Bonds

D.C. mayor touts bond rating in arena bid

A proposed plan to build a $2 billion arena complex in Northern Virginia through a public-private partnership that would move two major league sports franchises out of Washington D.C .is attracting pushback from state legislators, local residents, and Washington’s mayor who’s offering $500 million in renovations to the team’s current home.  

“The city would leverage our triple-A bond rating to borrow without raising taxes or displacing any planned capital projects,” said D.C. Mayor Muriel Bowser, via an op-ed in The Washington Post last Friday.  ”The result would be a new, more profitable, state-of-the-art urban arena, with improved corporate suites and more and better entertainment options.”  

Last week, the Virginia House Appropriations Committee voted 17-3 to advance legislation to create a stadium authority that would issue about $1.5 billion of bonds. The revenue for paying down the debt would come from ticket taxes, parking fees, concession taxes, income taxes levied on athletes performing at the arena, and naming rights.

“The city would leverage our AAA bond rating to borrow without raising taxes or displacing any planned capital projects,” said Democratic DC Mayor Muriel Bowser. ”The result would be a new, more profitable, state-of-the-art urban arena, with improved corporate suites and more and better entertainment options.”  

DC.Gov

Despite the vote, opposition remains. Democratic State Sen. L. Louise Lucas, who chairs the Senate Finance and Appropriations Committee, was quoted on X (formerly known as Twitter) Monday saying, “The more we use the reputation of the Commonwealth to finance billionaires’ projects, the more we risk not being able to finance our own projects.”

Lucas represents Portsmouth, one of the cities making up the Hampton Roads area which charges tolls for several water crossings that thread the area together. Tolls went up in January as Lucas searches for relief in Richmond.    

The plan for a new arena complex includes underground parking, practice facilities, offices, media studios, a fan plaza and a performing arts venue. Future development is also being eyed for the area on the western border of the site which is dominated by strip shopping centers and surface parking lots.

The site is near the desirable Del Ray neighborhood in Alexandria where opposition has arisen due to traffic and noise concerns along with skepticism about the complex generating enough revenue to service the debt. 

“We believe along with a lot of sports economists, who believe that most of these projects generally are money losers, and don’t generate anywhere near the revenue that they claim they will,” said local resident Andrew Macdonald. Macdonald is a former Alexandria vice mayor and former city council member now working as organizer of the Coalition to Stop the Arena at Potomac Yard.  ”Hence, at some point, somebody’s going to owe something.”

The proposed deal was officially announced last December by Republican Gov. Glenn Youngkin and Ted Leonsis, whose firm, Monumental Sports & Entertainment owns the Washington Capitals of the National Hockey League and the NBA’s Washington Wizards. 

If the deal happens, the teams will move across the river to brand new facilities built from scratch on a 12-acre site in Potomac Yard, a former rail hub that straddles Arlington County and the city of Alexandria. 

The arena jockeying happening in the D.C. area reflects a national trend of metropolitan areas tapping public financing to build new sports facilities that offer luxury class amenities. 

In Nashville, the NFL’s Tennessee Titans will be getting a new home thanks to a combination of over $700 million in local bonds and $500 million in state paper. Their current stadium is still on the hook for $30 million in public debt. 

Last December the Indianapolis City Council voted to finance Eleven Park, a $1.5 billion mixed-use development anchored by a minor-league soccer stadium, that will be partially funded through bonds issued by the Indianapolis Local Public Improvement Bond Bank.

The D.C. mayor also alluded to existing lease requirements that may come into play. “We intend to keep our end of the bargain and enforce the leases with Monumental that require the Wizards and Capitals to play at the arena through 2047 and the (WNBA) Mystics to play in Congress Heights through 2037,” she said in the op-ed. 

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