Team to Pay City $3.5 Million in Rent Settlement

By Aaron C. Davis
Washington Post Staff Writer
Sunday, October 19, 2008

The Washington Nationals and the D.C. government yesterday announced a settlement of their dispute over $3.5 million in unpaid stadium rent and the team's complaints about the ballpark.

Under the agreement, the Nationals will wire the District $3.5 million in rent tomorrow and the city will pay for almost $4 million in stadium improvements before the end of the year, said the city's acting attorney general, Peter Nickles.

"All parties will work together from this point forward and have resolved all outstanding issues," the two sides said in a statement. The agreement was reached late Friday, Nickles said.

The settlement addresses more than 47,000 construction-related issues raised by the team after its first season in the ballpark, Nickles said. "There were many outstanding disputes," Nickles said. "This agreement resolves all of those and, from my perspective, is a terrific new start for the stadium and the surrounding area."

He said the $3.5 million the team is paying in rent will go toward paying down debt on the stadium. Much of the $4 million for stadium improvements is being held in a District account, he said. Many of the improvements had been approved by the D.C. Sports and Entertainment Commission, but the District had withheld the money pending resolution of the rent issue, he said.

Nickles said some of the improvements -- better elevators, escalators, electrical work and issues related to the scoreboard -- might be noticeable to fans. Other money will go to behind-the-scenes improvements that will subtly improve the stadium experience. The city, for example, will seek to extend warranties on escalators, elevators and other aspects of the stadium with the construction firms that built them.

"You cross your fingers, but in the spirit of cooperation, I believe this agreement will produce a better stadium, better cooperation, and, hopefully, a better team," Nickles said.

A spokeswoman for the Nationals and a lawyer for the Lerner family, which owns the team, did not immediately respond to a phone call and e-mail seeking comment. Nickles said he hoped additional details of the agreement could be made public tomorrow.

The dispute had appeared headed for binding arbitration, and some District officials had expressed concern that if it wasn't settled before early next year -- when the team will owe a second multimillion-dollar rent payment -- the District's ability to meet its debt service could have been hampered.

The District used more than $611 million in taxpayer money to build the stadium. The family of Bethesda-based developer Theodore N. Lerner spent more than $450 million to buy the franchise from Major League Baseball.

The rent dispute centered on whether the ballpark was "substantially complete" on March 1, before the beginning of the season. District officials said that the city secured a certificate of occupancy that declared the building fit for business before the season. The Nationals played an exhibition game in the stadium March 29.

Besides withholding rent, the team had demanded damages of $100,000 a day from March 1. The two sides also were at odds over the timing of sales tax payments on tickets, with the Nationals paying game-by-game and the city wanting tax revenue from pre-sold ticket packages up front.

Nickles said the settlement has no effect on sales tax payments.

The District counts on the rent and sales tax, along with a special tax on city businesses, to help pay off the construction bonds it issued for the ballpark.

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