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Tag: Washington Capitals

Virginia’s fundamentals remain strong after unsuccessful arena competition

As Virginia celebrates Economic Development Week, there is no better time to recognize that when it comes to success in economic development, fundamentals matter most.

Incentives, public sector support, personal connections and various intangibles — like, say, letting a CEO pick his favorite Grateful Dead concert to play during a recruitment dinner — can undoubtedly be helpful in getting a deal over the finish line.

But what earns accolades and puts a state in the best position to compete for major investment are a state’s fundamentals: excellent education systems; a high-quality and available workforce; a stable and reasonable tax and regulatory structure; a first-class transportation infrastructure; abundant energy resources; ready-to-build sites; low cost of doing business; and ample natural resources — just to name a few.

This is where Virginia consistently shines and what makes the commonwealth’s recruiting pitch to corporate executives as impressive as ever.

And because our fundamentals are strong, Virginia will continue to shine in the years to come.

***

The commonwealth recently came up short in a spirited competition to be the home of a new $2 billion arena project that would have hosted the Washington Wizards and Capitals professional basketball and hockey teams in Alexandria and anchored surrounding redevelopment.

In the end, the teams accepted an investment package from Washington, D.C., the city they have called home for more than 30 years.

In the wake of this high-profile competition, it is fair to wonder whether there could be any lingering effects on the commonwealth’s ‘best for business’ reputation or its ability to attract new investments, businesses and headquarters.

That is a question that has been posed to me dozens of times of late given my past tenure as secretary of commerce and trade, as well as my current involvement in economic development deals in Virginia and around the country.

To me, the answer is an unequivocal ‘no.’

The arena project was a proverbial unicorn in the economic development world.

Indeed, sports franchises are rare, unique economic development prospects with needs that bear little resemblance to the kind of bread-and-butter recruitment and development projects that local, regional and state economic development professionals pursue every day.

While sports teams can be prestigious and impactful economic assets, especially when they anchor broader mixed-use developments in their surrounding areas, they tend to have little need for the commonwealth’s sterling workforce development programs — our excellent college athletics programs notwithstanding.

Nor do sports franchises typically qualify for Virginia’s traditional, highly regarded and performance-driven economic development incentive programs like the Commonwealth’s Development Opportunity Fund (COF), the Virginia Investment Performance (VIP) Grant and the Virginia Economic Development Incentive Grant (VEDIG).

That is why Virginia Gov. Glenn Youngkin, Secretary of Finance Stephen Cummings and other members of the Youngkin administration created a first-of-its-kind financing structure as part of its pitch to Monumental Sports & Entertainment, the company that owns and operates the Wizards and Capitals.

But as is so often the case in economic development, we were not the only players in the game.

Even as Virginia pursued the opportunity, the District of Columbia stayed in the game with a continually improving offer that eventually carried the day.

The strength of incumbency is significant when a corporation is considering the cost and challenges of a major relocation.

Virginia has both benefited from and lost out from the powerful allure of home.

No serious business leader would punish a state because it was unable to convince another business to pull up stakes and relocate.

Because the arena project was such a unique prospect, pursued in such a unique way, and supported by such a unique financing structure, its fate will have very little to no impact on the way companies view the commonwealth, its competitive assets and its economic development efforts.

***

As stated earlier, when a business is deciding where to invest, its leaders look at the fundamentals that will determine its long-term success.

Virginia touts its own fundamentals quite well, and independent, third-party validators also have consistently confirmed the commonwealth’s enviable position and solid fundamentals.

For example, CNBC consistently ranks Virginia as a top state for business and job creation — the commonwealth is currently ranked No. 2 in CNBC’s annual Top States for Business rankings — for many reasons, including education, thanks to our outstanding K-12 systems, community colleges and four-year colleges and universities that are the envy of the nation.

Further, Virginia scores highly because our corporate income tax has remained low and stable for more than 50 years, and our utility costs are competitive amongst our regional rivals.

