Arena contractors fined $500K for not hiring Detroiters

The City of Detroit has levied about $500,000 in fines against several contractors working on the new Red Wings arena for failing to hire enough Detroiters.

No fewer than 51% of the estimated 5,500 jobs involved in building the $627.5-million Little Caesars Arena are required to go to Detroit residents.

But some arena contractors have fallen short of meeting their hiring targets. So far, about $500,000 in fines have been paid for noncompliance with the 51% minimum, city officials said. The lower the number of Detroit residents, the higher a contractor's fine.

The jobs requirement was set by a development agreement between local government and the Ilitch family's Olympia Development, the arena's developer.

Money from the fines is to go to programs for training Detroit residents in the skilled trades, according to Portia Roberson, director of the city's office of human rights, which has been monitoring and enforcing  the hiring requirement.

The number of contractors that were fined was not available. The percentage of Detroiters across the entire arena project also wasn't available.

The 51% local hiring requirement was written into the arena deal to ensure that a wide swath of Detroiters benefit from the construction of such a large project in their city involving taxpayer subsidies. The arena's public subsidies include $250 million in state-issued bonds, plus $35 million in previously collected downtown property taxes.

"Where individual contractors and subcontractors fail to meet the 51% Detroit resident requirement, a noncompliance fee is paid with 100% of that applied to training Detroiters for skilled trades jobs," Roberson said in a statement. "Contractors are measured on a monthly basis and are fined only for months they do not meet the requirements. Over the course of the arena project so far, various contractors have been assessed fines at various times, which they have paid."

In addition to the hiring mandate, 30% of the total value of construction contracts are required to go to Detroit-headquartered and Detroit-based businesses. Officials have said the project is in compliance on that measure.

Olympia Development held several job fairs in recent years to help attract Detroit residents to arena construction jobs as well as training programs in preparation for such jobs.

Little Caesars Arena is on schedule to be completed next year and open by September 2017.

(2016 © Detroit Free Press)


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