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Schuette: DDA funds can be used on new Red Wings arena

Tom Greenwood
The Detroit News

Michigan Attorney General Bill Schuette has issued an opinion that Detroit Downtown Development Authority funds can be used to develop a planned $450 million hockey arena in the city.

Schuette issued his opinion on the constitutionality of using the DDA funds early Thursday morning.

“This opinion builds upon existing state Supreme Court precedent, as well as previous AG opinions from as far back as Frank Kelley,” Schuette said in a press release. “The DDA Act was enacted to provide a tool to aid municipalities ... thereby benefiting the economic growth of a designed development area.”

The new home for the Red Wings is the center of a planned $650 million, 45-block transformation of a mostly gritty, undeveloped area on the northern edge of downtown.

The arena district will contain residential units, approved retail businesses and hotels.

The arena district is bounded by Woodward on the east, Henry on the south, Clifford on the west and Sproat to the north. Renderings show a glass-roofed concourse and a roof emblazoned with the Detroit Red Wings logo.

The bowl-like arena is expected to be finished in summer 2017 with the Red Wing front office promising that it will be the “tightest, most intimate bowl in the NHL.”

Key features of the arena district include:

■Event Center/Arena footprint: About 785,000 square feet; 12.37 acres with the bottom elevation of the bowl about 40 feet below grade. The bowl rises about 75 feet above grade, the height of an eight-story building.

■Seating for Event Center/Arena: About 20,000.

■Piazza: Central gathering space for pre-event concerts as well as smaller events. It will remain open to the public when there is not an event.

■Via: The glass enclosure linking the adjacent buildings to the event center/arena as part of the “deconstructed” design.

■Parking: One parking structure with about 1,200 parking spaces is being proposed.

■Transit: An M-1 rail streetcar station is planned at the northeast entrance.

■Residential: About 184 residential units with 16 townhouses and 168 apartments, ranging in size from 690 square feet to 1,365 square feet.

Businesses that would not be allowed within the arena area include: pawnshops, warehouses, bail bond services, topless clubs, rehab clinics, and psychic or tarot card reading businesses.

The 45-block entertainment district will be as large as Washington’s Georgetown neighborhood, New York City’s Greenwich Village or Boston’s Back Bay, Olympia officials said.

Critics decry the mix of public/private funding and its sheer scope.

In 2012, 30-year bonds were approved by the state Legislature to cover construction of the arena.

In June 2013, Olympia Development and Detroit’s Downtown Development Authority agreed to a 58/42 split to pay off the construction debt.

Property and school taxes already captured by the DDA will pay $262 million. Olympia will pay $188 million. DDA funds to be used for the arena can be used only for economic development within its district. The state reimburses schools for diverted money.

Olympia keeps all revenue, including concessions and parking, and any naming rights deal. In an earlier interview with The Detroit News, Christopher Ilitch, president and CEO of Ilitch Holdings Inc, defended the way the arena was paid.

“A public-private partnership is the only way any of these type of projects work in an urban environment,” he said.

He pointed out that while The Palace of Auburn Hills was paid for by private owners, the key difference is it’s an isolated venue in the suburbs.

“The Palace gets all the revenues from parking, concessions, retail,” Ilitch said, pointing out that those sources of revenue are key to the financial success of a major venue.

Olympia must spend, or get others to invest, at least $200 million in development in the 45-block entertainment district. That spending must begin no later than five years after the arena’s 2017 opening, but Olympia has promised to spend $100 million while the arena is being built.

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