To order meeting back to order.

Will the clerk please call the roll?

Good afternoon, Councilmember Denzel McCampbell.

Present.

Councilmember Letitia Johnson.

President.

Councilmember Mary Waters.

Present.

Mr.

Chair, Dad Corum.

Thank you so much, Mr.

Clerk.

All right.

We will um the minutes don't move us on to approve our minutes.

The minutes have been received.

I'll entertain a motion to approve the minutes.

Without any objections, the minutes will stand approved.

We'll now move on to chair remarks.

I do not have any remarks today.

So we'll now open up for public comment.

We will close public comment at 120.

Please limit your remarks to two minutes, and we'll start with those in the room, and then we'll move on to those participating remotely.

If you are on Zoom, please use the raised hand feature, and you will be called in order.

Do we have anyone in the room for public comment?

Seeing none in the room, we'll move on to Zoom.

Do we have folks on Zoom?

Yes, Mr.

Chair.

Um our first.

Sorry, I have lost.

Commissioner Davis, good afternoon.

You may give your public comment.

You have two minutes.

Good afternoon.

Can I be heard?

Yes, you may.

Good afternoon.

Okay, I like to start off.

Of course, I think the city can and should be doing more to help the city of Detroit retirees.

This whole uh bank bankruptcy was you know is on our backs.

I think the city church should be renegotiated some aspects of it, especially the lease agreement with the Great Lake Squad Authority.

Uh I think they're sadly underpaying us for the value of the facilities that they are controlling that we're supposed to own, but they've already changed the names of them.

Uh also separately.

I would love to have uh a physical copy of the Plant Moran um report.

You know, I'm I'm not as young as some of y'all, and now it would be great if in the event that perhaps my city council person is going to be having a meeting soon, and I can get a copy there from him.

Sure, can uh I also I think um more aggressively, I'd like to see uh perhaps the retiree task force uh reestablish or continue and uh a date set up for that.

That's all I have for today.

Thank you.

Thank you, Mr.

Davis.

Yes, we'll get you a copy of the um Plant Moran overview, and um I member Waters, if you want to say about those retiree tasks first, yes.

Um yeah, thank you, Mr.

Davis.

So we uh we have re-established it.

Um uh Mr.

Chairman here and I uh would be co-chairing uh the retiring task force.

So we're just trying to agree on what date we're gonna do it next month.

All right, all right.

Thank you, Mr.

Chairman.

Thank you, Madam War Member Waters, and yes, Mr.

Davis, I'll make sure you get that information when we do get the date established.

All right, next person on Zoom.

Our next caller is Jadante Smith.

Mr.

Smith, you good afternoon.

You have two minutes.

You may begin.

Good afternoon.

I'm uh out and about my eating breakfast.

You may be heard.

Oh, there we go.

Yes, you may good afternoon.

Good afternoon.

Sorry about that.

I just want to say um, I'm just gonna keep repeating my sentiments from earlier about Conrad Mallet getting Conrad Mallet um out of his position.

Also, I like to talk to talk about Gary Brown and the fact we have 51 water main breaks um all across the city.

I think there may be more in my non-expert opinion, but I am sitting with two active plumbers in the city of Detroit who have lots of concerns about the state of DWSD and what's been going on.

I think that we need to really really scrutinize these reappointments and the people who have been here and the issues that we're having, especially especially Julie Snyder as well, his Conrad Mallet and Gary Brown.

We have a homelessness crisis.

We have 51 water main breaks.

We had this scandal that was giant in uh Southwest Detroit um last year with all of that water in these residents' um homes.

Also, Mr.

Benson, you have so many issues in your district.

I'm in your district right now.

You are not advocating for your residents correctly.

Um it seems like as residents, people have to band together to do things that the administration and or city council, the legislative body who has subpoena powers and powers to advocate for the residents should be doing.

It's very, very um terrible to see that you don't care if your residents and the ones that you do care for, you're trading favors.

They're trading um political game for you and donations to your campaigns and things like that.

I would love to see you step up and do the work that is required for your district to improve.

You have too many abandoned homes.

You have too many people who have sewer issues.

You have too many people who are dealing with chronic issues that come down to city council all the time and talk about it.

You have too many land bank issues, you have too many uh police officer issues within district three that you don't address.

So I think you need to do a lot better of a job when it comes to addressing your residents' concerns and complaints.

Thank you.

I see the rest of my comments.

Thank you, Mr.

Smith.

And just for folks to know, at the end of our former session, yesterday we did get an update from DWSD.

So I know my colleagues and I would continue to stay updated on the waterman and situation with our water department.

Uh next call.

Yes, Mr.

Chair.

Next caller is Betty A.

Verner.

Miss Varner, good afternoon.

You have two minutes.

Uh good afternoon.

Uh Council Member Denzel Matt Campbell and all the council members.

My name is Betty A.

Verner, president of the Soda Ellsworth Black Association.

Today I want to give some information to help people who have no in no health insurance or dinner dental insurance.

There is a uh organization, the Detroit Community Health Connection that has multiple clinics under their umbrella.

They they're not a free clinic, but they provide services on a sliding fee scale, and you can get uh health insurance, uh services, and dental insurances for $20.

But there is a process.

I'm gonna talk about the location called Nolan Family Health Center.

It's at 111 West Seven Mile.

It's in Detroit.

Their phone number for health services is 369 260 for the dental services.

It's 313 366 again for the health services 31369 2600 and the dental 313 366 520.

They will work and help you to get health insurance.

They have a um social worker, case worker, and a counselor on staff, they deal with uh mental health, they have a pharmacy, and they provide all health services, and so if you don't have health insurance or dental, you can still be service.

Thank you.

Thank you, madam uh member waters.

You know, I I just wanted to thank you, Mr.

Chairman.

I wanted to take this opportunity to just thank Ms.

Verner.

She's always calling in with extremely helpful information for our residents in this city.

And Ms.

Vernon, I want you to know that that does not go unnoticed.

Uh, we certainly appreciate that.

And um, I'll try to get this information out as much as possible.

In fact, I did give out some of the other information when you talked about senior citizens uh needing help, uh, some sort of services that were pre-provided for seniors.

So now I'm gonna help get this one out as well.

So thank you so much.

Thank you, Mr.

Chairman.

Thank you, Member Waters, and yes, thank you, Miss Varner and echoing the gratitude of always sharing the resources as well.

Thank you.

Um, next caller.

Yes, Mr.

Chair, our next caller is Brother Cunningham.

Brother Cunningham, um, good afternoon.

You have two minutes.

Brother Cunningham, are you there?

Brother Come.

Uh hello.

Let me roll my window up and pull over to the side of the road for safety.

Absolutely.

Can you hear me?

Yes, we can.

You have two minutes.

Okay.

Thank you so much.

313 444 9114.

313.

444, 9114.

313.

44, 9114.

That number was made so you can remember it.

If you're looking for me on Facebook, put in that number.

If you want to look for me on Cash App, you put in that number.

If you want to contact or text or meet up and do a write-along, a positive word prayer.

313 444 914.

Um I'm asking folks on their own to get hand warmers and bus tickets and get them out at the bus stops or the terminals.

Some of y'all are six-figure folks.

Some of y'all make 50,000 plus.

Some of y'all get 300,000 plus.

I'm talking about everyone under the sign of my voice.

You have some money and you're grateful because your vehicle is warm.

And you are uh getting to where you need to go in comfort.

Um a lot of folks don't have that opportunity.

And folks that are at the bus stops are not out there for their health.

