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Michigan governor Rick Snyder defended the project Wednesday as an attempt to rehabilitate the city’s tarnished image.

The 18,000-set arena, flanked by a new hotel development, condos and office buildings, would move Detroit, “from a place where people might have had a negative impression,” said Mr. Snyder, “to being a place that will be recognized across the world as a place of great value and a place to invest.”

Fifty-six per cent of the overall project cost would be private and 44% public, though about 60% of the actual $450 million arena cost would come from tax revenues. Another $200 million — all but $23 million of it private — is planned for projects nearby that could include rehabbing existing buildings and vacant lots for a hotel, stores, parking deck and residential units.

The Michigan Strategic Fund board voted unanimously to approve the use of economic development taxes for the project. No new taxes or funds from the cash-strapped city itself will be needed. The board also took a preliminary step toward issuing $450-million in bonds to build the arena.

The state Legislature last year approved a bill to help finance the project by allowing the use of tax dollars collected by the downtown development authority.

A spokesman for Mayor Dave Bing said the funding approval was “a positive step forward for what could be a very exciting contribution to the transformation of downtown Detroit.”

But the spokesman, Anthony Neely, declined to discuss why the city chose an arena as a major investment, deferring questions about city financial strategy to the emergency manager. Emergency manager Kevyn Orr, authorized by Governor Snyder, sought bankruptcy protection for the city last week. Mr. Orr could not be reached for comment to the Post on Wednesday.

If all goes according to plan, the new facility would replace the Red Wings’ current, 34-year-old home — Joe Louis Arena — by 2017. The Detroit Development Authority would own the building, with Red Wings ownership holding exclusive rights to operate and maintain it.

Olympia Development, owned by Red Wings owner Mike Ilitch, said the project will create 400 more permanent jobs and 5,500 construction jobs. At least half the construction jobs must go to city residents.

National Post with files from the Associated Press

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