Detroit and Michigan trade $5 million in demolition settlement

The Detroit Land Bank Authority and Michigan State Housing Authority will avoid going into arbitration by settling the dispute over demolition costs.

July 3, 2017
CDR Staff
Demolition Legislation & Regulations
The city of Detroit and the state of Michigan are trading $5 million to settle a dispute over improperly submitted invoices for blighted home demolition projects, a report by Crain’s Detroit Business says. The deal allows both the Detroit Land Bank Authority and the Michigan State Housing Authority (MSHDA) to avoid going into arbitration over disputed demolition costs.

The lank bank previously repaid the state $1.37 million after an audit found some demolition costs that exceeded a $25,000 per-house federal cap.

A six-month administrative investigation of the demolition program and billing practices also set the lank bank back $2.4 million after the program was temporarily suspended for 60 days. 

According to Mayor Mike Duggan, the land bank paid $5 million too much for demolition work. He proposed that the lank bank pay $5 million to the state, and in reverse, the state will pay $5 million to go back into Detroit demolitions—it’s intended purpose.

This settlement, the report says, does not end an ongoing federal criminal investigation into the program, though. As of May 31, the state has given more than $119 million to the land bank for the demolition of 7,488 abandoned homes and blighted properties. More than $139 million remains from the total $258 million the city received in 2013.

Earl Poleski, MSHDA executive director, says that there are new protocols in place to improve program operations.

MSHDA gave the lank bank $88 million in May to keep demolitions ongoing for the next 18 months. The state’s contribution will increase the funds to $93 million. Duggan says the funding will take 7,000 to 8,000 properties down by the end of 2018.

MSHDA was created by the Michigan Homeowner Assistance Nonprofit Housing Corp. to administer federal funding from the U.S. Department of Treasury’s Hardest Hit Fund.