Williams Digs Up More Stadium Cash
Wednesday, March 1, 2006
D.C. Mayor Anthony A. Williams (D) has told Major League Baseball officials that the city has identified $20 million to cover potential cost overruns for a new stadium, a proposal that could resolve the acrimonious standoff over the project.
But several D.C. Council members expressed concern yesterday that the plan would put the city's investment in the stadium over the $611 million spending cap the council approved last month.
The latest negotiations appear to be the final chance to resolve the standoff before Monday, the deadline set by the council for MLB to endorse the spending cap.
If baseball officials reject the cap, the stadium dispute could enter binding arbitration. That would cause a delay of as much as six months and open the possibility that the Washington Nationals could be moved elsewhere.
Baseball officials have made it clear that they do not want the Nationals' owner to have to pay for cost overruns for the stadium along the Anacostia River in Southeast. Over the past two weeks, the Williams administration has sought to assure MLB that another source of revenue is available.
Over the next two years, the District is projected to earn about $20 million in excess revenue from a gross-receipts tax on businesses, a utility tax on businesses and federal buildings and taxes from concessions at Robert F. Kennedy Memorial Stadium. Those taxes were implemented last year to pay off debt service on the construction bonds.
Williams aides have told baseball officials that revenue leftover after debt service can be used for overruns, if necessary, according to city government sources who spoke on condition of anonymity because the negotiations are ongoing.
"Every part of our financing plan squares with the letter and the intent of the council's legislation," said Vince Morris, a spokesman for Williams. "Nothing in our plan will impact the general fund or taxpayers. We are going to build the ballpark on time and at cost."
Morris stressed that the mayor did not expect cost overruns and that identifying the tax revenue was to give MLB security and peace of mind to sign off on the project.
Baseball officials said yesterday that they had not heard of Williams's plan.
"We do not know anything about this idea," MLB Executive Vice President John McHale Jr. said in an e-mail. "I cannot comment on the concept until we see and review a proposal."
However, it is unclear whether the council's spending cap legislation allows for the excess tax revenue to be used for cost overruns. D.C. Attorney General Robert J. Spagnoletti has been asked to review the legislation and issue an opinion on its intent. A spokeswoman said yesterday that Spagnoletti had not completed his review.
The council's legislation stipulates that cost overruns must be paid by the Nationals' owner, the federal government or private sources. But there is one exception. The legislation reads that "District government non-General Fund funds may be used if required by the bond indenture to finance the Ballpark project."
It is that clause, administration officials said, that allows the tax revenue to be used.
Several council members said yesterday that they were unaware of the mayor's plan until told of it by a Washington Post reporter. Some said that such a scenario would put the total public expenditure on the project above $611 million and show that the cost cap had little meaning.
"This makes a mockery of any council member who claimed that there was a firm cap," said Jim Graham (D-Ward 1), who voted against the cost legislation. "This is the mushiest cap imaginable. Here we go -- the next loophole we can drive the truck through."
Sharon Ambrose (D-Ward 6), a staunch stadium supporter who voted in favor of the spending cap, said it is not clear what the council intended. The four-page document was amended on the dais during debate that lasted until nearly 1 a.m. Feb. 8.
"It didn't come up as a coherent debate," Ambrose said. "I'm not entirely sure what a cap means. Does it mean you have a [stadium] structure that is three-fourths of the way built, but because we have a cap we stop and say, 'Whoa, there's no more money,' even though we have another pot [of tax revenue] earmarked for nothing except [paying off] the bond debt early?"
Some council members said that during the debate before approval of the cap, council member Marion Barry (D-Ward 8) tried to direct the excess tax revenue to a community benefit fund for schools and other social needs. That fund was promised by Williams as a benefit of building the stadium.
But Chairman Linda W. Cropp (D) argued with Barry and insisted on the final language that the mayor's office is now relying on, council members said. Two calls placed to Cropp's office were not returned yesterday.
Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission, said D.C. Chief Financial Officer Natwar M. Gandhi had insisted on the legislative language Cropp left in the bill. Gandhi said yesterday that he needed the wording for his bid to get an investment-grade rating on the construction bonds.
"We intend to fully comply with the council's directives in the legislation," Tuohey said.
Phil Mendelson (D-At Large), who voted against the legislation, said he supported a spending cap but told Cropp that the legislation left a major loophole. He said he had hoped that the cap would require MLB to pay for cost overruns.
"The cap was not ironclad," Mendelson said. "That's why I voted against it."