Detroit council turns down controversial $250M demo bond plan

Christine Ferretti
The Detroit News

Detroit — City Council rejected Mayor Mike Duggan's $250 million plan to erase blight, leaving the future path for demolishing tens of thousands of abandoned homes up in the air.

The council voted down the measure, 6-3, after lengthy public comment on Tuesday as well as a four-hour public hearing Monday night that drew upwards of 500 residents, clergy and some lawmakers, many of which shared strong objections while others warned of the dangers associated with vacant houses and urged support. 

Several council members repeatedly pushed back against the Duggan administration's bond proposal that had been eyed for the March ballot, citing unresolved questions and concerns.

Council President Brenda Jones said she won't buy in until a long-running federal criminal investigation into Detroit's demolition program is closed and there's clarity on who will manage the city's blight reduction efforts in the future. 

"I have to live with the vote that I take to represent the entire city of Detroit," said Jones, who also complained that telemarketers called her office Monday attempting to pressure her to vote for the bond.  "I am going to vote based on the information that I have before me and do the thing that I feel is right for all of the citizens of this city."

Duggan told reporters shortly after the council defeated the plan that he respected the panel's decision and believes all involved remain focused on getting blight out of Detroit's neighborhoods.

"What we need is a plan that the mayor and council can both agree on," he said. "Neither the mayor or the council is going to say to folks in blighted neighborhoods 'you just have to live with these blighted houses and there's no hope.' We're not going to do that."

Amid the controversial proposal, Detroit's auditor general this month released a critical report of city-administered demolition work. The report cited unreliable data, a lack of documentation and other failures. 

The mayor on Tuesday acknowledged the problems with the program that's been the subject of local and state reviews and the federal probe.

Detroit Mayor Mike Duggan talks to reporters in the lobby of his office at City Hall after the City Council on Tuesday voted down a contentious proposal to put a $250 million bond before city voters in the spring.

The intention, he said, has been to fix any broken processes and to keep going, "full speed ahead."

"I felt confident that if this were on the March ballot that we would be able to show the voters in December and January and February we have the controls in place," said Duggan, adding he also respects the perspective that the measure is better suited for the November ballot. 

The mayor did not specify Tuesday whether he'll continue to push for a spring initiative or instead refocus on November 2020. 

"My conversation is not to push one or another," he said. "My conversation is how do we solve the problem."

Duggan, who has made the fight against blight in Detroit a cornerstone of his administration, first unveiled his plan during the Mackinac Policy Conference in May. He's touted the 30-year bond as a means of erasing the city's blighted houses by 2025.

Council members Janee Ayers, Gabe Leland and Scott Benson voted in support of the resolution to add the measure to the ballot. Jones, Pro Tem Mary Sheffield and members Andre Spivey, James Tate, Raquel Castaneda-Lopez and Roy McCalister Jr. voted no. 

But the proposal might not be dead yet. Detroit's council members have until 4 p.m. Monday to file a motion to reconsider the vote. 

Sheffield said her opposition to the bond is tied to a lack of equity and inclusion, voter suppression with the timing of the measure and the ongoing issues with the demolition program.

Seeking bonds, she said after the vote, is just one way to fund demolition and the city needs to look at other ways. The administration also could propose to bring the bond back for the November ballot.

"And hopefully, it's stronger," she said. "We want a stronger resolution with stronger commitments, more oversight and guarantees for Detroiters that they are actually hired, that Detroit-based contractors are included, and that there are environmental protections put in place, too."

Several residents and activists had urged the council to hold off on its vote or outright reject the plan. Among them, city police commissioner William Davis. 

"Right now, there are a lot of questionable practices that can make this city go back into bankruptcy if you all allow mismanagement and corruption continue," he said. "Before ya'll put this on the ballot, you need to make sure everything is tight and make sure that checks and balances are in place."

Minister Malik Shabazz, a supporter of the bond, reiterated his worries about crimes associated with abandoned houses. Before the vote, he urged the council to vote yes and put the controls in place that it saw fit. 

“If there’s misappropriation, malfeasance, reappropriation, stealing with the money, lock them up," he said. 

Spivey said if the bond plan doesn't come back for reconsideration, he's hopeful a workgroup will come together next year to come up with an acceptable plan.

"People want to know: Can they trust the administration? Can they be transparent? Can we make sure that the work will be done properly and there's accountability?" he said. "I think that can be done."

The plan comes as the last of some $265 million in federal dollars allocated to raze blighted homes in Detroit winds down.

Apart from the potential bond funds, the city also gets $50 million annually for blight — $30 million of which is earmarked for residential demolition — as part of a debt-cutting plan arranged during its bankruptcy. The Plan of Adjustment helped Detroit shed $7 billion in debt and carved out another $1.7 billion for city service upgrades over a decade.

Duggan said there's currently $8 million available for residential demolition in the existing fiscal year. The mayor said he remains hopeful that he'll sit down with the council and find a way to get some funding. 

He remained firm however that a bond issue will be necessary at some point, regardless. The mayor said he doesn't see the Trump administration as a viable source of funding for demolition.

Jones said there will still be federal grant funding and the bankruptcy plan dollars carved out for demolition. She also suggested Tuesday that the mayor lobby lawmakers in Washington who represent Michigan to seek out more federal funding. 

Castaneda-Lopez said after rejecting the proposal on Tuesday that demolition as the main strategy to address systemic issues in the neighborhoods is not enough.

"I would love to see a more thought-out proposal come back and be presented to voters in November, and I'm still open to that opportunity," she said. "We all know that we need more financial resources to be able to demolish houses. At the same time, we also need more financial resources to board up, preserve and protect properties."

She stressed that while the scale of demolition proposed by the administration might not be going forward, the work is not going to stop. 

Detroit Auditor General Mark Lockridge concluded this month in his report that the Detroit Building Authority, which manages the demolition program, did not meet contract requirements or comply with city policies and procedures, state and other local rules.

While the audit was initiated more than two years ago, the Duggan administration admitted in recent weeks that some of the data it provided for the review was pulled together by a "junior staffer" in the building authority and it was "flawed," Detroit Building Authority director Tyrone Clifton wrote in a response to Lockridge's findings. 

Lockridge, in his report, called on the city to centralize its demolition administration.

That change, among others, are reflected in a resolution from the administration that proposes a demolition department that would operate under the direct supervision of the council and a plan to subsequently cancel or revise the city’s existing contract with the Detroit Building Authority. 

The commitments also include assurances that smaller, city-based women and minority-owned companies would get more access to the work and a strategy for the use of vacant lots left after demolitions. 

The city's federally funded work has long been the focus of federal, state and local investigations amid soaring costs and bidding worries raised in fall 2015. Two individuals pleaded guilty in the spring to bribery in a long-running federal criminal investigation into the program.

Since spring 2014, the city has knocked down about 19,600 houses, primarily with federal Hardest Hit Fund dollars. Duggan has said there are just as many left to raze, and that a bond will finish those. 

The administration has said that Detroit paid off past general fund bond debt ahead of schedule because revenues have been running higher than projections made during its landmark bankruptcy. This, officials said, will allow the city to seek out the bond for blight reduction without raising taxes above the current tax rate of 9 mills.

But Irvin Corley Jr., who heads council's fiscal division, said Monday the debt millage is projected to go down to 6 mills in 2021 if the blight bonds are not sold. That would be $60 less per year for the average Detroit homeowner with a taxable home value of $19,000.

The administration had been pressing for the council to vote on the bond measure before its winter recess. The language must be submitted to the Wayne County Clerk's Office by mid-December to appear on the March 10 ballot.