Ilitches can maximize parking money thanks to favorable city ruling on LCA lot designs

The Ilitch organization can make as much as $1 million more annually from its Little Caesars Arena parking operations thanks to favorable rulings from Detroit’s buildings department.

The Detroit Buildings, Safety Engineering and Environmental Department approved permits dating to 2016 allowing the Ilitch family’s parking companies to build or renovate 18 parking lots throughout the Cass Corridor without including any landscaping inside the lots, which is required under the city’s zoning code.

Click on the sites for parking details and photos:

By approving the parking lots without interior landscaping, the city allowed the Ilitch organization to maximize the number of spaces in their parking lots in a way other downtown parking lot owners could not, a Free Press investigation has found. The newspaper examined property records, site plans and building permits of the Ilitch family’s parking operations as part of its review.

Had the city enforced the zoning code as it is written, the parking lots would have been required to include more than 50,000 square feet of landscaping inside the 18 surface lots.

By avoiding the landscaping requirement, the surface lots contain an additional 269 parking spaces combined, which can generate an estimated $1 million annually in parking revenues from fans and concert-goers attending events at Little Caesars Arena.

City officials say the Ilitches were not given special treatment on their parking lots because the landscaping ordinance is open to interpretation. But they could not provide any specific examples of other parking lots built to the more relaxed standards the Ilitches received. The city’s top building code official admitted it’s not an industry best practice for inspectors to apply different standards during the permit approval process for parking lots.

Jerry Belanger, who owned the Park Bar near the arena district before he recently sold it, said he doesn’t begrudge the Ilitches for getting their permits approved without landscaping.

“The one thing I will say is that there never have been the same rules in this town for the wealthy than the others — ever,” Belanger said. “If you are in the billionaire class, you are asked to comply with a completely different set of rules.”

When Ilitch organization representatives sought city approvals for the arena’s construction a few years ago, details about a parking plan for the arena were scarce. Since then, massive surface parking lots and multistory parking garages built on property the Ilitches acquired quietly over the years have become a dominant feature of the arena district, which has been marketed as a shining example of Detroit’s comeback, a 50-block area anchored by Little Caesars Arena that will bring new neighborhoods, hotels and offices.

The Ilitches’ development company, Olympia Development of Michigan, has a 35-year contract granting it the exclusive right to operate the $863-million Little Caesars Arena, which was built with $324 million in taxpayer money and is owned by the Detroit Downtown Development Authority, a public organization. The Ilitch family also owns the Red Wings, the Tigers, Little Caesars Pizza and MotorCity Casino Hotel.

Olympia’s parking operations represent one source of revenue for the Ilitch organization related to the arena. Olympia also is entitled to all revenues from activities inside the arena, including concessions, souvenir sales, ticket sales and suite sales.

ODM Parking, which is under the Ilitch family’s umbrellas of companies, took out a $135-million loan last year to build and renovate 27 surface lots and six parking garages throughout the arena district and near Comerica Park.

The completed arena surface lots have a combined 2,686 spaces, according to city records, a figure boosted by the city’s relaxed zoning requirements. ODM Parking typically charges between $10 and $35 per parking space on the 200 or so nights a year when there is a game or other event at Little Caesars Arena. Assuming a $20 parking fee, those parking spaces can generate more than $10 million a year with relatively small overhead costs for labor and maintenance.

The surface parking lots, which range in size from those that contain between 20 and 50 spaces to much larger ones with hundreds of spaces, are all designed similarly.

Generally, they are bordered by a fence and outside the fences are shrubs, trees and grass. Those landscaping features satisfy the city’s requirement for landscaping around the perimeter of a parking lot. But the city’s zoning code also requires landscaping inside lots, and there isn’t any inside Olympia's lots.

The code requires commercial lots with at least 25 spaces to contain landscaping areas “to break up the expanse of pavement.” The size of the landscaped area depends on a parking lot’s overall size. The bigger the parking lot, the more landscaping is required.

Municipalities commonly require landscaping inside parking lots for safety, environmental or aesthetic reasons.

David Bell, director of Detroit’s buildings department, said city inspectors who approved permits for Olympia's parking lots took the position that landscaping along the lots’ perimeter — which is required under a separate section of the zoning code for “right-of-way screening” — would also count toward the interior landscaping requirements. He could not provide any specific examples of other property owners whose interior landscaping requirements were satisfied with landscaping outside of the lots, along their perimeter.

“While the Olympia lots near the arena are not the first time perimeter landscaping has been allowed to serve as right-of-way screening and as required (interior) landscaping, it is likely the first time it has been done on a large scale,” Bell said in a statement. “It remains my position that this is consistent with the spirit of the code and is an option available to any developer.”

Another city official with expertise on Detroit’s zoning code disagreed with Bell’s interpretation.

Marcell Todd, director of the Detroit Planning Commission, said the interior landscaping ordinance includes an image that might be confusing because it shows landscaping both along the perimeter and inside the lot.

“When you look at the actual text of the ordinance, it is specifying that landscaping has to be internal to the lot itself,” Todd said.

