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Detroit Council Grants Pro Hockey Arena Plan Final Approval

The Detroit City Council gave the go-ahead to build a $450 million Red Wings hockey arena with the help of state-issued bonds backed by local property taxes.

The council approved transferring city-owned properties worth $2.9 million for a 45-block project that’s to include residential and commercial developments. In December, the council approved measures to put real-estate taxes toward bond payments to help finance the development. However, it didn’t approve the property deal as some council members demanded assurances the project would employ Detroit residents.

The arena for the National Hockey League team is promoted as a catalyst for Detroit’s downtown and midtown areas, which have attracted new residents and businesses in recent years. Opponents call the project a gift of tax dollars to a billionaire sports team owner.

“This will be the epicenter of sports and entertainment in Michigan,” said Tom Wilson, president and CEO of Olympia Entertainment, a division of Ilitch Holdings Inc., which owns the Red Wings, Detroit Tigers baseball team, MotorCity Casino Hotel and Little Caesar’s Pizza.

Some residents and buisness owners spoke in support of the arena, to be completed in 2017, as a job-creator, or against it as a public favor to a billionaire.

State Assistance

The Red Wings and owner Mike Ilitch would pay 56 percent of the cost of the 18,000-seat hockey arena and finance the $200 million development around it. It would replace the 34-year-old Joe Louis Arena on the riverfront, where the Red Wings won the 1997, 1998, 2002 and 2008 Stanley Cups.

The planned 650,000-square-foot venue also would be used for concerts and other events.

The proposed arena has raised questions about spending public money on professional sports, as the city goes through the largest U.S. municipal bankruptcy. A local development authority collects the taxes that would back the 30-year bonds to finance the arena. The securities would be issued by the Michigan Strategic Fund, a state agency.

Under the deal, no city government money would be used. Michigan would cover the cost of diverting $12.8 million in local tax revenue each year toward bond payments.

“We don’t want our taxes spend on this stadium,” resident resident John Telford said at the council meeting. “Mr. Ilitch should spend some of his thousands of millions of dollars on it.”

Outside Bankruptcy

The Red Wings would pay $11.5 million a year, and the local development authority would pitch in $2 million annually. Combined state and private money would account for 86 percent of about $26 million annual debt payments.

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

Planners say the project 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 be near professional baseball and football stadiums.

Olympia Development of Michigan would manage the arena and have naming rights. The company is the real estate arm of Ilitch holdings Inc. which is owned by Ilitch and his wife, Marian, and includes the Red Wings, pizza chain Little Caesars Enterprises and the Detroit Tigers baseball franchise.

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