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Councilmember Carol Schwartz
Questions on proposed baseball stadium lease agreement
January 31, 2006




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January 31, 2006
CONTACT: John Abbot or Lee Smith
(202) 724-8105

Councilmember Carol Schwartz intends to ask the following questions regarding the latest amendments to the proposed Baseball Stadium Lease Agreement at today's Council Briefing:

  1. Sections 4.1, 4.6, and 5.1 were changed to allow bi-annual rather than annual lease payments, to eliminate the rent reserve account, and to remove the requirement that stadium vendors must obtain performance bonds to guarantee sales tax payments.  However, Dr. Gandhi has indicated that the removal of the rent reserve provision will cause the city to be unable to get investment grade bonds.  He has indicated that he will not go to Wall Street without the rent reserve, so I assume that will be re-added. However, why wouldn't we want to re-add the other provisions as well?  I can't imagine how getting our annual lease payment in one lump sum upfront on April 1st instead of half on March 31st and half on September 30th would
    be a bad thing for the District.  I also can't understand why having major stadium vendors get bonds to guarantee their sales tax payments would be a bad thing for us.  Why were these changes made?

  2. Paragraphs (e) and (f) of section 5.6 seem to be in conflict.  Paragraph (e) provides that the Commission is entitled to net parking revenues on days when there is Commission event parking.  However, paragraph (f) provides that the Team could elect to take 1/3 of all net parking revenues not allocated to the Team. Can you explain this?

  3. Section 6.7 is supposed to unencumber the $20 million Team contribution, which was previously earmarked for "fixtures." However, the new lease seems to only change, rather than remove, the encumbrance by now requiring the Commission to spend the money in the following order of priority: first for equipment, second for fixtures, and third for building construction costs.  Isn't this just six of one and half dozen of another?

  4. Previously section 6.6 provided that, after the Commencement Date, the Commission could only utilize development rights or make capital improvements on the stadium site as specifically provided in sections 6.1 and 6.6.  However, the section was silent as to the Commission's rights prior to the Commencement Date.  It appears that the only thing that changed in section 6.6 of the new proposed lease is that the Commission's right to utilize development rights, in accordance with the Construction Administration Agreement, prior to the Commencement Date is explicitly stated.  Is that correct?

  5. The Mayor indicated in his letter to Chairman Cropp that the Team will provide a total of $3.5 million in matching funds to the Team's youth baseball program over 10 years.  He also indicated that MLB committed to hold a meeting of all MLB owners in DC before summer of 2008.  Are these commitments memorialized in the latest proposed lease agreement?

  6. According to the mayor, the Anacostia Waterfront Corporation has agreed to assume the responsibility for any land and environmental costs above the budgeted amounts.

    • Assuming there are land and environmental cost overruns, how will AWC absorb those costs?

    • How is AWC being compensated for taking this risk?

  7. The Sports and Entertainment Commission is attempting to negotiate a guaranteed maximum price contract for the stadium.

    • What is the status of that negotiation?

    • When is it expected to be complete?

    • Assuming that negotiations are successful, what is the maximum price the District can expect to pay?

    • Is it possible for a guaranteed minimum price contract to be broken, requiring the District to pay more than the guaranteed minimum price?

  8. Have there been any changes to the Construction Administration Agreement since it was submitted to the Council?  If so, what changes have been made?

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January 31, 2006
CONTACT: John Abbot or Lee Smith
(202) 724-8105

In addition to asking or hearing discussion on the previously released questions, Councilmember Carol Schwartz, at today's Council briefing, reiterated her dissatisfaction with the section of the lease that provides that the Team's rent payments will not increase in the seventh lease year and thereafter if the Team's paid attendance for homes games does not equal or exceed the median annual paid home game attendance for all Major League Baseball teams for the prior three-year period.

"How can the District be denied its scheduled increase in rent for a stadium it financed if the Team fails to exercise its due diligence in paying for players who will attract fans?" Schwartz asked. "That's blatantly unfair."

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