A group of labor unions said on Tuesday they oppose a proposal to move the Washington Capitals and Wizards from downtown D.C. to Alexandria, Va., dealing another blow to a plan that is already facing increasingly tall hurdles among legislators in Richmond.
“Taxpayers should not make a massive investment in a project that is only going to create more low-wage jobs for local workers,” Virginia Diamond, president of the AFL-CIO’s Northern Virginia arm, said in a statement.
The unions’ stance — which follows a breakdown in their negotiations with state officials and Monumental — is likely to influence state and local lawmakers who have said labor support is essential for the $2 billion project.
Virginia state lawmakers and the Alexandria City Council must approve the proposal for it to move forward, and several Democrats in the legislature and on the council said they would vote no if organized labor was opposed.
“If they’re against it, then the arena deal is probably going to have a very difficult time,” said Virginia House Speaker Don L. Scott Jr. (D-Portsmouth). “If it dies, it dies.”
But a public statement of opposition from organized labor does not mean that the deal is dead. The final weeks of the legislative session are likely to see intense negotiating, and labor leaders may continue to try to work out a deal with Monumental and state officials.
Under the proposal crafted by Gov. Glenn Youngkin (R) and Monumental, the arena would anchor a 12-acre facility financed in part through a new sports and entertainment authority to be created by state lawmakers. The proposal would also include new private development — including offices, apartments and shopping — on adjacent land managed by the real estate developer JBG Smith, which also helped draft the plan.
In a joint statement Tuesday, Monumental and JBG Smith said they were “disappointed and somewhat perplexed” about the Northern Virginia AFL-CIO’s opposition to the project — which they claimed would create tens of thousands of mostly union jobs and “offer some of the strongest labor and worker protections of any project in Virginia history, especially during the construction phase.”
Youngkin expressed disappointment in a written statement but pledged to move ahead.
“My administration and the partners in this project have worked in good faith over the last few months to give union workers a substantial role in this project. Today, labor leadership backtracked on that progress,” Youngkin said. “Virginia is a right-to-work state and unreasonable demands from union leaders will not derail this project,” he said, vowing to continue working with the General Assembly to get it approved.
A Youngkin adviser emailed labor leaders Tuesday expressing surprise about their statement of opposition, saying he thought they nearly had a final deal on Monday, according to a copy of the email obtained by The Washington Post. But union leaders said the parties were never that close and that state officials had shot down their requests.
The chief disagreement was not over the arena itself but over a privately financed hotel that would go next to the arena, according to a labor negotiator and an arena promoter who spoke on the condition of anonymity to discuss sensitive negotiations.
That high-end hotel would replace what is now a strip mall on land that is managed by JBG Smith and owned by AT&T’s pension fund. The proposal’s boosters have pitched it and other private development projects next to the arena as key to making the deal work; they would be subject to an agreement between JBG Smith and Alexandria.
Labor groups, including the hotel workers union Unite Here, wanted a guarantee that workers at the planned hotel would be allowed to unionize. JBG Smith never said no to that but contended that the matter is “not timely” because an operator of the hotel has yet to be lined up, both people said.
The labor unions also had been pushing for a “project labor agreement” between the contractor and union regarding construction of the hotel and other private development. They asked for a deal that would have stipulated that the contractor pay prevailing wages, provide measures to prevent wage theft and misclassification of workers, workforce training measures, and a guarantee for a certain amount of women- and minority-owned contracting.
A project labor agreement for the hotel would make it harder to finance that project, since it drives up costs, the arena promoter said, although unions disagree with that premise.
But JPMorgan Chase, which acts as the pension fund’s fiduciary adviser, said it was too early for both kinds of labor agreements at that future private development, according to both people. JPMorgan Chase as well as the landowner, SBC Master Pension Trust, which is maintained by AT&T Inc. and its affiliates, did not immediately respond to requests for comment.
JBG Smith said in a statement that it does not own or operate hotels and “will do nothing to stand in the way” for the hotel’s owner or operator “to enjoy productive conversations with organized labor.”
The deal’s backers and union leaders also have not yet come to an agreement over labor protections at the arena itself and other parts of the complex that would be owned by the state’s sports and entertainment authority.
Since January, labor leaders and Youngkin advisers had been negotiating the terms of a project labor agreement — or something akin to it — that would have covered those phases of development.
State officials had advanced a “workforce standards agreement” between the sports authority and the contractor, which would not include unions as a signatory but could lay out a path for the unions to negotiate an agreement with the contractor. But the unions said they wanted a binding contract they could sign directly.