In addition, Virginia’s central East Coast location is a major plus. That position along major highways puts us just one day’s drive from key domestic markets and more than 50% of the U.S. population, while our international connections through the Port of Virginia and Dulles International Airport provide direct access to the global economy.

And thanks to recent and enhanced state and local investments, we have one of the East Coast’s megasites in the Southern Virginia Megasite at Berry Hill as well as dozens of shovel-ready sites that will allow companies to invest, hire and open for business quickly.

Put more simply: Virginia has never been more prepared or better positioned to move at the speed of business.

Having proudly worked alongside three governors — both Democratic and Republican — to recruit new businesses and investment to Virginia and having been on the receiving end of those overtures in the private sector, I can tell you with great confidence that fundamentals are what truly matters.

***

It would have been exciting to welcome two professional sports franchises to the commonwealth, which remains the most populous state in the nation without a professional franchise in the top league of the four major sports.

But regardless of the outcome of this particular effort, the fundamentals of the commonwealth’s business case remain unbelievably strong and make us the envy of most other states.

Indeed, Virginia has a tremendous story to tell and a great case to make.

That is why, even if Virginians must cross the Potomac to see live hockey or basketball, economic development professionals at the local, regional and state levels will continue to be successful in bringing new jobs, new investments and new opportunities to the commonwealth.

Todd P. Haymore is managing director of Hunton Andrews Kurth’s public affairs consultancy. He served as secretary of commerce and trade for Gov. Terry McAuliffe, secretary of agriculture and forestry for Govs. McAuliffe and Bob McDonnell, and commissioner of the Department of Agriculture and Consumer Services for Gov. Tim Kaine. He is rector of the Virginia Commonwealth University Board of Visitors, vice chairman of the GO Virginia Region 4 Council and a board member for the Virginia Chamber of Commerce, Virginia FREE and RVA757 Connects.

Washington Wizards, Capitals reach deal to stay in D.C.

The Washington Wizards and Capitals NBA and NHL teams are staying put in the District of Columbia and will not be moving to Alexandria, according to announcements from Washington, D.C., and Virginia officials Wednesday. These events put the final nail in the coffin of a controversial $2 billion Alexandria arena proposal touted by Virginia Gov. Glenn Youngkin.

“We’re going to be together for a long time,” Washington, D.C., Mayor Muriel Bowser said at a news conference Wednesday evening, joined by Monumental Sports & Entertainment CEO Ted Leonsis.

Bowser said that she and Leonsis had just signed an agreement to keep the teams in Washington through 2050, in exchange for D.C.’s pledge to pay $515 million over the next three years to upgrade and modernize Capital One Arena in downtown D.C.

According to Leonsis, he and Bowser continued discussions regularly after his and Youngkin’s December 2023 announcement of the proposal to create a $2 billion arena and entertainment district in Alexandria — a nonbinding deal that was opposed by some Virginia Democratic lawmakers and Alexandria residents.

Youngkin, whose efforts to build the arena were blocked by Virginia State Senate Democrats during the General Assembly session, said in a statement Wednesday afternoon that “personal and political agendas drove away a deal with no upfront general fund money and no tax increases, that [would have] created tens of thousands of new jobs and billions in revenue for Virginia.”

He also referred to the possibility of 30,000 new jobs and $12 billion in economic activity that the deal could have brought to the state, which “just went up in smoke,” according to the statement.

“This should have been our deal and our opportunity,” the governor continued. “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.'”

The proposed sports arena and entertainment district faced significant pushback from state Sen. Louise Lucas, the powerful chair of the Senate Finance & Appropriations Committee, who prevented the Virginia State Senate from voting on a measure to create a state authority that would control the project’s approximate $1.3 billion in public funding.

Answering a reporter’s question about what had happened with the Virginia negotiations and opposition among state lawmakers, Leonsis didn’t speak specifically about the state Senate’s roadblocks or any other missteps among state officials.

But D.C. officials “did everything right from December on. And when I looked at the other side of the board,” Leonsis said, referring to Virginia, “some of them weren’t scoring as high, and they weren’t together.

