Extension sought for Joe Louis Arena development plans
Detroit — A one-year delay is being sought for redevelopment plans involving the Joe Louis Arena site near the city's riverfront.
Detroit's City Council is expected to consider a resolution that would extend the deadline for the project plan from Jan. 15, 2020, to January 2021. The measure is set to be discussed in a city council subcommittee this week and could be before the full body for a vote by next week, officials said.
Under an agreement struck during Detroit's bankruptcy, the arena and its adjacent parking garage were given to New York-based bond insurer Financial Guaranty Insurance Co. The bond insurer was a major creditor that lost $1.1 billion in the city's debt-cutting plan.
As part of the deal, Detroit is required to facilitate the arena's razing, a process that's currently underway. But it's well behind an original time table forged under former emergency manager Kevyn Orr, said Chuck Raimi, Detroit's deputy corporation counsel.
That agreement had originally anticipated that demolition would occur within 90 days of when the Red Wings' lease expired in fall 2017.
The site, he said, was supposed to be cleared and ready for redevelopment within one year.
"However, over the last couple years, it has become apparent that the development agreement as negotiated by the emergency manager provided a completely unrealistic timeline for demolition of the arena," said Raimi, who noted the arena wasn't even vacated until early 2018.
"The city first had to secure the funding, which included state approvals that didn't take place until last year," said Raimi, adding the Detroit Building Authority had to conduct asbestos surveys and abatement prior to the razing. "Because of the change in the demolition timeline, we feel that this extension is appropriate and necessary."
Gotham Motown Recovery, LLC, a subsidiary of FGIC, is handling redevelopment of the arena site for the bond insurer. Officials with the firm could not be immediately reached for comment on Wednesday, nor could a representative for FGIC.
FGIC seeks to recoup its money by developing the site after the arena is demolished.
Gotham filed a lawsuit in U.S. Bankruptcy Court last year, arguing that up to two more years were needed to come up with a development plan. The city had refused, initially giving the bond insurer until August 2018.
Later, a mediation settlement gave FGIC an extension to Jan. 15, 2020.
Detroit-based Adamo Group was contracted for the demolition work, which began in the spring and is expected to cost about $10 million. Remediation of hazardous materials began last fall and was completed in mid-February.
The site is expected to be cleared by the end of the year or early 2020, according to the Detroit Building Authority.
In December, the Michigan Economic Development Corp.’s Michigan Strategic Fund board approved a loan for demolition. The board also approved the Detroit Brownfield Redevelopment Authority’s request for a plan to capture local and school taxes to repay the loan.
The city-owned arena opened in 1979 and closed down in summer 2017. The Red Wings moved to newly constructed Little Caesars Arena on Woodward that fall.