The city’s billionaire Ilitch family made ambitious promises in 2013, but now the area remains a redevelopment deadzone
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| Downtown Detroit |
Along the streets leading to Detroit’s recently minted Little Caesars Arena, colorful banners hang from temporary fencing, informing visitors they’ve arrived in The District Detroit. The neighborhood holds “a dynamic mix of shopping and dining” with “places to live in the heart of the action”, the signage reads. The banners depict a thriving urban core with smiling families holding hands while well-dressed people drink under patio lights.
Beyond the fencing, the landscape isn’t quite so lively. There are few places to live in The District, and little to eat. Vacant, decaying buildings make up entire city blocks. There are almost no lights, save for those illuminating surface lots and parking garages.
The arena, the Red Wings ice hockey team that plays there, and almost all the blighted property in The District share the same owner: Detroit’s billionaire Ilitch family. Their company hung the banners, but there’s growing frustration among many Detroiters over the discrepancy between the Illitches’ imaginative marketing and the neighborhood’s stark reality.
Just down the street from LCA, Sean Swierkosz, general manager of the longstanding sports bar Harry’s, watched the Illitches make progress, “but then it stalled”. “I feel like I’m looking over the fence at my neighbor’s yard at his half-finished project or garage,” he said.
The project began in 2013 when the Ilitches unveiled plans to revive the area between Detroit’s now-thriving mid- and downtowns. Their ambitious vision included a 50-block sports and entertainment neighborhood called The District Detroit, anchored by the 20,000-seat LCA. The Ilitches promised $200m in development around the arena, claiming new housing, stores, restaurants, bars and offices would bloom.
Though the late Mike Ilitch was worth $5.1bn at the time, local leaders handed the family a huge tax deal to help fund the vast rehab. They did so in early 2014, just as Detroit slid into the nation’s largest-ever municipal bankruptcy. The agreement will be worth at least $740m if the arena is open for 48 years, as the Ilitches estimate.
While LCA opened in 2017, the surrounding neighborhood that justified the huge tax deal never materialized, so The District largely remains a redevelopment deadzone. Instead of gaining luxury lofts, it’s lost housing, and the Ilitches have only renovated a small fraction of the hundreds of properties its companies purchased here.
Now, after five years, there’s less confidence that The District Detroit is good for the city. At Harry’s, Swierkosz said the jury is still out, but he isn’t encouraged by what he sees.
“Now they’re like, ‘Well let’s just fix this fenceline up a little more, show some more pictures of what it could be,” he scoffed. “Let’s get all the shiny things that are on the pictures I’m seeing around the fences. Let’s see the development.”
In recent years, Ilitch companies in and around The District leveled at least 30 buildings and currently maintain nearly 40 blighted or vacant structures. On blocks where historic buildings once stood, they’ve laid dozens of surface parking lots. Those are controversial because the Ilitches charge up to $50 per spot, and a vast stretch of once-dense downtown real estate is now a sea of Ilitch-owned parking spaces.
In January, the Ilitches finished evicting residents from 95 units across three buildings, and a small number of lower Cass Corridor businesses and bars are gone. That’s tracked by Terrible Ilitches, a citizens watchdog group that uses municipal property data to monitor the neighborhood’s development activity.
Francis Grunow, who used to live here and chairs the Neighborhood Advisory Council that advises the Ilitches’ Olympia Development on community benefits, sees the project so far as a “net deficit”.
“We’re still behind on local business and residential from where we were a few years ago. We’re not even at zero,” Grunow said. He acknowledged the arena, but added, “part of how the Ilitches sold it was by saying that it would be more than that – it was going to be a more meaningful project and part of an overall redevelopment strategy”.
Olympia did not respond to requests for comment. But it defended its track record in a July statement to the Detroit Free Press, touting “10 important and celebrated buildings” in various stages of redevelopment. It pointed to seven addresses, but in reality there’s only visible work underway on two buildings.
The situation is so bad that the city is pushing back. At the 15-story, Italian Renaissance Hotel Eddystone next door to LCA – one building on which work has started – city officials say they are compelling Olympia to install windows as they mull litigation to move that project forward. The Detroit City Council also in July created a new historic district to protect historic buildings when the Ilitches attempted to knock them down.
Notably, the landscape looks much different just a few blocks across The District’s borders, where Detroit’s neighborhoods are alive with redevelopment. Lofts list for as much as $650,000, and large residential projects are underway in the adjacent historic Brush Park neighborhood. Further up Cass Avenue, new restaurants, bars, and shops flourish on streets resembling the Ilitches’ banners’ renderings.
Victor Matheson, a sports economist at College of the Holy Cross, said what’s playing out in The District is unique.
“It’s not rare at all that new development does not materialize or takes very long to materialize – that’s very common,” he said. “It is extremely rare to see a stadium cause a neighborhood to go backwards – that is very rare.”
No oversight
It’s generally reported that The District didn’t require a dime from the financially struggling city’s general fund because the public’s contribution amounts to $324m captured from downtown business district taxes. The Ilitches stressed that point, and in 2014, the head of the Detroit Economic Growth Corporation – the city’s negotiating agency – agreed: “Given the amount of money that the city’s put into this – which is zero – it’s a great deal for the city and its residents.”
Though the city didn’t pay from its general fund, it did lose significant revenue. Prior to the Red Wings’ move to LCA, Detroit taxed annual ticket, souvenir, parking, concession, suite and other team revenues. That figure totaled about $3.5m in 2010, which had grown to $7m by 2014, and would have continued growing. The Ilitches no longer pay those taxes, and they estimate LCA’s lifespan at 48 years. So the city loses during that time well in excess of $336m from its general fund.
The $324m figure also doesn’t include $74m the Ilitches receive if they complete $200m in “spin off” development. And, for $1, the city gave the Ilitches land with an estimated value between $3m and $27m.
But the deal didn’t include any oversight or clawbacks.
That comes into play when the Ilitches claim a $24m parking garage counts as “spin off” development. The vision the Ilitches sold to the public offered much more than parking garages.
That’s partly why many felt from the outset that deal was bad for Detroit, and Matheson called it “lopsided,” especially since the Red Wings didn’t threaten to relocate. Two of the city’s lead negotiators on the deal now work for the Ilitches.
However, lopsided deals aren’t unusual in Michigan, said Michael LaFaive, fiscal policy director for the conservative Mackinac Center think tank, which tracks corporate welfare here. The state rarely tracks whether promises are fulfilled, he said, and the Mackinac Center studies have found they typically aren’t.
“What they do is create a facade of something to look at that’s beautiful, then politicians say ‘Look what we’ve done! Isn’t this great? There are more people walking around here’ … but the cost side must be examined as well, and costs can offset all or more of the benefits,” LaFaive said. “I doubt if a post-mortem of this deal by scholars will show that it has had a positive economic impact locally or statewide.”
At Harry’s, Swierkosz remains hopeful that that isn’t the case.
“I just want to see The District become The District. They’ve relabeled, they’ve marketed, got their own app, but where are we going here?” he asked. “Right now we’re in this stand still, this purgatory. Where’s the change?”
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