DETROIT (AP) - An internal audit of Detroit’s program to demolish thousands of vacant houses found about $1 million in ineligible costs were improperly billed for reimbursement from the federal Hardest Hit Fund.
The costs were billed to the Michigan State Housing Development Authority which distributes fund dollars to local communities, according to the Detroit Land Bank Authority.
The Land Bank commissioned the audit which also found inadequate records and bid tabulation errors.
“The controls were not in place,” Authority Chair Erica Ward Gerson said Thursday.
The Land Bank runs Detroit’s demolition program.
More than 10,000 empty structures - mostly houses - have been demolished in the past 2½ years under Mayor Mike Duggan’s blight elimination plan.
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, according to a summary of the audit report.
Amounts over the cap should have been billed to the city.
“It was a matter of shifting money from one property onto other properties,” Gerson said.
The money was shifted between June 2015 and February 2016. Contractors didn’t receive any extra money, Gerson added.
On Oct. 17, the city announced that the U.S. Treasury Department would be releasing $42 million in federal funding to allow Detroit to continue demolitions.
The funding was suspended in August while Treasury officials reviewed a separate state audit of how Detroit was spending federal blight elimination money.
Procedures and controls for assessing bids and processing payments to contractors have been strengthened, Duggan said on Oct. 17.
Detroit has been awarded more than $128 million in Hardest Hit Fund money for demolitions and other blight elimination over the past three years. The $42 million announced earlier this month is the first installment of a new $130 million allocation for the city.
A blight task force survey in 2014 revealed more than 40,000 structures needed demolition.
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