B25-1004 — Downtown Arena Revitalization Act of 2024

ENGROSSED ORIGINAL Law 5-93;

Official Code § 10-1101.01 et seq.), sections 4(2) (but only to the extent shown on plans the Mayor has approved pursuant to the Development and Financing Agreement), (3), (4), (5), and (6), 5(1), (2), (3) (but only to the extent the Mayor has otherwise approved plans pursuant to the Development and Financing Agreement), (4), and ENGROSSED ORIGINAL (5) (but only with respect to the requirement to submit a scale model), 7 (but only with respect to zoning laws and regulations), and 10 of the District of Columbia Public Space Utilization Act, approved October 17, 1968 (82 Stat.

Code §§ 10-1121.03(2) (but only to the extent shown on plans the Mayor has approved pursuant to the Development and Financing Agreement), (3), (4), (5), and (6), 10-1121.04(1), (2), (3) (but only to the extent the Mayor has 80 otherwise approved plans pursuant to the Development and Financing Agreement), (4) and (5) (but only with respect to the requirement to submit a scale model), 10-1121.06 (but only with respect to zoning laws and regulations), and 10-1121.09), and any other law, the Mayor may lease the airspace adjacent to Lot 47 in Square 455 and Lot 884 in Square 454, to DC Arena L.P., or its designee, on such terms as the Mayor deems appropriate, at no other rent or fee, for so long as the lease for the real property approved by section 2(a) of the Downtown Sports Arena Revitalization Act of 2024, as may be amended from time to time, remains in effect;

ENGROSSED ORIGINAL (b) Section 8 of the District of Columbia Public Space Utilization Act, effective October 17, 1968 (82 Stat.

“(34) The real property (and any improvements thereon) described as Lot 47 in Square 455 so long as the Land Disposition Agreement—Ground Lease, by and among the ENGROSSED ORIGINAL District of Columbia Redevelopment Land Agency, the District of Columbia, and DC Arena, L.P., dated as of December 29, 1995, and recorded with the Recorder of Deeds on January 5, 1996, as instrument number 9600001285, as may be amended from time to time, remains in effect;

“(c-2) This section shall not apply to the real property (and any improvements thereon) described as Lot 47 in Square 455 so long as the Land Disposition Agreement—Ground Lease, by and among the District of Columbia Redevelopment Land Agency, the District of Columbia, and DC Arena, L.P., dated as of December 29, 1995, and recorded with the Recorder of Deeds on January 5, 1996, as instrument number 9600001285, as may be amended from time to time, nor shall it apply to the real property (and any improvements thereon) described as Lot 47 in Square 455 or Lot 884 in Square 454 (or to any adjacent air space leased pursuant section 4(a) of the Downtown Sports Arena Revitalization Act of 2024) so long as the lease approved by section ENGROSSED ORIGINAL 2(a) of the Downtown Sports Arena Revitalization Act of 2024, as may be amended from time to time, remains in effect.”.

“(37) Deed with respect to the real property (and any improvements thereon) described as Lot 47 in Square 455 or Lot 884 in Square 454 (and any adjacent air space leased ENGROSSED ORIGINAL pursuant section 4(a) of the Downtown Sports Arena Revitalization Act of 2024), to the extent such deed conveys an interest between the District and DC Arena L.P., or its designee, pursuant to the lease or purchase and sale agreement approved by section 2(a) of the Downtown Sports Arena Revitalization Act of 2024, as may be amended from time to time, or a lease authorized by section 4(a) of the Downtown Sports Arena Revitalization Act of 2024.”.

If the Council does not approve or ENGROSSED ORIGINAL disapprove the proposed rules, by resolution, within the 45-day period, the rules shall be deemed approved.” in its place.

GO VERNMENT OF THE DISTRICT OF COLUMBIA Office of the Attorney General BRIAN L.

CHWALB ATTORNEY GENERAL Legal Counsel Division TO:

Tomás Talamante Director Office of Policy and Legislative Affairs FROM:

Megan D.

Browder Deputy Attorney General Legal Counsel Division DATE:

October 18, 2024 RE:

Legal Sufficiency Certification – Legal Sufficiency Review of Draft Legislation, the “Downtown Arena Revitalization Act of 2024”, the “Downtown Arena Revitalization Emergency Act of 2024”, and the “Downtown Arena Revitalization Emergency Declaration Resolution of 2024” (AE-24-391) This is to Certify that this Office has reviewed the above-referenced draft legislation and found each to be legally sufficient.

If you have any questions in this regard, please do not hesitate to call me at (202) 724-5524.

_________________________________ Megan D.

Browder Pennsylvania Avenue, N.W., Suite 409, Washington, D.C.

20004 Phone (202) 724-5524 Email:

megan.browder@dc.gov GOVERNMENT OF THE DISTRICT OF COLUMBIA OFFICE OF THE ATTORNEY GENERAL A TTORNEY G ENERAL B RIAN L.SCHWALB Commercial Division MEMORANDUM TO:

Megan Browder Deputy Attorney General Legal Counsel Division THROUGH:

David Fisher Deputy Attorney General FROM:

Lawrence Wolk (for Lawrence Wolk) Assistant Attorney General DATE:

October 18, 2024 SUBJECT:

Development and Financing Agreement, Amended and Restated Lease, and Agreement for the Purchase and Sale of Real Property (Improvements Only) by and between the District of Columbia and D.C Arena L.P., with respect to the Property located at 601 F Street, NW, commonly known as Capital One Arena (the 2024 Arena Transaction) _____________________________________________________________________________________ This is to Certify that the Commercial Division of the Office of the Attorney General has examined the following documents provided by the Office of the Deputy Mayor for Planning and Economic Development in connection with the 2024 Arena Transaction (Transaction Documents):

1.

Development and Financing Agreement between the District of Columbia and DC Arena L.P.

with Exhibits A - G annexed thereto (Council Version 10/17/24);

2.

