Detroit’s demolition program under fire for failing to substantiate $13M in costs

A scathing review of Detroit’s demolition program found that the city failed to substantiate $13 million in payments to contractors between 2017 and 2019, making it impossible to discern whether the tax dollars were properly spent.

The Detroit Land Bank doled out the federal funds to demolition companies, even though the contractors didn’t document the cost of dirt used as backfill, the special inspector general overseeing the federal government’s Troubled Asset Relief Program (TARP) said in a letter to the Treasury Department.

The inspector general’s office reviewed 100 reimbursement files from local contractors and found that none of them included the “actual amount the local contractors paid" for dirt.

As a result, payments to contractors “may have been the result of inflated payment requests,” the letter states.

“Absent this information, the Michigan and other state agencies cannot verify the accuracy of contractors’ reimbursement claims, and taxpayers have no assurance that contractors are not inflating reimbursement requests for demolition materials to exceed their actual costs,” the letter adds.

In a statement to Metro Times, the Detroit Land Bank said it did nothing wrong.

“The Detroit Land Bank Authority complied fully with all state and federal rules, and provided all required documentation,” Detroit Land Bank spokeswoman Alyssa Strickland said. “The DLBA sees no basis for a claim of improper payments.”

As a result of the investigation, the inspector general’s office is recommending that the federal government require agencies to “prevent fraud and waste” by substantiating “the actual price contractors paid for any materials used in the demolition process before releasing any reimbursements with TARP funds.”

This isn’t the first time the Detroit Land Bank has come under fire over dirt used in demolitions. In March, the Detroit Office of Inspector General found that contractors were putting untested – and potentially contaminated – dirt into the ground at demolition sites.

Separate state and federal investigations also found that the city was overpaying demolition companies for years. Since 2014, the city used federal funds to demolish more than 15,000 houses.

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