The Malik Report
Crain’s Detroit Business’s Shea: expansion of downtown district to rink footprint is a sticky wicket
by George Malik on 12/09/13 at 10:20 AM ET
Via Deadline Detroit, Crain's Detroit Business's Bill Shea reports that Detroit's City Council still has some questions regarding the City's benefits if the Council and Mayor decide to expand Detroit's official "downtown" footprint to include the area behind the Fox Theatre and the Cass Corridor near the Masonic Temple--a.k.a. the area in which Olympia Entertainment plans on building a $450 million rink and another $200 million in "economic development" investment.
If the Foxtown and Cass Corridor districts were officially deemed part of "downtown Detroit," they'd be eligible for funding from the Detroit Economic Growth Corporation's (the DEGC) "Downtown Development Authority," which would make the Ilitches' rink/economic development footprint eligible to receive the property taxes that the DDA diverts from downtown businesses toward economic development.
Earning that kind of status from a City Council that's never been anything less than primarily concerned with its own bottom line and friends and contractors' pockets requires a stiff admission fee--according to Shea, the City Council wants to see nothing less than a formal concession agreement between the Ilitches and the DDA as the DDA will own and lease the rink to the Ilitches...
The council will vote on, or allow to die, a proposal to expand the current 615-acre DDA property taxing district by about 40 blocks north of the Fisher Freeway between Grand River and Woodward avenues to encompass the arena district site, said Marcel Hurt, chief of staff for council President Saunteel Jenkins.
The council next meets Dec. 17.
What the council wants to see, Hurt said, is the final concession agreement between the DDA, which will own the arena, and Olympia Development of Michigan, the real estate arm of Red Wings owners Mike and Marian Ilitch's $2 billion Detroit business holdings that also include the Detroit Tigers and the Little Caesars pizza chain.
A draft concession agreement, absent timelines and other details, was made public in June. It would have Olympia operate the venue for 35 years, with 12 five-year renewal options.
It's unclear when the agreement might be finalized and made available to the City Council.
"Negotiations on the (concession management agreement) are continuing," said Robert Rossbach, a spokesman for the Detroit Economic Growth Corp. The DEGC, the city's quasi-public economic development arm, is contracted to staff the public authorities handling the arena project.
That's the tricky part--as Shea notes, there's a "memorandum of understanding" between all parties involved, but it's particularly tricky to try and get a formal concession agreement and formal timelines in place over the course of six-or-so months.
But that's how the cookie is going to crumble...
Olympia paid an estimated $50 million for half the land needed for the arena district, according to a Nov. 1 cost-benefit analysis provided to the council by its Legislative Policy Division.
That analysis recommended the council approve the DDA requests after the final concession management agreement is provided to the council, certain income tax questions related to Olympia and Red Wings employees are answered, and issues related to the future of Joe Louis Arena are considered.
Shea contiues at length and breaks down the entire picture in extensive detail, explaining how everything breaks down.
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