Lawsuit: Detroit authorities misuse revenue for arena

Jennifer Chambers
The Detroit News
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Detroit — A resident is suing two Detroit taxing authorities alleging they are illegally using tax revenues intended for the city’s public school students to finance construction of the Little Caesars Arena and a new headquarters for the Detroit Pistons.

D. Etta Wilcoxon alleges in a federal lawsuit filed Thursday in U.S. District Court that the Detroit Downtown Development Authority and the Detroit Brownfield Redevelopment Authority have violated her right to vote by attempting to use tax revenue from an 18-mill DPS levy “for a different purpose” without first obtaining voter approval from Wilcoxon and the other registered voters.

The grab violates Michigan’s General Property Tax Act, the lawsuit alleges.

Robert Davis, a Highland Park resident and civil activist, is also named as a plaintiff in the lawsuit, and alleges the two taxing authorities have violated his rights by attempting to use tax revenue generated from a Wayne County parks millage for the arena and headquarters.

Both Wilcoxon and Davis are asking a judge to block the DDA and DBRA from individually and collectively using or capturing any tax revenue without first obtaining approval from registered voters of Detroit and Wayne County.

Bob Rossbach of the Detroit Economic Growth Corp., a spokesman for both the DDA and DBRA, said Thursday neither agency had been served with the lawsuit.

“That said, DEGC, acting as professional staff to the DDA and DBRA generally does not comment on pending litigation. If, in fact a lawsuit has been filed, any response to it will be made directly in the court in which the lawsuit is filed,” he said

Detroit voters approved a 2012 millage renewal and restoration of the 18-mills.

In 2016, Wayne County voters approved the continuation of the Wayne County parks millage, dedicated to finance improvements to certain parks located within 43 communities in Wayne County.

Last week, city leaders voiced concerns about the impact tax captures would have on local entities, such as the Detroit Public Schools Community District, the Detroit Public Library and others. Leaders worried they would lose money as part of tax deals for the arena and Pistons facility.

In the case of DPS, the state reimburses the school district for any shortfalls that are the result of tax deals or other shortages. But other local entities which collect taxes, such as the Detroit Public Library, do not get reimbursed.

The Pistons aim to return to the city to play in the new Little Caesars Arena next season, which would be the first time the NBA team had its home court in Detroit in 35 years. It also plans to build a new $83 million corporate headquarters and practice facility in the New Center neighborhood.

On May 25, the council’s Planning and Economic Development committee held a public hearing on the Pistons’ headquarters and practice facility. It will be a space jointly operated by Henry Ford Health.

The committee voted to send the proposal to the full council, which will take the matter up at its Tuesday meeting. A separate issue about tax incentives that are part of the deal will be discussed June 22.

The New Center facility will proceed only if the Pistons get the approval needed to play at Little Caesars Arena, which will be the home ice of the Detroit Red Wings. The city, state and National Basketball Association all must sign off on the deal.

Kevin Grigg, Pistons vice president of public relations, said in an email last week the practice facility will be privately financed and “we continue to work through all the necessary approvals.”

Beyond the practice facility, several members of council raised concerns with how many public dollars have gone into the Little Caesars Arena project and what they would get in return.

So far, about 62 percent or nearly $539 million of the project is from private financing and the rest — $324 million overall — is government financed. The arena and other developments are estimated to cost a total of $862.9 million.

The Pistons could still get tax breaks to help build the new practice facility. A tax abatement reduces the amount of property tax the Pistons owners would pay.

If approved, a commercial tax abatement would lock in property taxes for 10 years, said City Councilman Scott Benson. Two personal property tax abatements could save Palace Sports & Entertainment and the Pistons a total of $476,000 based on a $5 million investment.

Another option is a tax capture, or tax increment financing, to help pay for a potential parking deck, according to city officials. Tax increment financing is the ability to use increased local tax property revenues from a new development.

Little Caesars Arena, where the Red Wings and Pistons will play their games next season, is scheduled to open in September.

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