District Detroit: Inside the Ilitches' land of unfulfilled promises

Detroit — Ilitch companies own or control at least 60% of the properties in the area they hope to transform into an entertainment district larger than the size of downtown Detroit, according to a Detroit News analysis.

The Ilitch family enterprise, founded by pizza magnates Mike and Marian Ilitch, has a dominant interest in the languishing 50-block area called The District Detroit, according to the review of property records, state records, interviews and tax assessments.

Thursday, the Detroit Medical Center plans to break ground on a new sports medicine facility on Ilitch land next to Little Caesars Arena. Earlier this week, the Ilitch group revealed a new timetable for a renovating the long-vacant 13-story Hotel Eddystone, a few yards away. 

Despite promises that the district would transform a forgotten area of Detroit by 2017, more than a dozen of its 50 blocks are now more vacant than when the plan was launched in 2014, according to the News analysis.

The accounting shows just how dependent the area is upon the Ilitch organization for its development as the long-awaited tie between two of Detroit's high-demand neighborhoods.

"The walkable neighborhood with active restaurants and retail around the arena with year-round activities has not materialized because (the Ilitch organization) doesn't want it to," said Richard Etue, a Cass Corridor resident and part of a neighborhood advisory committee that has met with Ilitch officials about the plans. "I just think they don't know how to do it." 

Ilitch 'aware of the coverage' critical of District Detroit

Although it's long been considered an Ilitch development, a detailed breakdown of the family's holdings in the area has never been compiled. The Ilitch group declined comment for this story, but says it has invested $1.5 billion and counting.

The group used more than two dozen companies that often cloak their ties to the organization to buy land in the district. In addition, many city-owned properties, such as Little Caesars Arena, are controlled by the Ilitch group.

The News examined the public records of more than 500 properties in and near the district to find traceable links to the organization and found: 

• Ilitch properties account for 83.8 acres, or 34% of the area's 243 acres. Downtown Detroit is 77.4 acres. 
• The Fox Theatre and Hockeytown Cafe are the only two historic buildings, of the 29 the Ilitches control, that the organization has restored and filled with tenants since 1987.
• The group controls 46 empty parcels and 24 vacant buildings.
• 148 of the properties linked to Ilitch entities are being used for 29 parking facilities, which are the only new developments beyond the high-profile venues along Woodward Avenue.
• A few large properties presumably are not available for Ilitches to buy or control. Cass Technical High School, Ford Field, two parks, a DTE Energy substation and the Masonic Temple fall within the district. Remove those and the Ilitches control at least 64% of developable land.

Grand plans

The District Detroit project has faced increasing criticism because of the lack of progress since the opening of Little Caesars Arena, its signature piece, in 2017.

Five years ago, President and CEO Chris Ilitch described elements of the massive development choreographed to rise simultaneously.

 "Now we really have been unharnessed, unleashed," he said in 2014.  "The idea is to have it all come out of the ground at once in 2017."  

The conceptual renderings of streets brimming with sidewalk cafes and quaint shops in "five new neighborhoods," with names such as “Wildcat Corner" and “Cass Park Village," were posted on the district website.  A projected 184 apartments were to open at the same time as Little Caesars Arena in 2017. Two years ago, the group said it was ready to start one of the largest residential developments in recent city history, creating nearly 700 new housing units in six buildings. 

None of that, aside from the arena, has yet to come to fruition. 

The Ilitch group, along with family members, have been hailed as visionaries for investing heavily in Detroit when many would not. Critics charge the group is a self-serving behemoth that left large swaths of the future district area untended while amassing land.

Many local politicians continue to express support, or simply decline comment about the delays.

"The reality is that major development often takes time," wrote Arthur Jemison, Detroit's chief of services and infrastructure.  "When you take on a 50-block redevelopment, it’s not surprising that some aspects will move more quickly than others." 

U.S. Rep. Rashida Tlaib, D-Detroit, in whose district the development falls, has a different perspective. 

"It's just wrong and unjust," she said. "I'm tired of us trying to make it out they are the best thing that ever happened to the city. We see homeless and longtime residents being pushed out of this island they have created.

"We . . . let them, a mega-billion dollar corporation, get away with decaying and boarded up buildings for years. When are we going to hold them accountable?" 

