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Detroit’s City Council to vote upon expanding Downtown footprint to include Wings’ follow-on rink

Today is going to be...Interesting...For the Red Wings. While the team attempts to build upon its 3-2 OT win over Calgary, and hopes to welcome some players back from injuries tomorrow against Toronto (tomorrow's Hockey Night in Canada meets 24/7 game will be hyped as much as the lead-up to the Winter Classic should be, I suppose...) while Stephen Weiss finds out whether he needs surgery to fix his ailing groin...

Downtown, as the Detroit News's Louis Aguilar notes, the Detroit City Council will decide whether to approve the expansion of the Downtown Development Authority's "footprint" to include the 45-block area where the Wings' follow-on rink and "economic development" will be built pursuant to the DDA and the Ilitches coming to an agreement regarding the construction and management of the new rink (as well as the demolishing of Joe Louis Arena).

According to Aguilar, the Council's approval of the deal would trigger a massive "land swap":

A land swap of 180 properties between the owner of the Red Wings, the city of Detroit, and two quasi-public agencies is the next step in making the $650 million new entertainment district reality.

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.

“Yes, of course, the Ilitches will look to that property first (to develop),” said Paul Kerber, vice-president of Marcus & Millichap Detroit, a commercial real estate investment services firm, in an earlier Detroit News interview.

On Friday, the City Council may vote on the deal as the plan winds its way through the complex approval process. The Red Wings hope to begin playing in the new arena starting 2017.

The arena takes up eight blocks of the planned 45-block area entertainment district, which would be located north of downtown. That district is now mostly vacant or blighted.

Under the land swap deal, the Wings owners would get an additional 37 properties where those lucrative developments could be built, according to city documents.

Continued

Update: The Detroit Free Press's Joe Gullien reports that the scene's a little crazy downtown...

The Detroit City Council chambers are at capacity this morning for a meeting to consider legislation on the new Red Wings arena project.

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

Council is to consider a package of legislation to advance the project, including a proposal to expand a Detroit economic development zone known as the Downtown Development Authority. A portion of property taxes within the DDA will help pay off of bonds sold to build the arena. The $450 million arena, which will be paid for with a mix of public and private money.

The DDA’s board approved an agreement last week for Olympia Development of Michigan -- one of Red Wings owner Mike Ilitch’s companies -- to operate the new arena. The agreement, which allows Olympia to use the arena for up to 95 years, is a giveaway, said Jerry Belanger, who owns buildings that house Cliff Bell’s jazz club and Bucharest Grill.

“This isn’t just a single win for” Ilitch, Belanger said. “It’s a win for him for the next 100 years.”

Although he doesn’t expect opponents of the project to sway the council, Belanger said he has spoken with attorneys about filing a lawsuit on behalf of various business owners to halt the project.

“There could be several aspects of this contract that could be challenged as unconstitutional,” he said.

WXYZ reports that we're going to hear more from local residents as public comments are part of the deal:

Friday morning, Detroit city council leaders will weigh in on a proposed entertainment district and hockey arena.

But first, they're listening to what the public has to say about it.

A lot of people are expected to have something to say about this proposed property.

It sits along Woodward Ave. near I-75, an area near many blighted and vacant buildings.

The Detroit city council has called a special session, which includes a public hearing on the proposed $650 million entertainment district and arena.

It's considering a change to the city code to add the property to the downtown development district.

The city has to expand the district, in order for this plan to go forward.

Meantime, Michigan's strategic fund would issue $450 million in bonds to help fund the project.

Critics say, however, that the timing of this mega project is poor, as the city is going through bankruptcy and pensioners face significant cuts.

Friday's hearing gets underway at 9 a.m.

Update #2: Also, per the Free Press's Matt Helms and Joe Guillen:

The City of Detroit is on the verge of settling a long-standing debt it says is owed by the Ilitch family’s business empire so the Red Wings owner can move forward with a plan to build a new hockey arena near downtown.

City officials say the Ilitches could owe the bankrupt city up to $80 million in payments tied to cable TV revenues, which were included in a 1980 amendment to the Red Wings’ original lease of Joe Louis Arena before the Ilitches bought the team in 1982. It is unknown whether the Ilitches ever have paid the city anything related to such revenues, according to city records. Nor is it clear how much of an effort the city has made over the past 30 years to assess and collect any money owed it.

But now the city is expected to offer a settlement of about $6 million to resolve the cable TV issue and a variety of other unpaid bills at the Joe.

Olympia Entertainment, an Ilitch company, has maintained through the years that the city is not entitled to any cable TV money. The company informed the city in 2007 that “Olympia has neither sold any such rights nor has it received any money for the sale of such rights.” The company’s position has made it difficult for the city to calculate how much it believes the company owes.

Nevertheless, a report on the new Red Wings arena project by the City Council’s Legislative Policy Division in August said outstanding television payments have been estimated to be between $50 million and $80 million.

“The city has been entitled to 25% of gross profits in excess of $750,000 received from the sale of television rights for events held live in either JLA or Cobo Arena,” the report said. “Although the city has been entitled to this remittance since 1980, it is unknown whether it has ever been received.”

The deal is being brokered by the Jones Day law firm and also includes a new lease of Joe Louis Arena so the Red Wings can continue to play there until the new taxpayer-supported stadium is expected to be built, as early as the 2016-17 season.

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About The Malik Report

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.