Todd, who played no role in the lots’ approval process, said several of the Ilitches’ lots appear to be “deficient” — a technical way of saying they are in violation of city code.

Detroit’s interior landscaping requirement might seem minor, but it can be a hassle for business owners planning to build a new parking lot — particularly in downtown and Midtown, where available land is less abundant. Following the code and building a landscaped island inside a parking lot can increase construction costs and decrease available parking inside a parking lot.

To get around the requirement, some developers file an appeal with the city’s Board of Zoning Appeals, a process that brings additional costs and delays.

Last year, Detroit’s building department told the Soave Real Estate Group it would need the Board of Zoning Appeals’ approval to proceed with plans for a Corktown residential development known as Elton Park because the plans did not comply with a handful of ordinances, including the interior landscaping requirement. Soave Real Estate paid a $1,200 BZA hearing fee and the board granted an exemption to the interior landscaping requirement because the proposed parking lot was temporary.

Other property owners simply comply with the ordinance and build lots with interior islands for landscaping.

When a General Motors subsidiary asked the city in 2015 to renovate two commercial parking lots near the riverfront, the buildings department required a minimum of three landscaped islands inside the lots.

Brandon Kritzman, an architect on the project, said the property owners would rather not have included the interior landscaping.

“Obviously, we wouldn’t have put them in if they weren’t important to the city,” he said. “It was driven by a requirement for the city.”

The city could not explain why the GM subsidiary, Riverfront Holdings, was required to build the interior landscaping islands. “At this time, we’ve not been able to locate documents to clarify this,” a buildings department spokeswoman wrote in an e-mail.

Michael Darga, a senior project manager at Giffels Webster, a Detroit firm that specializes in urban development, said he understands the city’s zoning code to require landscaping both inside parking lots and along the perimeter.

Darga recently designed a parking lot on the midtown campus of the nonprofit Children’s Center. The parking lot includes an island in the middle with landscaping.

Darga said there is always a degree of interpretation when it comes to city rules. But he said he was not familiar with an interpretation of the city’s zoning code that allowed inspectors to count perimeter landscaping toward the interior landscaping requirement.

“My understanding is the perimeter does not count as the interior,” Darga said.

Consultants working on Olympia's parking lots had a different experience. Brian Ellison, principal of Intersection Consulting Group, handled nearly all of the Ilitches’ parking lot permit applications, according to city records. Ellison was described in a published report as “the fixer” because businesses hired him to navigate the city’s permitting process. Ellison did not respond to messages seeking comment.

Site plan drawings for the Olympia parking lots did not include interior landscaping plans, yet the buildings department approved the permits anyway.

Furthermore, the city’s buildings department could not demonstrate how the Ilitches’ parking lots met landscaping standards under the more relaxed rules that counted perimeter landscaping toward requirements for interior landscaping.

Take, for example, a new 42-space parking lot the Ilitches’ built just north of the arena, near Second Avenue and Charlotte.

According to the city’s zoning code, 18 square feet of interior landscaping is required for each space in commercial lots with between 25 and 100 spaces. So, a 42-space lot would require 756 square feet of interior landscaping.

The site plans for the lot included a “landscape area calculation” note, which simply listed two numbers: 756 square feet of landscaping that was required for the lot, and 5,124 square feet of landscaping shown in the plans. The note did not specify whether the landscaping provided was interior landscaping or otherwise, but the plans showed rows of shrubs and trees planted along two of the lots’ four boundaries.

Looking at the site plans, it is difficult to tell how city inspectors verified the L-shaped grass strip actually equals 5,000 square feet. Bell, who reviewed the plans alongside a Free Press reporter, said he would get more information about the calculations. Three days later, a department spokeswoman provided a statement without any specifics about the calculations.

“The calculations for landscaping are based on the information submitted by the architects and engineers that create the plans. We do the math using the measurements provided, inspect the property, and after we’ve verified that requirements are met, we issue an approval. We don’t create and list official calculations when reviewing, which is the case for any project submitted to the department,” buildings department spokeswoman Tiffany Crawford wrote in an e-mail.

The design of the 42-space lot is consistent with other Olympia lots, with landscaping outside a fence installed along the lots’ perimeter.

Representatives of Ilitch Holdings would not make anyone available for an interview. In response to an e-mail describing this article, a spokesman provided the following statement:

“We have worked cooperatively with the proper city agencies to produce a variety of secure, well-lit, highly-landscaped parking options for visitors, residents, fans and shoppers. As a result of that cooperative effort, we have submitted for and received proper approvals and permits for all of our lots, which in many cases exceeded existing city requirements for landscaping quantity and quality.”

Urban development — especially the addition of new parking lots and garages — has significant environmental consequences, experts say.

“Impervious surfaces, such as parking lots and rooftops, cause more storm water runoff and pollutant loads than any other type of land use,” Betty Rushton, a storm water expert wrote in a 1999 research paper.