“We are an incredibly valuable company,” he added. “Forbes just said we’re worth $6 billion. That would make us one of the 10 most valuable companies in Virginia, one of the 10 most valuable companies in Washington, D.C., [and] we should be treated with that kind of respect. The city [of Washington] treated us that way. And that really was what the game changer for us.”

Leonsis said at the news conference that he would talk about Virginia at a later time, but he complimented Youngkin as “a good man,” who was aware of his ongoing negotiations with Bowser.

At the news conference, held Wednesday evening at Capital One Arena, Leonsis said that in recent months, he and Bowser met nearly weekly on 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 talk about what’s the vision for the city.”

The option of more space

Another key factor in D.C.’s negotiations with Monumental was the recent closure of a shopping mall near the current arena. Washington, D.C., officials and the mall’s owner offered to let Monumental expand into about 200,000 square feet of that space, Leonsis said. The 12 acres on the Potomac River, where the arena would have been part of 9 million square feet of new multiuse buildings, was part of that proposal’s appeal, he added.

Lucas opposed the amount of public spending on the arena — saying that schools and toll relief should be higher priorities for the state — and tweeted Wednesday afternoon, “As Monumental announces today they are staying in Washington, D.C., we are celebrating in Virginia that we avoided the Monumental Disaster! Thank you to everyone who stood with us in this fight!”

Other Virginia Democrats took Lucas’ side in the battle, and some were put off by the governor’s apparent lack of interest in compromising on their party’s priorities, including a $15/hour minimum wage starting in 2026 and setting up a recreational cannabis retail structure in the state.

Matt Kelly, CEO of Bethesda, Maryland-based developer JBG Smith, which would have developed the entertainment district, released a statement Wednesday, blaming the project’s failure on “partisan politics and, most troubling, the influence of special interests and potential pay-to-play influences within the Virginia legislature.

“The scheming and special interests that plagued this opportunity in the Virginia legislature will no doubt cause future employers and the next Monumental to question whether their opportunity will get a fair hearing,” Kelly’s statement continued.

“This opportunity also brought with it the potential to add tens of thousands of jobs and needed housing units, including 1,000 units of affordable housing preservation in Alexandria which we had pledged as part of the arena proposal. Traffic and transportation investments, including possible Metro funding, are also likely gone. Instead, the existing surface-parked, single-story shopping center on the site will remain through the remaining 20-year term of the Target lease, and development on the remaining land will likely be far less dense. To say we are disappointed is an understatement; we are disgusted with the backroom-dealing and opaque scheming that took place as this played out.”

Last week, JBG Smith pledged to double the number of preserved workforce-priced affordable residential units near the complex from 500 residences to 1,000, an attempt to save the deal, and previously, the governor put forward a $322 million Hampton Roads toll relief proposal, a priority for Lucas.

In February, George Mason University’s Center for Regional Analysis found in a study requested by JBG Smith Properties that the project would include the construction of 5,405 workforce-affordable housing units, more than twice the 2,250 affordable housing units the City of Alexandria aims to have by 2030.

The Democratic-controlled House of Delegates passed the authority legislation in a bipartisan vote during the General Assembly’s regular session, but the bill faced a roadblock in the Senate. Some Alexandria residents also opposed the project over costs, traffic and infrastructure stress.

Ted Leonsis, founder, CEO and chairman of Monumental Sports & Entertainment, owner of the Washington Capitals and Washington Wizards, speaks at a Dec. 13, 2023, news conference in Alexandria announcing a plan to invest $2 billion in a new arena and accompanying entertainment complex in Potomac Yard. Virginia Gov. Glenn Youngkin is at left. Photo by Will Schermerhorn

Big numbers touted

In December 2023, Youngkin and Leonsis, with Mayor Wilson on hand, announced the 9 million-square-foot entertainment campus project as close to a done deal, saying it could create up to 30,000 jobs for Virginia over several decades. With a 2025 groundbreaking, the arena was expected to be completed by 2028 on an accelerated construction schedule, and an economic and fiscal impact report conducted for the city anticipated up to $7.96 billion in annual economic output for the state if the arena was open by 2028.

