Wizards and Capitals teams staying in DC after all and the failure of the mansion tax referendum in Chicago have one thing in common: failure to take the time to build consensus

 Change is hard.  My experience in the civic arena is that it takes "a couple rounds" of putting the idea out there before there is consensus to go forward.

I wrote a bunch about failures of transit referenda in Tampa Bay and the State of Georgia in the 2010s.  Georgia introduced a new way to create transportation districts, then expected people to vote up or down in less than a year ("Failure of the transit-roads sales tax measure in Metro Atlanta," 2012).  

In Tampa, the two counties can't figure out how to work together on transit, nor can they build support within their counties (Voters reject Greenlight Pinellas," Tampa Bay Times, "My Ride/My Road: Polk County Voters Reject 1-Cent Sales Tax Increase," Lakeland Ledger, 2014).

There are plenty of other examples.

My point was that to do breakthrough initiatives, you have to build the support for it, people are conservative, and that takes time.  The other way I put it is that the more time you spend on the front end, with civic engagement and a slew of meetings and other activities, the faster it goes on the back end.  Finally, I hate losing. So I'd rather set myself up for success by taking the necessary time to build support.

1.  Sports Arena in Alexandria.  Virginia has a Republican Governor and a Democratic State Legislature.  Announced in December ("Lawmakers vote in favor of plan to bring Capitals, Wizards to Virginia," Washington Post), he wanted to move the Capitals hockey team and Wizards basketball team to an arena in Alexandria, claiming billions of dollars of benefits and many thousands of jobs("$730 rooms, $75 parking: Youngkin’s own report calls arena forecasts rosy").

Note while Downtown DC benefits from CapitolOne Arena, it's not like it drives the economy.

To stoke development in that area, a process that has been going on for about 20 years--giving the rights to develop to the team owner, which is the trend in stadium and arena development.  Team owners say they need the extra money to spend on the team, especially with the decline in broadcast revenues and minimal revenues from streaming.

-- "Suburban stadium/arena interest a function of new, younger generations of ownership or a better real estate play?," 2023

-- "Capital One Arena, Wizards and Capitals may move to Alexandria | Why not the RFK campus?," 2024
-- "Framework of characteristics that support successful community development in association with the development of professional sports facilities," 2021

The deal called for at least $1.35 billion in tax incentives ("Caps, Wizards complex in Virginia could get largest arena subsidy ever").  

It was a shocking move.  And not all the state, especially State Senator Caroline Lucas, was on board ("Leonsis finally met arena nemesis Lucas, but maybe too late to save it").

Other issues also brought more opposition ("Plan to move Capitals, Wizards to Virginia draws transportation worries," "Plan for new Caps, Wizards arena in Va. stirs up its would-be neighbors") including a casino proposal ("JBG Smith blames Tysons casino conspiracy for derailing Potomac Yard deal," Alexandria Now).

Governor Youngkin just sprung this on everybody.  And "everybody" needed more than 3 1/2 months to get on board.  Let alone vote on it.

An article about the aftermath in the Post , "Va. Gov. Youngkin arrived like a GOP star, but arena failure clouds legacy," made the point about Youngkin, on most new initiatives he proposes, doesn't attempt to build support for them in advance, therefore fails.  (Also see "After Va. arena plan collapses, politicians and dealmakers trade blame" and " Proclamation: Governor Glenn Youngkin Statement On Monumental Sports & Entertainment Project.")

But Holsworth, the political analyst, said he saw a significant difference in the way Youngkin approaches big initiatives compared with previous governors. When Republican George Allen wanted to impose new education standards in the 1990s and had a Democratic legislature, he said, the governor appointed prominent Virginia educators to key administration roles and mounted a campaign around the state to build support from lawmakers and local officials — all before any votes were taken. 

Similarly, in the 2000s, Democrat Mark R. Warner logged miles around the state and made endless PowerPoint presentations to persuade business groups and a GOP legislature that Virginia had to raise taxes to preserve its high bond rating. 

Youngkin made no such broad effort to pave the way for the arena ... “It’s just not a very keen understanding of the political dynamics of Virginia,” Holsworth said.

