The District government and Major League Baseball reached a formal agreement on a stadium lease yesterday after three months of negotiations and turned it over to the D.C. Council, which is to take a critical vote in 10 days.
The city and baseball also completed a second agreement that would require the team to play in the District for 30 years. It would allow the team to relocate as many as three regular season home games once every five years to an international venue or another place requested by Major League Baseball.
Under terms of the lease deal, baseball would give the city $20 million for stadium construction and a letter of credit that would cover Washington Nationals rent payments in case of a terrorist attack or players' strike.
The city agreed in return to give the Nationals a third of the parking revenue generated at the stadium on non-game days from the 1,225 spaces required at the site. That would return about $20 million to baseball during the 30-year lease.
"We've negotiated a good deal for the city and persuaded Major League Baseball to concede on many fronts," Mayor Anthony A. Williams (D) said in a statement released by his office. "I look forward to a full discussion of the lease during a hearing next week and I urge the Council to approve this lease as quickly as possible the following week."
The lease agreement requires approval from the 13-member council, which has scheduled a vote for Dec. 20. However, council members are concerned about rising costs and said they would reject the deal if baseball did not make a significant financial contribution.
If the council approves the lease agreement, stadium construction could begin in March. The Nationals played their first season at Robert F. Kennedy Memorial Stadium and are scheduled to play there the next two seasons. If construction is completed on time, the stadium will open in March 2008.
"We worked hard to accommodate the areas of pressing concern identified by the city," baseball President Robert A. DuPuy said in a written statement. "We now look forward to a favorable vote by the City Council."
If the council approves the lease agreement, baseball is expected to announce a new owner for the team shortly thereafter. Eight groups have bid on the franchise, for which baseball has said it has set a price of $450 million.
The city has approved a $535 million budget, along with $54 million in bond financing fees, for the publicly funded stadium project along the Anacostia River in Southeast Washington. The bulk of the money would be paid through a gross receipts tax on businesses as well as taxes on utilities and stadium concessions.
Natwar M. Gandhi, the city's chief financial officer, is scheduled to give the council an updated cost study Monday. This week, Gandhi's office told city officials that preliminary estimates reached as high as $714 million for the stadium and related infrastructure.
Council member Jim Graham (D-Ward 1), who has voted against public funding for the project, said he was unimpressed with baseball's promise of $20 million because the city would be paying it back with the non-game-day parking revenue.
The Nationals would receive all parking revenue on game days if the garage was limited to 1,225 spaces. But if the city built more parking spaces, the team would collect all game-day parking revenue and the city would keep all non-game-day revenue. This provision is designed to allow the Nationals to select whichever option the team thinks will provide more income, but the team must choose before the first season.
"I don't think that's fresh cash," Graham said. "I don't think this works. My vote's not changing."
But Jack Evans (D-Ward 2), a key baseball booster, said the lease represents a fair deal. "It's the best negotiated deal we could get from Major League Baseball," he added.
City financial officials have said they will not issue construction bonds, and Baseball Commissioner Bud Selig has said he will not sell the Nationals, until the lease is approved.
"This grueling process at last has an end in sight," Nationals President Tony Tavares said. "I wouldn't characterize anybody at baseball as being happy right now. I would characterize them as being hopeful that this comes to a positive conclusion on the 20th."
Baseball's letter of credit would come from a bank with a rating of at least AA and cover one season of rent. If the money was used, baseball would replenish the reserve account with another credit letter covering a season's rent.
The team would collect all stadium revenue other than non-game-day parking and advertising collected by the city during the 18 days the city could use the stadium for other events. And the Nationals would control all advertising on and inside the stadium and would receive all income from naming rights if a corporate sponsor paid to put its name on the ballpark.
If the stadium did not open by March 2008, the District would be required to pay penalties that could reach millions of dollars, depending on how much revenue the team lost during the delay.
The Nationals would pay an average of $5.5 million in rent during the 30-year lease and donate 8,000 tickets to city charities each season. In a statement, the city said it would control development rights on land outside the stadium and within the 21-acre footprint of the project. The lease agreement states that the Nationals and the city will "jointly evaluate . . . to attract economically viable commercial activity" south and east of the stadium.
The lease also calls for the team to pay the city $1 for every ticket sold over 2.5 million during the season. The team would not be required to pay rent if the stadium was damaged and home games could not be played, except during strikes, lockouts or other labor disputes between the owners and the Major League Baseball Players Association.
"Nobody won everything, but I think we ended up just fine," said Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission and negotiator of the lease for the city.
Also yesterday, Williams authorized final designs for the new stadium, which features glass, steel and limestone as its primary components and departs sharply from the popular red-brick throwback ballparks. The city plans to make the designs public shortly after the lease is approved.
The council has scheduled a public hearing on the lease for 10 a.m. Tuesday. Those wishing to speak must register by 5 p.m. Monday.