Detroit bets on uncertainty of rail, new arena

Published 12:00 am Sunday, November 3, 2013

DETROIT (AP) — It may be too broke to pay its bills or even respond to 911 calls on time, but Detroit is still thinking big.
As the debt-ridden metropolis moves through bankruptcy proceedings that are turning its empty pockets inside-out, local and state leaders are proposing expensive new projects, including a hockey arena doubling as an events center, plus a mass transit line.
If built, the developments would cost $800 million and bet at least $300 million in future tax revenues on an effort to attract people to a place that residents have been fleeing for 60 years.
Skeptics say the plans are needlessly risky for a city with so much debt that it can’t fund services as simple as streetlights. Spending hundreds of millions on unproven projects, they insist, is like taking an unemployment check to a casino instead of paying for basic necessities.
“Detroit is not going to be saved by an individual project with a bunch of money poured into it,” said businessman Jerry Belanger, a vocal critic of the arena project. “It’s not going to help Detroit schools, it’s not going to help rebuild buildings that are completely blighted.”
The efforts are focused narrowly on a 10-square-mile district in and near downtown, which is home to corporations such as General Motors and draws suburban workers and visitors to sporting events, concerts and cultural institutions. Outside the city center lays a wasteland of 130 square miles of neighborhoods with high crime, vacant homes and few prospects.
Supporters predict the downtown improvements will expand the tax base and lay the path to a brighter financial future. They say the stakes extend beyond Detroit to include the entire state.
Without “vibrant central cities,” college-educated young people will continue to leave “and take the future Michigan economy with them,” said Lou Glazer, an economic expert and president of the nonpartisan research organization Michigan Future Inc.
Tom Stephens, a lawyer who spoke against the hockey arena at a recent city council meeting, asked why elected officials would spend a huge sum to benefit the “multibillionaire owner of a sports franchise” at a time when the needs of average residents are unmet.
If successful, the projects could buy time for improving essential services — a promised upshot of bankruptcy. If they fail, the proposed developments could join a line of ideas — some futile, others effective — that could not stop Detroit’s slide into ruin.
Belanger remembers when the People Mover, a little-used elevated train circling downtown, was going to help save Detroit in the 1980s. The system never attracted enough riders and relied too much on government subsidies.
Then Michigan voters approved three city casinos within a decade. At the turn of the millennium, new stadiums for the Tigers and Lions followed and helped renew downtown. Yet Detroit still lost a quarter of its population between 2000 and 2010. It is now about 700,000.
Belanger’s bar, jazz club and restaurant stand to benefit if the new hockey arena for the Red Wings is built nearby, but he still has doubts.
“For every dollar spent in the new location, there’s a dollar being lost in the old location,” he said. “There’s not going to be a hockey team in Detroit that wasn’t already in Detroit.”
Others are equally certain that Detroit has no choice but to bet on downtown, where residential occupancy rates are high partly due to the relocation of thousands of jobs by business magnate Dan Gilbert and other employers.
The proposed 3.3-mile streetcar project along the city’s commercial corridor will bring light rail to one of the nation’s few urban centers still without it. Transit is seen as crucial to attracting young professionals who are driving less and want an urban lifestyle. Just 5 percent of the metropolitan area’s 25- to 34-year-olds live in or near downtown.
“I definitely think we can build out from this core,” said Matt Cullen, who oversees Gilbert’s portfolio of companies, investments and real estate.
Sensitive to concerns that the line could become another People Mover, proponents say they have secured funding to operate the system for 10 years for $5 million annually. Private companies and philanthropies have contributed more than $100 million for the $140 million project.
Defenders of the building plan, including Gov. Rick Snyder, say the projects will serve as catalysts for new investment and tax revenue. Planners want to increase the downtown residential population from 27,000 to 46,000 in 10 years, a sizable increase.
“You have to start somewhere, so you start where the major businesses are,” said John Mogk, a Wayne State University law professor who specializes in urban development.
He is not sure how much benefit will ripple out to the downtrodden parts of the city.
“This is a slow process,” Mogk said. “We’re talking about the next decade or two and what will downtown look like.”