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Schwartz Seeks Answers from Mayor to Stadium Lease Questions
Councilmember Carol Schwartz today sent Mayor Williams a series of questions related to the lease agreement for the proposed baseball stadium in Southeast. The questions follow up on the inquiries she made at yesterday's public roundtable on the stadium lease. Ms. Schwartz's letter to the Mayor and the 26 questions are in text below, as well as attached in file.
December 14, 2005
The Honorable Anthony A. Williams, Mayor
Dear Mayor Williams:
As was discussed at yesterday's Committee on Economic Development Public Roundtable on the Lease Agreement Between the Sports Commission and Major League Baseball, I am forwarding the attached questions to you for your written response. In light of the fact that the Council will be voting on the proposed lease on Tuesday, December 20, 2005, I request that you provide me with your responses no later than Friday, December 16, 2005.
If you have any questions regarding this request, please feel free to contact me at (202) 724-8105. Thank you.
cc: All Councilmembers
1. The Washington Times reported "the city has been negotiating with WMATA and WASA to acquire their parcels of land in the past several months to form the ballpark district." The WASA property mentioned in the article houses some key operations for WASA. For example, WASA has on that site over 200 employees, approximately 150 pieces of equipment and 2 significant pumping stations. WASA also operates its sewer services and a number of other significant functions on that site. Shouldn't the dislocation of the DMV from the Brentwood site and the resultant problems have taught you that ousting necessary services without adequate planning and preparation can be disastrous? But, if you unfortunately choose to disregard these legitimate concerns, how, where and when would you propose those functions be relocated? WASA would, of course, have to secure a replacement site for these facilities and operations that meets its needs - not an inexpensive proposition, and one that will have to be borne by the ratepayers (which are us). How can you commit to this quasi-independent agency that such a site can be found? And what would be the effect on the planned development around the stadium site, and expected additional tax revenues, if WASA did not relocate?
2. The WMATA property mentioned in the previous question is necessary to WMATA operations and houses one of the agency's bus garages. Furthermore, the Council's WMATA Board representative has indicated that the WMATA Board has made no commitment to sell the site, nor have they considered the matter. WMATA would, of course, have to secure a replacement site for this facility that meets its needs and is centrally located. Again, this is not an inexpensive proposition, and it is one that will have to be borne at least in part by the District because we subsidize this independent entity. And again, if you unfortunately choose to disregard these legitimate concerns, how, where and when do you propose that this operation be relocated? What would be the effect on the planned development around the stadium site, and expected additional tax revenues, if WMATA did not relocate?
3. The baseball stadium agreement required the stadium to contain 2,000 club seats. However, the lease requires the stadium to contain at least 3,800 club seats. Why has the number of required club seats nearly doubled?
4. The stadium agreement requires club seats to be at least 21 inches wide with a 36 inch tread depth. However, reserved seating is only required to be at least 18 or 19 inches wide with a 33 inch tread depth. Given those requirements, isn't it more expensive to provide a club seat? How much does it cost to provide 2,000 club seats? How much does it cost to provide 3,800 club seats?
5. Other than the $20 million team contribution, does this lease provide for Major League Baseball or the team owner to pay any portion of cost overruns?
6. Although I understand that the $20 million team contribution would not be paid until close to the estimated completion date of the stadium, why is it necessary to earmark those funds for fixtures and equipment? What guarantee do we have that the funds will not be used to upgrade the fixtures and equipment? Why can't we decide how to use the funds?
7. Mark Tuohey testified that Major League Baseball committed the future team owners to pay this $20 million without asking for or receiving anything in return. However, coincidentally-or, perhaps, not so coincidentally-the lease agreement also gives the team 1/3 of the parking revenues on non-team event days. Annually, how much is 1/3 of the parking revenues on non-team event days estimated to be worth?
8. Would you support a change to the lease that would allow the team contribution to be used to pay any costs of building the stadium?
9. Please explain the qualifications that must be met before the team makes the $20 million contribution I mentioned in the previous question?
10. If there is a disagreement between the stadium agreement and the lease, which one prevails?
11. Exhibit A of the lease indicates that the baseball stadium site is 19 acres and Exhibit B of the baseball stadium agreement indicates that the baseball stadium site is 21 acres. Please explain this discrepancy.
12. What, if any, specific commitments have you received to pay for infrastructure costs associated with the stadium?
13. The "construction administration agreement" is referenced several times in the lease. For example, the lease defines "infrastructure" as the facilities constructed and installed as "infrastructure" in accordance with the construction administration agreement. However, I have not seen the construction administration agreement. Where is that agreement, and when will we see it? Since the construction administration agreement appears important to the lease, will the Council have an opportunity to review and approve or disapprove that agreement?
14. As far as land is concerned, is the baseball stadium site the same as the baseball stadium complex? If not, how do they differ?
15. The Commission will get to use the new stadium for up to 18 calendar days for the first 5 calendar years. However, that number could be reduced to as few as 12 calendar days thereafter, which, of course, could reduce the revenues the Commission would receive from Commission events. Why do the Executive and the Commission continue to tout the 18 days and neglect to mention that those days could be reduced in the future? Why is the possible reduction necessary?
16. The lease would entitle the Commission to all net revenues derived from Commission events including, but not limited to, advertising, broadcast rights and parking. Where will those funds go?
17. Section 8.6 provides that if the Team is sold prior to April 1, 2010, the Team will pay the Commission 15% of the excess, if any, of the sales price less any cumulative net operating losses over the Team's acquisition price for the Franchise. Owners do not generally sell profitable teams, so isn't it likely that this clause would net little, if any, funds for the District if exercised? In other words, isn't it likely that any funds to be designated for the District would be offset by the cumulative operating losses of the team?
18. If this lease is approved and executed, will the Council have any further opportunity to vote on the stadium deal?
19. If this lease is approved and executed, what is the maximum amount of money for which the District will be liable for the construction of the stadium?
20. If this lease is approved and executed, what is the maximum amount of money for which the District will be liable for capital improvements?
21. Dr. Gandhi has indicated that part of the costs associated with building a stadium at the RFK site would be a $31 million contingency fund to be used if the federal government requires a 2-year environmental study before building. What costs have been assigned to the environmental study and clean up of the southeast site?
22. Dr. Gandhi has often said that the stadium rent payment will be $6 million per year. However, the stadium lease provides that the rent will be $3.5 million in year 1 and will escalate to $5.5 million in year 6. Beginning in year 7, the rent will be $10,000 less than 102% of the previous year's rent provided that the rent will not increase if the team's attendance for the previous year is less than Major League Baseball's median attendance for the same period. Given this formula, isn't it possible that the rent payments may never reach $6 million?
23. Section 16.1 of the lease provides that in the event of a team default, the Commission would have a choice of remedies. Would you support adding language to that section that would require the Council to actively approve the Commission's choice of remedies in the event of a team default?
24. You have said that placing the stadium on the southeast site would generate many additional revenues for District citizens. Can you commit that none of those additional revenues will be given to developers in the form of tax increment financing?
25. The stadium agreement requires that the stadium have 1,100 parking spaces and this requirement was unaltered in the lease. Please detail how 1,100 parking spaces will be able to adequately serve a 41,000-seat stadium?
26. Section 8.4 of the lease details with specificity the number and type of tickets the Commission shall get and when they shall get them. However, section 8.5, Community Benefit Obligations, is vague. Section 8.5 simply provides that the Team shall:
Other than the tickets, what are the guaranteed community benefits?
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