The Detroit City Council approved $34.5 million in subsidies for the billionaire-owned Pistons’ move downtown Tuesday, using captured taxes that include a millage intended to pay off $500 million in Detroit school debt.
The 7–2 vote comes the morning after U.S. District Judge Mark Goldsmith turned down a motion for an injunction in a lawsuit challenging the use of tax dollars for construction of Ilitch Holdings’ Little Caesars Arena.
An attorney for the city said in a Monday hearing that an injunction halting the tax capture would “kill” the project and trigger a municipal bond default on the initial $250 million in debt taken on for arena construction.
The arena is the new home of the Ilitches’ Red Wings and is at the center of a nearly $1 billion neighborhoodwide development, the District Detroit. The bonds OK’d Tuesday are for modifications to the hockey arena to accommodate the basketball team, after the Pistons announced their intention to move to the arena in November.
The move, which would result in professional basketball being played within city limits for the first time since 1977, still requires the blessing of the NBA, which is scheduled to meet July 11.
Retired Pistons players Rick Mahorn and Earl Cureton were among those who spoke in favor of the team’s move downtown — and subsidies to support it — at Tuesday’s council meeting.
A University of Michigan economic impact study commissioned by Gores estimates the Pistons’ Detroit move will have a $600 million economic impact, according to the Detroit Free Press.
“We are not trying to take away any money from the Detroit public school system,” said Councilwoman Mary Sheffield, who voted yes.
“Was it the best deal? No, I don’t believe that it was,” Sheffield said.
The taxpayer-supported modifications to Little Caesars Arena, which is slated for a September opening, include $222,118 to relocate a beer cooler, said Councilwoman Raquel Castañeda-López, who was one of two council members to vote no on the deal.
John Mozena, the vice president of marketing and communications at the conservative Mackinac Center think tank, urged the council to nix the subsidy.
"This proposed subsidy for the Pistons is not good public policy," Mozena said, adding that research has shown that arenas don't create new economic activity.
Another citizen criticized the current plan, saying it's "irresponsible to be putting money from the school district that's already financially troubled to support a billionaire stadium owner."
The Pistons’ owner, investor and Platinum Equity CEO Tom Gores, is worth an estimated $3.3 billion, according to Forbes.
Council President Brenda Jones, who voted no on the $34.5 million in bonds, said she nevertheless supports the Pistons’ move back to Detroit from The Palace of Auburn Hills, 30 miles north in suburban Oakland County.
“I am hoping the Pistons live up to the agreements they have made,” Jones said. “I still see nothing in writing that jobs will be guaranteed to Detroiters once everything is said and done.”
Subsidy Includes Detroit School Millage Funds
The former Detroit Public Schools and its $500 million in debt were separated from the city’s students in a deal signed by Michigan Gov. Rick Snyder one year ago.
The legislation created a new district, Detroit Community Schools, that operates debt-free and with state funding, and directed the 18-mill operating millage for the Detroit Public Schools passed in 2012 to pay down the old district’s debt.
A portion of those funds will be directed to pay the bonds approved by council Tuesday through the use of a Tax Increment Financing Authority district where Little Caesars Arena is located.
Council President Pro-Tem George Cushingberry, who voted in favor of the bonds, called criticisms of the council’s vote “balderdash” and “poppycock,” and said there “ain’t nothing been built in the city in the last 20 years without them,” referring to TIF districts.
________ Story image: Retired Detroit Pistons center and power forward Rick Mahorn speaks at Tuesday's Detroit City Council meeting. Photo by Dustin Blitchok.
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