D.C. Chief Financial Officer Natwar M. Gandhi yesterday lashed out over a change in the financing plan for a Washington Nationals stadium in Southeast, saying he will not sell bonds needed to pay for the construction unless adjustments are made.
City officials negotiating with Major League Baseball (MLB) over a revised lease agreement eliminated language requiring a reserve of rent to help back the stadium bonds. Last fall, bond raters on Wall Street said the reserve was needed to grant the bonds with an investment-grade rating.
“Our position is that would have given us an investment-grade rating,” said Maryann Young, a spokeswoman for Mr. Gandhi. “We will not take this deal to Wall Street. There definitely needs to be a discussion about this.”
The rent reserve had been included in the original lease negotiated between city and MLB officials last fall but was eliminated as a trade-off for additional community benefits and other contributions made by MLB.
Changes to the original lease were needed to gain the support of council members, who are scheduled to vote on the lease Feb. 7. Seven votes are needed for approval.
In a letter to council Chairman Linda W. Cropp, sports commission Chairman Mark Tuohey said the rent reserve could be reinserted into the lease if necessary. However, language allowing for a change is not included in the lease.
“[The council] will pass something, and then they will submit it to Wall Street, and they’ll say, ‘Excuse me, you forgot to talk to Dr. Gandhi,’” Ms. Young said. “Then we’re talking a month delay.”
Changes to the financing plan also eliminated the involvement of Deutsche Bank, which had struck a deal with the city to pay for $246 million of the stadium upfront in exchange for stadium revenue.
Now all of the $535 million to be borrowed for the ballpark will be repaid using revenue from the stadium, a ballpark fee on businesses and a utility tax.
Mr. Gandhi had helped design the Deutsche Bank plan. Council reaction was mixed because the bank would have received a $5 million management fee.
City sources said bank officials also were baffled by the change and had not been informed. A Deutsche Bank spokesman yesterday said bank officials were continuing to operate as if they were part of the deal and remained in contact with Mr. Gandhi.
Mr. Gandhi was caught unaware by the financing changes and was said to be angry. “This is D.C.’s deal and has been shepherded by Dr. Gandhi all the way,” Ms. Young said. “This is bad form.”
Representatives from the mayor’s office defended the lease changes and disputed the contention that Mr. Gandhi was not well-informed.
“We’ve been working with the CFO’s office during this whole process and we will continue to do so,” said Vince Morris, a spokesman for Mayor Anthony A. Williams. “If he was not briefed before the change, it was an oversight. He’s an important partner in this.”
Some council members said they would be reluctant to approve the lease until they have a chance to review the Construction Administration Agreement, which outlines how the stadium will be built.
Mayoral aides said the construction agreement may not be in the hands of council members until after the lease vote.