Virginia Sen. Scott Surovell (D) and Sen. Richard Stuart (R) introduced a bill Friday to establish the Virginia Sports and Entertainment Authority and Financing Fund, the first step toward state approval to build a new sports and entertainment district in Alexandria.
Surovell represents the 34th District, which encompasses most of Southeast Fairfax County. Stuart represents the 25th District, which is concentrated southeast of Fredericksburg.
The bill must be approved this session by the Virginia Senate and House of Delegates to move forward with funding for the proposed Monumental Sports Arena and related development in the Potomac Yard neighborhood of Alexandria.
Local and state officials announced plans in December to build a new professional sports arena at Potomac Yard for Monumental Sports and Entertainment, the owner of the Washington Wizards and Washington Capitals professional sports teams. In addition to the arena, Monumental Sports would move its global headquarters to Alexandria and spur a variety of other development such as residences, retail, dining and more. The City also plans to develop a 6,000-seat performing arts venue.
As expected, the bill itself calls to establish the Virginia Sports and Entertainment Authority. The VSEA would be governed by nine members — six appointed by the governor and three appointed by City of Alexandria officials. The VSEA would have its own executive director. The authority would be charged with tasks to "design, construct, reconstruct, improve, operate, and maintain the campus and any of its component buildings and facilities" and "fix, charge, and collect rates, fees, and charges for the use of, or the benefit derived from, the facilities provided, owned, operated, or financed by the Authority."
Designed to Pay for Itself
The proposed professional sports arena and surrounding development is designed to pay for itself and benefit the city at the same time, city officials said Thursday night, when the Alexandria Economic Development Partnership hosted the first of several Thursday evening "listening sessions" to answer resident's questions. AEDP's Stephanie Landrum led the listening session, joined by City Manager Jim Parajon, Monumental Sports Chief Administrative Officer Monica Dixon, Alexandria City Director of Finance Kendall Taylor, and James Sanderson and Ty Wellford of Davenport & Co., a financial consulting firm. (Future listening sessions are posted on the city's MonumentalALX.com website.)
In addition to the arena, the new neighborhood will include restaurants, public spaces, a performing arts venue, retail, hotels and more. The plan has to go through multiple rounds of approvals at the state and local level, and if everything moves forward, the arena wouldn't open until 2028 at the earliest.
Aside from concerns about increased traffic and the potential for increased crime, residents have raised concerns about how to pay for the massive project. Of particular concern to residents who have read the bill, which was introduced after Thursday evening's listening session, is the section noting that: "In connection with the issuance of bonds by the Authority to finance or refinance the campus, the local governing body of the City may direct, by ordinance or resolution, any other taxes or funds available to it for the repayment of bonds, campus operating expenses or capital expenditures, and other purposes of the Authority, including any other revenues approved by the local governing body of the City and any other taxes imposed by the City."
While that section is designed to be a "just in case" clause, the Sports and Entertainment District is structured to be self-funding, according to city officials, and may even contribute additional funds to the city as a whole.
"Those revenues, based on the projections that we have, are more than sufficient to repay the debt,” Sanderson said, and the city will not have to use revenue coming from other parts of the city. The revenues to pay for the project "don't exist without the project itself. The arena-specific revenues are modeled to be sufficient themselves,” Sanderson said, emphasizing that none of the current revenue the city collects will go toward the arena and entertainment district.
Diversifying the Tax Base
“We are way too reliant on residential tax," Landrum said, "and we need to find ways to significantly grow our commercial tax base.” The arena and adjacent entertainment district, plus future development it spurs, will help do that, she explained.
The city would benefit from use taxes paid by people attending arena events, in addition to taxes from new businesses, a hotel, meals taxes, parking and the jobs created by the project itself. Naming rights for the arena and other venues will also help. In addition, as a safety measure, the city plans to build up a "reserve fund" of at least one year of debt payments, in the event that there is any interruption of activity in the new district.
In addition, the fact that Monumental Sports is leaving its downtown District home gives residents pause that in 20 years, Monumental could abandon Alexandria for a different location, or demand a ton of money to renovate its stadium.
However, there are also plans for a capital maintenance fund, so "you won't have a situation where you have large capital needs that may be necessary" with no way to pay for them. The plan is for capital maintenance and upgrades will be done over time, "so that at the end of the 30-year-plus lease, you still have a facility that is [desirable]," Sanderson said.
Any extra money would be available for programming, services and additional capital projects elsewhere in the city. Those extra funds would go into Alexandria's budget negotiations on an annual basis.
Getting the project started will require a significant outlay of money. When asked about where the construction money will come from, Sanderson explained that "in addition to the project funding, we’re going to borrow funds to pay interest during construction of the project."
