A legal showdown over whether $34.5 million in public funding should be used to finance the Detroit Pistons move downtown took another twist Monday when the NBA, Palace Sports & Entertainment — the company that owns the team — and Olympia Entertainment were added to a federal lawsuit seeking to force a vote on the issue.
The entities were added to the 16-count lawsuit, which was filed June 27 by Robert Davis and City Clerk candidate D. Etta Wilcoxon against the Detroit Public Schools Community District and its president. The pair is arguing that the Little Caesars Arena project and Pistons move should not be funded with public dollars without a vote of Detroit residents.
A 10 a.m. teleconference is set for this morning to discuss the DPSCD case and Davis' attorney, Andrew Paterson, plans to request that U.S. District Judge Mark Goldsmith schedule an evidentiary hearing with testimony from representatives of the Pistons, Olympia, the NBA and taxing jurisdictions impacted by the funding.
"It's necessary to have the NBA as part of this lawsuit because it's quite clear that individuals are not being truthful," Davis said. "Moreover, the NBA needs to be a party to this lawsuit because of the fact that they are in essence being asked to approve an unlawful deal."
Counts 12 and 13 of the lawsuit allege that Olympia Entertainment and Palace Sports and Entertainment cannot legally be reimbursed with funds from the levy of the 18-mills Detroit Public Schools’ Operating Millage. Palace Sports & Entertainment is owned by billionaire Tom Gores and Olympia Entertainment is owned by the Ilitch family.
"Defendant Palace Sports has submitted a proposal to the Defendant NBA for approval without explaining the requirements set forth under Mich. Comp. Laws of the Revised School Code," the complaint states. "The Defendant NBA is being requested to approve an agreement that violates ... the Revised School Code."
The Detroit Downtown Development Authority, the public entity that owns the arena, is expected to collect $726 million in school property tax revenues through 2051. The money will be used to pay off $363 million in public investments in the $862-million arena and the surrounding development district.
The arena is the new home for the Detroit Red Wings and expected new home for the Pistons. It is located at Woodward Avenue and I-75 in the Cass Corridor neighborhood.
Paterson is arguing Michigan's Revised School Code prohibits the use of money raised by tax for a different purpose “without the consent of a majority of the school electors of the district voting on the question at a regular or special school election.”
"Defendants Olympia Entertainment and Palace Sports are seeking to (be) reimbursed by the DDA and Brownfield Authority for costs they have advanced to finance the costs of construction of the additional improvements to the new Little Caesars Arena," the amended complaint states, referencing the $34.5 million. "Additionally, Defendant Palace Sports is seeking to be reimbursed by the Brownfield Authority in the amount of $22 million for costs they advanced to pay for the construction of the Detroit Pistons’ Corporate Headquarters and Practice Facility."
Davis told the Free Press he decided to amend the lawsuit after Goldsmith questioned DDA attorney David Fink last week during a hearing on whether the Pistons would actually be prevented from seeking approval from the NBA on July 11.
Goldsmith said he found it unlikely that a major entity like the NBA would only be able to vote on such a matter on one specific date. Fink admitted it wouldn't create an undue burden on the team to push the vote back until July 25.
Davis and Wilcoxon initially filed a federal suit June 1, against the City of Detroit, Downtown Development Authority and other entities seeking to block the funding. That lawsuit was officially dropped Friday after Goldsmith on Friday denied an attempt by city lawyers to block Davis' voluntary dismissal of his first lawsuit.
Detroit Economic Growth Corp. Chief Financial Officer and interim President and CEO Glen Long Jr. said last week that the judge’s decision was not a surprise.
“We still expect to prevail on the merits of the case — no matter in what case or court they are presented," Long Jr. said.
Davis, who has a long history of suing public bodies in Detroit and Highland Park for violating government transparency laws, disagrees with public officials who have said his suits are frivolous.
"This lawsuit is aimed at making Tom Gores and Mr. Ilitch pay for the construction costs of this project, not the citizens," Davis said. "That's what this lawsuit is about, to ensure that the tax dollars of the hard working citizens of Detroit are not diverted from their intended purpose. As you can see, this won't stop them from coming downtown because they've already paid the money to construct the arena."
Reporter Joe Guillen contributed to this report.