December 19, 2005
Opinionist: Reject the Stadium Lease
Editor's Note: This is the second of two guest writers we invited to comment on the stadium lease, which is set to be voted on tomorrow. First off was Vincent Morris, the mayor's spokesman, speaking in favor of the stadium deal, and now we have Council-member David Catania (I-At Large) opining against it.
The Stadium is Bad News for the District
By David Catania
"If you build it, they will come," infers the voice in the classic baseball movie "Field of Dreams."
"Build it and money will appear," seems to be the exhortation of Mayor Anthony Williams and other proponents of spending an ever-growing and ultimately boundless sum of money on a baseball stadium at the proposed South Capitol Street site.
It's one thing for Hollywood to indulge in fantasy, quite another for the elected officials.
The District's elected representatives should deal in facts, and they should speak the truth to those who got them there.
From the beginning, the Mayor has allowed Major League Baseball to steamroll District taxpayers. The District government is now on the verge of committing residents and businesses to a 30-year liability of enormous but ultimately uncertain magnitude. However, in a vote this Tuesday on the lease agreement with MLB, the D.C. Council has a final chance to demand fairer terms.
These are the facts surrounding the proposed baseball project and lease:
>> Before ground has broken, estimated project costs are escalating rapidly, with no end in sight. The stadium project was originally sold to the District as a $435 million project. Now, District Chief Financial Officer Dr. Natwar Gandhi estimates the cost of the project at $667 million. That's an increase of 53 percent in just one year! Dr. Gandhi adds that if plans for surface parking are not workable, the increased cost of underground parking will drive the project cost as high as $713.2 million.
When the Council voted to approve the stadium deal last year, the total cost for the project was capped at $535 million. By law, this figure included stadium construction, infrastructure, and financing costs. Nearly a year later, misnamed "technical" amendments advocated by the chief financial officer and pushed through by Council Chairman Linda Cropp actually removed the cost ceiling and raised the price to $589 million. The Mayor and stadium proponents claim that previous estimates were never intended to include infrastructure costs, but that's just not so. They cannot rewrite history because the Council was clear in its intent that $535 million was to cover the entire project.
>> If the lease is approved, the District will be on the hook for untold millions more. The lease terms allow team owners to impose uncapped capital improvement obligations on the District.
Seattle's experience with its baseball stadium offers a cautionary lesson regarding such contractual terms. Obligations for "necessary improvements" and "upgrade improvements" there are costing $10-12 million a year -- roughly double what the Nationals would pay the District annually in rent.
Pittsburgh's capital improvement clause meant that by the time the Pirates moved out of Three Rivers Stadium in 2000, taxpayers still owed the team $44 million for a stadium that cost $40 million to build in 1968.
>> During his September 29, 2004, announcement heralding the return of baseball to the District of Columbia, Mayor Williams promised that, "not one dime -- not one dime -- of the money for this ball park is coming from D.C. residents." Yet, 15 months later, the District has no plausible or satisfactory means of funding the gap between what the Council authorized last year and what the stadium is now projected to cost.
The Mayor and others suggest financing might be available from the federal government or private developers. But these sources are uncertain at best and can be better described as fictional.
An Executive Order issued by President Bush prohibits the federal government from contributing to construction projects for which a Project Labor Agreement (setting basic labor terms for all contractors and subcontractors) is in place. The District has committed to a PLA for the stadium project -- meaning federal money is not likely to be on the table for the deal.
The claim of additional funding from private developers is simply being invoked by the Mayor, with no evidence whatsoever that such funding may appear. But even if it does, this is funding that should be available to offset the huge expenses the District already agreed to incur -- before the escalation of costs to an estimated two-thirds of a billion dollars.
>> The lease terms impose no meaningful reciprocal obligations on Major League Baseball -- and no real obligation to stay in the District. Under the terms of the lease, the team can simply void the non-relocation agreement with the District simply by refusing to pay rent. So, if 10 years down the line the team decides it would like to move to a new stadium in Northern Virginia because new stadiums increase revenues, there are no contractual terms to prohibit it from doing so.
