Detroit City Council OKs $34.5M public funding for Pistons move

Kat Stafford | Detroit Free Press

Show Caption Hide Caption Inside Little Caesars Arena as it nears completion Check out the Little Caesars Arena construction as of mid-June 2017 prior to its September opening.

The Detroit City Council has approved $34.5 million in public funding for the Little Caesars Arena and Detroit Pistons move, despite passionate pleas from some residents to reconsider or scrap the deal.

The approval comes more than six months after negotiations began between the city and the Pistons and hours after a late Monday night decision by a federal judge to deny an emergency injunction that sought to block the funding.

Council President Brenda Jones and Councilwoman Raquel Castañeda-López were the no votes.

Although some spoke in favor of the funding, several residents who spoke during the public comment portion of the meeting said they opposed the funding.

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Longtime Detroit educator Belinda Reid implored the council to "vote it down."

"I am here as an educator as a mother and as a resident and as a supporter of education," Reid said. "I am not happy what council and others have been doing with education. I am very pissed off. ... I think it's a shame that you have put (Detroit children) on the back burner for money. Each one of you council people are responsible. We hold you responsible ... We put you in your seat to take care of us and you are not doing that. I expect my kids and my friends kids to be educated and they are not. This system has been broken for many years."

Jones said while she supports the Pistons coming home to Detroit, she questions why the team has yet to put on paper just how many post-construction jobs and opportunities will be available for residents.

"I understand the basketball courts and the $100,000 that's going to workforce development, the skilled trade jobs that are there but again there is nothing in writing," Jones said. "I too am from a labor (background) but I too have sat on this council and have heard things that have been promised to Detroit and has not been put in writing. ... I'm hoping the Pistons live up to the agreements that they have made."

The council voted two weeks ago to approve key agreements — including a nearly $20-million brownfield tax incentive — and exemptions tied to the Pistons' practice facility downtown.

Council President Pro Tem George Cushingberry Jr. said misconceptions about the public funding element of the project need to be cleared up.

"I think we need to debunk certain myths," Cushingberry said. "There are some people from out of the city who don't live here who are just stirring up a whole lot of stuff that just ain't true."

But Castañeda-López, who has been vocal of her displeasure of the deal — specifically the community benefits tied to the project — said her office tried multiple times to get more out of the agreement.

"We did request multiple times for a commitment (from the Pistons) to sharing 1% of revenue," she said. "It's only a tenth of what the Pistons are worth. That may seem minimal but as I go out door knocking and talking to residents and seeing the conditions that they are living in ... that can translate into a significant amount for city services... I think ultimately it's unfair to residents to not advocate for more."

The Downtown Development Authority, the public entity that owns the arena, has amended its district boundaries several times, most recently in 2013, to accommodate the new arena, which will also be home to the Red Wings, and surrounding development that covers a nearly 45-block area from Grand Circus Park to Charlotte between Woodward and Grand River.

The DDA is expected to collect $726 million in school property tax revenue through 2051 as part of its tax increment financing. The money will be used to pay off $363 million in bonds for public investments in the arena and the surrounding development district.

Detroit Public Schools Community District spokeswoman Chrystal Wilson previously told the Free Press that the new school district does not levy taxes and receives full funding from the state. The capture would impact the former DPS district, which is already millions of dollars in debt.

Cushingberry, who represents the 2nd District in northwest Detroit, pushed back against people who have said money is being taken away from the school district and diverted to the project and said council has "nothing to do with taking" money from the schools.

"That is balderdash," he said. "That is poppycock. And if I was someplace on 8 Mile, I'd use other language in the face of the people who was saying that because that's not true. ... The project is what drives most of the specifics. The local government doesn't drive schools, it's the state government now and whatever's not caught in property taxes is caught in the other part of the School Aid Fund."

Councilwoman Mary Sheffield questioned the viability of a lawsuit, which was filed June 1 by activist Robert Davis and City Clerk candidate D. Etta Wilcoxon. The pair argued the project should not be funded with public money without Detroit residents voting on it first.

Sheffield said while she thinks the deal isn't perfect, the move will be extremely beneficial to Detroiters in the long run.

"We've passed tax captures and TIFs before," Sheffield said. "From my understanding, there has never been a vote that goes before the City of Detroit. ... We are not trying to take any money away from DPS."

Davis said after the vote he was "highly disappointed" in certain council members.

