The stadium debacle has finally come to an end.
Before I went to sleep on Tuesday night, I had written a column about the economic losses the city could suffer because the D.C. Council had rejected the lease agreement to build a new baseball stadium for the Nationals. Lo and behold, a surprising development came a mere four hours later when the Council reconsidered and approved the lease, with certain conditions.
The Council had initially approved a stadium contract back in 2004, but since then the cost estimates have risen. A December 2005 estimate by District Chief Financial Officer Natwar Ghandi put the total cost of the Anacostia waterfront stadium at over $667 million. This has caused a stir among District politicians, creating a heated and often very confusing debate. Opposition to the stadium came out of concerns about general fiscal issues to questions over whether the money would be better spent elsewhere—such as on the ever-failing D.C. schools.
Two-thirds of a billion dollars is a lot of money. However, this amount would not come directly out of the city’s bank account. Rather, the city would borrow the money through a massive bond issuance. The “cost” of issuing these bonds is estimated at $36.5 million each year, but the incoming revenue from the stadium is estimated at $58 million annually. Also a benefit for the District is President Bush’s new budget allocation of $20 million to upgrade the Navy Yard Metro Station.
From a business point of view, the stadium looks like a sound investment for the District. Increased tax revenue would help recover unexpected costs. However, because the issue has become so deeply politicized, these economic factors are often ignored. Councilmembers and many voters only see the high price tag, with fuzzy predictions of potential future returns.
It may be a noble, and perhaps popular, position to argue the money would be better spent elsewhere. But, that’s not how city finances work. Balking on the nearly $600 million stadium does not mean there will be $600 million to spend on schools or libraries.
After initially voting the lease agreement down, the Council heard Mayor Anthony Williams’ pleas for reconsideration. Following several hours of further negotiation, the Council agreed to the lease, with a provision that the city would not be responsible for costs over $611 million. While not part of the original agreement, the MLB will most likely agree to this new cap so the league can go forward with selecting a new owner for the Nationals.
The approval of the lease finally put to rest concerns that the Nationals would move to Northern Virginia, Las Vegas, or some other destination that was not the District of Columbia.
With the addition of the cap, those who were opposed to the stadium can claim credit for saving the city some money. At the same time, Mayor Williams has secured the future for at least one part of his legacy—bringing baseball back to D.C.
