CHICAGO - A bond-financed deal that would have brought new owners and renovations to Detroit's convention center appears dead after the Michigan Court of Appeals Friday upheld an earlier ruling blocking the state-crafted deal.
The ruling favored the Detroit City Council's recent rejection of the proposal, which would have allowed a regional authority to purchase, renovate, and expand the aging Cobo Center. Home to the North American International Auto Show, it is considered one of the city's chief economic engines, bringing in roughly $600 million annually for the cash-strapped city.
Mayor Ken Cockrel Jr., who had vetoed the council's rejection of the plan, said he would not appeal the latest ruling but that he would continue to fight for a deal to update the center.
"A modern, improved Cobo Center is critical to the competitiveness of Detroit and the region, and I will do whatever is needed to ensure that much-needed improvements to the facility are made as soon as possible," Cockrel said in a statement Friday.
But a number of state leaders, including Gov. Jennifer Granholm, have said that Lansing lacks the political will to renegotiate the Cobo legislation, which was years in the making. Oakland County Executive L. Brooks Patterson has said he would try to lure the auto show to the adjacent county.
After Friday's ruling, an auto show co-chair said the show would begin to consider other venues, including in Oakland County, according to published reports. Several auto makers have pulled out of the show in recent years citing space constraints at Cobo. By a vote of 5 to 3, the City Council in late February rejected the state-crafted legislation that would have allowed a regional authority to issue up to $300 million in bonds for Cobo.
Cockrel quickly vetoed their rejection, and the council took the matter to the Wayne County Circuit Court. The court ruled in favor of the council, and after Cockrel appealed that decision, the three-member state appeals court upheld the circuit court ruling that the legislation gave the City Council sole authority to approve or reject the plan.
"Under the clear terms of the act, if a majority of the City Council affirmatively votes to disapprove the transfer, then the transfer does not occur," the appeals court judges wrote in the 12-page ruling. "Because the City Council's vote was dispositive, the mayoral veto was, in essence, irrelevant."
The legislation would have created a five-member regional authority, including one member from Detroit, to take over ownership of Cobo. The authority would have paid the city $20 million for the center, and would have taken over all operational costs and up to $100 million in existing debt.
The authority expected to issue roughly $288 million in revenue bonds, backed by liquor, cigarette, and hotel taxes to finance the deal.