The Malik Report
by George Malik on 07/21/14 at 02:44 AM ET
Sunday's unveiling of the Red Wings' rink plans yielded what was very literally an all-night "vigil" for me. The Free Press usually publishes its next-day stories between 12 and 2 AM, and on "old-school" nights, between 3 and 4 AM. The rink stories weren't posted until after 5 AM; Crain's Detroit Business's stories hit around 7:30, and the Wings didn't post their official release until 8 AM.
After waking up from what I guess we'll call a nap, I woke up and thought, 'That's going to cost way more than $650 million."
Put simply? The Wings have allocated more than enough public and private funds to build a fantastic rink, but $200 million for surrounding economic development?
That's enough to clear the blight and to build the bare-bones foundation for the five "neighborhoods" surrounding the rink, but there's nothing behind the Fox Theatre or the Cass Corridor save abandoned buildings (including a few historic hotels which MLive's Eric Lacy reports the Ilitches might utilize) a few bars and some flophouses.
The "District Detroit" estimate of $1.8 billion in total economic development is far more realistic in terms of the kind of private investment the Wings are going to have to "sell" Southeastern Michigan's business community upon making to fully realize the 5-neighborhood, "European-style" district that the Ilitches invision, and there is no way in hell that it's all going to happen between now and the summer of 2017.
The rink will serve as the heart of the project, and if it delivers on its own lofty expectations, the facility should pump a significant amount of money into the area. But the heart plus $200 million in 2014 dollars gives you a heart, skin and bones. The guts of the project, the meat on the bones, the muscle and the sinew and the soul will have to come by building a city-wide, county-wide and region-wide coalition of business with a unified purpose and a community-centric drive.
It's going to a good decade, if not longer, to fully develop the surrounding area, and the private and public coordination necessary to bridge the massive socioeconomic, racial, cultural and financial divides will have to reach unprecedented levels...
And the Ilitches will have to change their business plan, too. Right now the Red Wings' rink and, to some extent, the Foxtown area work llike the MotorCity Casino--with the goal involving keeping as much sports, entertainment and food-drink-and-merchandise spending concentrated within a specific area as possible.
The neighborhood concept is far more like the Dan Gilbert model, where you build the "anchor tenant" and then literally and figuratively incentivize business and community investment spreading out from the "anchor tenant," all the while making allowances for the concept that some of the money that's going to be spent isn't going toward the "anchor tenant's" bottom line.
To realize the "paradigm-shift," the Ilitches are going to need help from City, County and State governmental agencies which have never really gotten along very well--organizations which have always been far more concerned with lining their own pockets than building a vibrant community--and I hate to say it, but whether there are tax incentives or private-public incentives, there's going to be more public spending involved to convince people to build, invest, work and live in what is currently Downtown Detroit's last dead zone, last scary place and last Wild West area.
Pumping the revenues out of downtown and into the rest of Detroit, where the majority of its 750,000-or-so residents live, is another story entirely, but in terms of realizing the Arena District, the Ilitches, Olympia Entertainment and the Red Wings do have at least one strong partner in the Downtown Development Authority and the Detroit Economic Growth Corporation.
They're the folks who've coordinated efforts with Peter Karmanos, Roger Penske, Dan Gilbert, the Ilitches, GM and the rest of the downtown businesses to relocate GM to the Renaissance Center, to bring Rock Financial and Quicken Loans downtown, to build the Riverwalk, to renovate Cobo Hall, to build Campus Martius and to coordinate all of the economic developments in such a manner as to deliver on their infrastructure and real estate promises on-time and under-or-at-budget.
Outgoing DEGC president George Jackson spoke with MLive's Eric Lacy about the Ilitches plans on Sunday afternoon....
"What we were looking at was transformation and connectivity in regards to downtown and to Midtown and transformation in regards to a new neighborhood, a new district." Jackson said. "The focus is on to be one complete, comprehensive, multifaceted district."
