DC DC-OAG-1994-10-28-Opinion-July-2014-Preconstruction-Cost-S 1994-10-28

Could the District tap the Convention Center Fund, the Starplex Fund, or the Rainy Day Fund in 1995 to pay consultants studying whether to build a new convention center and a new MCI-style sports arena?

Short answer: Yes. The Corporation Counsel concluded that feasibility and preconstruction studies were a necessary expense of constructing those facilities, and that all three funding sources, when combined with the FY 1995 Appropriations Act, supported paying for the studies. The Rainy Day Fund could front the cost, with later self-cancelling reimbursement from dedicated tax revenues once Congress approved them.

Disclaimer: This is an official DC Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed DC attorney for advice on your specific situation.

Plain-English summary

In late 1994 the District was deep into planning two flagship projects: a replacement convention center (the building that became the Walter E. Washington Convention Center) and a downtown sports arena (the project that became MCI Center, now Capital One Arena). Construction was years away, but the District was already paying consultants to run feasibility studies. Could the District legally pay for those preconstruction studies out of the FY 1995 Appropriations Act under the Convention Center Fund, the Starplex Fund, or the Rainy Day Fund?

The Corporation Counsel said yes on all three. The reasoning came in three parts. First, the Washington Convention Center Authority Act of 1994 expressly authorized the new Authority Fund to pay "preconstruction costs, other expenses necessary or incident to determining the feasibility of constructing the New Convention Center," and required the Authority to reimburse the District for any preconstruction costs the District government had borne. Second, the Starplex Fund could pay all expenses incurred by the Armory Board in exercising powers granted by the 1948 Armory Board Act, and the new Sports Commission Fund (created by D.C. Law 10-152) sat in the same chain. Third, even setting aside the specific fund language, federal appropriations law lets an existing agency appropriation cover preliminary work for a new statutory program if the new duties are "sufficiently related" to the appropriation's original purpose.

The opinion also blessed the proposed accounting maneuver. Because Congress had not yet approved use of dedicated arena and convention-center tax revenues "without appropriation," the District could initially charge preconstruction expenses against the Rainy Day Fund, then later move the entries to the Arena and Convention Center Funds once Congress signed off. That swap left no net General Fund expenditure: just two self-cancelling book entries.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The statutory framework has been substantially restructured since 1994: D.C. Law 10-188 has been amended several times, the Sports Commission was folded into Events DC alongside the Convention Center Authority, and the federal financial-control overlay (FRMA) has expired.

Historical background

The 1948 Armory Board Act gave the Board responsibility for the DC Armory and for "major athletic events, conventions, concerts, and such other activities as may be in the interest of the District of Columbia." Receipts went into the Starplex Fund, named for the original RFK Stadium complex. Decades later, the Armory Board ran out of room, and a generation of city leaders wanted both a modern convention center to replace the cramped 1983 building at Mt. Vernon Square and a downtown arena to anchor what would become Gallery Place.

The legal puzzle in 1994 was sequencing. Congress had not yet enacted dedicated tax revenue for either project, but the District wanted to spend money on consultants now. The Mayor proposed running the costs through the Rainy Day Fund as "mandatory unavoidable expenditures," with both Boards committing to reimburse once dedicated revenues started flowing. The Corporation Counsel signed off, with the caveat that the Council had to first allocate the Rainy Day money by resolution and that each Board had to commit to repay the Rainy Day Fund.

What this meant at the time for project sponsors

The Convention Center Authority and the Armory Board could move directly to consultant procurement without waiting for separate dedicated appropriations. The Rainy Day Fund served as an interim source, and the Authority's statutory reimbursement obligation under D.C. Code § 9-705(f) covered the back end.

What this meant for the Council

The opinion confirmed that allocating Rainy Day funds for preconstruction work was within the Council's "mandatory unavoidable expenditures" power, especially when paired with a written reimbursement commitment that prevented any net General Fund draw. It also confirmed the Council could condition Rainy Day allocations on those repayment commitments.

What this meant for federal appropriations doctrine

The opinion is a textbook walk through the GAO Comptroller General's "necessary expense" line. It collected the leading rulings (15 Comp. Gen. 167; 46 Comp. Gen. 604; B-195007 (1980)) and applied them to a state-level budget situation. That analytic move (federal appropriations decisions read as persuasive authority for the District's own budget law) shows up repeatedly in later DC opinions involving fund availability.

Common questions

Q: What was the Rainy Day Fund in 1994?
A: A $22,508,000 reserve in the FY 1995 Appropriations Act for "mandatory unavoidable expenditures within one or several of the various appropriation headings of this Act," allocated by the Mayor with Council approval by resolution.

Q: Why bother with the Rainy Day Fund instead of just charging the Convention Center Fund directly?
A: At the time, Congress had not yet approved use of the dedicated convention-center and arena tax revenues "without appropriation." Until that happened, those funds did not have the practical liquidity to pay consultant invoices. The Rainy Day Fund was the bridge.

