Alexandria Mayor Justin Wilson, left, with Monumental Sports & Entertainment executive Ted Leonsis and Virginia Gov. Glenn Youngkin at the announcement of the Potomac Yard arena proposal in Alexandria, Va., in December.

Alexandria Mayor Justin Wilson, left, with Monumental Sports & Entertainment executive Ted Leonsis and Virginia Gov. Glenn Youngkin at the announcement of the Potomac Yard arena proposal in Alexandria, Va., in December. (John McDonnell/The Washington Post)

D.C. Mayor Muriel E. Bowser and Ted Leonsis, owner of the Wizards and Capitals, said Wednesday they were finalizing a deal that — if approved by the D.C. Council — would keep the teams in downtown D.C. until 2050, ending the owner’s planned move to Virginia.

An announcement is planned for late Wednesday afternoon at Capital One Arena downtown.

Under the terms of the deal, D.C. would spend $515 million over three years to help Leonsis modernize the arena and the owner would sign a new lease keeping the teams in D.C. for 25 more years.

The agreement includes other provisions that address some of Leonsis’s concerns about the state of downtown and allow his company, Monumental Sports and Entertainment, to additionally expand in the city.

Among the provisions to which the two sides have tentatively agreed, D.C. would allow Leonsis to take over management of the Mystics home facility in Southeast D.C., utilize parking at some District-owned buildings for Monumental employees, keep a minimum number of police officers downtown and plan for a new future downtown practice facility for the Wizards.

The agreement marks a sharp change in plans for Leonsis, who three months ago joined Virginia Gov. Glenn Youngkin (R) to announce a handshake agreement to build a new arena in the Potomac Yard area of Alexandria as part of a $2.2 billion mixed-use development. Although the Virginia House of Delegates gave the idea initial approval, the proposal never passed the Senate and was left out of the state’s budget.

In a joint interview with The Washington Post Wednesday, the mayor and owner said they had stayed in regular touch since Leonsis’s announcement in Virginia. Leonsis said a number of moves made by Bowser and the council, including the formation of a plan to revive downtown and the council’s passage of a new crime bill, gave him greater confidence that he could comfortably grow and expand his business in the District.

“We appreciated our discussions about how we could grow together,” Bowser said. She said after Leonsis’s announcement that he planned to leave “it became very clear about how our community feels about our teams.”

Leonsis credited the mayor with continuing to make progress on improving the business climate downtown. He said after one of his meetings with her, “all of a sudden I really felt like we were in this together and that D.C. — it’s where I wanted to be.”

A deal in D.C. will not be complete without approval by the 13-member D.C. Council. But in December, members of the council unanimously signed on to legislation offering Leonsis $500 million in upgrades over three years, closely mirroring the terms Leonsis and Bower described Wednesday.

Youngkin released a written statement shortly after the news came out Wednesday afternoon in which he hailed the lost promise of a “one-of-a-kind project” that he said would have brought thousands of jobs and billions in revenue to the state.

“Virginians deserve better,” he said. Enormous economic potential “just went up in smoke...This should have been our deal and our opportunity, all the General Assembly had to do was say: ‘thank you, Monumental, for wanting to come to Virginia and create $12 billion of economic investment. Let’s work it out.’ But no, personal and political agendas drove away” the deal.

Youngkin thanked Leonsis, Monumental, the city of Alexandria and developer JBG Smith, all of whom he said had shown “professionalism, belief in Virginia and fortitude. Congratulations to Monumental for striking a great deal, I’m sorry you won’t be in Virginia.”

The news comes shortly after the city of Alexandria said Wednesday afternoon that it has stopped negotiations around the proposal to bring the Washington Wizards and Capitals to a new arena at Potomac Yard.

In the statement, the city said the proposal was “worthy of community discussion and Council consideration,” but that it was “disappointed in what occurred between the Governor and General Assembly.”

“We are disappointed that this proposal was not able to be thoughtfully considered on its merits by legislators, stakeholders and ultimately now by our community,” Alexandria Mayor Justin M. Wilson (D) said in a video statement released Wednesday afternoon. “Instead we got caught up in partisan warfare in Richmond.”

