January 29, 2006

Meet the new lease...

As promised, D.C. Mayor Anthony Williams sent his revised Washington Nationals stadium lease proposal to the city council on Friday. While details are still sketchy, it appears that the new deal addresses only some of the concerns raised in the council's 10-point list of demands (later revised to a 12-point list) of what would be necessary to win support for the stadium.

Among the new proposals revealed so far:

• If the new stadium is not ready by Opening Day 2008 (which seems all but a certainty now), the Nationals would pay half their normal rent, instead of getting free rent for a year. This is a genuine concession by MLB, but one worth only about $2.65 million.
• The city would enter into a "guaranteed maximum price" contract with construction companies to ensure a set price on the stadium itself of $300 million. This is all well and good, but does nothing about the larger problem of soaring land and infrastructure costs, and would still leave the project at least $40 million over the council's requested $611 million total public cost cap.
• The city would sell some parcels of land at the south end of the stadium site to developers, with the city getting 57.5% of the proceeds, the team 42.5%. The resulting money would be used to help pay for cost overruns on land acquisition elsewhere. Even aside from the question of whether the development rights sale would necessarily cover land costs, critics such as the BetterDeal4DC coalition argue that this actually represents a new giveaway to the team, since "Major League Baseball is taking more public assets and yet is bringing no more money to the deal."

Response from the council appears muted so far. Cropp told the Washington Post that "there has been an attempt to address most of the concerns that the council had," but "we need to look at the documentation to make sure it has been addressed completely and adequately"; to the Associated Press, she added: "I want to see that there's an assurance that the stadium won't go over a certain cost; that there are dollars there for land acquisition and remediation." Kwame Brown and Vincent Gray, two of the potential swing votes on the council, told the Post they're not convinced yet that the mayor has completely resolved the cost overrun isues. No word yet from Carol Schwartz, the other reported swing vote, with two flips into the "yes" column required for approval of the lease.

Meanwhile, D.C. CFO Natwar Gandhi has leapt into the fray, noting that the new deal had eliminated a monetary reserve account requested by Wall Street bond raters. "The lease agreement as it is submitted, I have serious reservations about," Gandhi told the Post. "I cannot take it to Wall Street."

Cropp is expected to brief councilmembers on the new plan this week, with a possible vote February 7 if it looks like enough support is there for passage. One sign that MLB and Williams may be expecting a longer haul: The new lease officialy requires the council's approval no later than June 20, 2006.