Judge Mark Goldsmith in his Monday ruling said the lawsuit could have caused "catastrophic damage" to the city. But Davis and Wilcoxon argued the project should not be funded with public money without Detroit residents voting on it first.

Davis filed an emergency injunction motion June 5 to block the funding and essentially enjoin the DDA, the public entity that owns the arena, from capturing the tax revenue.

Attorney David Fink, who represented the city, DDA and other entities Monday before Goldsmith, said DPS has already budgeted for the expected impact.

"There's no surprise to them," he said.

In his ruling, Goldsmith said the plaintiffs ultimately failed to establish why an emergency injunction was needed.

"The loss of anticipated commercial activity connected to the Detroit Piston’s downtown presence would be regrettable, but the loss of the city’s hard-won creditworthiness caused by defaulting on existing bond obligations would do catastrophic damage to the status quo," Goldsmith said.

Fink argued the lawsuit would effectively "kill the project."

"In fact, ultimately, it can have an adverse economic impact across the state of Michigan," Fink argued before Goldsmith on Monday. "This would be more than a bump in the road."

The estimated cost of the project has increased from $450 million to $862 million, and it is anticipated to be 62% privately funded and 38% publicly funded.

The National Basketball Association must now approve the Pistons' move. It is expected to take up the matter in July.

Meanwhile Monday evening, LaMar Lemmons, a member of the board of education for the DPSCD, said he thinks the board should have a formal discussion about the lawsuit and possibly take action to support some aspects of the suit.

He said the board received no notice from the city about the fiscal impact of the tax captures on the district.

Board president Iris Taylor questioned what kind of action Lemmons envisioned the board taking. Lemmons said it could be in the form of an amicus brief to support “at least a portion of the lawsuit.”

The board didn’t take any action at Monday’s meeting, but instead agreed to take it up through its finance committee and to have its legal counsel provide information about the lawsuit to help the board understand the issues.

After the council meeting, Davis said he has a number of actions planned to push his lawsuit forward, including talking more to DPSCD board members.

"We're in discussion with certain members of the Detroit school board," he said. "It seems they may want to weigh on this."

Davis' attorney Andrew Paterson sent a letter Tuesday afternoon to Taylor and Lemmons, "requesting and demanding" that the board place on the November ballot a question asking Detroit to approve or disapprove the DDA and the Detroit Brownfield Redevelopment Authority's use of public funds for the arena and practice facility.

Paterson said that the school board has the power to submit to the school electors of the school district a question of that nature. Paterson is asking the board to respond within seven days of receiving the request.

"I hope that this honorable body pass a resolution authorizing this question to be placed on the November 2017 General Election so that the citizens of the City of Detroit can properly exercise their fundamental constitutional and statutory right to vote on this very important question," Paterson wrote.

Friday, Palace Sports & Entertainment and Detroit Pistons CFO Greg Campbell said in a sworn affidavit that the NBA could deny the Pistons' move to Detroit had all legal and financing matters are not settled before its July board meeting.

Receiving public dollars was a "condition" of the team's agreement with the DDA, Campbell said.

John Mozena, vice president for Marketing and Communications of the Mackinac Center for Public Policy, spoke against the public funding and said private businesses will now be forced to compete with those who have an unfair edge in subsidized funding.

"It will not improve the lives of the people in the city of Detroit," Mozena said. "They (the Ilitch family and Pistons owner Tom Gores) can do this without your help."

But not everyone was against the vote, including former Pistons player Rick Mahorn.

"I think it's very intriguing that the city is getting back where it needs to be," Mahorn said. "I work in the community. I think it's just the best move because the growth of Detroit is really starting to blossom right now. ...For the last 25 years, this has been home. ... It's just a great feeling for what the Pistons is going to bring down here. ... I understand people have doubts but this is a great move."

Detroiter Jim Jenkins said he's excited for the team to return to Detroit.

"For us to have the Pistons here would be a big deal," Jenkins said.

Lead negotiator and Palace Sports & Entertainment Vice Chairman Arn Tellem previously told the Free Press that the Pistons' move was nearly a done deal and there was a "zero" chance of them returning to the Palace of Auburn Hills.

Davis said he plans to continue fighting the public funding.

According to a filing late Monday, Davis is planning to file a separate state-court action under Michigan's Open Meetings Act to invalidate actions the city council took at today's meeting.

"This thing is far from over," Davis said.

Contact Katrease Stafford: kstafford@freepress.com