Michigan could get up to $324M more in blight aid

Melissa Nann Burke
Detroit News Washington Bureau

Washington — Michigan will receive at least about $75 million and could receive up to $323.5 million more in federal aid for the demolition of blighted buildings in Detroit, Flint and other cities, officials say.

The U.S. Treasury said Friday it’s moving forward with a transfer within the Troubled Asset Relief Program authorized by Congress in December’s federal spending bill, making up to $2 billion more available to the fund that helps communities combat neighborhood blight.

The state is expected to receive $74.5 million immediately in the fifth round of funding for Treasury’s Hardest Hit Fund program and is eligible for up to $249 million in April through a competitive application process, lawmakers said. The state would decide how much of the money goes to cities such as Detroit and Pontiac that have tapped the program.

“We fought so hard to be able to give Treasury the authority to transfer dollars into the Hardest Hit Fund,” Sen. Debbie Stabenow, D-Lansing, said.

“I have every confidence that the communities in Michigan who have been the national leaders in these models will continue to be that. We’re in a position to be primed, hopefully, to receive that $249 million, or close to it.”

Detroit has been a major beneficiary of the blight demolition program, begun in 2013, having secured $127 million through the first three rounds of funding, according to city officials.

Treasury Secretary Jacob J. Lew said the announcement is the next step in the Obama administration’s effort to help struggling homeowners recover from the financial crisis and strengthen the housing recovery.

“Thanks to a bipartisan group of members of Congress who helped secure additional funding for the Hardest Hit Fund, we will be able to provide significant resources to hard-hit states and target these critical resources towards programs that we know have helped Americans avoid foreclosure, and stabilized housing markets, including blight elimination programs,” Lew said in a statement.

States receiving additional funds through the program will have until Dec. 31, 2020 to use their Hardest Hit money — an extension from the current program’s expiration at the end of 2017. If the money is not spent in a timely manner, Treasury officials said they would periodically redirect unused funds to states with higher spending rates.

In the past, about half of the money allocated for blight removal has gone to Michigan and Ohio. About two-thirds of that amount is spent in Michigan — more than $440 million since the fund was created in 2010.

The Hardest Hit Fund program was created for mortgage aid to help homeowners avoid foreclosure and has helped demolish thousands of vacant buildings in Michigan communities.

Under the omnibus bill, the Treasury Department has until the end of 2017 to transfer unused money from the Home Affordable Modification Program, which expires at the end of this year.

U.S. Sen. Gary Peters, D-Bloomfield Township, said he was pleased to work with Stabenow and Kildee to allow for the transfer, which will “build on efforts to improve safety and property values in our communities and attract new investments that will help these neighborhoods continue to recover and grow.”

Through the competitive bid process for a portion of the allocation, Treasury will consider states’ track record of quickly and efficiently using Hardest Hit Funds and implementing successful program models, officials said. Applications are due March 11, and Treasury anticipates announcing the second-phase awards by the end of April.

Rep. Dan Kildee, D-Flint Township, said Michigan will have a competitive advantage in part because the state has a lot of need, provides high-quality data on abandonment and has demonstrated its capacity to accomplish large-scale demolition.

“In most cases, the properties are publicly or land-bank owned, which makes it much easier to demolish a property,” said Kildee, a former Genesee County treasurer who founded the Genesee County Land Bank. “When attempting to demolish a property owned by someone else (a private entity), there’s an enforcement process, there’s an opportunity for appeal, and it’s a far less-certain demolition process.”

Detroit Mayor Mike Duggan said he looked forward to competing for the funding based on the city’s track record of using federal blight aid.

“The City of Detroit will fully support the state's application for the maximum $250 million Hardest Hit Fund allocation available in the next round,” Duggan said in a statement.

Fifteen other communities across Michigan, including Ecorse, Hamtramck, Highland Park, Inkster, Pontiac and River Rouge, have used the fund to provide homeowner assistance and revitalize neighborhoods since 2010. The others are Adrian, Flint, Grand Rapids, Ironwood, Jackson, Lansing, Muskegon Heights, Port Huron and Saginaw.

“While the housing market has strengthened in recent years, there are still many homeowners and neighborhoods experiencing the negative effects of the financial crisis,” Mark McArdle, Treasury’s deputy assistant secretary of financial stability, said in a statement.

“The additional HHF funds authorized by Congress will allow states to continue their efforts to stabilize local communities and help struggling families avoid foreclosure.”

The state program is run by the Michigan State Housing Development Authority, which reimburses money spent on demolition after receiving invoices and documentation that the work was performed.

“We are ready to insert these dollars into cities and continue the positive momentum of eliminating blight so it can no longer stand in the way of neighborhood revitalization,” authority Executive Director Kevin Elsenheimer said in a statement.

MSDHA says it has helped 29,798 households with more than $230 million in mortgage and property tax assistance through the program since 2010.

The blight elimination program, created in 2013, has helped to clean up or demolish more than 8,000 abandoned structures as of Jan. 31, according to the agency.


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