However, in March, The Washington Post reported that a separate economic analysis commissioned by the Youngkin administration and not released publicly had assumed fans would pay $75 for parking and that a new luxury hotel would book rooms at $731 a night, with the state using parking fees, ticket taxes and other revenue in order to pay off $1.5 billion in debt.

Earlier this month, Bowser said the District’s offer to fast-track a $500 million deal to update the teams’ current arena and keep them in Washington, D.C., was still on the table, after Virginia legislators omitted the authority wording from their budget amendments — a decision Youngkin called a “colossal mistake.”

“As stewards of the city’s economic health and development, city leaders believed the Potomac Yard entertainment district opportunity was worthy of community discussion and [city council] consideration,” Wilson said in a statement Wednesday. “We negotiated a framework for this opportunity in good faith and participated in the process in Richmond in a way that preserved our integrity. We trusted this process and are disappointed in what occurred between the governor and General Assembly.”

The 2024-26 state budget negotiations between state lawmakers and Youngkin remained the final avenue to create the state authority by including it in the finalized budget in April, but Wednesday’s events closed the door entirely on the proposed arena move.

GMU report: Arena project would produce 5,400+ affordable housing units

Updated Feb. 22, 2024

A study conducted by George Mason University’s Center for Regional Analysis found that the proposed $2 billion Alexandria sports arena and entertainment district supported by Gov. Glenn Youngkin would create more than 5,400 workforce-affordable housing units, far exceeding the city’s goals.

The report released this week was requested by JBG Smith Properties, the proposed project’s developer, which would bring Monumental Sports & Entertainment’s NHL and NBA teams — the Washington Capitals and Wizards — from their home stadium in Washington, D.C., to the City of Alexandria.

According to the report, authored by Terry Clower, director of the Center for Regional Analysis in GMU’s Schar School of Policy and Government, the proposed development would include 5,405 housing units completed between 2027 and 2036. The rental and purchasable residences qualify as “workforce housing,” meaning that they are expected to be affordable to people who make about 80% or 90% of the area median income, or between $66,000 to $154,000 annually.

The report noted that Alexandria is “currently far behind in its goal to produce 2,250 workforce-affordable housing units by 2030. The proposed [arena] development will dramatically support that goal in Phase 1 and will help the city exceed longer-term goals for workforce housing.”

Also, the arena’s developers plan to donate land that would support between 100 and 150 affordable housing units, as well as a new school, and contribute $25 million to the city’s affordable housing fund, the study says.

Evan Regan-Levine, JBG Smith’s chief strategy officer, said in an email Thursday that the company doesn’t have a specific housing unit count tied to the $25 million contribution, because “we do not know how the city will deploy the funds. … JBG Smith has separately committed to preserving the affordability of more than 500 affordable workforce housing units in Alexandria — with a specific focus on the Arlandria neighborhood near the site — to avoid displacement of existing vulnerable residents.”

Clower confirmed that JBG Smith requested the report in December 2023 and will pay for it. Although GMU is a state-funded public university, the Center for Regional Analysis is not funded by the state and receives funding via commissioned studies from state agencies, companies and other organizations. Nevertheless, Clower said, the center “takes as much rigor as the data will allow us” in conducting studies, and its researchers are “dispassionate” about the outcomes of study subjects like the arena deal.

“I’ve got too many years left to work to start selling my opinion,” Clower said in an interview Wednesday with Virginia Business.

On Thursday, JBG Smith’s chief strategy officer, Evan Regan-Levine, responded to Virginia Business’ questions about the report via email.

The developer asked the center to provide a third-party review of the HR&A Advisors fiscal and economic impact report produced for the Alexandria Economic Development Partnership, Regan-Levine said. “We have significant investments around the proposed arena and, while we were involved in providing inputs for HR&A, we wanted another review. We know that George Mason University’s Center for Regional Analysis is a reputable group locally who is familiar with these kinds of analyses.”

Also, “the governor’s office encouraged us to have a third-party review, which they believed would highlight the veracity of the HR&A analysis,” Regan-Levine said. He added that JBG Smith did not give Clower a specific deadline, just “asked that the report be completed in a timely fashion,” and said that the firm did not have any expectations for a certain outcome in the report.

Clower started working on the report in December (“instead of Christmas break,” he added) following Youngkin’s Dec. 13, 2023, announcement of the proposed arena project with Monumental CEO Ted Leonsis.

Following that announcement, JBG Smith gave Clower the outlines of what they wanted covered by the study and provided information about the housing they expected to develop as part of the entertainment district, and Clower obtained information from the City of Alexandria about its workforce housing goals, he said.

Clower also received an earlier draft of the HR&A report that was released last week. The state’s secretary of finance, Stephen Emery Cummings, and his office also assisted Clower by providing some information about the deal and the way it would be funded by the state and private partners, Clower said, although he had no direct contact with the governor’s office.

Although Youngkin and Leonsis framed the arena proposal in December as nearly a done deal, with the support of Alexandria’s mayor and U.S. Sen. Mark Warner, the project has faced some state and local pushback. A bill introduced in the Virginia General Assembly this session to create a state authority for the project has faced opposition and challenges from Democratic state senators, who want to see the Republican governor agree to more of their priorities, including a $15 per hour minimum wage by 2026.

Youngkin, however, signaled opposition to a minimum wage hike in January, saying he doesn’t think an increase is necessary and that the job market will take care of the issue without governmental input. Democrats in the House of Delegates and the state Senate passed a bill in February to increase the minimum wage, sending it to the governor’s desk. On Tuesday, Virginia’s AFL-CIO member unions went public with their opposition to the arena, saying the project wouldn’t provide needed protections for workers because the unions had not reached labor agreements with developers.

The House version of the bill has been referred to the Senate Finance Committee, where the Senate measure died quietly without being placed on the committee docket for a vote, a move by Sen. Louise Lucas, the finance committee’s powerful chair, who has raised multiple concerns about the proposed public funding of the project.

Although the House’s amended 2022-24 state budget does include language creating the sports authority, the Senate’s bill does not, setting up a battle over the matter in upcoming negotiations. The dueling budgets were passed by the legislative bodies Thursday.

Alexandria arena proposal economic impact report released

An economic and fiscal impact analysis released Friday by the Alexandria Economic Development Partnership forecasts that the proposed Washington Capitals and Wizards arena in Alexandria could generate up to $7.96 billion in annual economic output for the state. Additionally, the report says the arena could be completed as soon as 2028 if its construction schedule is accelerated.

Opposed by some Democratic state lawmakers and Alexandria civic groups, the proposed 933,000-square-foot arena would be part of a 9.43 million-square-foot, $2 billion sports and entertainment complex.

As with many economic and fiscal impact reports generated on behalf of localities and economic development authorities, the report issued Friday was fairly rosy, with no negative financial risks included in its options — just lower benefits if the arena is delayed by a year to 2029 under the slower schedule. The report included only financial benefits and costs to the city and state, and did not include Capitals and Wizards owner Monumental Sports & Entertainment’s estimated benefits and costs.

According to the analysis, conducted by HR&A Advisors, the project could create between 345 and 2,535 construction jobs in Alexandria — depending on the construction schedule — and 2,380 construction jobs or up to 17,645 jobs in phase one. If the arena is built on a slower schedule, it would be finished in 2029, along with a music venue, arena parking garage, Wizards team facility and an office building.

Ongoing jobs created during phase one at the arena and other buildings would include 9,190 jobs in Alexandria under the 2029 completion schedule, HR&A estimates. If finished by 2028, the report anticipates 29,555 permanent statewide jobs, including 12,330 in Alexandria, echoing what Gov. Glenn Youngkin said in his December 2023 announcement of the proposal, calling it an opportunity to create up to 30,000 jobs for the state.

