Detroit City Council to get first look at Red Wings arena

Louis Aguilar
The Detroit News

Detroit — Architectural drawings of the $450 million new home ice for the Detroit Red Wings to be unveiled this week show plans for a huge state-of-the-art entertainment venue in a walkable neighborhood.

The new drawings will be revealed publicly at 5 p.m. Thursday to the Detroit City Council. Work is expected to begin on the new arena site Sept. 25. It is the linchpin of a planned $650 million, 45-block transformation of a mostly gritty, undeveloped area on the northern edge of downtown.

“This is the first of five distinct new neighborhoods announced by the Ilitch organization in July,” reads the information provided by Olympia Development of Michigan, ODM, to the city. Olympia Development is the real estate arm of Michael and Marian Ilitch. The husband and wife are co-founders of Detroit-based Little Caesars Pizza. Michael Ilitch is owner of the Detroit Red Wings and Detroit Tigers. Marian Ilitch owns MotorCity Casino Hotel.

The 785,000-square-foot arena will be bounded by Woodward on the east, Henry on the south, Clifford on the west and Sproat to the north. Renderings show a glass-roofed concourse and a roof emblazoned with the Detroit Red Wings logo. Other drawings depict pedestrian-filled streets with restaurants and apartments where there are now acres of surface parking lots and empty buildings — many owned by Olympia Development of Michigan.

The architectural drawings released this week show how Olympia Development intends to use its “deconstructed bowl” design to lessen the visual impact of a huge venue. The bottom elevation of the bowl is about 40 feet below street level and top height of the arena is 75 feet above street level, which is the height of an eight-story building, according to Olympia Development.

There will be four- and five-story mixed use buildings surrounding the arena as well townhouses, which are intended to further reduce the presence of the arena.

Plans for the new arena and 45-block entertainment district have sparked both widespread accolades and criticism. Its many supporters call it a visionary plan that will fill in the gap between a surging Midtown and a booming downtown. Others decry the mix of public/private funding and its sheer scope.

In 2012, 30-year bonds were approved by the state Legislature to cover construction of the arena. In June 2013, Olympia Development and Detroit’s Downtown Development Authority agreed to a 58/42 split to pay off the construction debt.

Property and school taxes already captured by the DDA will pay $262 million. Olympia will pay $188 million. The DDA funds to be used for the arena can be used only for economic development within its district. The state reimburses the schools for the diverted money.

Olympia keeps all revenue, including from concessions and parking, and any naming rights deal. In an earlier interview with The Detroit News, Christopher Ilitch, president and CEO of Ilitch Holdings Inc, defended the way the arena was paid.

“A public-private partnership is the only way any of these type of projects work in an urban environment,’” Ilitch said. He pointed out that while The Palace of Auburn Hills was paid for by private owners, the key difference is that it’s an isolated venue in the suburbs.

“The Palace gets all the revenues from parking, concessions, retail,” Ilitch said, pointing out that those sources of revenue are key to the financial success of a major venue.

Ilitch mentioned an urban venue — Nationwide Arena in Columbus, Ohio — that was funded solely by private money and ended up needing a taxpayer bailout. The arena was named for its original majority owner, Nationwide Mutual Insurance Co. In 2012, the county, city and state governments had to step in with loans.

The arena was never profitable when it was under private ownership. The original owners pushed the local governments to buy the arena because they were running low on cash, and the venue is still struggling financially

Olympia must spend, or get others to invest, at least $200 million in development in the entertainment district. That spending must begin no later than five years after the arena’s 2017 opening, but Olympia has promised to spend $100 million while the arena is being built.

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