- The Washington Times - Saturday, December 3, 2005

Delays in approving a lease agreement for a new ballpark for the Washington Nationals will force the District to sell construction bonds on a tight timeline at one of the worst times of the year — unless the D.C. Council scuttles the plan altogether.

The lease is needed to complete a financing plan for a ballpark along South Capitol Street, and the council is expected to vote on the lease for the stadium Dec. 20. If the lease is approved, the city realistically will have just five workable days — all around the Christmas holiday — to sell $289 million worth of public bonds or it could be sued by Major League Baseball (MLB) for violating the ballpark agreement signed last year.

Late last night, city officials involved in the lease negotiations with MLB said they were close to finalizing the lease.

“We made substantial progress in the lease negotiations, and it’s on track to be executed and submitted to the council by next Friday,” said William Hall, chairman of the baseball committee for the D.C. Sports and Entertainment Commission.

Hall offered no further detail, but before yesterday’s meeting officials said they believed they would get $20 million from MLB to pay for construction costs, as well as a letter of credit to create a reserve of rent. Those commitments were needed to ensure investment-grade ratings for the bonds.

If the lease is rejected by council, plans to sell bonds likely would be tabled until the city and MLB finalize the lease through arbitration or craft an entirely new agreement.

Bonds usually can’t be sold on weekends or the Christmas holiday, and even Dec. 26 is a vacation day for many of the brokerage firms that would buy the bonds.

“It’s not optimal,” said Thomas Doe, president of Municipal Market Advisors in Concord, Mass. “There are just a lot of distractions. It’s tough because you have very few people focused on the deal.”

The city plans to sell $289 million in public bonds for the stadium, with the remaining $246 million of the $535 million project to be paid for by Deutsche Bank in exchange for stadium revenue. City officials said they must sell bonds during the week of Dec. 19 and ideally would like to go to market Dec. 20, the day of the council’s vote.

“It is technically possible to be in the market that week,” said MaryAnn Young, a spokeswoman for D.C. Chief Financial Officer Natwar Gandhi. “It is not the most advantageous time to be selling the bonds.”

If the city misses the Dec. 31 deadline, the league could then sue for damages or even decide to move the team to another city, though that option is seen as unlikely. Earlier this week, MLB president Bob DuPuy warned Mayor Anthony A. Williams that the District was cutting it too close to the deadline.

The city and MLB worked to finalize the terms of the lease yesterday, but it was not completely done. It is unclear whether the council will approve it when it votes. Many council members have threatened to vote against the lease if it does not contain additional financial commitments from baseball, and some members said they will reject it because they favor building the ballpark near RFK Stadium, where it could be less expensive.

City officials, including Mr. Williams, insisted yesterday the RFK site is not necessarily cheaper because it would have a smaller impact on economic development in the area and because the city already has sunk more than $100 million into the South Capitol Street site. MLB officials said they would consider the RFK site only if Mr. Williams asked for it. The city is doing an updated cost estimate for the RFK site and expects the results shortly.

City officials said the lease will be written into the financing before the council vote, allowing them to go to the bond markets immediately. And analysts said if the city can go to market before the Christmas weekend, it should be able to get the money in time.

“If they do it on December 21, they’ll probably be fine,” Mr. Doe said. “They’re right on the edge.”

The city also would be helped by the fact the bonds would be investment grade, making them attractive to investors, Mr. Doe said. Large brokerage houses might buy the bonds and keep them in their inventory for January, when investors often seek bonds to add to their portfolios.

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