CFO) of the District of Columbia has the responsibility to protect the financial interests of all components of the government of the District. As a result, the CFO has oversight authority in all of the District's financial activities and is empowered to take steps to help ensure the District's continued fiscal viability. The CFO is a member of the Washington Convention Center Authority Board (WCCA Board) and is, thereby, better able to monitor, advise and take appropriate actions to fulfill his duties and responsibilities with respect to WCCA finance matters. In addition, pursuant to D.C. Official Code Section 10-1202.05, financial decisions of the Board can only be approved if the CFO votes with the majority. My representative to the Board, Dr. John Ross, has attended every Board meeting in the past two years. I am regularly briefed on matters related to the Convention Center and its operations. Dr. Ross speaks for me and with my authority and is in every respect the delegated CFO on the WCCA Board. I have attended, and will continue to attend, certain meetings when, in my judgment, my personal presence is necessary. The WCCA receives dedicated tax revenue, intended to meet the District's commitment to holders of WCCA bonds. These commitments must be honored and I will use the authorities of the CFO to guarantee that this happens. Various reserve accounts were required to issue the bonds and should be maintained in accordance with the terms and conditions governing those reserve funds. Once the minimum required balances are reached and sustained pursuant to D.C. Official Code Section 10-1201.13(b), as amended, the holding of additional reserves of taxpayer money beyond these required for bond security serves no responsible public purpose. It was for this reason that the Council of the District of Columbia (the Council) limited WCCA's power to increase reserve levels and directed that excess revenues be transferred to the District's General Fund. Further, the WCCA is not entitled to spend this money for unbudgeted purposes. Rather, the WCCA is authorized to make only those expenditures that are approved by the Mayor, the Council, the U.S. Congress, and the President of the United States in the annual budgets of the District of Columbia. Overspending this budget would constitute an anti-deficiency violation, subject to sanctions under both District and federal laws. The Office of the Chief Financial Officer (OCFO), holds every D.C. government entity or instrumentality to the same high financial standards, including avoidance of anti-deficiency violations. While unplanned budget pressures may arise, they must be reported immediately to my office where we can support your efforts to find authorized solutions. Reasonably anticipated costs, like those of moving to the new Convention Center, should have been, and must be, budgeted and approved as required by law to avoid unnecessary spending pressures. After examination and analysis, I am of the opinion that it would be feasible and prudent for the WCCA to refinance its debts and develop reserve requirements appropriate to contemporary circumstances. By this letter, I request that the WCCA Board undertake a review to confirm that market conditions and other factors warrant such action. Please let me know by September 30, 2003, what course of action the WCCA Board intends to take. Should the WCCA Board choose not to act favorably on my request, please be advised that I am prepared to recommend to the Mayor and Council that appropriate steps be taken to ensure that the public benefits that can flow from an advantageous refinancing are, in fact, realized. My office is available to work with you and the WCCA Board on this matter. Upon completion of a refinancing, it appears that a smaller share of the dedicated tax stream would be needed in reserve to insure bondholders. The Mayor and several Councilmembers have raised questions with the OCFO about possible uses of any released funds that might result through a refinancing. We have met our responsibility to respond to these requests. The OCFO has no particular goals for the use of the money. Any decision in this regard will be made by appropriate policy officials. I look forward to working with my fellow WCCA Board Members in addressing these and other matters during the teleconference Board meeting set for Thursday, August 21s`, as well as subsequent to that meeting. Sincerely, cc: Honorable Anthony A. Williams, Mayor of the District of
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