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TESTIMONY OF MARK TUOHEY AND BILL HALL CHAIRMAN, D.C. SPORTS AND ENTERTAINMENT COMMISSION BEFORE THE COMMITTEE ON FINANCE AND REVENUE AND THE COMMITTEE AND ON ECONOMIC DEVELOPMENT OF THE D.C. CITY COUNCIL CONCERNING "Bill 15-108, "Ballpark Omnibus Financing and Revenue Act of 2004" GOOD MORNING CHAIRMAN EVANS, CHAIRMAN BRAZIL AND ALL THE MEMBERS OF THE D.C. CITY COUNCIL. MY NAME IS MARK TUOHEY AND I AM HONORED AND EXCITED TO BE HERE TO TESTIFY ON BEHALF OF THE D.C. SPORTS AND ENTERTAINMENT COMMISSION CONCERNING THIS LEGISLATION. JOINING ME IS BILL HALL, THE CHAIRMAN OF OUR BASEBALL COMMITTEE. FIRST SOME BACKGROUND. I. BACKGROUND OF BRINGING BASEBALL BACK TO WASHINGTONWHEN THE MAYOR ASKED ME TO SERVE AS CHAIR OF THE D.C. SPORTS AND ENTERTAINMENT COMMISSION, HE ASKED, IN ADDITION TO FOCUSING ON YOUTH RECREATION, TO CONTINUE THE WORK ALREADY UNDERWAY IN BRINGING BASEBALL TO D.C. I ENTHUSIASTICALLY ACCEPTED THIS ASSIGNMENT FOR TWO REASONS. FIRST, WE HAVE A WONDERFUL HISTORY OF BASEBALL IN THIS CITY WITH THE FORMER WASHINGTON SENATORS, NATIONALS AND HOMESTEAD GREYS, EVEN THOUGH A WHOLE GENERATION OF WASHINGTONIANS HAVE MISSED OUT ON THE FUN AND EXCITEMENT THAT BASEBALL BRINGS FROM T-BALL THROUGH ATTENDING MAJOR LEAGUE GAMES. SECOND, BRINGING BASEBALL TO D.C. IS BRINGING A $200 MILLION DOLLAR NEW BUSINESS TO WASHINGTON. WE ARE THE HUB OF A LARGE AND THRIVING ECONOMIC REGION AND BASE WILL, BRING A HUGE INFLUX OF NEW DOLLARS TO THE CITY FROM THE SUBURBS AND FROM VISITORS. THE BASEBALL EFFORTS HAVE BEEN SUBSTANTIAL, COLLABORATIVE WITH THE MAYOR'S OFFICE AND COUNCIL, AND SUCCESSFUL. IN THE SPRING OF 2003, THE COMMISSION AND THE DISTRICT OPENED DISCUSSIONS WITH MLB WHILE STUDYING THE FOLLOWING:
IN ALL 16 DIFFERENT ISSUES WERE EVALUATED AND RESEARCHED. BASED _ON THE INFORMATION, THE DCSEC AND THE DISTRICT ENGAGED IN LENGTHY AND PRODUCTIVE NEGOTIATIONS. II. TERMS OF THE BASEBALL AGREEMENTIT IS TRANSACTION THAT WE NEGOTIATED WITH MAJOR LEAGUE BASEBALL IS BOTH HISTORIC AND A VERY SOUND DEAL FOR THE FUTURE OF OUR CITY. IT'S HISTORIC IN THAT IT CULMINATES LITERALLY THREE DECADES OF EFFORTS TO BRING THE NATIONAL PASTIME BACK HOME TO THE NATION'S CAPITAL. THIS EFFORT WAS GREATLY ASSISTED BY THE COUNCIL'S CREATION IN 1995 OF THE SPORTS AND ENTERTAINMENT COMMISSION WITH ITS