Detroit group calls for community benefits deal on Red Wings arena

The Detroit community group Corridors Alliance is demanding that any public funding of a new Red Wings arena should include a community benefits agreement to guarantee that jobs go to local residents and protect local homeowners from being displaced:

“We want to hold the development to a higher standard,” [the alliance's Francis] Grunow said. “As time has gone on, there’s been more and more public money included in these projects.”

That’s all well and good, and a CBA would indeed provide some teeth for requiring that the Red Wings actually live up to their promise to hire Detroit residents for the majority of jobs created. The problem with even well-written CBAs, of course (i.e., not this one), is that 51% of the jobs created by an arena project is still not a whole heck of a lot of jobs, especially not once the actual construction is completed.

If the argument for the arena project is that it will help the local economy, then requiring local hiring seems like a no-brainer, but it won’t change the fact that Detroit could create a heck of a lot more jobs for its $261.5 million if it spent it on just about anything else. Which isn’t getting discussed now, mind you — and the state of Michigan has effectively ruled out considering it — but so long as community groups focus on getting a cut of the meager spoils and not the overall policy behind sports subsidies, it’s easy for team owners to buy off opposition by promising to hire the right people.

Detroit city council delays Red Wings land transfer until February to retain “leverage”

The Detroit city council voted on Friday to approve two of the measures required for a new Red Wings arena, expanding the Downtown Development Authority’s tax-increment financing district and redirecting the money to go toward paying off Red Wings owner Mike Ilitch’s construction costs. They did not, however, approve the transfer of city-owned land for the project, kicking that decision back to February.

The council apparently held off on approving the land sale because it wants to maintain “leverage” to cut a better deal, though it’s not exactly clear what it intends to ask for. (Some councilmembers had previously griped about how much the city would be compensated for the land and what guarantees there would be of local job hiring, so those could still be two possible demands.) Pushing the vote back into the new year, though, could scramble things significantly, as five new members will join the nine-member council in January, so who the hell knows how they’ll vote or what they’ll want in exchange for their vote.

Friday’s votes came after “dozens of people” (per the Detroit Free Press) spoke out against the public cost of the $650 million arena-plus-mixed-use-development project. Downtown Detroit landowner Jerry Belanger, who has emerged as one of the loudest critics of the deal, also hinted at filing a lawsuit against the project, asserting, “There could be several aspects of this contract that could be challenged as unconstitutional.”

We also finally got a cost estimate for demolition of the city-owned Joe Louis Arena, the Red Wings’ current home: Detroit Economic Growth Corp. VP Brian Holdwick says razing the arena is expected to cost the state $5 million, bringing the total public cost to $266 million. I hope they voted to put it in money balloons.

Red Wings arena could face council vote tomorrow

Lots going on in Detroit this week around the proposed Red Wings arena:

  • The city council is meeting tomorrow to discuss the arena plan, and could even vote on it, though MLive reports that even after that it would still require “parking agreements, homeland security approvals and an OK from Detroit Emergency Manager Kevyn Orr.” (Homeland security approvals?)
  • Opponents to the arena plan — mostly downtown property owners who see the Red Wings’s arena district as a land grab — are meeting at 3 pm today to discuss how to fight the project.
  • Detroit city officials are apparently set to cut a deal on the overdue share of cable TV revenues that they say Red Wings owner Mike Ilitch owes them, going back to 1980: The city has previously said this could amount to $70 million, but other experts say it’s more like $10 million, and Ilitch says he don’t owe nuthin; since cable rights deals are so complicated that it’s nearly impossible to tell who’s paying what to whom, the city is apparently going to just send Ilitch a bill for $6 million and call it even.

Red Wings’ new home would mean wrecking ball for Joe Louis Arena

Amid all the talk of the Detroit Red Wings‘ plans for a new $450 million downtown arena (public cost to the bankrupt city of Detroit: $284.5 million), little has been mentioned of what would happen to the Red Wings’ old home, Joe Louis Arena. Now it has been revealed: They’d tear it down, of course no team is going to want to have its old arena around to compete with it, what are you, nuts?

