Auditor says Events DC owes D.C. $45 million more in excess cash; the authority disputes the math

By Marcus Tillery

WASHINGTON — Events DC, the quasi-public authority that runs the Walter E. Washington Convention Center, owes the District about $45 million more in “excess cash” for fiscal 2025 than it paid, the Office of the D.C. Auditor said in a report dated Oct. 19. It is the second year in a row the auditor has reached that kind of conclusion. Events DC says its method is lawful and has been used for nearly two decades, and it has declined both of the auditor’s recommendations.

The dispute comes down to one formula in D.C. law. It decides how much of the authority’s tax-funded cash pile it has to send back to the city’s general fund each year, and how much it can keep. The D.C. Council will take up a bill on Oct. 28 that would write Events DC’s version of the formula into the code. The auditor’s office says that change would have “the practical effect of reducing to zero what is owed today.”

The Inquisitor reviewed the 22-page audit, Events DC’s written response included in it, the auditor’s July revenue sufficiency certification for fiscal 2027, and last year’s audit of fiscal 2024.

What the law requires

Events DC, legally the Washington Convention and Sports Authority, gets dedicated District taxes: an extra 4.45% on hotel room charges and 1% on restaurant meals, alcohol and rental cars, according to the sufficiency certification. Those taxes make up 69.5% of its projected revenue for fiscal 2027, the auditor found. The city’s chief financial officer projects $157.53 million of them that year.

D.C. Official Code § 10-1202.13 says that at the end of each fiscal year, the authority must send the District any cash left in its Convention Center Fund after it covers several items. Those items are current liabilities, debt service reserves, an operating reserve, a capital replacement reserve and any money set aside to retire debt early. The auditor’s report sums it up as cash plus investments minus current liabilities and reserves.

Events DC calculated that it owed $5.1 million for fiscal 2025 and transferred that amount. The auditor applied the statute to the authority’s own audited financial statements and bank records and got about $50.2 million, a difference of $45,042,160.

Where the numbers split

The two calculations differ on almost every line except the capital replacement reserve, where the auditor accepted Events DC’s figure. The auditor’s figure is higher because it counts less cash and investments but subtracts even smaller liabilities and reserves.

The biggest single gap is the operating reserve. On that line alone, the two methods differ by $40.9 million.

The five disputed points

The auditor lists five errors. Events DC answers each one in a point-by-point attachment to its Oct. 9 response, signed by President and CEO Angie M. Gates.

On the operating reserve, the auditor says the 2007 memorandum of understanding between the CFO’s office and the authority “incorrectly stated ‘budget’ instead of ‘expenditures,'” misquoting a 1998 Council resolution. It calls Events DC’s reading “contrary to the plain language of the statute.” On the debt service reserve, the auditor says the authority’s approach “effectively adds words that do not appear in the statute,” and it cites a 2016 D.C. Court of Appeals decision rejecting an agency’s statutory reading on similar grounds.

Events DC says the distinction between expenses and expenditures matters in accounting. It argues that using budgeted expenses, “as approved by Events DC’s Board of Directors and confirmed through the District’s budget process, is a reasonable approach to safeguard the resources needed to maintain operations.” On the sports division, the authority says leaving its costs out “would result in transferring funds to the District while leaving the Authority to seek additional budget support to fund the same operations.”

The outside accountants

Both sides point to independent review, but they mean different things by it. Events DC’s calculation was examined by its outside accounting firm, SB & Company LLC, and accepted. The auditor says that examination tested compliance only with the statute “as described in Note 1.” According to the auditor, that note was a set of stipulations and assumptions Events DC chose itself. The audit quotes the accountants’ report as saying their work “does not provide a legal determination” on compliance. It also says the firm told the auditor’s office during last year’s review that it “did not examine whether management had selected inputs that complied with the statute.”