Amended and Restated Lease by and between the District of Columbia and DC Arena L.P.

with Exhibits A – G-2 annexed thereto (Council Version 10/17/24);

and 3.

Agreement for the Purchase and Sale of Real Property (Improvements Only) between the District of Columbia and DC Arena L.P.

with Exhibits A – C annexed thereto (Council Version 10/10/24).

After a detailed examination of the Transaction Documents, we conclude they do not contravene or violate any known legal requirements, obligations or commitments of the District of Columbia government.

Accordingly, in their present form as provided to us, this Office finds the Transaction Documents to be legally sufficient.

This Office has not reviewed any transactional documentation other than the above Transaction Documents and provides no legal opinion about any transactional documentation other than the above Transaction Documents.

If you have any questions, please do not hesitate to call me at 202-724-5094.

Sixth Street, NW, Suite 9100, Washington, DC 20001 Tel.

(202) 724-5094 Government of the District of Columbia Office of the Chief Financial Officer Glen Lee Chief Financial Officer MEMORANDUM TO:

The Honorable Phil Mendelson Chairman, Council of the District of Columbia FROM:

Glen Lee Chief Financial Officer DATE:

October 11, 2024 SUBJECT:

Fiscal Impact Statement – Downtown Arena Revitalization Emergency Act of 2024 (and accompanying permanent version) REFERENCE:

Draft Bill as provided to the Office of Revenue Analysis on October 11, Conclusion Funds are sufficient in the fiscal year 2025 through fiscal year 2028 budget and financial plan to implement the bill.

There is $515 million in capital funding in the 2025-2030 Capital Improvements Plan to carry out this legislation and related agreements.

Background TheCapitalOneArena(theArena),locatedat7 St.andHStNW ,hoststheWashingtonWizards,the Washington Capitals, the Georgetown men’s basketball team, concerts, and other entertainment events.

The Arena is owned by D.C.

Arena L.P.

(DCALP).

Since 1994, DCALP has held a ground lease with the District of Columbia for the land on which the Arena was constructed.

In March 2024, an agreement in principle was reached between the Mayor and DCALP on a Development Financing Agreement that included a substantial construction and rehabilitation project for the Arena, District financial assistance, and changes to the existing ground lease.

The District financial assistance will support a construction project to expand the Arena, including adding seat options, modernizing the façade, and expanding visitor services.

The bill approves the following development documents:

the Development and Financing Agreement, the Agreement for the Purchaseand Sale of Real Property (Improvements Only), and the Amended and Restated Lease (the “Lease”).

As part of these agreements, the District will lease an 1Known for tax purposes as Lot 47 in Square 455.

Pennsylvania Avenue, NW, Suite 203, Washington, DC 20004 (202)727-2476 www.cfo.dc.gov The Honorable Phil Mendelson FIS:

“Downtown Arena Revitalization Emergency Act of 2024” (and accompanying permanent version), Draft bill as provided to the Office of Revenue Analysis on October 11, 2024 additional District-owned parcel to DCALP.

The agreements and bill also add air rights to the leased property,change the terms and rental paymentamounts ofthe existing ground lease,provide forthe District to purchase the Arena and lease it back to DCALP, and provide that certain District agencies provide regular services around the Arena.

Sale and lease of the Arena The agreementsinclude the saleoftheArenatotheDistrict of Columbiafor apurchase priceof$87.5 million.

The District will subsequently lease it back to DCALP through June 30, 2050, with the option ofupto5four-yearrenewalsafter.Therentscheduleincludesapro-ratedinitialpaymentplusyearly payments of between $1.5 million and $2.3 million per year over the term of the lease, with higher yearly amounts during the renewal period.

The Lease also includes a clause from the 1994 development agreement to continue to require an offset of rent if the District implements a sales tax increase applicable only at the Arena.

Expanding Arena property and abatement The agreements add to the Lease a lot consisting of the alley abutting the Arena with frontage on 6 th St NW.

The Lease also includes the existing Arena parcel.

The bill also provides for real estate and possessory interest tax exemptions for the existing Arena parcel and the additional parcel, and specifies that the transactions under the Purchase and Sale Agreement and Lease are exempt from deed recordation and transfer taxes.

The legislation also exempts the Arena and the underlying land frompossessoryinteresttax.Theagreementpermitstheairspacerightsaboveornexttotheexisting Arena property to be included in the Lease and extends the tax and possessory interest abatements to cover any air right parcels created for the renovation project.

District contribution TheagreementsincludeadirectfinancialcontributionfromtheDistrictofColumbiaof$427.5million over a three-year period to be used for the construction of Arena improvements.

The first allocation of $84.333 million shall occur as of the effective date of the agreement, the second allocation of $171.333 million by October 30, 2025, and the third of $171.333 million by October 30, 2026.

Requirements for operations and construction The agreements include modifications to the ground lease to establish some requirements of the Arena’s use, including requiring the Washington Wizards and the Capitals to play their home games at the Arena.

The agreement also limits DCALP from soliciting bids to move from the current Arena until 2045 (a “no-shop” provision).

TheagreementestablishestheminimumcontributionfromDCALPforthemodernizationbudgetand sets outtheprojecttimelines,budgetapprovalandoversight,andreimbursementfortherenovation.

The agreement requires that the construction project meet several standards, including abiding by Davis-Baconrequirements,meetingtheGreenBuildingAct,usingaprojectlaboragreement,entering into a First Source agreement with the District, and meeting Certified Business Enterprises (“CBE”) requirements.

2Known for tax purposes as Lot 884 in Square 454.

Page 2 of 4 The Honorable Phil Mendelson FIS:

“Downtown Arena Revitalization Emergency Act of 2024” (and accompanying permanent version), Draft bill as provided to the Office of Revenue Analysis on October 11, 2024 District services TheagreementsalsorequiretheDistricttoprovideservicestoassistwithsafety,security,andaccess to the Arena and minimize the impact on patrons, staff, residents, businesses, and commuters.