The governor’s office offered an on-site labor management committee that would be tasked with solving disputes, though it did not have enforcement mechanisms. It also specified that a certain portion of the jobs had to be filled with Virginia workers.
The groups also clashed over minimum wages included in the deal. Under the “prevailing wage” proposed by the state, which is determined via federal surveys, a carpenter would make $27 an hour plus $11 in benefits. Under the pitch advanced by the unions — which would mirror labor standards in D.C. and at Amazon’s second headquarters in neighboring Arlington County — it would be $37 an hour plus $14 in benefits.
Several state lawmakers and Alexandria City Council members said Tuesday that the labor unions’ opposition is significant.
“When you propose to build a $2 billion state asset, you need to make sure that things like wage theft are not occurring and that people are adequately compensated,” said State Sen. Adam P. Ebbin (D-Alexandria), who represents the site of the proposed arena.
Ebbin had said for weeks that he would not consider voting on the deal if three areas — transportation, worker protections and affordable housing — were not adequately addressed by the project’s proponents. While he hesitated to say that labor’s opposition kills the deal, “it certainly moves it in that direction,” he added.
“‘Kills’ is a strong word because you don’t know if someone is going to come back to the table,” he cautioned. But, “it certainly doesn’t help.”
Alexandria City Council member John Taylor Chapman (D), who attended a December event announcing the handshake deal, echoed Ebbin’s worries.
“One of the things I wanted to make sure was that we had labor support on not just the building of the project, but on the whole plan,” he said. “That doesn’t seem to be the case.”
Chapman said that “with additional discussions going on in Richmond, I’d be very surprised if the thing actually moves forward. If labor were to change its stance, there’s a conversation.”
Indeed, the arena proposal has already faced obstacles in the General Assembly.
A week after announcing a handshake deal with Monumental owner Ted Leonsis in December, Youngkin unveiled a state budget plan that laid the groundwork for the arena project. He later asked two prominent Democrats to carry stand-alone arena bills in the House and Senate, and they did so after Youngkin agreed to issue a public statement making an unspecified commitment to increasing funding for the Metro transit system.
Youngkin’s budget and the stand-alone bills he proposed would establish a sports and entertainment authority to issue bonds for the project. They call for the bonds to be repaid over 40 years with a combination of state and local tax receipts generated by the project, parking revenue, rent payments from Monumental, and the proceeds from the eventual sale of naming rights for the sports and entertainment district, though not for the arena itself.
The House passed the stand-alone bill last week, albeit with amendments meant to give the legislature more sway over the authority. On Sunday, the House Appropriations Committee advanced a budget bill that included the same amended language to create the authority.
But the plan ran into trouble on the other side of the Capitol. Senate Finance and Appropriations Chairwoman L. Louise Lucas (D-Portsmouth) refused to docket the stand-alone bill, allowing it to die last week without a hearing. On Sunday, she also stripped the arena language and the extra Metro funding from her panel’s budget bill.
There’s still a long way to go, though, in a legislative session that’s scheduled to wrap up March 9. The full House and Senate will each vote on its own budget later this week, then send the plans across the Capitol to the opposite body. Differences will ultimately be hammered out by a small conference committee, probably in the final hours of the session.
On Tuesday, several House lawmakers said there was plenty of room to work with Lucas for a deal on the arena and funding for Metro; the powerful senator has said she wants toll relief for her constituents in Hampton Roads, as well as legislation establishing a regulated commercial marijuana market and more.
“You guys know darn well that’s the Senate’s prerogative,” Del. Luke E. Torian (D-Prince William), chairman of the powerful House Appropriations Committee, told a reporter Tuesday when asked about the Senate’s decision not to include the arena or Metro funding in that chamber’s proposed budget.
Scott also said he is not troubled by the differences between House and Senate budgets. “The budgets are always going to be different,” he said. “Y’all got to stop saying one person controls all this. These are two collegial bodies,” Scott said, noting that both House and Senate money committees advanced their budget proposals on unanimous, bipartisan votes.
“We’re going to work through the differences in our priorities as we move through this process,” Scott said. “I believe Chairman Torian and Sen. Lucas have such a good relationship that at the end of the day they’ll be able to figure it out.”
Lucas seemed to soften her rhetoric on Metro on Tuesday after meeting with Randy Clarke, chief executive of the Washington Metropolitan Transit Authority. Clarke thanked Lucas on X, formerly Twitter, for “discussing the value Metro brings to Virginia.”
“I know how critical Metro is to the Virginia economy and we will continue to work with them on a long term plan to ensure they can survive for many decades to come,” she replied on X.
Schneider and Vozzella reported from Richmond.
