Johnson present.

Councilmember Waters.

Mr.

Chair, we have quorum.

Thank you so much.

And that'll move us on to the approval of the minutes.

Folks should have received the minutes.

And with that, is there a motion to approve?

Motion.

If there are no there's been a motion to approve and not seeing any objections, the minutes should stand approved.

That will move us on to chair remarks.

As folks know, yesterday we did pass um the fiscal year 2027 budget.

But one that also uh one that delivers for Detroiters.

And just want to know, you know, as we go throughout, as we go up to the next fiscal year and through the next fiscal year.

Um I know this committee will be charging, we'll be working to make sure that what we have allocated in the budget goes to the actual services and programs that our residents are counting on.

So just wanted to thank everyone.

Um it was uh it was uh it was it was a busy season, um, but one that um was needed.

So thank you all so much.

And that will end my chair remarks and move us on to public comment.

Um we are now back to two minutes for public comment.

Um we will take folks in the room and then go to Zoom.

We'll close request for public comment at 11.

And we will start with folks in the room.

Is there anyone that would like to give a public comment?

Not seeing anyone here in person that'll move us on to Zoom.

Um, how many folks do we have joining us virtually?

Good afternoon, Mr.

Chair.

We have nine hands raised as of right now.

And our first caller is Tyson Gersh.

Thank you so much.

Uh good afternoon.

Uh Mr.

Gersh, you have two minutes.

Hi, thank you.

Um I guess uh if we could just actually dive into the BZA budget stuff.

I mean, I know the memo says what it says, and I I think there's gonna be an attempt to explain revenues as being um purely the product of the um appeal or of the the appeal fee schedule, but I I think council needs to see the actual numbers because the actual cases and the charge the authorized charges related to each of those cases should equal like a very predictable amount, right?

And I don't think they do.

What is it like the like an appeals like 15 like a hardship um relief petition, which is effectively a conditional use variance request, um $1,500.

Um I don't think the BZA caseload equals that revenue and fiscal year 2024.

The revenue tripled, but the caseload didn't do anything like that.

Also, the caseload graph that was presented to council previously, like the numbers are totaled wrong.

Um there's only like a 13% increase in the caseload.

Um, like I mean, literally just count them.

Um and the fact that they're not organized by fiscal year is I mean, come on, like we're in budget season, like the only thing that should matter is is like those numbers during the fiscal year, um, because that is how the city structures um its financial reviews, so it's it's worthless if it's not done in the context of the fiscal year as opposed to the calendar year.

Um like this stuff should just be transparent.

Like we shouldn't have to kind of even dig, it should just be clear as day.

Thank you.

And just for folks to know, if there are responses, we'll do that at the end of public comment.

But I am taking note here.

Thank you.

Next speaker.

Our next caller is owner Papa.

Good afternoon.

Uh you have two minutes.

Oh, thank you.

And good afternoon to the chair, Matt.

Yes, you may.

Yes, on the agenda today.

You have um 5.15, which is an audit of the payroll, which um the actual audit is missing, but I I think is worth a discussion with the public and and and in front of the public.

What the gentleman would just spoke was saying was yes, there are a lot of good questions in your memos, but we rarely get to see the answers to those good questions.

And I think we are due the answers just as you are.

You list um and in the report that the uh taxes are at 140.

And I think they uh had them in millions and uh in 2026 to 172, and by 2030, uh 199.

I'm wondering how do you anticipate you'll make those numbers with the uh rising number of um of unemployment in the city and also the uh rising number of uh in lieu of taxes and um tax abatements that are delivered to the city, uh reducing the um general fund by millions.

Uh I think we had 262 million when this group sat down uh like four years ago, and now we're barely getting a hundred.

And I'm wondering why we can't use our own um surplus dollars to build what we need.

Uh we need a uh a center, and we should not be begging uh the pistons to build us a center when we have surplus dollars in our property taxes that we paid.

And instead of giving 42 million to plug a corporate hole, we could spend 42 million to build our recreation center, something that we get um some direct um benefit from.

And and that's uh another thing I like to show me in the in the in the budget what benefits me, what benefits me, the the average citizen in the city of Detroit.

Thank you.

Well, we will definitely have a discussion on the items you brought up.

Next speaker.

Our next speaker is legendary Detroiter.

Good afternoon.

You have two minutes.

Uh Councilman, and the rest of you citizens, taxpayers, and residents of the city of Detroit.

Motor City Route, Black Bag Rue, Mr.

Overwith, Joey Robo.

Six mile rule, seven mile rule, national telegraph on seven mile, six mile, all the way to the far far DB East, and I'm standing up 100.

It ain't nobody.

Not an N-word in the city of Detroit.

And say what I'm saying on my mouth is not the truth.

So if I'm not lying, and I am not lying.

And what am I doing?

I'm telling you the truth.

Kenisha Coleman, DPD, case 20-11112, did not shoot herself.

She did not commit suicide.

So that's a false A double dollar sign.

Bogus, a double dollar sign, tag that's been placed upon her.

And Nini, her daughter, the one that asked me for some help with her mama in February of 2021.

Gotta get what she wants.

Ask for requested and deserves.

I give zero F's about any of y'all.

And I mean that from the bottom of my heart.

Oh my mama.

I'm one of the codes.

Don't take that tag off the mother.

I'm gonna give me the oh y'all.

And I can do it.

Janice work we've been cheating in elections for over, I believe, 15 years, but I can prove 2020.

Okay, the information.

Donald Trump himself.

Thank you.

Next speaker.

Our next speaker is William M.

Davis.

Commissioner Davis, good afternoon.

You have two minutes.

Good afternoon.

Can I be heard?

Yes, you may.

Okay, start off with the uh public libraries over here, District 7.

In so much that we only have one, I think the hours and days of operations should be expanded.

We're the third largest district with the second largest school age uh population.