Specifically, the District will implement traffic signal timing, street closures, traffic management, additional police resources, pedestrian walkways, alternate access to public transit, and other services to facilitate access to the Arena on event days and improve security.

The District will also execute a plan for coordinated management of these additional District services before and on event days.

Existing TIF notes on the Arena The District issued a DC Arena L.P.

Tax Increment Financing (TIF) note for the Arena property in (established in statute as the Verizon Center sales tax revenue bonds).

At origination, $50 million in TIF notes were issued;

$6 million had a maturity date of 2027, and $44 million had a maturity date of 2047.

As of the end of fiscal year 2023, there was $34.6 million in principal outstanding on these bonds.

The interest on the notes is paid from a 4.25% tax on Arena tickets and merchandise sold at the Arena.

These TIF notes are also backed by the Downtown Tax Increment Financing (TIF)—the District will backstop these notes from incremental revenues from the downtown TIF area, if needed.

The agreements do not change the terms of these TIF notes.

Financial Plan Impact Funds are sufficient in the fiscal year 2025 through fiscal year 2028 budget and financial plan to implement the bill.

The 2025 through 2030 Capital Improvements Plan includes $515 million in capitalfundingtomeettheDistrict’sobligationsundertheagreementsfortheArenaacquisitionprice and the District’s contributions toward the renovation project.

th The existing ground lease is in its 28 year.

Under the terms of the existing lease, the annual rent paymentis $1.3millionfor each of theyears 2024,2025,and2026, and$1.5millionperyearstarting in 2027 (for the first 10-year renewal).

The current lease proceeds are received by the Office of the DeputyMayorforPlanningandEconomicDevelopment(DMPED)andtransferredtotheDepartment of Housing and Community Development (DHCD) as part of the repayment of the Community Development Block Grant loans.

Under the terms of the new lease, the annual rent payment will be $1.5 million each year throughout the financial plan period.

Thus, the District will receive a slightly higher payment from the new lease than from the prior lease ($200,000 a year for 2025 and 2026).

There is no fiscal impact from exempting the Arena and the additional District-owned parcel from real estate and possessory interesttaxes and the purchase andsaleand lease transactions from deed and recordation taxes.

The District does not receive real estate or possessory income tax payments from the Arena building or land, and the transactions contemplated under the agreement do not reflect ordinary development incorporated in the District’s revenue estimates.

3Active TIFs and PILOTs | ocfo (dc.gov) 4See page 119, ACFR_20240125_0001_(GRAPHS).pdf (dc.gov) 5Volume 5 FY2025 – 2030 Capital Improvements Plan.

Project no.

IBA 100073.

Chinatown Revitalization Fund.

Page 63-EB0.

Volume_5.pdf | Powered by Box Lease between the District of Columbia Redevelopment Land Agency and DC Arena L.P.

Recorder of Deeds.

Instrument number 9600001285.

Recorded 1/5/96;

Book Type:

Land.

Roll 1017 Frame 1133.

Page 3 of 4 The Honorable Phil Mendelson FIS:

“Downtown Arena Revitalization Emergency Act of 2024” (and accompanying permanent version), Draft bill as provided to the Office of Revenue Analysis on October 11, 2024 The District services referenced in the agreements—including the District Department of Transportation (DDOT) and Metropolitan Police Department (MPD) personnel and services as well as resources across several agencies—are included in each agency’s budget in the fiscal year 2025 through fiscal year 2028 budget and financial plan.

Page 4 of 4 GOVERNMENT OF THE DISTRICT OF COLUMBIA COUNCIL CONTRACT SUMMARY In support of the proposed Downtown Arena Revitalization Act of 2024, the following contract summary is provided:

A.

The contract number, proposed contractor, contract amount, unit and method of compensation, contract term, and type of contract Proposed Contractor:

DC Arena L.P.

(“DCALP”) Contract No.:

n/a Contract Amount:

$427,500,000 to renovate the Capital One Arena (the “Arena”) Unit and Method of Compensation:

Fixed cost for development and financing of the Arena Term of Contract:

Ongoing from date of execution Type of Contract:

Development and Financing Agreement B.

The goods or services to be provided, including a description of the economic impact of the proposed contract, the social impact of the proposed contract, the methods of delivering goods or services, and any significant program changes reflected in the proposed contract:

The downtown area of Washington, DC has experienced a period of stagnation following the COVID-19 pandemic, with retail spaces closing and fewer visitors coming to the area.

When Monumental Sports and Entertainment (“MSE”) considered relocating its professional sports teams, including the Washington Wizards and Washington Capitals, from the District, the District government acted quickly to offer assistance to keep MSE in DC and to upgrade the Arena that houses the teams.

Under the Development and Financing Agreement (“Development Agreement”) between the District and DCALP (an entity controlled by MSE) the District will provide funding to renovate the approximately 20,000-seat, one million square foot sports and entertainment arena currently known as Capital One Arena.

Under the Agreement for the Purchase and Sale of Real Property (“Purchase Agreement”), the District will purchase the existing Arena building for $87,500,000 (which will be reinvested into the project).

Additionally, pursuant to the Amended and Restated Lease Agreement (the “Lease”) the District will lease the land and the Arena back to DCALP until June 30, 2050, unless extended or otherwise terminated pursuant to the terms of the Lease.

The Development Agreement is for the District and DCALP to set forth the terms of renovating the Capital One Arena.

TheDistrict will fund thecontributionincrementallyviatranches from FY25-FY27.

DCALP has contributed funds and will contribute additional funds so that the total contribution by DCALP will equal at least $372,500,000 (including the reinvestment of the $87,500,000 purchase price) to the construction of the project and DCALP will be solely responsible for all cost overruns.

The Development Agreement also lays out the responsibilities of each party, the procurement and bid processes, the scope of work to be completed, project budget and estimated timeline.

DCALP shall obtain all relevant permits and approvals to commence construction on the project.

DCALP will also enter into CBE and First Source Agreements with the District and shall provide monthly written updates on the project to the District.

DCALP will need to require their contractors to follow the Apprenticeship Act and enter into a Project Labor Agreement.

