Not much is known about the new $450 million Detroit Red Wings arena near downtown, other than it will seat 18,000 fans and be situated in an area bounded by I-75, Cass, Woodward and Temple avenues. Nevertheless, state officials indicated they wanted shovels in the ground for the project earlier this month, Metro Times
has learned, but that ceremony fell through for unclear reasons.
An official deeply involved in the project's negotiations pegged June 2 as a likely groundbreaking date for the facility, according to emails obtained from the Michigan Economic Development Corp. (MEDC) by Metro Times
through a Freedom of Information Act request.
"Please put a hold on Mike's calendar for the morning of June 2 for a likely arena groundbreaking," Mark Morante, MEDC senior vice president of program management, wrote in an April 3 email labeled "CONFIDENTIAL" to Melissa Dansereau, administrative assistant of the MEDC's executive office -- likely in reference to Michael Shore, MEDC managing director of communications, who was copied on the message.
"G's office knows," Morante wrote, a likely reference to Gov. Rick Snyder.
It's unclear why the date fell through or if another has been scheduled as of yet. Ceremonial groundbreakings require numerous dates to be blocked out well in advance and are usually tentative, a spokesperson for the MEDC said today. Numerous officials with the state, the Detroit Downtown Development Authority and Olympia Development of Michigan, the real estate arm of Detroit Red Wings owner Ilitch Holdings Inc., today either declined comment or could not be reached. Morante confirmed the June date was for the new Red Wings arena, but declined further comment.
Emily Palsrok, MEDC managing director of public relations, said the Michigan Strategic Fund, an economic agency of the MEDC, has yet to give final approval of the $450 million in bonds it will issue to finance the project. The fund gave preliminary approval to the deal last summer
"This type of funding, and this type of project, is a two-step funding project for us at MEDC," Palsrock said. "We approved the first part ... last summer, but there's a second step that has to happen before we, MEDC, are handing all of the money over that we're giving to this project."
Said Palsrock of the June 2 date: "Groundbreaking schedules are usually pretty tentative." Asked if there was an issue in selling the bonds for the arena, Palsrock said: "That's not a problem." The next MSF board meeting is scheduled for July 22.
The funding for the estimated new Detroit Red Wings arena is constructed through a rather complex, slick deal. The arena will be paid through a mix of private funds (42 percent) and public funds (58 percent).
The arena itself is an estimated $450 million. Olympia has said it will lure private developers to construct an additional $200 million of ancillary mixed-use investment, which could entail anything, really, as Metro Times previously reported. If Olympia defaults on the commitment to "cause to invest" at least $200 million in private development within five years after the arena opens, the contract places no fault on the company. The arena will still be constructed regardless.
The Michigan Strategic Fund will issue up to $450 million in 30-year tax-exempt bonds to finance arena construction costs. Those bonds will be secured through annual payments by Olympia ($11.5 million), the DDA ($2.5 million), and state school taxes captured by the DDA (about $13 million).
According to city records, Olympia and the DDA say 51 percent of the arena's 5,500 construction jobs will be for Detroiters. Olympia estimates an additional 400 jobs will be created at the new arena, on top of the 700 currently working at Joe Louis Arena, the Red Wings current home.
Once the Red Wings move into the new arena, the Joe is expected to be demolished using $6 million in bonds issued by the Michigan Strategic Fund. The city of Detroit will have to reimburse the state using tax increment revenues generated by a future development on the Joe's site worth at least $24 million. It's unclear who would foot the demolition costs if a new development isn't lined up.
(You can read MT's cover story on how the arena deal came to fruition here.)