The state will pay to demolish Joe Louis Arena after the Detroit Red Wings move into a new facility sometime in 2017 or 2018…

The cost of the demolition and what could be built on JLA’s riverfront location haven’t been determined, said George Jackson, chief of the Detroit Economic Growth Corp., the quasi-public agency that staffs the DDA under a contact with the city.

Jackson said the demolition would happen not long after the Red Wings move out, pending an agreement with the state.

So tack on an as-yet-to-be-determined demolition bill to the public costs of this project. Given that it cost $2.9 million to raze the Pittsburgh Penguins‘ old Civic Arena two years ago, it probably won’t make a huge difference to a project already set to cost taxpayers 100 times that, but money is money.

The news about Joe Louis Arena’s fate came during a Downtown Development Authority special meeting to finally send a concession agreement (they’re not calling it a lease, but: it’s a lease) on the proposed new arena to the city council, at which point that body is expected to finally vote on whether to sign off on the deal. At last word it didn’t sound like councilmembers were going to raise too many serious objections, but we’ll see, maybe starting this week.

Detroit council delays Red Wings arena vote until they can read the actual lease

The Detroit city council was set to vote yesterday on the only thing it gets to vote on regarding the proposed $650 million Red Wings arena-and-other-development project (public cost: around $261 million), the expansion of the TIF district that will kick back property taxes to help pay for it, but instead postponed the vote until December 17. The reason: Councilmembers still haven’t seen details of the new arena’s concessions agreement, including whether local businesses will be hired and who’ll pay for increased police costs, a complaint that the council first raised back in September. The agreement will supposedly be ready in a couple of weeks, but at least some local elected officials aren’t down with buying a pig in a poke.

Meanwhile, the Detroit Free Press reveals that council staff say the arena deal will cost the city an estimated $45 million, which goes against the team’s (and governor’s) claim that this is all tax money that the state doesn’t let the city see anyway, so quit yer yapping. There are no other details of this in the news media, and doesn’t appear to be anything on the council’s website, either; if I can find out anything else, I’ll post an update here.

Public money approved, Red Wings now say they’ll build arena “at the right time”

Now that the state of Michigan has approved bankrupt Detroit spending $284.5 million on a new Red Wings arena — the Detroit city council still has to approve the final lease, though that doesn’t seem like it’ll be a major hurdle — Wings owner Mike Ilitch is moving ahead to cash the check and build his new $650 million arena-plus-retail/housing/office-district … um, someday?

An official for the Ilitch-owned Olympia Entertainment company told MLive on Tuesday at Detroit’s Joe Louis Arena there’s no timetable for the project proposed near Comerica Park and the Fox Theatre and “not much to comment” about it.

“We’re going to do it at the right time and make sure that it’s done right working with all the constituents that we have to work with,” said Tom Wilson, Olympia’s president and CEO. “But there’s nothing to report at this point.”

I’m not actually sure how long Ilitch can sit on the money without spending it — right now the Detroit Downtown Development Authority is just authorized to sell bonds for the project, so it’s certainly conceivable that if the DDA at some time in the future decided that this was an inane idea after all, they could call the whole thing off. Clearly the Red Wings owner isn’t concerned about that at the moment, though, so he’s happy enough to wait for a market to develop for the $200 million in other crap he’s promised to surround his $450 million arena with, so the public subsidy looks smaller by comparison. You just have to hope he doesn’t plan on building the arena first, then leaving the other stuff that’s coming out of his own pocket for later or never … but no, no one would be so fiendish as to do that.

Bankrupt Detroit slashes everything but hockey arenas, AP terms this “thinking big”

Still wondering why on earth Detroit is spending $283 million on a Red Wings hockey arena when the city is literally bankrupt? Perhaps it’s in part to earn articles that begin like this Associated Press article from Saturday:

It may be too broke to pay its bills or even respond to 911 calls on time, but Detroit is still thinking big.

