Detroit BFA Committee Reviews FY2025 Audit and NEZ Application

On January 28, 2026, the Detroit City Council's Budget, Finance, and Audit (BFA) Committee met to receive the city's annual comprehensive financial report (ACFR) and single audit report for the fiscal year ending June 30, 2025, and to discuss a Neighborhood Enterprise Zone (NEZ) certificate application. The committee heard public comments, received a presentation from the Auditor General and Plante Moran, deliberated on the NEZ application, and referred a report on a local option admissions tax to a future Committee of the Whole.

Public Comments & Testimony

• Mr. Davis: Expressed concerns about the city's treatment of retirees post-bankruptcy, urged renegotiation of the Great Lakes Water Authority lease (claiming the city is underpaid), requested a physical copy of the Plante Moran report, and called for re-establishment of the retiree task force. Councilmember Waters responded that the task force has been re-established and will meet next month.
• Jadante Smith: Called for the removal of Corporation Counsel Conrad Mallett and Gary Brown, citing 51 water main breaks across the city and a scandal in Southwest Detroit. Also criticized Councilmember Benson (District 3) for inadequate advocacy on issues including homelessness, water main breaks, abandoned homes, sewer issues, land bank problems, and police issues. Councilmember McCampbell noted that the committee received an update from DWSD the previous day.
• Betty A. Verner (President, Soda Ellsworth Block Association): Provided information on the Detroit Community Health Connection and Nolan Family Health Center (111 West Seven Mile), which offers health and dental services on a sliding fee scale. Councilmember Waters thanked her and pledged to share the resources.
• Brother Cunningham: Solicited hand warmers and bus tickets for those waiting at bus stops in the cold, citing inadequate bus service. Also thanked Councilmember Waters' office for constituent assistance.
• You Matter: Raised concerns about the Board of Zoning Appeals (BZA) charging appellants for transcripts (citing costs of over $4,700 in one case) and questioned a proposed rule change requiring appellants to pay. The caller criticized Conrad Mallett's leadership of the Law Department. Councilmember McCampbell asked the caller to contact his office directly for follow-up.
• Charlotte: Seconded comments from a previous caller (presumably "Joanne") and thanked the committee.

Presentation: Annual Comprehensive Financial Report (ACFR) and Single Audit

Presenters: Laura Goodsby (Auditor General), Ali Hajazi (Partner, Plante Moran), Amanda Ward (Partner, Plante Moran), Josh Ed (Principal, Plante Moran), Veronica Twazan (Senior Manager, Plante Moran).

• Audit Opinion: Plante Moran issued an unmodified (clean) opinion on the city's financial statements for FY2025, the highest level of assurance. The city has received the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting for eight consecutive years (FY2018–FY2025).
• Financial Highlights (General Fund):
  • Revenues increased 3.7% to $1.45 billion. Property tax revenue rose 14% (due to increased taxable value, despite a slight millage rate decrease); wagering tax revenue rose 18% (due to increased activity); other revenue decreased 13% (largely due to shifts in investment income).
  • Expenditures increased 3.4% to $1.381 billion, within budgeted appropriations. Development and management costs rose significantly due to increased required contributions to pension plans. Public protection costs rose 6% to $643 million.
  • General fund balance decreased 7.7% (approximately $85 million) to $1.029 billion. The decrease was driven by a $52 million drawdown from the Retiree Protection Fund for pension contributions and a $42 million addition to a corporate income tax reserve due to future uncertainty.
• Audit Findings (Financial Statement):
  • Two material weaknesses were reported (up from one in FY2024).
  • Finding 2025-001 (Repeat): Lack of proper controls to ensure timely and accurate financial reporting, encompassing 15 individual items (down from 17 the prior year). City staff stated these items were not individually material.
  • Finding 2025-002 (New): Lack of proper controls to prevent possible misappropriation of assets at a component unit (identified as the Detroit Transportation Corporation, DTC). This finding stems from a lack of segregation of duties that led to improper payments.
• Single Audit (Federal Expenditures):
  • Federal expenditures were approximately $508 million (a significant increase from prior years), with $291 million from ARPA (State and Local Fiscal Recovery Funds). Six major programs were audited, and all received unmodified opinions.
  • Four findings were reported (two repeat from FY2024), all classified as material weaknesses.
    • HOME Program (Repeat): (1) Failure to ensure timely inspections, deficiency communication, and corrective action. (2) Failure to implement controls to ensure eligibility reviews were performed in compliance with award terms.
    • Ryan White HIV Emergency Relief Program (New): Sub-recipient payments were not made within 30 days of reimbursement requests, as required. (Payments were 31–32 days late due to a system setting.)
    • WIC Program (New): A material weakness was reported (specific details not provided in the transcript).
• Question Costs: None were reported.

Discussion Items

• 6.1 NEZ Application – 1257 Bagley (Corktown): The committee considered a Neighborhood Enterprise Zone certificate application for the rehabilitation of an existing duplex at 1257 Bagley. Discussion focused on the tax valuation basis (capped vs. uncapped) for the NEZ. Vice Chair Johnson emphasized that the city needs to ensure the uncapped taxes (based on current property values) are collected to support revenue growth. Councilmember Waters raised concerns about property appraisal accuracy. The property owner, Matt Cassidy, was present. The assessor’s office (Deputy CFO Assessor Alvin Horn) clarified that under a rehab NEZ, the value is based on the pre-rehab assessed value as adjusted by the assessor, and the State Tax Commission makes the final decision based on the local assessor’s recommendation.
• 7.1 CRC Report on Local Option Admissions Tax: The committee received a report from the Citizens Research Council (CRC) of Michigan evaluating a local option admissions tax on sports and entertainment venues. The committee voted to postpone the item to a future date (to be determined) after a scheduled Committee of the Whole discussion, where CRC will present both the admissions tax report and a separate report on a local option sales tax. The item will return to the BFA committee after that discussion.

Member Reports

• Councilmember Waters: Announced a town hall on deed fraud on Saturday (date not specified) from 10 a.m. to noon at the Northwest Activity Center (18100 Meyers Road), co-hosted with Councilmember Callaway (District 2). The event will be hybrid.
• Councilmember McCampbell: Announced a District 7 swearing-in and visioning session at 5:30 p.m. at St. Suzanne and expressed appreciation for the committee’s work.

Key Outcomes

• The ACFR and single audit reports were received and discussed. No formal action was required.
• 6.1 (NEZ Application): Moved to Formal Session with a recommendation to approve.
• 7.1 (CRC Report): Postponed to a future date (to be determined) after a Committee of the Whole discussion, with the item to return to the BFA committee thereafter.
• The committee stood adjourned at 2:53 p.m.