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D.C. Called In Default Of Deal on Ballpark
MLB Says City Misses Deadlines

By David Nakamura and Thomas Heath
Washington Post Staff Writers
Friday, July 21, 2006; B01

Major League Baseball has declared the District government in default of the lease agreement for the new Washington Nationals stadium, contending that the city's failure to meet several deadlines could delay the opening of the ballpark.

The announcement reflects the deteriorating relationship between the incoming owners of the Nationals and the city and could threaten the long-term health of the franchise. City officials scrambled yesterday to respond to the MLB complaint, but the impasse already has held up the sale of the Nationals to Bethesda developer Theodore N. Lerner, which was supposed to have occurred before today.

The dispute developed as the Lerner ownership group prepared to welcome fans for a "grand reopening" of RFK Stadium tonight, when the Nationals face the Chicago Cubs. Yesterday, team officials placed red carpets outside the stadium and set up interactive zones for children and more than 100 new concessions stands.

In a letter to city officials this week, Tom Ostertag, an attorney for MLB, said the city had failed to meet 11 provisions in the construction administration agreement between the D.C. Sports and Entertainment Commission and MLB.

"The Commission has not delivered these items in accordance with the agreements," Ostertag wrote Tuesday. ". . . [T]his letter constitutes formal written notice of the Commission's failure to specifically perform or comply with the enumerated provisions" of the construction agreement. "The team hereby demands that these failures be corrected."

District officials characterized the provisions as relatively minor, but attorneys for the D.C. attorney general's office were preparing the required paperwork. Under the terms of the lease agreement, the city has 30 days to respond to the default notice and resolve the issues before baseball officials can pursue legal action.

City officials said MLB cannot legally move the team out of Washington.

Mark H. Tuohey, chairman of the sports commission, said the city will deliver all the documents that MLB needs to complete the sale of the team today. "The basics that are at issue here have all been now agreed to," Tuohey said. "The final language will be put on paper tonight."

The District has authorized $611 million in public money to build the stadium near South Capitol Street and the Navy Yard in Southeast Washington along the Anacostia River. Cranes and bulldozers are at work at the site. The Lerners have agreed to pay MLB $450 million to buy the Nationals and are anxious that the city meet the April 2008 deadline to open the stadium and parking lots on the 20-acre site.

The parties have haggled over many aspects of the stadium project, including the design of parking garages, the efficiency of transportation plans, the quality of luxury suites and the importance of deadlines. The arguments have soured relations just three months after MLB Commissioner Bud Selig announced the selection of the Lerner group to buy the team and praised its "family model" of ownership.

Some city officials interpreted the default notice as a legal maneuver intended to establish firm deadlines in case a dispute over the stadium project ends up in court. With a series of letters on file, the Nationals owners could argue that they gave city officials plenty of notice about their position on the lease, city officials said. The lease includes financial penalties on the city if the stadium is not opened by the start of the baseball season in April 2008.

"All of the issues raised in their letter are technical and will have no impact on our ability to deliver a first-class ballpark to the team in 2008," said Vince Morris, a spokesman for Mayor Anthony A. Williams (D). "It's too bad the team is reintroducing the Nationals to Washington this weekend while simultaneously waving legal threats meant to intimidate the government and local taxpayers."

Incoming Nationals President Stan Kasten said yesterday that the Lerner group has grown increasingly frustrated with the city's pace on the stadium project.

"We're having trouble getting the simplest things done," Kasten said. "We keep getting foot-dragging. . . . It does weigh us down as we try to move forward and we keep getting silly roadblocks that stop us."

In more than one letter to the city, MLB attorneys have complained that the city has been delinquent in turning over documents, including the lease of the stadium site, proof that the city has title to the land, soil boring reports, fund balance reports and monthly project schedules.

"Deadlines have been missed and required procedures have not been followed," Irwin P. Raij, an MLB attorney, wrote to the city last Friday. "That is a recipe for causing the Project to be late, over budget and substandard in quality, and susceptible to costly and unnecessary disputes between the Team and the Commission."

The Lerners have been concerned that the city will miss the deadline in part because of a plan endorsed by Williams and the D.C. Council to build shops, restaurants and condominiums around two parking garages to be built just beyond the outfield wall.

The stadium lease calls for 1,225 parking spaces on the property, but the Lerner group does not want other development around the garages because it believes the mixed-use project is too expensive and time-consuming.

Williams and other city officials, however, say the added development will help create a lively ballpark entertainment district that will bring in tax revenue to offset the city's investment in the new stadium.

Faced with dwindling crowds and a struggling team, the Lerner group has taken steps to enhance the fans' experience at the 45-year-old RFK.

On a tour for reporters yesterday, team officials said they have added 2,000 yards of red carpet and "fun zones" with batting games for children. There are new food items, including crab cakes, and petunias have been planted outside the stadium. Players and Lerner family members will greet fans tonight, officials said.

The stadium's age still shows, however. There is paint peeling off walls. No major changes were done to the infrastructure, said Cobey Kuff, special projects director for the Lerner Corp.

"If we were going to be here permanently, then maybe we would have done more," Kuff said. "We're in a temporary home and looking forward to getting a new house. This place, it needed some spit and polish."

Staff writer Robert Samuels contributed to this report.

© 2007 The Washington Post Company