Detroit land bank investigation raises concern over excess spending


Detroit – The Detroit Land Bank Authority and the city’s Demolition Department wasted time, resources, and tax dollars trying to determine if the topsoil used by a now banned demolition company was safe and failed to inform residents of the possible contamination. This was the result of an investigation report.

The office of Inspector General Ellen Ha received a request from the Landbank on June 9, 2020 alleging that the demolition of McDonagh in Chicago did not Providing documentation for topsoil used at a number of demolition sites as required by the rules of the city’s federally funded demolition program.

Subsequent tests by AKT Peerless, a Detroit The company had signed a contract at the start of the federal program to monitor backfill materials used to fill holes that once housed houses. It was found that 81 of McDonagh’s 89 locations had used dirt containing unacceptable levels of mercury, arsenic, chromium or lead.

Despite the results from AKT, DLBA spent nearly $ 100,000 contracting ASTI Environmental, a Brighton-based environmental and engineering firm, and law firm Dickinson Wright to conduct a separate analysis of whether the soil is acceptable. According to the Landbank, ASTI found that 23 of the 89 sites were contaminated.

The State Department for the Environment, Great Lakes and Energy is reviewing the results of the duel tests.

According to Ha’s office, the city made a conscious decision not to notify residents of the neighborhoods around the locations directly.

“What we are questioning is the process by which this was done,” Ha told The News on Tuesday. “It suggests that everything is being wasted. We want this to be an example of where you shouldn’t go because it could get you in trouble.”

Ha states in the report that the prosecuted trial was “suspicious”. Unlike other contractors who fail to comply with topsoil, McDonagh – a company previously admonished for violations and eventually removed from the federal program for noncompliance – did not have to pay the testing costs as the DLBA took the bill.

The Landbank said the OIG’s assumption that the problem could have been resolved by instructing McDonagh to clean up the sites from the start was a “fatal mistake”. McDonagh disagreed with AKT’s findings, and it is unlikely that the company would have voluntarily removed and replaced dirt at all locations – a company estimated to cost between $ 600,000 and $ 1.2 million, the Landbank argued in its Answer.

Timothy Devine, General Counsel of the Landbank, said if the state concludes that 70% of the sites have no public health issues because ASTI Environmental’s conclusion that only 23 sites are contaminated is correct, then ” strip everything off and replace … “would at least have been wasteful. “

The IG’s report alleges that the land bank wasted urban resources by not valuing AKT’s original environmental results at face value.

The soil problems prompted the land bank to review the standards in use since the $ 265 million program began in early 2014, which have been used to demolish more than 15,000 properties, the inspector general said.

Devine told the OIG it was important to involve ASTI in helping the land bank and demolition department “define a path that prioritizes public health and environmental standards,” including whether the soil classifications used in the program are “appropriate”.

The OIG asked why ASTI – a company unfamiliar with the city’s program requirements – should be hired to determine the suitability of the topsoil. AKT has been involved in determining whether the soil complies with the program requirements since the program began.

Alyssa Strickland, a spokeswoman for the land bank, said AKT “misapplied contractual and legal standards” at McDonagh locations but “we do not believe that they failed at any earlier point in the (demolition) process.”

Katie Bach, a spokeswoman for the Michigan State Housing Development Authority, said when DLBA announced to Michigan Homeowner Assistance Nonprofit Housing Corporation that McDonagh had failed their tests, the MHA urged testing at all of the contractor’s locations. She added that the MHA was not actively involved in the decision to hire a third party organization, and that the filth organization Detroit has used for many years, AKT Peerless, “should be actively involved in the discussion of filth quality.”

As of Tuesday, 23 McDonagh properties had been redeveloped. the inspector’s general report said.

In a statement, the Landbank said Tuesday that it had reported the problem to the OIG office for investigation and did so to protect public health.

“As the report notes, there is no public health problem,” it says. “The DLBA stands by its successful commitment at EGLE to conduct science in the interest of public health.”

McDonagh first became a pre-qualified bidder for the city’s federally funded demolition program in July 2018. In total, the company received $ 17 million in demolition contracts, the report said.