The Ilitches began stockpiling property in the area in 1987 when the company agreed to move its headquarters from the suburbs to the Fox Theatre. In some form, the Ilitches have been chasing the goal of creating new neighborhoods since at least 1992, when they began searching for a new baseball stadium for the Tigers.

The trailblazers
Part of the reality the Ilitch group envisions already exists on eight blocks along Woodward Avenue.

It includes Little Caesars Global Resources Center, the $150 million, nine-story building still under construction that will house 700 workers; the Fox Theatre, the 5,000-seat venue and office tower, which is the current Little Caesars headquarters; Comerica Park, the Wayne County-owned baseball stadium that’s home to the Ilitch-owned Detroit Tigers; Little Caesars Arena, the 20,000-plus seat venue that’s part of an $863 million retail and office complex; the Mike Ilitch School of Business at Wayne State University, built on land owned by the Ilitch group.

The October 1987 deal for the Fox Theatre and five blocks of property first lured the Ilitch group to Detroit. The deal still defines the relationship between the Ilitches' king-size desires and a city desperate for corporate patronage.

By then, Mike and Marian Ilitch had built the largest carry-out pizza chain in the world, a title it retains. Mike had owned the Red Wings for five years. 

The Fox, a former opulent “movie palace” built in 1928, had been empty for 13 years by 1987. Signs of Detroit's fading glory were everywhere. Not far from the Fox on the once-upscale Woodward Avenue were porn theaters and party stores with clerks working behind bullet-proof glass. 

The Fox deal was to revive a theater district on the northern edge of downtown near Grand Circus Park. Involving more than a dozen buildings, the city and another developer, Charles Forbes, crafted the plan. The city bought the Fox, along with four other buildings and a parking lot from Forbes and sold it all to the Ilitches for $3 million — $6.3 million in 2019 dollars.

The city demolished eight buildings to make way for parking. The city gave the Ilitches the empty Detroit Life and Blenheim buildings on Park Avenue and allowed the group to decide whether to save or raze the neoclassical-styled structures. The city loaned the Ilitches $8 million for the project.

The Ilitches spent $35.2 million on the renovation — $72.2 million in 2019 dollars. The firm relocated 250 Little Caesars workers from the suburbs to the Fox office tower. It converted the former Hughes & Hatcher building, named after a men’s clothier, next to the Fox into what would become Hockeytown Café and the 430-seat City Theatre. 

The purchase paid off for the Ilitches not only in profits — the Fox was the nation’s top-grossing theater of its size within five years — but in marketability. The Ilitches credited the positive press as one of the reasons Little Caesars pizza sales kept growing.

The Ilitches kept empire-building. In 1992, Mike bought the Tigers for $85 million. Almost immediately, the new owner contended historic Tiger Stadium in Corktown was outdated and the Major League Baseball team needed a new home near the Fox. 

City officials joined in a public campaign exploring the idea. Then-Mayor Dennis Archer and other city officials, along with reporters, traveled with Ilitch executives to visit stadiums such as Baltimore's Camden Yards.

A major snag arose back in Detroit. Building owners near the Fox were demanding double and triple the sagging market value for their properties. The high prices threatened to sink the plan. 

In March 1994, the Ilitches revealed its solution: Let the organization take control of the entire neighborhood. 
The plan was called Foxtown. It included:  

• A sports-shopping entertainment complex spanning 40 blocks and 80 acres. 
• A new stadium that would link to open plazas and new stores capped with glass or copper roofs. 
• 7,000 new parking spaces. 
• 150 new condominiums and upscale lofts.
• A television production and recording studio serving both the new arena and Fox.  
• A Motown Museum branch, a blues-jazz hall, a movie theater, a sports hall of fame and restaurants.
• A magnet school for performing arts or summer sports camps.

The llitches wanted at least two dozen buildings and sought to have another dozen demolished. The company expected at least $200 million in taxpayer support.  

Foxtown never moved past the concept stage. It didn’t have to. Politicians and Wayne County voters came to the rescue. Politicians crafted a ballot proposal in 1996 for a 1% hotel room tax and 2% car rental tax to pay for not just a new baseball stadium across the street from the Fox, but also a new football stadium for the Lions next to the new Tigers' home.

In 2000, the $325 million Comerica Park debuted. The Ilitch group paid about $145 million for the stadium’s construction. Wayne County taxpayers and federal grants paid the rest.