It's very cold out.

So the hand warms and the bus tickets are greatly appreciated.

Either do it vicariously to me, or do it on your own.

Don't just focus on your journey.

Look to the sides of the road.

Left side, right side.

Look at the people waiting at the bus stops.

Be a blessing to them.

The bus service is still not adequate.

And um I want to give a shout out to Jason and Council, honorable council one, Mary Waters office that helps me with constituents that are holding.

I reach a lot of them.

Thank you, everyone.

Thank you, Brother Canaham, and thanks for all you do.

Um, next caller.

Our next caller is you matter.

You matter.

Uh good afternoon.

You have two minutes.

Caller, you matter.

Are you there?

Good afternoon.

Can you hear me?

Yes, I can.

Good afternoon.

You have two minutes.

Great.

Thank you.

Uh well, Chairman Campbell, I want to address an issue that came up last year.

Um, and uh we're very curious to know about the budget for the board of zoning appeals.

Under Detroit City Code 50-2-6.

The Board of Zoning Appeals is supposed to have a stenographic record of all of its public proceedings, regardless of whether anyone appeals.

Their current rule of procedure 3.05 also requires that their record have the verbatim testimony of what people said.

In the past, when there have been Board of Zoning Appeals, uh the record was filed not properly, but it was filed by the law department.

The court will say the city clerk is supposed to file it, and while some resident submissions in the case I was involved in were omitted, at least the record was provided at no charge um to the uh appellants.

Now all of a sudden the law department's doing a 180 or whatever number you want to call it, saying, Oh, well, wait a minute.

No, actually, the appellants have to pay for the transcript and are trying to charge over like close to 700 seven dollars per page.

So in one case, they went over four thousand seven hundred dollars in transcripts.

My neighbor cannot find where that was ever approved, and now right now the board of zoning appeals prompted by the law department, which is the reason why I don't want Conrad Mallet because of this kind of behavior, is trying to change they were pushing them to change the Board of Zoning Appeals rules to say that the appellants have to pay for the transcripts.

Now, this is putting uh people's right of access to the courts out of reach, and I hope that you, member Campbell would look into it.

The law department was saying don't get involved because it's in litigation, but it's not involved with the city, it's the BZA.

There's a difference.

Thank you so much.

If you uh would reach out directly to my office so we can get more information, that would be great.

Thank you.

Next caller.

Our next caller is phone number ending in 169.

Caller would ending in 169.

Are you there?

You have good afternoon.

You have two minutes.

Hello, can you guys hear me?

Yes, we can.

Okay, great.

I just want to say um thank you for praying for Brother Cunningham.

Um, peace be still, peace be still, and peace be still.

Um thank you for my time.

Thank you so much.

Um, next caller.

Our next caller before you cut off requests for public comment at 120 is Charlotte.

Charlotte, good afternoon.

You have two minutes.

Good afternoon.

I just wanted to second Joanne's comment.

Um thank you very much.

I'll see the rest of my time.

Thank you so much.

Are there no further callers?

Nope, there are no further callers after you cut off requests for public comment.

All right, thank you.

That concludes public comment.

Thank you all to everyone who provided remarks.

Next, we have a scheduled presentation on the city's annual comprehensive financial report presented by Auditor General Laura Goodsby, along with representatives from Plant Moran.

After the presentation, we will take member uh questions from members.

Good afternoon.

And if you all could just state your name for the record.

Good afternoon.

Laura Goodspeed, Auditor General.

Good afternoon, Ali Hajazi, partner with Plant Moran.

Good afternoon, Amanda Ward, partner with Plant Moran.

Good afternoon, Josh ED, principal with Plant Moran.

Good afternoon, Veronica Twazan, Senior Manager with Plant Moran.

Thank you so much.

Thank you for joining us, and we'll turn it over to you, Ms.

Auditor General.

Thank you.

And congratulations.

It is my pleasure to come before you this first new BFA committee.

One of my awesome responsibilities ascribed to me in the city's charter under Article 7.5 is as soon as possible, after the close of each fiscal year, make a report of the financial position of the city.

The report shall be a public record.

To this end, and for the past 10 years, we have contracted with Plant Moran, PLLC, to conduct an external audit of our financial statements.

It's important to note that they are only the third external auditors for the city after Arthur Anderson and KPMG.

Plant works with the Office of the Chief Financial Officer, the OCFO, and I'm pleased to inform you that for the last eight of ten years.

Additionally, without stealing the OCFO's or thunder, Plant supports the publication of our financial reports.

And the city has received the government Financial Officers Association Certificate of Achievement for Excellence in Financial Reporting for eight straight years, beginning with fiscal year 2018 and continuing to this fiscal year ending June 30, 2025.

Before turning this portion of the presentation over to members of Plant Moran, who will present an overview of the city's annual comprehensive financial report, also known as the ACFAR and single audit report overviews for fiscal year ended, June 30th, 2025.

I just like to state for the purposes of the uh for the general public that this presentation has been published on the city's website under the city council agendas and documents under today's date.

Additionally, the ACFAR and the single audit reports can be found on the city's website, Detroit MI.gov by navigating to departments, Office of the Chief Financial Officer, and scrolling down to financial reports.

And with that, I will turn it over to Plant Moran.

Thank you very much, Ms.

Goodspeed.

Good afternoon, through the chair and members of the uh BFA committee.

My name is Ali Hajazi.

I'm an audit partner with Plant Moran.

I lead the audit of the city's ACFER.

And with me today is my colleague Amanda Ward, partner in charge of our audit of the expenditures of the city's federal awards, otherwise referred to as the single audit.

And also with me today is Veronica Twazan and Josh Edy, who function in the senior manager role serving uh serving the city.

Our plan for today's presentation is to provide a summary of the audit results and findings for both the financial statement audit as well as the single audit, as well as provide you with an overview of some of the financial highlights from the period under audit, which is the year ended June 30, 2025.

Before we get into the details of our process and results, I would like to thank uh the city's team, including the Office of the Chief Financial Officer, as well as the uh auditor general and her team for their cooperation and collaboration throughout this uh process.

For the fiscal year end of June 30, 2025, our audit covered the city's financial statements as well as the city's compliance with your federal grant programs and the related controls over the administration of its federal programs.

Just for context, the audit process really begins in the spring of each year with planning activities leading up to the city's fiscal year end.

Over the summer, our team works with your team to perform risk assessment procedures, understanding internal controls, and what we refer to as our year-end audit field work when all of our team is fully devoted to auditing the city begins in September of each year and concluding as uh Miss Scootsby mentioned with the publishing of the audited financial statements in December prior to the audit deadline.

So on this slide here, the audit opinion.

Uh, we get the pleasure of sharing with you the audit results, which is uh a clean, unmodified opinion on the financial statements.

And as Amanda will cover later on in our presentation, she will also share the audit opinions rendered on each major program that we've audited.

An unmodified or clean opinion means that the ACFR, the annual comprehensive financial report uh is materially accurate.

It conforms with all of the required uh financial reporting standards.

It's the highest level of assurance that we can issue on a set of financial statements.

With that, I'll turn it over to Veronica to walk through a few more details regarding the results of our audits.

Thank you, Ollie.

So this slide here uh covers the primary communication points that are contained.

Apology, can you make sure your mic is on?

Is it okay?

All right.

Thank you.

Yeah, so uh sorry about that.

Umtains the primary communication points that are contained in our end of audit letter, which is one of the items that's included in the packet in front of you all.