The District's elected officials owe their constituents more than flights of fancy. In the real world, money cannot be generated out of thin air. In the real world, cutthroat business people do not open their pockets to offer more than they are required to under already approved terms and conditions. In the real world, it matters whether the cost of the stadium is hundreds of millions of dollars more than originally claimed. In the real world, one-sided lease terms that impose enormous obligations on the District but virtually none on MLB matter.
While District officials operate in a world of make-believe, Major League Baseball is playing hardball, refusing even to choose an owner for the new team before the District compromises itself still further.
Shame on elected officials if they let themselves be an easy mark -- not with their own money, but with that of District residents.
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Some of your analogies are faulty.
You discuss Pittsburgh and Seattle. Pittsburgh and Seattle do not have the fanbase that DC has- DC has a huge local fan base, plus a traveling fanbase who stops through DC. DC is much more a hub to outside cities than either of those two.
Also, in your Pittsburgh analogy you don't account for inflationary changes. 40 million in 1968 is a lot more than 40 million now.
Additionally the way in which the stadium will be funded is through high rated munis. Whether they are saying it or not, that's whats going to happen- so essentially it is all going to be outside monies.
You neglect to see the added revenue the stadium is going to bring to an area the desperately needs it. You also neglect to see the bigger picture of how this can draw even more tourists to our town, who bring with them cash. Will all their cash go directly into the waterfront properties? Probably not, but a lot will stay in the district. Can I quantify how much? Not really- no one can.
The District is the one with everything to gain if this goes right and even more to lose if it goes wrong.
Jonny beat me to it -- 40 million in 1968 dollars was nearly equivalent to $200 million in 2000. Nice try.
In addition, the PLA (much as some may dislike it) only applies to the stadium itself, not to the infrastructure improvements. Therefore, President Bush's executive order might well prevent direct federal assistance for the stadium, but that is not under consideration. Any federal assistance would be for the infrastructure (specifically for the Navy Yard Metro station) which is not part of the stadium construction, and therefore not covered by the PLA.
Re 1:
I don't see how the SE/SW waterfront is an area that "desperately needs" $600 million in motivation. Judging by all of the high-rises being built in the M street corridor near the Navy Yard, buisnesses have already decided that this is prime area to develop. If any area of the city needs a multimillion dollar infusion to spur development, it's east of the Anacostia, and the stadium's on the wrong side of the river to help there.
As a taxpaying DC resident, I'm all for MLB packing up and moving to Las Vegas. The casinos would easily pony up the money to build a stadium, the amenities would be spectacular, and the team would have no problems selling out every game. Hell, people are willing to pony up hundreds of dollars to see Celine Dion every night, why not significantly less for a baseball game.
The other element that makes DC unique as compared to other jurisdiction is that monies spent in DC by game attendees are new monies into local coffers. Unlike say Pittsburgh, the average Nationals attendee is someone from Maryland, Virginia or a fan of the visiting team. Thus the monies spent in association with game attendance are monies that are new to DC.
Andrew
Dear Council Person Catania
I have been watching your behavior in the meeting and you are very rude and embarrassing to yourself and the district. There is no need to get personal on these and other issues - frankly you lose credibility when you embark on working the people and not the issue. I hope the people of DC realize that there are ways to disagree without being disagreeable and by the way you were so quiet when the Gay Marriage issues came up for DC - where were you then? very quiet - did not hear a peep from you...
could you please change your tone - you might find yourself more effective for we citizens..
thanks
I'm shocked at Mr. Catania's apparant lack of grasp of the particulars of this situation. There are good reasons to vote against the lease (and the stadium in general), but he doesn't touch on any of them here. That begs the question: does he not understand the situation, or is he grandstanding?
