Review Finds Billing Issues Tied To Detroit Demolitions

DETROIT (WWJ/AP) -- A review has uncovered about $7.3 million in billing issues tied to Detroit's massive demolition program.

The Michigan State Housing Development Authority said Tuesday that some federal funds used by the Detroit Land Bank Authority to tear down vacant houses were improperly reimbursed.

Mayor Mike Duggan told reporters Tuesday that the city has agreed to repay $1.3 million, but $6 million tied to a 2014 bulk demolition program will go to arbitration.

"We will send this issue to the arbitration panel as to whether the change orders were reasonable and necessary and we're going to abide by the outcome," Duggan said Tuesday. "So we'll make our case, MSHDA will make their case and however it comes out we will honor that opinion."

Federal funding was temporarily halted earlier this year and resumed after an audit determined demolition costs above a federal cap of $25,000 per house were redistributed to 350 other properties to have those houses appear to meet the cap.

Amounts over the cap should have been billed to the city. The city says controls have since been tightened.

"The $1.3 million were mistakes that were made that were just flat-out wrong," Duggan said. "We've admitted it and you can see from our letter we've authorized the withdrawal of that money."

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