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JBG Smith blames Tysons casino conspiracy for derailing Potomac Yard deal

Matt Kelly, CEO of JBG Smith, 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)

While there’s no shortage of finger-pointing in the aftermath of the collapsed Potomac Yard arena deal, one that flew a little under the radar in the news yesterday was developer JBG Smith laying the blame squarely on a conspiracy involving the Fairfax casino project.

The statement from JBG Smith was noted by the Washington Business Journal as being unusually blunt.

The first accusation is that the project was derailed by “partisan politics and, most troubling, the influence of special interests and potential pay-to-play influences within the Virginia legislature.”

JBG Smith elaborates on the other two later in the release, but the first one is likely a shot at Virginia State Sen. Louise Lucas. While the arena project made it through the House of Delegates mostly unscathed, Lucas used her position as chair of the Senate Appropriations Committee to keep the project out of the State Senate’s budget discussions.

Lucas said her opposition was primarily around the deal financing. While no upfront state taxpayer dollars would go to the project, new tax revenue from the project would have been diverted to pay down the bonds.

JBG Smith said the proposal was denied “a fair hearing” by never going to the Senate floor.

“Despite our best efforts, this project was unable to get a fair hearing on its merits with the Virginia Senate,” JBG Smith said.

Though the release stops just short of naming developer Comstock, JBG Smith pointed fingers at the “special interests” behind the Tysons casino deal.

It is now clear that our efforts may have been complicated and ultimately blocked, in part, by special interests seeking to move the Monumental arena to Tysons Corner and to combine it with a casino. The Washington Post and other outlets have reported on this scheme and the hundreds of thousands of dollars, enormous sums in Virginia politics, of political contributions associated with it – a large portion of which were directed to key senate leaders.  When one follows the money, the implications are deeply troubling for Virginia and for the future of transparency in economic development pursuits, especially those that seek certainty through the now damaged MEI legislative process.

The Washington Post reported that a group had formed to shift the arena to Tysons rather than Alexandria. The post reported that Christopher Clemente, chief executive of Comstock — the developer behind the casino project in Fairfax — had been pitching a casino-arena deal with Fairfax political consultant Ben Tribbett and Senate Majority Leader Scott Surovell (D-Fairfax).

One item of concern raised in the Washington Post story is that Tribbett, part of the casino group, also advised Lucas. Tribbett told the Washington Post that consulting for multiple parties involved in the arena debate was “politics.”

The proposal was apparently immediately shot down by Youngkin and Monumental Sports and Entertainment, with Monumental owner Ted Leonsis apparently voicing “disgust” at perceived pressure to link the arena to the casino. Alexandria Mayor Justin Wilson also expressed disappointment at the backroom dealing.

The Alexandria Economic Development Partnership, a city-funded organization that aims to bolster Alexandria’s economy, also hired lobbyists to advocate for the project in Richmond.

While JBG Smith accused inter-developer sabotage of killing the deal, the project also faced a host of other issues, from concerns over the financing plan to uncertainty about transportation to the arena development.

The full release from JBG Smith is below the jump:

Dear JBG SMITH Stakeholders:

In December, we announced plans to develop an entertainment district in Potomac Yard, anchored by the Washington Capitals, Washington Wizards and the Monumental Sports & Entertainment corporate headquarters. Today it was announced that discussions between Monumental, Alexandria and the Commonwealth of Virginia have been terminated. While we had made great strides in advancing the project’s transportation plan, overall design and financing structure, the opportunity was derailed largely due to partisan politics and, most troubling, the influence of special interests and potential pay-to-play influences within the Virginia legislature.

This was a once-in-a-generation opportunity to build a world-class arena and entertainment district at Potomac Yard and to realize the vision of that community as a dense, mixed-use neighborhood. We are thankful to those who made the opportunity possible in the first place, especially Monumental Sports. We are also thankful to our local partners, specifically the City of Alexandria and its City Council, Alexandria Economic Development Partnership, and the Governor’s office, and the many public supporters along the way who engaged in thoughtful dialogue about how to move this important opportunity forward.

Despite our best efforts, this project was unable to get a fair hearing on its merits with the Virginia Senate. It is now clear that our efforts may have been complicated and ultimately blocked, in part, by special interests seeking to move the Monumental arena to Tysons Corner and to combine it with a casino. The Washington Post and other outlets have reported on this scheme and the hundreds of thousands of dollars, enormous sums in Virginia politics, of political contributions associated with it – a large portion of which were directed to key senate leaders. When one follows the money, the implications are deeply troubling for Virginia and for the future of transparency in economic development pursuits, especially those that seek certainty through the now damaged MEI legislative process.

Beyond the arena, state and local governments will lose needed tax revenue, economic development credibility, and what could have been Virginia’s last best chance to land a professional sports franchise for at least a generation. Economic development and growth thrive on transparency and predictability. The scheming and special interests that plagued this opportunity in the Virginia legislature will no doubt cause future employers and the next Monumental to question whether their opportunity will get a fair hearing.

This opportunity also brought with it the potential to add tens of thousands of jobs and needed housing units, including 1,000 units of affordable housing preservation in Alexandria which we had pledged as part of the arena proposal. Traffic and transportation investments, including possible Metro funding, are also likely gone. Instead, the existing surface-parked, single story shopping center on the site will remain through the remaining 20-year term of the Target lease and development on the remaining land will likely be far less dense. To say we are disappointed is an understatement; we are disgusted with the back-room-dealing and opaque scheming that took place as this played out.

With this chapter now closed, we will continue to pursue alternate uses and amenities to further develop our sites adjacent to the Virginia Tech Innovation Campus. We will also continue to work tirelessly to attract business and customers to the Commonwealth of Virginia and the local communities in which we invest, and most importantly we will always conduct ourselves in a manner in which we and our stakeholders can be proud. We thank you for your continued trust and confidence.

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