I don't think anyone who has watched these hearings, could possibly say Mr. Catania doesn't grasp the particulars of this situation. He's been one of the most dogged Councilmembers throughout the whole process - not wavering and blowing in the wind as I've seen some others.
That said, he did fall deep into the weeds in this editorial and might have lost sight of the forest for the trees. Rather than aruguing PLAs (which the "technical amendments" may have addressed) and non-inflation adjusted figures, one really needs to just look at competing priorities for District funding and borrowing abilities.
We have choices, and right now, the oxygen on any other issue is being sucked dry with this debate. No matter the cost, the bonds the District must issue will greatly affect our ability to borrow or spend other money for more critical city needs. Housing, education, roads & repair... all have core infrastructure needs, but aren't being addressed. Write hundreds of millions worth of bonds - when DC already has the highest debt per capita than any other jurisdiction - and we'll need to put those investments on hold yet again.
As a DC tax payer and Nats season ticket holder - I want Council to vote no for this bad lease. I want baseball, and I want a new stadium and the development that comes with it, but a better deal is out there. DC is a proven winning market, MLB isn't going anywhere...
David Catania's editorial perfectly illustrates why I can't stand the man. If you take away all of his tantrums, pouts, cryfests, and snotty retorts, you have a man with little, if any, grasp of any issue.
As a life long southeast DC resident, I am 100% behind bowtie mayor on this issue! People need to focus on the bigger picture and not just the money being spent on the stadium. The proposed area (referred to as sodom and gomorrah by locals)is a total wasteland. All you stadium opponents who live in nicer neighborhoods, why dont you come down here and try taking a nice walk through the area with you family! I hope the vote passes and we get the damn thing built ASAP! As for David Cantania, he has ulterior motives (see Robert Seigal) for not wanting to see this vote pass.
Sorry RH, that's not really my responsibility to pay for your neighborhood to be rebuilt. You deserve services from the city such as police, education and getting your streets paved, but baseball stadiums in the hundreds of millions of dollars aren't a responsibility of taxpayers.
And Andrew, while that's true, so what? Lots of people come in from VA to shop in Georgetown on weekends -- should all those stores be subsidized gy the city? Do all establishments that attract customers from outside the city deserve subsidies? Where does it end?
I'm just stunned that in such a liberal city -- Kerry by 90% -- there is so much support for corporate welfare. If this thing is such a home-run baseball should be more than willing to pony up the full cost, which currently stands at over $1100 for every Washington resident.
Does anyone here know if Councilman Catania knows Mr. Siegel, and if so, what the nature of their relationship might be?
Councilman Catania-
You seem to contanstly point at Mayor Williams in your piece, which is a popular thing to do. What about other folks like your friend Jack Evans? Isn't he just as responsible, if not more? Do you have an issue with the Mayor specifically, or just the possible cost overruns on the stadium?
Do you really believe that the Mayor and Jack Evans, 2 of the folks that perhaps did the most in getting us out of the financial grand canyon that Marion Barry and other Council Members got us into, are living in a fantasy world? Two of the most financially responsible members or our government have done what they have done for our city while living outside reality? Do you really think that they are trying to drive the city into the ground? Do you really think that you and Marion Barry have to save the city from impending financial disaster caused by Jack Evans and the Mayor? Do you think they are lying to the city because they don't really believe that the NEW revenue brought in through the taxes paid by new businesses, new middle to upper income residents, high property taxes (due to the stadium neighborhood causing values to skyrocket), etc. will help the poor, the school system, and responsibilites that require increased revenues to the city after the real estate boom ends? I think they are right - this new ballpark district will spur a whole neighborhood of development which, in the long run, will help fund programs helping the needy, the school system, and the city in general because our city will be taking in significantly more revenue. This city has been struggling for decades because of the collapse of the economy in this city, and I believe Mayor Williams and Jack Evans are doing a good job in trying to reverse that trend.
