Council approves land transfer, gets nothing for residents
By Zenobia Jeffries
The Michigan Citizen
DETROIT — Construction on a new hockey stadium will begin this spring — with help from bankrupt Detroit. Against much community opposition, the Detroit City Council voted 6-3 to approve a land transfer deal that paves the way for the new $650 million project. Council President Pro Tem Cushingberry and Councilmembers Spivey, Leland, Jenkins, Benson and Sheffield voted in favor of the transfer; Council President Brenda Jones and Councilmembers Castaneda-Lopez and James Tate voted against it.
Ilitch Holdings’ Olympia Entertainment will pay the bankrupt city $1 for 39 vacant parcels along the Cass Corridor, a longtime blighted area. The publicly-owned land has a recorded assessed value of about $3 million.
President and CEO of Olympia Entertainment Tom Wilson told council, Feb. 4 before a packed auditorium of residents — many who opposed the deal — that it was a “once-in-a-generation-opportunity” where businesses “can now thrive.”
Detroiters don’t disagree the mega development project could benefit the city, their concern is that no guarantees are in place for jobs for residents.
“We’re not anti-development. We’re for equitable development that benefits all Detroiters,” reads the website and literature for Uniting Detroiters, a group demanding job guarantees for residents. “We’re for good jobs for Detroiters and we’re for enforceable benefits with representative community oversight.”
The organization was started as a resource to express the views of Detroit residents, community organization, neighborhood groups and other local stakeholders. “Absolutely wrong,” is what one resident called the deal, asking council to wait to vote until assurances were made that would benefit residents. “I’m against using taxpayers’ money to build a stadium for someone who can afford to build it himself.”
Forty-six percent of the project costs will be covered by public funds, which would come from existing economic development funds. Supposedly the deal doesn’t require new taxes. The remaining $400 million will come from private investors.
According to the proposal, actual construction of the arena will be 58 percent publicly funded and 42 percent privately funded. No Detroit general fund dollars will be spent; the state is contributing the bulk of the public money investment.
“I recognize this agreement does not offer a true community benefits agreement,” Councilmember Raquel Castaneda-Lopez, District 6, wrote in a statement. “Unfortunately we live with the reality of an emergency manager who can overturn any decision we make as a body.”
Castaneda-Lopez told the Michigan Citizen even though the city didn’t get everything it wanted, “it was a stronger deal than what was presented in December.”
The previous council put the vote on hold to host community meetings and develop a community benefits agreement. Some citizens say it didn’t happen.
Castenda-Lopez, who was one of three council members who rejected the deal said, “it wasn’t ideal but “we were able to negotiate several key benefits for the community and the city.”
If that were not the case, she says, she would have been more vocal about the deal.
Castaneda-Lopez says she will continue to be in communication with the developers and the Downtown Development Authority. She says the DDA has agreed to commission a community needs assessment to help inform later developments on the project. A key win, she says, is the addition of the city as a third party beneficiary on certain aspects of the Concession Management Agreement, which was not in the original proposal.
Councilmember Mary Sheffield, who despite very strong comments against the agreement, voted to approve the stadium deal. “The promise of jobs was way too much to turn down,” Sheffield wrote in an emailed response to this reporter. “This deal was not perfect, but I believe, overall, the development and promise of jobs will be good for Detroit.” Sheffield said she’s committed to monitoring the project and “holding the parties involved accountable.”
Rev. Joan Ross, North End Woodward Community Coalition, was critical of the council’s haste to vote. “We were expecting council to at least postpone the vote until there was time for language in the deal that enforces a community benefit agreement,” Ross said. “What we have now is loose, unenforceable, unaccountable language that doesn’t give any benefit to the community.” Ross and others wanted language that would guarantee Detroiters 51 percent of post-construction jobs. The deal, as structured, doesn’t promise any post-construction opportunities.
Officials say the project will create approximately 8,000 direct and ancillary construction jobs.
Sheffield said there will be opportunities to push the community benefits when developers come back to council for zoning and other requests. “We’re not trying to stop development in Detroit. It’s time for all community members, businesses and residents alike to benefit. If not, we continue to have these two cities that’ve been created … and we see no light at the end of the tunnel in how to get the city rebuilt if we’re not a part of it.”
Regarding the concession agreement, Sheffield said that part of the deal had been negotiated before she and other of her colleagues arrived on council in January. The council didn’t have time to advocate effectively on behalf of the community, and “to include tangible benefits in the agreement for the residents.”
Both Casteneda-Lopez and Sheffield say the Neighborhood Advisory Committee they created is another way to hold the developers accountable. The committee will receive reports about hiring, says Sheffield.
The stadium deal, according to reports, was negotiated by Emergency Manager Kevyn Orr. He has the power to approve the deal if council had not. According to local news reports, this new stadium deal is less favorable for the city than Ilitch’s current Red Wing lease of Joe Louis Arena from the city. Under that agreement, Olympia was responsible for annual rent of $300,000, property taxes capped at $252,000 and a portion of revenues from concessions, souvenirs and ticket sales going to the city.
Former City Councilwoman JoAnn Watson said, in December, the new deal had a no-compete clause that bars any other hockey team from using Joe Louis.
It has not yet been announced exactly where the new 650,000 square foot arena will sit. But it will take up eight blocks of the entertainment district, which is projected to encompass 45 blocks and will include a residential as well as retail section. The majority of downtown retail space remains empty. Several national studies have shown big stadium development projects do not result in tangible economic growth.
Olympia will own the arena’s naming rights and will keep all revenues from arena operations, including parking fees and concessions sales. The city will not collect property taxes on the arena.