MISSION TO PROMOTE AND ATTRACT SPORTING EVENTS, INCLUDING BASEBALL TO THE CITY. IT IS ALSO HISTORIC IN THAT IT REFLECTS THE TREMENDOUS TRACK RECORD OF ACHIEVEMENT THAT THE DISTRICT, UNDER THE LEADERSHIP OF THIS COUNCIL AND MAYOR WILLIAMS, HAS DEMONSTRATED ON THE NATIONAL STAGE. EVERY BASEBALL PERSON THAT WE ENCOUNTERED IN THIS PROCESS WHO HAD NOT VISITED WASHINGTON RECENTLY WAS ASTOUNDED BY THE TRANSFORMATION OF OUR CITY. SUCCESSFUL PUBLIC INVESTMENTS IN PROJECTS SUCH AS METRO, MCI CENTER, AND OUR CONVENTION CENTER, AND PLANNED PROJECTS SUCH AS THE SOUTHWEST WATERFRONT DEVELOPMENT AND THE ANACOSTIA WATERFRONT INITIATIVE, SHONE AS VISIBLE CORNERSTONES OF THE DYNAMISM OF THIS MARKET AND THIS GOVERNMENT. INDEED, THE STRENGTH OF BOTH OUR MARKET AND OUR GOVERNMENT WERE THE KEY FACTORS SUPPORTING OUR ABILITY TO ATTRACT MLB TO ENTER INTO THE VERY SOUND DEAL THAT I WILL NOW DESCRIBE. IN THE BASEBALL STADIUM AGREEMENT, THE COMMISSION IS CHARGED WITH TWO PRIMARY RESPONSIBILITIES -- FIRST - TO HOST THE MLB FRANCHISE IN A RENOVATED RFK STADIUM FOR THREE YEARS, AND SECOND - TO BUILD AND LEASE THE NEW ANACOSTIA RIVERFRONT BALLPARK TO THE TEAM FOR THE FOLLOWING THIRTY YEARS AND BEYOND. LET ME DISCUSS EACH OF THOSE COMPONENTS SEPARATELY. AT RFK OUR RELATIONSHIP WITH THE TEAM WILL BE GOVERNED BY A LICENSE AGREEMENT TO BE NEGOTIATED AND EXECUTED BY JANUARY OF 2005. THE MAJOR TERMS OF THE RFK LICENSE ARE SPELLED OUT IN THE BASEBALL STADIUM AGREEMENT AS FOLLOWS:
REVENUE-GENERATING:
THE RFK DEAL IS SOUND FOR FOUR MAIN REASONS: FIRST - THE LICENSE FEE IS DESIGNED TO COVER THE COMMISSION'S ADDITIONAL COSTS OF OPERATIONS AS WELL AS THE FOREGONE PROFITS FROM SOME EVENTS THAT BASEBALL WILL DISPLACE. THIS LICENSE FEE WAS HEAVILY NEGOTIATED. MLB PUSHED FOR FAR LESS, BUT WE INSISTED THAT WE ENSURE COVERAGE OF ALL OF OUR COSTS. SECOND - THE SCHEDULING ARRANGEMENTS AND STADIUM RENOVATIONS WILL ALLOW US TO BOTH HOST MLB AND HONOR OUR LONGSTANDING RELATIONSHIP WITH DC UNITED. AS A RESULT, THE RFK SEASON WILL NOW BOAST 100 MAJOR LEAGUE SPORTING EVENTS EACH YEAR. THIRD - THE DISTRICT WILL RECEIVE THE ECONOMIC BENEFITS AT LEAST THREE MILLION PEOPLE ATTENDING OUR 100 EVENTS EACH YEAR IN RFK STADIUM TURNING TO THE NEW BALLPARK, THE BASEBALL STADIUM AGREEMENT OUTLINES THE TERMS OF TWO SEPARATE AGREEMENTS THAT WILL GOVERN THE RELATIONSHIP BETWEEN