It's not "If you build it, they will come", it's "If you just say you will build it, they will come". They are already here - buying up property and making plans to build stores, restaurants, homes and offices. Land has skyrocketed because of the stadium agreement alone. In the begining, the arguement was that there is no garauntee that the stadium will spur development. That arguement is dead. It has already spurred development plans and the lease isn't even signed. However, if you kill the stadium or move it to RFK, real estate prices will fall, and while the plans for many offices and some residences may stay in place because of other development going on, much of the retail, restaurants and condos will be killed by developers as well. With that you diminish the new revenue that would have gone to helping the schools, the needy, and other city responsibilities that require more revenue to meet. I think killing the stadium or moving it to RFK would be much more of a loss than a victory.
You have done a lot of cost studying, but what about benefits? Are you really trying to imply to residents that if you kill the stadium, the school system will be great in a couple years as a direct result? That seems to be what is implied by saying that the 'residents money' (which it's not), could be better spent elsewhere. If you kill the stadium, there won't be any money, and we'll be right where we started a couple years ago - arguing over how to spend what little money we have instead of how to generate more in the long run.
In your piece you also seem to only have an issue with the cost overruns that have been spurred by Katrina and the real estate prices rising (thanks to the council moving so slowly and, because when we said we'd build it, they came), and the fact that costs may further increase in the future. This implies that if we controlled overruns, or got someone else to pay for them (as at least one bidder has stated he is willing to do), you would support the waterfront stadium deal. But weren't you against the stadium even before the talk of overruns? I think there is something more emotional or political behind your arguement. I think that if someone came out and said they would privately fund any overruns, you would find another reason to be against the waterfront stadium. This makes it difficult to negotiate, because many folks will never be happy and will always point out some problem that they believe is dire to our city and means the whole thing needs to be killed. Take the fully privately funded soccer stadium proposed across the river as an example. This is an area whose residents have been complaining it does not get any of the development that other parts of the city enjoy. The day it is proposed, WITH NO PUBLIC FUNDS, the neighborhood came out squarely against the stadium saying it will just be a lot of people coming into and out of their neighborhood. Marion Barry invented reasons to be against it so he could be a champion to the complaining residents instead of working to help them understand why it is good for their community. Even though it was the completely privately funded development that they have been asking for, he remained against it until they came up with more direct forms of payment to buy him and the neighborhood off. Maybe this form of negotiation would work on Marion Barry for the Baseball stadium as well. Are you really siding with the guy who drove our city financially into the ground until the federal government took over as a position of financial responsibility? After Mayor Williams and Jack Evans brought this city out of financial ruin and into good standing, you and Marion Barry have to come rescue us before the Mayor and Jack Evans financially ruin the city? Sorry, I think I'll go with Jack Evans and Mayor Williams on this one because I think they are right, again.
And please don't keep pushing the myth that getting rid of the staduim will somehow benfit poorer people in this city. Exactly how have you proposed to help everyday people as a direct result of killing the stadium deal? How have you worked to fix the stadium deal so that it gets your vote? What have you done other than talk loud and point fingers on this? We need people to get behind the city and help us to build a greater city that will have the money to fix schools and and build hospitals in the future, not people who are just going to criticize the administration to further their own interests. Killing the stadium would create no notable benefit that I can see, unlike the benefits that will come out of the future waterfront stadium neighborhood (mostly in the form of large revenues to the city from development around the stadium). Doing away with the benefit this would provide to the poorer folks in the city would be irresponsible. Moving the stadium to RFK will also not provide the benefits that the Waterfront Stadium neighborhood will provide to the poor, to the schools, etc., but we would still incur the majority of the costs. This would be even more irresponsible. If you find the issue of cost overruns to be troublesome, that is a responsible and legitimate concern. Please show the same level of responsibility by working with the necessary people to solve those issues and provide the benefit we are looking forward to, instead working against those same people to kill the stadium and walk away, supposedly in victory.