So uh the first item that we've included here is related to the city's adoption of GASB statement 101 related to changes and how the city accounts for compensated absences.

Specifically, this new standard impacts how uh accumulated leave balances are accounted for and disclosed in the financial statements.

The second item that's included on this slide includes uh several of the significant estimates that impact the city's financial statements.

Specifically, this includes accrued claims and judgments, workers' compensation, allowance for doubtful accounts, income tax, overpayment liabilities, and income tax receivables, as well as pension related balances and expenses.

These areas require management judgment, so we focus on testing the significant inputs and assumptions that go into determining these significant estimates.

Throughout our audit testing, um, we were able to conclude that all of these significant estimates included in the city's financial statements are materially accurate.

All right.

In this slide here, we summarize our financial statement findings for the year.

So both of the findings that are listed in this slide are classified by audit standards as material weaknesses.

A material weakness is a deficiency or a combination of deficiencies and internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the city's financial statements will not be prevented or detected on a timely basis.

The first finding listed here, 2025 001, is a repeat finding from last year and is related to the lack of uh proper controls to ensure timely and accurate financial reporting.

For any journal entries or other matters of accounting that are identified throughout our audit process, all of those items are accumulated into the single finding listed here.

On this slide, you'll see the overall trend in findings over the past six years for the city and its significant components.

So you'll see a reduction from six findings that are listed for in fiscal year 2020 down to one finding in fiscal year 24.

And then you'll see that that number increased this year to two findings, which is the result of that second component unit finding that I listed on that previous slide.

And then finally, as it relates to the city's findings, um, this slide here dives into the number of individual items that make up that overall finding 2025001.

Um the number of items contributing to that first finding did drop this year from 17 findings that would have been identified last year down to 15.

So a net reduction of two findings.

The remaining items that make up the overall finding that's listed as 2025 001 are spread across multiple different areas that we encompass in the audit.

That would include accounts payable, commitments and contingent liabilities, group audit procedures, leases, pension, as well as revenue.

So now we'll hand it off to Josh so he can cover some of the highlights in the general fund through the year.

Thank you.

So the next slides cover the general fund.

And the general fund is the operating fund for the city.

The revenues include property taxes, wagering taxes, sales taxes, uh charges for service, and other revenues used to fund the city's development management, public protection, pension benefits, and other operations.

This first slide shows a five-year history of the revenues within the general fund.

Revenues this year for fiscal year 2025 are up 3.7% to 1,450 million.

The largest changes are in a few categories.

That first line is property tax, which is up 14%.

While the millage rate had a slight decrease this year, taxable value overall increased, which is why that revenue increased overall.

Wagering tax is up 18%, and that's just simply due to increased activity uh within wagering.

Last uh other revenue is down about 13%, and that's largely due to shifts in investment income, and that is uh consistent with overall economic trends.

The next slide shows general fund expenditures for the last five years.

And on this slide, you can see that expenditures were up 3.4% to 1,381 million in fiscal year 2025, and to note was within uh budgeted appropriations.

I want to point out development and management here.

Uh, the significant increase from 23 to 24 and 25 was primarily a result of the increase in required contributions uh to the pension plans.

The contributions are required by state law based on actuarial calculations.

Public protection increased 6% to 643 million, and the increase in other expenditures in fiscal year 24 and 25 primarily relates to increased street lighting, capital repair, and blight removal activities, and some of those, just to point out, were funded through bond proceeds.

The next slide shows the general fund balance uh history over the last five years.

In fiscal year 2025, fund balance decreased 7.7% to 1 billion 29 million.

And the next slide has the detail of those changes.

So this slide shows the comparison of the various categories of fund balance between fiscal years 24 and 2025.

Now, for each of these changes, you can see explanations to the right, uh, but there are two changes that I would like to point out.

If you look under restricted, that second line, the city had previously set aside funds into a retiree protection fund to provide funds for pension contributions.

The city is now drawing down on those assets, making the required pension contributions, and that's uh resulted in the decrease of uh 52 uh million dollars there.

The other one I would like to point out is underassigned, the third line, the city added 42 million dollars to a corporate income tax reserve due to uncertainty in future corporate income taxes.

This slide concludes the financial statement portion of the presentation, and with that, I'll hand it over to Amanda for the single audit.

Great.

Thanks, Josh.

The city is required to have a single audit given its spending level of federal funding and for fiscal year 2025.

The audit threshold is spending of $750,000.

And moving forward, this threshold will increase to a million dollars.

This year, the city had federal expenditures of about $508 million.

And uniform guidance prescribes the audit requirements, including our risk-based approach on determining the major programs or the programs that we actually test and audit.

So while the financial statements are required to be filed on or before December 31st, the single audit is actually not due until March 31st.

And as Ms.

Goodsby mentioned, we actually issued the single audit concurrent with the financial statements this year.

Slide 13 provides a historical perspective specific to the single audit.

You can see the 508 million of federal expenditures are a significant increase from the prior years.

And this is primarily related to the state and local fiscal recovery funds or the ARPA funding that has been spent over the last few years.

And the ARPA funding alone represents 291 million of your 508 million of federal expenditures.

This year we were required to audit six major programs that resulted in four findings that we will discuss on the later slide.

This year the city decided to issue a separate single audit for DWSD, electing a series of audit options under uniform guidance.

As a result, the CIFA excludes about $58 million of federal expenditures that specifically related to DWSD in connection with their audit, and they will have two major programs that will be audited.

Slide 14 provides the results of the single audit.

And for each major program, we render a separate opinion.

And I'm pleased to report that for each of the six major programs that we've audited, we rendered an unmodified opinion.

And again, this is the highest level of assurance that we can provide as auditors, and it simply means that the city complied with the important federal requirements that we tested.

The slide also provides the name and the assistance listing numbers of the six major programs tested, the opinion rendered, the total federal expenditures for the program or cluster, and whether there were any findings reported for that program.

We had findings in three programs: your WIC program, your home program, and your HIV emergency relief projects grants.

And we did not have any findings related to your state and local fiscal recovery fund or opera funding or the other major programs that are listed.

Slide 15 provides a summary of the audit findings.

And the first two audit findings relate to the home program and their repeat findings from the prior audit.

And it's not uncommon that findings are repeated multiple years just based on when the matter is identified and the timing of when the audit is actually issued.

For the single audit, there are basically three types of findings.

Significant deficiencies and material weaknesses, and by definition, a material weakness is really the most severe level of internal control deficiency that we can report.

A SIG deficiency, on the other hand, is less severe than a material weakness, and it's really a control failure that could cause issues, but not expected to result in a material noncompliance.

The other findings related relates to noncompliance with program requirements.

At the time of the audit, it lacked adequate documentation to support compliance, or it appeared unreasonable and did not reflect the actions of a prudent person that would have been taken.

So in our findings, there were no significant deficiencies, and we did not report any question costs.

So I'll walk briefly through the findings.

So finding number 325 2025 3 is a repeat finding from home, and it is um deemed to be a material weakness and a material noncompliance.

And this finding basically reports that the home requirements mandate that the units be inspected, deficiencies be communicated, and corrective actions being be taken promptly.

The controls that are designed did not require that the inspector's work be reviewed, and we also identified that certain deficiencies were not resolved in a timely manner.

The second finding for home is a material weakness, and here the city did not implement controls to ensure that the eligibility reviews performed by the contractor were reviewed, um, were in compliance with the terms and conditions of the award.

But based on our procedures that we perform, we did review evidence that the contractor performed the required number of reviews and that the individuals assessed were actually eligible to participate in the program.