THE TEAM AND THE COMMISSION. THESE AGREEMENTS TO BE COMPLETED BY DECEMBER 2005 ARE THE CONSTRUCTION ADMINISTRATION AGREEMENT, TO WHICH THE DISTRICT WILL ALSO BE A PARTY, AND THE NEW BALLPARK LEASE. THE CONSTRUCTION ADMINISTRATION AGREEMENT WILL DETAIL THE RIGHTS AND RESPONSIBILITIES OF THE TEAM, THE DISTRICT AND THE COMMISSION RELATING TO DEVELOPMENT AND CONSTRUCTION OF THE NEW BALLPARK. IT CONTEMPLATES SEPARATE DESIGN AND CONSTRUCTION PHASES SO THAT THERE WILL BE A CLEAR DELINEATION OF THE PROJECT SCOPE THAT WILL FORM THE BASIS FOR A GUARANTEED MAXIMUM PRICE CONSTRUCTION CONTRACT. IN EACH PHASE THE COMMISSION WILL USE A COMPETITIVE PROCUREMENT PROCESS TO SELECT THE ARCHITECT AND THE GENERAL CONTRACTOR. DESIGN OF THE BALLPARK WILL NOT BE FROM A BLANK SLATE. MOST OF THE MAJOR PROGRAM ELEMENTS HAVE ALREADY BEEN ESTABLISHED AND ARE INCLUDED IN THE BASEBALL STADIUM AGREEMENT. THE DISTRICT AND COMMISSION WILL CONTROL EXTERIOR DESIGN TO MAKE SURE THAT IT FITS WITHIN THE URBAN PLANNING FABRIC OF THE AREA. ONCE THE PROJECT SHIFTS TO THE CONSTRUCTION PHASE, THE COMMISSION WILL BE RESPONSIBLE FOR BUILDING THE BALLPARK AND WILL TAKE ALL APPROPRIATE STEPS TO ASSURE THAT CONSTRUCTION JOBS AND BENEFITS WILL INURE LARGELY TO DISTRICT BUSINESSES AND RESIDENTS. ONCE THE BALLPARK IS COMPLETED, OUR RELATIONSHIP WITH THE TEAM WILL BE GOVERNED BY A THIRTY-YEAR LEASE. FIRST, IT SHOULD BE STATED THAT MLB LEASES DIFFER DRAMATICALLY ACROSS THE NATION DEPENDING MOSTLY ON THE AGE OF THE BALLPARK, THE NATURE OF THE FINANCING, AND THE TENURE OF THE TEAM IN THE MARKET. SOME INVOLVE COMPLEX REVENUE AND COST SHARING FORMULAS OF MANY DIFFERENT STREAMS, WHILE OTHERS ARE MORE STREAMLINED. OUR LEASE ADOPTS THE MORE STREAMLINED APPROACH. FIRST - THE LEASE WILL REQUIRE THE TEAM TO PAY A BEGINNING ANNUAL RENT OF $3.5 MILLION, WHICH INCREASES TO $5.5 MILLION BY YEAR SIX AND INCREASING 2% PER YEAR THEREAFTER. SECOND - THE TEAM WILL BEAR ALL COSTS OF BALLPARK OPERATIONS AND MAINTENANCE. THIRD - THE TEAM IS REQUIRED TO PAY AN ADDITIONAL $1 IN RENT FOR EACH PAID ATTENDEE IN EXCESS OF 2.5 MILLION ANNUALLY. FOURTH - TWELVE EVENT DAYS ARE RESERVED FOR COMMISSION EVENTS WHICH WILL GENERATE ADDITIONAL REVENUES. FIFTH - THE COMMISSION HAS THE OPPORTUNITY FOR REVENUE ENHANCING ADDITIONS TO THE STADIUM. I BELIEVE THAT THE DEAL IS DEMONSTRABLY SOUND AND