The lack of progress on development of the Ilitch family’s District Detroit hampered a $250 million bond refinancing late last year.

The Michigan Strategic Fund, a state economic-development entity, issued $450 million in bonds to finance the Little Caesars Arena’s construction in 2013, and loaned that to Detroit’s Downtown Development Authority, which owns the building and leases operational control to the llitches.

The DDA, created in 1978 and whose board is led by Mayor Mike Duggan, is the city’s economic development agency that supports private investment developments. The nonprofit Detroit Economic Growth Corp. staffs the DDA under a contract with the city.

Of the $450 million, $200 million were bonds backed by Ilitch-owned Olympia Entertainment, which manages the arena. Those bonds were paid off entirely by the Ilitches in 2017, and became a debt on their private books.

The remaining $250 million in bonds were backed by the DDA’s downtown property tax capture, which expanded to encompass the arena area. Those were short-term, tax-exempt bonds that had an automatic interest rate hike after five years. That rate would have gone to 10 percent Jan. 1 unless they were refinanced, according to DDA documents.

The thinking at the time the bonds were first sold was that district project would greatly increase the tax base, and the bonds could be refinanced at better rates. The DDA, according to board meeting records, last summer sought to refinance the bonds. There were nine responses, the DDA subsequently told Crain’s, but none offered the interest rates and investment grades the DDA originally believed it would get.