Feds looking into Detroit's house demo program

Posted at 6:33 PM, May 02, 2016
and last updated 2016-05-02 18:33:47-04

Federal Investigators are looking into Detroit’s demolition program following reports of questionable contracts.

7 Action News has learned investigators with The Office of the Inspector General for the Troubled Asset Relief Program, known as SIGTARP, have questioned people connected to the program and requested documents.  According to sources, the focus of the investigation is centered on contracts. 

In the fall of 2015, the demolition program under Detroit Mayor Mike Duggan came under fire when the average price to tear down a house reached a record high of more than $16,000. At the time, Duggan blamed the rising cost on higher standards required of the contractors and the difficulty getting fill dirt. However, a whistleblower blamed the rising price on what he claimed to be improper deals made with three demolition companies who received millions in contracts. 

Detroit Land Bank Authority Board Chair Erica Ward Gerson says investigators with SIGTARP have talked with the executive staff regarding the land bank’s practices, but as of yet, nobody has received subpoenas.  Ward Gerson says if they do, they will fully cooperate but she believes investigators will find no wrong doing.  The board chair tells Action News the land bank records have already been scrutinized by several other agencies.

According to Ward Gerson, the average price of tearing down a house has steadily declined to an average cost of $12,500.