The Detroit City Council voted 7-2 Tuesday in favor of $34.5 million in bonds to modify the new Little Caesars Arena to accommodate the Detroit Pistons’ move back downtown after a 40-year suburban hiatus.
Detroit’s Downtown Development Authority needed City Council’s approving of increasing a $250 million tax-increment financing deal the city forged with the owners of the Detroit Red Wings in 2013 to help finance construction of the new arena along Woodward Avenue.
Council President Brenda Jones and Raquel Castaneda-Lopez voted against the bond financing. They also voted two weeks ago against tax breaks for the Pistons to build a new team headquarters and practice facility in Detroit’s New Center neighborhood.
Castaneda-Lopez cited concerns about how the bonds would be used to make modifications to accommodate the Pistons playing at Little Caesars Arena this fall. She cited one such modification: $220,000 for “beer cooler relocation.”
Jones said she supports the Pistons moving back to Detroit, but has concerns that the team’s presence in the city won’t ensure more jobs for Detroiters.
“To me there is not enough guaranteed in writing to what the Pistons will do for Detroiters past building the facility and relocating to Detroit,” Jones said.
Mayor Mike Duggan hailed the council’s action at a Tuesday afternoon meeting of Downtown Detroit Partnership stakeholders at the Gem Theatre.
“Detroit will be the only city in America with all four professional sports in the downtown area,” Duggan said. “It’s a pretty remarkable day.”
The council’s action came less than 24 hours after a federal judge rejected a request from community activist Robert Davis and City Clerk candidate D. Etta Wilcoxon to legally block the flow of tax dollars that will finance the bonds.
U.S. District Court Judge Mark Goldsmith issued an order late Monday night denying Davis’ and Wilcoxon’s request for a temporary restraining order, citing concerns that stopping the tax-increment financing that will repay the $34.5 million in new bonds could cause the city to default on $250 million in DDA bonds previously issued for the arena project.
Wilcoxon contends the DDA should not be able to capture growth in tax revenue from education and parks taxes without a vote of the people.
At Tuesday’s City Council meeting, several residents and other outside observers spoke against taxpayer support for the Pistons joining the Detroit Red Wings at the new Little Caesars Arena.
“They can do this without your help,” said John Mozena, vice president of marketing and communications for the Mackinac Center for Public Policy.
City Council President Pro Tem George Cushingberry Jr. railed against critics of the project, arguing that there would be no new tax revenue for the DDA to capture without construction of the new arena and adjacent entertainment district.
“That is poppycock,” Cushingberry said. “If I was some place on Eight Mile Road, I’d use other language in the face of the people saying that.”
The DDA will capture 18-mill nonhomestead operating millage for Detroit Public Schools from downtown businesses to use to pay for the new bonds for Little Caesars Arena.
Under the Legislature’s financial rescue of DPS last year, that millage no longer goes toward annual funding for Detroit schoolchildren and is instead dedicated toward paying off old debts the school district accumulated under state emergency management.
“We’re not trying to take away any money from the Detroit Public Schools system,” said Councilwoman Mary Sheffield, who voted for the Pistons plan.
Despite voting for the deal, Sheffield expressed reservations.
“Was it the best deal? No, I don’t believe it was,” Sheffield said.
Cushingberry said tax incentives are necessary to lure developers who could otherwise build in open suburban spaces.
“We have to have these incentive programs if we want to continue to have building in the city,” he said.
Former Detroit Pistons “Bad Boy” Rick Mahorn appeared before City Council to lend his support for taxpayer support of the basketball team moving back to Detroit.
“It’s just the best move because the growth of Detroit is really starting to blossom right now, said Mahorn, who spent six of his 18-season NBA career playing for the Pistons at The Palace of Auburn Hills, including the team’s 1989 and 1990 championships.
Jim Jenkins, president and CEO of Jenkins Construction, Inc., a subcontractor at Little Caesars Arena, spoke in favor of the project.
“For them to have a practice facility here is even bigger,” he said. “It says a lot about who they are — they’re going to work here, practice here, make their living here.”
Eric Larson, president and CEO of the Downtown Detroit Partnership, said Tuesday that the addition of the Pistons will add another dimension to the new arena, beyond being a venue for hockey games and concerts.
“The decision was made, whether you like it or not, to put some public funds, significant public dollars into this facility,” Larson said in interview with Crain’s. “The reality is, we’ve doubled down on that investment. And that is very, very important.”