Plans that surfaced Sunday for an Ilitch-backed $650 million Red Wings arena and accompanying entertainment district certainly show that. Now it's time for action this fall, as the bold project that covers 45 city blocks north of downtown is set to break ground this fall.
Jackson, who left the DEGC in March to start his own firm, sees the arena and the district, simply named "The District," as a legacy builder.
Emphasis on legacy here given that Mr. I turned 85 on Sunday.
"Keep in mind he is a businessman, and he has a right to want to make money," Jackson said of Ilitch. "But I'm going to tell you that Mike Ilitch has a passion for the city of Detroit. Mike Ilitch really has a strong passion for doing what's right for the city of Detroit."
The 85-year-old Ilitch, also owner of Detroit Tigers and Little Caesars Pizza founder, is expected to make an investment that will include "tens of millions of dollars in public infrastructure improvements" such as lighting, sidewalks, green spaces and streets concurrently with arena construction, according to a press release.
This investment of at least $200M for new, mixed-use development is expected to help transform dozens of blighted blocks into five new neighborhoods. And experts claim the entire project will generate at least $1.8 billion in total economic impact, 8,300 construction and construction-related jobs and 1,100 permanent jobs.
"He still has his eye on making sure it's profitable and I can't begrudge him for that," Jackson said. "That's not a negative, but I'm going to tell you that this guy, Mr. Ilitch, believes that his legacy stands. It's important that he knows 'I helped rebuild my hometown, the city of Detroit; I helped it grow, I helped it transform.'"
The change in philosophy has to involve the concept that letting money "leak" out into the community is in fact a good thing, not a concept that takes away from the company's profit margins.
It can't work that way any more, and I don't know if Chris Ilitch or Olympia Entertainment CEO Tom Wilson can change the corporate culture after a lifetime's worth of keep-it-within-the-family, keep-it-within-the-Organi-I-Zation philosophy.
For the Ilitches, you're in or you're out, and the money's in or it's out, and there is an exclusive culture that involves excluding people you can't control (*waves*). Can the Ilitches embrace a little chaos theory?
I really don't know.
The DEGC's Jackson continued his conversation with Crain's Detroit Business's Kirk Pinho...
“The key right now is making sure that there is a good team that comes from all sectors, not just the (Ilitches),” Jackson said. “It should be seamless, and there are a lot of projects that complement this.”
Jackson said there are “penalities” written in the development agreement if the project is just the arena.
“The deal was structured, amid some criticism from some of the media folks who didn't read it,” Jackson said. “That was a major element of the development plan. It wasn't just, 'Maybe, with our best efforts.' ”
Jackson, who said there will be “a lot of out reach to Detroit residents” about the project, also called the project “a major commitment to Detroit residents and its businesses.”
That's good, too, and Pinho's business contacts in Detroit understand that this isn't going to roll out seamlessly:
“This is real estate redevelopment, and it will get a boost from it's core development, the arena, but no one should assume that it will unroll like one unbroken piece of development,” said David Di Rita, principal of the Detroit-based Roxbury Group, this afternoon. “This is a vision for what this neighborhood could be.”
Dale Watchowski, president, COO and CEO of Southfield-based Redico LLC, which developed the Gateway Marketplace featuring a Meijer Inc. supercenter at Woodward and Eight Mile Road, called the Ilitch plan “brilliant.”
“That was my first thought. The location is critical. It's nice to see that growth is continuing to move north and spreading out from Woodward east and west. Certainly the arena and the Fox will serve as a catalyst for this development, and the M-1 Rail will do nothing but add value and connection to Midtown that's so necessary,” Watchowski said.
“What it takes is courage and money and a thoughtful plan to ultimately kick this off,” he continued. “I think it's this type of concentration of uses that will ultimately be successful. Going in at a lesser scale would not have enabled success at the same degree you are seeing.”
It's got to be more than kicking things off. It's about following through, Ye Olde Starting On Time And Playing For A Full Sixty Minutes.
