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 A year after the city exited the biggest-ever U.S. municipal
bankruptcy, a plan to demolish half of its nearly 80,000 blighted or
deteriorating structures -- nearly one in three city buildings -- is
showing some signs of success.
The number of fires - often caused by arson attacks on abandoned
homes – dropped in October from a year ago, and deeply depressed
property values have ticked higher in areas close to demolitions.
The aim of the program is to stabilize home values and reduce
foreclosures as the city of 680,000 people struggles with emptying
neighborhoods, high crime and one of the worst unemployment rates in
the country.
But the federally backed program has been tainted by allegations
that Mayor Mike Duggan favored demolition contractors who donated to
his campaign and by a steep rise in costs.
Federal and city probes into the allegations are underway. Duggan,
whose program has razed more than 7,000 homes in two years, denies
any wrongdoing.
"I am proud of the work our team has done, and Detroiters should be,
as well," said Duggan, who took office in January 2014 as Detroit’s
first white mayor in nearly 40 years.
 Duggan was elected in November 2013 with "blight remediation" a key
plank in a platform he built around a financial turnaround, economic
development and reduced crime rates.
The special inspector general for the U.S. Treasury Department’s
Troubled Asset Relief Program -- from which Detroit gets its federal
blight-relief dollars -- is investigating the city's demolition
program.
Agents visited the Michigan State Housing Development Authority, a
state agency that is a pass-through for the federal funds, on Nov.
17 to discuss the matter, a spokeswoman for the state agency
confirmed on Monday.
The city's inspector general, James Heath, told Reuters the probe he
launched in October into Duggan’s demolition program should conclude
by March. Heath said he has not partnered with federal
law-enforcement agencies.
Duggan set a weekly demolition goal of 100 homes, which has Detroit
destroying derelict properties at almost quadruple the pace of any
other recipient of federal "blight-removal" dollars, federal records
show.
But demolition prices have fluctuated sharply. In October, he put
the average 2015 price of razing a home at $16,400. A month later,
after Heath opened his investigation, the administration cut the
2015 average to $13,830, citing lower contracting costs.
Duggan's predecessor, Dave Bing, told Reuters prices remain too
high. "The cost shouldn't have gone up that much," he said, noting
that the price averaged as low as $8,500 per structure during his
term between 2009 and 2013.
Duggan attributes the price hike to his administration’s higher
standards, including a faster demolition timetable.
DOUBTS OVER BIDDING
Critics have hit Duggan’s administration hardest for a
now-discontinued bulk-demolition program in 2014, where pricing was
discussed with four contractors before the $19.9 million project
that razed 1,453 homes was publicly offered. Three of the companies
later wound up as the only bidders on the deal.
The mayor has said there was nothing improper about the arrangement
and that the state of Michigan approved.
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"We did this in complete cooperation with the state," said Brian
Farkas, special projects director for the Detroit Building
Authority, which oversees the city's demolition work.
Executives for two of the companies that wound up with the contracts
collectively donated nearly $18,000 to the mayor since May 2013,
campaign records show. Mayoral aides denied the contributions
influenced the contract awards.
But Rev. Charles Williams II, an influential African-American
minister and Duggan foe, condemned the deal.
"How is it a contractor can go into the office, set the price, and
get the contract? To me, it's unprecedented," Williams said.
If rules were broken, Duggan's aides say, President Barack Obama's
administration would not have given another $21 million in
demolition funds to Detroit in October, bringing the amount of
federal backing for the city’s blight-elimination efforts to $121
million.
A Department of Treasury official, whose office oversees the
program, acknowledged "reported issues with Detroit's blight program
and potential rising costs," but praised Duggan's efforts.
"We recently visited Detroit, and you can see the real impact the
blight program is having on communities," said Mark McArdle, the
federal agency's deputy assistant secretary for financial stability.
Duggan believes demolitions played a role in reducing arsons during
this year’s three-day pre-Halloween period once known as "Devil's
Night." At its peak, city records show, 810 arsons erupted in 1984
-- compared with 52 suspicious fires during the same October period
this year. Between 2011 and 2014, arsons ranged between 93 and 97
during the period, records show.
In another positive sign, a report by the Detroit analytics firm,
Dynamo Metrics, showed occupied home values rose 4.2 percent on
average between April 2014 and March 2015 near federally funded
demolitions.
But Jacques Welch, a 55-year-old factory worker, says his street is
still waiting on City Hall. Near his brick home are a half-dozen
abandoned houses with missing doors and windows that Welch says
attract squatters and drug dealers. A vacant school stands a block
away.
“You get used to it,” he told Reuters from his front porch, resigned
to the lack of progress in his neighborhood. “There's nothing else
you can do."
(Editing by Stuart Grudgings)
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