Detroit Land Bank May Have To Repay $1.1 Million Following Audit
DETROIT (WWJ/AP) - An internal audit of Detroit's demolition program as part of its efforts to deal with blighted buildings found about $1 million in expenditures improperly billed to the state.
The report released Thursday says costs that were ineligible for federal reimbursement should have been billed to the city. The Detroit Land Bank Authority says contractors didn't receive any extra money from the mistakes. The audit also found inadequate records and bid tabulation errors.
"The experts found that in 100 out of the roughly 8,000 homes that we've demolished to date, certain costs that were not eligible for federal funding were in fact billed to MSHDA (Michigan State Housing Development Authority)," said Erica Ward Gerson, chair of the Detroit Land Bank Authority. "The explanation of this is a little technical. There's a cap of $25,000 per home and HHF (Hardest Hit Fund) will not reimburse above that amount. Instead, anything over $25,000 is supposed to be paid out of city funds, and that was not done."
Gerson said the total includes $824,000 in fees that the city should have paid, among other things.
"There's a total of $78,000 that we can't account for. There were increases, change orders were not appropriately filed, documents were not appropriately kept," she said. "And finally number three, the report identified one contract in which there was about $225,000 of potentially ineligible costs, and they were inaccurately billed to one parcel and then ultimately redistributed over all the other parcels in the same contract."
The city and its land bank could now have to pay that roughly $1.1 million back to the state.
The audit's release comes after the U.S. Treasury Department recently released $42 million in federal funding to allow Detroit to continue demolishing thousands of vacant houses. The city said funding was suspended in August while Treasury officials reviewed a state audit.
Federal authorities have been investigating the bidding process and costs associated with the demolitions.
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