Top Virginia Senate Democrats deal setback to legislation to relocate Washington Capitals, Wizards

RICHMOND, Va. (AP) — Top Democrats in the Virginia Senate have dealt a blow to legislation to help pave the way for the NBA’s Washington Wizards and NHL’s Washington Capitals to relocate to northern Virginia, refusing to docket the bill for a hearing and expressing serious reservations Monday about the financing of the proposed deal.

Sen. L. Louise Lucas, who holds great sway in the General Assembly as chair of the Senate Finance & Appropriations Committee, first said over the weekend on social media that legislation underpinning the deal negotiated by Republican Gov. Glenn Youngkin was “not ready for prime time” and would not receive a hearing in her committee. The decision effectively killed the Senate version of the legislation because of a procedural deadline this week, though another bill is making progress in the House of Delegates, which is also controlled by Democrats.

Lucas, who took questions from reporters Monday morning along with Senate Majority Leader Scott Surovell, said Youngkin had made a series of mistakes in trying to advance the proposal through a General Assembly now in full Democratic control after November’s elections.

Among them, she said, was a weekend speech at Washington and Lee University in which Youngkin took a broad swipe at Democrats collectively, saying the party does “not believe in — nor do they want — a strong America.”

Surovell said his caucus has concerns about whether the governor is truly willing to consider Democrats’ priorities, including legislation to establish recreational cannabis sales and further increase the minimum wage, in negotiations over the arena legislation. Lucas is also seeking toll relief for the Hampton Roads region.

Asked if the deal was “dead,” Lucas responded bluntly: “As far as I’m concerned, it is.”

Surovell did not go that far in his remarks. He said later in an interview that he doesn’t think the bill is dead yet but added: “Something is going to have to change pretty soon for the patient to get off the surgery table here.”

Lucas was asked if changes to the House version of the bill, which will eventually be before her committee if it clears a House floor vote, could make the proposal palatable.

She answered by saying she had a strenuous objection to the project financing as currently envisioned because of its use of moral obligation bonds backed by the state and by Alexandria. That means taxpayers could be on the hook if the project revenues don’t come through as expected.

“As long as the full faith and credit of this Commonwealth is backing this project, my answer continues to be an absolute no,” she said.

Surovell said Senate Democrats had asked questions about financing the deal another way but were told “that piece of the bill is untouchable.” He added that he was unaware of moral obligation bonds — which are typically used in Virginia to help finance public infrastructure projects — being used for any similar economic development initiative.

Rob Damschen, communications director for Youngkin, said in a statement that the governor remains confident that the Assembly “will come together because this project is good for the entire Commonwealth.”

“It creates 30,000 jobs and unlocks billions in new revenue that can be used to fund expanded toll relief in Portsmouth, increased funding for I-81, and new money for education for rural and urban school divisions across the Commonwealth,” Damschen said.

Senate Republicans criticized Lucas’ refusal to put the bill up for a committee vote, characterizing the move as a “pocket veto” of the governor’s priority.

Youngkin and entrepreneur Ted Leonsis, an ultrawealthy former AOL executive and the 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.

The proposed new site in Alexandria would be just miles from where the teams currently play in Washington.

The legislation currently pending before the Assembly would set up a sports and entertainment authority that would issue the bonds that will help pay for the project. The bonds would be repaid through a mix of revenues from the arena and broader development surrounding it, including a ticket tax, parking fees, concession taxes, income taxes levied on athletes performing at the arena, and naming rights from the district, among other sources.

Monica Dixon, a top executive at Monumental, said in a written statement Monday that the company is having “healthy discussions” with General Assembly leaders and Alexandria City Council members, who will also need to sign off on the deal. Dixon said the company is encouraged by Friday’s vote in a House committee, where the bill passed 17-3.

D.C. Mayor Muriel Bowser, in an op-ed piece that ran in Sunday’s Washington Post, urged Monumental to consider the city’s offer of $500 million to be used to renovate Capital One Arena in Washington. If Monumental leaves for Virginia, Bowser said the city will enforce the terms of its lease.

Under that lease, the Capitals and Wizards were expected to play at Capital One Arena through 2047, but the teams can break the lease as early as 2027, so long as they fully pay off $35 million in bonds that are currently outstanding.

There is no provision, though, for Monumental to break its lease for the WNBA’s Washington Mystics, who play at a smaller arena in the city and have lease obligations that extend until 2037.

Monumental said back in December it would like to move the Mystics to Capital One Arena when the Wizards and Mystics move to Virginia. But in a social media statement Sunday responding to Bowser, Monumental said it will keep the Mystics at the smaller arena through 2037 if the city insists.

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Associated Press writer Matthew Barakat contributed to this report from Falls Church.

Sarah Rankin, The Associated Press