Together, the Development Agreement, Purchase Agreement, and Lease for the Arena will serve as a pivotal catalyst for the transformation of the Capital One Arena and its surrounding environments.

The renovated Arena will again help revitalize a neighborhood, create quality new jobs for District residents, and strengthen a commitment to community and fan engagement for concerts and professional sports.

C.

The selection process, including the number of offerors, the evaluation criteria, and the evaluation results including price and technical components:

The contract was the result of a negotiation between the District of Columbia and MSE to keep MSE’s professional sports teams in the District and continue a partnership to build and revitalize the District’s downtown corridor.

D.

The background and qualifications of the proposed contractor including its organization, financial stability, personnel, and prior performance on contracts with the District of Columbia government:

DCALP is an entity controlled by MSE.

MSE has demonstrated strong financial stability and will be able to be a strong partner in the renovation and transformation of the Arena.

MSE is one of the largest integrated sports and entertainment companies in the country.

MSE owns, operates, and is affiliated with eight professional and amateur sports teams including the NHL’s Washington Capitals, NBA’s Washington Wizards, WNBA’s Washington Mystics, and NBA G League’s Capital City Go-Go.

In September 2002 MSE acquired a media network that holds exclusive local television rights to Capitals, Wizards and Mystics games.

The network was Page 2 of 4 rebranded as Monumental Sports Network and in early 2024, it opened the doors on a brand-new, state-of-the-art, digital-forward production studio adjacent to Capital One Arena.

MSE is also a partner in the Entertainment and Sports Arena, a sports and entertainment facility in Southeast D.C.

which houses the MedStar Health Performance Center, the current training facility for the Wizards, and a 4,000+-seat arena which serves as the home of the Mystics and Go-Go.

In March 2023, MSE cut the ribbon on District E Powered by Ticketmaster, a nearly 14,000-square-foot live-event theater offering a 365-day-a-year series of immersive experiences in esports, music, culinary excellence, event programming, and community events.

E.

Performance standards and the expected outcomes of the proposed contract:

The agreement will result in improvements to the Arena and surrounding environs that will generate economic activity and tourism and enhance the Chinatown/Gallery Place neighborhood.

F.

A certification that the proposed contract is within the appropriated budget authority for the agency for the fiscal year and is consistent with the financial plan and budget adopted in accordance with §§ 47-392.01 and 47-392.02:

The Office of the Chief Financial Officer has provided a fiscal impact statement, dated October 11, 2024.

G.

A certification that the proposed contract is legally sufficient and has been reviewed by the Office of the Attorney General, including whether the proposed contractor has any currently pending claims against the District:

The proposed contracts have been reviewed by the Office of the Attorney General and found to be legally sufficient, as reflected in a certification dated October 18, 2024.

H.

A certification that the proposed contractor is current with its District and federal taxes or has worked out and is current with a payment schedule approved by the District or federal government:

DCALP represents that it is duly organized, validly existing, and in good standing under the laws of the District of Columbia as part of the Purchase and Sale Agreement.

I.

The status of the proposed contractor as a certified local, small, or disadvantaged business enterprise:

The contractor is not a certified local, small, or disadvantaged business enterprises.

Page 3 of 4 J.

Other aspects of the proposed contract that the Mayor deems significant:

None.

K.

A statement indicating whether the proposed contractor is currently debarred from providing services to any governmental entity (federal, state, or municipal) the dates of the debarment, and the reasons for the debarment:

DCALP is not debarred from providing services to any governmental entity.

L.

Where the contract, if executed, will be made available online:

The Deputy Mayor for Planning and Economic Development will establish a webpage documenting the Capital One Arena transformation project.

The contract will be posted on the webpage.

Page 4 of 4 GOVERNMENT OF THE DISTRICT OF COLUMBIA COUNCIL CONTRACT SUMMARY In support of the proposed Downtown Arena Revitalization Act of 2024, the following contract summary is provided:

A.

The contract number, proposed contractor, contract amount, unit and method of compensation, contract term, and type of contract Proposed Contractor:

DC Arena L.P.

(“DCALP”) Contract No.:

n/a Contract Amount:

$87,500,000 for the District to purchase the Capital One Arena (the “Arena”) from DCALP Unit and Method of Compensation:

Fixed cost for purchase of arena Term of Contract:

Ongoing from date of execution Type of Contract:

Purchase and sale agreement B.

The goods or services to be provided, including a description of the economic impact of the proposed contract, the social impact of the proposed contract, the methods of delivering goods or services, and any significant program changes reflected in the proposed contract:

The downtown area of Washington, DC has experienced a period of stagnation following the COVID-19 pandemic, with retail spaces closing and fewer visitors coming to the area.

When Monumental Sports and Entertainment (“MSE”) considered relocating its professional sports teams, including the Washington Wizards and Washington Capitals, from the District, the District government acted quickly to offer assistance to keep MSE in DC and to upgrade the Arena that houses the teams.

Under the Agreement for the Purchase and Sale of Real Property (“Purchase Agreement”), the District will purchase the existing Arena building from DCALP (an entity controlled by MSE) for $87,500,000, such that the District will hold fee title to both the Arena building and the underlying land.

The District and DCALP will at the same time enter into a lease and development and financing agreement for additions and improvements to, and renovations of, the Arena.

Under the terms of the development and financing agreement, the $87,500,000 purchase price will be reinvested by DCALP into the project.

Together, these agreements will serve as a pivotal catalyst for the transformation of the Capital One Arena and its surrounding environments.

The renovated Arena will again help revitalize a neighborhood, create quality new jobs for District residents, and strengthen a commitment to community and fan engagement for concerts and professional sports.

C.

The selection process, including the number of offerors, the evaluation criteria, and the evaluation results including price and technical components:

The contract was the result of a negotiation between the District of Columbia and MSE to keep MSE’s professional sports teams in the District and continue a partnership to build and revitalize the District’s downtown corridor.

D.

