BruinsFTW
Registered User
This. When I first heard Detroit was getting a new arena I was baffled. I dont live in America and I could be absolute wrong here, but isn't the state of Michigan financially ****ed?
Didn't Illitch out of pocket for this arena? Of am I entirely mistaken?
After looking here how it's broken down.
http://www.crainsdetroit.com/articl...ost-financing-of-wings-arena-here-are-answers
How is the arena's construction being financed?
The Michigan Strategic Fund will sell $450 million in two series of bonds. They will be divided into $250 million in Series A bonds that will be backed by property taxes already captured by the Downtown Development Authority. The $200 million in Series B bonds will be backed by the $11.5 million Olympia Development has agreed to pay the DDA for bond retirement.
Who will pay off the bonds?
The Ilitches, through Olympia, will pay $200 million of the bond debt. Detroit's DDA, via its property tax capture ability, will pay back $250 million of the bonds.
How long will it take to pay off the bonds?
30 years. They mature in 2045.
Are any city general fund taxes being spent on the arena?
No.
What is the Downtown Development Authority?
The DDA is the city of Detroit's economic development agency that supports project developments. It was created in 1978. The nonprofit Detroit Economic Growth Corp.staffs the DDA under a contract with the city. The DDA has used it tax capture powers to fund downtown projects such as construction of the Millender Center, Riverfront Towers, One Detroit Center and 150 West Jefferson. Property owners within the DDA district pay a 1 mill property tax to fund the basic operation of the DDA.
How does the DDA raise money?
The DDA has a roughly 1-square-mile development district encompassing much of the downtown, and expanded last year to include the arena site. The increased value of taxes already paid by property owners within that district are captured by the DDA for economic development use within the district, better known as tax incremental financing. The DDA captures the entire increased value of properties in its district.
Can the tax captures be used for anything else?
No. State law requires the money be spent on economic improvement projects within the district, and the state Legislature in December 2012 modified the DDA's structure to permit it to use its tax capture for the arena's bond debt repayment.
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