The Ilitches never let go of the Foxtown idea. In 2002, during a Red Wings road game in San Jose, Calif., members of the family were struck with inspiration.  It came as they walked around the new $450 million Santana Row, described as a "village within a city." 

Santana Row is 42 acres of low-rise buildings in the same faux-Mediterranean style. Palm trees line security-monitored paths to shops like Gucci and Urban Outfitters, dozens of restaurants, nine spas and salons, a boutique hotel, and residences.

The Ilitches hired one of Santana Row's main designers, Richard Heapes. It wanted that same vision for the edge of downtown Detroit, mainly in the Cass Corridor neighborhood. It’s one of the most desolate areas of the city. 

This time, the Ilitches operated in stealth mode in its effort to buy a neighborhood -- a common tactic for developers with a big plan. 

For more than a decade, various limited liability companies with no public link to the Ilitches spent nearly $50 million buying 56 properties. The firms bought empty lots, shabby homes, dive bars, vacant and occupied buildings, a shelter for Vietnam War veterans, and other sites in the area that would become the future footprint of Little Caesars Arena.

Most properties were bought way above market value. The sellers signed confidentiality agreements. The buyer left scant information in public records, using such names as the Corporation Co., with post office boxes as addresses. 

The city gathered 74 properties in the future arena site and turned them over for free to the Ilitch group. The city still owns the property through its Downtown Development Authority where Little Caesars Arena stands.

Dozens of Ilitch properties have sat empty for more than a decade. “It’s been painful to not be able to develop some of that property because every time we made a move, the price for other property would shoot way up,” Chris Ilitch told The News in 2014. “But we had to wait, and that hurt.”

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A vision unrealized

From the start, the Ilitch organization and its supporters have sold District Detroit as the spark of widespread development in a quick amount of time. It is why the group needed hundreds of millions in tax money, it argued. 

“From the time we bought the Fox Theatre, I could envision a downtown where the streets were bustling and people were energized,” Mike Ilitch said in a December 2012 statement. It came when state legislation was introduced to allow public funding to help build the arena. “It’s been a slow process, but we're getting there now.”

In 2014, as the group sought Detroit City Council approval of the deal, Ilitch documents given to the Council state 184 residential units would likely be ready when the arena opened in September 2017.  

In January 2016, Ilitch officials declared a new major hotel, with 300-400 rooms, and about 150 residential units would be open less than “20 months from now,”  said an Olympia Development of Michigan vice president at the time, Steve Marquardt. 

The images of the five new neighborhoods are no longer on the District Detroit website. The hotel and residential units are still planned, but the timeline is vague. 

The eight-block stretch of Woodward Avenue makes the family’s ambitions vital to the city. Beyond Woodward, the other major Ilitch development is the MotorCity Casino Hotel. The casino hotel, owned by Marian Ilitch, is just past the northwest border of the district on Grand River Avenue. 

Ilitch companies are the city’s fourth largest employer in the city, with 7,686 workers, which is 1,325 more than General Motors employs in Detroit. Income tax collected from workers' paychecks is the city government's largest source of funds. The money helps pay for services such as police, fire department and fixing potholes.

The venues run by the Ilitches attract more than 12 million visitors annually. 

It’s tough to put a true price on all the breaks Ilitch companies have been awarded since the 1987 Fox Theatre deal. By conservative estimates, it has been awarded a half billion dollars in tax subsidies and grants; the company has been given dozens of properties for free; dozens of others have been demolished, there are the two decades of free city police patrols for Red Wings and Tigers games (the practice stopped in 2018). 

But the Ilitches are still chasing their long-deferred dream. 

Plenty of parking 

Many Cass Corridor residents view the surface parking lots and parking garages as daily reminders the Ilitch plans are not geared for them.

“Of course, it’s not about the people who have lived here, it’s about getting new people here,” said Karen McLeod, a 30-year Cass Corridor resident. The neighborhood is also called Midtown.

In 2016, the Ilitches built, expanded or renovated 18 parking lots. The city didn’t enforce a landscaping requirement applied to surface parking lots, allowing more room for additional parking spaces. More than 7,800 “secure, well-lit and credit card-ready parking spots” are operated by Ilitch's Olympia Development of Michigan.

