Did the 1988 agreement between the Maryland Stadium Authority and the Baltimore Orioles count as the 'long-term lease' state law required before issuing stadium bonds?

Plain-English summary

Before the Maryland Stadium Authority could sell bonds to build a new baseball stadium at Camden Yards, state law required it to first secure a "long-term lease" with a major league baseball team. The Authority's chairman asked whether the Memorandum of Agreement it had reached with the Baltimore Orioles, committing the team to play in the new stadium for at least 15 years (with an option for five more), satisfied that requirement, given that the Authority did not yet own the Camden Yards land the stadium would sit on. The Attorney General concluded it did: the agreement was legally binding immediately even though actual occupancy would begin later, courts have long enforced this kind of "agreement to lease" through specific performance, and the 15-year commitment matched exactly what the General Assembly had in mind when it required a "long-term" lease as a condition of issuing the bonds.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the Stadium Authority sign a binding "lease" for land it didn't own yet?
Yes, according to this opinion. The Attorney General concluded that requiring the Authority to already own the Camden Yards land before it could get a "long-term lease" would have been a legislative catch-22, since the whole point of the lease requirement was to let the Authority secure bond financing to acquire that same land. Courts have long enforced this kind of "agreement to lease" through specific performance, and the doctrine of estoppel treats a lease made before the lessor owns the property as if it had been in full effect once the lessor acquires title.

How long did the Orioles have to commit to playing in the new stadium for the deal to count as "long-term"?
The opinion found that the General Assembly's own legislative history, including 1986 correspondence from the team's owner and 1987 testimony describing a "long-term" lease as 15 to 30 years, showed lawmakers were looking for roughly a 15-year commitment, and the Orioles' agreement to play in the new stadium for 15 years, with an option for five more, matched that expectation.

Who actually got to decide whether a deal counted as "long-term" under the stadium law?
The General Assembly left that determination to the Board of Public Works rather than defining "long-term lease" itself, and the opinion noted the Board's own determination that the Agreement satisfied the requirement was entitled to considerable weight.

Background and statutory framework

The 1987 stadium financing law let the Maryland Stadium Authority issue bonds to build a baseball stadium only after securing, with the Board of Public Works' approval, a "long-term lease" with a major league baseball team for the stadium site and construction. On May 5, 1988, the Board of Public Works approved a Memorandum of Agreement between the Authority and the Baltimore Orioles committing the team to play at a new Camden Yards stadium for 15 years, with a five-year option, subject to detailed rent formulas and binding on any future owner of the franchise. The question was whether this agreement, executed before the Authority actually owned the stadium site, satisfied the statutory "long-term lease" requirement.

The opinion split its analysis into whether the Agreement was a "lease" at all and whether it was "long-term." On the first point, it reasoned that the General Assembly could not have intended to require the Authority to already hold title to land it needed bond proceeds to acquire, and found the Agreement enforceable as a binding "agreement to lease," a form recognized in Maryland through specific performance under Motels of Md., Inc. v. Baltimore County and treated, once the Authority later takes title, as if it had been a valid lease from the start under the doctrine of estoppel recognized in Columbian Carbon Co. v. Kight. Drawing on Progressive Ass'n v. Rose's description of a lease as "a contract for the possession of land or space on the one side, and a recompense of rental income on the other," the opinion found the Agreement's landlord-tenant structure, definite rent, and 15-plus year term satisfied that basic template even though it was technically an agreement to lease rather than a present lease.

On the "long-term" question, the opinion applied the statutory-interpretation principles from Kaczorowski v. City of Baltimore and Carolina Freight Carriers v. Keane, looking beyond the bare statutory text to legislative history, including 1986 correspondence in which the Orioles' owner expressed willingness to enter a "long term arrangement," a sunset provision that would have voided the entire stadium authority law if no long-term lease was reached by mid-1989, and 1987 committee testimony describing a long-term lease as running 15 to 30 years. Because the General Assembly left the precise definition of "long-term lease" to the Board of Public Works' discretion rather than fixing a number in the statute, and because the Board had already determined the Agreement satisfied that undefined standard, the opinion gave that administrative determination considerable weight under Comptroller v. Rockhill, Inc. and concluded the 15-year Orioles commitment was exactly the kind of long-term lease the statute required, clearing the way for the Authority to issue bonds for site acquisition and construction.

