The city of Alexandria declared the $2 billion Monumental arena project dead on Wednesday, expressing disappointment in the acrimonious political stalemate between the Virginia General Assembly and Gov. Glenn Youngkin, who had championed the project as his top legislative priority.
Instead, Ted Leonsis, owner of the NBA’s Washington Wizards and the NHL’s Washington Capitals, announced a deal with Washington D.C. Mayor Muriel Bowser to keep the teams in Washington until 2050.
“D.C. is home,” Leonsis said after embracing Bowser at center court of the Wizards’ playing floor at Capital One Arena in downtown Washington.
Leonsis also took a few jabs at Virginia. He repeated a comment from D.C. Council Chairman Phil Mendelson that: “It’s easier and better to do business in Washington D.C. than it is to do in Virginia.”
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The first sign that the move to Virginia would not happen came from a statement by Alexandria that said it had “ended negotiations related to the Potomac Yard Entertainment District opportunity and the proposal will not move forward.”
“As stewards of the City’s economic health and development, City leaders believed the Potomac Yard Entertainment District was worthy of community discussion and council consideration,” Alexandria said in the statement. “We negotiated a framework for this opportunity in good faith and participated in the process in Richmond in a way that preserved our integrity.”
The city’s statement said: “We trusted this process and are disappointed in what occurred between the Governor and General Assembly.”
Youngkin followed with a statement that blamed legislative leaders. Democrats lead the Senate and the House of Delegates.
“Virginians deserve better. A one-of-a-kind project bringing world-class athletes and entertainment, creating 30,000 jobs and $12 billion in economic activity just went up in smoke,” Youngkin said.
“This transformational project would have driven investment to every corner of the Commonwealth. This should have been our deal and our opportunity, all the General Assembly had to do was say: ‘thank you, Monumental, for wanting to come to Virginia and create $12 billion of economic investment, let’s work it out.’
“But no, personal and political agendas drove away a deal with no upfront general fund money and no tax increases, that created tens of thousands of new jobs and billions in revenue for Virginia.”
Virginia legislative leaders were unrepentant about their role in scuttling the project.
Sen. Louise Lucas, D-Portsmouth, the chair of the Senate Finance and Appropriations Committee, posted on social media the image of a woman basketball player blocking a shot. The caption read: “Rejected!”
As Monumental announces today they are staying in Washington DC we are celebrating in Virginia that we avoided the Monumental Disaster! Thank you to everyone who stood with us in this fight! pic.twitter.com/bBvKjLFPXO
— L. Louise Lucas (@SenLouiseLucas) March 27, 2024
Lucas wrote: “As Monumental announces today they are staying in Washington DC we are celebrating in Virginia that we avoided the Monumental Disaster!”
House Speaker Don Scott, D-Portsmouth, had tried to keep negotiations alive over the arena and Democratic priorities that Youngkin had threatened to veto, but he faulted the governor for expecting legislators to say “thank you, Monumental” without thoroughly reviewing a proposal that relied on Virginia’s credit rating to finance a $2 billion project over the next 40 years.
“It looks like he thought the legislature would rubber stamp it, and it didn’t happen,” Scott said in an interview, calling the project’s collapse “unfortunate.”
“Virginia used to be the number one state to do business in before the businessman took over,” Scott said, alluding to Youngkin’s former role as co-CEO of the Carlyle Group. “It’s ironic that he couldn’t close the deal by being willing to work with everybody across party lines.”
Now, the project’s failure looms over the fate of the $188 billion, two-year budget that the assembly approved on March 9. Youngkin has threatened to veto the budget if it raises taxes by applying the state sales tax to digital services — an idea he proposed in his own budget, but Youngkin packaged it with cuts to income tax rates. The assembly will consider the governor’s vetoes and proposed amendments to the budget on April 17.
“I fully expect him to veto the budget,” Scott said.
Youngkin and Leonsis announced the project with fanfare in December as an economic development coup that would bring two professional sports teams to Northern Virginia, giving the state its first major league professional sports franchise since the Virginia Squires of the old American Basketball Association 50 years ago.
But the project — a partnership between Virginia, Alexandria, JBG Smith and Monumental Sports and Entertainment, the owner of the teams — stalled in the General Assembly because of opposition to the governor’s proposal to create a state authority to issue $1.5 billion in bonds to finance the project, including $677 million that the state would back with its “moral obligation.”
It was the second time that a Virginia governor had sought to bring a professional sports team to Potomac Yard, more than 30 years after then-Gov. Doug Wilder proposed to build a stadium for the NFL team then known as the Washington Redskins. In that case, the deal between Wilder and team owner Jack Kent Cooke was an unwelcome surprise to Alexandria.
This time, the city had been fully behind the project as a way to broaden its commercial tax base and reduce the tax burden on homeowners, with little prospects for conventional office development after the COVID-19 pandemic.
Youngkin’s proposal passed the House of Delegates after extensive revisions and was included in the House budget, but Lucas, the Senate Finance chair, used her prerogative to block the powerful committee from considering the legislation or including it in the Senate budget. Lucas also excluded the project from the budget compromise that the Senate reached with the House, citing her concerns about its potential long-term cost to Virginia taxpayers.
A coalition of Alexandria residents and their allies gained strength in opposing the project, but Alexandria said it had worked with community residents to address concerns about transportation improvements, affordable housing and protection from financial risks, while providing revenues for public education and neighborhoods.
“We are disappointed negotiations did not result in a proposal that protected our financial interests and respected these community values,” the city said.
Leonsis said at the news conference with Bowser that he would not talk about the failed move to Virginia, although he quipped that “Virginia is kind of two states,” with Northern Virginia and Richmond and said they “need to get together.”
He acknowledged that the Potomac Yard site offered land that Washington did not have. But Leonsis said the mayor and city council, which will consider legislation for the new agreement on Tuesday, have now provided access to a deserted mall downtown and $15 million to help the business expand, in addition to a $500 million commitment to renovate Capitol One Arena.
“We have 200,000 square feet to expand to,” he said. “It’s not 12 acres, but it’s enough.”
Leonsis also credited ongoing conversations with Bowser and Mendelson, the D.C. Council chairman, whom he said he met regularly on the main couch in the lobby of the Waldorf Astoria Hotel despite their differences over the proposed move to Virginia.
Now, Bowser said, “We’re going to be together for a long time.”