Rent to Moan Why don't the Nats want to pay $3.5 million in rent? Lights! Cameras! Offices!

Specs Appeal: Supposedly “incomplete” ballpark has Nats pondering legal options.
Darrow Montgomery

By April 1 of this year, the Washington Nationals had played (and somehow won) two games at their new ballpark, paid for and built by the District of Columbia.

On that date, Bill Mykins, who works for a contractor hired by the city to help manage ballpark construction, contacted the team about what would seem to be a simple matter: sending the Nats the electric bill. After all, fans were flowing into the sparkling new stadium, depositing their money into Nats coffers. Plenty of funds for Pepco, right?

A Nationals exec sent back the following pissy comment: “I don’t know why we would do this. We cannot control the lights.”

That prompted Mykins to respond thusly: “This comment is unproductive.…Art—can you please instruct your staff to cooperate with the transfer of utilities?”

Mykins could not have addressed his request to less receptive ears. Art Fuccillo was, as the Nationals stadium-construction point man, the chief bulldog for Ted Lerner & Co.—the team owners increasingly reviled in this town for being unrelentingly stingy, needlessly combative, and all-around jerks.

Fuccillo, a longtime development executive for Lerner, pounded out a lengthy multi-point e-mail explaining exactly how and why the ballpark wasn’t living up to the Nats’ expectations. The lights in the stadium were not operating “efficiently” enough, he wrote, thanks to glitches with the control systems—no efficiency, no pay! “We do owe and will agree to pay for utilities associated with our use of the building. The inefficiencies will have to be priced until the controls are in operating order.”

The tussle over the light switches is just one episode in a monthslong conflict between the city, stadium contractors, and the Washington Nationals over ballpark construction matters large and small. And very small.

They have been revealed in letters and e-mails obtained by LL through an open-records request. The net outcome is that, to date, the Washington Nationals have refused to pay $3.5 million in rent under a 2006 lease agreement, a refusal stemming from the team’s contention that the city failed to meet its contractual obligation to deliver a “substantially complete” stadium by March 1. Meanwhile, the Nats played 80 regular-season games this year in a ballpark whose attendance was limited not by its construction but by its tenant’s crappiness.

And yet, says D.C. Sports and Entertainment Commission CEO Erik A. Moses, “They have not ever acknowledged that it is complete.”

This week, the city and the Nats are scheduled to sit down for a final attempt to hash out their remaining differences. Moses says he hopes to come out of the talks with “a road map and a timeline” for getting the punch list punched (less than 10 percent of some 27,000 items remain) and the rent paid. If that doesn’t happen, under the terms of the lease, the fight will be placed in the hands of an arbitrator. In anticipation of that possibility, the Sports Commission has recently hired the law firm Seyfarth Shaw.

The conflict dates back at least to Feb. 27, a month before the first Major League exhibition game was to be played at the stadium. On that day, Rick Weiss, a lawyer with Foley & Lardner working for the Lerners, wrote the Sports Commission and the mayor’s office warning that the ballpark would not meet the standards or the deadline for “substantial completion.”

But what does “substantial completion” mean? Merely having the stadium ready to host baseball games doesn’t pass muster, according to agreements signed by the city and the team. Rather, the stadium needed to secure building and health permits from the city and a certification from the project architect, HOK Sport, that construction is complete. The stakes behind “substantial completion” are high; under the contract, failure to meet the standard results in a $100,000-per-day fine.

On March 7, the city granted the stadium a certificate of occupancy, the main permit required to open it to the public. The same day, the Sports Commission sent the Nats a letter essentially asking for a degree of understanding, outlining the project’s contentious history and tight deadlines. Contractors, after all, had the stadium ready for baseball in a record 22 months.

Nats lawyer Irwin P. Raij would have none of it: “We think that particular history is irrelevant to the ‘Substantial Completion’ determination.…The tests are either met or they are [not]. To date they are not and attempting to portray our client in a bad light is inappropriate….It is unfortunate that you chose to depict the Team as ‘finger pointing and windfall seeking’ when all it is doing is stating its rights related to ‘Substantial Completion.’”

Perhaps the Nats executives were just mad about their offices. On April 17, after the Nats had played eight home games, Fuccillo demanded the city pay the $100,000-per-day delay charge “due to the continued failure to deliver the required approximately 30,000 square feet of Team office space…and other such deficiencies with the completion of the Complex.”

On April 29, the commission’s CEO at the time, Greg O’Dell, essentially told Fuccillo & Co. to shove it, again asserting that the ballpark—now having hosted 15 games—was indeed substantially complete. By that time, the Nats had been handed the keys to their offices, and O’Dell noted that “although there was undoubtedly some minor inconvenience, it does not appear that any real harm was suffered by the Team and…we allowed the Team to remain in their current offices at RFK free of rent.” Two weeks later, O’Dell notified the team that, as far as the city was concerned, the stadium was done and the rent was due.

Free D.C. commercial office space? Sounds like a deal to LL!

Alas for the city, such gestures mean nothing to Lerner & Co., whose lawyers at Foley & Lardner consistently squeezed the Sports Commission on their full complement of rights under the agreements signed by the city and the team.

Do the Nats have a legal case here? That’s not for LL to decide, but, yes, the team seems to be vigorously exercising their contractual rights.

