The Demolition Program is grant funded through the U.S. Department of Housing and Urban Development (HUD). The city obtains this funding annually and the total amount received varies year-to-year. Once the funding is absorbed, the City has to wait for the next year's funding to continue demolitions.
The National Stabilization Program (NSP) funding provided by HUD has allowed the Demolition Division to work diligently towards Mayor Bing's goal of 10,000 properties removed by the end of his first election term.
NSP funding has been disbursed by the federal government in three phases. NSP I and NSP II allocations for the City of Detroit have been spent. The Demolition Division is currently awaiting the NSP III allocation in order to begin additional demolition.
The Buildings, Safety Engineering and Environmental Department received a direct grant from the Michigan State Housing Development Authority (MSHDA) for the 2010 program year to complete a demolition blitz in the Detroit neighborhoods.
MSHDA directs NSP funding around the state including the allocation for the City of Detroit.
In the case of a building fire, the owner's insurance company sends a percentage of insurance money (typically 5-10%) to the municipality where the building is located, to be held in escrow for demolition.
If the structure will be repaired by the owner, a permit must be issued to do the work. When work is completed a certificate of completion is issued by the city. The owner or the contractor files paperwork with the municipality and escrow funds are returned to the property owner after approximately 30 days.
If the property owner chooses to demolish the property, the demolition contractor must be issued a permit. After the contractor completes demolition and receives a certificate of completion, the owner or contractor files paperwork with the municipality and the escrow funds are disbursed to the contractor after approximately 30 days.
If a fire-damaged building is abandoned and the municipality deems the structure to be a community hazard, the city may demolish the building and seek the insurance escrow funds to cover a portion of the costs of asbestos abatement and demolition.