Uses of Funds

There are various ways to manage a budget shortfall, including reducing the percentage of affordable housing, but these solutions have not yet been negotiated and will require some time to put in place. Moreover, the cost cap legislation states that:

Any revenue derived from development rights on the ballpark site may be used for any overruns on the land acquisition and remediation costs that are documented; and Any excess revenues derived from development rights that are not used for costs overruns for land acquisition and environmental remediation must be deposited into the Community Benefit Fund.

Since the end of May, additional inspections have uncovered more fuel tanks and asbestos in the building formerly owned by the Architect of the Capitol. 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.

As currently proposed, no funds from the sale of development rights will be available to pay for land and environmental cost overruns or to be deposited in the Community Benefit Fund. Our understanding is that the Office of the Attorney General has determined that the resolution is legally sufficient and, accordingly, consistent with the cost cap legislation. I leave it to the Council to satisfy itself that the transaction contemplated by the resolution is consistent with the cost cap legislation. Again, the issue of time becomes very important, as these matters would need to be resolved in time for construction on the WDC Baseball Partners’ proposal to start by Labor Day.

The WDC Baseball Partners proposal assumes the market value of the development rights purchased is $61 million. We believe the $61 million figure is reasonable based on current market conditions in the area. This number includes the reduction in value due to the allocation for the stadium parking.