Despite Bankruptcy, Detroit Likely To Spend $280 Million On New Hockey Arena


(Credit: AP)

(Credit: AP)

The city of Detroit last week became the largest American city to ever file for bankruptcy protection, a move that will make it easier for the city to get out from under its $18 billion in debts. That could complicate plans to use $238 million in public funds to help the National Hockey League’s Detroit Red Wings build a new downtown arena, a proposal the city council and several state agencies still need to approve. But the head of the group that would oversee the new facility expects it to proceed as planned, the Associated Press reports:

But that $650 million arena planned for the Red Wings? That can still become a reality, according to Brian Holdwick, an executive vice president for the Detroit Economic Growth Corp.

Plans for an 18,000-seat arena were announced by the team’s owners and local economic development officials last month, although the new proposal still needed to be approved by the City Council and a handful of state and local agencies. The Red Wings said there will be $367 million in private investment and $283 million in public funds in the complex, which would also include residential, retail and office space.

Spending that kind of money on an arena — in a city where bankruptcy could mean laying off employees and scaling back basic services — could draw some public resistance. Holdwick said funding for the project would come from tax increment dollars that can’t be used by the city’s general fund anyway, so it’s not necessarily a zero-sum game between building an arena and easing Detroit’s financial pain.

Holdwick says money for the arena would go back to the state if not used for development downtown.

“I think there’s a lot of reasons why the city should be supportive,” Holdwick said. “I can’t, obviously, predict what they’ll vote.”

Holdwick is right that the money for the arena doesn’t come out of the city’s general fund, so it isn’t tied directly to the city’s debt problems or its bankruptcy. It’s still unseemly that a city that’s about to give haircuts to public pensioners and slash public services still wants to devote millions of dollars to a corporate welfare project, especially for a franchise that is valued at $346 million, according to Forbes. And as Neil deMause noted at Field of Schemes, Holdwick isn’t exactly right that the money would go back to the state if it isn’t used for the arena. It could also be diverted to anything that would qualify as downtown development, and Detroit as a city needs smart development that will help reverse its downward trend and bolster its future. An arena, however, won’t do that, because they generally aren’t capable of promoting the type of economic growth proponents always promise and that Detroit so desperately needs.