Events DC’s letter says that after an error in earlier calculations was found in 2019, it recalculated excess cash for fiscal 2008 through 2018. It says those revised figures were reviewed by District financial officials and independently audited. Under its method, the letter says, Events DC has sent “in excess of $88.7 million” to the District from fiscal 2019 through fiscal 2025.

Two years of findings

This is the auditor’s second audit of the calculation. In October 2025, the office found that Events DC owed about $68.7 million more for fiscal 2024. Events DC later partly adopted one of that report’s recommendations and sent an extra $5.8 million, the new audit says.

The two shortfalls can’t simply be added together. The auditor calculated fiscal 2025 “in isolation,” using balances at the end of that year. The report says that if Events DC had already sent the full $86.4 million it calculated for fiscal 2024, “the excess cash amount due for FY 2025 would have been $0.” Put another way, much of the same cash would be counted in both years. The auditor’s office said in a news release that after last year’s finding, “the D.C. Council took no action to recover the funds.”

Plans to spend the reserves

The audit also notes that Events DC’s budget plans call for using “reserves” to cover deficits of $41.2 million in fiscal 2026 and $62.9 million in fiscal 2027. “In effect, this means Events DC plans to spend the excess cash rather than transferring funds back to the District,” the report says.

Those cushions are large. In its July certification, the auditor’s office found that Events DC began fiscal 2027 with $158.7 million in cash above its required minimum reserves. Its projected revenues and excess reserves should exceed expenses by about $113.3 million at the end of that year, the office said.

The certification also found that the Sports and Entertainment Division, which runs the RFK campus, CareFirst Arena and the non-military side of the D.C. Armory, brought in less revenue than budgeted in each of fiscal 2023, 2024 and 2025. For that reason the auditor said it was “unable to conclude” the division would hit its fiscal 2027 revenue target. It added that the shortfall would not materially affect the authority’s overall budget.

The bill

The legislation, B26-0843, the Events DC Excess Cash Calculation Clarification Amendment Act of 2026, was introduced Oct. 1 by Council member Anita Bonds (D-At Large). It was referred to the Committee on Executive Administration and Labor. According to a summary of the bill text, it would base the debt service reserve on the sum of each bond series’ maximum annual debt service, use budgeted operating and marketing expenses for the coming year, and exclude certain funds the authority manages for the District.

Those are two of the points the auditor disputes. The auditor’s release says the authority proposed the legislation and that it “would essentially codify the methodology Events DC has used in prior years.”

D.C. Auditor Kathy Patterson argued in the release that the choice belongs to elected officials. “If legislators believe what their counterparts believed in 1984, they will retain the excess cash repayment requirement,” she said. “If, as appears to be the case, they prefer Events DC to have and to spend that additional cash, they could simply remove the requirement from the Code. Changing one complicated calculation for another complicated calculation as the Events DC proposes does not seem prudent to me.”

Events DC wrote that it “remains willing to work with ODCA, the Office of the Chief Financial Officer, and the Council to resolve differing interpretations of the governing requirements prospectively.” It added that legislative clarification “may provide the most efficient means of resolving these issues.” On the auditor’s recommendation form, the authority checked “Do not Agree” for both recommendations and “No” when asked whether it would take corrective action.

The auditor’s office said in its reply that it had considered Events DC’s comments and made no changes. It said it is “the only entity that has conducted an independent audit of what is currently required by D.C. Code.”

What to watch

The Council hearing on B26-0843 is scheduled for Oct. 28, according to the auditor’s release. The auditor’s annual review of the fiscal 2026 calculation would follow next year. If the bill passes, the calculation it reviews would use the authority’s method.

The Inquisitor asked Events DC, the Office of the D.C. Auditor, Council member Bonds’ office, the Office of the Chief Financial Officer, Council Chairman Phil Mendelson’s office and the mayor’s office whether the District will seek the $45 million and how they view the bill. None had immediately responded. This story will be updated with any responses.

Photo: The Walter E. Washington Convention Center in November 2023. APK / Wikimedia Commons, CC BY 4.0.