Major defendants dropped from suit over arena funding

The Detroit News

A federal judge ruled Monday that parts of a lawsuit challenging $34.5 million in taxpayer-backed bonds to help fund the Detroit Pistons’ move to the city can go forward, but some major defendants are dropped from the case.

Community activist Robert Davis and Detroit City Clerk candidate D. Etta Wilcoxon had filed the complaint in a bid to block taxpayer aid for the new Detroit basketball and hockey arena. It seeks to have the Detroit Public Schools Community District board place the matter on the November ballot and allow voters to decide whether the bonds should be used to make changes to the Little Caesars Arena to accommodate the Detroit Pistons.

The pair contend the tax revenues are intended for public school students and Wayne County parks.

They allege the tax revenue generated by the levy of the 18-mill Detroit Public Schools’ operating millage cannot be used for a different purpose without the consent of a majority of Detroiters voting on the question at a regular or special school election, in accordance with the state’s Revised School Code.

In his opinion Monday, U.S. District Judge Mark Goldsmith said the plaintiffs “lack standing” to challenge the tax increment finance plan since “they allege no injury apart from that suffered by all school electors in Detroit.”

Addressing assertions the public only became aware of the tax capture from the millage in recent months, the judge wrote that it “is a modification to a tax increment financing plan that has been in place, and well-publicized, for years.”

He went on to write that “it has been public knowledge for years that millages — ostensibly collected for school use — have been captured, in part, for this very project. Permitting Plaintiffs to proceed on the merits of an argument that, in principle, could invalidate all tax increment financing for this project that was backed by school millage funds — when that argument could have been raised earlier — is not permissible…”

Goldsmith dismissed from the case Olympia Entertainment, Palace Sports & Entertainment, the NBA, the Detroit Downtown Development Authority and the Detroit Brownfield Redevelopment Authority.

The ruling is “a clear and convincing victory for the Downtown Development Authority, the Brownfield Redevelopment Authority, and economic development in Detroit,” Glen W. Long Jr., CFO and interim president/CEO at Detroit Economic Growth Corp., said in a statement Monday. “We are thrilled that this completely unnecessary distraction is behind us, and we can complete the process of returning the Pistons home to the Motor City.”

Olympia and Palace representatives did not immediately respond to requests for comment Monday night.

Davis said he expected an appeal to be filed within the next week.

He also said the plaintiffs intend to ask the court for a declaratory judgment with respect to the City Council’s June approval of $34.5 million in taxpayer-funded bonds to modify the arena to allow the Pistons to play there this fall. The measure passed by a 7-2 vote.

He pointed out that the judge in his opinion did not rule on whether the matter should go before taxpayers for a vote.

“I think the judge knows our legal position was right. … I doubt it very seriously that the citizens, if given the opportunity, are going to approve it,” he said.

Goldsmith ruled Monday that other parts of the lawsuit can still proceed.

Some of the claims in the filing involved a June 23 school board meeting on the bond issue during which Davis spoke.

He alleged his 14th Amendment right to equal protection was violated because board members would not allow him to address them for more than two minutes to rebut information the activist believes is false.

Goldsmith wrote that Davis “sufficiently alleged ill-will” by the board.

Siding with Davis, the judge also ruled that he can seek damages and attorney fees.

Davis on Monday praised Goldsmith’s decision. “It’s quite clear that he believes there were some constitutional violations by the DPS board,” he said. “I’m very grateful for that.”

Chrystal Wilson, a spokeswoman for the district, said officials cannot comment on pending litigation.

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