MLive's Lacy noted that the community outreach part of the deal should kick off today...
Ilich's organization plans to keep the community informed throughout this project with "regular announcements," meetings with city officials, the formation of a neighborhood advisory committee and other activities with various stakeholders "as the district comes to life."
A press release states that "subject matter experts" will be available July 21 "by appointment only" to discuss the community initiative.
The project - both the $400 million arena and $200 million district - is expected to be complete by summer 2017.
Maybe if we didn't have cold Michigan winters?
The arena and district will fill a gaping hole downtown and covers a 45-block area bordered by Charlotte Street to the north, Grand River to the west, Grand Circus Park to the south and Woodward Avenue to east.
Alan Mountjoy, worked with Red Wings owner and business mogul Mike Ilitch, his family and architecture firm HKS last year on the project and described it to MLive.com last year as one that has unlimited potential. Mountjoy, a principal at the firm NBBJ, said on June 21, 2013 he believed this ambitious plan will be something the public embraces and could be designed and constructed within three years.
"It's not unreasonable to think that," said Mountjoy, whose work portfolio includes master plans for Hart Plaza and Eastern Market. "We're looking at ways a new urban district would evolve around the arena."
That's hard for me to believe. It'd be awesome of everything that's in the way got torn down and everything that's supposed to go up went up in three years, but I don't see it happening.
The Detroit News's Louis Aguilar reports that area residents question whether the plan is feasible, or livable...
“To me, they are still just basic outlines of plans; not guarantees that designs will change in the future; not a lot of details of what kind of retail, what kind of construction issues will come up,” said Warren McBryde, a longtime Brush Park resident. He’s also a member of the neighborhood advisory committee that meets with Olympia officials about the planned development.
On Sunday, Glenn Ross walked amid a desolate patch near Cass and Temple, an area now mainly controlled by Olympia, that is the western border of the planned $450 million arena.
“This place needs a lot of change and I give them a lot of credit for investing and wanting to make it happen,” Ross said, identifying himself as a longtime resident of the area.
“But so many people are concerned whether they will still be able to afford it once it changes,” Ross said.
And the Ilitches' own track record has to change for all of this to work:
The Ilitches have infuriated some for doing little with several of their historical buildings. They owned the Madison-Lenox Hotel, demolished in 2005 after a years-long fight with local and national preservation groups. The building was empty when the Ilitches bought it, hung onto it and then argued it was too blighted to renovate. The city’s historical commission repeatedly denied permission to tear down the Beaux Arts landmark.
In 2008, Detroit’s Downtown Development Authority used $2.5 million in state money to knock down six Ilitch-owned buildings near Grand Circus Park, including the Fine Arts Building and Adams Theatre. Olympia put revenue-generating parking lots on some of the parcels cleared with taxpayer money.
The Ilitches financed about 60 percent of the $350 million cost of Comerica Park, while Wayne County taxpayers and federal grants covered the balance.
In 2006, the Ilitches held a press conference with then Mayor Kwame Kilpatrick to declare a major renewal for some of their empty buildings. Most of those buildings are still vacant.
What do the "Historical Hotels" that the Ilitches might incorporate into the arena project look like? The Free Press's JC Reindl explains the state of said buildings:
Advocates for historic building preservation may find a surprise poking out from the colorful renderings of Detroit’s new arena and entertainment district.
Towering above the bright LED-lit arena and new four-story apartment complexes are a pair of abandoned hotels from the 1920s: The Hotel Eddystone and Hotel Park Avenue.
Windowless and covered in graffiti, the 13-story hotels have been empty for years and stand as visual reminders of the Cass Corridor’s long-ago past and its desolate recent decades. The Ilitches acquired the pair while assembling parcels for their arena and entertainment district.
The chances of these hotels surviving are...Iffy...
Christopher Ilitch, president and CEO of Ilitch Holdings, said they are considering ways to possibly incorporate the hotels into the arena district. But he stressed that reusing the buildings presents many challenges, as the structures are vertically out-of-scale with the other buildings planned to rise with the development.
