Local developer wants to buy Joe Louis Arena site
Detroit — Even as the vacant Joe Louis Arena is dismantled, the plan to figure out what happens next at the riverfront site has taken another unexpected turn.
The bond insurer that gained the property as compensation for losing $1.1 billion in Detroit's bankruptcy no longer wants the property. Bond insurer Financial Guaranty Insurance Co., or FGIC, is in talks with an unnamed local development group that wants to buy the arena site and an adjacent parking garage and find a new use for the site.
FGIC "would like to remove themselves from the city of Detroit and sell their interests," said Matthew Walters, the city's deputy group executive for jobs and the economy.
Under the current deal with the city, FGIC needs to find a development partner for the site. The potential new arrangement would mean FGIC exits the deal, said Walters, who briefed an economic committee of Detroit City Council on the plan for the site last week.
It's not yet a done deal and the development group was not named. FGIC has been in talks with the development group for several weeks, Walters said.
"I have a high level of confidence this deal will get done," Walters said. He described the development group as having a proven track record in Detroit "They have an ability to execute deals," he said.
The developer wants complete ownership of the property, which also means buying out the city interests, Walters said.
The arena site along with an adjacent parking garage was the final pawn in Detroit's plan to get out of Chapter 9 municipal bankruptcy in 2014. New York-based FGIC was a major creditor that lost $1.1 billion in the bankruptcy. The city agreed to give the arena site and parking garage to FGIC as part of the settlement deal. The city must tear down the arena as part of that deal.
But the relationship between FGIC and the city has been marked by legal battles and years-long delays. According to the bankruptcy agreement, the city was to have started demolition of the venue within 90 days of the late 2014 deal. The original deadline to come up with a development proposal was late 2017.
This week, city council approved delaying the deadline for the project plan from Jan. 15, 2020, to January 2021. The arena opened in 1979 and closed down in summer 2017. The Red Wings moved to newly constructed Little Caesars Arena on Woodward that fall.
Calls to the FGIC were not returned. City officials also had no further comment.