CHICAGO — In a surprise move, the Detroit City Council effectively rejected a $60 million plan to rehab a vacant casino into a new police headquarters Friday — just three days before construction was set to begin and a month after the city sold bonds to finance the project.
Opposing council members said Mayor Dave Bing was not specific enough in how he planned to spend $34 million in proceeds left over from a $100 million bond sale held in mid-December, the bulk of which was to be used to finance the police project.
Construction on the new headquarters was set to begin Monday.
Of the $100 million, around $60 million is to be used for the high-profile renovation of a former MGM casino into a massive new public safety headquarters. After spending about $6 million on issuance costs, there were about $34 million of proceeds left over from the borrowing, and several council members said they wanted more information on how that money was to be spent. The council voted 6 to 3 against two measures that would have allowed the project to move ahead.
The public safety project is likely the victim of a battle between the City Council and the mayor over televising council meetings.
Earlier last week Bing sued the City Council after it took over the Cable Commission as part of an ongoing dispute over when and how often to broadcast council meetings on the city’s two public-access channels.
Council President Charles Pugh told local reporters Friday that he was not going to approve any expenditures until live council broadcasts are restored and the mayor drops the lawsuit.
Bing blasted the move as politically motivated.
“It is obvious from today’s vote that six of our council members have chosen politics over public safety,” he said in a statement issued shortly after the council’s vote Friday morning. “Council President Pugh has indicated that all city business is suspended until the citizens are able to see council on television five days a week. It is unfortunate that he and some of his colleagues view media exposure as a bigger priority than public safety. Citizen safety should be non-negotiable.”
Bing’s office also noted that all capital projects funded with the remaining bond proceeds must be approved by the council.
At least one source close to the council expects the headquarters project to move forward once the cable dispute is resolved. “The majority are in agreement with the project, but there are some internal issues with the mayor that needed to be worked out,” the source said.
The council meets Wednesday and could take up the issue again, though formally the budget amendment and contract measure advancing the projects are in the budget, finance, and audit committee.
The city sold $100 million of recovery zone economic development bonds in early December to finance the new headquarters and a variety of other capital projects. The Michigan Finance Authority issued the debt on behalf of the junk-rated city. The bonds carry a subordinate lien on the city’s state revenue aid.
Detroit saw pre-subsidy interest rates of 5.1% to 8.4% on the bonds, and officials said the deal was oversubscribed by 50%.
Recovery zone economic development bonds feature a 45% subsidy from the federal government to offset interest costs.