WILL GENERATE SUBSTANTIAL ECONOMIC BENEFITS FOR THE CITY AND ITS RESIDENTS AND WILL GENERATE SIGNIFICANT NEW TAX REVENUE FOR D.C. SCHOOLS, LIBRARIES, AND AFFORDABLE HOUSING PROGRAMS. IV. COMMISSION WILL SUCCESSFULLY MANAGE ITS BASEBALL OBLIGATIONSTHE COMMISSION IS TAKING IMPORTANT ACTIONS TO SUCCESSFULLY MANAGE ITS BASEBALL OBLIGATIONS. FIRST, WE ARE HIRING THE BEST POSSIBLE TEAM TO RETROFIT RFK AND TO BUILD THIS NEW FACILITY. OUR TEAM WILL BE LED BY ALLEN LEW AND A TEAM OF EXPERTS WHO HAVE EXTENSIVE EXPERIENCE IN LARGE CONSTRUCTION PROJECTS, INCLUDING BUILDING BASEBALL STADIUMS. MR. LEW SERVED AS THE MANAGING DIRECTOR OF DEVELOPMENT OF THE WASHINGTON CONVENTION CENTER DURING AND SINCE ITS CONSTRUCTION. AS YOU KNOW, THE CONVENTION CENTER OPENED ON TIME, AND IS CONSIDERED ONE OF THE BEST IN THE COUNTRY IN APPEARANCE AND AMENITIES. THE WASHINGTON CONVENTION CENTER TEAM LEAD BY MR. LEW BROKE NEW GROUND IN BRINGING IN MINORITY AND LOCAL BUSINESSES INTO THE PROJECT AS WELL AS ENSURING DISTRICT RESIDENT PARTICIPATION IN CONTRACTS, TRAINING AND EMPLOYMENT. WITH THIS MODEL IN MIND, WE INTEND TO ENSURE SIGNIFICANT EMPLOYMENT, APPRENTICESHIP AND TRAINING OPPORTUNITIES FOR DISTRICT RESIDENTS. IN ADDITION YOU HAVE MY COMMITMENT TO WORK WITH THE COUNCIL TO ENSURE. THE HIGHEST POSSIBLE PARTICIPATION BY DISTRICT AND LSDBE BUSINESSES. ON THE RFK RENOVATIONS AND ON THE NEW STADIUM, WE ARE COMMITTED TO THE BEST DESIGN, THE BEST PRICE, AND THE MOST MINORITY AND LOCAL PARTICIPATION WE CAN POSSIBLY ACCOMPLISH. I WANT TO TALK HERE ABOUT A MOST IMPORTANT ISSUE TO THE D.C. SPORTS AND ENTERTAINMENT COMMISSION AND TO THE RESIDENTS AND BUSINESSES OF THE DISTRICT. IN EVERY SINGLE COMMUNITY MEETING WE HAVE ATTENDED THROUGHOUT THE DISTRICT, THE SAME SUBJECT COMES UP OVER AND OVER. HOW ARE YOU GOING TO KEEP THE MONEY BEING EXPENDED TO BUILD THIS NEW STADIUM IN THE DISTRICT? I COMMIT FOR THE RECORD THAT WE WILL DO AS WELL IF NOT BETTER THAN THE CONVENTION CENTER ON MINORITY AND LOCAL CONTRACTING AND JOBS FOR DISTRICT RESIDENTS. V. RFK CAN ONLY BE USED AS A TEMPORARY SITEI WOULD LIKE TO SPEAK FOR A MOMENT ON WHY RFK CANNOT BE USED OR EXPANDED ON A PERMANENT BASIS FOR BASEBALL. FIRST, RFK IS ALMOST 50 YEARS OLD, AND ITS SYSTEMS, INCLUDING ELECTRICAL AND PLUMBING, AND ITS INFRASTRUCTURE ARE FAR OUT OF DATE. THE COST OF REPLACING INFRASTRUCTURE