Red Wings arena could endanger two historic Detroit buildings, council responds by not showing up

The Detroit Red Wings arena plans have hit … not exactly a snag, but possibly a speed bump, as city residents have belatedly realized that the area Red Wings owner Mike Ilitch is asking to have rezoned for development includes two historic hotel buildings, and Ilitch hasn’t specified whether he’d preserve them or raze them. And the city council is desperately interested in this matter:

On Thursday, a crowd of residents, activists and representatives of the Ilitches’ company, Olympia Development of Michigan, packed the council chambers for a committee meeting on the issue, but only two council members — Brenda Jones and Andre Spivey — showed up. The predicament left the council without a quorum and unable to ask questions.

Okay, somewhat less than desperately, then. The council has a hearing on Tuesday at which it could vote on the rezoning, or could kick everything back to January, depending on how committed it is to this whole “asking questions before voting” thing.

Did Detroit let Lions and Red Wings stall on water bills while punishing residents? Definitely maybe

The Daily Show took a look last night at how Detroit is shutting off water to poor residents who don’t pay their bills, but has left the water on for the Red Wings and Lions despite delinquent payments. It got lots of attention, and because the Daily Show is a comedy show, much of it was of the “Ha ha, so amusing” variety:

The controversy over water shutoffs for Detroit residents unable to pay their bills was front and center Monday night on Comedy Central’s “The Daily Show with Jon Stewart.”

It was a story that took some humorous twists and turns, and it probably was deemed offensive or even inaccurate to some as well.

That article on MLive didn’t actually provide any details of anyone who thought the segment was offensive or inaccurate, but in a followup, the site provided this:

“I can say right now that the information was not accurate,” DWSD spokesperson Curtrise Garner told MLive.com…

Garner said she would send MLive more information via e-mail Tuesday afternoon to show that all the commercial accounts mentioned in the “Daily Show” report have been paying their bills and don’t have any overdue balances.

“I’m taking a look at the larger ones here in the city and they are all current,” Garner said over the phone.

So where did this report of overdue water bills come from in the first place? It looks like from a June article in the Guardian, which further linked to a blog post by Oakland University journalism professor Shea Howell that reported that “Joe Louis Arena/Red Wings Hockey owes $80,000 and Ford Field $55,000.” Howell didn’t provide a source for those numbers, but they’re pretty specific to be made up, leading to the likely conclusion that if everyone is telling the truth, the Red Wings and Lions were behind on their water bills in June, didn’t get their water shut off, and have since paid up. Which is, as the Daily Show segment makes clear, the same treatment that low-income water protestors are requesting from the city.

I’m trying to reach Howell to get more info on her numbers, but as MLive seems eager to show us, modern journalism doesn’t need to wait until we see the actual documents. Updates as needed.

[UPDATE: Okay, thanks to a couple of correspondents who wish to remain nameless, I’ve tracked the Lions/Red Wings water bill story back a bit further: This all dates back to an April WDIV-TV report that found that the two sports teams were behind on their water bills. As of July, the teams still hadn’t paid, but as the Detroit water department told Metro Times, it was because the Lions and Red Wings owners were disputing their past stormwater runoff bills, which the water department was “still in the process of trying to collect.”

So: Detroit’s sports teams aren’t being allowed to keep their running water despite not paying their bills for that; they’re allowed to keep their running water despite not having paid different water bills. Which is less black and white than the simplified version that the Daily Show presented, and they probably should have done their homework better, or at least explained the situation more fully. But the general “one system for poor folks and another for big corporations” vibe is still legit.]

Detroit using adjustable-rate bonds for Red Wings arena because that’s all banks would give them

Here’s some more explanation of the Detroit Red Wings‘ new arena financing plan revealed last week, courtesy of Crain’s Detroit’s Bill Shea. In short: It’s still pretty much the same deal as announced last year, which is that the state and city give Red Wings owner Mike Ilitch about $300 million in cash and land, but it’s cash that the state says it’ll only use for economic development anyway, so why not give it to Ilitch instead of blowing it on something like working streetlights?

The main new twist appears to be that the Downtown Development Authority had to use variable-rate bonds for the project — i.e., bonds where the interest rate can go up later if the prime rate rises — because “under market conditions right now, [fixed-rate bonds were] not available,” an indicator that bond brokers weren’t real excited about this deal, and an explanation of why those interest-rate swaps were necessary as a hedge against interest rates soaring down the road. Though apparently the DDA intends to refinance in a few years once the project is underway and they can maybe get a fixed-rate loan and … man, these people really are taking every page they can find from the real estate bubble financial playbook, aren’t they?

Detroit to use (DUNH dunh dunh!) interest-rate swaps in Red Wings arena deal

The Michigan Strategic Fund approved new terms for the Detroit Red Wings arena bonds this week that involve … frankly, I don’t entirely understand them either, despite an excellent Bill Shea article in Crain’s Detroit Business attempting to explain them. Suffice to say that the Downtown Development Authority will now be able to pay off the bonds more quickly if more tax revenue comes in than expected (instead of having a $15 million a year cap), plus there will be credit-default swaps, which nobody truly understands except that they almost broke the global economy.

