Developers Offer $70 Million for SE Land Rights

Developers have offered to pay the District $70 million for the rights to build on land adjacent to a new baseball stadium, money that city leaders said would help cover potential cost overruns on the project.

The pledge was made in a letter this afternoon from Stephen Goldsmith, chairman of the Anacostia Waterfront Corporation, to Mayor Anthony A. Williams (D) and D.C. Council Chairman Linda W. Cropp (D). The letter was included in a larger package of documents submitted to the council that is intended to convince members that the city will be able to cover cost overruns without dipping into the city's general fund.

The council is sharply divided over a stadium lease deal with Major League Baseball that is critical for the project to move forward. Many members have expressed serious concerns over the rising cost of the project, whose price has risen from $535 million to $667 million.

Goldsmith and Williams went into a closed-door meeting with the council shortly after 1 p.m.

The Anacostia Waterfront Corporation was established by Williams to oversee development of the waterfront near the ballpark, near South Capitol Street and the Navy Yard in Southeast Washington.

Also included in the package to the council was a cap on stadium construction costs of $320 million. The cap was contained in a "guaranteed maximum price" contract between the city and the three construction companies that will build the ballpark -- Clark Construction Group, Hunt Construction Group and Smoot Construction.

The contract transfers the control of the project from the city to the construction companies, but also transfers the risk. The companies agreed to a guaranteed price of $320 million for the materials and labor. The price includes a $20 million payment from Major League Baseball, which the league promised in December.

If the companies fail to complete the stadium by March 1, 2008, their fees will be reduced by $100,000 per day, up to a maximum penalty of $5 million, according to the documents submitted to the council.

The documents also include a cap of $68 million for so-call "soft construction costs," including fees to architects and consultants.

In his letter, Goldsmith said developers have pledged to pay for the rights to develop on land within the 20 acres needed for the stadium project that is not taken up by the ballpark structure. Of the $70 million, $55 million will go to the waterfront corporation and $15 million will go to MLB.

The waterfront corporation has chosen four developers to oversee construction of a ballpark entertainment district just beyond the stadium site. Two of those companies, Forest City and Western Development, signed a letter stating they will pay $70 million for the three open parcels on the ballpark site. Two parcels are just north of the stadium abutting N Street SE and one is on the south side, between South Capitol Street and Potomac Avenue SE.

With the money, the corporation will pay for upgrades to nearby roads and an underground parking garage. The corporation also pledged to pay for cost overruns related to the city's acquisition of 14 acres for the ballpark and potential environmental remediation, as well as to help with other potential overruns related to construction.

Goldsmith's package stated that the corporation expected to take in millions more dollars from a special taxing district on new businesses to the area. Another special tax district farther from the stadium will raise money for a community benefits fund promised by Williams.

The council had also expected to receive a construction contract today. The contract, between the D.C. Sports and Entertainment Commission and the three construction companies set to build the stadium, was to include a special "guaranteed maximum price" contract that would cap ballpark construction costs at $320 million -- including a $20 million payment from MLB.