Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
Legislators in Maryland, Virginia, and the District of Columbia have teamed up to form an interstate compact that would bar any public dollars from financing the construction of a new Washington Redskins stadium.
The three-way agreement aims to ward off likely requests for a Redskins funding deal, a part of the burgeoning battle over public financing of sports stadiums.
However, the interstate compact faces an uphill legislative journey in all three jurisdictions and can only be enforced if all three legislatures approve it. The Virginia House Subcommittee on General Government and Capital Outlay voted unanimously Feb. 7 to lay the measure on the table, and the District of Columbia has yet to refer its bill to a hearing.
The proposed compact comes at a time when bids for Amazon.com Inc.'s second headquarters have dominated the national discourse about how much taxpayer spending is too much. Economists and stadium experts hope that the three-way measure will be a tipping point in city and state funding wars to win over companies and sports teams—which often come at taxpayers’ expense.
During a Maryland legislative hearing Feb. 6, Delegate David Moon (D) urged lawmakers to consider the price tag of a stadium alongside other initiatives the state is planning, including the state’s bid for HQ2.
“We have a billion dollar a year deficit each year. I don’t even know how we have the money for this, and also including Amazon, hospitals, Pimlico,” he said.
Per media reports, the team plans to have a new 60,000 seat stadium ready by the time the lease on the Redskins’ current home, FedEx Field in Landover, Md., expires in 2027.
The interstate compact would prohibit Maryland ( H.B. 229), Virginia ( H.B. 876), and the District of Columbia ( B22-0095) from providing any public financing or public incentives toward the construction of a new Redskins stadium.
Unless “otherwise available to all development projects or business entities located in” each jurisdiction, no public incentives could be provided for stadium construction, according to each bill.
Additionally, the proposed legislation would bar each jurisdiction from using public funds for the maintenance of facilities and for any public infrastructure required for a new stadium. They could not lease or donate land to the Redskins.
The legislators are joining forces in what is viewed as an experimental legislative effort to ensure that no state in the greater-D.C. area is strong-armed into a stadium deal.
“The really interesting thing about the Redskins stadium is that because it is a geographically anchored position, it seems plausible that we would be able to get jurisdictions to agree not to give money to lure the team from one place to another,” Moon told Bloomberg Tax.
“It’s a little bit of an experiment to give jurisdictions the tools to equip themselves to counteract the race to the bottom,” he said.
Stadium deals are notorious for inciting bidding wars among localities, Victor Matheson, sports economist and professor at the College of the Holy Cross, told Bloomberg Tax.
“Any company that has this single prize can so easily manipulate folks against one another, and one of the ways you prevent that is you prevent people from all competing against one another,” Matheson said.
While movement on the bills has been slow—and potentially stalled in Virginia—legislators have touted the bipartisan support across state lines.
Democratic Delegate Moon and Republican Delegate Trent Kittleman initially proposed their legislation in 2017, as did District of Columbia Councilmember David Grosso (I). Virginia Delegate Michael Webert (R) introduced his bill in January 2018 after the proposal missed Virginia’s filing deadline for 2017.
“It’s got bipartisan support from some of the most libertarian minded of the Republican caucus to quite a few Democrats that have voiced their concern as well,” Webert said about the bill’s support in the Virginia House. “So we’ll see what happens.”
“We love our Redskins, but we are not going to pay for your stadium,” he added.
Lawmakers over in Landover are closely watching the Redskins’ next move in fear that the city may be left holding the bag on an abandoned field, Moon said during the Feb. 6 Maryland legislative hearing.
“Many of my colleagues are concerned about all the asphalt in Landover. We shouldn’t be paying them to exacerbate that scenario,” he said.
The proposed legislation is targeting a future move, but it’s also reacting to the Redskins’ expensive past.
Constructed in 1997, the state of Maryland provided more than $70 million towards FedEx Field’s total construction costs of $250 million.
Richmond, Va., which is home to the Redskins’ summer training camp, is locked into a deal that requires the city to fork over $500,000 annually to offset the travel and lodging costs associated with the team’s out-of-state practices. On top of that, Richmond’s economic development authority is still making payments toward a $10 million loan for the 2013 construction of the training camp facility.
City officials who brokered the original deal at the time believed the Redskins’ presence would spur economic development in the city.
“It hasn’t been as profitable as we would like to believe for this kind of thing,” Webert said.
The rise of the interstate compact comes as Virginia, Maryland, and Washington have been named among the 20 finalists in the Amazon HQ2 bidding process.
“All of those jurisdictions are being very secretive about their bills, and they are willing to give a lot of money,” said Richard Auxier, research associate at the Urban-Brookings Tax Policy Center.
While at first glance a stadium deal and a bid for a fortune 500 company seem only tangentially related, both are similar at the root.
“States are constantly making economic development deals with big companies,” Auxier said. “And if you strip away the fandom and the absurdity of sports, that is all stadium deals are—another economic development deal.”
The interstate compact is a step in the right direction, said Matheson, as legislators in all three jurisdictions are viewing the Redskins as a private business entity bent on finding a good deal—and not just a glitzy sports team. “I think this is a pretty good signal that these states are presenting this united front that don’t even try to do this because you are not going to play us against one another,” he said.
To contact the reporter on this story: Victoria Graham in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan C. Tuck at email@example.com
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)