Wednesday, February 8, 2006

In a remarkable finish to a marathon day, the D.C. Council early this morning approved a lease agreement for the Washington Nationals’ new ballpark and passed a cap on construction costs for the stadium, mere hours after rejecting a nearly identical set of measures.

After initially rejecting the lease and failing to even vote on emergency legislation to cap the city’s costs at $611 million, the council reversed course and passed a combined bill by a 9-4 vote that includes the cost cap and the lease.

The cap calls for the city to contribute no more than $300 million for the “hard cost” of the stadium and $175 million for “soft costs,” like insurance and infrastructure. The remaining money, to cover land and lesser costs like financing, would be covered by the sale of development on the ballpark site.

Council members had first rejected the measures because of confusion about the true cost cap, as well as where money from development rights would go. But they changed their minds after agreeing on changes in language and clarifications on some points.

The lease and cost cap still must be approved by Major League Baseball and the city. After the council rejected the initial lease, MLB officials said they would take the city to arbitration to end the dispute.

“Today’s vote is a serious setback to all those in the Washington community who sought the return of a team to the nation’s capital,” MLB President Robert DuPuy said after the initial vote. “I regret very much that D.C. officials have failed to honor the agreement they made when they successfully bid for the Expos to move to Washington. Baseball has no choice but to pursue arbitration so the terms of our original agreement can be honored and to begin to explore whatever options are available to us.”

But late last night, the council began reconsidering the cap legislation, after receiving clarification on several provisions. It made it clear that the city would pay no more than $300 million for the “hard cost” of the stadium construction, plus $175 million in various “soft costs.” The rest of the money would be used for land acquisition and financing costs. All overruns for the project would have to be paid for by the team owner or other outside sources.

Members also continued to debate the level at which the city should cap its costs, with some supporting a total cap of $589 million and others calling for a cap of $611 million.

The city plans to borrow $535 million for the project, but will also receive money from bond premium, interest and baseball revenue from 2005. It will also take in $55 million from the sale of land at the ballpark site.

Council members met in two separate closed-door meetings totaling more than four hours to hammer out details of the cap legislation. Earlier in the day, several council members, including Carol Schwartz, Vincent C. Gray, Ward 7 Democrat and Kwame R. Brown, at-large Democrat, called for the vote to be delayed and threatened to shoot down the lease if the vote was not postponed.

Constuction on the ballpark could not begin until the lease is approved by the council. Mayor Anthony A. Williams and MLB had grown impatient during the past several weeks at the council’s inability to push it through.

Stadium supporters on the council were initially despondent when the lease was not approved, suggesting that the future of baseball in the District was in question.

“Baseball will fill its run at [RFK Memorial Stadium] for the next year or two and move on,” said Jack Evans, Ward 2 Democrat and an ardent ballpark supporter. “We’re at the end of the line.”

After the D.C. Council failed to vote on the lease in December, MLB and the city began working with a mediator, former Detroit Mayor Dennis Archer, to help end the dispute. The two sides on Jan. 27 submitted a new lease to the council, complete with additional concessions from MLB. The city also entered into a contract with the stadium construction team that called for a “guaranteed maximum price” for the ballpark.

The council then hired DLA Piper Rudnick Gray Carey Cary lawyers Peter C.B. Bynoe and Louis Cohen as consultants to review the deal. The consultants, according to council members, said the construction contract could still expose the city to some additional costs.

If MLB entered into arbitration, the lease would be submitted to a three-member panel, which would then issue a binding recommendation on how the city and MLB should proceed. It’s unlikely that the arbitrators could force the council to approve the lease, but they could rule that the city must pay damages or penalties.

Earlier yesterday, Mayor Mr. Williams warned the council against shooting down the lease.

“I believe we have to do it today,” he said. “We’re subjecting ourselves to the real possibility we will lose baseball.”

Meanwhile yesterday, city officials said they were outraged at Mr. Bynoe and Mr. Cohen’s involvement, arguing that they had an incentive to see the District’s stadium deal fall through because they had previously represented the Virginia Stadium Authority and its efforts to bring baseball to Northern Virginia. That connection, city officials said, represents a blatant conflict of interest.

“We’re hugely concerned about it,” said Stephen Green, the city’s director of development, who has been closely involved in the lease talks. “It raises a red flag. We feel they provided a biased and unfair analysis to the council.”

Mr. Bynoe defended his involvement.

“Mayor Williams’ suggestion that Mr. Cohen, myself or our firm is in a conflict of interest is completely unfounded and untrue,” Mr. Bynoe said. “There is no legal or ethical conflict of interest in our current representation of the City Council of the District of Columbia.”

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