Washington Wizards, Capitals move to Virginia passes hurdle in state legislature

Lawmakers on the Virginia House Appropriations Committee voted 17-3 to advance the measure, a top priority of Republican Gov. Glenn Youngkin, to the floor of the House of Delegates. Though the bill passed overwhelmingly, several senior Democratic legislators took care to say that their support for the measure at this point was in the interest of keeping negotiations over the deal going.

“This process is going to take the rest of our session at a minimum to enact or not enact this legislation,” Democratic Del. Mark Sickles of Fairfax County, who supported the bill, said before the committee vote.

The legislation could result in a legacy-defining project for Youngkin, a former college basketball player. Virginia is the nation’s most populous state without a major pro-sports franchise, something government officials of both parties over the course of decades have sought to change.

Youngkin and entrepreneur Ted Leonsis, an ultrawealthy former AOL executive and the CEO of the teams’ parent company, Monumental Sports and Entertainment, announced in December that they had reached an understanding on a deal to relocate the Capitals and Wizards.

The plan calls for the creation of a $2 billion development in the Potomac Yard section of Alexandria that would include an arena, practice facility and corporate headquarters for Monumental, plus a separate performing arts venue, all just miles from Capital One Arena, where the teams currently play in Washington.

Monumental and the city of Alexandria would put in upfront money under the terms of the deal, but about $1.5 billion would be financed through bonds issued by a governmental entity this year’s legislation would create.

The bonds would be repaid through a mix of revenues from the project, including a ticket tax, parking fees, concession taxes, income taxes levied on athletes performing at the arena, and naming rights from the district, among other sources. Proponents say those sources will more than cover the debt. But about a third of the financing would be backed by the “moral obligation” of the city and state governments, meaning taxpayers could be on the hook if the project revenues don’t come through as expected.

Critics of the project, including some who spoke against the bill Friday, asked why any tax subsidy was appropriate.

“This is a bad deal for every taxpayer in Virginia. We are saddling our children and grandchildren with 40 years of debt payments to help a billionaire get wealthier and wealthier,” said Andrew Macdonald, a former Alexandria city council member and an organizer of the Coalition to Stop the Arena at Potomac Yard, which held a rally on Capitol Square a day earlier.

The committee advanced a substitute version of the legislation that was initially introduced by Democratic Del. Luke Torian. It included a newly added provision that would require legislators to sign off on the deal again next year in order for the legislation to go into effect, something critics of the project cheered.

Monica Dixon, president of external affairs and chief administrative officer for Monumental, said the company was “very pleased” with Friday’s developments.

“We’ll take a look at it, but don’t expect we’ll have any major concerns,” Dixon said of the revised bill, which is likely to see further revisions as it goes through the legislative process.

Democratic legislative leaders, who control the General Assembly, have generally signaled openness or even optimism about the passage of the arena legislation this year. But they have stopped short of a full-throated endorsement of the project, both citing concerns still to be worked out and making clear the proposal is a bargaining chip in broader discussions about their own priorities.

Sen. L. Louise Lucas, who chairs the Senate finance committee, has said she wants consideration of increased public school funding, toll relief for her Hampton Roads region and legalized recreational cannabis sales in conjunction with the arena deal.

A Senate committee had at one point been expected to take up that chamber’s version of the bill on Thursday. But the hearing was delayed, and by Friday afternoon it was unclear when the bill might be heard ahead of Tuesday’s “crossover” deadline by which non-budget bills need to clear their chamber of origin.

Senate Majority Leader Scott Surovell, the sponsor of that chamber’s bill, said in a text message that his caucus is still working to reach consensus about changes to the legislation as introduced.

Many critics of the project have focused on the transportation impacts in an already congested part of Virginia.

The state released a transportation plan last week to address Alexandria residents’ concerns about traffic. Officials say they will commit $200 million to transportation improvements in the corridor, which is already seeing expanded use with a new Amazon headquarters and a new Virginia Tech campus under construction.

The plan seeks to have half of arena patrons arrive by transit, bike or walking and relies heavily on a newly built, $370 million Potomac Yard Metro station. But plan data shows that the station, as currently configured, would be overwhelmed at peak hours on game nights with “extreme crowding” lasting for 60 to 90 minutes.

The plan estimates that improvements to the station and increased service could reduce crowding to 30 to 45 minutes.

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Barakat reported from Falls Church, Virginia.