State awards tax aid for Pistons move to Detroit

Michael Gerstein
The Detroit News

Lansing — Michigan could offer up to an additional $36 million in tax incentives to help the Pistons relocate from Auburn Hills to Little Caesars Arena in downtown Detroit after the Michigan Strategic Fund voted Tuesday to change a prior agreement.

The Strategic Fund, an arm of the public-private Michigan Economic Development Corporation, in 2014 granted $250 million in tax-exempt bonds for the construction of the new hockey arena for the Red Wings. The Detroit Downtown Development Authority used $284.5 million in school property taxes captured from within its 615-acre downtown district to support part of the bonds.

The addition of a professional basketball team at the arena calls for about $34.5 million to help finance the Pistons’ move from the Palace of Auburn Hills to Detroit, according to a briefing memo. The Strategic Fund board approved the Detroit development authority’s request to issue another $36 million in tax-exempt tax increment revenue bonds to fund the “construction improvements and related costs.”

The board also set a ceiling of $310 million for the issuance of bonds, saying the development authority will need to issue more revenue bonds prior to Jan. 1, 2019, to refinance the outstanding debt from the 2014 bonds.

The Ilitch family, which owns the Red Wings and Olympia Development, is providing private financing for the rest of the project, which eventually includes shops, restaurants and residential housing. The arena and other developments are estimated to cost a total of $862.9 million total project, the memo said.

About 62 percent or nearly $539 million of the project is from private financing and the rest — $324 million overall — is government financed, according to the memo.

The arena is still under construction and is set to open in the fall. Pistons’ owner Tom Gores also plans to move its corporate headquarters and practice facility from the Palace to a spot in Midtown.

The arena deal has been surrounded by controversy after a private citizen sued the DDA, alleging that it was not transparent enough about how it reached a deal with the Pistons.

The DDA in February offered to settle a lawsuit filed by Robert Davis, a Highland Park resident who has filed suits against Gov. Rick Snyder and government agencies over public transparency issues in the past. The authority agreed to hand over notes from a private meeting about the Pistons’ move that the board’s finance committee held, according to the settlement agreement.

Davis later alleged in March that the authority violated the Open Meetings Act and the settlement agreement reached in February. He has asked Wayne Circuit Judge John H. Gillis Jr. to enforce the settlement.

The settlement does not stop the project or any of the tax incentives approved for it.

The Detroit City Council still has to officially approve the amended project. The nine-member state board unanimously OK’d updating the amendment package to offer more tax incentives.