The Detroit City Council has approved a major land deal to create a new hockey arena and entertainment district.
The Council transferred all city-owned land within the 45-block entertainment district’s borders to Detroit’s Downtown Development Authority Tuesday – for just $1.
That Authority will manage the mega-development, along with Olympia Development of Michigan.
That company is the real estate arm of Detroit Red Wings’ owners Mike and Marian Ilitch’s business empire.
The Ilitchs plan to build a $450 million “entertainment complex” that will serve as the Red Wings' new home.
Detroit economic development officials also promise another $200 million worth of spinoff development in the district, though no one has yet produced a plan or any specifics.
The district will radically transform a largely rundown part of the city known as the Cass Corridor. Right now, that area separates Detroit’s relatively booming downtown and midtown areas.
Outgoing Detroit Economic Growth Corporation CEO George Jackson says it’s a huge win for the city.
“I think it fills a real development gap that we have between downtown and midtown, the connectivity of all the stadia,” says Jackson. “So I think it’s really big for the quality of life.”
But the project is controversial on several fronts. It will be financed in part by public dollars, in the form of most of the tax revenue generated within the entertainment district. Many have suggested this is a bad move for a bankrupt city, but economic development officials say it won’t cost the city’s general fund anything.
Many people are also upset that the city gave up the land for just $1, instead of asking fair-market value.
Though much of the area in the district is rundown and semi-abandoned, owners of some private properties – even some derelict ones – made millions selling the land off to Ilitch-affiliated companies in the past year.
Some of those companies have also owned numerous blighted buildings in the area for years. And many fellow business owners in the area say that’s hurt their businesses – and that Olympia is getting an unfairly generous deal.
“Now, I’m going to be taxed to support his (Illitch) bars and restaurants that are going to be my competitors?” says Jerry Belanger, who owns a nearby bar. “(They) haven’t been part of economic development – more like economic blight.”
Other community business owners and residents also aren’t happy with the deal. They had pushed for a community benefits agreement that would have offered current residents some protections, and give them a strong role in the development process.
That didn’t happen. City Council member Raquel Castaneda Lopez, who represents an area that includes the future entertainment district, says the agreement is “not ideal.”
But Castaneda Lopez says Olympia did make some concessions that will benefit the city and the neighborhood. “I think it’s a starting point in terms of how we moved forward as a city, and it’s a decent compromise,” she says, adding there needs to be more citizen input in shaping future big developments.
Some Council members were also concerned the agreement doesn’t do enough to guarantee that jobs will go to Detroit residents. Officials have said building the arena will create about 8,000 construction jobs, and hundreds of permanent ones.
Economic development chief George Jackson says the Downtown Development Authority will “monitor” the process to make sure a fair share of jobs go to Detroiters, both during and after construction.
It’s not clear yet how much Detroit’s bottom line will benefit from this deal.
The city will get additional income taxes from some workers, and officials argue it will spur more widespread economic development without straining the city’s limited budget.
But much of the other additional tax revenue created will be funneled back into the project. And the city will lose the percentage of concessions and other revenues it now gets from Joe Louis Arena, the Red Wings current home.