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Private Financing Deals Offered for Stadium

Proposals Would Rely on Parking Revenue, Tax Write-Offs and Development of Nearby Land

By David Nakamura
Washington Post Staff Writer
Wednesday, January 19, 2005; Page B01

Eight groups submitted offers of private financing for a baseball stadium to the District government yesterday, along with nonrefundable $10,000 deposits, meeting a deadline imposed by city officials.

Among the proposals were a developer's offer to pay for much of the $530 million project in return for the right to build a mixed-use town center on adjacent land; a plan that would give the city $100 million in exchange for revenue from a special parking district; and one that would allow private investors to build the ballpark and use it as a tax write-off.

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The plans will be examined by the city's chief financial officer, Natwar M. Gandhi, who has until March 15 to determine whether any of them is feasible. He will report his findings to Mayor Anthony A. Williams (D), who will forward a recommendation to the D.C. Council. The $10,000 fee, which will be used by Gandhi to pay for consultants, also was intended to discourage less serious entrepreneurs from sending in proposals, government sources said.

The council, at the insistence of Chairman Linda W. Cropp (D), approved stadium financing legislation last month mandating that half the project be funded with private money. Major League Baseball officials said that District officials were free to pursue private money, but they convinced Cropp to remove a clause in the legislation that said the project would die if no private financing were found.

"My office will carefully review the plans, and will consult with outside financial advisors to determine the financial feasibility and cost to the District of each plan," Gandhi wrote in a letter to Williams and Cropp yesterday.

The financing plan approved by the council allows District officials to issue nearly $550 million in bonds. If enough private money is found, the bonds could be paid off without a gross receipts tax on city businesses.

A spokesman for Gandhi declined to identify the groups that submitted plans or discuss details.

But developer Herbert S. Miller, the Cleveland-based Gates Group and BW Realty Advisors, a finance company run by Richard A. Gross, said yesterday that they had submitted proposals.

Miller said his plan would allow the city to reduce its investment significantly. He envisions building the ballpark as part of a larger, mixed-use complex that encompasses the 21 acres for the stadium project as well as 12 acres to the north.

Under this proposal, Miller would pay for building the ballpark and an underground parking structure with 5,500 spaces, as well as infrastructure upgrades to nearby streets and underground water pipes.

In exchange, he would own the land outside the ballpark and would try to lure major retail shops and restaurants. A conference center and hotel also would be built on the property.

This plan would allow the city to do away with the gross receipts tax that is projected to raise about $14 million a year to pay off the stadium bonds, Miller said. A utility tax on businesses and federal buildings, which would raise $11 million, still would be needed.

"You get great community benefits, you don't get the [gross receipts tax] and you get a town center," Miller said.

The Gates Group has proposed to give the city $100 million up front. In return, the District would establish a special parking district on streets surrounding the stadium and give Gates Group investors a cut of the revenue from parking fees for more than 20 years.

The plan from BW Realty proposes that the city buy the land for the stadium and pay for infrastructure upgrades; the group's private investors would pay for the ballpark construction. The investors would own the stadium for at least 20 years and write off depreciation on their taxes before turning over the ballpark to the city.

The plans from the Gates Group and BW Realty had been disclosed previously.

John Ross, a top adviser to Gandhi, said last week that all the proposals being made to the city generally fell into those three categories, providing private financing through parking revenue, development rights or tax-sheltered investment.

Mayoral advisers have worked with some of the groups over the past few months. One administration official, who spoke on the condition he not be named because the process is ongoing, said: "A lot of people bandy about ideas, but until we sit and churn through the numbers, it's hard to say which will work. It's that old saying: Show me the money."


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