These next few weeks could bring an exciting step forward in the future of Virginia’s economy.
Legislators are considering a proposal to establish a new Virginia Sports and Entertainment Authority as part of a plan to welcome the Washington Wizards and Washington Capitals to a brand-new sports arena in Alexandria.
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Through a unique public-private partnership, a new Virginia Sports and Entertainment Authority would issue bonds to support the $2 billion project. Importantly, the commonwealth is not committing any upfront dollars to the project and utilizing no existing tax revenues or creating new taxes, unlike other similar deals seen across the country. The bonds will be paid back in full by revenues generated by the project itself.
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Because of this unique structure, and because all revenue used to pay bonds on this project is revenue that otherwise would not exist, there should be no impact on the commonwealth’s direct borrowing capacity for essential investments that aren’t revenue-producing, such as building and maintaining schools, state buildings and other public projects. Virginia’s Debt Capacity Advisory Committee reviewed the project and confirmed this view.
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All in all, this unique structure — no upfront cash, the responsible use of the commonwealth as a moral backstop and a one-of-a-kind public-private partnership — also preserves the General Assembly’s ability to continue investing in other priorities, including K-12 education, behavioral health and important regional priorities like toll relief in Hampton Roads.
Beyond the benefits of the financing structure, the long-term payoffs are more compelling. This is truly a once-in-lifetime opportunity.
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With a zero upfront cash commitment, the return to the commonwealth is projected at $12 billion in economic impact over the next 40 years. This includes $4.6 billion in direct cash — new revenue — paid to the commonwealth’s general fund after debt servicing.
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The opportunity also has the potential to create 30,000 new jobs — an astronomical total for one project that would easily make it the largest single jobs announcement in Virginia history, even surpassing the neighboring Amazon HQ2 opportunity.
The project would include more than $300 million in transportation and infrastructure improvements and $30 million in new education funding with no general fund commitment from the commonwealth.
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As the General Assembly considers this opportunity, its members can evaluate these huge rewards knowing that the commonwealth is not putting at risk its treasured sterling fiscal reputation, nor is it ignoring the needs of Virginians. I am confident that once evaluated in this context, our leaders will seize this moment.
