Read the entire article here on the Washington Times website

Gandhi defends ballpark figures

By Eric Fisher
THE WASHINGTON TIMES

What started yesterday as a D.C. Council hearing on private financing options for the Washington Nationals' new stadium quickly devolved into a verbal war on land costs for the planned ballpark.

Natwar Gandhi, District chief financial officer, received a vicious line of questioning from several council members, including David Catania, at-large independent, and Marion Barry, Ward 8 Democrat.

In March Gandhi estimated the land acquisition, environmental and infrastructure costs for the Southeast stadium site to be $161.4 million, but Catania and Barry yesterday said that number is based on badly outdated or irrelevant real estate comparables and faulty methodology. Even council chairman Linda Cropp, who previously accepted Gandhi's findings, briefly challenged the report.

Had Gandhi's total on those land costs exceeded $165 million, the District would have been forced to seek out a cheaper ballpark site. Most of the property in the stadium site, near the Anacostia River waterfront, is held by a disparate group of private landowners.

"You have completely manipulated and contrived these numbers, and when we're actually paying upwards of $200 million for the land acquisition instead of the $77 million you're suggesting, you're going to be long gone and we're going to be left with a huge burden on the taxpayers of the District of Columbia," Catania said. "I absolutely believe this to be malfeasance."

Barry took an opposite approach, unsuccessfully seeking a pledge from Gandhi to resign his job if the final costs for those parts of the stadium project exceed his estimate by more than 5 percent.

Barry and Catania also took sharp aim at a disclaimer in the land cost report saying it is not intended to be relied upon as a formal appraisal of market values.

Gandhi, predictably, bristled at the heated accusations and called the line of inquiry "disrespectful." Mayor Anthony A. Williams also said he was disappointed at the council's treatment of Gandhi.

The land cost estimate was compiled with the aid of professional consultants from Deloitte & Touche, and Gandhi said the projected land costs are adjusted to inflation and include fees for several infrastructure projects, such as the potential $27 million relocation of a sewer line under the stadium site, that ultimately may not be needed.

"I am thoroughly appalled by how Mr. Catania has misrepresented this report," Gandhi said. "Our study was never intended to be the instrument by which we go out and negotiate to buy the land."

While tensions ran high during Gandhi's testimony in the seven-hour hearing, public attendance in the council chambers was barely a fraction of the standing-room-only hearings and votes on the stadium issue last fall.

The session was the first of a two-part public roundtable, concluding Monday, to consider legislation now before the council to include private financing into the stadium project. Cropp led a movement last fall to mandate a search for private funds for at least 50 percent of the hard construction costs as a means to lower the project's public-sector investment.

Deutsche Bank, which submitted an offer of $246 million of debt financing and is favored by Williams, conversely received a gentler line of questioning, but the bid is far from the political slam dunk it was a week ago. The Deutsche Bank plan, designed to act in concert with District bonds, also has been recommended formally by Gandhi. But several council members said yesterday they did not see how the plan demonstrably lowers the city's overall indebtedness.

"We borrow some of the money from them instead of bonding everything, we're still on hook. The money still needs to be paid back," said Jack Evans, council finance committee chairman.

Instead, District sources said last night Cropp is actively seeking to develop council support for D.C. Baseball Stadium Associates, a renamed version of the BW Realty Advisors group that last fall helped spur Cropp toward private financing. The group intends to finance the project through a complex blend of traditional debt financing, equity investment and depreciation tax benefits and wants to take over lead status on the stadium development process.

The group's bid was not certified by Gandhi, and it is uncertain whether that will allow the District to sign a deal. But D.C. Baseball Stadium Associates testified yesterday at the invitation of Cropp and Evans, as did Deutsche Bank and five other companies that submitted private financing proposals.

Richard Gross, D.C. Baseball Stadium Associates principal, boasted that its plan "is cheaper than anything else out there" and took direct aim at its competitors, including Deutsche Bank.

"I've thought all along this proposal is the one true private financing out there," Cropp said.

The council is slated to vote on the private financing bill by the end of June. If no plan is adopted, the existing District-based financing plan approved in December remains in use. That plan relies on a four-pronged revenue stream led by gross-receipts taxes on District businesses.

