City Hall Watch with Bill Rossello: A windfall or huge risk for Alexandrians?

City Hall Watch with Bill Rossello: A windfall or huge risk for Alexandrians?
Bill Rossello. (Courtesy photo)

By Bill Rossello

If you’ve listened to our elected city officials or the Alexandria Economic Development Partnership, every concern about the Monumental Sports & Entertainment arena project has been addressed already. And heck, we have been assured of $2 billion in economic activity and 30,000 jobs, whatever that may mean for Alexandria residents. Local officials have done their usual to create an appearance of civic engagement in tightly controlled public events. 

Yet, the city seems to be losing in the court of public opinion. Commuters, neighborhood associations and environmental groups are making solid arguments against the arena. Meanwhile, they have witnessed their elected officials seemingly smitten with the proposal, a common mistake on deals that turn bad. 

Residents across the city have been asking the right questions about transportation, neighborhood and environmental impacts. Increasingly, what many are calling for is real rigor in the analysis of the financial side of the deal. Understanding whether it would produce a windfall for the city and taxpayers or just a huge financial risk might change the tenor of the debate. It starts with understanding the emerging legislation. 

On February 9, the Virginia House of Delegates’ bill that would establish the Virginia Sports and Entertainment Authority emerged from committee. It stipulates who would own the land, who would govern the entertainment “district,” how tax revenue would flow and how excess revenue would be shared between the state and the city. 

As envisioned, the district’s 70 acres will extend from the new Metro station west to Route 1, and from Four Mile Run south to East Glebe Road next to Target. It will include all land of the current Potomac Yard Shopping Center. It would also include anything else built there: hotels, restaurants, retail establishments, other businesses and residential units. 

The authority would own the land, the arena and other Monumental facilities. It would act as a landlord to the company and would be responsible for development and maintenance of the district. The city would be responsible for the performance venue, to be jointly owned with Monumental, according to one city official. 

The authority would collect the corporate income taxes from Monumental and be entitled to all of the individual income tax generated by those employed or operating within the district. Presumably, the city would split the revenue from the performance venue with Monumental. 

What about the various forms of local taxes? The current House bill says, “All district local tax revenues shall be remitted by the city to the authority.” While that doesn’t sound good to Alexandrians, there is a revenue sharing provision. The authority’s net revenue after all of its debt service and other costs are covered would be divided between the state and the city in some manner. 

It has become clear that we need to see the projected financial data that shows the specific revenue and cost line items by year of the project. Without that information, the argument that Alexandrians will benefit from the deal will continue to fall on deaf ears. 

How much money in authority distributions should we expect to receive to offset the loss of local tax revenue and our $100 million investment the city would contribute to the project? What exactly will be the cost of transportation improvements? Will any of that be on us? How will the incremental costs of additional law enforcement and other city services be covered? And, most importantly in the financial analysis, how much money should we expect to go back to city coffers for community investment and tax relief for residents? 

So, does this deal promise to be an economic windfall for the city or will we be subsidizing Monumental and the rest of Virginia? We will never know without the financial details. 

This process is far from over and City Council actually holds the power to kill the legislation even if it is approved by the General Assembly and the governor. Let’s hope city officials use that power to negotiate a financial deal for Alexandrians that far outweighs the negatives that residents have effectively articulated. Otherwise, City Council should muster up the courage to simply walk away. 

The writer is a civic advocate, management consultant and longtime Alexandria resident.