Wizards, Capitals to move to Virginia on tentative deal

Virginia Gov. Glenn Yonkin has reached a tentative agreement with the parent company of the NBA's Washington Wizards and the NHL's Washington Capitals to move those teams from the District of Columbia to what he calls a new “visionary sports and entertainment destination” in Northern Virginia.

The proposal, which would require approval by the state Legislature, calls for a $2 billion development south of Washington in Alexandria, just miles from the existing arena, Youngkin said in an interview with The Associated Press before a news conference Wednesday. The site will include an arena for the state's first professional sports teams, as well as a new Wizards practice facility, a separate performing arts center, a media studio, new hotel, a convention center, housing and shopping.

“The commonwealth will now be home to two professional sports teams, a new corporate headquarters and more than 30,000 new jobs — a landmark,” Youngkin said in a statement.

Monumental Sports and Entertainment CEO Ted Leonsis appeared with Youngkin and city officials at Wednesday's announcement. He supported the proposal, thanked Youngkin and said he had “goosebumps” at the thought of the project coming together “if all goes according to plan.”

Monumental also owns the WNBA's Mystics, and Leonsis said he hoped Capital One Arena, where the Wizards and Capitals currently play, could host other events such as women's sports and concerts.

“Our goal is to expand here and keep Capital One Arena a great place in D.C.,” said Leonsis, a super-wealthy entrepreneur and former AOL executive.

The new development will be located in the Potomac Yards section of Alexandria, along the Potomac River and near Virginia Tech's ambitious Innovation Campus, a graduate school under construction.

To help finance the project, Youngkin will ask the Virginia General Assembly in the 2024 session to approve the creation of a Virginia Sports and Entertainment Authority, a public entity with the power to issue bonds. Although no upfront state taxpayer dollars will go toward the project, terms of the agreement will divert new tax revenue from the project to pay off the bonds.

“We've reached a very clear understanding, really subject to finalizing the work of the General Assembly,” Youngkin said in the interview, adding that a key bipartisan legislative committee approved the stimulus framework earlier this week.

Still, on Tuesday night before the announcement, D.C. Mayor Muriel Bowser unveiled a counterproposal that she said has the unanimous support of the D.C. Council aimed at keeping the parties. The legislation would direct half a billion dollars to modernize Capital One Arena.

“This proposal represents our best and final offer and the next step in our partnership with Monumental Sports to breathe new life and vitality into the neighborhood and keep the Washington Wizards and Washington Capitals where they belong – in Washington, D.C.,” said Bowser, who held his own press conference later Wednesday. was supposed to

When the Capitals and Wizards moved from suburban Maryland to what was then known as the MCI Center in DC's Chinatown district in 1997, officials credited the arena with sparking a renaissance in downtown Washington. In recent years, critics who have blamed city officials for what they call lax crime policies have said the neighborhood around the arena has suffered disproportionately.

The administration expects the proposed 9-million-square-foot Virginia Entertainment District to generate $12 billion in economic impact for Virginia and Alexandria over the coming decades and create about 30,000 new jobs, Youngin's office said in a statement. Subject to legislative approval and sign-off from the Alexandria City Council, it will break ground in 2025 and open in late 2028.

The development would be a major blow to D.C. and a huge win for Youngkin, a former private equity executive and college basketball player, who said he has a pre-existing friendship with Leonsis from the business world. To top it off, he will have to work with Democratic majorities in both chambers of the General Assembly after his party fell short of his stated expectations in the November election.

Democrats, including incoming House Majority Leader Charlie Herring, accompanied U.S. Sen. Mark Warner for Wednesday's news conference. Other key lawmakers were not.

Scott Surovell, who will serve as Senate Democratic leader in January, said in an interview that he thought the project might be a good opportunity, but he stopped short of endorsing it entirely. Legislators will have questions about transit, taxpayer risks and compensation for workers who will build the project, he said.

The broad outline of the proposal calls for Monumental to invest $403 million in a $2 billion development. Alexandria will pay $106 million for performing arts venue construction and underground parking improvements.

The remaining approximately $1.5 billion in financing will be supported through authority-issued bonds. These bonds will be repaid over time through rent paid by the team, parking fees, naming rights and new tax revenue generated by the development.

“No upfront investment or taxes already collected by the commonwealth to repay the bonds are included, and there will be no tax increase for local residents,” Youngkin's office said.

Potomac Yard, just south of Reagan National Airport, is currently occupied by strip malls and other retailers. The site is adjacent to redevelopment resulting from the construction of a new headquarters in nearby Amazon's Arlington neighborhood.

Moira Salcedo, who lives in the area, attended Wednesday's event to protest, saying she and her neighbors were blindsided.

“I hate subsidizing billionaires. And I've lived here for the last 10 years and I know there's no infrastructure for that,” he said.

In the 1990s, the site received serious consideration as a site for an NFL stadium, but negotiations between the team and Virginia collapsed.

Asked how a move by Monumental might affect the state's efforts to lure the NFL's commanders to Virginia, Youngkin said he could not comment. Legislation aimed at recruiting that group in Northern Virginia caught fire last year.

Reporting by the Associated Press.

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