Lansing — The Michigan State Housing Development Authority on Wednesday redirected $32.7 million in federal funds intended for preventing residential foreclosures toward the demolition of blighted buildings in Detroit and Flint.
The state authority’s board voted on the recommendation during a Wednesday meeting.
The funding comes out of Treasury's $498 million award in 2010 from the Hardest Hit Fund, which has been used to provide homeowners with assistance paying mortgages and taxes to avoid foreclosure.
Detroit will get $21.2 million and Flint will receive $11.4 million to remove blighted homes.
The Detroit Land Bank was in danger of running out of blight removal funding before year’s end and “Flint has essentially stopped demolition because they’re out of money,” said Kevin Elsenheimer, executive director of MSHDA.
An improving Michigan economy means the need for anti-foreclosure programs is “winding down,” Elsenheimer said.
“We believe this is the most efficient way to get these dollars out,” he said.
Detroit Mayor Mike Duggan met with Treasury officials this month to talk about blight funding. The city’s demolition program had been funded through December, and he was working to extend it through April.
On Wednesday, Duggan said he was pleased that additional dollars were approved and now he’ll turn his attention to finding money for the balance of 2016.
“What we are doing is important work,” he said. “We are doing it at record rates.”
Duggan said that the city is exploring several strategies to bring demolition costs down. A plan, he said, is anticipated next month.
Among the strategies: Detroit is working on a scientific study with a major university on more cost-effective ways to do asbestos removal. He’s also exploring the idea of having the city’s building authority do about 10 percent of the city’s demolitions itself. Currently, all the work is contracted.
The city had knocked down nearly 7,000 in the last 18 months. Duggan said that he expects the number will reach between 8,000 and 9,000 by the end of April.
Duggan’s demolition program has been under scrutiny in recent weeks amid soaring costs and questions about bidding practices. The effort has been the centerpiece of the mayor’s plan to deal with an estimated 40,000 blighted properties.
MSHDA officials have completed a review of Detroit’s blight demolition program and plans to send a review team to Flint on Thursday, he said.
Duggan noted that the state conducted a review of all the bidding procedures at the Land Bank and has made a number of recommendations for improvements. The city agrees with the findings and will fully implement them, he said.
Starting next month, the land bank and the building authority will also publicly post all awarded bids within a week, to ensure that price trends and expenditures are transparent.