Citations and references

Statutes:

• §13-712.1(4)(i) of the Financial Institutions Article
• FI §13-711(a)
• §7-312(e) of the State Finance and Procurement Article

Cases:

• Motels of Md., Inc. v. Baltimore County, 244 Md. 306, 314-16, 223 A.2d 609 (1966)
• Columbian Carbon Co. v. Kight, 207 Md. 203, 211, 114 A.2d 28 (1955)
• Progressive Ass'n v. Rose, 235 Md. 169, 174, 201 A.2d 8 (1964)
• Kaczorowski v. City of Baltimore, 309 Md. 505, 514-15, 525 A.2d 628 (1987)
• Carolina Freight Carriers v. Keane, 311 Md. 335, 339, 534 A.2d 1337 (1988)
• Comptroller v. Rockhill, Inc., 205 Md. 226, 233, 107 A.2d 93 (1954)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

MARYLAND STADIUM AUTHORITY

Baseball Stadium—"Long-Term Lease"—Agreement Between Authority and Baltimore Orioles Meets the "Long-Term Lease" Requirement For Issuance of Bonds.

September 27, 1988

Herbert J. Belgrad, Esquire
Chairman, Maryland Stadium Authority

You have requested our opinion on whether the memorandum of agreement between the Maryland Stadium Authority and the Baltimore Orioles meets the requirement for a "long-term lease" set forth in §13-712.1(4)(i) of the Financial Institutions Article ("FI" Article).
For the reasons stated below, we conclude that the memorandum of agreement meets this statutory requirement.

                                        I
        Legislative Requirement for a "Long-Term Lease"

FI §13-712.1 sets out certain requirements that must be met for the Authority to be permitted to "close on the sale of bonds to finance any segment of the facility ... "1 One of these is that a "long-term lease" must have been secured with the Orioles before the Authority may issue bonds for a baseball stadium:

  The Authority may not close on the sale of bonds to finance any segment of the facility unless the Authority:

(4) Has secured, as approved by the Board of Public Works, ...:

1
The term "facility" is defined in FI §13-701(c).

      (i) With respect to site acquisition and the construction of a baseball stadium, a long-term lease for a major league professional baseball team.2

On May 5, 1988, the Board of Public Works approved the Memorandum of Agreement Between Maryland Stadium Authority and Baltimore Orioles, Inc. (the "Agreement"). See letters from James J. McGinty, Jr., Secretary of the Board to Herbert J. Belgrad, Chairman of the Authority (May 11 and May 17, 1988).
The Agreement provides that the Authority will construct and maintain a new baseball stadium at Camden Yards, which the Orioles will use. Agreement at 1. The Orioles promise to use the new stadium for 15 years after it is completed, and they have an option to use the stadium for an additional five years. Agreement 14. The Agreement also contains elaborate formulas for determining the rent to be paid by the Orioles. Agreement 10 and 10A.
The Agreement expressly recites that it is binding on the Orioles, regardless of any possible change in ownership: "This Agreement shall be binding upon the Orioles and its successors and assigns, including, but not limited to, assignees of the franchise as a consequence of a sale of assets or stock, merger, consolidation or other form of disposition, from the date hereof until the end of the term." Agreement 19. It also provides for binding arbitration on "[a]ll disputes regarding this Agreement" [25] and for each party's "right to seek the specific performance of this Agreement" [26].
The Agreement also contemplates a later, "more formal agreement which shall incorporate in greater detail all of the provisions of this Agreement ..." [36] and which would elaborate on the following matters: liquidated damages in the event that the new stadium is not ready in a timely manner, 6; rental parity and resolution of schedule conflicts with a future football tenant, 10(d) and 24; insurance and indemnification requirements, 30; force majeure, 31; anti-discrimination clauses, 36; any necessary bond sale requirements, 36; and other customary provisions, "not inconsistent with the terms of [the] Agreement," 36.