You know, so I think a greater effort should be made to make sure that we have some of the resources that most of the other districts have.

Also, I was uh listening keenly to everything that was going on with the budget hearings, and uh congratulate y'all for being so strong and staying as late as y'all did and to work on all the smaller details.

I also personally I would like to see a greater effort to make sure more of our Detroit dollars stay in Detroit and it's turned over in our community so we can expand our economic pie more.

Um, because you know, I don't believe that we should be sending our dollars if at all possible to uh other communities when our dollars are needed here because other communities don't send no dollars to Detroit.

Uh also I think it would be good if we had greater cooperation in generating and getting more people out to vote.

Because I'm I'm the precinct delegate over here in the Barton McFarland area for precinct 410, and I have to go over three miles to go vote.

I think that is a form of voter suppression.

Because before the before the pandemic, you know, I said I could go, uh I could walk a half mile and go vote.

Right now, people in my precinct that have been a precinct delegate for quite some time have to go over three miles, you know.

So a lot of seniors like to vote in person, if at all possible, but that's something being denied to us.

We should be able to vote closer to our home.

Thank you.

Thank you.

Next speaker, Mr.

Chair, our next speaker is Black Bag.

Uh good afternoon.

You have two minutes.

If that's if that's uh Mr.

Crowley, then we'll go to the next speaker.

Our next caller is ending in 039.

Next caller ending in 039.

You have two minutes.

Is that him as well?

Okay.

Next speaker.

Just to remind folks, you are only allowed to speak one time during public comment.

So if please do raise your hand once with one user on our next caller is Nini's friend.

Next speaker, please.

Our next caller is Cunningham.

Good afternoon.

You have two minutes.

I'm at Peter Hood and Fernville.

There's a background noise.

I do apologize if you all hear me.

313-444-9114, 313-444-9114.

413-444-9114.

That number was made so you can remember it.

Financial struggles continue.

I still help the community.

Some folks have stopped their donations because they thought that the position of ambassador is a paid position.

And it's not.

Gas prices have increased, and uh I do still need your help.

Um if you helped me in the past, I'm asking you to help me again go east, west, north, and south.

Um people follow that I give out uh paratransit applications, low-income uh fair uh applications.

I give seniors and disabled uh free rides sometimes.

Uh, give out bus tickets, hand warmers, um, and water in the summertime, and uh I give people information.

I come and advocate at the meetings, and most folks probably get like 50,000 or so and above to do just a uh a small portion of what I'm able to do, and God getting all the glory and the credit for it.

Uh I would like y'all to drink a lot of fluids, praying the Holy Spirit.

Uh say my name in the atmosphere, my mother sure Murray Lyons at the Rivers and Gross Point.

Praying the Holy Spirit sometimes is just nothing else to pray.

Um I keep my head up, and all I can do is pray.

Um, and I want to thank uh all the council persons that do pick up the phone for me when I call um uh or text or cell phone.

So uh appreciate you guys.

Thank you, Brother Cunningham.

Next speaker.

Our next caller is phone number ending in one two four.

Phone number ending one two four.

Good afternoon.

You have two minutes.

Good afternoon.

May I be heard?

Yes, you may.

Okay, thank you.

Um, I second the emotion that Mr.

Gersh said about the uh BCA budget.

And it's clear as day.

Detroit City Code 50-2-6.

Now maybe scenographic transcripts are you know something of the past before we and recording technology.

And people lose their jobs because of that.

That's one of the people at Amazon who've been automated out of their jobs.

But we ought to figure out a way to make this cost prohibitive for people.

And very politely, if you don't do anything about it, I consider you a part of the problem.

And it's almost like a conspiracy.

Because the two new members excluded, but the last year budget on the BBA, people are like, why do we even have to go to the BZ at all?

Well, it's because we have the Michigan zoning labeling act, and we have zone, and there's a reason that people selected to buy their neighborhoods and stuff.

They wanted what was there.

I also wanted to uh so please uh take that seriously, law department.

You know how to read the Trade City Code 50-2-66.

I also found a business card from Zone Detroit that I got years ago.

I signed up to be an ambassador, but boy, I wasn't kept very informed of things.

So what happened to that?

I thought $500,000 got spent on that rezone Detroit.

And then at the end of last year, they tried to rim all this stuff through that people didn't notify this only ambassador about.

So I really hope that the city can do more on community engagement.

I know it's not an exact science.

Also, I wish they would have follow-up master plan meetings because district five only got eight days' notice for the meeting tonight, and these meetings are district specific.

And so that's not enough time.

Um maybe because of a uh uh a tragic situation.

I may be able to go to thank you, next speaker.

Our last caller is please do follow up master plan meetings.

That Miss War good afternoon, you have two minutes.

And they went off.

All right, I think that was Ms.

Wark as well.

All right, thank you all for um calling in for public comment.

Just a few things, Mr.

Gersh.

I believe you have been in contact with our office.

If you have not, um, if you can just send us the points that you brought up so we can check further into the VZA.

Um, Ms.

Hughes, uh, we would definitely look into the uh line items that you brought up.

I can assure you that we are not begging the pistons to build the rec center.

The recenter is being built.

Um, so that is actually happening.

Um Commissioner Davis, uh the public library, we did inquire with the library, so we'll follow up on expanded hours and of course with capital improvements to um push to get an additional library in district seven.

And Commissioner Davis, if you can send us your precinct number, we'll follow up with the clerk and the elections department on that as well.

I believe that's it.

Colleagues, do you have anything else?

All right, that will move us on into the agenda.

Uh first under unfinished business.

Um, these are various memos related to the budget.

Uh, if there is before I take a uh let's take up 5.1 through 5.14.

Is there a motion to discuss?

Motion.

It's been a motion to discuss.

I don't I'm not sure if Ms.