The next um finding is related to the Ryan White program, and it's deemed to be a material weakness and a material noncompliant.

And what this is is that sub-recipient payments were not paid within 30 days of receipt of um reimbursement requests as per prescribed by uniform guidance.

And then the final finding is a finding related to WIC, and it is deemed to be a material weakness.

Actually, it explains the status of any prior year findings, both for the financial statement and the single audit.

And then it also states whether or not the findings have been fully corrected, if they've been partially corrected, or if no action has been taken and why that is.

Thank you, Miss Ward, and thank you all for um going through the presentation and for your work as auditors.

I will now open it up for questions from members on the committee.

Um start with Vice Chair Johnson if you have any questions, Mr.

Chair.

Do you mind coming back to me?

Oh, absolutely.

Yes.

Uh member Wardus, do you have any questions?

Great.

Thank you.

Thank you, Mr.

Chairman.

So good afternoon.

And what's your name again, young lady?

Just finished Amanda.

Amanda.

Okay.

All right.

I just wanted to be sure.

I um you had me listening pretty intensely.

Um one of the things that you wow.

So have those errors and omissions been corrected so far.

You mentioned some errors and omissions.

Um they been corrected.

Yeah, so you're talking about in the indirect cost allocation plan.

So the city is currently working with the Michigan Department of Health and Human Services, who is the person who actually approves that to actually get the next year's cost allocation plan to prove.

So they are in the process of working with the fund around that.

Okay, so the general fund balance declined by 85 million dollars from an audit perspective.

Is this still within a healthy range?

So the uh the fund balance that is set aside has restrictions and assignments for the the legal restrictions on the fund balance and what uh has been approved by city council to be set aside for particular purposes, and the remaining amount is unassigned, which remains uh on a solid financial footing as of today.

So we have some flexibility in case there's an economic downturn.

Well, for the the income tax reserve was set aside for that specific issue.

Um, but it's something that city council and administration should definitely keep an eye on in terms of the economic status to assess that on a continuous basis to make sure they feel comfortable with the level of unassigned fund balance.

What would you say is the um single biggest risk highlighted by this audit that deserves immediate attention?

Yeah, from an audit perspective, any time we identify internal control issues, those would be the items that are most important to us to see addressed in the subsequent year's audit.

Internal control issues.

All right.

So all right, so let's go to the federal programs.

Um several pro uh federal programs findings are repeat issues, uh, especially in housing.

And I gotta tell you, that's my baby.

So why do these keep coming back despite corrective action plans?

Yep.

So one of the things that we um actually noted is that corrective action would have started on those two findings subsequent to the fiscal year 24 audit being issued.

But by the time the audit is issued, you are already halfway through the next fiscal year.

So based on the audit and based on the compliance rules, you still would have been non-compliant for a portion of the year.

Um, so the city has begun to take action.

They just have not fully corrected the matters from 24.

So based on your experience, should you repeat um housing finers usually point to say contractor failures, weak city oversight, or under resource departments?

What I will say here is if you notice both of these, none of these relate to like question costs to say that they did something wrong.

It really is internal control matters, and the amount of dollars that you push through on your home programs and just all the work that that is being done, you will find here and there that there are matters that come up.

Um, I think they're working on it.

They the city does take and acknowledge when findings come up and they work very diligently to make sure um that they're moving forward in that area.

So it's not uncommon that you would see something repeat just just because of timing.

You know, we have some very long wait lists when it comes to housing repairs, things like that.

So, what does this mean in real in real terms for for residents?

Is it delayed repairs, unsafe housing, slower program delivery?

What does that mean for residents?

And from an audit perspective, I don't know that I'm able to answer, you know, the impact to residents directly as this would be a specific program to fund portions of how you administer housing for all of the city, and oftentimes the way that's administered to the residents could have multiple funding sources, so this could just be one of many in that case.

Okay.

Um these issues are they serious enough?

Because I'm always concerned about federal dollars.

Um that they could eventually trigger uh repayment of federal uh fund, increase federal funding or uh monitoring, I mean, uh, or loss of future funding.

So certainly it is the responsibility of the city to respond to all findings that are reported, and they have done that.

Um back in 2021, um, HUD actually did have um monitoring that takes place, and so it's not uncommon that the city will see monitoring on a on a periodic basis from all of their funding.

Um at this point, based on the findings and based on the corrective action, um, we're unable to say what the funder will or will not do, but certainly taking corrective action is a healthy step for the city to make sure that they remedy any of the things that are reported.

All right, so I'll ask you one more for now.

Um, from an auditor's standpoint, what is a reasonable time frame to fully resolve a material weakness once it's first identified?

How much time do they have so that it doesn't continue to bring harm, cause harm to the to the city?

Was it reasonable time?

I would actually say it depends.

It really depends on the root cause of the issue, and really we actually encourage um all organizations to get to the root cause because oftentimes you could maybe place a band-aid to say that you fix something, only to realize that it wasn't fixing what the ultimate issue was.

So really taking a step back to first understand what the true issue is and what's causing it, and then designing procedures to correct it there, and based on what you find it could impact the duration of how long it will take to resolve it.

But even being clear in your corrective action to say that these are the steps you're taking, helps the funder know that you are still taking action.

Um I say it was gonna be the last one, but just this little piece here.

Yeah, I would say we're in touch with the city for substantial portion of the year, given the timing of when an audit ends around uh Christmas time, and then when we have to start planning for the next audit.

So we try to give them a little bit of a break from us.

Uh but generally we're in touch for most of the year, and one of the primary conversations is what's new, what's different, what questions do you have?

Uh, we have a responsibility to be to remain independent, so we're very conscious of you know where that line is.

Sure.

But while also um being a resource and sharing, you know, what we can within the parameters of our professional responsibilities.

And and I certainly hope that we are taking advantage of those resources within, you know, reasonable, I mean, within the law, that is, I'm put it like that, just so that we can make sure that we are doing things right.

These are very uh sensitive times, um, very um for the city and and in this country, in fact.

So we want to make sure that we have people that are keeping an eye on things for us, you know, letting us know where things are going wrong, what we need to fix right away if we know.

Thank you, Mr.

Chairman.

Through the chair, thank you.

Um, and just to add to that, Councilmember Waters, we are partners in terms of the external audit and uh what we do in the Office of the Auditor General.

We work with Plant Moran, but more importantly, we take the findings, we include those in our audit report.

So you will see very often that we will re uh make a note of these as prior audit findings.

So we look for uh we do that work as a part of our internal audit to follow up with the agencies and to see where they are in terms of uh remedying this the situations.

So it is truly a partnership.

All right, thank you.

We're your eyes for you as well.

All right, thank you.

Thank you.

Thank you.

Thank you, Member Waters, Vice Chair Johnson.

Thank you, Mr.

Chair, and good afternoon to you all.

Thank you so much for the presentation.

I had to, I needed a little time for what you all shared to sink in a bit.

Um I want to just kind of continue the conversation about the home findings.

Um, and this may be a question for the auditor general.

Uh, Ms.

Goodspeed, do you know, have you been provided with the corrective action that was planned to address the two findings through the chair.

Not for these specific two findings, but that is on our agenda to uh look at the corrective action plan for these two findings.

We have uh work with the OCFO as they work through the corrective action plan for the findings related to those 15 items related to the financial statements.

Uh certainly this would have been a part of our audit that we just suspended for um our audit of the unhoused process.

So we will still look at that as we move forward with that audit.

