Stadium finance plan splits commissioners

Wednesday, July 4, 2007

Click here to enlarge this photo Staff Photo by Jay Friess Construction crews with Skanska USA Building Inc. are moving earth at the future site of the Regency Furniture Stadium on Piney Church Road to construct drainage channels and a pond. E-Mail This Article | Print This Story

After a closed-door negotiation session last Wednesday evening, the commissioners voted 3-2 to issue public bonds for the Maryland Baseball LLC $8.5 million share of the project in return for a healthier contingency fund.

The deal didn’t please commissioners’ President F. Wayne Cooper (D) and Commissioner Edith J. Patterson (D), who voted against letting the company finance its third of the project cost using public bonds.

The dissenters did not voice their opinions in public before the vote, and neither commissioner could be reached for comment on their decision.

Under the deal, the county will issue public bonds with low-interest rates for Maryland Baseball’s share of the project as well as its own. Maryland Baseball will not reap any savings from the cheaper public bonds. Instead, according to county officials, Maryland Baseball will make payments to the county over the next 15 years for the public bonds that equal the amount the company would have paid for private bonds.

The county plans to funnel the savings from using the cheaper public bonds into the project’s contingency fund, beefing it up from $500,000 to $1.5 million. While the move does expose the county to more risk for the project, the three commissioners who voted for the deal couched it in conservative terms.

‘‘Some of us on the board thought we needed an additional layer of protection,” said Commissioner Gary V. Hodge (D).

Hodge said that the county’s contract with Skanska USA Building Inc. does include a guaranteed maximum price of $25.6 million for Regency Furniture Stadium, which would be split three ways between the county, state and Maryland Baseball. However, Hodge said that the construction contractor ‘‘could encounter things that simply are not in the scope of the contract.”

‘‘We only had a limited amount of money in contingency,” explained Commissioner Reuben B. Collins II (D). ‘‘You need money, because anything can happen. ... [The deal] was an attempt to think ahead.”

‘‘It was a creative financing deal,” said Commissioner Samuel N. Graves (D). ‘‘There is a certain risk, but I felt the risk was mitigated. We’ve done what we can to safeguard the money as best we could. ... I hope that it will be a great partnership and everything works out all right.”

The deal could leave the county in the position of paying for two-thirds of the stadium in the event that Maryland Baseball goes out of business. However, the majority of the board believes that the county has included enough safeguards in the deal to prevent that scenario from happening.

‘‘We’re pretty well layered with protection,” Hodge said.

The county has secured a letter of credit from Maryland Baseball, equal to one year of bond payments from the company, as a sort of security deposit on the bonds. If the company is unable to continue paying on its bond obligations, county officials say the deposit would give them enough time to maneuver a new tenant into the stadium.

‘‘That would give us a solid year,” Hodge said, to recruit a new baseball team or rearrange the county’s capital projects budget to absorb the loss of income.

According to a county press release, the newly augmented contingency fund could also be used ‘‘to respond to any shortfall in the final installment of State funding for the project, which is expected to be approved next spring during the 2008 session of the Maryland legislature.”

The state has yet to approve the final $1.5 million of its share of the stadium. However, Hodge declared that he is confident that the state funding will be appropriated, saying, ‘‘There’s not going to be any surprises there.”

But Del. Sally Y. Jameson (D-Charles) was not quite that certain. Jameson said that the state must close a ‘‘painful” $1.5 billion budget hole next year, and that the governor’s office has not ruled out any revenue sources, including slot machine legalization and increases in the gas and sales taxes. Jameson said that the state has a separate funding source that is currently used exclusively for stadiums, but that could change.

‘‘You can only hope that the money will be there,” Jameson said, calling the county’s contingency deal ‘‘an interesting concept.”

If the project stays on budget and the state delivers its portion of the funding, then the money left in the contingency fund would be used to reduce the county’s share of debt to the project.

‘‘We could end up reducing the county’s share and start crawling back to that original [$7 million] price estimate,” Hodge said.

The finance plan is not unprecedented. Portions of the cross-county connector and St. Charles Parkway in Waldorf are currently being constructed under a similar deal with American Community Properties Trust, the developer of St. Charles. And the new wing of Civista Medical Center in La Plata is also being constructed with public bonds.

Skanska has already dispatched earth-moving crews to the Piney Church Road site and begun grading and filling to construct the stadium’s drainage system. County officials said the stadium should be completed within a year, opening during the 2008 baseball season. The complex could be available for community events by early next year.

The county will own the stadium outright when it is completed. An official groundbreaking ceremony is being planned for later this summer.

E-mail Jay Friess at jfriess@somdnews.com.