2
A long-term lease is not a prerequisite to the Authority's acquisition of property from revenue sources other than bonds. See FI §13-711(a); §7-312(e) of the State Finance and Procurement Article.

Paragraph 35 of the Agreement specifies the conditions that make the Agreement binding:

     This Agreement shall become effective when (a) each party hereto has taken all board, stockholder and other action necessary to make this Agreement a binding, valid and enforceable obligation of such party, (b) all necessary approvals and consents to this Agreement have been obtained from all governmental, Major League and American League authorities, (c) a concessionaire has been selected and has entered into a binding Agreement (which may contemplate a further, more formal Agreement) with the Orioles containing the provisions set forth in Paragraph 13 hereof, and (d) the binding commitment pertaining to the Season Ticket Purchase Plan and Operating Guaranty has been received by the Orioles.

You have advised us that all of these events have occurred. Therefore, the Agreement is effective. The question, then, is whether the Agreement is the "long-term lease" required by FI §13-712.1(4)(i). In Part II below, we conclude that the Agreement is a "lease," as envisioned by the General Assembly. In Part III below, we conclude that it is "long-term."

                                      II
                          Nature of a "Lease"

When the General Assembly used the term "lease" in FI §13-712.1(4)(i), it could not have meant to require that the Authority already be in possession of the land to be leased.3 The securing of a "long-term lease" is a prerequisite to the Authority's issuance of bonds to finance "site acquisition," and the General Assembly surely contemplated that one possible financing mechanism for acquiring land was the issuance of bonds. Department of Fiscal Services, The Stadium Issue at 15 (March 1987). Under those circumstances, the General Assembly could not have legislated a Catch-22, requiring the Authority to have already obtained land in order to issue bonds to finance the acquisition of that very land.

3
Generally, "to establish tenancy, it must be shown that the lessor had actual possession of the land and that the lessee was let into possession by him." 49 Am. Jur.2d Landlord and Tenant §14, at 58 (1970).

At the same time, the term "lease" connotes a legally binding contract creating a landlord-tenant relationship between the Authority and the Orioles, albeit one that will commence in the future. In our view, the Agreement is such a contract.
In the world of real estate development, parties often agree that one (the prospective lessor) will rent to the other (the prospective lessee) property that the prospective lessor does not yet own.4 Such a contract, typically called an agreement to lease, might well be necessary if the prospective lessor is to obtain the financing with which to buy the property.
A contract of this kind is enforceable through specific performance. Motels of Md., Inc. v. Baltimore County, 244 Md. 306, 314-16, 223 A.2d 609 (1966).
Moreover, once the Authority acquires title to the stadium site, the Agreement will be no different in its effect than if the Authority had title when it entered into the Agreement. As the Court of Appeals has held: "[W]here a lease of real estate is made by a person who has no present interest therein, but who acquires an interest during the term, the lease, by the doctrine of estoppel, will operate upon his estate as if vested at the time of its execution." Columbian Carbon Co. v. Kight, 207 Md. 203, 211, 114 A.2d 28 (1955).
The Agreement embodies the essentials of a lease. "A lease is, in shorthand, a contract for the possession of land or space on the one side, and a recompense of rental income on the other." Progressive Ass'n v. Rose, 235 Md. 169, 174, 201 A.2d 8 (1964). The Agreement recognizes a landlord and tenant relationship; it contemplates that the new stadium will be owned by the Authority and used, in part, by the Orioles for a determined rent and term.
In our view, the Agreement unquestionably reflects the parties' mutual intention to bind the Authority to build the new stadium for the Orioles at the site it will acquire, on the one hand, and to bind the Orioles to play there for 15 or more years for specified rent, on the other. Because the Agreement is by itself legally binding and will assure that the Orioles continue to play in Baltimore once the new stadium is built, it is the kind of "lease" meant by the General Assembly in FI §13-712.1(4)(i), even if it is technically an agreement to lease rather than the lease itself.

