Detroit Hit Hard by Mismanagement and Exploitation

n 2010, the Troubled Asset Relief Program (TARP) (also known as the Hardest Hit Fund) was established to provide help to families in areas of the nation adversely affected by the economic tsunami ignited by wild, predatory speculators in the housing and financial markets.

The Hardest Hit program initially focused on five states (Michigan being one of them) with the most distressed homeowners and a funded initiative of 9.6 billion dollars that included 18 states along with the District of Columbia.

Each of the states selected had their funding administered by the state’s Housing Financial Agency (HFA).

Although HHF’s were earmarked to be distributed to keep people in their homes, by the end of 2011, Michigan along with several other states began to be more concerned with the blight caused by abandoned homes which had its root cause in predatory loan foreclosures (and in cites like Detroit to unlawful over assessment of property taxes) which were what the HHF program was established to address and to alleviate. (Data reveals that from 2009 to 2015, 55 to 85 percent of Detroit homes were overcharged property taxes in violation of state law).

In 2013 the U.S. Treasury Department, which has overriding control of HHF disbursements, allowed Michigan and several other states that were devastated by egregious antics in the financial markets to use HHFs for demolition.(The permission to allocate HHFs from home reinvestment to home demolition,did not change or amend the original law or purpose of HHFs which was to keep people in their homes).

In Detroit, hundreds of millions of HHFs were diverted toward tearing down homes. And, particularly at the local level, these activities have been enmeshed in corruption, incompetence and controversy from the beginning.

Recently, the Detroit Inspector General, the Detroit Auditor General, and the Detroit Ombudsman have released damning reports on the violations and mismanagement of the city’s demolition program under the stewardship of mayor Mike Duggan.

Moreover, according to numerous academic studies and news reports, many of the houses that were targeted for demolition were vacant because the previous owners and residents were unlawfully victimized by high property tax assessments that homeowners could not afford and should not have been required to make.

One study estimated Detroiters overpaid their property taxes by at least 600 million dollars between the years 2010 and 2016.

Furthermore, other studies reveal that mayor Duggan’s claims that his demo program has made huge inroads on removing blight in the city is doubtful because of a lack of any comprehensive surveys on the issue along with skewed and incomplete data submitted by the Detroit Land Bank which is in charge of Detroit’s demolition program. Many Detroiters believe that the demo program alone, without a more aggressive program geared to keep Detroiters in their homes, is doomed to fail.

Thus, according to an analysis of the Wayne County Treasurers Office, in 2014 houses with delinquent taxes (which averaged $8000 per house) went largely unoccupied after foreclosures and entered the Detroit Land Bank to be subsequently torn down at a price often two or three times the amount owed in delinquent property taxes.Ironically, this irrational process that can be likened to a dog chasing its tail, resulted in more abandoned properties and vacant, blighted areas in the city of Detroit.

“We view helping people who are losing their homes as a bailout,” said Michelle Oberholtzer, director of the Tax Foreclosure Prevention Project at the United Community Housing Coalition. “We need to save these precious things rather than waiting for the convenience of vacancy to write a check to a contractor, which will not benefit anyone but the contractor.”

Steven Malik Shelton can be reached at [email protected]