Sullivan or uh Mr.

Washington is on, but I just have a question for them.

Ms.

Alvin will be rejoining as panelists in a moment.

Okay, thank you.

I was just joining as a panelist, so I missed the tail end of that question.

Oh, no worries, uh Miss Sullivan.

Good afternoon.

If you uh I just had a question on items.

Uh well, actually, for items 5.4 through 5.11.

Um, we were it seems like we got some answers back, but they're not on e-scribe, and just wondering if we could get those up.

I want to make sure that folks have access to those.

Absolutely.

So for the budget memos, they are posted to the public, but it is not on e-scribe.

They are on the office of the budget's website under budget documents.

And all memos that have been responded to are available on that website.

Oh, that's great.

So could you just repeat that one more time before the public does listen on how they can find those answers?

Yes, they can find all answers to memos on the office of the budget website.

And they go under budget documents, and all memos are listed there.

All right.

Thank you so much.

All right.

That will bring so with the um with the uh line items one 5.1 through 5.14, just so we can make sure everything is there and before we receive and file commitment.

Is there a motion to bring us back in one week?

In one week, see no objections, the action shall be taken.

That will move us on to make sure I didn't miss anything.

5.15.

Um, this is the from the uh Office of Auditor General, the city wide payroll performance audit.

Um is there a motion to discuss?

Motion.

There's been a motion to discuss if Madam Auditor General, if you can come forward.

Good afternoon.

Good afternoon to this honorable body.

Laura Goodspeed, the Auditor General, City of Detroit, Office of the Auditor General.

Good afternoon.

I'm Ray Roth, Director at Stout.

Good afternoon.

I'm Kevin DeSadi, Chief Auditor, Office of the Auditor General.

And thank you, and good afternoon to the public.

I we appreciate this opportunity to review the audit report that was published in April relating to the city of Detroit's general payroll systems.

This audit is part of a citywide employee audits that we launched in late 2023.

And there's really three pieces to it.

We wanted to look at the experience of city employees from start to continuing employment or finish.

The first part of the employees experience is the pre-onboarding.

That audit is ongoing and it's being conducted by a team within our office.

The next part is the experience dealing with our human resources employee services division.

That audit is also ongoing, and it is being conducted by a team out of our office.

The last experience is payroll.

And we have partnered with our audit partners, Stout Recist and Ross, uh to conduct that audit.

This report is the second interim report in the payroll audit.

The first report was published and it related to a scope limitation for D dot payroll.

And with that, I will turn it over to our audit partner, Mr.

Roth.

Thank you so much.

And before you start, just wanna do you have slides for this?

Yes.

Great, thank you.

All right.

Hello, everybody.

Good afternoon.

I'm Ray Roth, director at Stout.

I've led uh this audit on behalf of you maybe.

I'll uh try to speak forward.

Uh I'm Ray Roth.

I'm a director at Stout.

I've led this audit on on behalf of Stout.

Um so I'm gonna I have a lot of information to to present today, um, partly because some of our findings were disputed uh by the OCFO NHR.

So I thought it prudent to go through each of our of our findings.

Um go to the next slide and one more.

Uh to start at the top, uh, is Ms.

Goodspeed uh mentioned Stout was awarded a contract by her office to conduct a performance payroll audit uh where we were asked to look at the uniformity and consistency of the city's payroll and related systems.

We are also asked to evaluate payroll processes, systems, internal controls, and environment for protection against fraud, waste and abuse.

Our audit period was from July 2021 through June 2023, effectively fiscal years 22 and 23.

Next slide.

Two important pieces of context to keep in mind as we're going through our findings.

One will be quite obvious to this audience having just gone through the budget process.

But I think it's important to note and say how important payroll it is.

It compromises more than half of all general fund expenditures and is budgeted at about a billion dollars annually.

Go to the next slide.

Auditor Goodspeed already mentioned our first interim report, so I'll skip that.

This um we're here today to talk about our second in-term report.

Um so this was the culmination of over two years of work.

We had 23 observations and recommendations, uh, mainly aimed at the efficiency, accuracy, and transparency of city payroll functions.

We classified these into four areas manual processes, analytical anomalies, unsupported transactions from our testing, and other observations.

Next slide, please.

Of those 23 observations and recommendations we made, uh the OCFO and HR respective uh collectively provided an action plan for only six uh of those of those recommendations.

Um I think the response from the signatories from HR and OCFO was very inconsistent from uh managers and supervisors within payroll and HR that we spoke to.

Um from our interviews uh with those employees, I I took note of some items uh that I thought would be relevant to share today, and these are city employees' words, not mine.

Uh the first of which is the people that designed the system did not really understand it.

Only 30% of it is working the way it should.

My day-to-day is going back and cleaning up the system.

It would take two years to get it to a desired state, and this was two years ago when this was made.

A payroll manager said as part of her validation for for payroll, most errors are human errors, not system errors.

Additional training uh for departments uh for departments to be held accountable would be helpful.

Another manager said there are gaps where there shouldn't be gaps.

This doesn't make sense.

We are involved in things that we shouldn't be involved in.

And a fourth person said, I estimate my team deals with 100 issues a week from errors and pay.

This consumes most of my team's time.

Um so the comments from the frontline staff is very different than those that signed the response to our audit.

Um I'm gonna go through each of these recommendations one by one, explain our observation and recommendation, uh, note the comments to those observations by the OCFO and HR, and our response to that.

Um our first set is of observations we relate to manual pay observations.

Um we can go one more slide.

Um the first observation relates to time in attendance uh for DPD and DDOT.

Uh these time records are not captured within the payroll system, similar to all other city departments.

Um instead, they're manually uh imported from smart sheet files.

And it's not just a straight import of those files.

Uh there's a payroll employee that deletes columns, uh, he changes formats, nothing nefarious was observed.

