Neither Alexandria nor Virginia state taxpayers will be paying for a possible new Wizards and Capitals arena in the Potomac Yard neighborhood, Mayor Justin Wilson said in a recent newsletter.
However, Wilson said in a community newsletter Monday that 5% of the total project — about $100 million — will come from Alexandria. Under the proposal, the money won’t go toward the arena itself, but will be used to fund construction of a neighboring performing arts venue and the development of underground parking.
Wilson told WTOP that Monumental Sports and Entertainment, which owns the sports franchises, will pay a “significant private investment upfront, and ongoing rent that is paid for by the private sports teams, by Monumental.”
The rest of the project’s cost will be covered by tax revenue generated by the complex itself.
Last month, Virginia Gov. Glenn Youngkin, Monumental CEO Ted Leonsis and Wilson announced plans to bring the sports franchises to the Potomac Yard neighborhood. They touted the economic benefit, but some residents have expressed concerns about transportation, traffic and who will pay for the project.
“It’s a model that minimizes the risk on the taxpayers, both the state and the city, and helps drive economic growth in Potomac Yard, which is ultimately what we’re trying to do,” Wilson said.
The funding structure, Wilson said, is similar to the one used to create the Potomac Yard Metro station. The facility was funded “using a portion of the new tax revenues that are generated to basically fund the Metro.”
Under the proposed structure, Monumental would make an annual rent payment, and the remainder would be paid for using tax revenues generated by the project itself. Those include dining taxes at the arena and the performing arts center, sales taxes, and admissions taxes paid on events.
“These are not revenues that can be used for police and fire and teachers and all the other priorities of local and state government,” Wilson said. “These are new revenues that will be generated by this development, and then those will pay off the debt.”
The timeline for the project to move forward is unclear, because it still needs approval from the state’s General Assembly and Alexandria’s City Council. State lawmakers are scheduled to convene later this month, and Wilson said they’ll have to draft legislation that would authorize the project and create a stadium authority.
Alexandria lawmakers, meanwhile, have to “make decisions on the agreements with Monumental, with the Commonwealth, with the landowner JBG. The city is also going to have to make a land-use decision deciding about the use of the land,” Wilson said.
Wilson didn’t offer a specific timeline for the city’s process, but said Alexandria will put out a schedule of meetings during which the public can provide feedback within the next few days.
Some members of the public have taken a hard stance in favor of or against the project, Wilson said, but others have lingering questions, including about the funding plan.
“Help me understand the finances,” Wilson said he’s heard from constituents. “What is the risk for the city? What is the risk for the Commonwealth? How does that play out? Those are things that we have to walk through and explain to the community.”
The project would bring nearly 30,000 permanent jobs and generate $8 billion for the state, according to an economic study the city released just before the Christmas holiday weekend. The city wanted to get the analysis out to the public quickly, Wilson said.
“There was certainly no intent to hide it,” Wilson said. “It was actually trying to draw as much attention as possible at a time [when] everyone was kind of scattered. We just got it out as quickly as we could.”