Detroit council grills Duggan staff over FCA deal with land speculator
Detroit — Mayor Mike Duggan's staff vowed Tuesday they would meet with a controversial landowner to discuss his alleged blighted properties after city council members complained of his deal with City Hall that forgave more than a $1 million in fines and tickets.
David Bell, who heads Detroit's building department, shared the city's plans to meet with Michael G. Kelly, who city staff said owns about 400 residential properties across the city amid questions from Detroit City Council in the wake of news reports of Detroit's agreement with Kelly.
Records show the city, with council approval, made a deal with Kelly this spring to forgive nearly $1.3 million in property tax debt and fines, along with likely thousands more in blight tickets the city maintained he owed for land needed for Fiat Chrysler Automobiles NV’s $1.6 billion expansion on the city’s east side.
Kelly, the city and the Detroit Brownfield Redevelopment Authority brokered the agreement in May. As part of it, Kelly and his companies transferred five of his properties to the authority. In exchange, the city gave Kelly 15 parcels of city-owned land elsewhere in the city, including near the Detroit riverfront.
Bell said Tuesday the purpose of meeting with Kelly would be to develop a "strategic plan" to address what he said were blighted properties. David Viar, Kelly's attorney, did not immediately return a call for comment Tuesday morning.
Many of the residential properties Kelly owns, Bell noted, are under land contract with homeowners.
President Brenda Jones on Tuesday grilled several members of the Duggan administration, including Corporation Counsel Lawrence Garcia, about Kelly, calling the deal that many council members were unaware of a "disrespect for Detroit."
Bell said Tuesday the city is aware of Kelly's properties but stressed the FCA deal has no impact on the city's ability to issue tickets to Kelly.
"We have issued tickets before this deal, we have issued tickets after this deal and we will continue to issue tickets to Michael Kelly," Bell told the council.
Since the council approved the FCA land swap agreements, Kelly has been issued 58 tickets, Bell added.
Garcia told the council that the land acquisition necessary for the FCA deal was complicated and had to be done quickly. Also, Detroit's ability to enforce city code has not been impacted, and it retains power over equal enforcement across all landowners.
"We made a lot of complex deals in a limited amount of time," he said. "This was and still is a good deal for the city."
Jones said it's "unfair" that the council was forced to vote on the deal without all of the information and that "no one told council that it was a slum landlord" when the panel voted on the FCA agreements.
"Nobody takes what the body has to take and nobody hears what this body has to hear when we vote on something without having all of the information," she said. "It's unfair and it's disrespectful."
The council and its Legislative Policy Division admitted during Tuesday’s meeting that they weren’t fully informed about Kelly and those components of the deal prior to voting on the FCA agreement.
The city made a similar deal with Kelly in fall 2018 before the FCA deal was announced for 38 properties needed for the expansion.
The city dropped 18 lawsuits and 17 blight cases against Kelly in exchange for the 38 properties he gave to the brownfield authority and another 23 he transferred to the Eastern Market Corp.
Kelly and his companies were sued last year in U.S. Detroit Court in Detroit by home buyers who accuse him of violating the federal Truth in Lending Act, Homeownership Equity Protection Act and the Michigan Consumer Protection Act. Kelly has denied the allegations in court, arguing the rent-to-own contracts are not subject to federal rules.
The lawsuit alleges purchasers believed they were buying their homes and were encouraged “to keep paying the monthly payments and to repair the dilapidated properties,” all while paying a 10 percent interest rate and property taxes.
Then if payments were missed, Kelly and his companies would try to evict them as tenants without the normal protections provided homeowners, according to the lawsuit.
In 2011, The Detroit News reported that Kelly was the city's largest private property owner. At the time, The News reported that he used tax auctions to build a portfolio of more than 1,152 parcels on which nearly $100,000 in blight fines were owed going back six years, according to The News investigation.