Last Detroit house demolished in $265M blight-removal effort

Detroit — For nearly a decade, Stephenie Lee has been fearful and embarrassed over the burned-out house across from her eastside rental.

On Friday morning, it took mere minutes for a demolition team to topple it down.

The property on Waveney off Cadieux was the final house of 15,084 knocked down with $265 million in federal Hardest Hit Fund dollars in Detroit since spring 2014. 

"There's a lot of abandoned houses in this city that need to be torn down," said Lee, 49, who last saw the house occupied prior to a 2011 fire, apart from squatters. "It's a safety issue."

The federal dollars enabled Detroit to raze about 3,000 properties per year. Officials estimate 22,000 vacant houses in the city remain.

But the progress, officials said, is at a standstill since the federal funding ran out and $50 million per year allocated for blight removal in the city's bankruptcy plan was diverted to stave off a $350 million-plus budget shortfall tied to the COVID-19 pandemic.

City voters in November will decide a $250 million bond proposal to continue Detroit's efforts to remove another 8,000 blighted structures. The plan — Proposal N, as in neighborhoods — also would stabilize another 8,000 vacant but structurally sound houses.

"We at the land bank literally have no dollars," said Tammy Daniels, deputy director of Detroit's Land Bank Authority, on Friday as she watched the final federally funded demolition. "There are 8,000 other houses that need this level of attention. Proposal N is critically important to finishing what we've started."

The demolition of the structure on Waveney cost $16,200.

A divided Detroit City Council voted in July to send the measure to the Nov. 3 ballot one week after Detroit Mayor Mike Duggan introduced it. The panel's 5-4 approval came amid worries over a lack of public awareness and unanswered questions. 

The council rejected a separate bid from Duggan last fall. At that time, the proposed initiative sparked contentious debate and a packed town hall that drew upward of 500 residents, activists, clergy and lawmakers. 

Critics then cited worries over a long-running federal criminal investigation into the city's demolition program and the need for more guarantees for the hiring Detroit workers. 

The city's demolition program has been controversial for years after it fell under scrutiny in fall 2015 over bidding practices and soaring costs. It later became the subject of city, state and federal reviews and investigations. In spring 2019, two men involved in the program pleaded guilty to accepting hundreds of thousands of dollars' worth of bribes and rigging bids. 

A Detroit News investigation last fall found a lack of controls allowed contractors to charge whatever they wanted for dirt to fill holes left behind from demolitions during the initial years of the program.

Daniels on Friday acknowledged there have been "hiccups" along the way. The goal of the program, she said, is and has always been to make the city a better place.

"In a program that's operating at this scale, there are going to be problems. This is something that was never done before," she said. "We did not have a road map, and so yes, there were mistakes and there will continue to be issues. But we have a strong team that's committed to making Detroit better."

Council President Pro Tem Mary Sheffield has been critical of the program and was among the members who voted against the bond plan. She argued there weren't enough guarantees in the plan and "matters involving placing more debt on Detroiters should be met with intense community engagement." 

Duggan in January appointed LaJuan Counts to head the city’s new, municipally-controlled demolition department. The shift from a land bank- and Detroit Building Authority-led effort marks the first time in six years that demolition is being run by the city.

Counts said this fiscal year her department has $9.5 million for demolition. That will restrict the focus to emergency demolition work on properties in imminent danger of collapse.

She's uncertain how many homes fall into that category but the funding could pay to remove about 300. At least 40 others are in need of emergency demolition but don't rise to the priority level, she added. 

There have been 30 emergency demolitions since the new fiscal year began. The department could regain access to the $50 million stipend in three years, but there's no guarantee of that right now, she said.

The federal program limited demolitions to specific geographic areas within the city. Since its inception, the program has expanded its boundaries four times. But Detroit was still unable to touch all neighborhoods in need. 

The federal guidelines also prohibited the land bank from giving preference to any contractor based on race, gender or location.

Counts said areas primarily in Council Districts 3, 4 and 7 didn't get as much attention.

"Our focus is going to begin with one of those three districts," she said. "They might have had demolitions that took place, but they weren't percentage-wise to what they needed."

Officials on Friday said 65% of Detroit's demolition contracts — or about $165 million worth — went to city-based or headquartered companies under the federal program. Another 28%, or $71 million, went to minority-owned companies, officials noted. 

The city's new demolition office expects to tear down 14,000 structures and will prioritize work with city-based firms that hire residents. 

The transition to a city-run demolition program also beings oversight under Detroit's council. 

Under the bond proposal, the city would commit to a goal of awarding more than half of all contracts associated with the work to Detroit companies. City residents would get preference for acquiring homes that can be salvaged and reused, officials have said.

Now that its relieved of managing demolition, the land bank will focus on salvaging and selling properties through its online auction site and side lot sales.

To date, the land bank has sold 15,018 side lots for $100 apiece, and it has another 25,000 listed for sale on buildingdetroit.org. 

If voters reject the bond plan this fall, Detroit's demolition division will have few options.

"We'll go from doing about 3,000 demos a year to doing only 300," Counts said. "There will be more (blighted homes). It'll just add onto the inventory that already exists."

cferretti@detroitnews.com