4
The practice is sufficiently common to merit a model in a form book. 11 Am. Jur. Legal Forms 2d Leases of Real Property §161:18 (1972).

                                III
                    Durational Requirement

In order to understand fully what the General Assembly intended by the phrase "long-term lease," we must examine other statutory provisions and relevant legislative history:

  When we pursue the context of statutory language, we are not limited to the words of the statute as they are printed in the Annotated Code. We may and often must consider other "external manifestations" or "persuasive evidence," including a bill's title and function paragraphs, amendments that occurred as it passed through the legislature, its relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.

Kaczorowski v. City of Baltimore, 309 Md. 505, 514-15, 525 A.2d 628 (1987). As the Court of Appeals recently summarized: "We look at the words of the statute in the context of their adoption and from that perspective determine the meaning of the language in a manner consistent with the goal the legislature was trying to achieve." Carolina Freight Carriers v. Keane, 311 Md. 335, 339, 534 A.2d 1337 (1988).
In light of these principles, we conclude that the General Assembly's purpose in enacting FI §13-712.1(4)(i) was to obtain a commitment from a major league professional baseball team to remain in Maryland for at least 15 years. The Agreement does exactly that.
During the 1986 Session, when the General Assembly was contemplating the bill to create the Authority, the owner of the Orioles wrote to the Governor expressing the Orioles' "willingness to enter into a long term arrangement for the use of" a new stadium. The General Assembly's acceptance of this goal is reflected in the following provision, added to the bill by amendment:

[T]his Act shall take effect July 1, 1986. It shall remain effective for 3 years and, at the end of June 30, 1989, if no long term lease with the corporation known as the Baltimore Orioles or a professional football franchise has been entered into with the Maryland Stadium Authority and approved by the Board of Public Works, that with no further action required by the General Assembly, this Act shall be abrogated and of no further force and effect. The Board of Public Works shall determine what constitutes a long term lease for the purposes of this section.

Section 3, Chapter 283 (Senate Bill 297), Laws of Maryland 1986.
The General Assembly enacted FI §13-712.1 at the next session. Chapter 124 (Senate Bill 847), Laws of Maryland 1987. Its legislative history indicates that the General Assembly was aware that a 15-year commitment by the Orioles might be the nature of the desired "long-term" lease. On March 4, 1987, while testifying before the Senate Finance Committee on Senate Bill 847, the Orioles' owner stated his view that a "long-term" lease was between 15 and 30 years. See Senate Finance Committee Minutes, SB No. 847; Department of Fiscal Services, The Stadium Issue at 1 (March 1987).
The General Assembly did not define a "long-term lease" in either piece of legislation, however. Perhaps this omission was purposeful, in order not to limit the Authority's ability to negotiate successfully. In any event, the legislation empowers the Board of Public Works to decide what constitutes a "long-term lease" for the purpose of permitting the continued existence of the Authority. See Section 3 of Chapter 283, Laws of Maryland, 1986. The Board has exercised its discretion and has determined that the Agreement satisfies that undefined requirement, and its decision is entitled to considerable weight. E.g., Comptroller v. Rockhill, Inc., 205 Md. 226, 233, 107 A.2d 93 (1954).

                              IV
                          Conclusion

In summary, it is our opinion that the Memorandum of Agreement Between Maryland Stadium Authority and Baltimore Orioles, Inc. approved by the Board of Public Works on May 5, 1988, is the "long-term lease" required by FI §13-712.1(4)(i). Accordingly, the Authority may close on the sale of bonds to finance site acquisition and construction of a baseball stadium.

        J. Joseph Curran, Jr., Attorney General
        Norman E. Parker, Jr., Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice