Virginia budget bill leaves out governor's $2 billion deal to lure NBA, NHL teams from Washington

Virginia Sports Stadium
Posted at 1:47 PM, Mar 07, 2024
and last updated 2024-03-07 21:10:45-05

RICHMOND, Va. — Work on compromise budget legislation Virginia lawmakers will take up later this week is complete, and the bill does not include language enabling a proposed relocation by the NBA’s Washington Wizards and NHL’s Washington Capitals to Alexandria, top lawmakers said Thursday.

The development does not necessarily mean the end of the road for Republican Gov. Glenn Youngkin’s plan to lure the teams across the Potomac River with a $2 billion development district featuring a new arena. But it deals yet another blow for the proposal, a top priority for Youngkin.

In a news conference at the foot of the Capitol steps, the governor said he believed the Democratic-led General Assembly was poised to make “a colossal mistake.” He sought to make the case that they should reconsider and restore the project terms to the budget before advancing it to his desk.

“They have a chance to stand up and do what's right. They have a chance to assess this one-of-a-kind, first-of-its-kind economic development opportunity on the merits of the opportunity. And I will again repeat again that the merits are truly, truly amazing,” he said.

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Local News

Top Virginia Senate negotiator on Governor's arena plan: 'Not a good deal'

Sarah Rankin Associated Press
9:35 AM, Mar 07, 2024

Democratic Sen. L. Louise Lucas of Portsmouth, the top Senate negotiator and a sharp critic of Youngkin, stood on the Capitol portico, looking down on the governor and sometimes smiling as he spoke. She told reporters earlier that she remains firmly opposed to the deal, in large part because of its reliance on bonds backed by the state and city governments.

Senate Majority Leader Scott Surovell said he objected to trying to include the arena project in the budget because the process does not provide a full opportunity for debate. Surovell also blasted Youngkin for what he called the governor's unwillingness to consider some of the top priorities of Democrats.

“This is a process that requires compromise, and so far the governor has made very little indication that he’s willing to compromise,” Surovell said.

While the full text of the budget bill was not immediately available to the public, both Lucas and Democratic Del. Luke Torian, who chairs the House Appropriations Committee and led negotiations for his chamber, confirmed that the arena-related provisions had been removed from the legislation, which lawmakers are expected to take up Saturday.

The legislation had been in the hands of a conference committee — a small, bipartisan group of legislators that's been meeting behind closed doors — after the two chambers passed competing budget bills earlier this session and then rejected both.

Torian, who had sponsored a standalone version of legislation to underpin the deal that was defeated earlier, said he was “perhaps a little disappointed” the language didn't make it into the budget.

“But that's the nature of trying to govern here in the Commonwealth,” he said.

The budget was the last remaining vehicle for the necessary legislation to pave the way for the deal because Torian's bill and another standalone version failed earlier this session. Lucas refused to give them a hearing in her committee.

Going forward, once lawmakers send the governor a budget, he could pursue an amendment and restore the project language, or he could call a special session on the issue.

Legislators could also reject the budget bill and send it back to the conference committee for further consideration.

Wizards, Capitals would move to Virginia in tentative deal, Youngkin says
Ted Leonsis, owner of the Washington Wizards NBA basketball team and Washington Capitals HNL hockey team, speaks during an event with Virginia Gov. Glenn Youngkin to announce plans for a new sports stadium for the teams, Wednesday, Dec. 13, 2023, in Alexandria, Va. Virginia Gov. Glenn Youngkin has reached a tentative agreement with the parent company of the NBA's Washington Wizards and NHL's Washington Capitals to move those teams from the District of Columbia to what he called a new "visionary sports and entertainment venue" in northern Virginia. (AP Photo/Alex Brandon)

Youngkin and entrepreneur Ted Leonsis, an entrepreneur and the ultrawealthy 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.

“We are disappointed in the legislature's decision not to fully consider a proposal that promises transformative benefits for Alexandria and the entire Commonwealth. We remain hopeful that the merits of the proposal will eventually get a fair hearing so this important project can advance for our fans, players, employees and the residents of Virginia," the Monumental Opportunity campaign, the group associated with Monumental Sports & Entertainment which owns the Capitals and Wizards, said in a statement.

At least one D.C. official welcomed the snafu in Virginia and expressed hope that the teams would remain in the district.

“The Arena and Monumental Sports have been partners with the District for almost 30 years, and a great asset to downtown,” D.C. Council Chair Phil Mendelson said in a statement. “As a deal in Virginia remains uncertain, the Council continues to be ready to welcome Monumental Sports’ change of mind."

The plan calls for the creation of a $2 billion development, partly financed by public money, 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.

Wizards Capitals Qatar
An exterior view of Capital One Arena is seen on Saturday, March 16, 2019, in Washington.

Under the proposed terms of the deal, Monumental and the city of Alexandria would contribute some upfront funds, but about $1.5 billion would be financed through bonds issued by a governmental entity that lawmakers were expected to set up this year.

The bonds were envisioned to 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. Proponents say those sources will more than cover the debt, creating new revenues for the city and state in the project’s first year. But about a third of the financing, under the terms lawmakers were expected to vote on, 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.

Youngkin, a private equity executive before he ran for public office, emphasized that the state would not be putting in upfront cash and that revenues that “otherwise will not be here” would help finance the deal. And he warned that the way the Senate has handled the deal could put the state's business-friendly reputation at risk.

Lucas dismissed that concern and said she had serious concerns about the idea of “putting taxpayers' money behind the project of a billionaire.”

She acknowledged that her move to block the arena could damage some of Democrats' top legislative priorities, like a measure establishing marijuana retail sales. But she said she thought the trade-off was worth it.

“I just stood firm on what I believe in my heart to be in the best interest of the Commonwealth. And that was just to say no to the Glenn dome,” she said using a nickname she's given the proposed arena.

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