Council To Revisit Stadium Financing

By David Nakamura and Thomas Heath
Washington Post Staff Writers
Saturday, October 15, 2005

The carefully crafted agreement to finance a new baseball stadium is headed back to the D.C. Council, an unexpected development that could reopen the debate over the controversial home for the Washington Nationals.

City officials who negotiated the publicly financed project tried to avert another review by the council. But Natwar M. Gandhi, the city's chief financial officer, said Wall Street bond raters notified him that they will not give the city an investment-grade rating until the legislation is changed to correct several technical problems. An investment rating would ensure the city a lower interest rate and reduce its payments.

Gandhi's request for amendments gives the council's baseball opponents another opportunity to alter the financing and even the location of the stadium.

Major League Baseball, which is in the process of selling the Nationals, objected to any substantive changes in the agreement and emphasized that the deal for a stadium along the Anacostia waterfront has been signed.

"We have a contract that we expect to be honored," Major League Baseball President Robert A. DuPuy said yesterday in an e-mail to The Washington Post. "Everyone experienced what a terrific thing for the community the Nationals presence and play were this year, and I am confident no one would want to jeopardize that."

Gandhi said he will give the amendments to council Chairman Linda W. Cropp (D) on Monday. The District needs to have a financing agreement in place by early December to meet its timetable of issuing bonds by Dec. 31, Gandhi said. But the proposed amendments could threaten that timetable.

"If this enables debate about where to put the stadium and brings it back to the forefront, that is very problematic," said council member Jack Evans (D-Ward 2), who voted for the original deal and is head of the council's Committee on Finance and Revenue. "It would be very hard to get seven votes to keep the stadium at the Southeast waterfront."

Some members of the council -- which approved the controversial stadium financing by a 7 to 6 vote in December -- remain unhappy with the level of public funding for the $535 million project. And three new members who oppose public funding joined the council in January, replacing members who voted in favor of the stadium package.

Some government officials fear that once the technical changes are introduced, council members might propose other amendments that would reduce the public investment in the project by asking baseball officials for more money or by building the ballpark at the site of Robert F. Kennedy Memorial Stadium.

Kwame R. Brown (D-At Large), who joined the council after the stadium deal had been approved, said he would seek to reopen the debate if given an opportunity.

"If we're looking at amendments, maybe we need to look at other things," Brown said. "Baseball's great; I love baseball. I'm not interested in holding up a project that would cost millions to D.C. taxpayers down the road. But I am interes ted if there's a way to reduce the amount of public financing. I'm all for that."

The news that the council might get involved in the stadium financing debate again comes just as Major League Baseball appears to be narrowing a list of bidders for the Washington Nationals. Two Washington-based groups, along with Indianapolis media mogul Jeff Smulyan, have emerged as favorites among the eight groups trying to buy the team, officials said yesterday.

The bidding groups have been informally polled by baseball officials about their willingness to buy the team if a stadium is built near RFK Stadium, rather than near South Capitol Street and the Navy Yard along the Anacostia River, according to sources familiar with the process who asked not to be named because of the sensitive nature of the negotiations. Two groups contacted by The Post said they would still offer to pay $450 million for the team if the ballpark is constructed on another site.

Mayor Anthony A. Williams (D) was in China yesterday on a business trip, but his aides said they are moving forward with construction plans at the waterfront location. City Administrator Robert C. Bobb said on a WAMU radio show yesterday that the District struck its first agreement to purchase property from one of the 23 owners of 14 acres of land at the stadium site. If necessary, the city will go to court this month to seize the rest of the property through eminent domain, officials said.

"We're still on course," mayoral spokesman Vince Morris said. "Everybody knew there'd be hiccups. This is pretty small; we're not too worried. The [technical changes] are very minor."

But the uncertainty surrounding the council's intentions and the land acquisition process has led D.C. Sports and Entertainment Commission Chief Executive Allen Y. Lew to ask his staff to determine the cost and feasibility of building a ballpark near RFK, said government sources familiar with the deliberations, who spoke only on condition of anonymity.

Lew's study was described by officials as a precautionary measure, in case city officials ask questions about the RFK location. Commission Chairman Mark H. Tuohey said he does not foresee any holdups with the plan to build along the waterfront.

Cropp said she is aware changes must be made to the ballpark financing legislation but added she does not know enough details to predict what her colleagues might do.

The three changes to the financing legislation center on the gross receipts tax on city businesses, a utilities tax on businesses and federal buildings, and a special district that will be created to tax new businesses near the ballpark, Gandhi said.

The gross receipts tax must be reduced from a total of $26 million a year to $14 million because changes the council made were improperly stated in the final version of the legislation.

Changes the council made this week in the way utility taxes are assessed must be incorporated into the ballpark financing legislation. And money from part of the new business taxing district was mistakenly pledged both to stadium construction and to a community benefits package, Gandhi said.

"These are technical changes," Gandhi said. "This was council's intent -- to make sure we have enough tax to take care of the debt service. . . . We aren't changing anything substantially."

But David A. Catania (I-At Large), who has opposed public funding and voted against the stadium agreement last year, said financial officials are "asking for it" if they bring amendments before the council.

"If you reopen this entirely," Catania said, "you're opening a Pandora's box."


© 2005 The Washington Post Company