On Funding the Wings’ New Arena

A few days ago there was an excellent fan post over at Winging it in Motown about the Red Wings’ new arena. It touches on a lot of the economics of the project and the sources of the arena’s funding but I wanted to further break down one of its points.

It is also important to note that the DDA is a chartered institution not affiliated with the city’s other institutions. The DDA is specifically in charge of procuring investments privately for the city as well as playing a major role in neighborhood revitalization, restoration, and construction. In short, this is an additional sum of money paid out by businesses (call it a tax if you want) but it is in a different category, meaning it will not be stealing money from the school system, trash collection, pension funds, police, or firefighters as many are arguing. Could the DDA have been disbanded to save money for other priorities? Sure. However, it can be argued that certain parts of Detroit would resemble slums more than they do at the present moment.

The Downtown Development Authority is the source of the “local” public funding for the redevelopment project. As noted, the DDA is not the City of Detroit itself, which is why Detroit’s bankruptcy doesn’t matter for this project to move forward.

The DDA is the equivalent of a homeowners’ association. Downtown property owners pay their dues to the DDA and the DDA funds projects that make downtown better.

You can think of this whole thing as a homeowners’ association building a new playground when a nearby school needs money. The school district wasn’t going to get the money that went towards the playground anyway, so it’s not a matter of taking from one to give to the other.

That’s a bit of a simplification because no one homeowner would be expected to profit more than others in the case of building a neighborhood playground, while Mike Ilitch’s empire clearly will profit more than, say, General Motors in the case of building the new arena. It covers the funding side of it, though, which is all I’m touching for now.