[CORRECTION: In fact, they’re so confusing that I confused interest-rate swaps, which is what the DDA will be using, with the related but distinct credit-default swaps. Interest rate swaps didn’t almost destroy the global economy, just some municipal and state budgets. An interest rate swap is essentially a hedge against interest rates going up, but if interest rates instead go down, you end up paying more than you would have otherwise. With interest rates still at historic lows, that’s not too likely, but there’s still a decent chance that the DDA ends up spending money on the swaps that will gain it absolutely nothing in return.]

In the grand scheme of things, it probably doesn’t matter much, or at least doesn’t matter as much as the $300 million or so that the arena will be costing the Michigan public. But just in case it blows up spectacularly when the DDA spends all its money collecting Pat Boone albums, don’t say I didn’t warn you.

Poll on whether Red Wings arena will create jobs finds that journalists are addicted to stupid polls

Let’s talk about polls. Polls can be very useful things when you want to know what people want, whether it’s who they want to vote for in the next election, or what policies they want to pursue, or whether they hate where they live. They are not so useful when you’re asking about statements of fact: Trying to determine whether the Higgs boson exists by polling people on the street, I think we can all agree, would be pretty pointless.

This, then, is a very, very bad poll:

Poll: Are job projections for new Detroit Red Wings arena development accurate?

Right now “no” is handily beating “yes,” with “I have no idea” a close third. Sadly, there’s no option for “Wait, you’re asking me?”

Red Wings promise to build “deconstructed” arena with public’s $300 million

The Detroit Red Wings issued renderings of their planned $450 million arena yesterday, and it’s … kind of interesting-looking, I guess?

Those buildings surrounding the arena are actually part of the arena, with the space between that and the arena structure proper being the concessions concourses. (Another rendering shows what appear to be glass roofs over the concourses, maybe?) The Red Wings are calling this a “deconstructed” design, and it’s something interesting to try, anyway, if only because it would make the arena a bit less monolithic from the outside. (Setting the arena floor 32 feet below ground level would help, too.)

It’s still not necessarily worth spending $300 million in public money and free land on, of course. But since that’s now water under the bridge, at least it’ll be nice if they can avoid a major public eyesore.

Detroit council approves deal to phase out Joe Louis arena, despite qualms

The Detroit city council approved the Red Wings‘ new lease on Joe Louis Arena yesterday, but only by a 5-4 margin, as some councilmembers raised concerns about the deal, which sets the stage for the old arena to be torn down once a new one is built. In particular:

  • Mary Sheffield voted against the lease because she felt the $5 million the city will be getting from Red Wings owner Mike Ilitch to pay off 30 years of back cable rights fees that he failed to share with the city at the time is insufficient.
  • Raquel Castañeda-López and Scott Benson voted against the lease because it contains a non-compete clause that prevents the city from selling tickets to any events at Joe Louis once the Red Wings leave. If the city isn’t able to redevelop the old arena site, warned Benson, “the building stays there and we’re not able to use it as an arena. There’s just so much risk there: It becomes a white elephant — blighted, damaged, vandalized.”

City COO Gary Brown, meanwhile, responded that Detroit needs to look forward, not backward: “We’re getting a brand-new stadium, and we can’t go back and undo the past. Let’s move forward and get the city moving again.” Yeah, the past — what’s it good for, anyway?

 

Red Wings lease deal includes Detroit writing off $65m in unpaid cable fees

Hey, remember that $70 million in delinquent cable rights fees that Detroit Red Wings owner Mike Ilitch owed to the city of Detroit, and which he and the city were going to work out as part of a new arena deal? The Detroit News reports that the haggling has been resolved, and it’s not to the city’s advantage:

The city would receive $5.17 million from the owners of the Detroit Red Wings to “put to rest” unpaid cable rights revenues that were estimated to be as high as $50 million to $80 million under a new lease for Joe Louis Arena, according to a City Council report.

The cable TV revenues language of the lease was “deemed to be largely unenforceable” based on negotiations between Emergency Manager Kevyn Orr’s legal team, Jones Day, and lawyers for Olympia Entertainment, according to the analysis prepared by the council’s policy staff.

Basically, Orr decided that it would take a big messy lawsuit to get anything more than $5.17 million out of Ilitch — made more difficult by a six-year statute of limitations on seeking damages, and the city hasn’t bothered to seek collecting any of this money since 1980 — and decided that it wasn’t worth it, even though the city is bankrupt and cutting pension payments by 26% and it’s Orr’s job to find money under any seat cushion he can. Plus, the Red Wings are in the midst of building a new stadium that Orr’s boss really really wants, so best to just make this whole thing go away, don’t you think?

Joe Louis Arena could become happy friendly green park space, suggests absolutely no one

Okay, so a little inside dirt on how the journalistic sausages get made: Fairly often, the way a news article comes to be is that some reporter notices a little tidbit of an item, thinks, “This could be a great story!” and then takes it to their editor, who greenlights it. Then the reporter starts researching, and, also fairly often, it turns out that there isn’t much to support the initial premise. But the article is already assigned, and the initial legwork is already done. So instead, they find a quote or two that marginally support a flashy headline, file it, and then hope nobody notices how flimsy the whole thing is.

