Detroit Red Wings arena contractors fined $500K for failing to meet local hiring requirements

Dive Brief:

The City of Detroit has fined several Little Caesars Arena contractors approximately $500,000 for falling short of local hiring requirements on the $627.5 million Red Wings project, according to the Detroit Free Press.
In exchange for approximately $285 million in public subsidies, the Red Wings organization and developers agreed that 51% of the estimated 5,500 construction positions generated by the arena would be set aside for Detroit residents.
Detroit Office of Human Rights Director Portia Roberson, who is charged with making sure the hiring goals are met, told the Free Press that the city is confident that developers have made an "honest" attempt to meet the requirements. The Red Wings development arm, Olympia Development, held job fairs and organized worker-training programs in advance of starting arena construction.

Dive Insight:

More than two years ago, industry onlookers had questions as to whether — in a time of a widespread skilled worker shortage — arena management would be able to meet the 51% mandate. Developers also agreed to hire at least 30% local subcontractors, and officials said they have met that requirement.

The Red Wings arena is the centerpiece of a 50-block mixed-use area called "District Detroit." The Ilitch family, who own Little Caesars and the Red Wings, have sunk approximately $1 billion into the district's development, which includes the arena, retail, office, multifamily and hotel spaces. Subsidies for developments like these, as well as for sports arenas, are sometimes seen as a "gift" to wealthy developers, so there have been increasing calls to see some kind of community benefit in return, and negotiations often center around hiring practices.

For this reason, Mortenson Construction, which has a successful track record of meeting local and minority hiring goals, has been in high demand for like high-profile, publicly funded sports arenas. The Milwaukee Bucks announced earlier this year that Mortenson would build its $500 million arena, which is operating under a 40% local workforce mandate. The company is also the general contractor for the Minnesota United soccer stadium in St. Paul, MN, and that project has a 25% requirement that vendors and subcontractors be women-owned, minority-owned and small businesses.