The background and qualifications of the proposed contractor including its organization, financial stability, personnel, and prior performance on contracts with the District of Columbia government:

DCALP is an entity controlled by MSE.

MSE has demonstrated strong financial stability and will be able to be a strong partner in the renovation and transformation of Capital One Arena.

MSE is one of the largest integrated sports and entertainment companies in the country.

MSE owns, operates, and is affiliated with eight professional and amateur sports teams including the NHL’s Washington Capitals, NBA’s Washington Wizards, WNBA’s Washington Mystics, and NBA G League’s Capital City Go-Go.

In September 2002 MSE acquired a media network that holds exclusive local television rights to Capitals, Wizards and Mystics games.

The network was rebranded as Monumental Sports Network and in early 2024, it opened the doors on a brand-new, state-of-the-art, digital-forward production studio adjacent to Capital One Arena.

MSE is also a partner in the Entertainment and Sports Arena, a sports and entertainment facility in Southeast D.C.

which houses the MedStar Health Performance Center, the current training facility for the Wizards, and a 4,000+- seat arena which serves as the home of the Mystics and Go-Go.

In March 2023, MSE cut the ribbon on District E Powered by Ticketmaster, a nearly 14,000- square-foot live-event theater offering a 365-day-a-year series of immersive experiences in esports, music, culinary excellence, event programming, and community events.

E.

Performance standards and the expected outcomes of the proposed contract:

The agreement will result in improvements to the Capital One Arena and surrounding environs that will generate economic activity and tourism and enhance the Chinatown/Gallery Place neighborhood.

Page 2 of 3 F.

A certification that the proposed contract is within the appropriated budget authority for the agency for the fiscal year and is consistent with the financial plan and budget adopted in accordance with §§ 47-392.01 and 47-392.02:

The Office of the Chief Financial Officer has provided a fiscal impact statement, dated October 11, 2024.

G.

A certification that the proposed contract is legally sufficient and has been reviewed by the Office of the Attorney General, including whether the proposed contractor has any currently pending claims against the District:

The proposed contracts have been reviewed by the Office of the Attorney General and found to be legally sufficient, as reflected in a certification dated October 18, 2024.

H.

A certification that the proposed contractor is current with its District and federal taxes or has worked out and is current with a payment schedule approved by the District or federal government:

DCALP represents that it is duly organized, validly existing, and in good standing under the laws of the District of Columbia as part of the Purchase Agreement.

I.

The status of the proposed contractor as a certified local, small, or disadvantaged business enterprise:

The contractor is not a certified local, small, or disadvantaged business enterprises.

J.

Other aspects of the proposed contract that the Mayor deems significant:

None.

K.

A statement indicating whether the proposed contractor is currently debarred from providing services to any governmental entity (federal, state, or municipal) the dates of the debarment, and the reasons for the debarment:

DCALP is not debarred from providing services to any governmental entity.

L.

Where the contract, if executed, will be made available online:

The Deputy Mayor for Planning and Economic Development will establish a webpage documenting the Capital One Arena transformation project.

The contract will be posted on the webpage.

Page 3 of 3 COUNCIL VERSION 10/17/24 DEVELOPMENT AND FINANCING AGREEMENT between DISTRICT OF COLUMBIA and DC ARENA L.P.

Dated as of [_______ __, 2024] Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 TABLE OF CONTENTS Page ARTICLE I.

Definitions ................................................................2 1.1.

Definitions..............................................................2 1.2.

Use of Words .........................................................2 ARTICLE II.

Term ........................................................................2 2.1.

Conditions to Closing ............................................2 2.2.

Term.......................................................................3 ARTICLE III.

Representations and Warranties.............................3 3.1.

Representations and Warranties of DCALP..........3 3.2.

Representations and Warranties of the District .....5 3.3.

Disclaimer of Warranties.......................................6 3.4.

Determinations by the District;

Limitation of Funds...........6 ARTICLE IV.

Documentation.......................................................6 4.1.

DCALP Deliveries.................................................6 ARTICLE V.

Covenants Of Dcalp................................................7 5.1.

Minimum Developer Contribution and Use of Proceeds.....

7 5.2.

Corporate Existence and Properties.......................7 5.3.

Payment of Indebtedness and Taxes......................7 5.4.

Compliance with Laws ..........................................7 5.5.

Books and Records, Inspection and Audits ...........7 5.6.

Disclosure ..............................................................8 5.7.

Licenses..................................................................8 5.8.

Continued Operation..............................................8 5.9.

Compliance with ADA ..........................................8 5.10.

Anti-Discrimination...............................................9 5.11.

Litigation................................................................9 5.12.

No Prohibited Persons............................................9 ARTICLE VI.

Project Design and Disbursements........................9 6.1.

Project Budget;

Funding........................................9 6.2.

Project Program Statement ....................................10 6.3.

Project Plans and Specifications............................11 i Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 TABLE OF CONTENTS Page 6.4.

Project Construction Contract(s)............................15 6.5.

Permits and Approvals...........................................16 6.6.

Construction Consultant;

District Representative..16 6.7.

Preliminary Schedule;

Renovation Schedule;

Project Coordination Meetings;

Inspection and Monitoring Rights .........................17 6.8.

Change Orders to the Work...................................18 6.9.

Disbursement of Progress Payments......................20 6.10.

Bid Process.............................................................25 ARTICLE VII.

Construction of the Project...................................25 7.1.

Payment and Performance Bonds..........................25 7.2.

Conditions to Commencement of Construction.....25 7.3.

DCALP’s Obligations Regarding Construction of the Project...26 7.4.

Compliance with Applicable Laws, Land Use Approvals and Permits and Approvals...............................................................27 7.5.

Utilities...................................................................27 7.6.

Davis-Bacon Act....................................................27 7.7.

Green Building Act................................................27 7.8.

Apprenticeship Act ................................................27 7.9.

Project Labor Agreement.......................................27 7.10.

Utilization of the District Businesses.....................27 7.11.

Hiring of the District Residents.............................28 7.12.

