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Michigan lawmakers blast Senate plan to kill blight aid

Melissa Nann Burke
Detroit News Washington Bureau

Washington — Several Michigan Democratic lawmakers on Wednesday denounced a U.S. Senate proposal to fund federal transportation projects by rescinding money that Detroit and other Michigan cities are using to eliminate neighborhood blight.

U.S. Sen. Peters, D-Bloomfield Township, said it would be “unacceptable” to fund a highway bill this way.

“It could leave cities across Michigan on the hook for millions of dollars already outlaid for blight-removal projects,” Peters said.

The plan — negotiated over the weekend by Senate Majority Leader Mitch McConnell, R-Kentucky, and Sen. Barbara Boxer, D-California — would be funded in part by pulling back unused money from a fund within the the Troubled Asset Relief Program meant for foreclosure prevention and blight removal in urban centers. The proposal hopes to raise an estimated $1.7 billion this way.

“It’s a bipartisan, long-term, multi-year measure that will fund our roads, highways, and bridges for longer than any transportation bill considered by Congress in a decade — and this highway proposal will do so without raising taxes or adding to the deficit,” McConnell said in a Wednesday statement.

He and supporters say housing prices have recovered and foreclosures have slowed since the mortgage meltdown and ensuing recession, and the money would be put to better use on infrastructure projects.

But at least three Michigan members of Congress say eliminating the Hardest Hit Fund puts at risk future blight-removal efforts, as well as potentially millions of unspent dollars intended for demolition of abandoned homes in cities such as Detroit, Flint and Saginaw.

U.S. Sen. Debbie Stabenow, D-Lansing, called the proposal “outrageous.”

“I’m leading the fight to protect the Hardest Hit Fund, so our cities aren’t handed a bill for money that they were promised and have already spent,” she said in a statement.

In June 2013, Michigan became the first state to receive permission from the U.S. Treasury Department to redirect $100 million in unused Hardest Hit mortgage-aid funds to blight elimination among cities such as Flint and Pontiac. The money was part of the TARP legislation that Congress authorized in October 2008.

The state has committed more than $175 million statewide for blight-reduction efforts, and another $210 million on behalf of homeowner participants, according to state and federal data.

U.S. Rep. Dan Kildee, D-Flint Township, also slammed the McConnell-Boxer proposal, noting that work remains to revitalize blighted areas.

“Come to Flint or Saginaw, and the need is still clear,” said Kildee, who helped secure the redirection of the initial $100 million in aid for blight elimination in Michigan.

“Republicans in Congress should not pull the rug out from under these hardest hit communities.”

The state Housing Development Authority said the bill could deal a “critical blow” to progress on blight elimination and foreclosure prevention across Michigan.

“Cities have worked very hard to identify targeted blight projects to demolish in an effort to allow those households still in the neighborhood to begin to grow in value,” spokeswoman Katie Bach said.

As of March 31, Michigan had spent $43 million in federal funds to demolish about 3,220 homes — a little more than $13,000 a home. Overall, the state has dispersed more than $240.8 million in Hardest Hit funds.

Detroit has received more than $107 million in Hardest Hit funds for anti-blight efforts to date, said John Roach, spokesman for Mayor Mike Duggan.

Saginaw has completed work on 560 houses and been reimbursed for roughly $6.5 million in expenses through the program, with another 181 houses in the works, according to the city treasurer’s office. The city hopes to complete another 100 projects this fall.

Fourteen other cities have agreements with the state for projects, including Adrian, Ecorse, Flint, Grand Rapids, Hamtramck, Highland Park, Inkster, Ironwood, Jackson, Lansing, Muskegon Heights, Pontiac, Port Huron and River Rouge.

A summary of the McConnell-Boxer bill notes that, from its inception, the Hardest Hit Fund has been criticized by the Special Inspector General for TARP as being “ineffective, without objectives, and poorly administered.”

The Treasury Department has defended the redirection of unspent mortgage aid to blight removal, saying the states are best positioned to run such programs. It previously sent a team to review Michigan’s progress to ensure there was no waste or fraud.

mburke@detroitnews.com

(202) 662-8736

David Shepardson contributed.