- The Washington Times - Tuesday, November 16, 2004

Linda W. Cropp, chairwoman of the D.C. Council, said yesterday offers to help finance the cost of the District’s proposed baseball stadium are “pouring in” as a result of her insistence to seek out private funds for the project.

Even before Cropp introduces her planned amendment to Mayor Anthony A. Williams’ stadium bill to establish a formal, six-month process to seek private funding sources, she said her office is steadily receiving offers from all over the local business community. Ten such proposals had reached the John A. Wilson Building as of last week, and the number of solicitations now is believed to be more than twice that.

“I am committed to making sure this deal has private financing,” Cropp said. “I am pushing this as much as I can. I want to look at any way I can to reduce the cost of this project.”

The current cost of the ballpark is projected by the mayor’s office at $435.2 million, all of it fronted by the issuance of District bonds and then paid back through a combination of ballpark-related sales tax, team lease payments and a gross-receipts tax on large city businesses.

But concerns are growing fast that related infrastructure costs such as Metro improvements and environmental remediation for the stadium site, located near the Anacostia River waterfront, will push the final bill much higher.

Much of Cropp’s time yesterday was devoted to her pursuit of private stadium funding. She held a two-hour hearing for fellow council members to listen to a proposal from BW Realty Advisors to fund the costs of the proposed ballpark in Southeast, leaving $100million in land acquisition and remediation costs to the District.

Cropp also heard a proposal from a group of unnamed banks in the region who want to be part of the stadium deal.

While Cropp is garnering plenty of deference from Williams and others on the council to her recent efforts, skepticism remains high as to whether the quest ultimately will bear any fruit.

BW Realty Advisors, a real estate financing group with offices in the District, received an often-negative line of questioning from council members on its proposal. Though no ruling or vote was made on the pitch, foremost among the critics was Jack Evans, Ward2 Democrat and chairman of the council’s finance and revenue committee.

“I still haven’t heard them offer to do anything we can’t do for ourselves,” Evans said. “I want to hear what’s out there, but right now, I think what’s on the table [from Williams] is the best deal possible.”

BW Realty Advisors is proposing to lease the stadium site from the District and finance the construction cost itself through private investors. In return for their funds, investors would receive tax breaks from interest and depreciation on the property, as well as the ability to accrue its lease debt to the city instead of paying the fee each year.

At the end of a agreed-upon lease period lasting at least 25 years, the District would receive either ownership of the stadium or $438million, a sum estimated as the total of accrued lease payments plus interest.

BW claims no other company performs quite the same type of real estate financing, and is pursuing a patent on its methods.

“The public is not convinced that 100 percent public financing is the way to go. I happen to agree,” said Richard Gross, BW Realty Advisors manager.

Congress in recent years has begun to clamp down on many types of leveraged real estate deals that rely on depreciation tax credits, claiming many do not bring sufficient economic benefit to the public. Gross, however, said his investors are not tax-exempt entities, which have been the target of most of the Capitol Hill clampdown.

After the tough round of questioning from the council, Gross and his team of advisors acknowledged their plan still has holes. Most notably, the group would need the Washington team owner to provide credit support for the debt, something likely to be unpopular, and it also needs a formal endorsement from Natwar Gandhi, chief financial officer.

The activity from BW and others stems from a deal struck last week between Cropp and Williams. After making a late maneuver on Nov.9 to keep the Williams stadium bill from a full council vote, the two agreed to revive the legislation for a vote Nov.23. Because of scheduling conflicts among several council members, that vote now is likely to happen Nov.30. In return for that concession, which would keep the bill on track for a Dec.31 deadline for ratification, Cropp secured support to establish the formal search for private funding.

“I’m not pushing this [BW] proposal and saying this should be the one,” Cropp said. “But I do happen to think this could work.”

Meanwhile, MLB’s relocation of the Montreal Expos to Washington shed a potentially troublesome obstacle yesterday. Arbitrators ruled against a Quebec-based group of former limited partners of the Expos who claimed MLB and former majority owner Jeffrey Loria conspired to wreck their equity in the club.

The partners filed a federal lawsuit in July 2002, accusing Loria and baseball of racketeering and fraud. But a Miami judge postponed the case to make way for a private arbitrator, hoping that would hasten resolution of the dispute. The arbitration ruling yesterday killed any chance of the partners prevailing back in court, and they now have no plans to appeal.

“It has been this office’s position since the commencement of the litigation and arbitration that this was merely a partnership dispute, and attempts to include this office and the commissioner were particularly malicious and frivolous,” said Thomas Ostertag, MLB senior vice president and general counsel. “We still believe that to be true.”

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