The rest of it goes on to give the usual he-said-she-said that articles of this type specialize in — some people say it’ll revitalize the inner city, others say it’s too risky a gamble — but never once attempts to analyze what else the city could be doing with the money, or indeed, what else the city is scrimping on in bankruptcy that could be helping the city to recover. (I’m guessing that answering 911 calls might help encourage those all-important 25-to-34-year-olds to move downtown.) So long as pouring money into massive construction projects is termed “thinking big” — and paying schoolteachers or residents’ pension benefits is not — local elected officials are going to continue to be susceptible to the edifice complex.

Red Wings arena plan called “sham” at public hearing

Hey, it turns out the Detroit city council actually still gets to do stuff, even if its control of the city purse strings has been usurped by a state-appointed emergency manager. Yesterday the council held a public hearing on the $450 million Detroit Red Wings arena project that would get $261.5 million in city development subsidies, and public reaction, according to the Detroit Free Press, was “mixed”:

“Right now we’re in a bankruptcy,” said resident Joann Jackson, who opposes the arena deal. “I feel that there will not be any jobs. You all have said that about the casinos. You all have said that about the ballparks,” yet unemployment in Detroit remains high, she said.

Joel Landy, who owns more than 50 residential and commercial properties north of I-75, said the project should start without delay.

“We couldn’t fill this hole in for another 20 years,” he said. “However, we have to fund it. It’s important to our success.”

Tom Stevens, a member of the group Detroiters Resisting Emergency Management, said he opposes taxpayer support for the project, saying the economic spin-off benefits of sports arenas are not proven and any proposal that relies heavily on public financing “should be greeted with a great deal of public skepticism.”

He said that even with Detroit under control of an emergency manager, “What this shows is nothing has changed. It’s about public money for connected insiders.”

The Freep also quoted another downtown property owner who declared, “This whole thing is a sham” (he also criticized the Red Wings development site alongside two highways as being a place where suburbanites can “come into the compound, you can get out, and you don’t have to rub elbows with Detroit”) and a retired teacher who said the project would create jobs and said, “Let’s get it on.” But given that pretty much every council hearing ever has featured at least some people testifying on both sides, it’s tough to tell what the overall tenor was of the public comments.

The council also does apparently have some say in this matter, since even though it doesn’t have to approve the money, it does have to approve a new lease (or rather a “concessions-management agreement”) with the Red Wings before the project can go ahead. Again reading from the Freep, it sounds like councilmembers’ main concern is that Detroit will be compensated for any city land that’s used in the project, which shouldn’t be too high a hurdle. But at least it’s nice that Michigan hasn’t totally disenfrachised Detroit voters — just mostly.

Bankrupt Detroit is building a hockey arena because it’s out of actual good ideas

Bloomberg News ran a nice summary of the “Detroit is building a new arena for the Red Wings even while it’s going bankrupt” controversy yesterday, most of it covering ground we’ve already discussed here. But it does include one truly epic quote from Detroit emergency fiscal manager Kevyn Orr:

“There’s always a debate about does this really pan out?” Orr, the emergency manager, said in a July 25 interview. “The reality is we are so needy of some economic development, I can’t see how we don’t pursue it because if we don’t, what’s left?”

Um, how about pretty much anything else?

Little opposition to Red Wings arena, says Reuters report citing opposition to Red Wings arena

Reuters headline yesterday:

In cash-strapped Detroit, few question sports arena funding

Actual human beings quoted in the article, and their opinion of Detroit’s plans to put $261.5 million into a newRed Wings arena while facing bankruptcy:

  • Smith College economist Andy Zimbalist, who says arenas just move money around a metro area, they don’t create much new spending.
  • Michigan state senate leader Gretchen Whitmer, who says Detroit would be better off spending money on schools or public safety. And who is actually from Lansing.
  • Baseball historian John Thorn, who doubles down on his newfound distaste for numbers by saying, “You can show me a spreadsheet, and I’ll still trump you because it’s the psychic benefit of having a sports club. It separates a city from thinking of itself as big league or thinking of itself as bush league.” And who lives in New York City.

So to tally it up, that’s two out of three sources who actually do question sports arena funding, and none of the three are actually in cash-strapped Detroit. Apparently Reuters is as committed to accuracy in headlines as it is to reporting on climate science.