Do they have a case in the realm of public opinion—an arena in which LL has a tad more expertise? Hell no.

Don’t get LL wrong: If this were one of the malls or office parks with which Lerner Enterprises has pocked the suburban landscape over the years, he wouldn’t give a bowl of Manny Acta’s warm Skoal residue about the tactics at play.

But, in a set of facts that seem to have escaped the famously skinflintish Lerner, the District of Columbia tore itself asunder in a bid to publicly finance this ballpark—a process that was substantially complete by the time Major League Baseball sold the team to the Lerner group. The Nats have gotten a state-of-the-art stadium in record time without having to risk a dime to build it.

As the season progressed, the Nats’ attitude did not.

On May 22—25 home games into the season—reps from the city and the Nats met to discuss the “substantial completion” issue. Fuccillo left unhappy, penning a livid e-mail rife with bold words and underlining later that evening. “How about getting HOK to do the right thing and provide the certification that you and we are entitled to under the documents,” he wrote. “why have they not provided us that?…Can you answer that???” In the morning, he accused the Sports Commission of “weaving a maze of connect the dots” in order to avoid providing the certification. (Moses declined to comment on the architect issue.)

Things continued to degenerate into June, as Fuccillo turned his attention to the team’s “hotlist”—an inventory of supposedly major stadium construction items still in unsatisfactory condition. The list included placing more TVs in areas where fans couldn’t see the scoreboard well, getting the stadium’s security cameras to work properly, stopping rainwater from flooding the dugout, and fixing surface cracks in the concrete ramps as well as leaks in a Nats conference room (“Week after week after week we tell you there are leaks there,” Fuccillo wrote, “and no one has fixed them”).

On June 25—42 home games into the season—Tom Engers, a Turner Construction exec apparently sick of Fuccillo blowing punch-list items out of proportion, smacked the Nats bulldog down. “Art…The drama can be played out elsewhere,” he wrote in an e-mail. “The Nationals choice was to play in the new stadium or play at RFK. You chose the new stadium. It is really that simple. It was a good choice.”

Release the Lobbyists!

Wilson Building schedulers, be on notice: CareFirst will soon be wanting to speak to your boss.

If they haven’t already.

LL is going to call last Tuesday the official kickoff of what promises to be one of the most active lobbying seasons in District history. On that day, former D.C. Council Chairman Linda Cropp paid a visit to her successor, Vincent C. Gray, and other councilmembers. Cropp, who sits on the board of the CareFirst affiliate operating in the District, brought with her the Owings Mills, Md.-based health insurer’s CEO, Chet Burrell.

The reason for the visit was legislation introduced last month by Ward 3 Councilmember Mary M. Cheh that aims to force the health insurer to comply with provisions in its charter that it be run as a “charitable and benevolent institution.” (For more on this convoluted saga, see LL’s column of May 23.)

Cheh’s bill, which will be the subject of an Oct. 10 hearing, aims to take a yearly chunk out of CareFirst’s $754 million in cash reserves to help fund the city’s health needs. Upon introduction, the bill garnered 10 co-sponsors—only Ward 2 Councilmember Jack Evans and At-Large Councilmember Carol Schwartz failed to sign on.

Evans last week told LL he’ll be recusing himself from any issues involving the company. That’s due to reports last fall in the Washington Times that Evans had voted to give CareFirst a tax break while being listed on his law firm’s lobbying reports as having represented the company.

The firm, Patton Boggs, called the listing a “clerical error” when the Times report broke, and Evans has said he has never done any work for the company. Patton Boggs no longer represents CareFirst.

His decision to recuse, he says, comes out of an abundance of caution.

Schwartz says her decision not to co-sponsor stems from her desire to see a voluntary solution forged between CareFirst and the city—a solution she thinks she can help forge by remaining “an honest broker.” But in principle, she says, “I do believe that CareFirst owes the District.”

So that leaves 11 councilmembers, all of whom are introducing or co-sponsoring the legislation. Bulletproof, right?

Well, LL calls no majority bulletproof in the face of CareFirst’s lobbying team. Besides Cropp, making her lobbying debut, the company has plenty of talent at its disposal trying to swing council opinion in its direction. According to the company’s most recent disclosure report, CareFirst is certainly in the top echelon of spenders on Wilson Building influence. Since the beginning of the year, the company has paid just shy of $70,000, most of it to former Ward 7 Councilmember Kevin Chavous, now of Sonnenschein, Nath & Rosenthal, with the balance going to Jeff Trammell of Trammell & Co. and Andrew Marks of Crowell & Moring. Together, counting several in-house execs, CareFirst representatives made more than 50 reported visits to city officials in the first half of 2008.

The lobbying isn’t limited to the legislative sphere, either: CareFirst reps, LL is told, recently met with the Washington Post editorial board.

A successful CareFirst lobbying drive might look something like this: The company might make assurances to voluntarily fund activities in various wards, plucking off one legislator or another suddenly convinced of the company’s commitment to community benefits. Getting seven votes against might be a tall order, but a “soft seven” willing to amend Cheh’s bill might not be impossible. Failing that, there’s always a chance of getting Congress to put the kibosh on it.

A week after Cropp made the rounds, Cheh says she still has 10 co-sponsors and an abiding faith in her colleagues’ ability to withstand any rhetorical onslaught. “I love democracy in action,” she says. “Let them lobby as much as they want!”

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