And if you wouldn't mind just sharing with the general public why the um audit was suspended.

Absolutely.

Um at the request of councilmember Johnson, we started an audit of the unhoused community unhoused community process in HRD at December the 5th, based on the announcement for the impending uh executive organization plan that really a new office that will look at the housing and all of those uh areas surrounded.

We have decided to suspend that audit pending the full implementation of that plan and establishing you know the specifics for that department.

And so I think that uh the final date for the plan to be approved is April 7th, and so we would look to resume that audit sometime after April.

Thank you for that.

Um, as in anyone who listens to the Detroit City Council who watches us knows that housing is something that many of us are very focused on.

I think it's important to recognize and identify um that as we look to increase the number of housing units that are in the city of Detroit, we have to stabilize what we currently have.

And so when I see this repeat finding, it is troubling to me.

It is very troubling to me because I think it's important to ensure that we are encouraging and supporting quality housing.

Quality housing starts with stabilizing the existing structures and supporting quality infrastructure as we move forward.

And I think as I've indicated in previous years that it's important for us to support projects that have a greater or a higher standard so that we don't continue to provide additional dollars for projects because now the materials that were used or the way that they were developed need to continue to be provided subsidies for them to provide housing for our residents.

Through the chair, I will defer part of this to uh Miss Amanda and in terms of what part of this program.

As you are aware, and when we started looking into the unhoused process, there's just so many components to it in terms of the providers and the wraparound services.

I'm not sure exactly at the moment where these deficiencies lie.

It could very well be within the HRD as opposed to B seed.

Um we also, for the sake of the public, have uh started an audit to look at the rental activity within B seed in terms of uh their looking at compliance.

So again, I'm not sure whether this particular grant was housed in HRD versus BC.

Perhaps you can speak to that.

Thank you.

So this is an HRD related grant, and within the single audit report, I know you you got a lot of pieces of paper in front of you, but the single audit report it says the schedule or federal awards, that audit within the audit finding, there is actually more context that is given.

Um so in that audit finding, you will actually see that the context related to that finding in particular has three pieces to it.

Um is that we found that there's really the inspector doesn't have a review, so there's no review to make sure that the inspector did what he or she was supposed to do.

Um the second piece of it is that during our testing we revealed that um eight of the 13 projects that were scheduled to be inspected wasn't actually performed in the time frame that they set out.

So again, this is really a compliance audit, so it's did this happen yes or no.

And then the final one revealed that there had been some deficiencies, and in this report, I don't have the details of what those deficiencies were that weren't addressed timely.

So HUD prescribes what time frame something needs to be done based on the severity of what the deficiency was, but based on that, those it did not follow the prescribed rules by HUD, and that's what this finding relates to.

Thank you for that.

I I think I understood that it is within BC or within HRD, but I would think internally that the inspection process would happen with BC.

Um, but that perhaps HRD is just ensuring that the properties or the projects are inspected properly or in a timely manner.

Um I think that's rather important.

I really do.

I think that is extremely important, and it's it's um unfortunate that this is a repeat offense, and I'm not sure if the details are what continues to be a repeat offense.

And that's something that we can look into and perhaps talk about just to make sure that we are providing the necessary support and direction for the housing and revitalization department as they continue to move forward.

As the chair of PED and home funds come through, will come through my committee on PED.

I'll make sure that we uplift that just to ensure that we are not only using federal dollars the way that they should be used, but also ensuring that we are doing everything that we need to do to have funding support various types of projects, and we don't have to keep refunding projects because of the quality of the projects that we've supported in the past.

So we could probably talk about this for a long period of time.

But I'm I want to move on to a couple of other things.

So when we talked about uh the information on page five and the material weakness around the lack of proper controls to ensure timely accurate financial reporting, so attorney general goodsby talked about the last eight out of the last 10 years that the reports have been completed before the end of the year.

So can you help us to understand what this the first 2025 the first finding entails?

Sure.

So as part of the city's year-end closing process that they prepare financial records that they submit to us for audit.

So here's all the final balances of revenues, expenditures, etc.

And then when we conduct our audit, if we find items that require adjustment because they were accounted for differently from how the accounting rules would prescribe, either due to oversight or whatever the underlying causes, we accumulate those entries, and that's what rolls up into this uh 2025-001.

So there may be a variety of different individual items that roll up into this, um, but the core issue is the same, is it's differences in terms of how the city accounted for something from what the rules prescribe.

Thank you.

And would you identify something that's significant?

Would that be in the greater report if there was a significant finding underlying this particular finding?

Yes.

If any of the journal entries we believe to be material, then we would have to specifically say what that material journal entry was.

None of the entries that we identified this year were material.

Okay, thank you.

And through the chair.

So when I spoke to the fact that the city has produced this financial uh report prior to the deadline, that is a great accomplishment.

Uh Plant Moran, along with the members of the OCFO worked very hard from really September to December to finalize the report.

So it is a great accomplishment, but that spoke to the ability for the city to work together and provide all the information needed for the external auditors to complete their audit.

Excellent.

Thank you.

We appreciate all the work that you do.

Um we really do, uh, and and certainly do recognize it.

Um let's talk about this finding number two on page five.

That that doesn't sit well with me at all, and it's a new finding.

Um, so it says lack of proper controls to prevent the possibility of misappropriation of assets at component unit of the city.

Help us to understand what that is.

Sure.

So the City of Detroit's financial statements would include all of the activity accounted for by the city as well as certain component units of, for example, you know, library, Detroit Transportation Corporation, et cetera.

And so uh because that activity rolls up into the city's financial statements, those agencies or component units uh often have their own audit reports, and we would obtain those audit results and anything that we deem requires elevation, we would include in our findings.

So this was for one of the component units where there was um not material misappropriation of assets but some controls, lack of segregation of duties that resulted in some improper payments that were made that was reported in the components audit.

And so we thought because of that um control deficiency that that weren't a separate mention as a separate finding.

And which can component unit?

I believe that was DTC.

And through the chair, I have spoken with the management at DTC.

I will be following up with them.

I just want to point out something for this body as well as the general public.

And I received one report from them in terms of the follow-up.

It's important for the agencies to respond to our recommendations and implement them.

We certainly believe that if some of the recommendations had been implemented, it might have prevented or at least alerted the management to this misappropriation.

I'll give you another prime example which was a finding in 2024, 2023 that dealt with the public lighting authority.

Again, we had published a report that had significant findings and recommendations.

We feel that had those recommendations been acted upon timely, it might have prevented that finding as well.

So the good news is that the Office of the Chief Financial Officer has established an internal audit department.

And so we're looking forward to and began working with them to actually go in and do follow-up audits more timely.

So it's an additional resource for us.

We're excited about it.

We will start our first follow-up audit uh very soon.

And so we hope that that helps reduce the possibility of some of these uh findings and things occurring in the in the future.

Thank you for sharing that.

And I do recall the recommendations for the Detroit Transportation Um Corporation Company.

I don't know what whatever the C stands for.

Um and so now they have new leadership that worked in this building.

Um so we have budget hearings coming up very soon, so I'm sure um there will be a number of things that will be elevated at as a result of the information that is shared within the greater report.

So thank you.

Thank you all.

Thank you, Mr.

Chair.

Thank you, Vice Chair Johnson, and thank you all.

I I do have uh a couple of questions here.

Um when it comes to um Madam Auditor General, uh you talked to a little bit about your relationship with various departments and folks.