Um, but it is a process that there's an opportunity uh for error uh whether whether intentional or or not.

So our recommendation was to integrate DPD and D dot time, similar to all other city, similar to all other city departments.

So responding to those the standards may allow for this practice, but it's certainly not a best practice for the reasons I said anything that's manual and not done through the system is is an opportunity for things to go awry.

And the statement that HASTIS is functioning as designed, that's not a state that it's just not a true true statement or not a statement that can be made.

Our first interim report, which DDOT agreed with, was a scope limitation because information cannot be retrieved from this HASTA system, and so neither us nor DDOT were able to confirm that the function that the system was functioning as as intended.

As a recommendation to our first interim report, DDOT committed to working with its vendor HASTIS to integrate this time system within Alti Pro.

They confirmed it was possible.

And so they already committed to working on it.

Within DPD, non-sworn officers uh had already been integrated into AltiPro, and there is a plan, or at least there was a plan when we concluded our audit to integrate the non-sworn officers.

Uh so this really should have been a non-issue.

Um I don't understand the response the way it was made.

One final note on this that's not included in the formal response is it's my understanding that a new payroll system is being considered uh as a result of certain uh modules being phased out within the current system.

Um so one way or another, whether AltiPro is kept or another system is implemented all together, um, a new time in attendance module uh will need to be considered by by 2028.

Um so I think this goes in with all recommendations.

There may be thought of well, if we're considering upgrades to the system, we're gonna put this off uh until that time.

And what I want to make sure this honorable body understands is first of all, first of all, you know, we're talking 2028, two years away, a billion dollars a year, that's a long time to wait.

Um and second, a lot of our recommendations are process recommendations where if a new system is to be implemented, um, these should be considered in the planning for for that that process.

Uh let's move to the next slide and recommendation.

Our next uh observation and recommendation is around lump sum payments.

Um these are the result of accumulated benefits such as sick or vacation time that can be paid uh for not used.

And during our transaction testing, we identified that an amount was paid in excess of the hours banked, um, and that it was a manual process uh for how this time gets gets gets paid out.

Um and so our recommendation was to put more control around this process and integrate that into the system.

Um the OCFO and HR responded that they do an audit to ensure accuracy, uh, but as I noted, we found what looked like an error.

Uh we communicated that to the OCFO.

We followed up on three separate occasions, um, and they never responded to each of those.

So for them to say that they have insured the accuracy, um, that is an item that that we dispute.

Uh next slide.

Uh so number three relates to retroactive adjustments and 336 hour adjustments to 336 is uh fire employees that work 24 hour shifts.

OCFO employees need to investigate and coordinate with DFD and HR to balance that that out.

So both of these are grouped together because both of these situations are the result or commonly the result of employees not entering their time and or supervisors not approving their time.

And so our recommendation was to create consequences if time reporting procedures are not fouled.

And for example, this could be disciplinary action for employees and supervisors.

Next slide number four.

And we identified that there's manual adjustments that are made for this pay group for overtime.

And when we dug into this further, we identified that overtime policies were not memorialized in collective bargaining agreements.

So it's it's unclear what the standard is as to how this this time is approved.

And so our recommendation here was to negotiate and memorialize a formal overtime policy within collective bargaining agreements to set a standard.

And this observation and recommendation was agreed to.

Again relates to the 336, and this is time worked outside of shift, and similar to the last observation.

But we observed several instances where there was an override to that policy where this time was approved and paid.

So overrides are not do not need to be made.

And this is a good thing that they do.

However, the recommendation on this was to just bring their notes into an online record keeping system to increase the transparency and memorialize that and let others see those notes in case the need the need arises.

So that is all of the manual process observations.

So we have five observations and recommendations related to some analytics we did over all of the payroll transactions.

And we'll take these one by one.

And we identified that there were several instances where employees receive paychecks for regular hours after they have been separated from the city.

And their responses, the the math just doesn't math.

First and foremost, of the 71 employees, they were saying 34 of these received retro payments due to the following reason.

So of the 34, they then say 58 of 34 relate to prior period adjustments and retro changes from prior periods.

Two were voided in reverse.

Six relate to late entry of termination dates by police HR, which I think this is potentially concerning.

It alludes to the fact that maybe these payments should have never been made, had those dates been timely entered.

And then for six of these, they basically said they don't they don't understand why why they why they were made.

Sorry, the DPD non-sworn is already migrated, and there's a plan for DPD, like I mentioned earlier, so that relates to another finding.

So it's unclear what they're getting at here.

But I think an example, if we go to the next slide, might be uh helpful for everyone's understanding.

And so we have a fighter employee that was separated from the city November 3rd, 22.

And nearly a month later, they received a paycheck for regular pay earnings.

And the OCFO and HR provided comments to this, and the bottom line from their comments was that 24 hours of sick time was reallocated after separation to regular hours and paid.

Um as I noted earlier, there's a separate process for lump sum payments where if that time was to be paid, that's how uh they they should have been paid.

Um even in that case, why they were reclassed as regular hours, it's just unclear.

And and neither the retro file provided or the most recent comments from OCFO and HR is that explained.

Um so this remains a concern.

Um next slide.

Uh our next analysis, we looked uh, we were trying to make sure that we're looking to test whether employees were paid for both regular time and paid time off.

And so how a payroll week should work if an employee works a 40 hour week, eight hours a day for five days, that's that's 40 hours of regular time.

If they work four hours, sorry, if they work four days at eight hours, that's 32 hours of regular time, and then take vacation day on the fifth day, 32 hours regular time, eight hours of vacation, it adds to 40 over a two-week period, that's 80 hours.

So in theory, there shouldn't be situations where the combined regular time and paid time off hours exceed 80.

But we found several thousand transactions that exceeded that that threshold.

So our recommendation was again to increase control on this and if override is needed, make sure it's it's documented.

