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Lease proposal: Joe Louis Arena to be darkened, demolished after Red Wings leave

The Detroit Red Wings’ owners will keep renting Joe Louis arena through at least 2015, according to a proposed lease presented to the Detroit City Council Tuesday.

City officials have already cleared the way for the Red Wings’ owners, Mike and Marian Ilitch, to build a new arena complex for the hockey team.

But the question remains about what to do with Joe Louis Arena, which the city of Detroit owns. Right now, the two sides are retroactively negotiating a lease agreement that expired in 2010.

Under the proposal submitted to City Council, the Ilitch family’s company, Olympia Entertainment, would pay $12.2 million in rent and “to settle other claims” (including disputes over back taxes) through June 2015. It also contains five one-year renewal options.

The agreement assumes the state will pay for Joe Louis to be “promptly demolished” once the Wings leave. The Michigan Strategic fund, an arm of the Michigan Economic Development Corporation, is set to vote on whether to approve those funds later this month.

But in the meantime, a “non-compete clause” would bar the city from holding any ticketed events at the Joe before the building is demolished.

Detroit emergency manager Kevyn Orr has final say over the deal, but getting his approval doesn’t look like it will be a problem. Lawyers from Orr’s former law firm, Jones Day, have been front and center in the lease negotiations.

The generous terms of this deal are bound to add to the controversy already surrounding the new Red Wings arena project.

Critics say that arena – which will be partly financed by tax revenues while Detroit is in bankruptcy –won’t provide enough tangible community benefits or guaranteed jobs for Detroiters to justify public financing.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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