Contracts Are To Hold Marlins Accountable For All Cost Overruns In Building Of New Baseball Stadium
Written by Risa Polansky on October 2, 2008
By Risa Polansky
Contracts between Miami-Dade County and the Florida Marlins are to hold the team accountable for all cost overruns it may cause in building a $515 million ballpark — including specifying a remedy should the team fail to meet obligations.
"It would be a breach of contract action if the team failed to pay," said Assistant County Attorney Geri Keenan, lead attorney on the pending contracts. "There would be a remedies section in the contract" that would set forth how the team would make up for any defaults.
Negotiations are ongoing, she said, so specifics are pending.
The Marlins are to pay $120 million in the deal, plus $2.3 million a year rent.
A framework already approved by the county, team and City of Miami stipulates that the team is to cover any overruns not caused by a government party, protecting the county from spikes in material costs and other price inflators.
The agreement contains "a contractual obligation by the team to the extent that the stadium developer has overruns… that the team itself will meet the obligations to pay for the overruns," Ms. Keenan said.
It requires also evidence of bank credit or other financial instrument of at least $20 million for overruns.
For months, Commissioner Sally Heyman has pressed questions, including how to pin the team down beyond $20 million if necessary.
"We know from the airport, we know from the seaport, we know from the performing arts center: everything has been a large overrun," she said, "none of them with the small — but substantial — amount of $20 million."
She questioned why the team has not been required to reveal its financials.
"Why haven’t the Marlins disclosed, if in fact they are obligating themselves to X amount of money in surety?" she asked. "If there are any problems — that’s almost a given that there will be problems — where is the money? Show us what your financial status is."
In a 2003 pro-forma, the Marlins were $141 million in debt, with equity declining.
"What happens if they default? What happens if they don’t have the financial means to meet their obligations?" Ms. Heyman asked.
Ms. Keenan reiterated that negotiations continue but said an assurance agreement "will set forth all the terms related to the Marlins overruns obligation."
The general stadium agreement puts the county on the hook for overruns it causes.
She said an arbitrator would probably determine who was at fault should a dispute arise.
Ms. Heyman said she has also repeatedly asked how the county would pay.
"If there are liabilities to the county for delays that we cause, for procurement problems, what is our liability and how much money do we have available, and where is that money coming from?"
She questioned also how much the county is to pay for site infrastructure and how to pay for it.
Staff has mentioned sales tax revenue, she said, meaning the ballpark might dip into general funds, which officials have insisted are not involved because convention and tourist taxes are to cover costs.
"I think it’s prudent… that if we’re doing this we know what the finances are on all parties obligated," Ms. Heyman said.
It would take nine of 13 commissioners to pass the contracts.