Pistons move is Robin Hood in reverse
Detroit seems to be ready to facilitate the Pistons return to Detroit at all costs.
But can Mayor Mike Duggan justify an investment of additional public tax dollars in a struggling economy and the reality that Detroit is broke—financially, socially and economically?
The homecoming is expected to cost an additional $34.5 million in public funding that will come from refinancing and extending $250 million in public bonds previously issued to help pay for the Little Caesars Arena construction. The bonds won’t require tapping the general fund. Rather they will be retired using property tax collections captured for “economic development” by the Downtown Development Authority (DDA).
However, the city can’t afford further cash diversions from the real problems that retard real growth.
Shootings, homicides, carjacking, arson, population loss, just to name a few problems, keep Detroit perched at the top of national statistics. Police ranks could use a $35 million shot in the arm.
Detroit is also a perennial national leader in high unemployment and low labor participation rates. It is the poorest major city in America, with about 40 percent of residents living at or below poverty line. With a median income is slightly above $25,000 a year, few Detroiters earn enough to purchase even the cheap Pistons’ game seats.
After going bankrupt in 2013, the city subsists on a disproportionate reliance of $195 million in state revenue sharing. With blight and abandonment rising and property tax collections waning, city services will need the same kind of revenue stream afforded the basketball team.
Another state bailout of $617 million was needed this year to retire the Detroit school district debt. Would the stadium subsidy be better spent on the future of children?
Prudence and practicality are called for as another test of whether public subsidies to professional sports stadiums equals good policy. What we know is that other subsidies to private enterprise deals haven’t fared well.
The publicly owned Pontiac Silverdome, for example, had amassed a $55 million construction debt when completed in 1975. Pontiac taxpayers ended up dishing out $25 million a year, not to mention the annual $800,000 state subsidy given the Silverdome, which lost money in all but two years. Taxpayers there were left high and dry when the Detroit Lions transitioned back to Detroit.
The Pistons may defy the odds and become the critical link in a total, self-perpetuating environment where businesses locate and people work, shop, entertain and live. But if history is any guide, it won’t be the key to that metamorphosis that ushers in a new sense of development, pride and consciousness other than for downtown Detroit.
No less was promised with a huge city handout to Mike Ilitch’s historic Fox Theatre in the 1980s—as well as for the Joe Louis Arena, Comerica Park and Ford Field. Neighborhoods continued to rot. Skepticism grew.
The last thing Detroit needs is another big, expensive, low-community-benefit project that primarily serves to subsidize rich team owners at the expense of other private businesses and the working poor.
Bill Johnson is a freelance journalist and runs the Bill Johnson Group, a consulting firm.