Virginia Gov. Glenn Youngkin has reached a tentative agreement with the parent company of the NBA‘s Washington Wizards and NHL‘s Washington Capitals to move those teams from the District of Columbia to what he called a new “visionary sports and entertainment venue” in northern Virginia.

The proposal, which would need the state legislature’s approval, calls for the creation of a $2 billion development south of Washington in Alexandria, just miles from the existing arena, Youngkin said in an interview with The Associated Press ahead of a news conference Wednesday at the site. It would include an arena for what would be the state’s first professional sports teams, as well as a new Wizards practice facility, a separate performing arts center, a media studio, new hotels, a convention center, housing and shopping.

“The Commonwealth will now be home to two professional sports teams, a new corporate headquarters, and over 30,000 new jobs – this is monumental,” Youngkin said in a statement.

Monumental Sports & Entertainment CEO Ted Leonsis appeared with Youngkin and city officials at Wednesday’s announcement. He endorsed the proposal, thanked Youngkin and said he had “goosebumps” at the thought of the project coming together “if all goes as planned.”

Monumental also owns the WNBA’s Mystics, and Leonsis said his expectation was that Capital One Arena, where the Wizards and Capitals currently play, could host women’s sports and other events like concerts.

“Our intention is to expand here and keep Capital One Arena in D.C. a great place,” Leonsis, an ultra-wealthy entrepreneur and former AOL executive, said.

The new development would be located in the Potomac Yard section of Alexandria, along the Potomac River and near Virginia Tech’s ambitious Innovation Campus, an under-construction graduate school.

To help finance the project, Youngkin will ask the Virginia General Assembly in the 2024 session to approve the creation of a Virginia Sports and Entertainment Authority, a public entity with the ability to issue bonds. While no upfront state taxpayer dollars would go toward the project, the terms of the agreement would divert new tax revenues from the project to pay down the bonds.

“We have reached a very clear understanding, really subject to finalizing the General Assembly’s work,” Youngkin said in the interview, noting that a key bipartisan legislative committee endorsed the incentive structure earlier this week.

Still, on Tuesday night ahead of the announcement, D.C. Mayor Muriel Bowser unveiled a counterproposal she said had unanimous support from the D.C. Council aimed at keeping the teams. The legislation would direct a half billion dollars to modernize Capital One Arena.

“This proposal represents our best and final offer and is the next step in partnering with Monumental Sports to breathe new life and vibrancy into the neighborhood and to keep the Washington Wizards and the Washington Capitals where they belong – in Washington, DC,” said Bowser, who was scheduled to hold her own news conference later Wednesday.

When the Capitals and Wizards moved from suburban Maryland to D.C.’s Chinatown district in 1997 in what was then known as MCI Center, officials credited the arena with sparking a revival in downtown Washington. In recent years, critics who have faulted city officials for what they call lax crime policies have said the neighborhood around the arena has suffered disproportionately.

The administration expects the proposed 9-million-square-foot Virginia entertainment district to generate a combined $12 billion in economic impact for Virginia and Alexandria in the coming decades and create around 30,000 new jobs, Youngkin’s office said in a statement. Subject to legislative approval and sign-off from the Alexandria City Council, it would break ground in 2025 and open in late 2028.

The development would be a major blow for D.C. and a massive win for Youngkin, a former private equity executive and college basketball player who said he had a pre-existing friendship with Leonsis from the business world. To get it over the finish line, he’ll have to work with Democratic majorities in both General Assembly chambers after his party fell short of its stated expectations in November’s elections.

Democrats, including incoming House Majority Leader Charniele Herring, were on hand for Wednesday’s news conference, along with U.S. Sen. Mark Warner. Other key legislative leaders were not.

Scott Surovell, who will serve as Senate Democratic leader come January, said in an interview that the project seemed like it could be a good opportunity, but he stopped short of fully endorsing it. Legislators will have questions about transit, taxpayer risk and compensation for the workers who will build the project, he said.

The broad outlines of the proposal call for Monumental to invest $403 million in the $2 billion development. Alexandria will put in $106 million toward the construction of the performing arts venue and the development of underground parking.

The rest of the approximately $1.5 billion financing would be supported through the authority-issued bonds. Those bonds would be repaid over time through rent paid by the team, parking fees, naming rights and new tax revenues generated by the development.

“There is no upfront investment or inclusion of any taxes already being collected by the Commonwealth to repay the bonds and there will be no tax increases for local residents,” Youngkin’s office said.

Potomac Yard, just south of Reagan National Airport, is currently occupied by strip malls and other retail. The site is adjacent to the redevelopment sparked by Amazon’s construction of a new headquarters nearby in neighboring Arlington.

Moira Salcedo, who lives in the area, attended Wednesday’s event to protest, saying she and her neighbors were blindsided.

“I hate subsidizing billionaires. And I’ve lived here for the last 10 years and I know there’s no infrastructure for this,” she said.

In the 1990s, the site received serious consideration as a site for an NFL stadium, but negotiations between the team and Virginia fell through.

Asked how a move by Monumental might affect the state’s efforts to lure the NFL’s Commanders to Virginia, Youngkin said he could not comment. Legislation aimed at recruiting that team to northern Virginia flamed out last year.

Reporting by The Associated Press.

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