Virginia Defeats Debt-Funded Arena While D.C. Doubles Down | Citizens Against Government Waste

Virginia Defeats Debt-Funded Arena While D.C. Doubles Down

The WasteWatcher

Virginia taxpayers marked a historic victory when Alexandria, Virginia Mayor Justin Wilson announced that the deal to build a new arena for the Washington Wizards and Capitals in Potomac Yard “will not move forward.”   The mayor’s March 27, 2023, press release noted the end of a saga that began in December, 2023, when Virginia Gov. Glenn Youngkin (R) and the teams’ owner, Ted Leonsis, unveiled plans to build a sprawling new $2 billion development, including the arena, a practice facility, corporate headquarters for Monumental Sports, and a performing arts venue in Potomac Yard.

District of Columbia Mayor Muriel Bowser (D) offered Leonsis $500 million to keep the teams in their downtown D.C. Capital One Arena, but “Leonsis sought bigger improvements,” reported Axios, “including a new glassy entrance and seating that's closer to the action.”  Despite Gov. Youngkin’s strong support and passage of the proposal by the House of Delegates by a vote of 59-40 on February 13, 2024, Senate Finance and Appropriations Committee Chair L. Louise Lucas (D–Portsmouth), blocked funding for the arena out of concern that the use of taxpayer-backed bonds would divert funds from higher priorities like improving infrastructure or financing public services. 

Lucas stated, “It’s just not a good deal for the Commonwealth,” and vowed to keep language enabling the proposed relocation out of the state budget. Richmond political consultant Ben Tribbett explained that, “when you say hundreds of millions of dollars of bonds to a professional sports team in Northern Virginia, you’re telling people in Senator Lucas’s area, for example, in Portsmouth, you’re going to have to go to school with a leaky roof because Ted needs a stadium.”

Citizens Against Government Waste, which has written about the cost and lack of return on investment by taxpayers for sports facilities, including warning against Virginia building a new stadium for the Washington Commanders, weighed in on the deal by naming Governor Youngkin the January Porker of the Month for pushing this taxpayer-funded billionaire bailout despite opposition from a diverse, bipartisan coalition that included both Northern Virginia Republican leaders and Democratic state legislators.  “The Commonwealth would have been on the hook for paying that debt,” said Sen. Barbara Favola (D-Arlington), who ultimately voted against the proposal.  “I was a No from the get-go,” agreed Del. Patrick Hope (D-Arlington). 

Northern Virginia labor unions representing hospitality and construction workers also joined the fray, voicing their opposition to the project out of concerns surrounding the proposed wages and benefits for construction and service sector workers at the new facilities.  With the Virginia deal facing such insurmountable hurdles, D.C. leaders stepped in and reached a new agreement with Leonsis to keep the teams at the existing Capital One Arena until at least 2050 in exchange for a $515 million taxpayer-financed renovation from the District’s capital improvements fund.  The agreement includes a $500 million arena renovation over the next three years and an additional $15 million to improve transportation and security surrounding the arena. 

In a March 27, 2024, press conference with Leonsis and D.C. officials, they publicly made up for the attempted betrayal of the city.  D.C. Council Chairman Phil Mendelson (D) defended the District’s close relationship with the Monumental Sports owner, saying, “It’s easier to do business in the District of Columbia than in some other jurisdictions.”  With a hug, Mayor Bowser passed the microphone to Leonsis, “Ted, you have the floor.”  Taking center stage, Leonsis declared, “It’s a great day, and I’m really relieved. The mayor and Phil deserve all the credit. I had a difficult conversation with them and said, we can still be friends, … I haven’t signed anything, you never know how things are going to end.  And the mayor pinged me, reached out to me, texted me, and then we started having our dates.  … We would go pretty much every week… to the main couch in the lobby at the Waldorf and I would jump up and run to the bar and get some drinks and we would sit and we would talk …  I felt that we were really in a good partnership.”

Mayor Bowser said, “We, with the teams, have identified additional opportunities to expand their footprint right here in downtown, and we’re also going to invest $15 million in that.”  She continued, “As Ted likes to say, ‘We’re going to be together for a long time.’”

The Potomac Yard project’s failure, however, opens the undeveloped section for multiuse development projects which may include new housing units along with entertainment venues.  At an April 2, 2024, Arlington Chamber of Commerce legislative breakfast, Sen. Favola remarked that the area is still a “prime location” that could include “multiuse development,” and that there is still a need for “a lot of housing.” 

Gov. Youngkin had suggested that he would offer the arena plan in the General Assembly’s special session on the budget, which begins on May 13, 2024, but he did not include it among his more than 200 budget amendments.  The Capitals and Wizards will therefore remain in D.C., and hopefully the taxpayers will receive a positive result on their investment, unlike most other jurisdictions where that has not occurred from subsidies for sports facilities.

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