So it failed and the teams are staying in DC ("Caps, Wizards will stay in D.C. under deal announced by Bowser, Leonsis," Washington Post) getting $500+ million from the city to do so, and getting the rights to redevelop the adjacent Gallery Place development to add some revenue streams ("MRP Realty to buy Gallery Place, make room for Monumental Sports & Entertainment," Washington Business Journal).

Under the terms of the deal signed Wednesday, pending expected D.C. Council approval next week, the District will send $515 million over three years to finance Capital One Arena’s modernization. In addition, the agreement provides for 200,000 square feet “of newly programmed space throughout Capital One Arena and in the Gallery Place building next door.” The terms also call for a new downtown practice facility for the Wizards, with “options including top floors of Gallery Place,” per Monumental’s release.

Campaign flyers for the Bring Chicago Home referendum at a march to the polls event March 9, 2024, in Chicago. (Vincent Alban/Chicago Tribune)

2.  Real estate transfer tax in Chicago.  In Chicago, new mayor Brandon Johnson proposed a higher transfer tax rate on properties selling for more than $1 million, to pay for affordable housing.  

Called "Bring Chicago Home," he proposed it in September ("Chicago mayor introduces real estate transfer tax plan to combat homelessness," Axios) for a vote this March.   That's 6 months!

It was estimated the tax could raise $100 million per year.

Naturally, the business community especially the real estate development community was against and could spend a lot of money fighting it.  Plus a lot of citizens were indifferent.

A number of cities, including DC, have such a tax, so it's not novel (Local Mansion Taxes: Building Stronger Communities with Progressive Taxes on High-Value Real Estate, report, Institute for Taxes and Economic Policy), the issue is getting it passed.

• As of early 2024, 17 cities and counties have progressive taxes on high-price real estate sales, also known as “mansion taxes.” Several others are currently considering adopting these policies.
• Together these taxes raise nearly $3 billion in annual revenue, equipping communities with resources to make progress on critical priorities of local and national concern including housing, education, and infrastructure. 
• Local mansion taxes have been around since 1982, but the momentum for them has built in recent years. 
• Nearly all of today’s mansion taxes were enacted or expanded between 2018 and 2023. 
• Local mansion taxes play an important role in rebalancing upside-down tax codes, advancing racial and economic equity, and raising new revenue to build more resilient and inclusive communities. 
• Mansion taxes have proven popular with voters: When put on the ballot, measures to enact or expand mansion taxes have succeeded 86 percent of the time.

Which they didn't.  It was also challenged in court by real estate interests, who didn't even want the votes to be counted ("Real estate group appeals Bring Chicago Home to state Supreme Court," Chicago Tribune).  The court said no, count the votes.  

But it didn't pass anyway, losing roughly 54% to 46%, a 21,000 vote difference in a low turnout election ("Chicago Voters Reject Mansion Tax in Blow to Mayor Johnson," Bloomberg).

Some electeds are chastened ("City Council’s Progressive Caucus responds to ‘Bring Chicago Home’ defeat with ‘we heard you’ humility," Chicago Sun Times). Not the mayor ("Johnson, defiant after 'Bring Chicago Home' loss, vows agenda push will 'get stronger'," Crain's Chicago Business).

But they shouldn't be so chastened, just recognize that they mishandled the initiative, by trying too soon for a vote without building the consensus for the need.  From the Axios article, "Why the Bring Chicago Home ballot measure failed"

1. People not affected by homelessness don't understand it
2. Voters fear rising residential taxes if the measure further hurts commercial real estate
3. People worry that the tax could stifle future development
4. Citizens have little faith in city leaders
5. Voters were confused by the measure's changing legal status and swayed by opponents' commercials
6. The measure lacked spending specifics

Conclusion.  My point is pretty clear.  Losing sucks.  So take the time necessary to build the consensus and coalition so you can win.  I don't understand why elected officials can't figure this out.

Especially in Chicago when you know from the outset that monied interests, in this case the commercial real estate industry, will fight you hard.  Or in Virginia, where the governor was asking to subsidize a billionaire with $1.35 billion, based on dubious claims about the economic value of doing so.

When I used to work in restaurants, there was a woman who was really fast but made mistakes and I would say "speed kills."

In this case, "Speed kills good ideas."