Substantial Completion and Final Completion of Construction of the Project.......28 7.13.

Written Monthly Reports.......................................29 7.14.

Open Book Reporting............................................29 7.15.

Site Safety and Clean-Up.......................................30 ARTICLE VIII.

Insurance, Casualty and Condemnation..............30 8.1.

Insurance Requirements.........................................30 8.2.

Application of Insurance Proceeds ........................31 8.3.

Condemnation........................................................31 ARTICLE IX.

Events of Default;

Disputes;

Remedies.................32 9.1.

Events of Default ...................................................33 ii Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 TABLE OF CONTENTS Page 9.2.

Remedies for Events of Default by DCALP..........33 9.3.

Rights and Remedies Cumulative..........................34 9.4.

Remedies for Default by the District.....................34 9.5.

Mitigation...............................................................35 ARTICLE X.

Exculpation and Indemnity.....................................35 10.1.

Exculpation............................................................35 10.2.

Indemnification......................................................35 10.3.

Defense of Claims..................................................35 10.4.

Notification and Payment ......................................36 ARTICLE XI.

Assignment............................................................36 11.1.

Assignment ............................................................36 ARTICLE XII.

Termination for Reasons Other Than an Event of Default..............36 12.1.

Failure to Achieve Outside Performance Dates..............................36 ARTICLE XIII.

Governmental Limitations ..................................37 13.1.

Anti Deficiency Limitations ..................................37 ARTICLE XIV.

Miscellaneous .....................................................38 14.1.

Entire Agreement...................................................38 14.2.

Notices ...................................................................38 14.3.

Waiver....................................................................39 14.4.

Limitation of Rights...............................................39 14.5.

Effect of Granting or Failure To Grant Approvals or Consents...........39 not defined.

14.6.

Titles of Sections....................................................39 14.7.

Counterparts...........................................................39 14.8.

Governing Law ......................................................39 14.9.

Relationship of Parties...........................................39 14.10.

Confidentiality.......................................................40 14.11.

Dispute Resolution.................................................40 14.12.

Further Assurances.................................................41 14.13.

Severability............................................................41 14.14.

Joint Preparation....................................................41 iii Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 TABLE OF CONTENTS Page 14.15.

Incorporation of Exhibits.......................................41 14.16.

Survival..................................................................41 14.17.

Amendments and Supplements..............................41 14.18.

Waiver of Jury Trial...............................................41 14.19.

Venue;

Forum ........................................................42 14.20.

False Claims Provisions.........................................42 14.21.

Time of the Essence;

Standard of Performance......42 14.22.

Third Party Beneficiaries.......................................42 14.23.

Attorney’s Fees......................................................42 14.24.

District as Contracting Party..................................42 14.25.

Rules and Regulations............................................42 LIST OF SCHEDULES AND EXHIBITS Exhibit A - Definitions Exhibit B - CBE Agreement Exhibit C - Renovation Schedule Exhibit D - Phases of the Work Exhibit E - Form of Application for Payment Exhibit E-1 - Form of Lien Waiver Exhibit F - Insurance Requirements Exhibit G - Davis-Bacon and Related Acts, Provisions, Procedures And Wage Rates iv Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 DEVELOPMENT AND FINANCING AGREEMENT THIS DEVELOPMENT AND FINANCING AGREEMENT (this “Agreement”), dated as of [_______ __, 2024] (the “Effective Date”), is made between the DISTRICT OF COLUMBIA, a municipal corporation, with offices at 1350 Pennsylvania Avenue, N.W., The John A.

Wilson Building, Washington, DC 20004 (the “District”), and DC ARENA L.P., a District of Columbia limited partnership, with administrative offices at 601 F Street, N.W., Washington, DC 20004 (“DCALP”).

RECITALS A.

The District owns the approximately 20,000-seat, one million square foot sports and entertainment arena currently known as Capital One Arena (the “Capital One Arena”), located at the Site (as hereinafter defined), and more specifically described in that certain Amended and Restated Lease, dated as of the date hereof (the “Lease”), pursuant to which the District will lease the Site and the District Owned Improvements (as hereinafter defined) (collectively, the “Leased Premises”) to DCALP until June 30, 2050, unless extended or otherwise terminated pursuant to the terms of the Lease.

B.

On [__________], the Council enacted the [____________________], as amended (the “Act”), authorizing the execution of the Lease by District and approving this Agreement, which provides for the expenditure of up to Four Hundred Twenty-Seven Million Five Hundred Thousand and 00/100 US Dollars ($427,500,000.00) (the “District Contribution”) for the purpose of, among other things, financing improvements to the Capital One Arena, all as more fully described therein and herein.

C.

The Capital One Arena provides the District with significant economic, cultural, social and financial benefits.

D.

The District and DCALP desire to enter into this Agreement to set forth the terms of financing and developing additions and improvements to, and renovation and refurbishment of, the Capital One Arena (consisting of the additions, exterior improvements and renovations to, replacements for, and upgrades to, the Capital One Arena located on the Site and the Gallery Place Area (as hereinafter defined), all as identified on the Project Program Statement, as the same may be amended from time to time in accordance with the terms hereof, collectively, the “Project”).

E.

The Project will be designed and constructed in Phases (as hereinafter defined).

F.

The District has appropriated the funds for the District Contribution and proposes to fund the District Contribution incrementally over three fiscal years (each, an “Annual Funding Amount”), with $84,333,333 available as of the Effective Date (the “FY2025 Tranche”), $171,833,333, which will be available no later than October 30, 2025 (the “FY2026 Tranche”), and $171,333,334 which will be available no later than October 30, 2026 (the “FY2027 Tranche”), and District has no other obligation to provide additional funding.

G.

DCALP has expended funds (including Predevelopment Costs) and will expend additional funds so that the total contribution by DCALP will equal at least $372,500,000 to the Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 constructionoftheProject(the“MinimumDeveloperContribution”),andDCALPshallbesolely responsible for all Cost Overruns (as hereinafter defined).

