Feds to audit $25.5M Flint demolition program

A federal watchdog agency has announced it will conduct an audit of $25.5 million in demolition costs in Flint related to the Hardest Hit Fund.

The Office of the Special Inspector General for the Troubled Asset Relief Program said in a memo sent Monday to the U.S. Secretary of Treasury that it will examine demolition and related costs in Flint that were reimbursed with TARP dollars.

The review comes after a nationwide audit last spring found the full blight elimination program to be at risk of unfair competitive practices and overcharging.

Officials with SIGTARP declined to disclose Friday what prompted the audit for Flint.

“We certainly have had audits focused on specific counties and audits that have done deep dives on specific cities,” said Rob Sholars, a SIGTARP spokesman.

As of Friday, the Genesee County Land Bank Authority, which handles the Blight Elimination Program in Flint, had not received formal notification of an audit or a request for information, said Christina Kelly, director of planning and neighborhood revitalization for the land bank.

The authority is prepared for an audit, she added.

“We have a lot of procedures in place to make sure we have all of our i’s dotted and t’s crossed,” she said. “We go to great lengths to keep records in order and follow procedure required under the grant.”

According to the memo, the Hardest Hit Fund has spent $25.5 million in Flint for demolition and related activities.

Kelly said that as of this month, 2,039 demolitions have been completed since work began in 2014. The Michigan State Housing Development Authority has reimbursed the Genesee land bank $26.3 million.

An additional 244 properties have been demolished, but not yet funded, Kelly said. Another 340 demolitions are in process.

The audit in Flint comes after SIGTARP issued two subpoenas in May in Detroit demanding the Detroit Land Bank Authority and Detroit Building Authority, which oversee the city’s blight reduction program, hand over information on federally funded contracts and several demolition contractors.

SIGTARP is conducting a criminal investigation into Detroit’s demolition program, which first came under scrutiny in the fall of 2015 amid concerns over bidding practices and spiraling costs.

Detroit officials have defended the demolition efforts that have brought down close to 11,000 blighted homes since 2014.

In June, SIGTARP issued a report on a national audit of the full blight elimination program, Sholars said.

The report covered the seven-state Housing Finance Agencies participating in the Hardest Hit Fund that the Treasury approved for the program: Alabama, Michigan, Ohio, Illinois, Indiana, South Carolina and Tennessee.

“It found that the program is significantly vulnerable to the substantial risks of unfair competitive practices and overcharging,” Sholars said. “In January, Treasury accepted two of our most important recommendations: requiring full and open competition and requiring that only necessary and reasonable costs be reimbursed.”

cwilliams@detroitnews.com

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