Northern Virginia arena deal in doubt

The deal to move two major league sports teams out of D.C. and into a new arena built on bonds in Northern Virginia is looking less than likely to happen. 

The $2 billion public private partnership would move towards existence with a budget approval by the Virginia State Legislature, but Senate Finance and Appropriations Chairwoman L. Louise Lucas, a Democrat from the southeastern part of the Commonwealth, is opposed to the idea. 

The General Assembly adjourns on Saturday and unless something unexpected happens, Republican Gov. Glenn Youngkin will need to call a legislatively risky option play to move the deal forward. The arena could still happen by way of a budget amendment or a special legislative session that would require approval in the General Assembly.     

The hope of building the hockey and basketball arena is somewhat dependent on the struggle for transit funding. The 12-acre site in Potomac Yard is a former rail hub that straddles Arlington County and the city of Alexandria. The site is currently served by one Washington Metropolitan Area Transit Authority rail line that was recently improved, but local opposition has centered on traffic concerns.  

Lucas made headlines again earlier this week by temporarily omitting new Metro funding from the state budget. Metro is funded via a compact arrangement between Virginia, Maryland, the District and the Federal government. Like many mass transit agencies, WMATA has been struggling to recover from a pandemic induced ridership drop.  

Metro leadership engaged in outreach with the Senator and a compromise appears to have been reached.  On X, formerly known as Twitter, Lucas said, “After securing commitments for the long-term reform that Metro needs, I have decided to put their extra funding into our Senate budget for this year. We will be monitoring this situation closely on behalf of all taxpayers in Virginia who are stepping in to help save this system.”   

As opposed to spending state money on a new arena, Lucas is advocating for toll road relief in her homebase in Portsmouth.   Tolls to cross the Elizabeth River from Norfolk to Portsmouth range from $3 to over $7 depending on payment method and time of day. The tolls are collected and administered by a P3 and have been in place for 58 years.    

The possibilities of tapping public financing for major league sports venues in and around the nation’s capital have quickly become more complex as legislation that would turn control of the currently underused RFK football stadium in Washington site over to the District was approved by the House and is headed toward the Senate.  

“The vote was a significant step forward in our efforts to unlock the full potential of the RFK campus for our residents and visitors, the community, and DC’s comeback,” said D.C. Mayor Muriel Bowser.

If the legislation passes the Senate, the District intends to convert the obsolete stadium and the 174-acre site into a mixed-use development that would include commercial and residential elements. A renovated or brand-new stadium could then be used to lure the NFL’s Washington Commanders, who are currently playing in Landover, Maryland., about seven miles east of RFK. 

The Commanders got a new ownership group last year, changed their name in 2022 and are under contract to play in Landover at what used to be called FedEx Field until 2027. Last week, FedEx announced they were ending their naming rights deal on the stadium two years early, a $15 million hit.          

The land the RFK football stadium sits on currently belongs to the federal government who rents it to the District for free with a lease that runs to 2038. The current arrangement stipulates the land can only be used for recreation, a stadium and open space while the National Park Service bears the cost of maintaining the site. 

In addition to the mayor’s office, the pending legislation has backing from the U.S. Department of the Interior, Rep. James Comer R-Ky., chairman of the House Oversight Committee, and D.C. Del. Eleanor Holmes Nortonm who serves in Congress as a non-voting member. 

“This bill is a win-win for the federal and D.C. governments. said Norton. “This bill would give D.C. administrative jurisdiction over the campus for at least 99 years and permit D.C. to use the campus for commercial and residential development, recreation, a stadium, parks and open space.” 

Financing strategies for renovating the RFK stadium haven’t been laid out, but D.C.’s other stadium and arena projects offers clues. In February Bowser touted the city’s bond rating to explain how a major renovation of the Capital One Arena would be accomplished in her bid to keep professional basketball and hockey in their current home in the Chinatown neighborhood in downtown Washington. 

Tapping public funds for another major stadium overhaul would require approval from D.C.’s City Council, with early readouts showing a split of opinions. 

Figuring out ways to pay for a major RFK stadium demo and rebuild are being aided by a $397,000 sports study commissioned by Bowser’s office last October. The contract was awarded to Jones Lang LaSalle Americas Inc., and the Robert Bobb Group, the founderof which helped captain the baseball stadium deal.  

In January the D.C. City Council began tweaking the rules governing how the baseball stadium debt is being retired for Nationals Park. The home of the Washington Nationals is funded with bonds supported by the Ballpark Revenue Fund. The BRP is filled from taxes levied against those earning more than $5 million a year, along with sales tax charged public utilities, telecommunications, and at the stadium. 

The bonds are projected to be paid off by 2036 but some reports show payments running ahead of schedule with a payoff date as early as 2028. In the past, excess money that exceeded the bond payment was funneled back into the city’s general fund to balance the budget.  

When the bonds are paid off, the taxes and revenue streams will remain in place, which has other venues and teams already eyeing the proceeds.