Players Shun Faded Stadium By Christina S.N. Lewis The Wall Street Journal 11-12-2009
Players Shun Faded Stadium
Few Buyers Line Up for Silverdome in Depressed Pontiac, Detroit Lions' Old Home
By Christina S.N. Lewis
The Wall Street Journal
November 12, 2009
The empty Pontiac Silverdome, an 80,000-seat municipal stadium that once was home to the Detroit Lions, is up for auction -- and it is possible no one will bite.
Bids are due Thursday for the 127-acre property, which has become the latest local symbol of futility for an economically hurting region. Experts say possible bidders might be scared off by the credit crunch in real estate, as well as the troubles of General Motors Co., which have hobbled the local economy.
The Silverdome has mostly sat idle since 2002, when the Lions decamped for Ford Field in nearby Detroit. The city of Pontiac, which owns the property, put it on the market two years ago. After several deals fell through, the city decided to auction it with no minimum price.
Pontiac faces a $6.5 million budget gap and is $103 million in debt. Michigan Gov. Jennifer Granholm declared a financial emergency earlier this year, and removed control of the city from its elected officials. She installed a financial manager to restore fiscal order.
By selling the Silverdome, Pontiac hopes to stop paying its $1.5 million annual upkeep and return the stadium to the tax rolls.
"The sale of the Silverdome at some reasonable price will be a major linchpin in the turnaround process," said turnaround consultant Fred Leeb, the financial manager appointed by Ms. Granholm. Since the auction was announced the city has received roughly fifty inquiries, he said, including from Asian investors.
Developers over the years have proposed a range of uses for the Silverdome, including a casino, racetrack, office park, water park and indoor soccer arena. A local developer bid $17.5 million for the property last year but the deal collapsed.
"It is really a liability today due to the cost to hold and the difficulties in landing a future user for the property," said Lowell Salesin, a local real-estate attorney with Maddin, Hauser, Wartell, Roth & Heller.
Various states and local governments are scrambling to sell property to close budget gaps. California Gov. Arnold Schwarzenegger this summer proposed selling the Los Angeles Memorial Coliseum and Sports Arena, but the plan wasn't approved by the Legislature. Instead the state will sell and lease back 17 office buildings, as well as a 190-acre fairground in Orange County, raising an estimated $600 million, according to Eric Lamoureux, a spokesman for the California Department of General Services.
Arizona is facing its budget crisis with a plan to sell and lease back 12 state properties, including a government building that houses state lawmakers' offices.
The Silverdome was built in the 1970s at a cost of $55.7 million. The stadium hosted a Super Bowl, Pope John Paul II and such events as a Led Zeppelin concert and WrestleMania. It was built with an inflatable Teflon-coated dome that shined silver -- hence its name.
The Lions announced plans in 1996 to move back to Detroit after the team wasn't able to renegotiate its lease with Pontiac. The city sued the team and settled the lawsuit in 2001 when the Lions agreed to pay the city $26 million, helping to pay down the city's debt on the property.
Other large sports arenas have been successfully converted to other uses. About five years ago, the Compaq Center, a Houston basketball arena once home to the Houston Rockets, was leased by Lakewood Church. It is now one of the largest so-called megachurches in the U.S.
To make the Silverdome deal more attractive, Pontiac in September rezoned the surrounding 127 acres from residential to a more flexible commercial zoning that could allow a race track, golf course or an amusement park, as well as other commercial enterprises. A buyer would be eligible for state, local and federal tax incentives.
Architects and planners who have studied the Silverdome say the site's main features are its location near two major highways and the size of the property. Some initial proposals involved razing the stadium; others called for removing its roof and redeveloping the structure.
"You could imagine the premier seating becoming a ring of office buildings and hotels and the field becoming a grand green space," said Arthur Smith, an architect with the firm Harley Ellis Devereaux who worked on an earlier plan for Michigan developer Samir Danou.
But with Pontiac's unemployment rate at 30%, an investor would have to have "deep pockets and a tolerance for risk," said Robin Boyle, a professor of urban planning at Wayne State University.
He pointed out that additional subsidies would probably be needed and that the area faces competition from another large-scale redevelopment in the works in nearby Troy, Mich.
