A June 3 Metro article incorrectly identified Natwar M. Gandhi. Gandhi is the District's chief financial officer.
Cropp Still Hopeful of Private Financing
Friday, June 3, 2005
D.C. Council Chairman Linda W. Cropp said yesterday that she is still seeking private money for a baseball stadium, adding that she will drop the cause if no "significant" plan is found soon.
"It's not over yet," she said. "We're still waiting for some information. But unless private financing shows significant savings, I don't know if we need to do it."
Cropp (D) pushed vehemently for private financing last fall, casting the decisive vote when the council approved a $535 million stadium financing package that required Mayor Anthony A. Williams (D) to seek at least $140 million in private money.
Although eight companies submitted plans, only two were certified by Natwar M. Gandhi, the city's chief executive office. Later, asked by the council to recommend one of the options, Gandhi settled on a plan by Deutsche Bank that would have provided the city a $246 million payment. Gandhi liked that method because it would reduce the city's borrowing to $313 million in publicly financed bonds.
But Cropp and other council members have not supported that plan. In return for the payment, Deutsche Bank would receive the revenue stream from taxes on ballpark concessions. If that tax stream failed to reach $18 million a year, the city would have to make up the difference.
Instead, Cropp has favored a plan from a group of investors, represented by Richard A. Gross and Fred Cooke, that has offered to build the stadium and lease it back to the city. The investors would pay for the construction and write off the depreciation on their federal taxes.
Gandhi did not certify the plan, noting that the federal government could close the tax loophole. The group also plans to build a parking garage and use the parking revenue to help fund its proposal.
Cooke said yesterday that his group has made significant changes to the plan, including purchasing insurance that would help the city pay for the stadium if there were financing problems.
"We continue to talk with the CFO and his people and council staff, and hopefully this can be resolved in the near term and our proposal can move forward," Cooke said.
In recent meetings, Cropp has asked Gandhi, Gross and Cooke to provide more information about the plan. Mary Ann Young, a spokeswoman for Gandhi, said the chief financial officer stands by his initial evaluation of the Cooke-Gross plan.
Cropp said she hopes to decide whether to push that proposal or even the Deutsche Bank plan in the next couple of weeks. Any recommendation, she said, would be reviewed by the Committee on Finance and Revenue, chaired by Jack Evans (D-Ward 2), before being considered by the full council. Cropp intends to schedule two more legislative meetings before the council's July 15 recess.
If no private money is found, the stadium will be funded through a combination of a gross receipts tax on large businesses, a utility tax on businesses and federal buildings, an annual rent payment by the Washington Nationals and the concessions tax.
Cropp said she would be comfortable with the public financing plan if it turns out that "the savings are such to the District that it's more cost-effective and beneficial to taxpayers."
She noted that as a result of the push to reduce the public investment in the stadium, the gross receipts tax was lowered significantly last fall from the mayor's initial plan. And Major League Baseball agreed to drop a requirement that the city pay significant damages if the opening of the stadium, scheduled for March 2008, is delayed by a year or two.
"I had no idea how this would turn out," Cropp said. "I wanted to do the right thing, and I still believe I did the right thing."