Tight timeframe on business deal
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With a new deadline looming, negotiations began afresh on Wednesday to see if Fredericksburg officials can reach acceptable terms to bring professional baseball and an amateur sports training complex to the city.
On Tuesday night, the City Council voted unanimously to continue working with the partners representing the Hagerstown Suns and Diamond Nation.
But the hurdle is $18 million and time is tight. The council is to consider the fruit of the new negotiations at its next meeting on Sept. 9.
The owners of the Suns, a Class A affiliate of the Washington Nationals, want to move the team from its 84-year-old stadium in Hagerstown, Md., to Fredericksburg. The team has a lease to continue playing there through the 2016 season, if necessary, but attendance there is poor.
The Fredericksburg proposal would include a multipurpose stadium with 4,750 fixed seats that would serve as home to the Suns and host other events. The proposal also includes a training facility where Diamond Nation would operate camps and tournaments for amateur baseball and softball on five artificial turf fields on 38 acres in the Celebrate Virginia South development.
Diamond Nation already operates a similar facility in Flemington, N.J.
The original price tag for the Fredericksburg stadium complex was $35 million, for which the partners say they have obtained financing. However, construction bids currently set the price $18 million higher.
In a letter to the city last Thursday, the partners asked the city to cover the $18 million and give a permanent exemption of real estate taxes. In exchange, they offered 3 percent of gross revenues for the first decade of operations and 1.5 percent of revenues thereafter.
However, the city had agreed last September to $8 million in debt to cover the purchase of land and construction of an 1,800-space parking lot to serve the stadium complex.
The city also agreed to an incentives package that returns tax revenues to the partners, based on performance. Those incentives are worth roughly $1.4 million annually.
An economic analysis report prepared for the partners suggests the project will increase city tax revenues by about $1.8 million annually, but that is essentially the debt service payment if the city takes on the $18 million debt.
Council members expressed interest in the project Tuesday, but didn’t support the debt, which would total $26 million, including the parking lot contribution.
“We’re interested in negotiating. We don’t want the project to die,” Councilwoman Kerry Devine said. But she added that it “was a great disappointment” when the partners returned to the city for a second round of help.
Most public speakers at the meeting also opposed the additional financial burden for the city.
Some council members had been expected to decide the fate of the project on Tuesday. However, Councilman Matt Kelly—the key proponent of the project—met with the partners after they arrived in town a few hours before the meetings.
Kelly announced at the start of the council’s work session that he would be making a motion at the regular meeting to allow additional negotiations.
Those negotiations started about 9:30 a.m. on Wednesday in City Hall.
Mayor Mary Katherine Greenlaw represented the council and was joined by City Manager Bev Cameron and additional city staff.
Neither could be reached for comment on Wednesday about how the meeting went. No meeting is scheduled for today, and the baseball partners have returned to New Jersey.
In addition to providing the full council an update on negotiations in two weeks, the council has asked for its bond counsel and financial advisor to take a look at the partners’ financial documents, to better assess the city’s risk.
It was unclear Wednesday whether that can be completed by Sept. 9.
Jack Cust, the managing partner of Diamond Nation, said the partners face a tight deadline of their own for the project.
The team wants to have a Fredericksburg stadium built in time for the start of the 2016 Minor League Baseball season.
During last year’s negotiations with the city, the goal had been to have it built in time for the 2015 season, but that would have been a challenge.
Building one by April 1, 2016, won’t be easy if a deal can’t be reached soon.
In addition to construction concerns, Cust said he has a report due to Major League Baseball soon on the status of the relocation.
In response to questions from councilmen Chuck Frye Jr. and Billy Withers, Diamond Nation President Keith Dilgard said the partners are not in negotiations with any other localities about the Suns.
However, he said Diamond Nation is in discussions with “many localities” about building another amateur baseball/softball complex.
Cust said the New Jersey location has drawn 500,000 visitors annually since opening, and he projected 900,000 annually in Fredericksburg.
That figure includes stadium attendance, athletes taking part in Diamond Nation events, and families accompanying the athletes, Kelly said.
Cust also said he expected the 900,000 people to bring $51 million in new spending into the area each year.
Cust expressed concern this week about meeting his deadlines, but Frye said the partners should have come with their request sooner, not in a last-minute rush.
“To come here and almost demand money is not good for the citizens,” he said.
Pamela Gould: 540/735-1972