The Malik Report
Let’s just say that the Red Wings’ rink proposal won’t be derailed by Detroit’s municipal bankruptcy
by George Malik on 07/24/13 at 01:43 PM ET
Updated 2x: the funding plan for the Wings' rink proposal has been approved. We're apparently still waiting for this to go down, but the Detroit News's Louis Aguilar reports that Michigan governor Rick Snyder's makig a public show of support for the Red Wings' rink and economic development project today in Lansing:
Gov. Rick Snyder will tout the $650 million new hockey arena and 45-block entertainment district Wednesday afternoon as evidence that big Detroit projects will continue to move forward amid Chapter 9 bankruptcy.
Snyder was scheduled to speak at 2 p.m during the Michigan Strategic Fund meeting where the fund, a state economic development agency, is expected to start the process for $284.5 million in 30-year bonds to cover the public portion of the arena’s construction costs.
The bonds were revealed in the June announcement of the new arena and entertainment district. A division of the Detroit Economic Growth Corp. intends to use property taxes captured within its 615-acre downtown district to pay off bonds issued by the state to build the 18,000-seat hockey and entertainment arena at Woodward and I-75.
The remainder of the arena costs, $365.5 million, will be picked up by Olympia Development of Michigan, the property development arm of Mike and Marian Ilitch. Mike Ilitch owns the Red Wings and Detroit Tigers. Together, they both own the Little Caesars pizza chain.
City general fund tax dollars are not being used the hockey arena. Instead, it’s a blend of mostly private financing with some other public funding.
Update: It's official:
Update #2: MLive's David Muller confirms:
On Wednesday, Gov. Rick Snyder said he expects the project, which is expected to add 4,380 construction jobs, to be a boon for Detroit.
“This new entertainment district will be much more than a new arena for the Detroit Red Wings. This is a project that will help revitalize Detroit,” Snyder said in a statement. “This project creates another major destination point for residents and visitors alike that builds on prior investments along Woodward from Comerica Park and Ford Field to the new Whole Foods in Mid-Town. The Ilitch family organization is making an enormous investment in the city and state bond financing makes this project a true public-private partnership.”
The project was first revealed near the end of last year when the Illitch family said that that the development hinged on passage of state legislation that allows for use of DDA funds. That legislation passed in December.
The state legislation allows Detroit's DDA to collect up to $15 million a year for the project. According to the DEGC, the primary public funding mechanism for the project will be about $12.8 million per year in property taxes captured. The DDA will contribute another $2 million each year, and OIympia Development will pay another $11.5 million annually. Together, those three commitments will be used to retire 30-year bonds through the MSF.
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