Q: What were the "self-cancelling transactions" the opinion describes?
A: A bookkeeping move. The District first records the consultant payment against the Rainy Day Fund. Once Congress approves dedicated-revenue spending, the District reverses that entry and re-records the same expense against the Arena or Convention Center Fund. Net effect on the General Fund: zero.

Q: Could the District charge purely federal grants for the same work?
A: The opinion did not need to reach that question, but the Comptroller General's "necessary expense" framework would have applied the same way to a federal grant (the work has to bear a sufficient relationship to the grant's purposes).

Citations

Statutes
- FY 1995 Appropriations Act, Pub. L. No. 103-334 (Sept. 30, 1994)
- Washington Convention Center Management Act of 1979, D.C. Law 3-36
- Washington Convention Center Authority Act of 1994, D.C. Law 10-188
- DC Armory Board Act, 62 Stat. 339, ch. 418 (1948), D.C. Code §§ 2-301, 2-307
- Omnibus Sports Consolidation Act of 1994, D.C. Law 10-152
- Arena Tax Amendment Act of 1994, D.C. Law 10-189

Comptroller General decisions
- 15 Comp. Gen. 167 (1935)
- 46 Comp. Gen. 604 (1967)
- B-195007 (July 15, 1980)

Source

License

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Original opinion text

•

.Memorandum

TO:

Ellen
Chief

FROM:

Vanessa Ru
Corporatio

Government of the District of Columbia

Office: Corporation Counsel
prepared by: LCD:KLC:TFB:lf:pw
(AL-94-462)
Date: October 28, 1994
opinion of the corporation Counsel
RE: May the District pay preconstruct ion costs
for a new convention center and a new sports
arena from the FY 1995 Appropriations Act?

•

,This is in reply to your request for my legal ,opinion as'to
whether or not the District may pay for studies of the
feasibility of constructing a new convention center and a new
sports arena from FY 1995 appropriations under the headings
"Washington Convention Center Fund," "starplex Fund," and "Rainy
Day Fund." The short answer is yes. My ,opinion is based on an
analysis of the FY 1995 Appropriations Act, the statutes
establishing the funds in question, more recent statutes
establishing successor funds, and the principles of
appropriations-law.
Fiscal Year 1995 Appropriations Act
The District of Columbia Appropriations Act, 1995, Pub. L.
No. 103-334, approved September 30, 1994, appropriates
$12,850,000 for the Washington Convention Center Fund, and for
the Starplex Fund "an amount necessary for the expenses incurred
by the Armory Board in the exercise of its power granted by An
Act to establish a District of Columbia Armory Board •.. and the
District of Columbia stadium Act of 1957 . . . . n The
Appropriations Act also establishes a "Rainy Day Fund" of
$22,508,000 for "mandatory unavoidable expenditures within one or
several of the various appropriation headings of this Act to be
allocated to the budgets for 'personal services and nonpersonal
services as requested by the Mayor and approved by the
Counci 1. . . . "
Washington Convention center Fund

•

The Washington Convention Center Management Act of 1979,
D.C. Law 3-36, effective November 3, 1979, D.C. Code § 9-601 et
seg. (1989), established a Washington convention Center Board
with the duty to "develop policies for the management,
maintenance and operation of the convention center" and the
authority to "enter into contracts to achieve its purposes."

85-P·1048

•

section 4, D.C. Code § 9-603.
Section 6 of the act, D.C. Code §
9-605, established the Washington Convention Center Fund, into
which the Board was to deposit all revenues and from which it was
to pay "all expenses necessary for the operation and management
of the convention center."
The Washington Convention Center Authority Act of 1994, D.C.
Law 10-188, effective September 28, 1994, D.C. Code § 9-701 et
seq. (1995 supp.), abolishes the Washington Convention Center
Fund and transfers its assets and liabilities to a new Washington
Convention center Authority Fund into which dedicated revenues
are to be deposited and from which are to be paid the expenses
incurred by the new Board of the Washington convention center
Authority. Section 208, D.C. Code § 9-709 (l995 Supp.). Until
the new Board is in place, its duties are to discharged on an
interim basis by the old Convention center Board. section
217{b), D.C. Code § 9-718.
The Board of the Washington Convention center Authority is
authorized to construct and operate a new Convention Center.
section 202{b), D.C. Code § 9-703. The expenses which the Board
is authorized to pay from the Authority Fund are "all expenses
necessary for debt service, reserve funds, repair, maintenance,
issuance costs, and preconstruct ion costs, other expenses
necessary or incident to determining the feasibility of
constructing the New Convention Center and all other costs of
operating and managing the Authority." section 208(C), D.C. Code
§ 9-709{c).
The Board is directed specifically to reimburse "any
and all reasonable, necessary, and verified preconstruct ion costs
that are borne by the District government." section 204{f), D.C.
Code § 9-705{f).
starplex Fund
Section 1 of an Act to establish a District of Columbia
Armory Board, 62 Stat. 339, ch. 418 (1948), D.C. Code § 2-301
(1994), directed the Armory Board to operate and maintain the
Armory in order to provide facilities for the D.C. National Guard
"and, secondarily, to provide suitable facilities for major
athletic events, conventions, concerts, and such other activities
as may be in the interest of the District of Columbia." Section
8 of this Act, as amended, D.C. Code § 2-307, established the
Starplex Fund, into which the Armory Board was to deposit its
receipts and from which it is to pay "all expenses incurred by
the Armory Board in the exercise of the powers granted" by the
Act.

