Summary: The District of Columbia has proposed building a sports arena to spur economic development in the city's downtown. The proposal to build the arena is in the early stages of development. The District will need more information on the project before precise cost and benefit projections can be made. The most recent arena proposal suggests that the project should be able to generate enough revenue to cover known expenses; however, several unanswered questions could significantly affect the project. The arena's construction costs are very tentative--the project does not yet have a formal feasibility study, an environmental impact study, or an architectural and engineering design. Current cost projections also do not include needed infrastructure changes and total land costs. Also unclear are the costs to the District for police, who would be needed for traffic control and security in the area, and the specific relationships between the operating entities and the District. For example, it is unclear what impact that sustained losses by the arena would have on the District. The arena would be financed through revenue bonds backed by specific District taxes. The District's high debt level makes the use of general obligation bonds to finance this project unlikely. The District has outlined the next steps that will need to be taken to answer the various questions. One key step will be authorizing contracts for various studies. These studies will better define the project and allow the District to specifically assess the project's costs and benefits.
