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Monday, July 21, 2014

Just to clarify, Olympia hasn't 'finalized' financing details on promised Detroit ancillary development — yet

Posted By on Mon, Jul 21, 2014 at 5:00 PM

Rendering of proposed arena district and new neighborhoods. (Olympia Development of Michigan) Yesterday, the Detroit Free Press and Crain's Detroit Business reported on the remarkable concept Olympia Development of Michigan, the real estate arm of Detroit Red Wings owner Ilitch Holdings Inc., has developed for the proposed "catalyst development project." (The basics of the project can be found here.) Baked into the details offered by the Freep was this:

Arena plans announced earlier called for development to grow up around the arena over ensuing years. But the Ilitches decided to do it all at once: A large part of the infrastructure and construction associated with the retail and residential projects will rise out of the ground along with the arena — and be ready by 2017.

Christopher Ilitch said construction of the residential units, restaurants and other new development around the arena was moved up because of its importance to Detroit. He estimated the development would create at least $1.8 billion in total economic impact over several years, 8,300 construction and construction-related jobs, and 1,100 permanent jobs.

As Crain's reported, Olympia would development 300 apartments in "two buildings on what currently are the surface parking lots between Comerica Park -- home of the Ilitch-owned Detroit Tigers -- and Woodward Avenue." Crain's writer Bill Shea also notes a new building across Adams Street would provide "bleacher seats for Tigers games, and possibly retail and bar space." Also, Shea wrote, Olympia planned to build a multi-story 120,000-square-foot office building "that will have ground-level restaurants and could be nightlife-oriented."

Again, the plans revealed by Olympia were remarkable. It would be transformative, if implemented in its entirety. (The full scope can be viewed at a website launched Sunday, DistrictDetroit.com)

Still, we had one question after reading the exhaustive coverage offered by both outlets: How is Olympia going to pay for the $200 million in new development? This portion of the project, as we previously reported, is a stipulation that came with little obligation in Olympia's contract with the Downtown Detroit Development Authority (DDA).

(According to city documents, if Olympia causes to invest at least $200 million in private development in, and around the arena district, the DDA would credit the company $62 million for the projects. If Olympia defaults on that commitment, the arena would nevertheless still be constructed.)

This morning, in an interview with Tom Wilson of Olympia, we asked just how the company would finance these aforementioned ancillary projects cited by Crain's and the Freep. He said the details weren't firm. We confirmed that with an Olympia spokesperson, who sent this in response:

"Those details are not finalized yet but all of that development will be our private investment. What is finalized is that the development of the district will take place concurrently withe construction of the arena, and that we will have expanded our planned investment to include millions of dollars to stabilize public infrastructure including paving streets, sidewalks, curbs, developing green spaces, in addition to the private development plans that were released yesterday."

So, the company intends to develop the district concurrently with construction of the new arena -- when it finalizes details on how it will be financed.


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