As for annual permanent labor income, the 2029 completion plan anticipates $2.387 billion, or $2.847 billion if the arena’s finished by 2028, and between $3.531 billion and $7.96 billion in annual economic impact.

The Alexandria Economic Development Partnership hosted a media question-and-answer session and report overview Friday morning with the HR&A researcher involved in producing the report in attendance, as well as a JBG Smith Properties representative and Monica Dixon, Monumental’s president of external affairs and chief administrative officer. The Zoom press briefing was held on background, restricting reporters from quoting participants.

Reporters asked why the Q&A was on background, as well as questions about job numbers and possible “doomsday scenarios,” in which public costs could outstrip tax revenue of the project.

The net fiscal impact on the state, the report estimates, could reach $760.6 million total over 30 years in the accelerated building schedule, or $187.5 million in the slower scenario. That includes one-time construction impacts, as well as sales-and-use tax spending, business and personal income taxes and hotel taxes. The report anticipates a 10% admissions (ticket) tax on arena and performance venue events, which Washington, D.C., does not charge.

Monumental hired CSL International in 2023 to develop a business model related to the operations of a new arena, according to the report. CSL estimates the arena can hold as many as 221 events annually, up from Capital One Arena’s average of 216 events annually pre-pandemic, including a high of 228 events in 2018.

According to HR&A’s report, the arena’s operational costs would reach $292 million annually in its first year, 2028, under the faster schedule. That would include $248 million in stadium operations, with the remainder of the budget going toward headquarters operations and performing arts.

Rendering of a potential $2 billion, 9 million-square-foot entertainment complex that would include a new arena for the Washington Capitals and Washington Wizards team overlooking the Potomac River in Alexandria

Some numbers in the report were redacted for public release, including estimated annual retail sales at the existing Potomac Yard shopping center in 2023, and proposed parking, limited service and sports retail revenues per game, although the total spending is $116 million per game, according to Monumental.

HR&A Advisors was hired in June 2023 by Alexandria Economic Development Partnership to conduct an economic and fiscal impact analysis of the arena development, according to the analysis provided Friday. HR&A, the report notes, was not involved with discussion of underwriting or financing of the project, or non-tax revenue that could result, such as parking revenue from a publicly owned garage, or naming rights.

The revenue projections were extrapolated to 2063, at the same growth rate to match Monumental Sports & Entertainment’s contemplated lease term with state authority.

Alexandria civic groups opposing public funds for the project and anticipated traffic and infrastructure pressures were not appeased by the released report.

“This still isn’t the transparency we have called for,” said Brian Hess, an Alexandria-based lobbyist and nonprofit executive director who leads the Sports Fans Coalition, which previously pushed back against public funding of a proposed Washington Commanders stadium in Virginia. “They have redacted significant pieces of information that leaves their conclusions dubious at best — especially when D.C.’s released report says almost the opposite. Economic consensus still says these kinds of deals don’t work, and nothing about this report suggests this arena will be the exception.”

Andrew Macdonald, a former vice mayor for the City of Alexandria who is part of the Coalition to Stop the Arena at Potomac Yard, said in a statement that he wonders “why has it taken the city until now to release this report, such as it is. It talks a lot about ‘economic output’ but very little about revenue projections.

“There is still a lot we don’t know,” Macdonald added. “The real economic benefits and costs are still unclear. There should be an independent cost-benefit analysis of the project, and the public should be able to review it and decide if they want any arena in Virginia. The commonwealth also needs to release any economic studies they have. We still don’t have all the information we need. This bill should not be passed by the General Assembly.”

Among the endorsements of the project following the release of the economic analysis was the Virginia Economic Developers Association (VEDA), which represents more than 600 economic development professionals in the state.

“We place great weight on the approval process utilized for this project by the General Assembly’s Major Employment and Investment (MEI) commission,” VEDA President Linda Green, vice president of economic development at the Danville-based Institute for Advanced Learning and Research, said in a statement. “The benefits of a project of this size will be felt well beyond the region, and we believe the entire commonwealth will benefit from this influx of jobs, revenue, and economic opportunity in Virginia.”

