Michigan receives $188M in blight removal aid

Keith Laing
Detroit News Washington Bureau

Washington — The U.S. Treasury Department said Wednesday it is giving the state of Michigan an additional $188.1 million in federal money to remove blight, a new infusion that is expected to help Detroit speed up its demolition of derelict home.

Michigan was eligible to compete for up to $249 million of the 323.5 million in second-round federal funding against 13 other states. It received 75 percent of the money for which it was eligible.

Sen. Debbie Stabenow, D-Lansing, said Michigan has received the most money of any state that was competing for the Hardest Hit Fund federal aid.

“In total, this means that this year we’ve been able to secure $263 million for communities in Michigan to create safer neighborhoods and take down blighted homes,” she said.

Detroit has received the bulk of Michigan’s federal blight assistance since the program began in 2013, but the Snyder administration will later decide the amount it receives in this round.

Detroit Mayor Mike Duggan said he expects the new money will help the city increase its pace of demolition from 4,000 houses in 2015 to 5,000 this year and 6,000 homes in 2017.

“Though Detroit’s share of this new funding is yet to be determined,” Duggan said in a Wednesday statement, “it is likely to be far greater than the $42 million recently awarded to the city out of the state’s $75 million share.”

Earlier this month, the Snyder administration said Detroit would receive $41.9 million in federal funding to fight blight and Flint $13.9 million under a $74.5 million plan approved by the U.S. Department of Treasury. The other $18.6 million was targeted for mortgage assistance programs.

Duggan thanked a “diverse coalition” that backed Michigan’s latest application for federal aid, including the Rev. Jesse Jackson, JPMorgan Chase CEO Jamie Dimon and Quicken Loans founder Dan Gilbert.

But he gave “a great deal of the credit” to two Michigan State Housing Development Authority staffers who wrote the state’s winning application.

Sen. Gary Peters, D-Bloomfield Township, agreed that Michigan’s experience mattered with the Treasury Department, saying “the fact that Michigan is receiving the most money in a very competitive process speaks volumes for the quality of the programs that are being conducted in our state.

“This is a very important day for Michigan and cities across our state,” Peters said.

The federal government in February made a $2 billion commitment to the Hardest Hit Fund, which was created to assist homeowners facing foreclosure in the wake of the Great Recession and mortgage industry meltdown but was later expanded to allow spending on blight prevention.

Michigan has received $761.2 million in Hardest Hit aid in five rounds of funding, according to the Treasury Department. California, Florida and Ohio have received more overall mortgage and blight aid than the Great Lakes State since 2010.

“Today’s announcement continues Treasury’s commitment to provide relief to struggling homeowners and help stabilize neighborhoods in hard hit areas,” Treasury Deputy Assistant Secretary for Financial Stability Mark McArdle said in a statement.

The $188 million in aid will help Michigan’s struggling families and communities even as the state’s unemployment rate has dropped below the national average, Gov. Rick Snyder said.

“Michigan is ready to put these Hardest Hit Funds to good use to help Michiganders stay in their homes and eliminate blight across the state,” he said in a statement.

The state has used more than $273 million to give mortgage aid to over 30,000 households to avoid foreclosure, according to the Michigan State Housing Development Authority.

Another $130 million has financed the demolition of 8,500 structures, according to the state. Michigan has until the end of 2020 to spend its Hardest Hit money. Treasury officials have said unspent money would be redirected to states with higher spending rates.

The fund is targeted at 18 states considered hardest hit by the 2008 economic recession and housing market decline.

U.S. Rep. Dan Kildee, D-Flint Township, said Michigan has been a leader in blight removal that other states have looked to emulate. He said the new round of funding “means a lot of money for our state to deal with a really significant problem.

“This money will give cities, will give neighborhoods, will give individuals who live in their neighborhoods a different look at their neighborhood,” he said.



Twitter: @Keith_Laing