But that's simply not true.

We considered all of the retro adjustments in this analysis, and we still found several thousand um items.

Um and I have another example to illustrate this.

And so we have a WDD W DWD employee that received um compensation in April 2023.

Um 70.1 of those hours were regular pay hours, um, eight hours of vacation and eight hours of holiday for a total of 86.1 hours.

Um in the middle box are all of the retroactive adjustments that were provided for this employee.

And so for the first two sets of adjustments were in December of 21, nowhere near this pay date.

Uh the April 30th adjustments are kind of close to this, but they should really be applied to the next pay period.

Um it would not be applicable to the prior period, but just in case, um, wanted to walk through this.

As you note, all of these hour adjustments net to zero.

Um, this is done because these adjustments are commonly made to um adjust a pay rate.

So you back out the hours at the old pay rate and add hours at the new pay rate.

Um, and so the effect on hours is zero.

And if you look at the holiday lines, there's negative eight, positive eight, that nets to zero.

Um, and if you look at the vacation, um those are zero to begin with.

So the retro adjustments can't possibly explain this transaction as claimed.

Uh next slide.

Uh our next analysis was looking at shift premiums.

Uh shift premiums are uh additional compensation paid to certain employees if they work in afternoon uh or night shift.

This could be an additional 50 cents an hour, a dollar an hour, it could it could vary.

Um and then there's also overtime shift premiums that if the employee works overtime on that shift, then um the shift premium is subject to the to time and a half or whatever the overtime rules are.

Um but in all instances the shift premiums are tied, should be tied to the hours work, and so we compared the hours recorded for shift premiums and the hours worked, and we found many more hours were paid for shift premiums uh than what was actually worked.

Um and so again, similar recommendation is to develop process and control to ensure that premium hours are aligned with hours worked and any overrides are um documented and transparent.

Um the OCFO and HR in their response said that um time is paid for hours worked and may include time outside of shift, that system controls are in place on supervisors can override and it welcomes the opportunity for future review, further review.

Um we had provided our work papers on this analysis back in June of 2025, um, many months before they submitted this formal response, so it's unclear what uh and offered to discuss any of these in detail, so it's unclear what they would like to review.

Uh again, we have another simple uh um example here on the next slide.

Um for a DFD employee that received compensation in July of 21.

Um, their overtime premium hours were 21 and a half, uh, more than double uh the overtime hours worked at nine and a half.

Um our next analysis, we wanted to see if there were any employees that were receiving um multiple payments within within uh uh a payroll period.

No no employee receives an actual uh physical check anymore, it's all direct deposit, but commonly um the payments are still referred to as checks, and I may use that term even though there's no checks.

Uh so when we started to do this analysis, there's there's kind of two separate issues here.

The first, the first set of um data we looked at showed um a significant number of uh multiple net disbursements within a pay period.

When we went over this analysis uh with the OCFO, we learned that multiple payments were not actually made uh for many for many of these.

It's how the data is reported and that's the result of HR inconsistently ending entering project codes uh for certain payments that are non-hours related, such as uniform allowance or incentive type bonuses.

Um the way the city's system works, um project codes could be entered to if there are certain items that are related, let's say to like an ARPA fund, so that could be accounted for separately, um, and the default is five zeros.

But when HR entered these, um they either didn't enter a project code or under one zero, and so that caused um a duplicate line uh in the in the system um and and created a false positive.

Um so there's a recommendation for just HR to uh enter uh project codes within the required format, and that would make the city's data much much cleaner.

Um but after we incorporated this, we still found um in looking at the payroll register, there were several instances of employees receiving two checks or two payments within within a pay period.

Um and so our recommendation around that was to um again put more control around it, and if overrides are needed, make sure there's there's an explanation.

On the next slide, I have an example of a situation where an employee received more than one payment.

Um, and so this was a DFD employee in December of 22.

There were two checks that were paid in this in this pay period, both for around 1,100 each.

One was a regular check, and one was a manual check.

Uh we were able to identify the regular check to the payroll records for that pay period.

The manual check through further investigation, we were actually able to agree that to time worked in August of that year that looks like it was never paid.

Um it doesn't look like the employee received anything more than they should, but this brought up a lot more questions than answers of why the employee was not paid, how four months, nearly four months went by before this was rectified.

Is there something else going on here that maybe requires further investigation?

Um it's a red flag where more control uh would certainly benefit the city.

Our last observation and recommendation relates to supplemental pay runs, supplemental uh payments, and so these are um payroll runs that are made in between pay periods.

Um if an employee was not compensated as they should have during a normal payroll run.

And these are uh we understand these are commonly the result of time not being entered, uh that time not being improved, or HR not providing uh information as needed.

Um, observation here was the city had made strides between 21 and 22 to decrease um the frequency of of these, uh, but not between 22 and 23.

And it's it's relevant because it's just the use of of resources.

Um the more the more time um payroll is spending doing these runs, the less time they could be doing other things, such as implementing some of these process improvements.

Um and so our recommendation here was similar to a previous one to just create consequences uh for employees that are not following city city procedures.

Commented that employees are the supplemental processes in place to timely compensate employees, acknowledging from missed hours.

Then they essentially uh repeat our findings that no improvement was made between 22 and and 23.

Uh their action here was that they will continue to work with employees and supervisors, but it's very non non-committal.

Um we can move on.

Our next section, uh go one more slide.

Um that's fine.

Uh our next section relates to observations and recommendations from specific transaction transaction testing.

So our last our last analyses were on all payroll transactions as a whole.

Um we created a random sample of specific transactions, looked at all of the supporting documentation for those transactions, um, and commented on whether we thought those transactions were supported by that documentation or not.

Our finding here was that nearly one-third of the payroll transactions tested had one or more elements of unsupported pay.

