UPDATE, 11:26 a.m.: City Council narrowly approved Monday a lease agreement with Olympia Entertainment for Joe Louis Arena and parking structure that will pay the city rent, $5.2 million in cable fees and other fees over the next five years, Darren A. Nichols reports in the Detroit News.
The council agreed by a 5-4 vote to approve a lease agreement for the 34-year-old arena and its parking garage on the last day before the agreement expires.
The new lease — which replaces the original 1978 agreement that expired July 1, 2010 — calls for rent of $1 million a year. Olympia Entertainment — part of the Detroit business empire owned by Mike and Marian Ilitch — also will pay the city about $100,000 a year for police fees.
EARLIER: Although it would collect all rent payments from the Detroit Red Wings, the City of Detroit’s parking system would end up losing money under terms of a lease proposal allowing the team to play at Joe Louis Arena until the Wings’ new home is built north of downtown, Joe Guillen reports in the Free Press.
The city’s parking system would lose $266,880 over the first four years of the lease, a city financial analysis shows, despite annual rent payments of $1 million from Olympia Entertainment, the Ilitch-owned company that handles the Red Wings’ business operations.
The loss is partly the result of a property tax credit in the proposed lease that reduces the Red Wings’ rent bill. Fees the city must pay Olympia for operation and management of Joe Louis’ parking garage cut into the city’s rental revenues even more.
John Naglick, the city’s finance director, acknowledged the parking system would lose money, Guillen writes. Such losses are typical for municipal parking facilities, he said, adding that Olympia agreed to pay an additional $1.25 million to restore 600 unused spaces at the city-owned Joe Louis garage.
“It is impossible to charge a high enough parking rate to cover the full costs of maintaining aging infrastructure in older parking decks,” Naglick said in an e-mail. “The thought is that they create other economic benefits. In this case, allowing us to rent out the Joe Louis Arena.”
The financial impact to the city’s parking system is just one facet of the proposed Joe Louis lease to the Red Wings. The City Council is holding a special session at 8:30 this morning to consider the lease and a handful of related agreements with Olympia, including a $5.2-million payment from the company to settle any claims the city has to a share of the Red Wings’ past cable TV revenues.