Meanwhile, according to a Washington Post report, the arena plan is stripped from one version of the state budget under consideration in the Virginia General Assembly. The state Senate would also have to approve a House-originated bill to authorize creation of the state authority for the arena project, which would shoulder $1.35 billion of the project’s $2 billion cost with bonds.

The project has been fiercely opposed by some Alexandria residents, and some Senate Democrats — including Sen. Louise Lucas, chair of the powerful Senate Finance Committee — have voiced wariness and opposition to the project, particularly over the possible risk to public funds.

Opponents say that the public bonds of more than $1 billion to fund the project — anticipated to be repaid by tax revenue generated by the arena and other businesses — could put a burden on Alexandria taxpayers and others in the state, if spending and tax revenue don’t live up to backers’ expectations, which could be caused by unforeseen circumstances such as an economic downturn or another pandemic.

The House-originated bill that would create the arena authority currently includes a reenactment clause. If the wording remains in place when the measure is signed by the governor, the authority bill would have to be voted on and passed a second time in the 2025 session by both legislative bodies for the authority to become law — in effect, delaying work by at least a year on a new arena.

That, said Senate Majority Leader Scott Surovell in an interview this week, “could cause a problem” for Monumental.

Wizards, Capitals plan Alexandria move in $2B deal

The Washington Capitals and Washington Wizards are planning a move to a new home in Alexandria in a $2 billion deal that would see the professional sports franchises exit Washington, D.C., by 2028, Virginia Gov. Glenn Youngkin announced Dec. 13, 2023.

The nonbinding agreement to build a new arena for the Capitals and Wizards is part of a 9 million-square-foot entertainment complex planned for the Potomac riverfront in Alexandria’s developing National Landing neighborhood. Virginia Tech’s $1 billion Innovation Campus would be a neighbor, and Amazon.com’s HQ2 campus is just two Metro stops away.

The project is a partnership between the state, the City of Alexandria, JBG Smith and Monumental Sports & Entertainment, which owns the Capitals National Hockey League franchise and the National Basketball Association’s Wizards. Monumental would invest $403 million in the deal. It would include the arena, new corporate headquarters for Monumental, a performing arts venue and retail, restaurants, hotels and conference and community spaces. 

The first phase, including the arena, could generate $12 billion in economic impact and create 30,000 jobs over the next several decades, Youngkin said. The project is expected to break ground in 2025 and be completed by 2028.

“Our commitment would be to build really iconic, fan-centric businesses,” Ted Leonsis, founder, CEO and chairman of Monumental, said.

The deal rests on approvals from the Virginia General Assembly and Alexandria City Council. The state legislature, which convenes Jan. 10, will be asked to approve a new Virginia Sports and Entertainment Authority that would own the land and buildings within the district and enter into a 40-year lease with Monumental. The $2 billion investment would be supported through bonds that would be repaid through annual rent from Monumental and arena parking revenues, naming rights and incremental taxes generated by the arena and development of the first phase. Alexandria would contribute $56 million toward construction of the performing arts venue and $50 million toward underground parking development.

But the proposal is far from a sure thing.

In a Dec. 19, 2023, tweet, Democratic Sen. Louise Lucas, incoming chair of the Senate Finance and Appropriations Committee, said the deal does not have her support. “Anyone who thinks I am going to approve an arena in Northern Virginia using state tax dollars before we deliver on toll relief and for public schools in Hampton Roads must think I have dumbass written on my forehead.”

Youngkin, however, called the deal an “affirmation of what’s happening in Virginia,” citing other prominent economic development deals in Northern Virginia, including Amazon’s HQ2 and the 2022 headquarters relocations of global Fortune 500 defense and aerospace contractors Boeing and RTX in back-to-back announcements.

“This once-in-a-generation historic development will be the best place to live, work, raise a family and watch hockey and basketball,” Youngkin said.

A longer version of this story was published on VirginiaBusiness.com on Dec. 13, 2023. This article was updated after publication.