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Alexandria Mayor: Potomac Yard arena will have minimal parking, but Metro station currently inadequate

Alexandria Mayor Justin Wilson speaks at the announcement of a new arena for the Washington Wizards and Capitals in Potomac Yard in Alexandria, Dec. 13, 2023 (staff photo by James Cullum)

Yesterday’s announcement of the possible new arena at Potomac Yard turned a previously scheduled conversation with Mayor Justin Wilson into one of the first public discussions of the contentious project.

The Del Ray Citizens Association was packed with 375 participants on a Zoom call to ask Wilson questions about the new project. Across social media — and at a small protest outside the announcement — concerns focused on the secrecy around the project, car congestion at the site, and the Potomac Yard Metro’s ability to handle the amount of traffic.

Wilson acknowledged that “traffic and transportation is the biggest unknown here.”

While some traffic improvements are planned for Route 1 as part of this project, according to City Manager James Parajon, Wilson said the city’s focus is on discouraging people from driving to the arena.

“The city’s interest in these early discussions has been in keeping the number of parking spaces on this site at a minimum because we do not want a lot of vehicles accessing this use,” Wilson said. “This is intended to be a transit arena, a transit operation, that’s why we invested in a Metro station.”

Wilson said the new Potomac Yard will have a “significant net reduction” in parking spaces at the site.

“The intent is to ensure that we do not have people beyond a small core accessing this by vehicle,” Wilson said. “We will continue to push to keep parking at a minimum.”

But at the same time, Wilson admitted that the current Potomac Yard Metro station isn’t up to the task of handling the types of traffic generated by a sports arena.

“There’s no way the current station can accommodate this use as is,” Wilson said. “A significant chunk of transportation investments will require improvements to the station.”

Wilson said the station, which just opened earlier this year, will need upgrades to handle the volume generated by Capitals and Wizards games.

“[We’ll be] ensuring that the bridges and things like that can handle that capacity of volume,” Wilson said. “WMATA is aware of this discussion.”

For adjacent neighborhoods, Wilson said the city will take another look at parking permit questions that fell off during the pandemic.

“The pandemic and lower levels of office workers made that not as big of an issue, but we did create a [residential parking permit] in Potomac Yard and Potomac Greens,” Wilson said. “We never want to see a situation where our neighborhoods become street parking for this or the Metro in general.”

One of the concerns about the project was funding, but Wilson said this wasn’t going to be a giveaway of taxpayer money to a billionaire.

“I’ve heard quite a bit about concerns that we are providing a billionaire with taxpayer money; that is not what is happening here,” Wilson said.

Wilson said the development will be more than just an arena, it will have a music venue, esports, a practice facility, and more, along with a corporate headquarters for Monumental Sports & Entertainment.

According to Wilson:

Virginia Stadium Authority will be issuing bonds for the construction for the arena. The land and arena will be owned by the public entity; it will be owned by a state agency. The debt borrowed by this public entity will be paid by three streams of money.

First: a private stream. Ted Leonsis will pay, first of all, a $400 million downpayment and a rent payment. That rent payment will be used to pay off that debt.

Second: the city will take a portion of the new tax revenue that comes from this development and we will use it to pay off a portion of this debt borrowed by that authority.

Third: the Commonwealth will take a portion of its tax revenue coming off this use and they will use it to pay off the loans used to construct it.

This is exactly the way we funded the Potomac Yard metro. We funded it using the tax increment of development that happened in Potomac Yard.

We are not using city tax dollars that would be used to pay police officers, firefighters, educators etc. We are using the new money generated by the project to pay off the debt.

Wilson acknowledged that there are some stadiums that are bad investments. In fact, many economic studies suggest sports stadiums don’t deliver on the promised economic impact.

“There are a lot of bad stadium deals around the country,” Wilson said. “That’s why, when we went into this discussion, we had to have private money in this… A public-private partnership should not be entirely public. There are stadium deals around the country, even in this region, that have been entirely public. We, as we went through this process, tried to ensure that we learned the lessons of those failed deals.”

Economic studies commissioned by the city, according to Wilson, said a new arena in Potomac Yard could beat the trend and provide a positive impact.

“Based on the analysis we have done, and we’ve brought in outside entities to analyze the financials of this project, this has the potential to be a very significant net positive for the city’s taxpayers,” Wilson said.

The alternative, Wilson said, is slow growth around the Metro station without a central anchor to spur development.

“If this doesn’t happen, we’ll continue to have a large surface parking lot and a suburban shopping center,” Wilson said. “Virginia Tech will come along, mixed-use projects close to the Metro would potentially happen, but the financial difference is dramatic. That’s why we pursued this, and that’s why we’re presenting it to the public.”

Touching on a few other topics, Wilson noted that the Target at Potomac Yard was always slated for redevelopment, though the store does “extremely well” and it’s likely that there will be another Target there as part of redevelopment.

“That was always an assumption, that we’d, in the future, have a more urban Target,” Wilson said. “What that looks like still needs to be determined in the future.”

Wilson also said a new school site has been in plans for Potomac Yard, but only once the project reaches certain development thresholds. Wilson said the hope is the arena development will be a catalyst for other development in the area.

Many local residents said they were blindsided by the decision, which only emerged as public reports of backroom deals earlier this week despite Senator Mark Warner saying discussions about the move have been ongoing in the higher echelons of power since earlier this summer.

“Obviously, for a lot of residents, this is a surprise; an announcement that nobody was expecting,” Wilson said. “Unfortunately [due to] the nature of competitive economic investments… it has to be confidential at the leadup of the process.”

Wilson said the city will be launching a public engagement process soon.

“Now we have entered the phase where we’ve got to hear from you,” Wilson said. “We have to hear from you about what would make this feasible, what would make this possible, what you think is missing, and how we could make it viable if you don’t feel it is. That’s the conversation we’re going to have over the next year and that’s how we’re going to address some very real concerns about infrastructure.”

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