Truth-tellers, liars and equivocators

Are the Wizards and Capitals keeping D.C. in the black?

January 11, 2011 - 10:27 PM
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UPDATE, 3:02 p.m. - Includes comments from Ward 2 Councilmember Jack Evans.

Capitals, Wizards and Verizon Center owner Ted Leonsis is already the most-beloved franchise owner in D.C. The Lerner family's Nationals have yet to prove themselves, D.C. United has slipped under Will Chang, and Dan Snyder, well... is Dan Snyder.

And why wouldn't Washingtonians love Leonsis? The Capitals are the city's best team, and he's managed to keep the Wizards (somewhat) interesting by promising to do the Dougie if the team sells out a game. Heck, he's even keeping the city budget afloat.

Huh? At a Washington Post conference featuring all of the local owners Tuesday, Leonsis said 10 percent of the city's revenues were generated in the area around the Verizon Center.

Downtown D.C. has been revitalized over the past decade, and that the Verizon Center and other major developments played a role in the turn-around. But is one-tenth of the money in the city’s coffers really coming from the area surrounding the sports arena?

Leonsis, who also owns the Capitals and made his fortune as a top executive at AOL, didn’t exactly define what area he was referring to and a spokesman for his company, Monumental Sports & Entertainment, never clarified his remarks and never sent us an ultimate source for Leonsis' claim. (We'll update this item if we hear back.)

The logical government source for the data didn’t know where it was. “The only taxes that can be determined by area are real estate taxes,” said David Umansky, a spokesman for the office of the chief financial officer. “I don’t want to say it’s made up, but we don’t know where they’re getting it.” Looking at property taxes wouldn’t give much of a picture either -- according to Umansky, they make up less than a third of the district’s revenue.

The District’s Downtown BID does know. In their 2009 State of Downtown report, the nonprofit (which is funded by business owners within its boundaries) said that 15 percent of the city’s tax revenue came from the area included in the BID -- about 2 percent of the District’s total land. Is that the “area surrounding the Verizon Center?” The BID’s territory stretches from Massachusetts Avenue NW to Constitution Avenue NW and from 16th Street NW to New Jersey Avenue NW, which seems too large.

Karyn LeBlanc, the communications director for the BID, also sent us an internal study it did estimating that in 2011, economic activity within seven blocks of the Verizon Center would generate $355 million in taxes. That comes out to only 7 percent of the District’s projected $5 billion in revenue for 2011.

Keep in mind, the Downtown BID exists to promote economic activity downtown, so they have incentive to make things look as shiny as possible. The reports are based on work done in-house and by two consulting firms -- Economic Research Associates and Aecom. That said, there’s no official government data to contradict them, either.

Ward 2 Councilmember Jack Evans, who represents the area that includes the Verizon Center and chairs the committee on finance and revenue, didn't have hard numbers, either, but said Leonsis' point held.

"The construction of the Verizon Center has produced a wealth of taxes for the city," Evans said. "I think he's not off-base in saying that."

There’s a second question here. How much did the Verizon Center have to do with any revival of downtown? The economic impact of stadiums is a much-contested topic. While downtown might be thriving, the area around Nationals Stadium has entered a much-hoped for Renaissance just yet. The general consensus among researchers seems to be that when coupled with a true urban renewal plan, a sports stadium can have a big, positive impact. (The Verizon Center's neighborhood has seen plenty of other development, including a new convention center near Mount Vernon Square.) If it's built solo, it often ends up just replacing other entertainment spending.

Evans -- who also wants to lure the Redskins back to the District -- said the Verizon Center stands as a counterpoint to studies indicating sports arenas don't spur economic development. Unlike office buildings or other types of development, the Verizon Center made a "living downtown" that has people coming and going on nights and weekends.

Let's sum up: There's no official data backing up or disputing Leonsis' statement. A larger area around the stadium generates 15 percent of the city's tax revenue, while a smaller one generates only 7 percent. And those numbers come from a group with an interest in promoting downtown business. Without clarity on what area he was referring to from Leonsis, we don't have much choice other than to admit we have Insufficient Evidence to Rule.

Insufficient Evidence To Rule
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  1. G in DC G in DC

    G DC

    Jan 12, 2011 - 09:26:37 PM

    There's no way to be certain, but I’d bet that areas adjacent to the Downtown BID, but within 7 blocks of the Verizon Center, would not have developed as they are without a thriving Chinatown nearby, which the Verizon Center anchors. Consider the Mt. Vernon neighborhood, especially the area north of Mass, east of the Convention Center, with new residential (City Vista, Yale, Madrigal, Sonata), existing and new apartments (Museum Square, Dumont), Safeway, Kushi, Busboys & Poets, etc. Most of that area was parking lots, and probably much still would be without a revitalized Chinatown. Sure, Chinatown would have would have gotten new retail and polished up its rough edges regardless, and some of those parking lots would have been used differently. But, the degree of development in Chinatown, plus secondary development in nearby areas would not have happened (or would have happened much more slowly) without the Verizon Center. So, we should thank Mr. Polin and Mr. Leonsis. Did the estimates include that adjacent area? I don’t know (I’d have to read the report). Am I a shill or the Verizon Center or its owner? No. But, I’m glad to have a sports venue inside the District and not out in the cut. People were displaced, however. Would we have more Chinese in Chinatown without the Verizon Center? Probably a marginal difference -- the migration of Chinese to the burbs likely preceded the Verizon Center. Would have a greater diversity of mixed-income residential in Chinatown without Verizon Center? I don't know. I’d guess it would have swung to either end of the economic scale, but I’m no expert. For full disclosure, I do live in the Mt. Vernon Neighborhood. I’m not un-biased about the Verizon Center’s effect (which, in this case is a good thing). I see pictures of Chinatown establishments front-and-center in adverts throughout the neighboring area. That's gotta say something.

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  2. Beltway Greg Beltway Greg

    Beltway Greg

    Jan 12, 2011 - 06:47:35 PM

    Insufficient evidence to rule? Let me help you here. 10%? It's probably much more than that if you consider all of the development that has resulted. Back in the 80s you couldn't have gotten mugged down there even if you taped $100 dollar bills to your behind. There was no there there. So take a look at the Portrait Gallery and all of the condos and the stores. 10%? "Which seems too large." The only reason why it's large is because of the Verizon Center. Just shut-up and say thank you to Mr. Pollin and Mr. Leonsis and please don't make Ted mad. He's from Lowell, Mass. and they don't play.

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    • krobillard krobillard

      Kevin Robillard

      Jan 14, 2011 - 03:25:20 PM

      Having grown up just outside Lowell, I am well aware that "they don't play." That said, I didn't feel there was enough evidence to prove conclusively that one-tenth of the city's revenue came from the area around the Verizon Center. It's certainly possible (and might even be likely), but because the city couldn't provide us with official data, it's ultimately very difficult to tell.

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