D.C. Exempt on Stadium Overruns
Tuesday, March 7, 2006
D.C. Mayor Anthony A. Williams signed a lease agreement last night with Major League Baseball for a new ballpark for the Washington Nationals, and the city's chief financial officer examined the deal and is ready to "move forward" with financing for the project.
In a letter to the D.C. Council, Chief Financial Officer Natwar M. Gandhi certified that the deal struck over the past few days between the mayor, the D.C. Sports and Entertainment Commission and baseball officials includes a legal "acknowledgement" of the council's mandate to cap public spending on the project at $611 million.
Although baseball officials have not agreed to cover costs above that amount, Gandhi said documents submitted for his review make clear that "the Team and the Commission have agreed that the Cost Overruns, if any, shall be paid solely and only by sources identified" in emergency legislation the council passed a month ago.
Those sources include the team, the federal government and developers or other private funds, as well as any excess tax revenue collected to pay for the stadium, Gandhi wrote. However, excess tax revenue may be used only with the council's approval.
Gandhi's findings appear to erase the last major doubts council members said they had about the deal and to clear the way for the city to sell nearly $535 million in stadium bonds, which could take place by early May.
No additional council action is needed to seal the lease agreement. The council is scheduled to vote today on legislation to reaffirm the spending cap as well as a separate contract with Clark Construction to build the stadium for a maximum guaranteed price. Council Chairman Linda W. Cropp (D) predicted that both bills would easily win a seven-vote majority.
Once they are approved, Williams (D) said, the city would push to take control of the remaining properties on the 20-acre stadium site near the Anacostia waterfront in Southeast Washington and unveil the design of the ballpark. Sports Commission Chairman Mark H. Tuohey said excavation could begin by May 1.
"The signed lease is the green light we needed to turn this dream into a reality," Williams said in a written statement. "We have in place a firm cost cap, not just on the construction costs for the ballpark, but for the entire project. We've protected taxpayers and insured that they are never asked to contribute a penny towards the cost of this stadium."
The lease calls for the owner of the Nationals, currently Major League Baseball, to pay $5.5 million a year for 30 years to use the stadium. Combined with a gross receipts tax on large city businesses, a utility tax on businesses and federal buildings, and a concessions tax, the lease payments would be used to service the debt on the stadium bonds.
With the lease approved, baseball sources said MLB could name an owner for the team, a franchise that until last year played as the Montreal Expos, as soon as the end of March.
"I feel very pleased that we are moving into a new phase with a new owner," Tuohey said.
Nationals President Tony Tavares called it "great news that the mayor and Mr. Tuohey have signed the documents. It's time for D.C. to get on with its business of building a new stadium."
The signing of the lease capped a day of confusing events as council members sought to make sense of the deal baseball struck with the mayor's office and the sports commission Sunday afternoon. Tuohey and Bill Hall, a member of the sports commission and chairman of its baseball committee, walked the halls of the John A. Wilson Building all day, reassuring council members that baseball had signed the lease and acquiesced to the cap on public spending. But none of the relevant documents were brought, leaving some council members wondering what baseball officials were trying to hide.
"No one's seen any documents," council member Kwame R. Brown (D-At Large) complained late yesterday afternoon. "That's what's real confusing here. Either they signed what we sent over, or they didn't."
At midafternoon, the mayor joined a trio of baseball boosters on the council -- Cropp, Jack Evans (D-Ward 2) and Vincent B. Orange Sr. (D-Ward 5) -- for a news conference to hail the deal, even though none of the council members had seen it yet.
Despite more than a year of bitter political wrangling during which the council and baseball officials repeatedly blindsided each other, Orange said he was willing to trust Hall's and Tuohey's representations.
"At this point, it would be totally ridiculous for them to send some documents down here that are not in harmony with what they've told us," he said.