And yes indeedy, some tax credits may serve as the catalyst for either redeveloping them, or maybe razing them:
And there are fresh plans for a new hotel near the arena. A third-party developer is looking to build one with 130 to 170 rooms that would go north of I-75 at Henry and Woodward.
So far, there have been no final decisions regarding the future of the Eddystone and Park Avenue. The buildings are on national historic registries, which qualifies them for potential redevelopment tax credits but it doesn’t preclude them from demolition.
The Free Press's Dan Austin hopes that the Ilitches will "do the right thing," as it were:
Amid all the still-to-come details about the new hockey arena are more vague details about a new entertainment district that will spring up next door. Now, Detroit’s been promised entertainment districts with stadiums in the past. Assuming this one succeeds where others have come up short, you’re going to need a place for tourists, visiting hockey teams and tipsy Red Wings fans to stay. You could build some generic cheap hotel, or you can dust off and spruce up something truly special — historic landmarks that could be destinations unto themselves. Arenas like the one in Columbus, Ohio, have incorporated residential into them. What hockey fan wouldn’t want to stay — maybe even live — next to their team’s arena?
Built in the 1920s, the Eddystone and Park Avenue are architectural tanks. Underneath all that tasteful limestone and irreplaceable architectural detail lie fortresses of steel. If you’re an abandoned building in Detroit, you don’t live to be 90 years old if you’re made of cheap materials and poor craftsmanship. For years, demolition has been the only feasible choice for many abandoned properties in the city. Nobody wanted them. Nobody wanted the land on which they sat. Nobody wanted to look at them.
But downtown and Midtown are both seeing occupancy rates of about 98%, according to Midtown Inc., many of them in beautiful, historic buildings. The rebirth of once-grand hotels like the Book-Cadillac gets national press coverage. Quicken Loans owner Dan Gilbert is snatching up historic buildings downtown left and right. In fact, Detroit is seeing a slew of its sleeping architectural giants being awakened: the Broderick Tower, the David Whitney Building, the Fort Shelby Hotel, the Federal Reserve, heck, they’re even renovating some of the city’s closed schools.
Historic abandoned buildings in Detroit are no longer liabilities — they can be assets.
Moreover, the Ilitches should be familiar with the positive press and goodwill that comes from saving a historic landmark. It’s been 26 years since they spent $12 million to restore the Fox Theatre and people are still praising them for it. This town loves a good comeback story. Conversely, when the family had the historic Madison-Lenox Hotel razed for a parking lot, there was outrage.
Saving the Park Avenue and the Eddystone is not impossible — they are on the National Register of Historic Places, which qualifies them for tax credits that would save millions on the rehab.
Look, nobody’s suggesting every abandoned building in the city can or should be saved. In any challenge, it’s wise to pick your battles. But let’s at least have a conversation about what we can — and what we should — save.
Resurrecting these hotels would be another Fox Theatre or Book-Cadillac success story for Detroit, a city hungry to honor its history — and its historic buildings — during its reinvention. And the promise of a new arena and entertainment district, and the jobs created through that process, will all play a role in that reinvention.
As hockey fans, you and I care most about the rink---and it's going to have to be the best modern-day facility ever built, one that replicates Joe Louis Arena's sightlines with seats people can actually comfortably sit in, one that replicates Joe Louis Arena's acoustics while ensuring that the rink isn't a quarter empty for the first five minutes of the 2nd period because people are in line to use the restroom, and that the first five rows of what will surely be more expensive seats aren't empty because their corporate owners aren't busy downtstairs watching the game on TV from the Olympia Club, are 5 stories above the rink in their suites, or have chosen to catch maybe 10 minutes of actual game action because the restaurants and entertainment they want to spend the night enjoying prior to and after the game are so damn far from the rink.
