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Detroit Council Dunks on Taxpayers, Will Use School Funds for Basketball Arena

Taxpayer-funded bonds sold to raise revenue for parks and schools in cash-strapped Detroit will instead be used to lure its professional basketball team back into the city.

The Detroit Pistons have played out in the suburbs (first in Pontiac, now in Auburn Hills) since 1977, but will relocate to a new downtown arena thanks to $34 million in incentives approved by the Detroit City Council.

Taxpayers are already on the hook for more than $300 million of the $900 million construction cost for new Little Caesars Arena, built to host the Detroit Red Wings of the National Hockey League. The additional spending will make the arena suitable for basketball and help pay for new practice facility and front office for the Pistons.

Michigan Radio reported this week that “some Detroiters are unhappy with the deal because the bonds are taxpayer funded with money originally intended for schools and parks.”

As well they should be. In a city still recovering from bankruptcy, local officials might have found better ways to use $34 million. It’s a fair question whether government should be spending money on parks and schools, but it’s certainly a more core function than throwing cash at billionaire team owners. Tom Gores, who owns the Pistons, is worth an estimated $3.3 billion.

But it gets worse. As the Detroit Free Press reported earlier this month, local activists filed a lawsuit to block the stadium spending. The city asked the judge to dismiss the case, making several laughable claims about why it was essential to spend money on the stadium project, instead of using the money to help fund the city’s public schools (which are $500 million in debt, by the way).

Stopping the project, the city’s attorneys argued, would be “devastating” to Detroit’s “remarkable comeback story.”

“Post-bankruptcy, the city cannot expect lenders to extend unsecured credit at reasonable rates, so its debt has been limited to secured transactions, tied to specific revenue streams,” the attorneys write. “The default on any of that debt would significantly affect the ability of the city to attract investors. The city is currently engaged in a bond offering to raise funds to rebuild neighborhoods. A default on DDA’s debt would certainly increase the costs and could possibly derail the plan completely.”

As Deadspin noted this week, this is disingenuous nonsense. The city’s attorneys are essentially arguing that not giving millions of dollars to the Pistons’ billionaire owner would jeopardize Detroit’s entire economic recovery.

A federal judge dismissed the lawsuit.

The next time you see a headline about how woefully underfunded Detroit’s schools are or hear about appeals for additional state and federal funding, think about how its city leaders prioritize a finite amount of tax revenue. Detroit’s rickety fiscal situation is the result of decades of poor choices, from which it appears the current leadership has learned nothing.

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