Red Wings almost ready to build new taxpayer-subsidized arena, are Pistons next in line?

The Detroit Historic District Commission is set to vote this afternoon on whether to allow Red Wings owner Mike Ilitch to demolish the historic (but long-vacant) Park Avenue Hotel to make way for his arena district construction project, which promises to draw to a close the city’s debates about sports arena construc — oh, come on now, seriously?

Pistons owner Tom Gores launched Project “Big Math,” a sweeping idea for change and economic growth for the city of Detroit and state of Michigan, when he hired agent Arn Tellem last week as vice chairman of Palace Sports and Entertainment.

One of Tellem’s first agenda items when he takes over Aug. 3 is to explore bringing the Pistons downtown from Auburn Hills. … The Pistons have two viable options. They can move into the new Red Wings arena, which is scheduled to open in 2017, and share it with Olympia Entertainment. There is also a Hail Mary option to tear down the half-built Wayne County Jail and build an arena in conjunction with Quicken Loans chairman Dan Gilbert.

This is still pretty much just at the rumor stage — and the Pistons say they have “no plans” to move from Auburn Hills, for what it’s worth — but still, there’s at least the chance that Detroit may end up talking about building not one but two downtown arenas. Not bad for a city that’s bankrupt. Or, looked at another way, not good.

Red Wings owner has no immediate plans to build most of arena district, no he’s not giving his $300m back

You know how every time some team owner announces that their new publicly financed venue will come with a “ballpark village” or “arena district,” and I shake my head sadly and warn that accompanying development rarely if ever happens on the expected timetable? Well, this just in from the Detroit Red Wings front:

Nearly a year after Olympia Development announced that a big chunk of $200 million in retail, offices and apartments could be open when the Red Wings’ hockey arena debuts in summer 2017, plans, details and timelines of many of those components remain unknown.

“I don’t even see the majority of that 45-block overhaul starting before the arena is open,” said John Mogk, a Wayne State University law professor who closely follows Detroit development.

“You need to prove a strong market for new residential and commercial, and what is in that area now doesn’t make much of a case,” Mogk said.

So, Red Wings owner Mike Ilitch can’t build the new housing and stores until there’s a market demand for it, and there’s no market demand for it yet. I could be churlish and point out that the whole point of the state giving public money for the arena was that the market wasn’t creating enough demand to get anything built on that site, and so the arena was supposed to jump-start things, and if it’s just a matter of waiting for demand for more housing to materialize then Detroit could have done that without having to give Ilitch $300 million, and — you know what, it’s Monday, I have a right to be churlish. Or at least to point out that when developers make promises about all the stuff they’re going to build, you really want to get it in writing.

(Ilitch can reportedly get another $74 million from the city development authority if he spends the $200 million within five years; whether you consider that a valuable incentive or throwing good money after bad is your call.)

Detroit council gives up and lets Red Wings owner have his arena rezoning without job commitments

Detroit Red Wings owner Mike Ilitch finally got his rezoning approval from the Detroit city council last night, and it didn’t require a community benefits agreement for local hiring or promising to save two historic buildings or any of that. Instead all that will be worked out later, without the council holding its best leverage, because surely that’s a good plan.

Ilitch celebrated the ruling by tearing down a popular sports bar that stands in the way of his planned arena. (No, not with his bare hands, but if it’s more fun to picture it that way, go for it.)

No, community benefits agreements aren’t the solution to stadium subsidies

Here’s British journalist Ian Betteridge explaining his eponymous law of headlines:

Any headline which ends in a question mark can be answered by the word “no.” The reason why journalists use that style of headline is that they know the story is probably bullshit, and don’t actually have the sources and facts to back it up, but still want to run it.

So when Deadspin runs an article asking, “Has Detroit Found An Answer To The Publicly Financed Stadium Scam?” you should probably approach it with a grain of salt. But for the record, allow me to answer Deadspin’s question:

No.

What the Detroit city council is considering is a law to require community benefits agreements for all development projects. CBAs, as they’re known, are agreements that developers negotiate with local residents, community groups, and other stakeholders committing to jobs and other local benefits as part of a project; as state assemblyperson Rashida Tlaib told Deadspin, “We are allowing these large corporations—companies that could build a hockey arena without our money—to get in the corporate welfare line and take resources away from us. In exchange for what?”

In theory, CBAs sound great: If developers want public money, they have to give the public something in return! In practice, they’re more problematic. While everyone loves to point to the CBA for development around the Staples Center in L.A., which got parks and job training for local residents impacted by the new construction, there are far more CBAs that haven’t worked out as well: The one the New York Yankees set up, for example, which arranged for a “charity” that handed out benefits to several groups that barely existed, and which didn’t bother to keep track of how many Bronx residents were hired at the new stadium. There’s also the problem of how the “community” is defined: then-New Jersey Nets owner Bruce Ratner famously paid to set up community groups that he could then negotiate a CBA with, over the objections of much of the rest of the community.

And even when CBAs are legit, more or less, there’s still the problem that they’re less a referendum on whether pumping public money into a development project is good for a city as a whole, and more a way for community members to demand a cut of the boodle. Which isn’t necessarily a bad thing — as Tlaib implies, at least if you’re shelling out all that money, you might as well demand something in return — but it can end up being just an easily applied fig leaf for developers, and an incentive for community groups to trade their support for what amounts to a cash payoff, rather than keeping the broader public interest in mind.

So, points to Deadspin for covering this, but more points off for a misleading clickbaity headline. Developers may hate the mandatory-CBA plan — developers hate mandatory-anything plans — but that doesn’t necessarily make it a good thing.

Red Wings owners decide they’re not ready for council zoning vote after all, get it called off

The Detroit city council was all set to vote last night on the rezoning plan for a Red Wings arena development that could lead to the demolition of two historic downtown hotel buildings, but backed off after Red Wings owner Mike Ilitch’s development company asked them to delay the vote:

Olympia Development of Michigan’s request to delay the vote followed a council committee meeting this morning where a handful of amendments to the zoning request were suggested. One amendment aimed to preserve the historic Hotel Park Avenue. Another suggested changes to the parking deck attached to the arena.

Councilwoman Raquel Castaneda-Lopez said the council’s willingness to honor the developer’s request rather than vote on the changes “shows council’s commitment to wanting to see the project be successful and accommodating.”

Olympia didn’t comment themselves on the reason for the delay request, or even make the request themselves, instead sending a Detroit city planner, Marcell Todd, to pass the word along. Todd says that the proposed amendments presented “a number of obstacles” that the developer isn’t ready to address, so they wanted further council action to wait until they had a plan.

This is actually all pretty healthy — negotiations out in public! taking time to consider the implications of new proposals! — especially compared to how things work in some other cities. It’s still just a mite unnerving, though, to have the city council setting its agenda based on what developers tell them to do via the intermediary of a city staffer. Not surprising, mind you, just unnerving.

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?”