As hockey fans, if the players are still dealing with what are sub-standard workout and locker room facilities by this day and age's standards, if the visiting players aren't intrigued by Detroit because the area around the rink is desolate and the visitors' facilities make the term "spartan" sound like the lap of luxutur, and if the press is still pissed off about the lack of a press box or a team that doesn't want to work with them, the rink and the area around it won't provide any sort of competitive advantage in terms of player recruitment or anything less than a, "Ding, Dong, The Wings Are Dead" PR din.
As hockey fans, we're going to be paying the bill for this damn thing for the rest of our "careers," so we want to make sure that the rink lives up to both the legacies of Olympia Stadium and Joe Louis Arena, while giving us the kind of pre-game tailgating and restaurants and souvenir shops and plain old attractive places to gather, both inside and outside the rink doors, to keep us comfortable, well-fed, entertained and not itchy about our safety instead of heading back to Greektown, a casino or plain old out of town to enjoy the rest of our evening's pilgrimage to watch our favorite team play.
As either by-birth or by-fandom Michiganders, Metro Detroiters and Detroiters--and yes, those of you who were born in Chicago, Cape Breton and Columbia all count here--our city, our community and our state deserve better.
As the 36-year-old, Detroit-born and blue-collar-suburb-raised son of a Detroit/Wayne County probation officer (during the bad old days of the 70's, 80's and early 90's) and a nurse, as someone whose late-blossoming love for hockey and the Wings in 1991 has turned into a going-through-the-window profession of chronicling the team from a literal and figurative outsider's perspective, this former Engineering major, English degree-holder and most-of-a-secondary-ed-degree-holder who now spends his time working on a blog and taking care of his mom and aunt...
I've spent my whole life here. I remember my father recounting all the sins of Coleman Young and Ed McNamara, speaking with that classic Detroit blend of inherent cynicism regarding and hope for the state of a city that was and still is very "scary" for suburbanites and Detroiters alike, as someone who grew up having to learn how to act in the big city to not get yourself mugged, as someone who's come back to his car to find his window broken and his CD collection gone, grateful that the car was still there, because the car was parked all of 400 feet from a guarded lot downtown...
As someone who can tell you that the Ilitches haven't done all that much to benefit the community when it doesn't involve their bottom line since they moved downtown, and as someone who was raised in the city where they started Little Caesars, Garden City, Michigan...
I expect the Ilitches, Olympia Entertainment, the City of Detroit, Wayne County and the State of Michigan to deliver on their damn promises. I expect Little Caesars' owners to, if you'll pardon the sophomoric metaphor, make the best damn urban pizza they've ever attempted to piece together from the crust on up...
And ten years from now, I hope to Gordie Howe and God that you and I aren't talking somewhere about the regrets we have regarding the "District Detroit" and all the grandiose plans that we never witnessed while lamenting how much we're paying to watch a substandard on-ice product. Again.
The local news stations did cover the rink announcement. WXYZ posited a report...
As did WDIV...
And Fox 2:
To whom 56% of $650 million is given, much is expected, and that $364 million in Downtown Development Authority funds won't buy a rink, never mind the kind of community the Ilitches must see through to its fruition, and absolutely nothing less than fulfillment of 100% of the promises and potential that are being promised.
It's going to take far more than a billion dollars, a massive amount of unprecedented coordination between governmental organizations, businesses and the sometimes-prickly Ilitch empire, and it's going to take somewhere closer to ten years to truly "happen," but happen it must. Nothing less will suffice if Mike Ilitch's legacy project is to truly live up to the man and the image he's presented to us.
This has to be the stuff of city-changing and community-building benefactors, and it's going to have to involve the embracing of the a business model that flips the keep-it-within-the-walls concept on its head.
Are you up for it, Mike, Marian and Chris?
We'll all be watching, and expecting you to fulfill your promises.
Quick note: Crain's Detroit Business's Bill Shea is doing a live chat about the rink and surrounding economic development at 1 PM EDT today.
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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.