The replacement of natural landscapes with impervious surfaces disrupts the natural absorption of rainfall and increases the velocity of storm water runoff. Faster runoff picks up pollutants and stresses the city’s aging infrastructure. Heavy rains can cause sewer overflows, sending untreated sewage into the Detroit River and other local waterways, said University of Michigan professor Joan Nassauer.

Billions of gallons of storm water from impervious surfaces flow into Detroit’s combined sewer system each year. Transporting and treating the drainage costs more than $100 million a year, according to the water department, which passes that cost on to property owners through a drainage fee.

There was an opportunity to reduce runoff into the sewer system — even if incrementally — when Olympia built and renovated parking facilities for Little Caesars Arena. The Ilitches’ surface lots take up more than 20 acres combined.

“It’s really important as downtown Detroit and other parts of Detroit develop, to be attentive to how new development does manage storm water,” Nassauer said.

Options abound. Storm water can be directed and held in an underground bioretention system. Parking lots can incorporate permeable pavements. Interior landscaping inside parking lots also can reduce storm water runoff by cutting down on the amount of impervious surface.

City officials raised the issue with Olympia. According to a September 2014 e-mail recapping a meeting between the city and Olympia during the arena’s design stage, the city’s planning department asked: “Will the development team consider ways to mitigate the storm water runoffs by using innovative landscape elements and green infrastructure and low impact design strategies such (as) bioretention areas, filtration strips and pervious pavement? Please identify what items anticipated?”

Olympia’s answer was not promising.

Richard Heapes, a lead design consultant for Olympia, admitted during a November 2014 public meeting that runoff from the arena site would be headed to the city’s storm sewer system.

“We are looking at places where we can have pervious materials, the use of green planting beds, etc. But I would be disingenuous if I told you it wasn’t an urban site that’s largely impervious and will be headed toward the storm sewer,” Heapes said.

The noncommittal attitude toward storm water management practices at the arena site extended to the Ilitches’ surrounding surface lots. They were built without any storm water management features, a spokesman for the Detroit Water and Sewerage Department said.

“There is no city ordinance which requires property owners to implement storm water management practices,” DWSD spokesman Bryan Peckinpaugh said in a statement. “We are considering such options, however it’s premature to share details until we have a draft submitted to city council.”

Outside of Detroit, nearby suburbs also have interior landscaping requirements. But unlike Detroit, they actually require interior landscaping to be inside the lot.

Royal Oak requires one landscaped island for every 16 continuous spaces in a parking lot. Royal Oak insists on the islands for two reasons — to provide some visual relief from a monochromatic, paved parking lot, and to guide the flow of pedestrian and vehicular traffic.

Rochester has similar rules. Landscaped islands are required to divide no less than 20 parking spaces in a row. Vidya Krishnan, the city’s planning consultant, said the islands promote safety by preventing drivers from driving diagonally through the lots. They also have aesthetic value and give plows a place to pile snow.

“The visual impact is significantly different,” Krishnan said.

Just as landscaped islands can perk up a plain slab of asphalt, the absence of parking lot interior landscaping can be just as striking.

The visual effect is multiplied around Little Caesars Arena. Many of the Olympia's new and renovated parking lots and garages are near each other, creating pockets of the arena district dominated by black asphalt.

The glut of parking lots is raising questions about the Ilitches’ long-term development plans for the arena district.

“I don’t think that when they planned this, the people who approved this envisioned these surface parking lots,” said Nicholas Miller.

Miller, a Midtown resident who follows economic development near his home, said the area south of I-75 was especially crowded with parking lots.

“It just seems like it’s going to be a parking ghetto for the foreseeable future,” he said.

Developing the space into surface parking lots is lucrative, Miller reasoned, but the strategy shortchanges the city, which could collect more tax revenue if the land was developed into retail or housing space.

Fred Russell, a city planning commissioner, said he hopes the high number of parking lots is a temporary condition.

“I don’t think that surface parking lots encourage walkable, sustainable communities,” he said. “Especially with the demand in Midtown and downtown. Yeah, we need parking. But it doesn’t need to be a surface lot.”

The Ilitches have been tight-lipped about future developments surrounding the arena.

The only details about new additions to the arena district coming in 2018 are a new sculpture outside the arena and two well-known projects that are nearing completion — a new Little Caesars headquarters and the Mike Ilitch School of Business at Wayne State University.

Site plans for Olympia's parking lots show four more surface lots are on the way. One of the lots, on the southeast corner of Cass and Temple, already is under construction.

“These lots support current development in The District Detroit and set the stage for future additional development, all while delivering tax revenue to the city,” Olympia said in its statement to the Free Press.

Bell, director of the city’s buildings department, said all of Olympia’s lots are compliant with city code “until somebody tells me something different.” He said the law department recently reviewed the buildings department’s approval of the Ilitches’ lots and agreed it was acceptable.

Belanger, the former owner of the Park Bar, said the city should be more consistent with rules.

“I’m just saying, 'where is equal justice? That’s all,' ” Belanger said. “If they (the Ilitches) don’t have to do it, why doesn’t everybody not have to do it?”

Contact Joe Guillen: 3131-222-6678 or jguillen@freepress.com.