By David Nakamura
Washington Post Staff Writer
Thursday, March 2, 2006
A strategy offered by D.C. Mayor Anthony A. Williams to ensure that Major League Baseball will not have to pay for potential cost overruns on a new stadium drew critical and angry reactions from several D.C. Council members yesterday.
The Williams administration told baseball officials this week that $20 million in surplus tax revenue being raised to finance debt on construction bonds can be used to cover overruns if necessary. Williams (D) is trying to persuade baseball to endorse a $611 million stadium spending cap on city funds the council approved last month.
But council members said they did not intend for the tax money to be used as a safeguard against overruns because such a scenario would potentially raise the city's investment in the project above the cap.
"I don't think the intent was for cost overruns," said D.C. Council Chairman Linda W. Cropp (D).
Cropp said she intends to tell the mayor that she does not want the excess tax revenue pledged as an option to cover the overruns.
Council members Marion Barry (D-Ward 8) and Kwame R. Brown (D-At Large), who cast critical votes for a stadium lease agreement and the spending cap, criticized the mayor's approach.
"If there's one thing I said to the mayor, it's that I didn't want any shenanigans, no side deals like this," Barry said. "If he does this, this stadium is dead again. . . . We wanted a cap that was tight. Everyone was confident, so we went with it. If it's not tight, there will be rebellion."
Williams vehemently defended his position at his weekly news conference yesterday, saying the council's legislation expressly ensures that the tax money raised to pay stadium debt can be used for cost overruns.
"I'm not trying to wink and nod," Williams said. "We're talking about the legislation as stated."
Mayoral aides stressed that they are trying to assure MLB that money is available if necessary but do not expect to have to use the tax money for overruns.
The latest political debate over the stadium comes before the Monday deadline set by the council for baseball to endorse the spending cap. If MLB accepts the cap, stadium construction could begin, and baseball could select an ownership group for the Nationals this month. If MLB rejects the deal, the stadium dispute, which has dragged on for months, could enter binding arbitration.
The sticking point is who will pay for costs above $611 million. MLB is selling the Nationals for about $450 million, a sum predicated largely on a publicly financed stadium, and has made it clear it does not want the team owner to be stuck paying for overruns.
The city is funding the stadium through a gross receipts tax on local businesses, a utilities tax on businesses and federal buildings, a stadium concessions tax and the Nationals' annual rent payment. Mayoral aides told baseball officials that the city will collect about $20 million more in tax revenue over the next two years than is necessary to pay debts on the construction bonds.
Under the council's spending cap, all overruns must be paid by the Nationals' owner, the federal government or private sources. There is one exception. The legislation says, "District government non-General Fund funds may be used if required by the bond indenture to finance the Ballpark project."
That is the provision that mayoral aides said allows the excess tax money to be used to cover overruns. The administration has asked D.C. Attorney General Robert J. Spagnoletti to review the legislation and issue an opinion. A spokeswoman for Spagnoletti said yesterday that he has not completed his analysis.
The exception was added to the council's legislation to help the city persuade Wall Street bond raters to give the stadium project an investment-grade rating, city officials said. Bond raters want to be sure that if the stadium project exceeds the spending limit there is money to cover construction, said D.C. Chief Financial Officer Natwar M. Gandhi.
Council members said they agreed to leave that provision in the legislation to avoid complications on Wall Street. But they added that the intent of the spending cap was to force the mayor to find other entities, such as MLB, to pay for costs above $611 million. Excess tax revenue could then be used to pay off the bond debt early, freeing revenue for other city needs, members said.
"It had nothing to do with paying cost overruns," Brown said.
Barbara Lang, president of the D.C. Chamber of Commerce, said business owners would prefer that excess tax revenue be used to pay off the debt so that the tax can be lifted earlier than anticipated.
It is not clear what council members could do to stop the deal if Spagnoletti rules that the money can be used for overruns, and MLB endorses the spending cap by Monday. Barry suggested that the council could introduce an emergency disapproval resolution of the stadium lease at its legislative meeting Tuesday. Such a measure would need the support of nine of the council's 13 members for passage.
"People feel betrayed on both sides," Williams said of the council and MLB. "There's bad faith on both sides. And I think the only thing everybody agrees on is they don't like me."