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Ilitches offer Detroit land in trade for deadline delay on arena-related development

Louis Aguilar
The Detroit News

A potential new deal between the city of Detroit and the Ilitch organization would give the family-run business empire three years or more to develop a vacant parcel next to Little Caesars Arena that the group originally vowed to fill by 2018.

In exchange for the new deadline, the group would give the city two empty lots in nearby neighborhoods. The agreement also sheds light on more unused Detroit land connected to the billionaire organization, which uses dozens of limited liability companies that often cloak its ownership. 

An empty lot at 242 Watson near John R.

The arrangement would give the Ilitch group until September 2022 to submit a development plan for the empty lot on Woodward Avenue next to the arena. That plan would then need full city government approval and secure financing, which could take more than a year. That means whatever gets built may not open until 2023 or later. 

The city has included potential penalties if the llitches fail to meet the new target dates, said John Roach, a spokesman for Mayor Mike Duggan. The city could potentially retake ownership of the property, which was sold to the organization as part of the arena deal, he said.

Further, the city will gain permanent control of the two lots slated for park space, he said. 

As chairman of the board of the Downtown Development Authority, Duggan "was aware of the terms of the extension that had been negotiated," Roach said in an email. 

The Woodward parcel was originally pitched as part of a block where a major hotel and a row of retail would open around 2018. 

This boarded-up, sagging home at 64 Edmund Place is the 47th  empty Detroit building linked to the Ilitch organization, according to public records.  The home is in the Brush Park neighborhood on the northern edge of downtown. Hundreds of millions of private development has poured into the neighborhood the past decade to restore historic homes and build new residences.

To secure more time, the Ilitch group would give the city two open lots in nearby neighborhoods — one in Brush Park, the other in the Cass Park area of Midtown. The Ilitch group would give the parcels to the city for free. The city would use the land to expand two small parks that are next to the Ilitch-owned properties. 

The agreement underscores how the Ilitch group remains both catalyst and roadblock to reviving blocks of empty land. Little Caesars Arena, the sports-entertainment-office-retail arena complex operated by the Ilitches, is intended to spark 50 blocks of real estate investment. It hasn't turned out that way so far.

Seven years ago, the Ilitch group promised city officials it would submit a plan for the Woodward parcel by December 2017, according to public records. 

The lot at Woodward Avenue and Henry Street remains empty. The Ilitches have made major infrastructure upgrades to the small parcel, which is used as a pedestrian area.  

The block of empty land on south side of Little Caesars Arena was originally promised to be a site for a major hotel and a row of retail. Now the billionaire Ilitch group who owns the property says it needs until Sept. 2022 to figure out what to do with land.

It's on a vacant block where all the parcels are owned by entities linked to the Ilitches. The block runs alongside the southeast entrance of the arena —  by Mike's Pizza Bar and the Google offices — and the Fisher Freeway service drive.

The Woodward block is where the Ilitch group had said a 350- to 400-room hotel and retail could be built, according to the original agreement. The group still aims for a major project on the location, said Keith Bradford, senior vice president of Olympia Development of Michigan. Olympia Development is the full-service real estate division of the Ilitch group that oversees its Detroit holdings.

"We've got a vision what needs to go there and we are currently in that development process. It's going to be stunning," Bradford said. He declined to say whether a major hotel is still being considered for the site, or what the potential development may include. "But that's the reason we are going for the extension," he said, referring to the new potential deadline. 

The deal for more time was approved last month by the board of the city's Downtown Development Authority, the public entity that directs tax money earmarked for downtown real estate projects. It now needs the City Council's and mayor's approval.

A January 2016 rendering of the Little Caesars Arena development plan touted by the Ilitch group shows that Woodward Ave. and Henry Street area filled with a row of retail and other new buildings.

The Woodward Avenue lot was included in a deal approved in 2014 that helped the Ilitches get $324 million in taxpayer money. The money went toward building the $863 million arena; the Ilitches paid for the other $593 million in construction costs. The Ilitch group also agreed to $200 million in other developments beyond the arena.

