Detroit reviewing excavation work by demolition firm

Christine Ferretti
The Detroit News
Demolition of an unoccupied house on May 19, 2016

Detroit  — A company held up as a model in the city's demolition program is under review to determine whether it failed to fully excavate debris at a half-dozen sites, according to the Detroit Building Authority.

Concern over work performed by Detroit-based Gayanga Co. was brought to the attention of the city on Tuesday by the firm, according to Brian Farkas, director of special projects for the building authority. 

"We are currently looking into potential issues at a half-dozen demolition locations that were brought to our attention today by the contractor that performed the work," Farkas said in a statement Tuesday. "The nature of what we are looking into at these sites is whether the demolition contractor fully removed the basement concrete and masonry to determine if they are in compliance with the terms of their contract."

Farkas declined to confirm the locations flagged for review, but said two had been backfilled and there currently are "no concerns regarding the fill used at those sites."

"As we are still gathering the facts, there have been no violations or stop-work orders issued at this time," he said. 

The program's review of Gayanga's work comes after Mayor Mike Duggan held up the "outstanding demolition contractor" as an example of a minority-owned and operated company that's employing Detroiters. 

During his budget address Thursday to Detroit's City Council, Duggan noted that the firm has secured about $9 million in demolition work and is "doing an outstanding job."

Gayanga representatives did not immediately respond Tuesday to messages seeking comment. On its website, the firm, described as a construction engineering startup that works in Michigan and Texas, touts inclusion and efforts to hire community members who have faced barriers to employment. 

The company is the latest in recent weeks to come under scrutiny for allegations of violating the city's demolition program rules. 

Last month, Chicago-based McDonagh Demolition was issued a stop-work order by the building authority for all demolition and backfill work after it was discovered that the company had not fully removed demolition debris before adding fill dirt at several sites.

Farkas has said the "attempted scheme" will cost the company about $17 million in contracts. 

McDonagh has called the violation an "isolated issue" that it was taking steps to correct. 

Farkas first touted the catch as evidence the building authority's controls worked as intended, saying one of the department's field liaisons discovered the problem.

But it was later determined that a former McDonagh employee had acted as a whistleblower. 

McDonagh was specifically ordered to excavate several sites and it had dozens of others that were in various stages, some of which had not been backfilled but officials said would be reviewed in some form.

Separately, another contractor, DMC Consultants, in February began filling holes with unauthorized dirt. The building authority caught on to the issue after its online platform alerted officials that the company had exhausted their supply of approved fill, the department has said. 

Soil sampling was initiated for 37 holes that DMC filled with dirt that had not been approved. Testing is expected to determine whether the soil is unsafe for residential use.

The building authority oversees the city's federally funded demolition work in partnership with the Detroit Land Bank Authority. The demolition effort has paid out close to $177 million in federal funding to take down 11,000 structures since 2014.

Katie Bach, a spokeswoman for the Michigan State Housing Development Authority, which administers program funding through its Michigan Homeowner Assistance Nonprofit Housing Corp., said that the land bank alerted the state of the activity involving Gayanga late Tuesday afternoon.

"Next steps are to be determined," Bach said. 

On Friday, The Detroit News reported detailed findings from an exhaustive review of the program's record-keeping that turned up a disjointed process for tracking what went into the ground at thousands of sites across the city. 

University of Michigan doctoral candidate Michael Koscielniak conducted an analysis of a digital database used to track the sources of dirt, finding nearly half were unaccounted for. The city countered that there are records for all of the dirt used under the program and that Koscielniak had based his findings on only part of the data.

In January, the federal watchdog agency investigating the city's blight elimination effort issued a round of subpoenas to certain contractors, seeking detailed records of where they obtained their dirt, the cost and where it ended up. 

In subpoenas dated Jan. 10, the Special Inspector General for the Troubled Asset Relief Program demanded two years' worth of documentation.

Soil worries also prompted Detroit City Council's second in command, Mary Sheffield, to put out a call last month for a congressional hearing on demolition in Detroit. 

Last week, state Rep. LaTanya Garrett introduced a resolution seeking state-level hearings on what she described as "improper use' of the federal Hardest Hit Fund by Detroit's land bank and building authority, saying the program has been "mired in controversy" since its inception in 2014.

Land Bank Executive Director Saskia Thompson has denied the assertion, noting that the U.S. Treasury Department has "shown its confidence in our program" by releasing more funding toward the effort annually, totaling more than $265 million over five Hardest Hit Fund rounds.

The mayor on Thursday also told the council that as federal funding is exhausted, the city will transition this fiscal year from a demolition effort controlled by the Detroit Land Bank Authority to a city-administered effort.