Would you say in your opinion that folks have been forthcoming and willing to work with you and your office and implementing recommendations and getting you the information that you need through the chair?

Um I would say so.

I believe that the particular the uh folks in the OCFO office have a heart for the city, are very dedicated and committed to making sure that our finances are budgeted properly and handled properly.

Uh there have we have had some occasions where we've not received the documents timely.

We are, you know, we have subpoena powers, so we've had to use that unfortunately in the past.

Uh but it's a love-hate relationship, if I may say that.

I understand.

I appreciate that, and um just want to make because I agree that whenever, and I I I appreciate the unmodified um aspect of this, but when we have these findings, I definitely want to take them seriously.

I want to make sure that folks are being forecome and willing to actually um solve these issues.

Um for the plant moran team, when you are looking at I know you all do a lot of work, and I just want to in your in your view of other municipalities that you may have worked with or colleagues that work with other municipalities.

When you look at the federal findings, do you see similar or the number of or um across municipalities?

Is this something that is common in other cities or and cities similar to the size of Detroit?

Yes, I would definitely say that it's not uncommon for um larger cities to have findings when you just think about the sheer amount of dollars that's coming through and the amount of activity that people are going through, things will happen, not because they are trying to be intentionally um incorrect, but just the sheer volume alone that cities have had to work through.

Um, but I will say as we work through the state and local fiscal recovery, which is 291 million, there were no findings related to that in the city, you know, did take all the lessons learned from some of the earlier ARPA dollars in COVID funding to make sure there were good controls put in place related to that funding, um, and I think that's has shown based on our audit results.

Thank you, Ms.

Ward.

And uh additional question on the um the single audit finding summary.

We talked about the home program.

I have a question about the Ryan White program because we we just had this come up in public health and safety, um, and related to sub-recipients.

And this finding, and apologies, I'll look deeper into it, but um, since we're at the table now, was this related on could you go deeper into the um payments to subrecipients?

I understand that there were some sub recipients that were dropped during um the fiscal year or at some point, but I just want to get a better picture of this finding here.

Yeah, so this finding in particular relates to the requirement that uniform guidance prescribes that um a pass-through entity, which the city is their passing through funds to a subrecipient must pay them within 30 days of their request for reimbursement, unless there's something within the package that would warrant them to say it's not allowable, there's in improper information that's being reported.

And in the case where we saw there were three payments that were outside of that 30-day window, but to give perspective, they were around 31, 32 days.

So what we realized is that um as the city went back, they realized there was a feature that was turned on inside the system that would allow for you to go just over 30 days, even though the 30-day requirement is there.

Um so that's really what it relates to is literally the timing of the payments that went beyond the 30-day process.

Thank you for that.

I appreciate that.

Because I know we again we had this um contract come up between on public health and safety, and I know we're gonna have another contract for the next year.

So thank you for expanding on that.

I those are the end of my questions.

I will also say for the members of the committee, I know you mentioned Vice Chair Johnson, you mentioned PED, but I also think it would be useful if we had um doesn't have to be in this meeting, but if we have folks on the OCFO come and talk to us about the um corrective action plans in place for this.

Um so we'd love to see that as well.

Um just uh I'll turn over to Mr.

Corley for anything you may have.

Thank you so much, Mr.

Chair, uh Gathering City Council.

Um I'm Irv Corley from the council's legislative policy division.

Um we're from the fiscal section of LPD, and uh really appreciate the work that Plan Moran does with the city of Detroit.

Um it's been a long partnership, been a very good one.

Um and so it we can go to page five of the PowerPoint.

I have about a few questions and a couple comments on some of these slides.

So um I definitely echo what Ms.

Good Um Guspee indicated earlier.

You know, the fact that we're getting these artists done um to meet the deadline is tremendous.

I you know, I've been here for a while, right?

So I remember the days.

I remember the days when it took maybe six months to a year for an order to get done in City Detroit.

So now that we're getting them done by December 31st, it's definitely um a good thing.

And and the credit rating agencies look at that as well as a positive.

So I really echo Ms.

Cusby's questions about that.

However, I am as well, I know because of members raised questions about the um repeat finding that 2025 001.

Um, and I know um the gentleman uh gave a response to that.

It would be good if uh the OCFO can provide City Council just some response as to how they're trying to rectify that.

This is this is a repeat finding.

You know, is it a lack of personnel?

Is it a lack of technology?

Um, you know, just to give council a great understanding, and maybe know the budget process, you might want to address or help address it for the OCFO.

So if if they can provide information, that'd be great.

Um page seven, excuse me.

Uh I just want to know.

So, where can we find the details of these current year findings, these 15 items or so?

Where are they located?

So they the details of the findings are not um published as part of the required reports because they're none of them were material.

However, those have been provided to um OCFO and the Auditor General's office.

Okay, so I I can reach out to to them.

Yes.

Okay, thank you.

Page uh 10.

So you can see here um for fiscal 2024, fiscal 2025, there's a decline in fund balance.

And in fact, if we can go to page page um 11.

And Council Member Waters asked a question about, you know, so is there a concern about an $85 million uh reduction in fund balance?

Um we in the LPD will be providing city council within a month an analysis, our analysis of the um 2025 act for and what we notice is that that decline is largely due to the city's increase in contributions to DOT as well as contributions to the airport, and so we're gonna you know flesh that out for you because it's really two years of decline that we're seeing, and we feel that's important for council to you know be aware of that, and you want to you know get some more information for the administration.

So just want to highlight that and uh page 13.

So this year uh at least by 2025, uh it was indicated that the single audit for order and sewage um is now a separate report.

Is that single audit is that done that single audit is in process.

That's in process, yes.

Okay, but they have a course until March 31st to get it done.

Okay.

Okay.

And then 14.

I guess to end on the good note, you know, the largest um is federal expenditure, of course, is the opera funding that uh line item two, and there were no findings, you know, associated with that.

And I think that's something to highlight.

Um that's that's a major program, and as council knows it's a lot of money that's going through that program, and that pro the monies have to be spent, you know, by December 31st of this year, 2026.

So it's a lot of activity, and to have no findings, I think is um is it's laudable.

So but thank you so much.

Thank you, Mr.

Corley.

And um just gonna survey any other questions from the committee.

All right.

Well, to Madam Auditor General to the team at Plant Moran, thank you all so much for coming today.

Thank you for all the work that you continue to do on behalf of the City of Detroit and um uh for the auditor general looking forward to continue to work with you and get reports to make sure we're on the right track here.

Thank you.

Thank you.

Thank you.

Have a great afternoon.

All right, we will now uh move to unfinished business.

Um at this time I'll entertain a motion to discuss line item 6.1.

A neighbor yes.

Oh thank you.

Thank you, Vice Chair Johnson.

All right, this will move us on to discussion of 6.1, a neighborhood enterprise zone certificate application for the rehabilitation of existing duplex at two uh 1257 Bagley in the Corktown Neighborhood Enterprise Zone.

And Mr.

Gulag, how are you doing this afternoon?

Chris Gulak, CPC staff.

Thank you, Mr.

Gulag.

Um all right, and um we I know we brought this, we had uh postponed this for to bring it back on today, two weeks ago.

And do we have the um owner with us today?

Yes, I'm here.

If you can state your name for the record, please.

Yes, my name is Matt Cassidy.

Matt Cassidy.

Correct.

Okay, thank you, Mr.

Cassidy.

All right.

Um I will I know we brought this back.

Just wonder if members of the committee have any questions or further discussion items.

We can start with Vice Chair Johnson.

