Detroit slows work on a new Red Wings home with hiring, preservation demands that will be difficult to meet
Detroit is allowing the difference between a commitment and a hard guarantee to delay start of the most exciting redevelopment project it has seen in decades. The former reflects the reality of the city's workforce, while the latter is starting to look like a self-destructive posturing.
Olympia Development, owned by the Ilitch family is asking the city for routine rezoning for its new Red Wings arena, planned to anchor a complete makeover of the Cass Corridor that will include an additional half-billion dollars of investment in housing, retail and offices.
The Ilitches negotiated a deal with the city when it was under control of emergency manager Kevyn Orr last fall. But now Detroit is being run again by the mayor and the City Council, and Olympia is finding that a deal is not a deal.
The original agreement contained a commitment by the Ilitches to hire 51 percent of Detroiters to staff the $450 million arena once it's built, and use Detroit contractors for 30 percent of the work, if possible. Olympia refused to sign an iron-clad Community Benefits Agreement locking those numbers in stone out of fear it would be unable to hire and keep enough qualified Detroiters to meet the goal.
Now the council, with the apparent backing of Mayor Mike Duggan, is insisting on a CBA that includes a guarantee of the hiring mix.
Council members are ignoring some facts about Detroit's workforce. Just 12 percent of city residents have college degrees, according to the U.S. Census Bureau, and just 77 percent have high school diplomas.
In addition, contractors complain that meeting hiring mandates is a constant challenge because once city residents are trained and employed, many move to the suburbs and no longer count against the Detroit number.
The city is also demanding a hard guarantee of affordable housing in the arena district. Mandating a specific percentage of low-rent units will drive up the overall cost of apartments and townhouses. Detroit has an abundance of low-cost housing; what it needs is a lot more of the sort of high-end — and high tax revenue generating — units planned by Olympia.
As leverage, the city is slowing up the approval process by invoking historic preservation concerns, particularly for two ancient, rotting hotels — the Park and Eddystone.
Duggan's office is now demanding zoning variance approval for all of the project, not just for the historic structures. The added work to meet the new demands will delay the start of construction for many more months.
The history of the area targeted for redevelopment is a half-century of blight and abandonment. The Ilitches, who have envisioned this remake for more than a decade, want to give it a much brighter future. But investment in Detroit remains a high-risk endeavor. Developers facing a slim profit margin should not be burdened with unnecessary costs.
Detroit is acting as if the family has no other choice in relocating the Red Wings. City officials should take a look at history, and how hostility toward business and development contributed to Detroit's abandonment.
The Red Wings belong in Detroit, and the Ilitches want to keep the team here. But they're not likely to do so at any cost.