Nobody saw this coming. Maury, when am I allowed to say "I told you so"?

Well, K., you can say I told you so, but one of the things that jumped out from Day One was the District's own site analysis:

http://www.businessofbaseball.com/relo/DCBallparkSiteEvaluation.pdf

Check the Navy Yard site... there are site issues galore with it.

Of course, there's been speculation that the numbers presented by the DC CFO were designed to just come in under the wire. I love this...

quote:

"I am thoroughly appalled by how Mr. Catania has misrepresented this report," Gandhi said. "Our study was never intended to be the instrument by which we go out and negotiate to buy the land."

That sure is a vote of confidence on the validity of the numbers, now isn't it?

This will pan out for all involved... the alternative is a number of expensive lawsuits otherwise.

Lawsuits? I don't know, but I sense that there will be a number of them in the coming months. My gut feeling is if acquiring land through Eminent Domain for a sports venue is a major part of your overall plan, then big time legal issues are heading your way. I'll wager you that the 1st pitch in any new stadium doesn't happen before 08, and costs, when all is said and done, at least 800 million.

The agreement with MLB stipulates that the new facility is online by 2008.

As for Eminent Domain... the Connecticut case in the Supreme Court will factor in that.

I along with others enjoy the spectator sport of watching how way over budget their stadium has become. I do however have a concern how this may effect our effort. Does anyone know what percentage of MLB stadiums have been built within budget? I fear if there are a lot of stadiums being built over budget we could lose some credibility in regards to our calculated $350m.
It would be great to have some good examples of MLB stadium budgets researched in advance to counter the nay-sayers.

quote:

Originally posted by Maury:
The agreement with MLB stipulates that the new facility is online by 2008.

As for Eminent Domain... the Connecticut case in the Supreme Court will factor in that.

Oooh! MLB fall behind a self imposed deadline..unheard of !!

HOK has historically come in at or below budget on their facilities.

The problem in DC is that they picked a site that is owned by a myriad of people, several of whom are allied with staunch foes of MLB2DC on the DC City Council. Unless Portland decides to put the stadium into the acreage at and around Pioneer Square, I don't think this will be an issue.

I haven't seen Gandhi's estimates or the methodology behind them but from everything I have seen about Gandhi, along with the fact that Deloitte signed off on the numbers, leads me to believe that the numbers are reasonable. Remember that Gandhi was the one bumped up the estimates in the first place, and that he has no vested interest in the matter other than improving DC's financial situation. This is a far cry from Catania's outlandish claims.

If there is a problem then it lies within the terms of the agreement that MLB drew up with the city in the first place.

Who is to say what the land is worth anyway? If my house was sitting on land that the city of Hillsboro had promised to sell to Intel for no more than $X without buying it from me first, then you can be sure that I will get $X for it, or more, especially if I didn't want Intel to have it because, I don't know, I hated computers or something.

quote:

Originally posted by The Cactus Leaguer:
HOK has historically come in at or below budget on their facilities.

Thats very good to hear!

quote:

Who is to say what the land is worth anyway? If my house was sitting on land that the city of Hillsboro had promised to sell to Intel for no more than $X without buying it from me first, then you can be sure that I will get $X for it, or more, especially if I didn't want Intel to have it because, I don't know, I hated computers or something.

Ha! good analogy.

quote:

Originally posted by Merrittk92:

quote:

Originally posted by Maury:
The agreement with MLB stipulates that the new facility is online by 2008.

As for Eminent Domain... the Connecticut case in the Supreme Court will factor in that.

Oooh! MLB fall behind a self imposed deadline..unheard of !!

Not self-imposed... it's within the actual agreement signed by the District and MLB.

quote:

Originally posted by Maury:

quote:

Originally posted by Merrittk92:

quote:

Originally posted by Maury:
The agreement with MLB stipulates that the new facility is online by 2008.

As for Eminent Domain... the Connecticut case in the Supreme Court will factor in that.

Oooh! MLB fall behind a self imposed deadline..unheard of !!

Not self-imposed... it's within the actual agreement signed by the District and MLB.

Which is very similar to agreements signed with Don Corleone. We all know who's calling the shots.