Crowd packs Detroit council's public hearing on $250M demo bond

Detroit — Residents packed a public hearing Monday night to share their views on a controversial $250 million bond proposal to wipe out blight. Among the concerns: worries about trust and previous problems with the city's demolition work. 

The City Hall meeting, which at one point had residents waiting on the first floor for seats at the 13th floor hearing, comes on the eve of a possible vote by council members about whether to place the measure on the March 2020 ballot following weeks of discussion and delay. 

Council President Brenda Jones and Pro Tem Mary Sheffield led off with harsh words for the administration over how it has executed demolition work in the city. Jones also cited efforts to pressure council members to favor the plan.

Jones told the crowd that her office and the offices of other council members received telemarketer calls earlier Monday to lobby them to vote in support of the ballot initiative.

"Whomever chose to hire the telemarketing company, intimidation gets no place with this council president," she said. "That was one of the most ridiculous things I've ever seen."

Detroit's auditor general this month released a critical report that flagged multiple concerns over the administration of city-funded demolition work. The lengthy report cited unreliable data, a lack of documentation and other failures.

Detroit Mayor Mike Duggan has made the fight against blight in Detroit a cornerstone of his administration. The mayor unveiled his plans for the ballot initiative during the Mackinac Policy Conference in May, saying the 30-year bond would erase the city's blighted houses by 2025.

The plan comes as the last of some $265 million in federal dollars allocated to raze blighted homes in Detroit winds down.

On top of the potential bond funding, the city gets $50 million annually for blight — $30 million of which is earmarked for residential demolition — as part of a debt-cutting plan arranged during its bankruptcy. The Plan of Adjustment helped Detroit shed $7 billion in debt and carved out another $1.7 billion for city service upgrades over a decade.

City officials say the bond money also would go toward the rehabilitation of anywhere from 500 to 1,000 Detroit Land Bank properties that will then be sold to new owners. It will not fund home rehabilitation grants for current homeowners, officials have noted. 

Sheffield posted a statement on social media Monday saying she won’t support the bond. Sheffield cited a lack of equity and inclusion, voter suppression with the timing of the measure as well as past and ongoing problems with the demolition program as among her concerns.  

Earlier this month, Detroit Auditor General Mark Lockridge concluded in a report that the Detroit Building Authority, which manages the demolition program, did not meet contract requirements or comply with city policies and procedures, state and other local rules.

Lockridge, during an hours-long discussion on Tuesday, told the council that numerous delays by the administration in providing requested information for the audit had been "the most egregious thing."

While the audit was initiated more than two years ago, the Duggan administration admitted in recent weeks that some of the data it provided for the review was pulled together by a "junior staffer" in the building authority and it was "flawed," Detroit Building Authority director Tyrone Clifton wrote in a response to Lockridge's findings. 

The bond proposal has been met with resistance by some council members and the public over the potential long-term impacts on the city, and whether it should be postponed to the November presidential race when Detroit historically has higher voter turnout. 

Detroit's Chief Financial Officer David Massaron has said postponing the ballot initiative until November would halt the city's progress with demolitions and could mean a different rate for Detroit in the bond market.

Residents, activists and a state lawmaker are among those who have spoken out against the bond proposal, citing issues of trust and worries about waste and abuse during last week's formal council session and dozens on Monday night. Others warned of the dangers of having abandoned homes on their block and turning down a plan that could stall progress. 

State Rep. Sherry Gay-Dagnogo addressed the council last Tuesday, noting the recent execution of a search warrant at Detroit's IT department by the state Attorney General's Office amid an investigation into deleted emails involving a controversial nonprofit linked to the mayor as well as the demolition audit findings.

Gay-Dagnogo told the council "we need to remove the cloud of suspicion" and argued that a vote on the bond was premature. 

"We cannot have a representative democracy with all of these inquiries that are going on," she said. "I'm asking for this body to stand for the people today."

On Monday night, state Sen. Marshall Bullock, D-Detroit, said the issue is “beyond trust and blame.”

“No matter who is in office … we need that money to continue to do things that’s pro-Detroit,” he said. “Instead of having this community of blight. The kids see this as normal. It’s time for us to continue to move Detroit forward.”

Longtime resident Thomas A. Wilson Jr. cited multiple unknowns and said he’s not ready to support the bond. 

“Dot the i’s and cross the t’s. People forget this, put a period at the end of the sentence,” he said. “From what I’ve read and what I’ve heard here tonight, none of that has been done.”

Activist Demeeko Williams told the council he was voting no on the bond. 

“I want abandoned houses torn down like any other Detroiter. But when that comes at the expense of my money, we are not giving no money," he said. “We have too many pressing issues in the city in order to give money to mismanagement. There is no way in hell that I’m giving my money to mayor Duggan or anybody else in this city.”

The city's federally funded work has long been the focus of federal, state and local investigations amid soaring costs and bidding worries raised in fall 2015. Two individuals pleaded guilty in the spring to bribery in a long-running federal criminal investigation into the program.

Since spring 2014, the city has knocked down about 19,600 houses, primarily with federal Hardest Hit Fund dollars. Duggan has said there are just as many left to raze, and that the bond will finish those. 

The administration has said that Detroit paid off past general fund bond debt ahead of schedule because revenues have been running higher than projections made during its landmark bankruptcy. This, officials said, will allow the city to seek out the bond for blight reduction without raising taxes above the current tax rate of 9 mills.

But Irvin Corley Jr., who heads council's fiscal division, said Monday evening that the debt millage is projected to go down to 6 mills in 2021 if the blight bonds are not sold. That would be $60 less per year for the average Detroit homeowner with a taxable home value of $19,000, he said.

Corley cautioned that that the tax-exempt bonds could become taxable if bond proceeds are used for private benefit. 

“There has to be very detailed record-keeping on the use of the bond proceeds over the 30-year period of the bond,” he said. “Because at any time during the 30 years, if it’s deemed that some of the bond proceeds are used to benefit a private individual, then those bonds would become taxable, and become taxable retroactively.”

Massaron said there's a lot of documentation associated with demolition and "it won't be difficult for us to track." If there's an issue, he said, "It will be relatively easy to fix."

The administration has been pressing for the council to vote on the bond measure before its winter recess. The last day for the panel to vote before the break is Nov. 26. The language must be submitted to the Wayne County Clerk's Office by mid-December to appear on the March 10 ballot.

Jones defended the panel amid criticism Monday night over the council's concerns about a bond issue. The panel, she said, was doing its job.

“I have said to everyone, it’s not that I don’t want houses torn down. I want it done properly," she said. "They give the job to me to legislate and that’s what I’m doing.”

Among the recommendations in the new audit, Lockridge called on the city to centralize its demolition administration.

That change, among others, are reflected in a resolution from the administration that proposes a demolition department that would operate under the direct supervision of the council and a plan to subsequently cancel or revise the city’s existing contract with the Detroit Building Authority. 

The commitments also include assurances that smaller, city-based women and minority-owned companies would get more access to the work and a strategy for the use of vacant lots left after demolitions. 

Councilwoman Raquel Castaneda-Lopez said Monday night that there's a "false narrative" that the current proposal is the only hope to eradicate blight.

"This is not our only opportunity to do this," she said. "We have an opportunity to push forward and put it forward in a better way."

cferretti@detroitnews.com