Um recommendation was that labor relations um should review uh our work here in these highlighted transactions and provide input uh where compensation paid to the city was or were not administered uh to the terms that that were bargained.

Um and if they agree with our findings that compensation was made outside of bargain terms, um policies and procedures should be updated uh to ensure payroll is administered uh to those terms.

Um the audit response here was that they may need to be updates to city code um andor the bargaining agreements, and that may be part of it, uh, but they did not respond to considering any updates of their own policies and procedures where they may not just be applying the terms of city code andor the bargaining agreements.

Uh the next item um related to the payment of overtime without any hours recorded for overtime.

Um so our recommendation here was to review the business rules for how overtime payments are made, really to try to understand how this payment could have been made.

And if this payment is valid, they they should create a separate earning code classification to differentiate between overtime paid for hours and non-hours worked.

Uh the response from OCFO and HR was that they will review the rules configuration when updating the ATU contract.

I think they're trying to get this one right, uh, but I think there's a misunderstanding here is we identified an ask me that this transaction related to an ask me employee.

It's not entirely clear what they mean by ATU, but that's probably the amalgamated transit union.

Um and so we're noting um that distinction.

Um next slide.

Our next observation related to there was an employee that was paid double the overtime rate when they should have been paid for holiday pay.

Um our recommendation was to review the circumstances that led to incorrect time classification and update policies and procedures if needed, um, which might involve additional employee and/or supervisor education, a review of manual overrides, which look to be at play in this in this situation, um, and or system controls on verifying this type of of pay.

Um the OCFO and HR said that they would like to further review this, uh, but again, this was presented to them in June uh of last year at our end of field work conference, and all of our um all of our work papers were provided at that time.

Uh next slide.

Next observation uh related to the payment of spread time that was not supported.

Spread time relates to D dot transportation equipment operators, these are uh cities bus drivers, uh, and spread time is paid for time in between shifts.

And spread time is paid for time in between shifts.

So if a driver has a shift between 8 and noon and 3 to 5, spread time is that time in between their shifts that they're compensated for.

When we reviewed the employees' schedule to support this time, the employee did not have a schedule that supported the payment of spread time.

And so I think this might relate to some of the issues we saw in the HASTA system, and our recommendation was that DDOT should update its HASTA system to allow for better transparency and supporting the compensation paid.

Ultimately, this was agreed to.

Next item.

This incentive bonus instead of following the terms that were bargained for, they developed their own process that was somewhat close to the required policy, but it was a little more simple than what was required.

And so our recommendation was that they should align its criteria for paying the bonus with that and the contract.

And ultimately they agreed to that.

They will update the HASTIS programming.

And the issue here is there are designated holidays, and then there are also excused days.

Again, this was covered in our June end of field work conference and work papers provided at that time.

Next slide in this section, relates to another holiday pay issue.

And the issue with this one is the way many of the city's collective bargaining agreements read is that to be entitled for holiday pay, the employee must work the work day before and the day after the holiday.

And so the agreements make a distinction between work day and day.

So we have four other kind of recommendations without a central theme, but we thought important.

First one of these is we found that the OCFO has a couple of unresolved prior audit findings that related to payroll.

And so our recommendation was that they just developed plans and roles and responsibilities to incorporate those recommendations.

The response on those was that one of the recommendations related to the Detroit Transit Corps, which is a component union, which they thought to not be in scope, and then they did not seem to agree with another recommendation related to compensated absences related to the fire department.

But they chose not to.

Next slide.

And so this was a accumulation of our experience throughout the audit.

It took seven months for us to receive basic payroll reports.

When we did our end-of-field work conference, the OCFO and HR made many representations.

Their documentation provided for those representations were not supported by the documentation that they provided.

And ultimately, if everything we've discussed here thus far is on the up and up, there's no errors, no fraud waste or abuse.

The point here is that it shouldn't be that this hard.

Everything should be transparent, it should be well documented.

If there's an issue, you should know exactly why a payment was made.

Next observation.

Relates to the payroll inquiry system that the city uses to process questions or complaints by employees.

So there's there's a process that if an employee has any question on a payroll item, and this could be whether they don't think that they were compensated correctly, or they just have a question on how else on how their health insurance or some other benefit or component works, they could file a formal ticket, and then that is triaged by the payroll team.

And these are all handled one by one, and um as far as I could tell, they do get resolved.

Our recommendation on this was there's 1,400 um inquiries made per month on average.

Um again, the the way that they're currently using the system is not wrong, but they're not fully utilizing it to categorize like issues and consider where system enhancements and or training or some other mechanism might alleviate the need for an inquiry to be made and have continuous improvement.

Um so that that was the recommendation is that they better utilize this reporting, add some more structure and categories so that they could group uh analyze and monitor uh in a more efficient way and incorporate in improvements.

Um the OCFO and HR responded that uh they leverage existing platform to manage and track inquiries uh to support continuous process improvement.

Share wallists, that's the name of the system, provides robust ticketing and reporting, including ability to reference prior inquiries and track staff response, and it's used by other departments.

Um again, just highlight the average of 1400 complaints per month uh without any sign of improvement, um suggests there's an unmet opportunity.

Last item um so this relates to an error uh an overpayment that we found and everybody uh agreed with.

This actually related uh to one of um the auditor general's employees.

Um, and this is really the reason that we did our end-of-field work in June uh but published a report in January because we were investigating this item.

What happened here is the city's payroll system uses two tables for its pay rate.

There's the HR pay rate table, and then there's the time and attendance pay rate table.

These tables are supposed to be in sync, uh, but for an unknown reason, um, these tables did not sync up for a period of time, which resulted in an employee getting paid at a higher pay rate uh than she should have.

Um HR investigated this with the city's payroll provider to try to understand why this happened.

It was ultimately nobody knows or understands.

Um so our recommendation here was to develop a reconciliation process between these two tables to make sure that they are in sync for future payroll runs.