In consideration of the mutual undertakings herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, DCALP and the District hereby agree as follows:

ARTICLE I.

DEFINITIONS 1.1.

Definitions.

Capitalized terms used in this Agreement shall have the meanings assigned such terms herein, including, without limitation, in Exhibit A attached hereto and made a part hereof.

The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement.

The word “includes” when used in this Agreement means “includes, without limitation,”and the word “including” means “including, but not limited to.” 1.2.

Use of Words.

Unless the context clearly indicates to the contrary, for all purposes of this Agreement, (a) words importing the singular number include the plural number and words importing the plural number include the singular number;

(b) words of the masculine gender includecorrelativewords ofthefeminineandneutergenders;(c)wordsimportingpersonsinclude any person;

(d) any reference to a particular Section shall be to such Section of this Agreement;

and (e) any reference to a particular Schedule or Exhibit shall be to such Schedule or Exhibit to this Agreement;

and to all sub Exhibits related thereto (e.g., references to Exhibit A shall include Exhibit A-1, Exhibit A-2, etc.).

No listing of specific instances, items or matters in any way limits the scope or generality of any language in this Agreement.

This Agreement shall not be construed more strictly against one Party than against the other, merely by virtue of the fact that it may have been prepared primarily by counsel for one of the Parties.

ARTICLE II.

TER M 2.1.

Conditions to Closing.

This Agreement shall be executed after parties deliver the following, or the following occurs, prior to or simultaneously with the Effective Date:

(a) Council Approval.

The Council shall have approved this Agreement, the Purchase Agreement and the Lease.

(b) League Approval.

(i) The NHL and the NBA shall have approved this Agreement, the Purchase Agreement and the Lease.

(ii) The NHL, with respect to the Capitals’ team use agreement, and the NBA, with respect to the Wizards’ team use agreement, shall have approved the Licenses.

Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 (c) Project Budget.

The Parties shall have mutually approved in writing an initial project budget setting forth the funds available to complete the Project as more fully described in Section 6.1(b) (as amended from time to time in accordance with the terms of Section 6.1(a), the “Project Budget”).

The Project Budget shall specify the amount that DCALP has paid toward Costs of the Project prior to the Effective Date (the “Predevelopment Costs”).

(d) Concept Design.

The Parties shall have mutually approved in writing the Concept Design for the Project.

The Parties acknowledge that the District’s approval of such Concept Design is solely to the extent such design is within the District Review Scope.

(e) Project Program Statement.

The Parties shall have mutually approved in writing an initial project program statement for the Project (as amended from time to time in accordance with the terms of this Agreement, the “Project Program Statement”).

(f) Gallery Place Area.

DCALP shall have entered into a lease agreement with the fee owner of Gallery Place, whereby DCALP has secured a leasehold interest in the Gallery Place Area and the approvals required thereunder to complete the Gallery Place Portion of the Project in accordance with the terms and conditions of this Agreement.

(g) Execution and Delivery of Documents.

(i) Each Party shall have executed and delivered, or caused to be delivered, the Lease.

(ii) Each Party shall have entered into the Purchase Agreement, and the transaction contemplated thereby shall have closed in accordance with its terms.

(iii) DCALP shall have delivered, or caused to be delivered, to the District (A) copies of all organizational documents of DCALP, (B) certificates of good standing evidencing that DCALP is in good standing and authorized to transact business in the District of Columbia, (C) the DCALP Opinion and (D) the Team Opinions.

2.2.

Term.

Other than the obligations, if any, of the District or DCALP, as the case may be, that expressly survive termination of this Agreement, this Agreement shall automatically terminate and be of no further force and effect on the earlier of (i) the date on which Final Completion of the Project is achieved and the District makes the Final Payment, and (ii) the termination of this Agreement by any Party as permitted hereunder.

Upon the termination of this Agreement, the Parties shall each execute such documents as may be reasonably required to evidence such termination.

The operation of the Capital One Arena and the Site shall be governed by the terms and conditions of the Lease.

ARTICLE III.

R EPRESENTATIONS AND WARRANTIES 3.1.

Representations and Warranties of DCALP.

DCALP represents and warrants to the District (i) as of the Effective Date, and (ii) upon each Application for Payment, the following:

Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 (a) DCALP is a limited partnership duly created and validly existing pursuant to the laws of the District of Columbia and is qualified to do business in the District of Columbia.

True, correct and complete copies of the organizational documents of DCALP have been delivered to the District on or before the Effective Date and, after the Effective Date, any amendments to such organizational documents have been provided to the District.

(b) DCALP has full right, power, and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder.

(c) This Agreement has been duly executed and delivered by DCALP and, when duly executed and delivered by the District, shall constitute a legal, valid, and binding obligation of DCALP enforceable against DCALP in accordance with its terms.

(d) The execution, delivery, and performance of this Agreement does not violate any of the terms, conditions, or provisions of (i) DCALP’s organizational documents, (ii) any judgment, order, injunction, decree, regulation, or ruling of any court or other Governmental Authority, or any Applicable Law to which DCALP is subject, or (iii) any agreement or contract to which DCALP is a party or is otherwise subject.

(e) This Agreement and DCALP’s other undertakings pursuant to this Agreement are and will be used for the purpose of developing the Project, and not for speculation in land holding or any other purpose.

(f) No action, consent, or approval of, or registration or filing with or other action by, any Governmental Authority or other Person is or will be required in connection with the execution and delivery by DCALP of this Agreement or the assumption and performance by DCALP of its obligations hereunder, other than the issuance of the Permits and Approvals.

(g) Neither DCALP nor any of its members, partners or shareholders, or the constituent members of any of its members, are the subject debtor under any federal, state, or local bankruptcy or insolvency proceeding, or any other proceeding for dissolution, liquidation, or winding up of its assets.

(h) Neither DCALP nor any member, partner, shareholder or Affiliate of DCALP is a Prohibited Person.