Thank you, Mr.

Chair.

Um, and I'm not sure if there is someone from the assessor's office that is available.

I know we sent over um a couple of questions.

We did receive a response from the assessor's office, but I just want to find out um a couple of things.

So I'm not sure if Mr.

Washington or Miss Sullivan is available.

It's Mr.

Washington on a Miss Sola.

Uh Ms.

Mr.

Chairman Sullivan is on, and I am promoting her to panelist.

Ms.

Sullivan, are you there?

Chair, yes, I am.

Good afternoon.

If you can uh state your name for record, and then if there is someone from the assessor's office that we can speak with.

Through the chair, Brianna Sullivan, City of Detroit Mayor's Office, Government Liaison, and we have John Maglik.

So let me ask the question.

I'm not sure if Mr.

Naglik is the um appropriate person, but my question is um so when I look at this property, so we got information from the assessor's office to identify the uncapped um taxes and estimate um from the assessor's office.

My question is whether or not the NEZ will go into effect before or after the uncapping, and who ultimately decides.

I will actually get a different representative.

Can we bring this item back?

Sure.

Um Mr.

Chair, I would like to move that we bring line item 6.1 postpone it to the end of the agenda.

All right.

Without for any objections, we'll postpone this uh 6.1 to the end of the agenda.

All right, that will take us on to the next line item.

We'll now move on to new business.

Um next, I'll entertain a motion to discuss line item 7.1, which is the citizen research council of Michigan's report on evaluating a local option admissions tax on sports and entertainment venues in Michigan.

All right, uh discussion of Vice Chair Johnson.

Um, so this is a report that the mayor and I, uh, a study that the mayor uh at the time was council president, and I requested it has been completed.

Um I do know that, and I'm not sure if a determination has been made on when the discussion is going to happen because of the recommended suggestion by Mr.

Whitaker um yesterday.

Um I will just note that the equitable development task force um that I was working with on even moving in this direction for the study to be done, would like to be present and would like to uh present as well uh as it relates to their thoughts, suggestions on the local option sales tax um component of the study.

Um and so I'm not sure if you and Council President have had any discussion to identify determine when that will take place um so that we can advise and and proceed however it is determined.

Absolutely, thank you, Vice Chair.

So we have been in contact with the president's office.

We have not yet heard back on a specific date, but um it is my understanding that there's a desire to um take this up as a community of the whole.

So if um if there is a motion out there to refer this to the president's office for that uh for the purpose of scheduling committee the whole, I would definitely entertain that.

This uh motion and discussion.

Um I just wanted to ask um you're gonna bring in members of the CRC, right?

Yep, so um we'll take up that motion uh um for discussion on that motion for member Warders.

Yes, um, it would be for the CRC to prepare their presentation and give that for the community of the whole.

Oh, I I don't so for some reason um chairman through you I thought they were coming today.

Yeah, so yes, they're they're they are not here today, they're still put uh preparing the presentation, but they wanted to make sure that we got this on the agenda to start um setting that table for them to come.

Okay, Fresher Johnson did you have it there?

Mr.

Chair, um, I was just going to note that this is a report.

I'm not sure if we want to bring the report back until the actual um the scheduling of the date for the presentation or conversation is had.

Um, but I also did see Mr.

Corley.

Mr.

Corley.

Thank you, Mr.

Chair.

Um, I wouldn't highly suggest that you bring the report back, you know, after the committee of the whole, just to make sure that this committee is satisfied, you know, with the discussion, but I will also suggest that you will have um Mr.

Lufer, Eric Loofer, the um author of the report from CRC.

Uh and this report, of course, is the local option sales tax.

He also did a report based on you know, council's request on a local entertainment tax.

And so I suggest that when he comes before you in the committee hold, he talks about the two, because the two are potential new revenue sources um for the city of Detroit.

One is entertainment based on entertainment venues, and then local you know, sales tax based on you know sales of goods and services in the city of Detroit.

So if it's okay with the committee, uh when you reach out to council president for community hall, if he can have uh Mr.

Lofer to speak to both of those reports, that would be great.

Thank you.

Thank you, Mr.

Coley.

So just for we have a motion on the floor.

We need to take care of the we need to take care if there is a motion.

This is a motion to refer this to the president's office.

Is that correct?

For a scheduling of the committee of the hall.

Yes.

All right.

Is there any other any objections to that motion?

All right.

Yes.

So, madam parliamentarian, is that the appropriate motion?

Does it need to be referred to the president's office for scheduling?

Your microphone wasn't on.

She said LPD.

I said for the scheduling, that would be a question for LPD.

Mr.

Crowley.

Uh unfortunately we don't do not have uh Miss Barkley.

She's in another meeting today.

She's a lawyer that comes up here, so that's more of a lawyer type question.

But I would think just for a matter of protocol, you know, um, that you would you know reach out to the council president to the chair.

Yeah.

All right.

Thank you, Mr.

Crowley.

Mr.

Anderson.

Graham Anderson Law Department.

I think um the uh best use here would be uh a bring back TBD that way following uh the committee of the whole conversation, as Mr.

Corley um suggested, it could come back to this committee and if there's any additional details that need to be flushed out following that uh discussion that it could still be then dealt with in this committee.

So I would recommend a uh TBD uh bring back.

Motion to bring back TBD.

All right, we have a motion to bring this back at uh to be determined date after the committee whole is there are there any objections?

All right, so we will bring back 7.1 at a to be determined date after the committee to hold, and we'll continue to be in conversation with the president's office on scheduling that committee whole for both of the presentation on the local option seller tax and uh entertainment tax.

All right, so that will take us back to 6.1.

Ums Sullivan.

If you're on, do we have the appropriate person from the assessor's office?

Alvin Horn is joining.

All right, do we have Assessor Horn to promote as a panelist?

Mr.

Chair, uh I do not see him yet.

Move for discussion on 6.1.

Um there's been a motion to discuss without any objections, Vice Chair Johnson.

Mr.

Chair Alvin Horton is here, and I've moved to him two panelists.

Thank you.

Assessor, are you there?

Are you on mute, Assessor Horn?

Oh, apologies.

Can you hear me now?

Well, no worries.

Yes, we can.

If you could just state your name for the record, please.

Good afternoon.

No, sir.

Alvin Horn, Deputy CFO assessor for the state of Detroit.

Thank you so much.

And um we Vice Chair Johnson.

Thank you, Mr.

Chair, and good afternoon.

Mr.

Horn, line item 6.1 is it in regards to 1257 bagley?

Um thank you so much for returning, responding to the questions that were uh sent over relative to the property.

My question is um whether or not if this NEZ is approved, would the NEZ be based on the capped or uncapped taxes?

So the property was purchased in 2025.

You provided the uh taxable value for the property, noting that an assessor had gone out and taken a look at the property.

Um if the NEZ is approved, will the NEZ be applicable to the taxes that were paid for 2025 or the uncapped taxes moving forward.

And the other part of the question is who makes that ultimate determination.

Ultimately the state tax commission makes the decision, but it's based on the recommendation from the local unit, Detroit from the local assessor.

Um I believe this is an NEZ rehab that the developer that the new owner has applied for.

He's trying to rehabilitate the property.

Uh the way an NEZ rehab works, the value is based on the pre-rehab pro value.

It would be the adjusted value that the assessor created after we went to the property and adjusted the uh the assessed value.

So the numbers that we would provide to the state tax commission will be based on our revised numbers after one of our commercial appraisals went to the property.

Okay, thank you.

