Friday, June 17, 2016

Detroit Demolition Deals Skipped City Council Approval
Joe Guillen
Detroit Free Press
11:17 p.m. EDT June 16, 2016

The Detroit City Council next week will begin voting on city-funded demolition contracts worth more than $25,000, after Mayor Mike Duggan's administration discovered that for years it failed to seek council's approval as required.

The discrepancy was found during a broader review of the city's purchasing ordinance by officials. Up to that point, Chief Financial Officer John Hill's office had been approving the contracts without sending them to City Council, said Boysie Jackson, the city's chief procurement officer.

It was unclear exactly why or when council was cut out of the approval process, but the decision apparently predates Duggan's term as mayor. Jackson said council approval hadn't been sought for "many years."

The Duggan administration's new commitment to proper City Council oversight comes during an ongoing federal probe into rising costs and questionable bidding practices within the city's demolition program.

Councilman Gabe Leland said the city is trying to figure out the total amount of city-funded demolition contracts performed since 2014 — when Duggan revamped the demolition program — without the proper council approval.

"There's some grave concerns that we have about the transparency," Leland said today after a discussion on the contracts at a council subcommittee meeting. "This is going to take a serious look at the process."

Going forward, the council will vote on city-funded demolition contracts worth more than $25,000, officials said. The council is expected to vote Tuesday on eight new demolition contracts with various companies worth nearly $2.1 million.

The bulk of the program, about 80%, is paid for with dollars from the federal Hardest Hit Fund and is not within the council's purview. The Detroit Land Bank Authority handles those contracts.

SIGTARP, the federal inspector general who monitors the Hardest Hit Fund, is investigating the city's blight demolition program with assistance from the FBI. Duggan has promised full cooperation. The city has torn down more than 9,000 blighted and vacant homes since Duggan took office.

Aside from the federally funded demolitions, the city spends about $20 million of its own money each year demolishing blighted properties that are not eligible for federal funding.

The city-funded demolition contracts fall into different categories based on whether they are commercial or residential properties, whether the contracts to tear them down are more or less than $25,000 and whether the property is a threat to public health or safety.

If a property is a threat to public safety and its demolition costs more than $25,000, the city's chief procurement officer can enter into a contract and then get council's approval within four weeks.

Jackson, the chief procurement officer, told the council's planning and economic development subcommittee last week that the contracts will start coming to council now that the purchasing ordinance has been reviewed.

"Demo contracts have not come to City Council in many years," Jackson said. "My understanding is that it was due to a resolution between the department and City Council. Obviously, we were not here so we can't give more specifics on that."

Some city-funded demolition contracts to tear down individual residential properties are less than $25,000 and don't require city council approval. The council will be notified of those contracts.

The city's top lawyer, Melvin Butch Hollowell, said today that he has submitted a confidential legal opinion to City Council members on their approval of demolition contracts.

"Detroit City Council asked for an opinion as it relates to City Council approval of demolition contracts," Hollowell said in a written statement to the Free Press. "Our research has indicated prior city practice had been inconsistent ... and city-funded demolitions should be sent to Detroit City Council for approval and/or notification."

Contact Joe Guillen: 313-222-6678 or  Follow him on Twitter @joeguillen.

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