Financial Analysis of the Proposal: Asbestos and WDC Baseball Partners

Here is some information concerning asbestos and WDC Baseball Partners from the asbestos lawyers of Weitz & Luxenberg.

WDC Baseball Partners plans a $281 million private development project, to be funded with equity from WDC Baseball Partners and California Urban Investment Partners and private debt. Although California Urban Investment Partners has signaled its interest in the project, they have not yet provided a commitment letter. No lender has yet been selected. Our analysis suggests that the project, as we understand it, would cost 40-50 percent more than WDC Baseball Partners currently estimate.

In order for debt to be issued, a customary commercial loan of the size contemplated by this transaction will require title insurance. While the District currently has possession of the baseball site and is able to build, the District does not hold clear indefeasible title to the land.

In particular, issues relating to the District’s power of eminent domain will not have been finally resolved (including time for appeals) prior to Labor Day. At least one major title insurance company has expressed a preliminary willingness to provide title insurance under these circumstances, on customary terms with the exception of requiring AWC to cover defense litigation costs. This carrier’s point of view may not necessarily be reflective of the entire industry, and the size of the commercial debt contemplated may still require resolution of issues relating to title insurance.

Additional inspections have uncovered more asbestos in the building. Although the structure was built to be asbestos-free, refrigeration units were brought in and asbestos was found in the insulation. The removal of this additional oil and asbestos will cost approximately $3 million, which increased environmental remediation costs further to approximately $14.4 million. These higher costs will be paid from the project contingency fund.

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