McLeod lives in an apartment building operated by a nonprofit dedicated to keeping affordable housing in the area. It's a few blocks from the arena. The city took away most of the street parking to make room for Little Caesars Arena traffic.  During most LCA events "there's just a flood of traffic, and we are just kind of trapped," she said. There are about 200 LCA events a year.

When there is not an event, the neighborhood “feels hollowed out now,” McLeod said. “People are being forced out or just leaving. There are far fewer business now.”

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Vacant buildings, lots 

Meanwhile, 24 vacant buildings and 46 vacant lots are under Ilitch control, spread throughout the district. 

Patrons who use the northwest corner of Little Caesars Arena pass by the towering ex-Hotel Eddystone, a lifeless 13-story building near the Cass Avenue/Sproat Street part of the sports/entertainment complex. This week, a new plan for the Eddystone was released. It's a $40.9 million renovation to convert the building for residential and ground-floor retail. The building would ready for occupancy sometime around 2021 or 2022.

Amid a bustling downtown near Grand Circus Park, the 18-story United Artists Theatre, 150 Bagley Ave., had been dormant since the early 1980s. The Ilitch organization bought the former movie palace in 1997.

On Park Avenue, the Detroit Life and Blenheim buildings that the city gave to the Ilitch group as part of the 1987 Fox Theatre deal are still vacant. 

Not far from the MotorCity Casino Hotel is a virtual dead zone of 22 properties on the western border of the district; a mix of grassy lots around Temple between Third and Fourth and two blocks of boarded-up buildings along Grand River. 

In May 2017, Ilitch officials said the group was ready to start one of the largest residential projects Detroit had seen in decades. Six buildings would be used to create 686 residential units. The Eddystone and the United Artists buildings were to be among the four vacant buildings to be filled, along with the construction of two new buildings. The buildings should have been opened by now or well on the way to being renovated.

Beyond the new deadline set for the Eddystone this week, the timeline for remaining projects are more fluid. 

City officials remain content to allow the Ilitch group to determine when that time is appropriate. 

Tax breaks sought for $40.9M renovation of ex-hotel next to arena

Absentee landlord

There are four apartment buildings on streets where Ilitch-run parking lots take up most of the block. The surface lots look spotless and secure. The apartment buildings are at risk ever since being bought by Ilitch-linked entities, said more than a dozen current and past residents and others familiar with the conditions.  

At three apartment buildings on the same block of Henry Street, one of the buildings has closed and the other two have been hit with city blight violations since an Ilitch-linked entity bought the properties in 2016. 

The residents in the three Henry Street apartments, 96 units in total, pay $300 to $400 a month in rent and don't have long-term leases. Many residents are service industry workers, such as dishwashers in one of the nearby trendy restaurants or cleaners of downtown office buildings. Some residents have substance abuse issues and other challenges that make daily life a struggle. But, by Cass Corridor standards, the buildings were stable and clean. Each building had its own maintenance person under the prior owner.

Conditions in the buildings quickly changed since the 2016 sale. Months after the sale, a partial roof collapse permanently closed one of the buildings. Before the building closed, it joined the other two apartment buildings in racking up nearly two dozen blight violations for such things as rodent infestation, failure to inspect for lead paint and dangerous living conditions, according to public documents.

In summer 2018, The News found an old mattress blocking a staircase in one of the buildings. In the other building, an unused janitor sink in the hallway was dirt-caked and cockroach infested. In July, the Ilitch group said it was the true owner of the buildings. The admission came as it sought city approval to tear down four empty buildings, including one at the corner of Henry and Cass, near the apartments.

One block from the Henry Street apartments is another small historic apartment building owned by an entity linked to the Ilitch group. The Cass Park Apartments, 2714 Second, was bought in July 2016 for $2.1 million.

Since the purchase, parking for the 37-unit building has been wiped out by the Ilitch-run parking lot next to the building. Management of the building has changed at least twice during that time, according to current and past residents.

When asked about Cass Park Apartments in February,  the Ilitch organization emailed The News a one-sentence reply:

 "We are very excited about our development plans for The District Detroit and look forward to sharing future project plans at the appropriate time."

Cass Corridor resident Etue says it's time for the city to take a harder line with the organization. 

"My across-the-board position is, 'put up or shut up" as far as (the Ilitch group) is concerned," Etue said. 

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laguilar@detroitnews.com

Twitter: @LouisAguilar_DN