City ramps up demolition program, nears resolution with MHA/MSHDA on final amount of ineligible billing

* New Protocols successfully implemented to ensure accuracy going forward
* City adds $5 million to escrow fund established in October

DETROIT - The City of Detroit today released the findings of a MHA/MSHDA investigation into billing practices at the Detroit Land Bank Authority’s demolition program that used federal Hardest Hit Funds. The State’s findings, focused almost entirely on contracts in 2014 and 2015, suggest $7.3 million of inaccurate and inappropriate billing occurred prior to February 2016.

The Detroit Land Bank agrees that $1.33 million of the billing identified by the state was billed inaccurately. The $1.33 million includes the $1.2 million in inaccurate billing first announced by DLBA Board Chair Erica Ward Gerson in October of last year. The DLB has authorized the release of $1.3 million from the escrow account.

The remainder of the State’s findings will be disputed and ultimately resolved pursuant to an agreed upon arbitration process.

Meanwhile, the state reimbursement agreement requires any disputed amount be placed into escrow, plus a 25 percent cushion. The City of Detroit will transfer $5 million to the account, bringing the total to $10 million.

“The $5 million is coming from the $40 million appropriated for demolition in FY 2016-2017,” City of Detroit Chief Financial Officer John Hill said.

Today, The Detroit Land Bank Authority and Detroit Building Authority are operating under new regulations and protocols around contracting for the City of Detroit’s demolition program. MHA staff have been embedded in DLB to ensure compliance with all state and federal regulations and to assure accuracy in every step of the process. Thanks to the new protocols, the process is working successfully.

“Working closely with MHA and MSHDA, we have put much stronger controls and regulations in place to ensure these types of billing questions are answered before anything is submitted for reimbursement,” Ward Gerson said.

Demolition program Scales Up
In 2016, MHA, in coordination with MSHDA, awarded the city an additional $130 million in HHF funding for rounds 4, and 5 to continue the city’s demolition program under the new DLB/MHAMSHDA processes.

Demolitions, now being done at a rate of 30 per week, will ramp up to 100 per week by the end of spring, and will be closer to 150 a week by the end of summer.

For a list of completed demolitions, along with a list of contracted and upcoming demolitions, visit the City’s demolition tracker website at www.detroitmi.gov/demolition.





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