Which brings us to this:

Detroit Red Wings’ Joe Louis Arena to go green? ‘Anything is possible,’ riverfront official says

DETROIT, MI — The Detroit Riverfront Conservancy, a non-profit organization that’s revitalized 5.5 miles of city waterway, could play a role in the future of Joe Louis Arena once the Detroit Red Wings move to a new home.

William Smith, the organization’s CFO, told MLive.com on Wednesday it hasn’t ruled out any options now that Red Wings owner Mike Ilitch has city approval for a new $650 million arena and entertainment district north of The Joe.

“That would be an enormous jump of what our purpose and mission is right now,” said Smith, when asked if the organization would be interested in buying the city-owned Joe for redevelopment. “But, you know, anything is possible, anything is possible.”

Okay, so what do we actually have here? There’s a non-profit conservancy in Detroit that works on creating public space along the riverfront, and Joe Louis Arena is on the riverfront, and Joe Louis Arena is set to be torn down once the Red Wings move to their new taxpayer-subsidized home a few blocks away, so … sure, that’ll bring in a few hits! Especially if we put “green” in the headline! Kids today are all into that “green” stuff, right?

I’d further point out the irony of lauding the possibility of clearing land for use as public space when the whole argument for the new arena is that it will take vacant land and develop it — but then I’d have to also point out the irony of talking up “greening” a former sports venue site when the city of Detroit is already fighting to preserve as little as possible of the Tiger Stadium ballfield as public space, and I just don’t have the energy. How about we just agree that Detroit’s new nickname should be “Irony City” and be done with it?

Okay, bankrupt Detroit paying for a hockey arena is nuts, but what can we do about it?

Hey, it must be “Let’s all boggle at bankrupt Detroit building an arena for the Red Wings” week: Yesterday’s Lansing State Journal article is followed up by an in-depth piece today at NextCity (you can read the whole thing for $1.99, or read an excerpt at Deadspin) on how “the Ilitch family—with its estimated $3.2 billion net worth—will get a new stadium, slated to open for the 2016-2017 season, built off the backs of taxpayers.” In a city, mind you, where police and firefighters may have their pensions cut to 16 cents on the dollar*.

All of this should be old news to readers of this site, though NextCity’s Bill Bradley does provide a nice precis. The more interesting bit (aside from the several quotes from yours truly, which is mostly going to be interesting if you’re related to me) comes in the section omitted from the Deadspin excerpt, where Bradley asks sports subsidy critics like former U.S. Rep. Dennis Kucinich (who held hearings on stadium subsidies back in 2007) and Seattle city councilmember Nick Licata (who testified at those hearings, as did I, and who was instrumental in passing Seattle’s Initiative 91 that requires that the city get a positive return on any sports venue investment) what the heck they think can be done about it. Kucinich first:

“Any time you’re talking about massive investment of public resources, it ought to be treated in the same way that a venture capitalist would treat it,” Kucinich said. “There’s no business in the world — no bank, no venture capital fund — that would give money to an entity without asking for anything in return. Negotiate a position in the same way that a venture capitalist would. You become a partner, not simply someone who is playing Santa Claus with taxpayer money.”

That’s certainly what Licata and the I-91 forces did, even if the math for “return on investment” turned out to be trickier than they had anticipated. And, it’s worth noting, even though the Sonics subsequently moved to Oklahoma City, Licata says he didn’t suffer any significant retribution at the ballot box from spurned basketball fans:

When he ran for reelection in 2009, the year after the Sonics had left for the heartland, his opponent, Jessie Israel, came out “aggressively” on the stadium issue. “[Israel] was younger than me, well connected, raised more money than I did and beat me up on that issue,” Licata said. “And I still won by a 14-point advantage. The folks who are strong advocates for professional sports teams are passionate and that passion translates into a lot of heat, but it doesn’t necessarily translate into a lot of votes.”

Still, the number of elected officials pushing a standard of “the public should get back something equal to what it puts in” remain few and far between, for reasons that I’ve covered elsewhere. (TL; DR version: Lobbyists!!!) And to change that is likely to require more organizing from both the local Licatas of the world and the Congressional Kuciniches — okay, you know what, hell with, I’m just going to quote myself:

Ending the scam that is stadium welfare very well may have to start with local leaders — like Licata in Seattle and [Frank] Rashid in Detroit — before there’s a better chance of real change in Washington.

“I think it has to be both at once,” deMause said. “Congress isn’t going to act until there’s a major public groundswell, which needs to happen locally because organizing takes place around this stuff on a local level. At the same time, local officials are always going to be at the mercy of teams threatening to move — even if only to the county across town with the elected officials dumb enough to fall for their scam — until there’s some federal restriction on companies playing off localities against each other.”

Things aren’t exactly going great on either of those fronts, but hey, there’s a first time for everything. Drops of water turn a mill.

*UPDATE: Or 94 cents on the dollar, or somewhere in between. See comments.