A federal judge has knocked down an initial effort to stop the Detroit Pistons from moving to a new downtown arena unless there’s a public vote on financing the project.
On Monday, U.S. District Judge Mark Goldsmith heard arguments in a federal lawsuit, filed by activists Robert Davis and D. Etta Wilcoxon. It alleges team owners and city officials didn't seek public approval before using public funds for the project, in violation of state law.
As Detroit voters, the plaintiffs “have a statutory right to vote on this very question,” attorney Andrew Paterson argued to U.S. District Judge Mark Goldsmith.
Detroit’s Downtown Development Authority plan to use $34.5 million, pulled from millages normally dedicated to Detroit Public Schools and Wayne County Parks, to pay for bonds issued to cover part of the cost of the new Little Caesars Arena.
Paterson acknowledged the DDA has the right to capture tax revenues within its boundaries. But he argued that under state law, any funds diverted away from a dedicated revenue stream, like school and park millages, must be directly approved by voters—and failing to do so amounts to a violation of the constitutionally-protected right to vote.
“I don’t think the citizens of Detroit, or the citizens of the County of Wayne, want school money going to fund two billionaires’ projects, especially when they can afford to finance the project themselves,” said Davis, referring to Pistons owner Tom Gores, and the late Detroit Red Wings owner Mike Ilitch.
Wilcoxon said the deal to move the Pistons downtown should have been done with more transparency.
“Why is there such reluctance on the part of the parties to ask us whether or not we want to repurpose the money?” Wilcoxon asked. “We may very well repurpose it, [but] the issue is, why hasn’t the vote come back to us?”
The plaintiffs wanted Judge Goldsmith to issue a temporary restraining order that would bar the city and DDA from using the captured funds “until they comply with the law.”
But DDA attorney David Fink told Goldsmith doing that could cause “devastating financial harm to the city.” He said there was no need bar the DDA from capturing those dollars because “You can order the parties to move money around.”
Fink added that any ruling against his client would be a “harm that can’t be undone.”
Goldsmith ultimately ruled late Monday against the plaintiffs' motion for an emergency order to put a halt to the move, saying they “have not carried their burden to show that the circumstances clearly demand injunctive relief.”
In court, Goldsmith was skeptical of Paterson’s claims that by failing to put the matter up for a vote, the city of Detroit and DDA had violated the constitutional right to vote. While they “might have all kinds of issues in state court,” the case didn’t necessarily belong in federal court, Goldsmith said.
Goldsmith also ruled that while the plaintiffs failed to show the court’s immediate action would cause them “irreparable harm,” the defendants argued persuasively that “an injunction that Plaintiffs seek would cause great harm to the City of Detroit by making it very likely that the DDA would default on $250 million in bond obligations, which in turn would greatly damage Detroit’s creditworthiness.”
This paves the way for the NBA’s Board of Governors to approve the Pistons’ move to Detroit when the board meets next month. The Pistons had alleged the NBA won’t do that until this lawsuit is resolved and all the financing is assured.
The Detroit City Council is scheduled to vote Tuesday on whether to approve the $34 million in bonds to support the new arena.
