Audit raises conflict of interest over Detroit staff

Christine Ferretti
The Detroit News

Detroit — A preliminary audit into Detroit’s demolition activities has flagged potential conflicts of interest between the city and executive leadership of the Detroit Building Authority.

In an interim report released Tuesday, the city’s Office of the Auditor General contends the Detroit Building Authority and city have violated terms of a joint property management agreement as well as state law “by creating and allowing a conflict of interest” in executive leadership.

At issue is the role of David Manardo, who holds dual roles as head of the Detroit Building Authority and as the city’s Chief Operating Officer, the audit says. Manardo, it contends, is a public official, has direct responsibility for the building authority and is also paid by it.

Since the director of the building authority reports to the city’s COO, Manardo “in essence has authority of himself albeit in two different roles,” it says.

Separately, Manardo’s deputy, Rebecca Christensen, serves a dual role as a demolition contractor for the Detroit Building Authority, creating another conflict, it claims.

The report further recommends the city take steps to eliminate the conflicts, arguing not doing so would diminish “the assurance that governmental decisions are made in the public's best interest.”

But Detroit’s top attorney Melvin Butch Hollowell countered the assertion of conflict is “misplaced and inaccurate.”

Hollowell, in an April 1 memorandum, noted Manardo is “Group Executive, Operations,” not Detroit’s COO. Manardo, who earns $215,000 annually, is an employee of the city and not paid under a personal services contract. Though he was previously, he wrote.

Christensen is “Director, Commercial Property Projects,” for the building authority, not its demolition contractor — a position that she’s never held, Hollowell wrote.

He also clarified Christensen’s city position as “Executive Director, Operations,” and her salary, which is $130,000 and paid by the city. He further argues that Christensen transitioned from the DBA to the city in December and has not served both entities at the same time.

“The Law Department has issued an opinion which finds there is no conflict of interest between the Detroit Building Authority and the city,” Hollowell said in a statement provided Tuesday. “The DBA is a unit of city government, and under state and local law, the city cannot be in conflict with itself. The DBA was incorporated by the city; its members are appointed by the Mayor and the City Council; and it may be dissolved by the city. The provisions cited in the report are misplaced as they only apply to entities outside of city government.”

The Auditor General's Office said it doesn't agree with Hollowell's response and it stands by the original findings cited in the report.

The Detroit Building Authority is funded by the city and is in the city's budget. The authority is included in the operations and activities of the city. It was created for acquiring, owning, improving or maintaining buildings, parking lots or structures and recreational facilities.

The early findings represent the Detroit City Council’s first look at a review it requested in October of the Detroit Building Authority and Detroit Land Bank Authority’s demolition activities in response to concerns over bidding practices and spiraling costs.

For the most part, the interim audit notes that it’s meant to be informative, with the exception of its finding of conflict.

When asked about the audit on Tuesday, Stephen Grady, chief of staff to Council President Brenda Jones, said that they had “just received it and we’re looking at it.”

Tuesday’s report did not delve into concerns raised over rising costs tied to Detroit’s demolitions. But the audit focuses on citywide demolition activity between Jan. 1, 2014 and Sept. 30, 2015, and says there could be other conditions worthy of reporting. The timeline for a final report is not known.

“We discovered that demolition activity in the city is convoluted, complex, and will require a considerable amount of time to audit,” the report says.