Detroit council rips land bank over demo suspension
Detroit — Leadership of the city’s land bank acknowledged it kept quiet over a two-month suspension of the city’s controversial demolition program as it faced critical questions Tuesday about leaving the City Council in the dark.
Council members said the decision to exclude them — and others, including some Detroit Land Bank Authority board members — was “disrespectful.”
“That is unacceptable to have a legislative body sitting here not knowing what’s going on,” President Brenda Jones told land bank officials during a discussion that spanned nearly two hours. “I’m just appalled by what I am hearing and the things that are happening.
“We are talking about taxpayer dollars. It seems like the truth is 200 miles away from what I’m hearing. There seems to be little to no transparency.”
Demolition funded by the city program shut down Aug. 15 while the city and land bank met with officials from the U.S. Treasury and Michigan State Housing Development Authority to resolve issues.
In an email Tuesday, state housing authority spokeswoman Katie Bach confirmed the state agency notified the mayor’s office when U.S. Treasury “imposed and later lifted the suspension on funding” for demolitions.
Land bank officials told council on Tuesday the “short pause” of the program, tied to a state review, was supposed to be brief and only four people within the land bank were aware of it.
“The communication that we received at the time was that there was going to be a short pause in the program. We thought the pause was going to be very short. As soon as we realized the pause would be longer, that’s when we started to notify the board and started to notify others,” Land Bank Executive Director Carrie Lewand-Monroe told the council on Tuesday.
Lewand-Monroe added “we had every indication that the (federal) funding itself was not in jeopardy” and that land bank officials were following the direction of the state housing authority, which administers the federal funding for the demolition program.
“We were told (by the state) to be very, very quiet about it, and we wanted to make sure we were cooperating and respecting the wishes of MSHDA and not sharing that information publicly,” she said. “Had we done that, we would have gone crossways with MSHDA and we don’t want to do that either.”
Bach said the state agency wasn’t aware of attempts to conceal the suspension.
“MSHDA is not aware of any efforts to keep the suspension out of the City Council or public view,” she said.
Councilman Andre Spivey said when it was revealed last month the program had been halted, council members were like “deers caught in headlights.”
Spivey further cast doubt on any notion Mayor Mike Duggan wasn’t promptly aware when it first went down in August, saying Duggan is “too close to the land bank.”
Duggan came forward and publicly admitted the suspension on Oct. 17, three days after it was over.
The land bank’s appearance before council Tuesday also comes after the authority released findings last week from an independent June audit that revealed sloppy record keeping and improper billing for more than $1 million in demolition work over a nine-month period between June 2015 and February.
It also uncovered some demolition overages were hidden by spreading them over hundreds of properties so it appeared none of the work exceeded cost limits set by the state.
The practice — which kept each property under a $25,000 required cap — was authorized within the city program by “a rogue employee,” whom Land Bank Chairwoman Erica Ward Gerson has declined to name, citing privacy involving personnel matters.
“The monies moving around ... it’s like a high school kid knowing where mom and dad’s stash is,” Spivey remarked Tuesday about the audit’s findings.
The investigation flagged 100 demolitions out of approximately 8,000 that had excessive costs that were ineligible for the federal funding but were billed to the state housing authority. Mistakes noted in the new audit did not result in contractors receiving extra money, the land bank said.
Gerson on Tuesday said the land bank will pay back the state housing authority for the expenses improperly billed with money from the city’s $40 million appropriation for blight.
“We will spend that money to reimburse MSHDA because that’s the money that should have been spent in the first place,” Gerson told reporters.
“They (state housing authority) are finishing their audit to decide on a definite number, then we will cut them a check out of the $40 million because that money should have been spent in the first place.
“And it’s a mystery to me why it wasn’t.”
The land bank’s audit is among numerous state, federal and city reviews into demolition activities in Detroit after concerns were raised last fall over rising costs and bidding practices.
State housing authority and U.S. Treasury investigations into the program remain ongoing.
Last month, a review conducted by the Michigan Homeowner Assistance Nonprofit Housing Corp. in conjunction with the state prompted state housing authority employees to be embedded at the land bank and building authority to prove compliance.