ALONE MAKES SUCH A PROJECT UNWORKABLE. SECOND, KEEPING BASEBALL AT RFK PROVIDES NO ECONOMIC SPIN OFF FOR THE DISTRICT; THERE WILL BE NOT BE NEW HOTELS, RESTAURANTS OR RETAIL VENUES BUILT AT THE RFK SITE. THIRD, THE COST AND BUSINESS INTERRUPTION INVOLVED IN ATTEMPTING A RENOVATION OF RFK MAKES THE TASK IMPRACTICAL. RATHER, WE WOULD HAVE TO RAZE THE STADIUM AND BUILD A NEW STRUCTURE WITHOUT THE BENEFITS OF ECONOMIC STIMULUS AND DEVELOPMENT. VI. MAJOR LEAGUE BASEBALL COMMUNITY BENEFIT OBLIGATION IS STRONG AND SUBSTANTIAL, AND WILL ENHANCE THE COMMISSION'S ISSUING OF PROGRAMSANOTHER IMPORTANT QUESTION WE HAVE ALSO HEARD FROM THE COMMUNITY, "WHAT IS MLB GOING TO DO FOR US?" I AM HERE TO PROMISE, AS WE HAVE BEEN PROMISED, THAT MAJOR LEAGUE BASEBALL AND TEAM WILL BE GOOD CORPORATE CITIZENS AND CONTRIBUTE TO THE BENEFIT OF OUR COMMUNITY. THE BENEFIT PACKAGE WE NEGOTIATED WITH MAJOR LEAGUE BASEBALL IN THE BASEBALL STADIUM AGREEMENT - AND WHICH WILL BE SPELLED OUT IN DETAIL IN THE LEASE - INCLUDES FINANCIAL SUPPORT FOR FAMILY AND YOUTH RECREATION FACILITIES, DEVELOPING ATHLETIC FACILITIES, INCLUDING BASEBALL FIELDS, AND ASSISTING THE DEVELOPMENT OF YOUTH BASEBALL PROGRAMS, TRAINING COACHES AND PLAYERS AND PROVIDING ACCESS TO BASEBALL FOR DISTRICT YOUTHS. IN ADDITION, THE TEAM WILL CONTRIBUTE TO. THE DCSEC ONE DOLLAR FOR EACH TICKET SOLD OVER 2.5 MILLION FOR EACH SEASON, AND WE VALUE THAT ANNUAL CONTRIBUTION AT $500,000 TO $1,000,000. FINALLY, THE TEAM WILL PROVIDE HUNDREDS OF FREE TICKETS PER GAME TO THE DISTRICT'S YOUTH. TO FACILITATE THIS BENEFIT PACKAGE, THE TEAM WILL ESTABLISH A FOUNDATION WHICH FUNDED BY CONTRIBUTIONS FROM THE TEAM, ITS PLAYERS, ADVERTISERS AND SPONSORS, IN ORDER TO PROVIDE FINANCIAL AND IN KIND SERVICES TO THE D.C. SPORTS AND ENTERTAINMENT COMMISSION FOR OUR SPORTS AND RECREATION EFFORTS CITY WIDE. WE INTEND TO EXPAND OUR MISSION OF IMPROVING SPORTS AND RECREATION AMENITIES IN OUR COMMUNITIES, AND THE BASEBALL TEAM WILL HELP EXPAND OUR EFFORTS. SINCE 1996 THE COMMISSION HAS SPENT OVER $1.2 MILLION THROUGH ITS COMMUNITY GRANTS PROGRAM. ON AVERAGE, OUR GRANTS RANGE FROM $5,000 TO $10,000 AND ARE AWARDED TO SMALL NOT-FOR-PROFIT COMMUNITY GROUPS. EXAMPLES OF AWARDS INCLUDE: THE LANGSTON BOYS AND GIRLS GOLF CLUB FOR THE SUPPORT OF JUNIOR GOLF CAMP, KIDS ON ICE WHICH PAID FOR SKATING INSTRUCTIONS