Feds investigating Detroit Land Bank over questionable demo contracts

Demolition crews knocked down more than 8,500 houses and buildings since January 2014.
Demolition crews knocked down more than 8,500 houses and buildings in Detroit since January 2014.

By Steve Neavling
Motor City Muckraker

Federal investigators are probing questionable contracts doled out by Mayor Mike Duggan’s demolition program over the past two years.

The Office of the Inspector General for the Troubled Asset Relief Program, or SIGTARP,  is leading the investigation into the Detroit Land Bank, a federal law enforcement official told Motor City Muckraker this morning.

The investigation comes after serious questions were raised about the rising costs of demolitions and three contractors who received a bulk of the work.

Detroit’s Auditor General’s office confirmed today it received subpoenas for records related to the demolition program, which the Free Press reported Monday.

Since Duggan took office in January 2014, Detroit has received more than $170 million from the federal Hardest Hit Fund, a TARP program, to demolish more than 8,500 homes.

A Detroit Land Bank demolition. Photos By Steve Neavling.
A Detroit Land Bank demolition. Photos By Steve Neavling.

The average cost of a house demolition over that period was $12,681, compared to under $10,000 under former Mayor Dave Bing, according to city records. The cost increased after Duggan met privately with three contractors in June 2014 to set a price for demolition work.

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The contractors were Adamo, Homrich and MCM Management, who received a combined $71.4 million of the $126.8 million spent so far. Some of that money was from other sources and includes commercial building demolitions.

Records show Adamo received $38.4 million for 2,432 demolitions. Homrich tore down 1,866 houses and buildings for $28.6 million. And MCM received $4.4 million for 334 demolitions.

City officials defended the rising costs of the demolitions, saying the work involved more environmental protections and was so unprecedented in scope that resources such as dirt and trucks were harder to come by.

Detroit Land Bank officials said they welcome the investigation.

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“Everything we do is in our website,” Land Bank Chairwoman Erica Ward Gerson told Motor City Muckraker. “We couldn’t be more transparent.”

She added: “We have no problem with (the investigation). We are going to fully cooperate.”

Gerson said the Land Bank has not been subpoenaed, and federal investigators have not revealed details of the investigation.

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Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.