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The Malik Report

Detroit’s City Council approves expansion of DDA footprint, but it’s part of a larger process

Updated 3x at 5:13 PM: As noted earlier today, Detroit's City Council was to meet to discuss the expansion of the Downtown Development Authority's footprint and what the Detroit News's Louis Aguilar accurately described as a significant "land swap," but anybody expecting more than the commensurate amount of public dissent and a "this is a part of the process" set of agreements would have to be disappointed to find that some parts of the City's agreement with the DDA and Ilitch Holdings were approved...

And others, as the Detroit Free Press's Joe Guillen notes, were essentially punted to meetings to be held by the "new" City Council in February:

The Detroit City Council today passed a pair of city ordinances —despite considerable public opposition — to advance a project for a new Red Wings arena near downtown.

However, the council put off voting on a third measure which allow the transfer of city-owned land for the project until February. Council member said the by delaying acting on that measure it could leverage its pending approval to ensure the project proceeds to its satisfaction and to give the public more chances to have input.

The postponement means the project will come back next year before a significantly different group of council members. Five new members will take office in January.

The council did however agree to expand the DDA's boundaries to include the arena project site. It also voted to amend the DDA's tax increment financing plan to accommodate the project.

Several residents could not get into the meeting when it started at 9 a.m. at the Coleman A. Young Municipal building and were waiting in line. City Council President Saunteel Jenkins typically ensures everyone gets an opportunity to address the council on a subject the body is considering.

“We all want this to happen,” Jenkins said. “It’s our job to make sure Detroiters are apart of that.”

As Crain's Detroit Business's Kirk Pinho notes, however, progress was made:

The project needed council approval to expand the current 615-acre DDA property tax capture district by about 40 blocks north of the Fisher Freeway between Grand River and Woodward avenues to encompass the arena district site.

Brian Holdwick, executive vice president for business development for the Detroit Economic Growth Corp., said at the meeting that the demolition of city-owned Joe Louis Arena, where the Red Wings have played since 1979, is expected to cost the state about $5 million.

The DEGC staffs the DDA under a contract with the city and owns some of the land in the proposed development area.

Dozens of people spoke during the public comment period against the planned development, with many decrying the use of tax dollars to fund part of the project.

The team is expected to move in 2017 or 2018 into the new $450 million arena at I-75 and Woodward Avenue, where there would also be another $200 million in private sector investment for residential, office and retail space around the arena.

Holdwick said following the meeting that the council is expected to take up a series of land transfers between the DDA, DEGC and Olympia Development of Michigan — the real estate arm of the Ilitch family, which owns the Red Wings — in February.

He continues...

Update: Yes, the public outcry was vocal, as Bloomberg's Chris Christoff notes:

Although Detroit is under control of state-appointed Emergency Manager Kevyn Orr, the council has power to approve the arena deal, said Orr’s spokesman, Bill Nowling. The plan doesn’t require approval of U.S. Bankruptcy Judge Steven Rhodes, who presides over Detroit’s case, Nowling said.

It’s ludicrous and embarrassing to use tax money for an arena that will turn profits for Ilitch, said Samantha Peeling, 26, one of several residents who spoke at a two-hour hearing.

“Nobody will move to a city just to watch a hockey game,” said Peeling, who said she moved from a suburb to an apartment near the proposed arena site in April.

Others said arena and surrounding development would create much-needed jobs.

“This is an opportunity for the city to grow,” said Ken Harris, 39, a Detroit resident and president of the Michigan Black Chamber of Commerce.

The new 650,000-square-foot arena would replace the 34-year-old Joe Louis Arena on the riverfront, where the Red Wings have won four Stanley Cup championships since 1997.

Planners say it would create more than 13,000 jobs and a $1.8 billion benefit for Detroit and the state. The project near the city’s midtown district would add bustle in a corridor near professional baseball and football stadiums.

The area has experienced an influx of businesses and residents, and is considered an axis for the city’s economic revitalization. The new arena would enlarge a core entertainment district where a new light rail line also is planned, said Republican Governor Rick Snyder.

“It could really be important in terms of overall economic development and connectivity within Detroit,” Snyder said in an interview in Lansing on Dec. 18.

Update #2: MLive's David Muller confirms:

The lame-duck council voted 4-2 to expand the DDA’s coverage area to include all of the 45-block development district for the $650 million project, with council members JoAnn Watson and Brenda Jones voting against it. Council voted 5-1 in favor of an agreement (Watson voted no), approved by the DDA last week, that would have Olympia Development operate the arena and allow for its use for 95 years.

Council tabled an item that would transfer city-owned land for the project. A new City Council takes power in January, and the first meeting at which the new members could take action is scheduled for Feb. 4.

Gregg Solomon, project director for Olympia Development, said further delaying the item could consequently push back plans for site development. City Council President Saunteel Jenkins said that Olympia should have given the legislative body the documents it had been asking for sooner. She said delaying the action would also ensure the public has more time to weigh in.

Meanwhile, several people voiced their opposition to the project, which would be funded with a mix of $365.5 million in private investment and an estimated public investment of $284.5 million.

Jerry Belanger, who has been a vocal critic of the proposed arena development, said he believes the Ilitch family, which runs Olympia Development, is getting unfair treatment despite doing little to develop other buildings they own in Detroit.

“Dan Gilbert, the first 3 months he was here, had more economic impact on this city than the ilitch family has had in 40 years,” he said. Belanger, who owns the downtown building at 2040 Park Ave. that houses Cliff Bell’s, Bucharest Grill and The Park Bar, also called it a “crescendo of cronyism.”

Several speakers opposed to the project said public money should not be involved, especially at a time when the city is literally bankrupt.

Update #3: Um, different numbers? Per the Detroit News's Louis Aguilar and Darren Nichols:

The council, by a 5-1 vote, passed a change in the boundaries of the Downtown Development Authority, a move that extends the area farther north of downtown, to include the area where a new hockey arena is expected to be built. Councilwoman JoAnn Watson was the only member who voted against the measure.

The council also approved financing for the deal by a 4-2 vote, but decided to postpone a decision on the land transfer until early February. It needs to work through several issues, but council members said they primarily want to ensure jobs for Detroiters.

“We made some great strides today. Those are very important issues that just don’t get approved easily, expanding a DDA district and also the tax increment financing plan and things of this nature,” said George Jackson, executive director of the Detroit Economic Growth Corp. “So we’ll just keep going and resolve the final issue.”

Jackson said while the council didn’t approve a transfer of nearly 180 properties, he expected the outstanding issues to be resolved.

The swap means the Red Wings owner Mike Ilitch is poised to develop a good chunk of the $200 million in new projects — retail, residential, hotel and parking facilities — intended to be built around the new arena. Officials are facing an April 1 deadline to resolve all of the outstanding issues.

But council is fighting for a stronger community benefits agreement that will ensure that Detroit residents and businesses are included in the development process. The project is expected to include about 8,300 construction jobs.

“We will resolve the issues as it relates to the land property issue. It’s basically more tied to certain commitments made to the community,” Jackson said. “We made some great progress. Land is what needs to get transferred, but the real issue is sitting down and working out what else is required in regards to making the community feel comfortable and we’ll do that.”

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The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.