Bill Shea of Crain’s Detroit has a rundown of the Detroit Red Wings arena funding plans today, and while he’s generally excellent, I do have a small bone to pick with him over this:
General Motors Co. and other downtown corporations will be the chief funders via their property taxes of the public portion of the $650 million Detroit Red Wings arena and entertainment district under a plan announced last week.
Detroit’s Downtown Development Authority intends to use $284.5 million in property taxes captured within its 615-acre downtown district to pay off bonds issued by the state to build the 18,000-seat arena at Woodward Avenue and I-75.
GM has the largest taxable value within that district, and it and other corporations, along with small- and medium-sized property owners, will foot some of the arena’s bill through property taxes.
Well … sort of. Yes, downtown property taxes would be siphoned off to pay for the arena, and yes, GM is the largest property tax payer in that area. But they’ll be paying those taxes regardless of what the DDA uses the money for — it’s a bit like saying that because Bill Gates is the richest man in America, he paid the most for the Iraq War. (Ha ha, just kidding, the richest people in America don’t really pay the most in taxes.) Unless there’s a special tax on GM, which there isn’t, this is just Detroit spending out of its general revenues and assigning the cash flow to its “downtown property taxes” column. But that’s okay, it’s not like Detroit is suffering through a crime wave because it can’t afford to fix its street lights or anything.
To be fair, as Shea notes, the DDA’s property tax fund can only be used for economic development. To be equally fair, working street lights are probably a pretty good economic development catalyst. The DDA also claims that the state reimburses the city’s schools for lost property tax revenue, but I’m not finding that in the DDA’s audits.
In short, Red Wings owner Mike Ilitch is still looking at getting more than $300 million in subsidies to help build his arena, and that money has to come from somewhere. And since neither Detroit nor Michigan is raising taxes to come up with it, it has to come out of some existing public pocket. Deciding which public pocket is as much semantics as economics, but suffice to say it’s $300 million that Detroit won’t have for spending on anything else.