Contractors pay $553,000 in fines at Wings arena

Christine Ferretti, and Louis Aguilar

Detroit — Contractors building the new Red Wings arena have been fined a total of $675,000 for failing to hire enough Detroiters at the construction site, according to information released by the city Tuesday.

Work at the new Little Caesars Arena began in early 2015 and continues today. As part of the deal to allow $250 million in taxpayer-backed bonds to pay for construction of the venue, the arena’s developer, Olympia Development of Michigan, agreed to hire at least 51 percent of Detroiters to work at the site.

But monthly data shows some contractors on the project failed to meet that goal as early as April 2015. As of July 2016, a total of 41 percent of workers at the site have been Detroit residents. But that percentage is dropping, the data shows. The latest monthly report shows that during July, 33 percent of workers at the site are Detroiters.

The failure to meet the 51 percent workforce goal has resulted in contractors being fined, and that money has gone toward workforce training, according to the city officials and representatives of the Ilitch family, which owns Olympia Development. The contractors have paid a total of $553,000 of the fines, according to the data.

Fines levied by the city can pay for an accredited apprenticeship training program that’s selected and approved by the city and recognized by the building trades and construction industry. The money also can pay for the purchase of tools and equipment to train skilled trades workers.

Initially, there was an option to provide training money to existing operations, such as the Detroit Training Center, where contractors could buy supplies. But primarily, money from the fines has gone to the workplace training fund and earmarked for city job training programs, such as Grow Detroit’s Young Talent, said Portia Roberson, director of Detroit’s Office of Human Rights, the city department that monitors workforce agreements with developers.

Roberson said her department conducts the assessments monthly, pulling pay cards, time sheets and checking residency, if needed. Before she started in the human rights office, Roberson said there hadn’t been compliance or enforcement for about a decade.

“People knew about it but, for a variety of reasons, nobody ever enforced it,” she said, adding Mayor Mike Duggan tasked her with ramping up compliance in the department and making sure development agreements and the executive order were followed.

News of the lagging hiring targets comes as city voters prepare to take up dueling ballot proposals in November that seek to provide guarantees — including jobs — for other large-scale projects in Detroit.

One of the measures, Proposal A, was placed on the ballot by a grassroots organization. The other, approved by Detroit’s City Council, is Proposal B. Both measures going before voters on Nov. 8 seek guarantees and other protections for communities where major development is planned. But the ordinances differ on enforcement, levels of investment and city involvement.

In its ongoing work on the Little Caesars Arena and the surrounding retail and office space, Olympia has awarded more than $300 million in contracts — nearly 60 percent — to Detroit-based businesses, the firm said. Nearly $500 million, or more than 90 percent, of contracts have been awarded to Michigan-based companies.

The $627.5 million, 20,000-plus-seat Little Caesars Arena opens next year. It’s expected to be the economic spark that will transform its 50-block surrounding area. Several businesses linked to Olympia Development control a sizable share of the planned 50 blocks to be redeveloped. That overall plan is called District Detroit.

Earlier this month, Christopher Ilitch, president and CEO of Ilitch Holdings Inc., said, “We’ve got about 52 projects right now on the board” for the area around the arena. Ilitch also upped the ante of how much the Ilitches may invest in the area.

“We are on track to be at about $2 billion,” in Detroit investment, Ilitch said. “We’ve announced about $1.2 billion and got about another billion yet to be announced.”

Roberson said Olympia brought the city in from the beginning and has held job fairs and sessions with contractors and subcontractors.

“We set a really big goal — 51 percent,” she said, adding contractors are “doing as much as they can do to meet that number.”

Detroit News Staff Writer Christine MacDonald contributed.