Uh, this was ultimately agreed to.

There was a short-term fix that has already been implemented, and there was a longer term fix that um was in process as of a couple months ago that may uh already be implemented now.

Next slide.

Um so thank you.

I appreciate you all bearing with me.

I know that was a lot of information.

Um I am going to pause here and happy to answer any questions.

Thank you, Mr.

Roth.

I appreciate the thoroughness of the presentation and also of the audit as well.

Um these are important issues and items.

Um, as you mentioned, the sheer amount of that payroll takes up of our budget.

Um so I appreciate the thoroughness of it.

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

We could start with Vice Chair Johnson.

Thank you, Mr.

Chair.

I'm not sure where to start.

Um so I appreciate the information.

I do recognize that this is like almost a 200 page report that was provided, so I would love to um delve deeper into it and be able to digest it because of what Mr.

Chair said and what you indicated as well, how much of the city's general fund budget um is for staff uh in payroll.

Um and as we sat here last night um having a very intense negotiation with the administration on um just making sure that city council's priorities were recognized and funded going into the next fiscal year, right?

So there's there's that push pull at play, and um I I think as we look at this and and really understand it and recognize where improvements need to be made, where they have to be made, as um dollars become tighter, as um programs and services to the residents throughout the city of Detroit become a little bit more difficult to provide.

Um this is very important.

It's extremely important.

Uh and so I Mr.

Chair, I'm not sure how much time we have to devote to this, but I would like to get a better understanding from HR and the OCFO's office as to what payroll processing looks like throughout the city, because I understand that we have different divisions.

Um the divisions I assume have an HR person within them.

Um not sure about how the OCFO's office works.

I know how they work with our office, um, but I think that really needs to be understood and clarified to determine where training opportunities are, where um we can improve the processes throughout the city.

Um I can note what we all saw in the news a couple months ago about a fire fighter who was overpaid and and you know receiving um money that he shouldn't have, right?

And so I think it it requires us really understanding how the divisions work, um, who within the divisions are processing payroll, what their training looks like, um, where the real challenges are for us to be able to understand and really push the administration, including city council and our administration on how payroll is being processed.

Um the one thing that bothers me tremendously are manual processes.

And really trying to understand any verification processes within any agency, any department.

So if there's one person who's doing manual inputting manual information, who then supervises oversees that to verify that the information that was manually put in is accurate, and you know, all of those things.

So I think I have a lot of questions.

I have a lot of things that I would like to understand better.

So this is one of the reasons when we set out to do the citywide.

Looking at the uh citywide experience by an employee.

This is why we have the three separate audits.

I want to just share with you with the public.

Prior to bankruptcy, payroll was housed within human resources.

But coming out of a bankruptcy and establishing the plan of adjustment, split those segregated those responsibilities as it should be.

And that was with that was part and parcel with the emergency management offices that restructured and created our office of the chief financial officer.

One of the things that uh Ray did not, Mr.

Stout did not point out, but we were surprised to receive a joint response from that included human resources in the response to the payroll, because this was the payroll audit.

My team that has the OAG team that has been working on human the human resources employee services, they are the ones that's looking at all the stuff that's going on in HR.

And they've shared samples.

So it's really some of the questions and and and items that you're curious about, how the different departments are processed.

That was that's a part of the HR audit.

For example, City Council, you have your own HR person, there are other departments, the police and the fire uh have their own HR kind of uh department.

So we are looking at all of the various uh HR departments, including the main human resources department that services most of the city.

That will be a part of the human resources audit.

We are we just about wrapping up the field work on that, and so the next phase would then be moving into finalizing the findings and the reports.

I do want to point out too, though, that this is the second report in the payroll, and it really was looking at citywide payroll.

It did you did hear findings on uh DFD and DPD, but there is a third report that has been completed that will be citywide public safety.

Um so while this touches on some of the things that we may touch upon in the public safety report, we felt it was necessary to separate that report from the other main city employees.

We're expecting that report to be published.

Uh, we're hoping for the July time frame.

The work has been done.

It's just a matter of going back and working through that draft report with the OCFO.

Okay, thank you.

Uh if I may quickly through the chair to Councilmember Johnson respond quickly.

Uh first uh I'm at your office's disposal.

If I could answer uh any additional or detailed questions, I understand this is a lot to address.

Um, but I I do think you had the the nail on on the head of moving from reactive to to proactive.

Um I think the the payroll team, there are a lot of talented uh people on that team, and they're doing a good job.

A lot of times people read this report and you know take it personally or getting defensive.

Um, but I think I think I think think the focus of moving them from reactive to proactive, they're they're fixing so many errors and handling these one offs that it's distracting from the true improvements that would be needed to hopefully prevent some of those in the in the future.

You noted that there's so many divisions and departments, and you could go on to the bargaining units.

Uh the city's payroll is extremely complex.

Um and it's and it's an enormous challenge.

So to point out the issues that we pointed out is not to point the finger at any one person or department individually.

It's just recognizing that it is enormous a challenge, um, and if the goal is continuous improvement, uh, eventually uh we will get there, but you need to have that commitment to improvement.

Thank you for that.

And within that, um if if various divisions or departments have an HR team, let's say that does payroll.

I would think it would be the human resources department that works with all of them to ensure they understand payroll, how to process it, they're going through trainings with them on a regular basis when they first start to understand the systems or when a new system is put in place.

And I'm not so certain who that is or how that process actually works.

Um I don't know if our our uh team that assists us with payroll has that tie, that connection to HR.

I know they do, but as it relates to um identifying whether they're one-off challenges that they encounter as they encounter doing payroll, um, who are they working with just to ensure they understand the process, they have additional training um to ensure accuracy of the work that they're doing, um, or who can come back and say, you know, perhaps there is a policy that needs to be changed.

