This article in the Detroit News on developments surrounding development surrounding the Red Wings and Pistons arena requires a bit of unraveling to get to the bottom of, so bear with me for a minute:
Once upon a time, a city named Detroit gave the local pizza barons $261.5 million in city and state funds plus $50 million in free land to build a new hockey arena, then another $34.5 million to the local basketball team to move into the new arena, then $74 million more to build themselves two parking garages, a pizza company headquarters, and a Google office with all of 100 workers that’s actually inside the arena itself. All this was in hopes the arena would spur lots of additional development, but in reality it’s surrounded by vacant lots, lots and lots of lots.
The pizza barons felt bad about this, possibly because they’d agreed in their deal with the city to already start developing this land two years ago. (The Detroit News article is silent on whether there were established penalties in place for missing this deadline; a Crain’s Detroit article from last month says the Ilitch family was “in violation” of the 2013 agreement to start construction by the end of 2017, but not what the consequences of this were.) So they came up with a new plan: Buy another three years of time to come up with a plan — making them five years late in total — by giving the city two pieces of vacant land totaling a quarter of an acre:
The Brush Park lot that may become a city park is at 242 Watson. It’s 0.172 acres. The Ilitch-linked entity bought it for $3,000 in 2009. It is currently valued at $390,000, according to property tax records.
The other property that may become a park is a 0.065-acre lot at 3118 Fourth. The land is valued at $111,600, according to property tax records.
So that’s $500,000 in vacant land in exchange for a three-year extension on meeting the requirements of a deal that got the Ilitches $385.5 million in cash and land. You can sort of see why Detroit is handing them more rope — city officials want the promised development, and the Ilitches are their best hope for making it happen — but you can also see where this will be the exact same case three years from now, meaning the Ilitches can always offer up another 100-by-100-foot lot (that’s how big a quarter of an acre is) then if they still don’t feel like building anything.
All of which is a excellent cautionary tale about handing over control of your city’s land, plus hundreds of millions of dollars in arena money, to a single developer in hopes that they’ll make it bloom, especially if you have no Plan B for what to do if they decide, “Enh, the real estate market isn’t hot enough this decade.” A spokesperson for Mayor Mike Duggan told the News that the latest deal includes “potential penalties” if the Ilitches blow off the new deadline, including possibly having the city retake ownership of the property that was sold to the Ilitches as part of the arena deal — that’s something of a hammer, anyway, but even so it will have allowed the Ilitches to control most of downtown and hold it hostage to their own business whims for nearly a decade, which isn’t really the best way to get people interested in moving to your hollowed-out city. And there were almost certainly more effective ways to spend that $385.5 million — but then, those ways weren’t being pushed by the local pizza baron, and that’s what makes all the difference.