FOR KIDS AT THE FT. DUPONT SKATING RINK NEIGHBORHOOD, PETERBURG SHOE REPAIR FOR THE PURCHASE OF UNIFORMS FOR THE NEIGHBORHOOD FOOTBALL TEAM, THE URBAN RANGERS FOR A BICYCLE REPAIR AND RECREATION PROGRAM. IN ADDITION, THE COMMISSION HELPED FINANCE A NEW OUTDOOR TRACK AT WILSON HIGH SCHOOL, REPLACED THE BLEACHERS AND THE FOOTBALL FIELD AT ANACOSTIA HIGH SCHOOL AND WE ARE HELPING OUR FRIENDS AT EASTERN HIGH MAINTAIN THEIR FOOTBALL FIELD. MOST RECENTLY WE GAVE $10,000 TO BALLOU HIGH SCHOOL TO HELP ITS BAND GO TO CALIFORNIA FOR THE NATIONAL BAND COMPETITION. WE ARE PROUD THAT WE HAVE TOUCHED EVERY WARD IN THE CITY. THROUGH THE FOUNDATION WITH MLB, AND THROUGH NEW MONIES FROM THE PROCEEDS OF THE SALE OF TICKETS, THIS COMMUNITY GRANT PROGRAM WILL BE SIGNIFICANTLY ENHANCED AND WE CAN DO EVEN MORE. WE HAVE MANY PLANS FOR THESE FUNDS, AND FOR THE FUNDS COMING THROUGH THE FEDERAL APPROPRIATION TO REPAIR AND ENHANCE THE ARMORY:
THESE ARE REAL DOLLARS GOING TO LONG TERM PARTNERSHIPS WITH OUR NEIGHBORHOODS TO BRING BETTER RECREATION AND SPORTS OPPORTUNITIES PERMANENTLY. IN CONCLUSION, OUR FIRST JOB WAS TO RESEARCH WHAT OTHER CITIES HAVE NEGOTIATED WITH MLB AND THEN NEGOTIATE THE BEST DEAL FOR THE DISTRICT OF COLUMBIA, AND WE BELIEVE WE DID THAT. OUR CURRENT JOB IS READYING RFK FOR OPENING DAY APRIL 15, 2005 WHICH WE HAVE ALREADY STARTED. OUR FUTURE GOAL IS TO BUILD A NEW STADIUM THAT STAYS ON BUDGET, OPENS ON TIME AND IS ONE OF THE BEST STADIUMS IN THE SYSTEM. AND, TO WORK, STARTING NOW, TO KEEP AS MANY CONTRACTS AND AS MANY JOBS AS POSSIBLE HERE IN THE DISTRICT. AS WE BUILD THIS STADIUM WE WILL MOVE SOME OF THE ECONOMIC BENEFITS COMING FROM BASEBALL DIRECTLY INTO OUR NEIGHBORHOODS. HOW?
CHAIRMAN EVANS AND BRAZIL AND MEMBERS OF THE CITY COUNCIL, TO US AT THE SPORTS AND ENTERTAINMENT COMMISSION, THIS IS NOT JUST ABOUT BRINGING BASEBALL AND IT'S ECONOMIC VALUE TO SOUTHWEST, OF WHICH THE MAYOR AND HIS TEAM HAVE ELOQUENTLY SPOKEN, THIS IS ABOUT CAPTURING REAL RESOURCES, ON A PERMANENT BASIS; AND PUTTING THOSE RESOURCES TO WORK IN CONTRACTING AND EMPLOYMENT, IMPROVED RECREATIONAL OPPORTUNITIES AND HELPING TO DEVELOP STRONGER NEIGHBORHOODS. WE ARE AS COMMITTED TO THIS AGENDA AS WE ARE TO OPENING DAY AT RFK IN 2005 AND OPENING DAY IN OUR NEW STADIUM IN 2007. THANK YOU. |
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