The group surpassed that $200 million mark in 2019. It was met with the construction of two parking decks, the Google offices in the arena complex and the Little Caesars Global Campus headquarters. 

As a result, the Ilitch organization will receive another $74 million in added taxpayer subsidies. Most of the $74 million won't be paid out for another 20 years, after the group pays off its construction bonds, according to the agreement. But other Ilitch promises to fill some of its empty buildings and lots have been delayed for years now.

The deal means more potential jobs for Detroiters when the Woodward Avenue site next to the arena is developed, Bradford said.  Further, the city gets more green space from the parks in nearby neighborhoods, he said.

 "There is tremendous potential to bring a dynamic and high-demand development to Brush Park and lower Midtown," Bradford said. 

The agreement provided insight into seven more Ilitch-linked properties that have not yet been made public, including the two parcels to be given to the city, based on an ongoing Detroit News analysis of the group's holdings.

It brings the total to 154 idle properties in Detroit tied to the group, according to the News analysis of property records.

From every one of those inactive pieces of land — downtown office towers, boarded-up homes and apartment buildings, shuttered storefronts and warehouses, block-long empty lots — it's possible to see one of the big-ticket developments owned or controlled by the Ilitch group: the Fox Theatre, Little Caesars Global Campus, MotorCity Casino Hotel, Comerica Park and Little Caesars Arena. 

The latter venues represent an estimated $1.5 billion of investment in Detroit by the Ilitches. The 154 inactive properties show that as the group focuses on its blockbuster developments, other properties remain in limbo.

Two generations of the Ilitch family have aspired to revive downtown and several neighborhoods next to the central business district. For decades, the group bought properties using legal entities, usually limited liability companies, that often hid links to the organization.

One of the properties newly linked to the Ilitches is a 7,100-square-foot home in Brush Park. The residence at 64 Edmund Place was built in 1912, city records show. The front of the structure sags on both the left and right. Part of the roof is gone. Red bricks are crumbling off the exterior.

The Brush Park home is the 48th empty building owned by an Ilitch-linked entity, according to the News analysis. The entity, Altco LLC, bought the property in October 2009 for $4,500. The land is currently valued at $550,800, property tax records show. The Ilitch group has no immediate development plan for the property, company officials said. 

This boarded-up, sagging home at 64 Edmund Place is the 47th empty Detroit building linked to the Ilitch organization, according to public records. The home is in the Brush Park neighborhood on the northern edge of downtown.

Next to the home is a sign for condominiums for sale on the same street. The starting list price is $399,000. Within one block, two condominiums sold for over $1 million in the past 14 months, according to property records.

Nearby are signs of the emerging City Modern, an estimated $100 million project that aims to develop 24 buildings — townhomes, carriage homes, apartments and rehabbed historic homes — across multiple blocks in Brush Park.

The six other newly identified properties linked to the Ilitch group are all vacant lots. Three are in North Corktown, two in Cass Park and one in Brush Park.

It brings the total to 106 vacant lots linked to the Ilitch group, according to the News analysis. 

Brush Park, a neighborhood east of Woodward Avenue and north of downtown, is an area where the Ilitch group doesn't appear to have declared any public development plans in recent years.

The Brush Park lot that may become a city park is at 242 Watson. It's 0.172 acres. The Ilitch-linked entity bought it for $3,000 in 2009. It is currently valued at $390,000, according to property tax records. 

The other property that may become a park is a 0.065-acre  lot at 3118 Fourth. The land is valued at $111,600, according to property tax records. Across the street from the lot is Cornerstone Estates, a mixed-income affordable housing rental development. The Fourth Street property was bought in 2016 by an entity, Wright Apartments LLC, for $312,000 in a multi-parcel sale. The same entity owns 18 vacant lots on the same block of Fourth and Third streets. There are no plans for other empty lots owned by the Ilitch-linked entity. 

laguilar@detroitnews.com

Twitter: @LouisAguilar_DN