•

The Omnibus sports Consolidation Act of 1994, D.C. Law 10152, effective August 23, 1994, D.C. Code § 2-4001 et seq. (1995
Supp.), creates a new Sports commission Fund, which is to receive
dedicated revenues pursuant to the Arena Tax Amendment Act of
1994, D.C. Law 10-189, effective September 28, 1994. There are

•

in the absence of additional appropriations
(assuming in either case the absence of
contrary congressional intent).
The rule is that existing agency appropriations
which generally cover the type of expenditures
involved are available to defray the expenses
of new or additional duties imposed by proper
legal authority. The test of availability
is whether the duties imposed by the new law
bear a sufficient relationship to the purposes
for which the previously-enacted appropriation
was made so as to justify the use of that
appropriation for the new duties.
For example, in the earliest published decision
cited for the rule, the Comptroller General held
that the Securities and Exchange Commission could
use its general operating appropriation for fiscal
year 1936 to perform additional
duties imposed
on it by the later-enacted Public utility Holding
company Act of 1935. 15 compo Gen. 167 (1935).

•

Similarly, the Interior Department could use its
1979 "Departmental Management" appropriation to begin
performing duties imposed by the Public utilities
Regulatory. Policies Act of 1978, and to provide
reimbursable support costs for the Endangered Species
Committee and Review Board created by the Endangered
species Act Amendments of 1978. Both statutes were
enacted after Interior's 1979 appropriation.
B-195007,
July 15, 1980.
A related question is the extent to which an agency
may use current appropriations for preliminary
administrative expenses in preparation for
implementing a new law, prior to the receipt of
sUbstantive appropriations for the new program.
Again, the appropriation is available provided it
is sufficiently broad to embrace expenditures of
the type contemplated. Thus, the National Science
Foundation could use its fiscal year 1967
appropriations for preliminary expenses of
implementing the National Sea Grant College and
Program Act of 1966, enacted after the appropriation,
since the purposes of the new act were basically
similar to the purposes of the appropriation.
46
Compo Gen. 604 (1967).
The preliminary tasks in
that case included such things as development of
policies and plans, issuance of internal instructions,
and the establishment of organizational units to
administer the new program.

•

Mayor and the Council determine' that preconstruct ion cos ts
incurred by the Convention Center Board and th e Armory Boa rd in
disch a rging their inte rim statuto ry responsibil it i es t o co nstruct
new facilities are "mandatory unavoidable expenditures." The
Mayor and the Council may also condition such an allocation on an
agreement by the two Boards to reimburse the Rainy Day Fund as
dedicated revenues are received. As noted supra, each Board has
the authority to expend such dedicated revenues to cover
preconstruct ion costs. 2 To the extent that each allocation is
repaid during Fiscal Year 1995, and the expenditures are recorded
against the Washington Convention center Fund or the Starplex
Fund, or their successors, I am of the opinion that such an
allocation would not constitute the obligation of any General
Fund appropriation. Rather, in each case, there would be no net
expenditure by the General Fund -- only two self-cancelling
transactions. The foregoing opinions form the legal basis for
the accounting steps described by the Mayor in her letter to
Chairman Clarke, dated October 24, 1994:
As to the question of budget authority, expenditures
for the arena and convention center pre-development
costs will initially be counted against the Rainy
Day Fund appropriation. However, the Rainy
Day Fund appropriation authority can be restored
fully, when the Congress approves the use of the
dedicated tax revenues for the arena and convention
center "wil:.hout appropriation" or enacts specific
appropriations for those purposes. The District
could then adjust its books to record the obligations
and expenditures initially made to the Rainy Day
Fund directly against the Arena and Convention
Center Funds . This action would restore the Rainy
Day Fund budget authority, leaving it without any
obligations or expenditures recorded against
it.
VR

I See council Committee of the Whole Report,
on Bill 10-557,
the "Fiscal Year 1995 Budget Request Act," dated March 22, 1994:
"For rare instances of extrodinary and unanticipated need, the
committee has established a $22,508[,000J rainy-day fund to be
accessed by the Mayor only with approval of the Council [by]
resolution" (emphasis added).

•

The Convention Center Board even has the statutory duty to
reimburse the Rainy Day Fund for bearing preconstruct ion costs .
See p.2 supra.
However, this statutory duty is surplusage where
either the Convention Center Board or the Armory Board assumes a
contractual duty to reimburse the Rainy Day Fund.
2