Todd Spangler

Detroit Free Press

WASHINGTON – A few years ago, the question for Detroit Mayor Mike Duggan was where could he find the funding needed to continue what was then and continues to be the most aggressive blight removal program in the nation.

It’s no longer a question.

On Wednesday, federal lawmakers announced another $188 million from the U.S. Treasury for Michigan under the Hardest Hit Fund, a program which already has provided $264 million for tearing down decrepit, abandoned buildings across the state. Of that, the vast majority -- $172 million -- has already been spent or committed to pulling down blighted residences in Detroit.

And while it’s not known at this point exactly how much of the $188 million will go to blight eradication efforts in Detroit or any other Michigan city, it’s likely -- if the past is any guide -- that the state's largest city will receive a sizable portion, if not most of it.

“There’s no question what’s being done in Detroit is tremendously effective," said U.S. Sen. Debbie Stabenow, D-Mich., as she and her colleagues, U.S. Sen. Gary Peters, also D-Mich., and U.S. Rep. Dan Kildee, D-Flint Township, unveiled the latest round of funding for Michigan under the Hardest Hit Fund during a conference call with reporters Wednesday.

Duggan called the announcement "great news" and specifically credited officials in the Michigan State Housing Development Authority with presenting a compelling case for the blight removal effort underway in Michigan, and especially in Detroit, which has with one of the nation's largest inventories of abandoned homes and buildings.

"While Detroit's share of this new funding is yet to be determined, it is likely to be far greater than the $42 million just recently awarded to the city. ... This will allow us to increase our pace of demolition from 4,000 houses last year to 5,000 this year and 6,000 next year," Duggan said. "In the next few weeks, we also expect to receive federal approval to expand the zones where we can spend these funds so our blight removal efforts can reach into even more neighborhoods."

In this latest round of funding, 12 other states and Washington, D.C., also received awards but, according to the Treasury Department, Michigan won more than any other -- though it was still somewhat less than the $249 million it was eligible for in this round. It brings to more than $761 million the total Michigan has received or been committed under the Hardest Hit Fund program since its inception in 2010, though only a portion of that has been targeted for blight eradication, mostly in the last three years.

Peters said while Michigan is receiving more than any other state or jurisdiction under this round of grants, it is somewhat less than it might have been because other states across the U.S. have seen the effectiveness of blight removal programs in Michigan and also applied for funding under the competitive awards.

“Communities across Michigan will benefit greatly from this huge influx of federal funds,” said Kildee, who represents Flint, which has also received more than $45 million to date for demolishing abandoned buildings and is expected to receive even more under this round of funding.

“Removing blight raises property values for surrounding homeowners, decreases violent crime and unlocks greater opportunity for all families," added Kildee, who has long advocated for government funding of blight removal. "Securing these funds has been one of my main focuses in Congress and I look forward to seeing the real positive impact this initiative will have on neighborhoods across the state.”

"The fact that Michigan is getting the most money in a very competitive program speaks volumes," added Peters, who also made clear that while Detroit and Flint may see much of the funding, money for both blight removal and other efforts have been and are expected to be spent in more than a dozen other cities across the state as well.

Conceived as a response to the housing crisis of 2008-9, the $7.6-billion Hardest Hit Fund was at first limited to state-based programs aimed at keeping residents in their homes, largely through mortgage assistance and principal reduction efforts. In that initial round, Michigan -- one of 18 states and Washington that got funding -- received $498 million.

But in the years that followed, Michigan asked for and received permission to use some of its already allocated funding for blight removal efforts, especially in Detroit, where as many as 40,000 blighted, abandoned buildings have been identified. The Treasury agreed, believing that removing such structures helped to stabilize neighborhoods and, in turn, keep other residents in place in their homes.

Detroit blight fight to be boosted by Treasury funds

Studies have also borne that out, indicating that property values have risen in Detroit neighborhoods targeted for blight removal. In the last two years, Duggan’s program has taken down more than 8,000 structures, with a target of more than 15,000 to be demolished by 2018 -- a target which could be exceeded by utilizing the new funds. The mayor also recently asked for permission to expand areas in the city where Hardest Hit Funds can be used to remove blight.

A few years ago, however, it appeared that even with the funding committed to blight in Detroit -- $130 million of the $208 million promised to tear down buildings in Michigan under the program – Duggan’s program, as well as others across the state, would run out of cash before it could get near its target.

Then, late last year, Duggan, Stabenow, Peters and Kildee launched an effort to have $2 billion in unspent funds from another federal housing program moved into the Hardest Hit Fund. It was a long shot, considering partisan divides in Congress. But with civil rights leader Jesse Jackson, Quicken Loans founder Dan Gilbert and JP Morgan Chase head Jamie Dimon all making calls on Detroit’s behalf, it succeeded.

In February, Treasury announced another $74.5 million for Michigan as it doled out another $1 billion to most of the original Hardest Hit Fund recipients based on population and how well they had spent their initial funding and, this month, Gov. Rick Snyder announced that $56 million of that would go for blight in the state – $42 million in Detroit and $13.9 million to Flint. The rest is to go to homeowner protection programs across the state.

Wednesday’s award more than doubles that earlier award this year and is based on need and whether programs – like Detroit’s – are in place to spend the funding by 2020. An announcement from the state on the specific allocation of the funding is expected in the weeks to come.

Thirteen states and Washington, D.C., applied for funding in the latest round and all, except Georgia, received an award. While Michigan's was the largest at $188.1 million, California received the next highest amount at $169.8 million and Illinois was next, at $151.3 million. Out of the $2 billion in new funding secured for the program, Michigan has received commitments for a total of $262.6 million.

“Today’s announcement continues Treasury’s commitment to provide relief to struggling homeowners and help stabilize neighborhoods in hard hit areas,” said Mark McArdle, the federal deputy assistant secretary for financial stability. “While the housing market continues to recover we know some homeowners and areas are still experiencing the damaging effects of the housing crisis."

Kildee said Wednesday that he, Stabenow and Peters continue to press the Obama administration for blight removal funds and were scheduled to meet later in the day with Treasury Secretary Jacob Lew to discuss, among other things, the need for funding to take down abandoned commercial buildings.

Hardest Hit Fund money cannot be used for that purpose at present, said Kildee, but that could change.

"If you go back three years," he said, "demolition itself was not an allowable expense."

Contact Todd Spangler at 703-854-8947 or at tspangler@freepress.com. Follow him on Twitter at @tsspangler.