Detroit approves free land for Red Wings arena after owner promises to hire locals, if he feels like it

As expected, the Detroit city council rubber-stamped the transfer of several blocks of downtown land to Detroit Red Wings owner Mike Ilitch for $1 yesterday — or rather, the transfer of the land to the Detroit Downtown Development Authority, which will lease it to Ilitch for 95 years, because you wouldn’t expect a guy to own his land and have to pay property taxes on it, seriously, right? The council approved the plan 6-3, notwithstanding that Ilitch didn’t agree to anything in writing guaranteeing that jobs would go to locals, as some councilmembers wanted, and the city didn’t succeed in getting more than that dollar (I hope it has lots of 1’s in its serial number, at least) for its land, as other councilmembers had been insisting.

Yesterday’s agreement came two months after the council put off a vote in order to increase its “leverage,” which has Detroit’s Metro Times wondering what kind of leverage they exerted, exactly:

But if that was the point — to meditate on what Olympia Development CEO Tom Wilson glibly called a “once-in-a-generation” deal — some left City Hall Tuesday puzzled after the council approved the transfer of city-owned land to the Downtown Development Authority at the cost of $1. City Council President Brenda Jones, Councilman James Tate and Councilwoman Raquel Castaneda-Lopez voted against the swap…

Councilwoman Saunteel Jenkins says the original proposal offered no job guarantees for Detroit residents or the creation of a neighborhood advisory council. So, the pre-construction job guarantees now in writing were an improvement, she says.

“Is this a perfect agreement? Absolutely not,” Jenkins says. “… We didn’t reach perfection, but I think we did work very hard.

“It’s much better than what we had originally.”

According to city records, Olympia and the DDA say 51 percent of the jobs hired for the arena’s construction will be for Detroiters. But without a community-benefits agreement in place, that’ll be difficult to monitor, Grunow says.

And, City Council staff noted Tuesday, there’s no job guarantees for Detroit residents post-construction.

Leverage, people! It works better when you’re willing to walk away.

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7 comments on “Detroit approves free land for Red Wings arena after owner promises to hire locals, if he feels like it

  1. No matter how you spin it, this is a win for the city of Detroit. No money from Detroit’s general fund will be used and the arena will be publicly owned by the Detroit Downtown Development Authority. The only contribution the City will make is the transfer of land ( in a crime-ridden area where I don’t see anyone else stepping up to develop that land… it has been blighted for over 40 years). The project will create new jobs, new revenue for the city, attract new activity for local businesses, and provide a new place that will bring more people to live, work and play in Detroit. The State may be issuing bonds, but they will be paid back. In addition Ilitch has already spent $50 million buying up property in the area. This man has now put well north of $2.5 billion dollars into Detroit. He could of done it all in the suburbs (trust me if he wanted to he could have gotten a 100% publicly funded arena in Oakland County), but he chose to do this in the city.

  2. Olympia entertainment will be paying off the bonds that are funding the stadium ($11.5 million/year). Also, in return they gave the DDA, 50 of their own parcels near this same area.

    Regarding the people complaining about them not paying property taxes, what other incentive would these companies have to be downtown? None. That is the nature of business. I mean, would you rather give no company incentive to be in Detroit and have Campus Martius, Foxtown, the Financial District and Corktown be cesspools like they were years ago…

  3. $11.5 million a year isn’t anywhere close to enough to pay off $284.5 million in bonds. The rest (more than half) is being paid off by the city development agency out of property taxes:

    And Ilitch giving the DDA parcels that he himself will get to develop isn’t much of a gift.

    If you want to argue that this is just the price of getting developers to work with you, that’s debatable. (Though I suspect that Detroit could have gotten equally valuable development for far, far less if it hadn’t only negotiated with a single developer, or even driven a harder bargain with Ilitch. Or even built a bunch of buildings itself.) But there’s no getting around the fact that Detroit is putting about $200 million plus free land into this project, and getting nothing back in equity.

  4. It is mostly linked to taxes from GM and other businesses. Basically, it will be corporately funded and the city benefits from jobs going to Detroit residents plus fixing an area that has been an eye sore for decades. When you look at the details, this deal is probably the best publicly-financed arena/stadium deal of all time.
    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.

  5. It’s paid off by kicking back the developer’s property taxes. If you consider that “corporately funded,” I do not think that term means what you think it means.

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