DALLAS -- Detroit officials say savings from a bond refinancing will cover the $34 million cost of adapting the design of a halfway-finished pro hockey arena to include the region's pro basketball franchise.
Detroit Mayor Mike Duggan at a press conference Tuesday announced that the NBA's Detroit Pistons will leave the Palace of Auburn Hills in the Detroit suburbs to begin play next season at the new Little Caesars Arena downtown.
Duggan was joined by Pistons owner Tom Gores and Ilitch Holding CEO Christopher Ilitch. The Ilitch family owns the Detroit Red Wings hockey team, for which the new arena was originally designed. The influential family also owns the Detroit Tigers baseball team and the Little Caesars pizza chain.
The City of Detroit plans to pay for the redesign of Little Caesars Arena to accommodate the Pistons with the savings achieved from a $250 million bond refunding.
The Pistons also plan to move into a new practice facility in the city by 2018.
The new arena, which is half way complete, was originally designed primarily for hockey. It must now undergo a redesign to a joint hockey/basketball facility. The redesign will include additions such as floor seating, and locker rooms and training facilities for the Pistons and visiting teams.
The city of Detroit has agreed to contribute $34 million toward the cost for the redesign which Duggan said will be funded through savings created by the refinancing of $250 million of 2014 bonds issued by the Detroit Development Authority.
The 2014 bonds were issued to finance the $650 million hockey arena during Detroit's historic bankruptcy. They are supported by tax increment financing revenues collected by the DDA. No city of Detroit general fund dollars will be spent on the arena project.
"Very few times will you see a professional sports team come for a price of a $34 million contribution," said Duggan.
Duggan said that any additional costs or cost overruns on the LCA will be paid entirely by the Pistons, the Red Wings, and their associated companies.
Duggan anticipates that bonds will be priced with enough time to ensure that the Pistons move is not delayed.
The new practice facility will cost between $32 million and $55 million dollars which will be entirely absorbed by the Pistons. The location of the practice facility has not yet been determined, but may be owned by the DDA, subject to a concession agreement with the Pistons.
If the building is owned by the DDA, the authority may play a role as a financing conduit for the practice facility. The DDA would issue taxable revenue bonds of up to $55 million to support the construction of the practice facility, which bonds would be paid solely from fees to be paid by Pistons to the DDA under a concession agreement.
Relocating the Pistons and building a new practice facility and corporate offices will generate an additional $596.2 million in estimated total economic impact in Metro Detroit and create more than 2,100 jobs, according to a study by the University of Michigan Center for Sport and Policy commissioned by Pistons owners Palace Sports & Entertainment. That includes an estimated 1,722 construction and construction-related jobs, and 442 permanent positions.
The Pistons' move is subject to approval by the NBA and is expected to be presented to the league's board of governors sometime after the first of the year. The league's commissioner, Adam Silver, was present at Tuesday's announcement in Detroit.
