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Detroit —  A plan by a Midtown homeless shelter to move into a new, bigger space is in limbo because the owners of the Detroit Red Wings and Little Caesars pizza chain have waffled on a verbal agreement to pay $1.5 million to the shelter's operators, according to three sources familiar with the potential deal.

The nonprofit Neighborhood Service Organization and Olympia Development of Michigan, the real estate arm of the Ilitch family's host of businesses, have been in talks for about two years about the NSO's Tumaini Center on Third Avenue near Martin Luther King. Jr. Boulevard. The neighborhood is called both Midtown and Cass Corridor. 

For more than one year, the two sides had a verbal agreement that the Ilitch's Olympia Development would buy the Third Avenue building as part of a $1.5 million deal. The money would help the nonprofit pay for a new facility on the east side that NSO hopes to start building early next year, at an estimated cost of $20 million. 

Olympia Development backed out of the deal in early November, according to sources who requested anonymity because they are not authorized to speak publicly. The nonprofit began to seek other potential funders, the sources said.

Last week, Olympia officials renewed talks, NSO officials confirmed. 

Olympia Development declined to comment. 

"We are continuing discussions with the Ilitch organization about the purchase of the property, " Linda Little, NSO's president & CEO-elect, wrote in a Monday email. "Hopefully, our discussions will result in a definitive solution over the next couple of weeks."

The Tumaini Center is about six blocks northwest of Little Caesars Arena, the sports and entertainment complex that is home ice to the Ilitch-owned Detroit Red Wings. The arena is expected to be the spark for 50 blocks of new development, in a plan called The District Detroit. Entities linked to the Ilitches own a sizable portion of those 50 blocks.

Other development plans involving Olympia have been delayed or substantially revised.

In January. 2016, the Ilitches vowed a new hotel and about 150 residential units would be completed when the arena opened in September 2017. So far, no new housing has opened.

Earlier plans to build nearly 700 residential units in six buildings were changed this spring; with two of the buildings now slated for office and retail. 

For years, the Tumaini Center, on the 3400 block of Third Avenue, has been defined by the scores of people who congregated around the center and the surrounding empty lots. About three blocks away, new condominiums are being listed from anywhere to $429,000 to $699,000 — just part of the billions in development that has taken root.

The center serves more than 1,000 people each year and accepts them under almost any conditions, including those battling substance abuse or mental illness issues that would cause shelters to turn them away. The clients can stay as long as they like, though there are no beds, only chairs in the small center.

There are showers, a nurse on standby, emergency food, counseling services for housing and other needs. The center allows clients to access some storage and receive mail there.

It’s one of the reasons the block outside the NSO center is a gathering point for many — they have no place else to go.

Entities linked to Olympia Development began to buy some of the empty lots around the Tumaini Center three years ago. The total sale price for the lots adds up to $1.4 million, public records show. The city of Detroit also owns nearby lots on Third, Fourth and Peterboro.

The empty lots around the Tumaini Center have had fences around them for more than a year. 

The NSO plans to build a 67,000-square-foot shelter-housing and apartment development on Mack Avenue, just east of Gratiot Avenue, on the city's east side.  It  aims to open the new facility in 2019.

The services offered at the current Tumaini Center are just one part of the new facility and the uncertainty over the Olympia funding doesn't impact the residential parts of the new facility, sources said.

NSO helps older adults with mental illnesses and people with developmental disabilities, including children. With an annual operating budget of around $20 million, it employs more than 250 people,

In fiscal year 2016-17, NSO answered 88,000 housing crisis calls, served more than 4,200 older adults and helped more than 2,000 individuals with intellectual disabilities, according to its latest annual report.

The city-owned Little Caesars Arena, named after the global pizza chain founded by the Ilitches, was built with the help of $324 million in taxpayer money. The Ilitches paid the rest of the $863 million construction cost; their Olympia Entertainment arm manages the arena, which has become the top concert venue in the state.

 The Ilitch organization says it has invested $1.4 billion in office, retail and other developments in the district. That includes a Little Caesars headquarters being built and the new Wayne State University Mike Ilitch School of Business, which the family contributed $40 million to help build.

But the Ilitches face increasing neighborhood criticism that much of their property remains empty beyond 27 parking areas that serve the arena crowds. 

laguilar@detroitnews.com

Twitter: @LouisAguilar_DN

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