In February 2019, the Detroit Construction Department issued a work hiatus and correction plan for the company. It was forced to dig up properties where unacceptable materials were used as fill dirt.

At that time, the company was prohibited from dismantling or demolishing other contractually agreed properties. By March 2019, the company had been issued a notice of termination for refusing to fix the issues.

McDonagh followed suit with a settlement proposal that enabled him to demolish, seed, and classify the 89 locations that had homes out of the total group of 772 properties that had been given to the company prior to the termination.

This backfilling work took place in April, May or June 2019. The Landbank discovered the missing bills next spring.

McDonagh, according to the OIG report, “has historically failed to meet program requirements”.

“Still, the DLBA spent a lot of time, effort, and money proving that the topsoil used by McDonagh was suitable for the Detroit neighborhoods,” it said. “These actions do not seem logical given the totality of the circumstances.”

The city’s demolition department paid 130,000 AKT for ground testing.

Originally, the land bank and demolition department considered not testing the sites, despite the fact that MSHDA mandated it, according to the OIG report.

ASTI was selected by Dickinson Wright, a law firm hired by the Landbank in June 2018 to provide various legal services. The city is not a party to the Dickinson Wright Treaty, but Detroit’s Demolition Director, LaJuan Counts, and Tammy Daniels, Landbank’s director of demolition, both signed the contract approval. The OIG report states that the contract was no-bid and that Detroit contract agents, the legal department, or the city council did not provide any information.

As of January 30, 2021, ASTI had billed the land bank for services of $ 30,637. To date, Dickinson has billed Wright more than $ 69,000 for legal advice.

The Landbank said the city will be complete with a portion of $ 223,000 in frozen contract payments available to McDonagh due to the final liquidation of the 89 properties. If funding is insufficient, the land bank will take action to reimburse McDonagh for the remaining costs.

The OIG report notes that Counts notified Detroit Mayor Mike Duggan of the issues in June. In her interview with the OIG office, Counts confirmed that McDonagh had used an unapproved source of dirt in his demolished buildings in violation of his contract.

John Roach, a Duggan spokesman, said Tuesday that the land bank’s due diligence had uncovered the potential soil problems. He added that the Landbank had consulted with state regulators “every step of the way” and that science had shown there was no risk to public health.

“The OIG report essentially boils down to a complaint that the land bank wasted money by spending too much to make sure public health was protected,” Roach wrote in a text message. “We believe the money was well spent and we have every confidence that the Landbank did the right thing.”

EGLE’s senior geologist Steve Hoin, an expert on soils in southeast Michigan, said the test results showed high levels of mercury, the report said. The land bank had given Hoin no details of the source of the dirt, “so he lacks an understanding of the history of the soil.” Although Hoin said there was a “low chance of harm,” the report said.

Jill Greenberg, a spokeswoman for EGLE, said in an email Tuesday that “data is being collected to determine if corrective action is needed” for McDonagh’s 66 remaining locations.

The potential of a press release was discussed by the land bank, the demolition division and the Duggan office last June after data indicated that topsoil at 11 properties “could present potential environmental or health concerns.”

Instead, at the request of Duggan’s office, the land bank agreed to publish soil sample data and scientific analysis on its website. The information was released in September, but Ha said the website was difficult to navigate.

Detroit City Council was briefed last summer on the problem and the need to engage experts and consult with the state before the panel considered the city’s $ 250 million anti-epidemic bond initiative.

No final update of the test results was presented to the Council in October. This is due to a final statement from EGLE, officials from the Landbank informed the OIG.

“Any government program that uses taxpayers’ money should operate with full transparency,” it says. “In this case, the DLBA and demolition department failed.”

McDonagh’s problems prevented the DLBA from ending its participation in the Federal Hardest Hit Program. The company met the April 2nd deadline to replace the floor. The deadline for completing the program is June.

The Detroit federal program has been controversial in the past with tendering practices and rising costs. In recent years, some city, state and convention lawmakers have raised concerns about the potential for pollution in the dirt used by contractors after a series of high profile violations at urban demolition sites.

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Dusty Kennedy