Demolition contractors who have been working on the blighted homes project in Detroit have not been paid by the Detroit Lank Band Authority (DLB), a report by the Detroit Free Press says. Up to $8.7 million has been delayed because of alleged issues stemming from within the agency.
Land bank officials rebuffed the claims in the report, but the Michigan State Housing Development Authority (MSHDA), with offices in Lansing and Detroit, said in a statement to the Free Press that the “backlog is currently in the DLB office in getting us invoices for review.”
The land bank is reimbursed by the state agency to pay contractors. While the state agency said in the statement that delays are to be expected, a year-long delay is not typical and the agency is working with the land bank to assist in any issues.
DLB says the report that the delays stem from incorrect invoices from contractors, a strenuous paperwork process and requirements that hazardous waste abatement must be verified on the properties demolished before payment.
Detroit received $258 million in federal Hardest Hit Funds and has spent $144 million, the report says. Mayor Mike Duggan has a goal to demolish all blighted and abandoned homes in the city by the end of 2019.
The $8.7 million is tied to 2,180 properties torn down within the last year and is owed to 10 contractors, the report says. The largest amount, $1.7 million, is being owed to DMC Consultants Detroit, as of Feb. 4, which is the most recent data available. Other outstanding balances as of Feb. 4 include:
- Able Demolition, Detroit: $1.3 million
- Adamo Group Inc., Detroit: $1 million
- Blue Star, Warren, Michigan: $229,500
- Direct Construction Services LLC, Detroit: $256,966
- Esso Wrecking Co., Detroit: $24,400 (as of March 15)
- Gayanga Co., Detroit: $407,790
- Homrich, Carleton, Michigan: $792,577
- Rickman Enterprise Group, Detroit: $1.6 million
- Salenbien Trucking & Excavating Inc., Dundee, Michigan: $1.2 million
Land bank officials say it has disbursed $5.7 million since Feb. 4, but that amount also includes invoices for other vendors, environmental contractors and other invoices submitted after Feb. 4, the report says. Because of this, the DLB cannot identify which invoices in the $8.7 million were paid out.
The lank bank would pay contractors before MSHDA approval, which created reimbursement issues, the report says. Now the agency requires contractors to receive a certain threshold of approval before paying on their invoices. Interim Demolition Director Tammy Daniels says in the report that contractors have submitted invoices with several issues.
Thompson said during a Feb. 22 city council meeting that 30 percent of invoices have been outstanding for less than 30 days and 22 percent for 60 days or less. One percent of the invoices, she said, have been outstanding for more than a year. It takes an average of 58 days to process payments.