If you’ve been remotely awake the last couple of weeks, you’ve no doubt heard about the controversy around the Detroit Red Wings arena, which the team’s owners the Ilitch family promised would create tons of new development in the surrounding district and which instead led mostly to lots of parking lots. Injury, get ready to meet insult: The Ilitches are about to pocket $74 million in bonus subsidies from the city because they built, among other things, parking garages:
Ilitch-owned Olympia Development has made at least $200 million in building investments within the arena district, popularly known as District Detroit. That spending fulfills the organization’s minimum legal commitment for so-called “ancillary development” around the new sports venue where the Red Wings and Pistons have played since fall 2017…
The $200 million goal was met by development of two parking decks, the Google office at the south side of the arena and the still-under-construction Little Caesars headquarters on Woodward.
That Google office, which opened last year, employs all of 100 people and is actually in the arena itself, so it’s hard to call it additional development. The parking decks are for the Red Wings (and their tenants, the Pistons), while the Little Caesars headquarters is for the pizza company owned by the Ilitches. (One garage will feature some ground-floor retail stores, at least, if anyone rents the space.) So while that’s all certainly an “investment” by the team owners, it’s an investment in their own business, for which they’ll now be collecting a check from city taxpayers covering 37% of their $200 million cost.
The Detroit Free Press has this as increasing taxpayers’ total arena outlay to $398 million; there are so many moving parts to this deal — stadium construction bonds, demolition costs, free city land, etc. — that I can’t confirm that independently, but it sounds about right. The lesson here, as the lesson pretty much always is, is for god’s sake don’t sign leases allowing team owners to rake in additional subsidies for easily attainable goals that gain local residents pretty much nothing. It would have been easy enough to tie the bonus subsidy to jobs created instead of money spent, or exclude spending on the Ilitch’s own businesses, or any number of other requirements, but the state officials running Detroit when the arena deal was agreed to during the city’s bankruptcy seem not to have been interested in any of that. I would say that I hope at least future elected officials in Michigan and elsewhere would learn from this mistake, but given past experience, really I don’t hope that hard at all.