Friday, December 9, 2005

The D.C. Sports and Entertainment Commission and Major League Baseball yesterday finalized a lease agreement designed to keep the Washington Nationals in the District for at least the next 30 years, pending approval of the lease by the D.C. Council.

The 140-page lease, completed just before noon yesterday after nearly four months of tense negotiations, sets the terms for how the league and city will manage a new $535 million ballpark along South Capitol Street and forces the league to pay heavy penalties if the team ever moves from the District.

Work on the ballpark can’t begin until the D.C. Council approves the lease. Seven votes on the 13-member council are required for approval. A hearing on the lease is scheduled for Tuesday, with the vote scheduled for Dec. 20. The city is required to have the document approved by Dec. 31 or it could face arbitration or penalties from MLB.

The commission appears to have been a tough negotiator on several aspects of the lease. If the Nationals’ owners were to move the team out of the District, they would have to pay the city the full $535 million used to pay for the ballpark, plus interest, and also pay for any potential revenue loss resulting from the team’s move.

Negotiators also secured $20 million from MLB to pay for a contingency toward stadium costs, an agreement for the city to receive two-thirds of the revenue from parking when the team is not playing, and use of the stadium for 18 events on nongame days — an unusually high amount for a baseball stadium. The commission also avoided giving up any development rights on or around the stadium site and will require the Nationals to offer 250,000 tickets each year at a 25 percent discount and distribute 8,000 free tickets to underprivileged youth.

“We’ve negotiated a good deal for the city and persuaded Major League Baseball to concede on many fronts,” D.C. Mayor Anthony A. Williams said. “Negotiating this lease was not an easy matter, and I commend the sports commission for its work and hard-line stance.”

Under the lease, the Nationals will pay $3.5 million in rent for the first year, with rent gradually increasing to $5.5 million by the sixth season. After that, the team will pay $10,000 less than 102 percent of the previous year’s rent. The team’s rent could rise if more tickets are sold, but also could remain flat if attendance is in the lower half of the league. The lease allows the team to play as many as three exhibition games in the ballpark and play one regular-season home game at an alternative site.

“It was a long and tough negotiation,” said William Hall, chairman of the sports commission’s baseball committee. “The lease is the next step toward getting a first-class stadium in a part of town that could become the next Georgetown.”

The lease still was being circulated to council members late yesterday afternoon. Several council members said they likely would not vote for the lease, because it does not contain a hard cap on how much the city will pay for the ballpark.

“The lease itself merely memorializes the deal that was passed by the council last year, and everyone now knows it was a bad deal,” said Adrian Fenty, Ward 4 Democrat, who has opposed public funding for the stadium. “It will be interesting to see what happens. I think there are eight votes from people who would like to see this thing capped.”

Eight council members this week voted in favor of two resolutions that would have capped ballpark costs at $535 million, including all infrastructure and transportation upgrades, which the city has said will be paid for by private funds or the federal government. However, the measures required nine votes to pass because they were emergency pieces of legislation.

Rising costs for the stadium project have caused some council members to suggest building the ballpark near the current location of RFK Stadium to save money. Some reports peg the total cost of the stadium at more than $700 million, but city officials have insisted they will borrow only $535 million for the project, and all other costs will be met by private funds or the federal government.

District Chief Financial Officer Natwar M. Gandhi is working on an updated estimate for the cost of building near RFK Stadium. If the RFK estimate is considerably lower than estimates for the South Capitol Street site, it likely would fuel arguments that the city should consider moving the stadium. However, several city sources said the cost estimate for the RFK site will be comparable or even higher than the South Capitol plan because of massive environmental problems and other issues that could delay construction by as much as three years. Moving the site also would require the city to renegotiate an entirely new ballpark agreement with MLB — something both sides said they will not do.

Furthermore, advocates of the South Capitol site argue that it will have a bigger economic development impact than would a site near RFK. Council member Jack Evans, Ward 2 Democrat and ardent proponent of the South Capitol plan, told constituents in a letter yesterday that they should compare the plan with those of the MCI Center or Convention Center, which have helped trigger new development near downtown.

“Yes, I am a Nationals fan, but I wouldn’t be supporting baseball in D.C. if I didn’t believe this project, like the two before it, would bring far more tax dollars to the city than it cost city businesses to build,” Mr. Evans wrote.

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