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Baseball Questions Stadium Cost Cap
Deal 'Seriously Disrupted,' Says Letter to City

By David Nakamura and Thomas Heath
Washington Post Staff Writers
Saturday, February 11, 2006

Major League Baseball President Robert A. DuPuy told District officials yesterday that a stadium spending cap adopted by the D.C. Council has "seriously disrupted" the previously negotiated ballpark agreement, but he pledged that baseball officials will continue talking with the city.

In a one-page letter to Mayor Anthony A. Williams (D) and Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission, DuPuy said baseball officials are reviewing the spending cap approved early Wednesday. The cap limits city investment in the project along the Anacostia River in Southeast Washington to $611 million.

"It clearly contains conditions, restrictions and new provisions which go well beyond our previous agreements and raises a number of questions," DuPuy wrote. "We want to make sure that the kind of ballpark we agreed upon will be built."

Already, there are signs that the cap could compromise the design of the complex. The council's legislation leaves the city about $34 million short of the cost of an underground parking garage, which D.C. and baseball officials have said is crucial to creating a lucrative entertainment district.

The latest development raises questions about whether baseball officials will endorse the spending cap or seek to negotiate changes. DuPuy added in his letter that MLB wants to see analysis from the District's chief financial officer and the D.C. attorney general before making a decision on the council's cap. D.C. finance chief Natwar M. Gandhi is conducting a review.

On Wednesday, the council also approved a stadium lease agreement with MLB contingent upon it accepting the city's spending limit.

Under the council's legislation, cost overruns, except those related to acquiring land, must be paid by the Washington Nationals' owner, the federal government or other private entities.

Mayoral spokesman Vince Morris said DuPuy's letter does not represent bad news for the administration. "It shows MLB is just as keen to press ahead with the ballpark as we are," he said. "So far as we can tell, the late-night revisions made by the council do not jeopardize the deal and mostly reaffirm our existing plans."

But baseball sources said a contingent of MLB officials -- led by Chicago White Sox owner Jerry Reinsdorf, chairman of the relocation committee -- was leaning toward taking the city to binding arbitration. Under that scenario, baseball officials would seek to force the city to abide by the original stadium agreement, under which the District is responsible for all cost overruns.

DuPuy was taking a more moderate position, hoping to negotiate a final agreement with the city, said the baseball sources, who spoke on condition of anonymity because the deliberations are ongoing. DuPuy and Reinsdorf could not be reached to comment.

Williams has said that land adjacent to the stadium should be used for a mixed-use entertainment district, featuring retail businesses, restaurants, residential units and office space.

On Feb. 3, Williams offered the council a plan under which the city would sell development rights for land adjacent to the stadium. Under one provision, the money would be used to build an underground garage.

But under the council's legislation, that revenue is now earmarked for cost overruns related to the city's purchase of stadium land. If anything remains, it must go into a Community Benefit Fund, the council's bill states.

The community fund was promised by Williams, who said the city will tax new businesses near the ballpark to help fund libraries, schools and other social needs. The city would get less money from the sale of development rights if an above-ground parking structure was built.

The council's spending cap includes $21 million for a 1,225-space, surface-level parking structure. Officials have estimated that building underground parking for the same number of vehicles would cost $55 million.

"We will need to look at other avenues to pay for parking," council Chairman Linda W. Cropp (D) said yesterday. "Underground parking is a better approach. We should use above-ground for development. It's a much better use of space."

The council's emergency legislation reads: "Any excess revenues derived from development rights that are not used for cost overruns for land acquisition and environmental remediation shall be deposited into the Community Benefit Fund."

That provision was added by Marion Barry (D-Ward 8) early Wednesday, just after midnight and moments before the council voted to approve the document. Barry could not be reached to comment.

Ed Lazere, executive director of the D.C. Fiscal Policy Institute, a think tank, has opposed the stadium. Yesterday, he said, "The direction they seem to be going appears to suggest the stadium cost estimate is already over the $611 million cap by council."

Jack Evans (D-Ward 2), a staunch stadium supporter, said the council's frantic negotiations on the deal, with amendments coming on the dais late after a long day, left it unclear whether the council had made a reasoned analysis before blocking the use of development money for underground parking.

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