"Interest payments on the bonds issued to pay for Little Caesars Arena will push the project's final cost to nearly $1 billion.
The current cost estimate for the future home of the Detroit Red Wings is $627.5 million, but that doesn't reflect interest payments on $450 million worth of 30-year bonds floated in 2014 to finance construction.
The estimated $336.5 million in interest payments, plus additional spending on the arena beyond the bonds, would bring the total cost to $991 million by 2045. The DDA outlined the expected interest costs to Crain's on Tuesday.
The arena's public owner, Detroit's Downtown Development Authority, issued $250 million in tax-exempt Series A bonds that will be paid off via a complex tax capture on downtown real estate owners whose properties are in a particular zone.
COST OF BUILDING AN ARENA
A breakdown of the cost of the Little Caesars Arena being built in downtown Detroit:
- Series A bonds are $250 million plus $231 million in interest for a total of $481 million.
- Series B bonds are $200 million plus $132.5 million in interest for a total of $332.5 million.
- Additional Olympia arena spending beyond the two bond series: $177.5 million
- Grand total: $991 million
The quasi-public Detroit Economic Growth Corp., which staffs the DDA under contract with the city, Tuesday told Crain's that interest payments on the Series A bonds are forecast at $231 million through 2045, the maturity year.
...The rest of the construction is being privately financed by $200 million in non-tax-exempt Series B bonds, which were forecast to have $132.5 million in interest over 30 years.
...Olympia is bound to pay for any arena construction costs beyond the $450 million generated by the bonds, and so far that additional spending has reached $177.5 million..."