NCPA - National Center for Policy Analysis

New $444 Million Hockey Arena Is Still a Go in Detroit

July 29, 2013

Detroit's financial crisis hasn't derailed the city's plans to spend more than $400 million in Michigan taxpayer funds on a new hockey arena for the Red Wings, says CNNMoney.

  • Advocates of the arena say it's the kind of economic development needed to attract both people and private investment dollars into downtown Detroit.
  • It's an argument that has convinced Michigan Gov. Rick Snyder and Kevyn Orr, the emergency manager he appointed to oversee the city's finances, to stick with the plan.
  • Orr says Detroit's bankruptcy filing won't halt the arena plans.

But critics say the project won't have enough economic impact to justify the cost, and that it's the wrong spending priority for a city facing dire economic conditions.

  • Detroit city services are already stretched extremely thin.
  • On average, police take about an hour to respond to calls for help, and 40 percent of street lights are shut off to save money.

Additionally, Orr wants to make deep cuts to both the pensions and health care coverage promised to city employees and retirees.

The state legislature approved the taxpayer funding for the arena in December.

  • The arena will be paid for with a $450 million bond issue that will be repaid over the next 30 years.
  • Taxpayers will be paying almost two-thirds of the cost of the arena -- $283 million -- and private developers will cover the rest.
  • Including interest, it's projected that there will be a total of $444 million in taxpayer funds spent on the project.

Most of the tax money going into the project would otherwise be going into Detroit schools, which are also under state control due to their dire finances. But the lost money is slated to be made up for by the state government according to Michigan's school-funding formula.

Source: Chris Isidore, "New $444 Million Hockey Arena Is Still a Go in Detroit," CNNMoney, July 26, 2013.


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