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Virginia’s bills to lure Commanders could offer unlimited tax dollars for ‘mini-city’

From left, former Washington star Joe Theismann, co-owner Daniel Snyder, defensive tackle Jonathan Allen and co-owner Tanya Snyder unveil the new Commanders name at FedEx Field on Feb. 2. (John McDonnell/The Washington Post)

RICHMOND — Virginia lawmakers might think they’ve been wrestling with this question: Should the state give up about $1 billion in tax revenue to build the Washington Commanders a new National Football League stadium?

But they’ve really been deciding this: Should Virginia forfeit possibly unlimited tax dollars to finance not just a stadium but team offices, unrelated office space, retail stores, restaurants, lodging and anything else that the team, stadium authority and local government are up for?

It’s no secret that team owner Daniel Snyder wants to build not merely a stadium, but a vast commercial and residential complex that supporters call a “mini-city,” including a convention center, concert venue, hotels, restaurants and housing. Tax revenue generated from that broader development would go toward paying down bonds, but it was widely understood that the bonds would finance construction of only the stadium.

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In reality, language in both the House and Senate bills says the bonds would finance a “facility,” yet the legislation defines that term so broadly that it could encompass the entire development.

“I don’t think it should be called the ‘stadium authority,’” said Michael D. Farren, a senior research fellow at the Mercatus Center at George Mason University. “I think they should call it the ‘Snyder City authority.’”

Neither bill caps the amount of money that can be raised. And while the House bill limits the bonds to 20 years, the Senate version would allow the stadium authority to issue new bonds in perpetuity — and collect the tax revenue to pay them down — to finance new construction, expansion, repairs and maintenance.

“It’s an endless gravy train of subsidies,” said Farren, whose research focuses on the effects of government favoritism toward individual businesses and industries. “As long as we keep some bonds active, we can keep the gravy train rolling. I don’t think that in reality you would ever see everything paid off.”

Farren’s assessment runs counter to how legislators have been pitched on the idea.

“All the stuff outside the stadium is Snyder’s obligation, 100 percent,” Senate Majority Leader Richard L. Saslaw (D-Fairfax), who sponsored the bill in his chamber, said in an interview Friday.

A lawyer and lobbyist for the team said Saturday morning that the language will be tightened if needed. But he noted that the definition of “facility” — including references to restaurants, non-team office space and lodging — was taken directly from a portion of state code created in 1995 with hopes of attracting a Major League Baseball team to Virginia.

“There is certainly no intent for the authority to be used for anything other than to help finance a portion of the stadium and nothing else,” said Mark T. Bowles, who is chairman of McGuireWoods Consulting. “If that needs to be clarified in the bill we will certainly do so.”

After this article was published online, Bowles said Saturday afternoon he has proposed a revision to make that intention clear. “We’ve prepared language to ensure that nothing other than a portion of the stadium can be funded,” he said.

Commanders spokesman Joe Maloney declined to comment.

Another person close to the team’s efforts in Richmond, who spoke on the condition of anonymity to discuss ongoing negotiations, acknowledged that under the Senate bill, the team could repeatedly issue new 30-year bonds, “starting the clock all over” for the new debt. But he suggested that would keep the team at the stadium that much longer.

“We recognize that the Senate version of the bill gives the authority to issue debt in the future, but we think that generally would occur in the context of a strong ongoing relationship that might need upgrades,” he said. “And just like the initial offering, would obligate the team to stay and play until those bonds are paid off or defeased.”

Saslaw said on Saturday he will move to make sure the bonds can only be issued once and can only finance the stadium. “When the bill comes out of conference, it will be drawn tight as a drum,” he said.

Saslaw’s bill — like the House version sponsored by Barry D. Knight (R-Virginia Beach) — makes a distinction between the “facility” that the bonds would finance and the broader commercial “campus.”

But “facility” is defined expansively. It includes things typically associated with a sports venue: the stadium itself, practice fields, team offices, concessions and parking garages. But it also includes restaurants and retail without specifying that they be located in the stadium, potentially applying to an Armani store near the venue as much as a Commanders merchandise shop inside.

The definition also covers “lodging,” office space for tenants other than the team, and “other properties on a site specified by the team and consented to by the Authority and the county/city [where the facility is located].”

The person close to the team said there is no intent to include things in the “facility” that are not “contiguous and closely related to football operations.” He noted that local officials would have to consent to what’s included in the “facility,” calling their power “the check in that system.”

Legislation to create a football stadium authority to oversee the financing and construction of the stadium has been well received in Richmond. Gov. Glenn Youngkin (R) gave it a shout-out in January in an address to the legislature. The Republican-controlled House of Delegates and the Democratic-led Senate passed separate bills in February by wide, bipartisan margins.

With the General Assembly set to adjourn in a week, a conference committee appointed Wednesday was set to start ironing out differences between the House and Senate versions.

At least one of the conferees, Sen. Adam P. Ebbin (D-Alexandria), said he was wary of the broad language.

“While I question whether we should even be paying for the stadium at all, this deal is so broad you could drive a truck through it,” he said. “It needs to be reined in significantly. … We don’t need to pay for Daniel Snyder’s hotels, and his restaurants and offices that he rents out to other parties.”

The Senate bill is more generous than the House version, according to an analysis by the Commonwealth Institute, a fiscal think tank.

The House version, for instance, would require the team to dedicate at least half of revenue from stadium naming rights — something worth potentially hundreds of millions of dollars — to cover the debt service. The Senate version would allow the team to pocket that revenue.

The House bill allows the stadium authority to take a share of sales tax revenue generated in the “facility” and “campus” for 20 years or until the bonds are paid off, whichever comes first. The Senate version has no time limit and includes sources of tax revenue beyond sales tax — including personal income tax revenue generated within the “facility,” the team’s corporate income tax revenue and pass-through-entity tax revenue.

Both bills would also allow the stadium authority to take a share of local taxes, if the localities agree.

“The differences are stark between the two,” said Del. Mark D. Sickles (D-Fairfax), a House Appropriations Committee member who said team representatives told him “the House bill would never suffice, would never be enough to lure the Washington Commanders to Virginia.”

The Senate bill does have some restrictions not found in the House version, including a provision that would exclude revenue from sports betting and e-commerce.

The Commanders are contractually obligated to play at FedEx Field in Landover, Md., until 2027, after which they could stay or seek another home. The team has been shopping for a new home for years in Virginia, Maryland and D.C.

Maryland and D.C. have stepped up their efforts in recent weeks as the proposal in Virginia has advanced and as the team has rebranded with a new name to replace one widely viewed as racist.

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All three jurisdictions are actively courting the team at a time when some members of Congress, including Rep. Don Beyer (D-Va.), are calling for the elimination of tax subsidies for new pro sports stadiums.

Lawmakers seek to end lucrative tax breaks for pro stadium construction

Congress also has been calling on the NFL to release the details of its investigation of the team’s workplace, including allegations of widespread sexual harassment.