(i) There is no litigation, arbitration, administrative proceeding, or other similar proceeding pending or, to DCALP’s knowledge, threatened in writing against DCALP or its partners or members which, if decided adversely to DCALP or its partners or members:

(i) would impair DCALP’s ability to enter into and perform its obligations under this Agreement;

(ii) would materially adversely affect the financial condition or operations of DCALP or its partners or members;

or (iii) threaten the legal existence of DCALP.

(j) DCALP represents that it has taken steps reasonably necessary to ascertain the nature and location of the Work, and that it has investigated and satisfied itself as to the general and local conditions which are applicable to the Work including, but not limited to, the following:

(a) conditions bearing on transportation, disposal, handling and storage of materials;

(b) the availability of labor, water, power and access to the Site and the Gallery Place Area;

(c) normal Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 weather conditions;

(d) observable physical conditions at the Site and the Gallery Place Area;

(e) the surface and sub-surface conditions currently known to DCALP to exist in the area in which the Site and the Gallery Place Area are located;

and (f) the equipment and facilities needed prior to and during the performance of the Work.

(k) DCALP is in material compliance with all of the terms and provisions set forth in this Agreement on its part to be observed or performed.

(l) DCALP is in material compliance with all of the terms and provisions set forth in the Lease on its part to be observed or performed.

(m) DCALP will secure, or has secured, all funds necessary to pay for all Costs of the Project (other than the amounts to be funded from the District Contribution in accordance with the Project Budget), no later than the date eighteen (18) months after the Effective Date.

3.2.

Representations and Warranties oftheDistrict.TheDistrict represents and warrants to DCALP, as of the Effective Date, the following:

(a) The District is a governmental entity and has all requisite right, power, and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder.

(b) The District has full power and authority to execute and deliver this Agreement and to perform all of its obligations under this Agreement.

No agreement, instrument or law by which the District or any of its assets are bound, prohibit the District from entering into, or performing its obligations to be performed under, this Agreement and each document, agreement and instrument executed and to be executed by the District in connection herewith, and all transactions contemplated hereby and thereby.

The District needs no consents, authorizations, approvals or other actions which have not been duly obtained, and is not required to give notices or make filings with any Governmental Authority, regulatory body or other person in connection with their execution and delivery of this Agreement or any other agreement, document or instrument executed and delivered by theDistrict inconnectionherewithwhichhave not beenduly given or filed.

The execution and delivery of this Agreement by the District has been duly and validly authorized by all necessary action on behalf of the District.

This Agreement and all other agreements, documents and instruments executed and delivered by the District in connection herewith are, and each other agreement, document or instrument to be executed and delivered by the District in connection herewith when executed and delivered on behalf of the District will be, valid and binding obligations of the District.

(c) The execution, delivery and performance of this Agreement and each agreement, document and instrument executed and delivered and to be executed and delivered by the District in connection herewith do not and will not violate or result in a violation of, contravene or conflict with, or constitute a default under, (i) any agreement, document or instrument to which the District is a party, or (ii) any law, statute, ordinance or regulation applicable to the District.

(d) There is no litigation, arbitration, administrative proceeding, or other similar proceeding pending or, to the District’s knowledge, threatened in writing against the DistrictinvolvingtheSiteorthat,ifdecidedadverselytotheDistrict,(i)wouldimpairtheDistrict’s Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 ability to perform its obligations under this Agreement;

or (ii) would materially adversely affect the financial condition or operations of the District.

3.3.

Disclaimer of Warranties.

The District makes no warranty or representation, express or implied, as to the title, value, design, condition, merchantability or fitness for a particular purpose or fitness for use of the Project or any portion thereof or any other warranty with respect thereto.

In no event shall the District or DCALP be liable for any incidental, indirect, punitive, special orconsequential damages inconnectionwithorarisingout of(i)this Agreement, (ii) the Project, or (iii) the existence, furnishing, functioning or use of the Project or any item or products or services provided for in this Agreement.

3.4.

Determinations by the District;

Limitation of Funds.

The Parties acknowledge that the District has made or will make its determinations as to issuance of bonds, notes or other obligations in reliance on information supplied in writing by DCALP concerning the Project and on DCALP’s compliance with the provisions of this Agreement.

No funding will be available for the Project without an available appropriation by the District.

ARTICLE IV.

DOCUMENTATION 4.1.

DCALP Deliveries.

Prior to or simultaneously with the Effective Date, DCALP shall deliver to the District the following:

(a) a Certificate of Authority, issued by the District Department of Licensing and Consumer Protection, that DCALP is qualified to do business in the District;

(b) an opinion of counsel for DCALP opining that DCALP has been duly organized, is validly existing and is good standing in the District, and that DCALP’s execution and delivery of this Agreement and the Lease are duly authorized and that this Agreement and the Lease are the valid and binding obligations of DCALP, enforceable in accordance with their respective terms (the “DCALP Opinion”);

(c) evidence that each of the Washington Wizards professional basketball team (the “Wizards”) and the Washington Capitals professional hockey team (the “Capitals”) have entered into team use agreements to play at the Capital One Arena until a date not earlier than [______________] (collectively, the “Licenses”);

(d) evidence of the approval of (i) the National Basketball Association (the “NBA”), and (ii) the National Hockey League (the “NHL”), with respect to this Agreement and the Licenses (collectively, the “League Approvals”);

(e) opinions of counsel for each of the Persons holding the franchise for the Wizards and the Capitals opining that suchPerson’s respectiveexecutionanddeliveryofthe Lease is duly authorized and that such Lease contains the valid and binding obligations of such Persons, respectively, enforceable in accordance with its terms (collectively, the “Team Opinions”);

and (f) a Certificate of “Clean Hands” for DCALP and the Contractors from the Office of Tax and Revenue.

Capital One Arena – Development and Financing Agreement 4876-2835-8842.27 ARTICLE V.

COVENANTS OF DCALP DCALP covenants and agrees that until this Agreement terminates or is terminated pursuant to the terms of Article IX hereof, unless the District shall otherwise consent in writing, DCALP shall: