Telegram - Serving Metropolitan Detroit Since 1944

By Steven Malik Shelton
Contributing Columnist 

DETROIT HIT HARD-Part Two

 

March 12, 2020

Since taking office in 2014, Mayor Mike Duggan has spent close to 300M dollars in federal Hardest Hit Funds to tear down thousands of homes in the city of Detroit. Moreover, he has stated publicly on numerous occasions that these funds were strictly allocated toward demolitions and he was powerless to spend them to keep Detroiters, suffering under a litany of burdens and abuses, in their homes.

Yet, when the United States Congress passed the TARP legislation in 2008, it specifically set asidea portion of the funds to include an allocation of 7.6 Billion dollars for foreclosure prevention. In fact, the Congress was against enacting the former U.S. Treasury Henry P. Paulson'sinitial three page proposal that would have earmarked all TARP funds to bailing out the banks and the mega-financial institutions unless it included the provision to use the money to provide relief and stimulus to suffering homeowners.Congress stated in the finalized version of the TARP law that funding was to be used to protect home values, preserve homeownership,and promote jobs and economic growth. And regardless of any allowances or policy changes made later by state agencies or city authorities, the law passed by Congress with its specific stipulation on how this portion of TARP money was to be used, was never altered, amended or canceled.

On February 19, 2010, the United StatesTreasury Department which was authorized to distribute TARP funds, announced the creation of the Hardest Hit Fund with the stated purpose to help families in states determined by the Treasury to be suffering the most from the crisis in the housing markets. The funds were allocated to prevent home foreclosures and stabilize homeownership in the "hardest hit" sections of the nation. The Hardest Hit Fund developed out of the Troubled Asset Relief Program (TARP) created to correct or alleviate the damage done to millions of homeowners across the nation which was caused by predatory banks and unscrupulous financial institutions and which ignited a firestorm in home foreclosures and resulted in one of the worst economic system failures and depressions in history.

The situation was so terrible that, not only the nation's, but the world financial system was on the verge of complete collapse. Consequently, legislature was quickly presented to Congress to provide a bail-out to the Wall Street banks and mega financial institutions in the incredible amount of 700 billion dollars. (Many experts concur the amount ballooned into the trillions).

In 2013, US Treasury approved HHF program assistance that was dubbed the Blight Elimination Program. This program allowed Hardest Hit funding to be siphoned off toward tearing down homes instead of saving homes. In May of 2013 Michigan asked to be allowed to use HHF for "blight elimination." And subsequently, Treasury changed its contract, and unlawfully permitted the use of HHF for blight removal and demolition purposes. Yet, again, no revision, amendment, change or voidance in the law passed by Congress ever took place, and no department, or agency, or directive or arbitrary policy change, or contract, can override the stipulations and provisions of a federal law.

"Out of 700 billion dollars from TARP funds, only a pittance of a few billion was designated to help poor people stay in their homes," said civil attorney and Detroit activist, Jerry Goldberg. "Yet, there was nothing in the TARP law about tearing homes down. In Michigan, when the Hardest Hit money came in, we demanded that they put the funding in a community bank that worked for the people so they could buy their homes back. And we could have stopped the foreclosure crisis in Detroit right in the beginning."

Over several years, hundreds of millions of dollars in Hardest Hit Funds was funneled into Detroit through the Michigan State Housing Development Authority (MSHDA) to demolish homes, many of which were foreclosed on by predatory lenders or because of illegally high property tax assessments, and acquired by the Detroit Land Bank (a quasi-city authority with no real accountability to the residents of the city).

A slew of investigative reports has concluded that Duggan's handling of Detroit's demolition programs was plagued with waste, mismanagement, cronyism, fraud, and incompetence from the beginning.

In November of 2019, the Detroit Auditor General released a scorching report revealing that Duggan's demo initiatives have been riddled with serious problems and violations over the last four years. Among them were that it failed to provide oversight when administering contracts, that it violated state and federal laws, and that there was a perception that public officials are using the procurement system to reward themselves, their friends and supporters.

"The City of Detroit squandered hundreds of millions of dollars in Hardest Hit Funds that could have been used to keep people in their homes, and to pay delinquent property taxes, rather than tearing homes down," said Goldberg. "The city chose to use these funds for a demo program that has destroyed our neighborhoods and has been laced with corruption. And we say enough of this; it's time to rebuild this city, not continue to tear it down."

According to information released by the Special Inspector General for the TARP program, the allowable cap amount for funding authorized to be spent on structures designated for demolition in Michigan is 25,000 per property. Yet a recent report by the Detroit Auditor General revealed that the 25,000-dollar limit was violated many times. Moreover, a federal study revealed that the US Treasury department was negligent in monitoring and overseeing Hardest Hit demolition funding in Michigan as well as in other states.

"The Hardest Hit Fund Program was totally designed to help struggling people to stay in their homes," said Detroit activist, Ramone Jackson." There was a small sub-section that allowed them to use some of it for blight removal. Duggan and others are saying they had no choice but to use all the funding for demolition. But Duggan didn't have to honor that, because there is no law saying he must follow it. And it wasn't in accordance with the law passed by Congress and what that law specifically stated."

Steven Malik Shelton can be reached at [email protected]

 

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