Players Shun Faded Stadium
Few Buyers Line Up for Silverdome in Depressed Pontiac, Detroit Lions' Old Home
By Christina S.N. Lewis
The Wall Street Journal
November 12, 2009
The empty Pontiac Silverdome, an 80,000-seat municipal stadium that once was home to the Detroit Lions, is up for auction -- and it is possible no one will bite.
Bids are due Thursday for the 127-acre property, which has become the latest local symbol of futility for an economically hurting region. Experts say possible bidders might be scared off by the credit crunch in real estate, as well as the troubles of General Motors Co., which have hobbled the local economy.
The Silverdome has mostly sat idle since 2002, when the Lions decamped for Ford Field in nearby Detroit. The city of Pontiac, which owns the property, put it on the market two years ago. After several deals fell through, the city decided to auction it with no minimum price.
Pontiac faces a $6.5 million budget gap and is $103 million in debt. Michigan Gov. Jennifer Granholm declared a financial emergency earlier this year, and removed control of the city from its elected officials. She installed a financial manager to restore fiscal order.
By selling the Silverdome, Pontiac hopes to stop paying its $1.5 million annual upkeep and return the stadium to the tax rolls.
"The sale of the Silverdome at some reasonable price will be a major linchpin in the turnaround process," said turnaround consultant Fred Leeb, the financial manager appointed by Ms. Granholm. Since the auction was announced the city has received roughly fifty inquiries, he said, including from Asian investors.
Developers over the years have proposed a range of uses for the Silverdome, including a casino, racetrack, office park, water park and indoor soccer arena. A local developer bid $17.5 million for the property last year but the deal collapsed.
"It is really a liability today due to the cost to hold and the difficulties in landing a future user for the property," said Lowell Salesin, a local real-estate attorney with Maddin, Hauser, Wartell, Roth & Heller.
Various states and local governments are scrambling to sell property to close budget gaps. California Gov. Arnold Schwarzenegger this summer proposed selling the Los Angeles Memorial Coliseum and Sports Arena, but the plan wasn't approved by the Legislature. Instead the state will sell and lease back 17 office buildings, as well as a 190-acre fairground in Orange County, raising an estimated $600 million, according to Eric Lamoureux, a spokesman for the California Department of General Services.
Arizona is facing its budget crisis with a plan to sell and lease back 12 state properties, including a government building that houses state lawmakers' offices.
The Silverdome was built in the 1970s at a cost of $55.7 million. The stadium hosted a Super Bowl, Pope John Paul II and such events as a Led Zeppelin concert and WrestleMania. It was built with an inflatable Teflon-coated dome that shined silver -- hence its name.
The Lions announced plans in 1996 to move back to Detroit after the team wasn't able to renegotiate its lease with Pontiac. The city sued the team and settled the lawsuit in 2001 when the Lions agreed to pay the city $26 million, helping to pay down the city's debt on the property.
Other large sports arenas have been successfully converted to other uses. About five years ago, the Compaq Center, a Houston basketball arena once home to the Houston Rockets, was leased by Lakewood Church. It is now one of the largest so-called megachurches in the U.S.
To make the Silverdome deal more attractive, Pontiac in September rezoned the surrounding 127 acres from residential to a more flexible commercial zoning that could allow a race track, golf course or an amusement park, as well as other commercial enterprises. A buyer would be eligible for state, local and federal tax incentives.
Architects and planners who have studied the Silverdome say the site's main features are its location near two major highways and the size of the property. Some initial proposals involved razing the stadium; others called for removing its roof and redeveloping the structure.
"You could imagine the premier seating becoming a ring of office buildings and hotels and the field becoming a grand green space," said Arthur Smith, an architect with the firm Harley Ellis Devereaux who worked on an earlier plan for Michigan developer Samir Danou.
But with Pontiac's unemployment rate at 30%, an investor would have to have "deep pockets and a tolerance for risk," said Robin Boyle, a professor of urban planning at Wayne State University.
He pointed out that additional subsidies would probably be needed and that the area faces competition from another large-scale redevelopment in the works in nearby Troy, Mich.
YOU TUBE CHANNEL - Follow me on my You Tube Channel at Joe Jurek Real Estate Investing Adventures
https://www.youtube.com/channel/UCiko62V79zLKX_owbirAYNA
TWITTER - Follow me on Twitter at Joe Jurek CPA
Joe Jurek CPA
https://twitter.com/JoeJurekCPA