Bonds to build the new $450M arena for the Red Wings were "approved by the state" yesterday, but "Wall Street jitters about the city’s bankruptcy means more taxpayer money may be on the line than originally intended," according to Louis Aguilar of the DETROIT NEWS. One series of bonds for $250M will be "backed by property and school taxes captured by Detroit’s Downtown Development Authority." The others series of bonds for $200M will be "backed by Olympia Development of Michigan," the real estate arm of Red Wings Owner Mike Ilitch. The state legislature "originally approved that Detroit’s DDA could collect" up to $15M a year in taxes for the project. But Merrill Lynch, the buyer of the taxpayer-backed bonds, "demanded that cap be removed" because of the "low rating the bonds are likely to receive." Another "new demand made by Wall Street is the bonds now have a set interest rate for 4.5 years instead of a long-term fixed rate." That is "due to 'current market projections' of the city’s 'bankruptcy.'" Construction work at the arena site is "scheduled to begin next week" (DETROIT NEWS, 9/17). In Detroit, John Gallagher noted the "launch event" for construction of the arena is scheduled for next Thursday (FREEP.com, 9/17).
