Detroit demo company says it has given feds documents

Christine Ferretti
The Detroit News

Detroit — One of the city’s largest demolition contractors confirmed Tuesday it has complied with a subpoena from federal inspectors seeking documents related to the firm’s contract with Detroit’s Land Bank Authority for federally funded demolition.

Christian Hauser, an attorney for Detroit-based Adamo Group, said the company received a subpoena in April from the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP.

“The subpoena requested certain documents pertaining to Adamo’s contract with the Detroit Land Bank Authority on the Hardest Hit Blight Elimination Program,” Hauser said in an email. “Adamo fully complied with the subpoena and will continue to cooperate with any further request for documents if necessary.”

The contractor’s subpoena came the same month the city’s auditor general was contacted by SIGTARP for records.

Auditor General Mark Lockridge said his office received a federal subpoena after it released preliminary findings from a months-long audit into the city’s demolition activities.

The report, issued in mid-April, flagged potential conflicts of interest between the city and executive leadership of the Detroit Building Authority. Lockridge told The News the SIGTARP subpoena was seeking documents supporting the preliminary audit that was published.

Detroit’s City Council last fall requested the audit of the building authority and land bank demolition activities in response to questions over bidding and costs. The Detroit Building Authority and the Land Bank Authority have received federal subpoenas, sources told The News.

Craig Fahle, a spokesman for the land bank which administers the city’s Hardest Hit Fund demolitions, said the land bank does not comment on active investigations.

In a June letter to the land bank’s general counsel from the counsel for SIGTARP over a Freedom of Information Act request seeking copies of federal subpoenas, B. Chad Bungard said he was “writing to strongly ask that you withhold subpoena contents.”

Disclosure, said Bungard, would reasonably “interfere with law enforcement proceedings” and could “constitute an unwarranted invasion of personal privacy.”

The Duggan administration’s demolition program came under scrutiny last fall amid concerns over soaring costs and bidding practices. In May, the FBI’s Detroit office acknowledged it’s investigating the program.

The land bank, city and building authority retained lawyers in May.

Alexis Wiley, chief of staff for Mayor Mike Duggan, said Tuesday the city could not comment on ongoing investigations. But she did say “no city departments or the mayor’s office have received subpoenas.”

Detroit’s auditor general is independent of the city administration, is appointed by the City Council and operates independently of the mayor.

SIGTARP doesn’t comment on its investigations. It also does not confirm whether they are open, nor does it discuss its actions, including subpoenas.

Duggan has said he welcomes the SIGTARP review, adding “we are cooperating 100 percent with everybody who wants to investigate.”

Last fall, the city came under scrutiny over a pilot program aimed at attracting larger players to rapidly take down larger bundles of homes. At the time, a WJBK-TV report accused city building officials of improperly meeting with contractors in 2014 to set prices for the bulk demolition work before requests for bids were official.

Three of the four local contractors participating in discussions — Adamo, Homrich of Carleton and MCM of Bloomfield Hills — were the sole bidders after the project was publicly offered. They were awarded the work. The fourth company, Bierlein of Midland, did not bid.

Richard Adamo and Hauser have declined to comment while the investigation is pending. Homrich and MCM did not return calls from The News and officials with Bierlein declined to participate in an interview.

The 2014 pilot project paid Homrich about $8.4 million; Adamo, $8.1 million; and MCM, $4.4 million, plus other costs tied to change orders.

The administration has said there was nothing unusual or improper about the set-price contract initiative, which was discontinued shortly after when it didn’t attract national players.

In October, the Michigan State Housing Development Authority reviewed the land bank’s bid selection process related to Hardest Hit funds and didn’t uncover any significant issues. The agency, which distributes the federal funding once invoices are reviewed, did however require changes to “further strengthen their selection of contractors.”

Detroit’s demolition costs went from an average of about $13,600 per house in 2014 to about $16,400 in 2015. The city said the rising prices were tied to new environmental safeguards. Costs now for the average residential demolition is about $12,300 per house.

Recently, the U.S. Treasury and the Michigan State Housing Development Authority announced more funding has been directed toward Detroit’s blight fight. The city has been awarded about $258 million to-date for blight demolition.

Duggan contends there’s no way the federal government would continue awarding blight dollars to the city if they had concerns about the way the program was operating.

cferretti@detroitnews.com