And I just want to be clear that um the taxable value increased significantly, presumably the person who owned the property prior to its acquisition in 2025 owned it for decades.

Um and so I just want to be clear that is the amount that's being presented or provided to the state for the taxes to be calculated based on the amount that was provided to us.

The prior owner had owned that property for quite some time and clearly had allowed it to deteriorate.

They did not take any steps to uh to maintain it.

Um from their perspective, they're going to guess the taxes were capped at a fairly low amount.

So they weren't burdened by the uncapped tax.

Uh when they sold it, they sold commercial property.

The assessment went up as as most commercial values in the city have come.

The new owner applied for the uh for the revision.

But you are correct, that's exactly how it will happen.

Thank you.

Thank you, Mr.

Chair.

Thank you so much, Vice Chair Johnson.

Member Waters.

Okay.

All right.

Um, thank you all.

I don't have any further questions.

I got all the information that I needed um in the follow-up.

I will say um as we and I appreciate um the petitioner, Mr.

Casty, for providing information, definitely understanding that NEZs are and uh the purpose of NEZs as we're thinking about vacant, deteriorated, and economically unviable um properties and what we have the parameters here when it comes to NEZs.

I think for us as a body, I would just say beyond this this single line item for us as a body, as we're thinking about NEZs and and the tools that we have for folks to um you know provide significant savings on the taxes.

Uh we also are by the and and I I uh believe the administration shared this shares this as well, is trying to make sure that we have adequate and affordable housing for folks in the city.

So for me, as we're looking at NEZs as a whole, and we there's been quite a bit of conversation about this um in this committee.

I think as moving forward with NEZ with the zones and and the parameters there, especially around affordability and accessibility, we should be able to take a look at that in the creation moving forward um as well.

But with that, um I have all the information I need on and uh I will entertain our motion um on this line item.

Discussion.

Uh yes, Vice Chair Johnson.

Thank you, Mr.

Chair.

Um, thank you for sharing that information.

I just want to share that um as we move forward with NEZs and uh development in the city of Detroit.

Chair um thank you for sharing that information I just want to share that um as we move forward with NEZs and uh development in the city of Detroit I think what I am looking for is just making sure that there is um an incremental base taxes that are provided to the city noting that you know we just looked through um our requirements and expectations of the retirement uh the the pension fund and and noting that um we're looking to to drive revenue increase revenue so for me I wanted to make sure that the uncapped taxes were um going to increase and be provided to the city uh prior to making a determination on how to move forward I will look for that in all NEZ projects and um economic development projects coming to us because um we have to figure out how we grow our revenue in order for us to provide the services that we do within the city and so um just for anybody everybody that's listening just know that that is my expectation I do have uh a thought an idea just to make sure that the base taxes are in alignment with property values today as opposed to anyone who has held on to a property for the last 10 or 15 years although this is not Mr.

Cassidy's uh situation but anyone who is held on property held on to property in the city of Detroit and it has gone um vacant it has been vacant and unrehabbed I think there should be a recalculation if you will of the base taxes um prior to an NEZ or perhaps other tax abatements being provided to that developer and so I'm sure we'll have some great conversations moving forward we may have to have some conversations with the state uh but that is just my thought um and with that I see my colleague has turned on her microphone thank you Mr.

Chair Johnson number one thank you Mr.

Chairman uh through um through you to um uh vice chair john I mean she really got me to thinking again as I always do you know when it comes to the true value of these of these properties uh do you believe we are where they say we are when it comes to property value because I can tell you for for an appraisal sometimes a home is appraised at a certain amount but you cannot sell that home for that amount of money and I've always been concerned about that so I want your thoughts on it you know as a numbers person yourself oh I was gonna kick it to the chief assessor because I'm sure that's a question he gets all the time but I mean you know that it's it's all based on what somebody is willing to pay right I I think if you get if you identify the right person to come in and purchase it you could probably get it um I I think the the thing that I'm trying to ensure is just that we know where property values were let's say 15 years ago right we went through 2008 and several years after that where our property values declined significantly and I think there were people who were purchasing property in the city of Detroit during that time um when property values were suppressed and now people are seeing that there's a a resurgence that there is greater interest in the city as they come before us for tax abatements I think we should identify the current value of that property although it's still vacant they should see an increase in their taxes and then we provide the abatement not for it to be where okay the abatement is based on property value and the taxes from however long they've owned it that's my thought that and and listen I'm just trying to come up with some creative ways for us to generate some additional revenue in this city and we'll continue to do so but um I'll have some offline conversations about it is just try and be creative.

Yeah that's that's what we have to be so thank you I'm with you on that thank you Mr.

Chair all right if there is no additional discussion I'm um happy to make the motion uh to move line item 6.1 to formal with a recommendation to approve all right we have a motion on the floor to move line item 6.1 to uh formal with a recommendation to approve not see any seeing no objections 6.1 will be recommended to formal recommendation to approve thank you so much thank you mr cassidy uh thank you to mr horn and mr guloch as well thank you all right that will take us on to member reports and we can start with vice chair johnson thank you mr chair uh i have no report member waters thank you mr chairman i just want to remind um people that this uh saturday from 10 a.m to noon

All right, that will take us on to member reports.

And we can start with Vice Chair Johnson.

Thank you, Mr.

Chair.

Uh I have no report.

Member Waters.

Thank you, Mr.

Mr.

Chairman.

I just want to remind people that this uh Saturday from 10 a.m.

Um to noon.

Um Councilmember Callaway in District 2 and I will be hosting a town hall meeting regarding deed fraud.

Uh it's gonna be at the Northwest Activity Center, which is 1-8100 on Myers Road.

And it's just such a very, very important issue for us to uh to address around this city.

And so that's the first uh meeting that with town hall that we will have, and it is hybrid, so people can if they don't want to come out in the cold because we've been having some cold days, um, then uh make sure that they um call our office and get the link.

We we're posting the link too on on our page as well.

Uh they can stay at home and do it virtually.

But it is very important that when people, if you have properties, you you have if it's a PRE or even property that you've purchased for for rental or whatever it might be, you need to be armed with the information so that your property uh does not get taken away from you and it's happening a lot.

So we started with district two, that is the highest number uh that's being reported at this time uh in terms of theft when it comes to to these properties.

So thank you so much, everybody.

So that's this Saturday from 10 until noon, Northwest Activities Center.

See you there.

My number is 313 628-2363.

If you want additional information, 313 628-2363.

Thank you.

Thank you, Member Waters.

And and we actually had a community leader reach out to our office on the defraud and wanted to have a similar so we'd love to partner with you on that.

I can have the um office return.

Um coming to your neighborhood, Mr.

Chairman.

We're gonna do this together.

Yes, yes, we'll yes, we're gonna we're gonna do it together.

Absolutely.

Looking forward to that.

I will uh just a short report.

Um we do have our district seven swearing in envisioning session today at 5 30 at St.

Suzanne.

So looking forward to that.

Um, I just want to also show um appreciation to my fellow committee meeting members here.

I know all of us for BFNA uh this is new to us, but I appreciate the the intentionality and and and view of making sure that one we are good stewards of the city's dollars of our residents' tax dollars and and really trying to have make sure that our our our resources are encouraging um growth in the city, but also taking care of the needs of our residents.

So I just wanted to show their uh gratitude and us and of course to all of uh the various staff members that help us to to try to achieve this goal.

So with that, uh thank you all, and with that there being no further business before this committee, the budget finance and all this committee time stands adjourned at 253.

Thank you.