He said the city would turn its focus to other efforts to bring “quality commercial opportunities” to the city. Alexandria is facing stagnant revenue growth that he said was straining to meet the rising costs of funding city services, Wilson added.

The Post reported last year that Leonsis had asked for $600 million in public funding for major renovations at Capital One that included moving more seats closer to the court and ice, a food court and new entrance at Seventh and F streets. Bowser (D) and Leonsis had negotiated for months in 2023 but were unable to come to terms in part because of a strict cap on the District’s ability to borrow. That cap prevented Bowser from offering enough upfront funding to satisfy Leonsis — until a routine refinancing of the city’s debt by D.C. Chief Financial Officer Glen Lee late in the year.

In December — just days after that refinancing freed up more money — Bowser and Mendelson went to Leonsis with the offer of $500 million over three years to upgrade the arena and keep the teams in the city. But the two sides were unable to come to an agreement and the next day, Leonsis joined Youngkin onstage in Alexandria to make their announcement.

The Potomac Yard plan surprised fans and prompted an outcry from D.C. residents and business owners worried about the potential loss of an economic engine that brings nearly 2 million visitors per year to Chinatown, an area that has lately struggled with empty storefronts, office vacancies and crime.

While Youngkin quickly struck a rapport with Leonsis as the two put a deal together over the summer and fall of 2023, he never managed to build a solid base of support in the General Assembly — particularly among Democrats who rose to power after claiming majorities in both House of Delegates and Senate in last fall’s elections.

Shortly before announcing the arena plan in December, Youngkin presented it to a Major Employment and Investment commission made up of leading lawmakers. Charged with reviewing major economic development initiatives that might require state incentives, the bipartisan group voted unanimously for Youngkin to pursue the deal with Monumental.

But the commission was still made up of old General Assembly leadership, and some of the newly ascendant figures were not there — most notably, incoming Senate Finance and Appropriations chairwoman L. Louise Lucas (D-Portsmouth).

Lucas would prove to be a formidable foe of the project, saying it was a giveaway to a billionaire that put state finances at risk. She never docketed a Senate bill to set up the sports and entertainment authority necessary to oversee the arena project, and she stripped arena language from the state budget.

When Leonsis belatedly met with Lucas in early March, they hit it off. But by then it was too late to save a project that never claimed enough support among other lawmakers — of either party — to overcome Lucas’s determined opposition.

“As Monumental announces today they are staying in Washington DC we are celebrating in Virginia that we avoided the Monumental Disaster! Thank you to everyone who stood with us in this fight!” Lucas tweeted Wednesday afternoon.

The General Assembly adjourned March 9 having snubbed the arena, and Democratic leaders rebuffed Youngkin’s attempts to revive it ahead of a routine April 17 legislative session for considering vetoes and amendments proposed by the governor.

“After a lot of conversations about this thing over long period time and a lot of hype … I think it probably worked out for the best at the end of the day,” Virginia House Speaker Don L. Scott Jr. (D-Portsmouth) said in an interview.

Scott said lawmakers tried to do their “due diligence” on the deal, looking into whether the finances would be a good deal for the state. But he faulted Youngkin for not keeping legislators of both parties in the loop as the deal took shape.

“It was probably not a good idea to give legislators a take it or leave it, already-done deal that they can’t kick the tires on and look under the hood on before voting,” Scott said. “The deal was too big to be done in the shadows.”

In Alexandria, political momentum had been building since December against the plan to bring the teams to Potomac Yard.

All members of Alexandria City Council, which would have been required to sign off on the plan, had appeared onstage at the initial announcement more than three months ago.

But with a competitive mayoral primary election looming, both leading candidates for the job began turning against the idea. Vice Mayor Amy B. Jackson (D) released a statement in mid-March opposing the plan. And Tuesday afternoon, Council member Alyia Gaskins (D) said there was not enough information to take a stance but seemed to indicate the plan’s days were numbered.

“It seems extremely unlikely that we will be offered such a deal” to consider the plan, she wrote in an email to supporters. “If that turns out to be the case, it will be time for us to move on.”

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