Detroit Authority Approves $450 Million Deal for Arena BondsChris Christoff
A $450 million bond sale to finance a Detroit hockey arena neared final approval with consent of the city taxing authority that will help pay for it.
The Detroit Downtown Development Authority approved terms that may be considered tomorrow by the Michigan Strategic Fund, which would issue the bonds.
The 18,000-seat arena is the anchor for a 250-acre (101-hectare) redevelopment to be financed by Olympia Development, part of Ilitch Holdings Inc., owner of the National Hockey League’s Detroit Red Wings. The new venue will replace Joe Louis Arena, where the Red Wings have won four Stanley Cup championships since it opened in 1979.
The Ilitch organization, led by billionaire Mike Ilitch, would pay 44 percent of the cost of the arena. The Downtown Development Authority would pay the remainder using a portion of taxes collected in its district.
Comerica Inc. will purchase the $200 million backed by the private funds, and the rest will be offered publicly, said Steven Kantor, an adviser to Olympia Development.
Kantor said he expects the Michigan Strategic Fund board to favor the plan when it meets tomorrow.
“We think we have a plan they will approve,” he said after the development authority vote.
Ilitch has pledged to spend at least $200 million on the surrounding redevelopment to include housing and retail outlets.
The bond sale would be the largest by the Michigan Strategic Fund. The issuance has been delayed for months as the state explored ways to maximize tax-exempt securities with lower interest rates.
Of the securities, $250 million backed by public money will be tax-exempt, according to a report to the authority board. Olympia Development will pay $11.5 million a year toward the 30-year bonds. The developer also pledged to pay for infrastructure around the arena.
Olympia Development may be reimbursed as much as $75 million after it spends $200 million on the redevelopment.