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Hilda Mason:
An Open Letter to All Councilmembers on the Proposed New Convention Center
May 28, 1998




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Councilmember at Large


TO: All Councilmembers
FR: Councilmember Mason
DA: May 28, 1998
RE: Proposed New Convention Center

When I first took office as a councilmember, plans for the presently existing Washington Convention Center in the District of Columbia were underway. Now, about 20 years later, the Council must vote on whether a new convention center, which would supplant the current center, should go forward as proposed. I plan to vote against the proposed convention center and I write this memorandum to share my views on this issue.

Tax Dollars Should Not Fund Convention Centers

I have long held the position that convention centers, including the current center and any new center, should be built and operated by the private sector rather than the government of the District of Columbia.1 The District government should not be in the business of funding the construction and operation of convention centers, just as it should not be in the entertainment business, the retail business, the hotel business or any other large-scale capitalist venture.

The District government should limit itself to its traditional role and there are good reasons for keeping within those limits. The traditional role of the District government involves a combination of state and local responsibilities. Like other state and local governments, the District government is charged with providing basic services that promote the general welfare of its residents. These basic services traditionally have included those related to education, public safety, criminal justice, public health, safety nets for the needy, construction and maintenance of streets, sidewalks, public transportation, and other basic public needs. Unlike governments in some nations, the federal, state and local governments in the United States do not tend to own and operate grocery stores, theaters, hotels, telecommunications monopolies or other such endeavors. In the United States, those endeavors generally are left to the private sector.

It is true that governments in the United States assume responsibility for activities such as lotteries, real estate transactions and other such revenue producing activities. However, I believe that where marketplace activities are of a high-risk, speculative nature that would place in jeopardy substantial amounts of tax dollars, the line should be drawn. Such activities belong in the private sector where the risk can be diversified. Lotteries, real estate transactions and other such capitalist government activities pose little, if any, risk to the District's tax coffers. These activities produce revenues that directly and consistently fund basic government services.

Convention center speculation is not a low-risk activity that promises revenues that are immediate and easily calculated. Certainly the government bonds, which would have to be sold in order to finance this venture, would be low-risk with accordingly low interest rates, but only because substantial government assets provide security against the risk of default. The risk posed to the District's taxpayers in this sort of venture, as opposed to that posed to bond buyers, is an entirely different matter. The risk posed to taxpayers is whether economic benefit to District government will be realized and, if so, whether increased funding toward the provision of basic government services will result directly and immediately from that economic benefit, as measured against the tax dollar cost of the venture.

The stakes for this new convention center are substantially high, exceeding $650 million in tax dollars. and the anticipated benefits to all residents of the District are neither direct nor easily quantified. It is my view that this legislative body has no right taking high risks with enormous sums of tax dollars for a venture that will have little, if any, direct impact on the delivery of the basic services for which our government is responsible. My view is not that a new convention center is a bad idea. Rather, it is a bad idea for the District government to be the primary financial backer in this type of venture.

The Cost Of The New Convention Center As Proposed Will Be Borne By All Taxpayers, Not Just The Hospitality Industry

Proponents of the current plan for financing the proposed new convention center assert that the “dedicated” taxes that would fund this project do not divert dollars from the District's general fund. Their argument is that the hospitality industry is the primary tax source and nonresidents are the primary taxpayers, thereby placing no additional tax burden on residents of the District. This argument is invalid.

The use of dedicated taxes for this proposed center has and will have an enormous effect on the District’s general fund and to argue otherwise is to fail to acknowledge why the District funded construction of the current convention center, beginning about 20 years ago. When the Council debated 20 years ago whether the District should fund the current convention center, the primary argument was that the District would be the beneficiary of a greatly expanded tax base. Now that the District has an expanded tax base that results from the current center, the hospitality industry asserts that the dedicated tax on this industry's revenue is not a tax that would go into the District's general fund, but is instead an additional tax that the industry has volunteered to pay for this proposed venture. There lies the invalidity of that argument.

While the District government continues to pay the debt service on the current convention center, with a balance of about $65 million, it would be funneling into a new center the very tax dollars that the Council anticipated 20 years ago would accrue from the economic vitality brought by the current center. The tax dollars anticipated with the creation of the current center were to go into the general fund in order to fund the basic services for which the District is responsible. Instead, these dollars would be dedicated to the construction of a new center, which once again has nothing to do with the basic services for which the District is responsible.

The groups benefiting from this misuse of tax dollars are primarily hotels and restaurants but this scheme burdens all District taxpayers. I believe that the only equitable way to fund this project would be for interested parties to incorporate and, through the sale of stock, to spread the risk among those who anticipate direct gain. It would be irresponsible for the government of the District of Columbia to bear all of the risk once again.

For the foregoing reasons, I plan to vote against the proposed plan for financing a new convention center. However, in the event that the Council does pass a finance plan that requires the District government to pay for a new convention center, I plan to vote against construction of a center at the Mt. Vernon Square site, favoring instead the site near Union Station. I believe that problems with maintaining the integrity of the neighborhoods, limits on facility expansion and the additional costs associated with building underground all weigh in favor of the alternative site near Union Station.

1. In Convention Center Referendum Committee. et al. v. District of Columbia Board of Elections and Ethics, et al.. 441 A.2d 889 (D.C. App. 1981), I entered the case as arnicus curiae to persuade the court to permit an initiative on the policy issue of whether the District government should fund the Washington Convention Center. On rehearing en banc, the Court of Appeals ruled 5-4 that the proposed initiative was not a proper subject matter for an initiative because it would place before the electorate a matter involving appropriations, which the law was construed to prohibit in this case. I viewed this case as a civil rights issue because the proposed Washington Convention Center was a major policy decision involving more than appropriations and a decision for which the initiative provisions were designed. It remains my belief that the Washington Convention Center presented a major policy issue that should have been on the ballot. I also think that a majority of District voters would agree that the District government should not have committed tax dollars to pay for the Washington Convention Center, and that it should not do so for a new center.

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