Detroit’s war on blight just got a huge shot in the arm thanks to $42 million in federal funds.
It is the first installment of a new $130 million blight allocation for the city and is part of the Omnibus spending bill passed by Congress in December of 2015.
Over the past three years, more than $128 million in Hardest Hit Funds (HHF) from the 2010 U.S Treasury allocation have been awarded to Detroit for the blight removal program. The funding from the 2010 allocation is winding down, with only about 100 structures awaiting demolition and approximately 1,867 in the reimbursement process.
The city has completed 10,666 demolitions throughout Detroit as of October 14. Of those completed demolitions, just under 8,000 (7,953) were paid for through the federal HHF program and approximately 6,226 have received Michigan State Housing Development Authority (MSHDA) reimbursement.
A review conducted by MSHDA found a number of internal controls that needed improvement at the Detroit Land Bank in managing demolition contracts. In August, U.S. Treasury directed MSHDA to suspend HHF blight activity in Detroit pending Treasury’s review
“Abandoned houses are a danger to families across this city,” says Mayor Mike Duggan. “We are the most successful city in America in the speed of blight removal, but we have not been the most successful in developing the kinds of controls a program of this size needs. Today we’re fixing that.”
For the last two months, MSHDA and the Land Bank have worked cooperatively to develop a far more comprehensive set of procedures and controls for assessing bids and processing payments to contractors that will ensure full compliance with federal guidelines on the use of federal Hardest Hit Funds.
On October 14, MSHDA obtained the approval of U.S. Treasury to resume HHF blight elimination activities in Detroit.
Several key provisions of the new procedures include:
- A far more intense MSHDA/Detroit Land Bank partnership where two MSHDA employees will be housed at the Land Bank and Detroit Building Authority. The MSHDA staff will provide real time compliance support, input on process improvement, and onsite assurance that all contracts are bid appropriately.
- Quality control audits to assure compliance on an ongoing basis.
- The Land Bank has established a $5 million escrow account fund to assure payment of demolition costs not eligible for HHF funding.
- Demolition bid packages will be restricted in size to no more than 50 houses
- Contractors required to disclose the names of all subcontractors
- Contractors required to limit markup work performed by subcontractors by no more than 10% and must attest to their compliance.
The last three provisions will apply to cities’ demolition programs statewide under the new policy.
“I want to thank MSHDA and Treasury for working with us to develop better controls and procedures and pledge to them our commitment to achieve full compliance with all federal and state rules and regulations as we go forward,” he says.