Proposed new Red Wings arena, entertainment district clear more hurdles

Dec 20, 2013

Credit Wikipedia

A proposed new hockey arena and entertainment district in Detroit has cleared more hurdles.

The Detroit City Council voted Friday on two measures that will allow the $650 million project to move forward.

They agreed to expand the boundaries of its Downtown Development Authority to cover the entire “sports and entertainment district”—a roughly 45-block area between Detroit’s downtown and Midtown areas--and approved a financing scheme.

Aspects of this project that will give the Detroit Red Wings a new home have been controversial.

The Downtown Development Authority (DDA) will own the events center, but the city will not receive any concession revenues.

Officials also promise the “sports and entertainment district” will attract $200 million in private investment in new residential, retail and office developments.  But details of those additional developments haven’t been worked out.

And construction of the new arena will be financed in large part by bonds, which will be paid back with tax revenues captured from the DDA.

The partial public financing has angered some people, who argue a bankrupt city can’t afford to subsidize a massive new development.

Samantha Peeling was one of a number of Detroit residents who lobbied against the deal. She pointed out that the Red Wings’ owners, Mike and Marian Ilitch, still owe the city television revenues and other revenues from events held at the team’s current home, Joe Louis Arena.

“The fact that we are discussing the potential to pay taxpayer dollars to a company worth billions of dollars to build a second arena, when this company didn’t pay millions of dollars it owed on the first arena, is ludicrous to me,” Peeling said.

Lawyers representing Detroit have reportedly reached a tentative deal with the Ilitch family to pay at least part of what they owe the city for Joe Louis. Both sides have haggled over the exact amount that’s owed.

But the Ilitches and Detroit economic development officials insist the project will be a major boost for the city, creating about 500 new permanent jobs and more than 8000 temporary ones. Members of building trades unions also lobbied Council in favor of the project.

“With the completion of the events center district, the Ilitch’s investment in downtown Detroit will reach approximately $1.2 billion in brick-and-mortar projects,” said Gregg Solomon, project director for Olympia Development, an arm of the Ilitch’s business empire.

The City Council did hold off on approving one key aspect of the project, though—the transfer of city-owned properties within the district to the DDA. They promised to take up the issue again in February.

Council members wanted better guarantees that Detroit residents and businesses would get the bulk of the jobs the development creates.