I'm just wondering who that overarching um department is and how that is working to provide the support for all of the divisions and the departments to improve upon what we are seeing within this report.

My response again through the chair is that is the very thing that is also included in the HR employee services.

One of the things that we've done across this, and that's why it's an umbrella, citywide employee audits.

The samples that he's used for payroll, the we have there was the same examples or samples uh for some of the testing that started when the employee was pre-onboarded, because we wanted to see how that moves through to ultimately payroll.

The the I can assure you that you're concerned with the additional HR departments and whether or not that process and that training works to ultimately end up with that employee being paid properly.

That is what we also are addressing in the HR employee services audit, have addressed in yes, we will be speaking to that uh and and hopefully again our recommendations are always my two favorite words value add.

So there may be some cases where we may recommend that this process change or or you take part in the the uh overall HR employee services division.

So we are looking at that as well.

Thank you.

And lastly, I will just say um we'll look a little closer into the recommendations and the responses that came from the departments to better understand them.

So thank you.

Thank you, Mr.

Chair.

Thank you, Vice Chair Johnson.

Before we go to member waters, because I think what you brought up is a a good point because I think we do have to have a deeper conversation about the audit and also with the OCFO and and uh HR.

Um so what I would be we'll go to member waters, but what I would recommend is that we um have a further discussion in this committee on April 29th, um, if that is okay with folks.

But before we make that motion, I will go to Member Waters.

Oh, I was gonna suggest that so we could make the motion.

We certainly have to hear from the departments.

I I agree with uh you and um Member Johnson who uh has a finance background herself.

So I heard you mention uh no fraud waste or abuse.

Did you say there was none?

I mean, because everything that I then I've heard, but then maybe I misunderstood that part.

Uh uh through the chair, uh that's a great great question.

I appreciate you giving me an opportunity to to clarify here.

I think I think there was some.

I mean, there is uh some items like that.

Was was an overpayment.

Um I wouldn't say it was fraudulent in in any ways, but it was it was waste uh for for sure.

Um of a lot of the other issues I identified.

Our our scope was to not quantify overpayments to the city.

It was really to focus on opportunities for improvement.

And so we identified things that um looked like they could be potentially incorrect.

We don't have a conclusion that they necessarily were.

There could be reasons for a lot of it, but it was more forward looking of let's fix these items going forward so we don't need to ask the question is this is this fraud waste or abuse.

Um but as I noted, there were transactions where there was not documentation to support the transactions or the documentation to provide it did not support it.

There was analytical anomalies, there's there's certainly a lot of a lot of concern, um, but to run each one of those to grounds is uh is is a separate assignment.

But I I'm certainly hoping that the departments are working with you as some sort of we have some sort of spirit of cooperation and and taking those and not being combative about about what you are recommending uh because what we what we're all strive to make improvements, right?

So I certainly want to be able to see that.

That's why it's going to be so interesting, Mr.

Chairman, when we have that conversation uh with those departments starting with HR.

Through the chair, uh Member Waters, certainly some of the recommendations, some of the observations and recommendations do correlate with the recent uh article with respect to the DFD, as well as the inspector general investigations, because they also have investigated these cases of fraud.

And so, yes, our findings and the rec the findings support that and could be uh the recommendations uh could be used if implemented, we feel in some cases that could prevent that from occurring in the in the future.

Then then I will ask you which which findings uh pose the highest um uh financial or fraud uh risk to the city.

Which you have any thoughts.

Uh through the chair.

I think overall, I think the manual processes uh to council member Johnson's uh point are are probably the the biggest risk because there's just so much opportunity for things to go to go wrong there.

But otherwise it's it it's it's hard for me to pinpoint each one.

I think all of them are very important, or I wouldn't have mentioned them.

I know it's overwhelming to get 23 all at once, but you know, to prioritize payments after a separation or um unsupported overtime.

Um it's hard, it's hard to pick for those or potential duplication between regular time and paid and paid time off.

It it really kind of depends on in each circumstance.

Are we talking about a paycheck for a hundred dollars or double compensation of regular time and overtime for a thousand dollars, and then you could reverse that that that situation?

So did you find that they you know they repaid, you know, whenever they were overpaid, that they repay that money.

Uh through the chair, well I don't think we tested that far.

We didn't we didn't follow up that far.

Okay, that's but we'll be we'll be asking the departments at the end.

No problem.

I just wanted to know if you know Madam uh Auditor General at all, you know, if in fact uh those kinds of things were happening.

I mean, because what are we doing?

We're asking retirees to pay repay all of this money, you know, and um so we certainly cannot um allow actives to um to get away with that.

We just can't.

So we we'll have to see um what what measures they've put in place.

I don't know what those are right now.

I suppose we'll get to the bottom of it.

But if you had to summarize this audit in one sentence, you're saying it to you're telling the taxpayers.

Here's how I summarize this audit.

What would you say?

Uh through the chair, I would say just opportunities for for improvement.

City of Detroit payroll is extremely complex.

There's a lot of moving pieces and parts.

There's a lot of one-off situations.

I feel the payroll processing has gotten into a reactive mode and trying to fix errors and sort of proactive and in preventing them.

And if you allow me one more sentence, the danger with that, one of the dangers with that is when you're relying on an inquiry, a complaint system, almost everyone is gonna complain if they're underpaid.

But it takes a very special employee to bring to the attention if they're overpaid.

That's right.

Right.

And so that's that's that's one of the risks, one of the areas that needs to be kept in consideration here.

All right, thank you.

I'll leave it at that for now.

I'm I'm a chat.

I if I may sum it up.

So I perform the human resources audit back in 2010, prior to bankruptcy.

I was asked to pause it pending the implementation of our system Ulti Pro.

And so I published a document called the labor characteristics of the city of Detroit.

And in that document, I talked about we it it to say it's complex to me is an understatement.

Our payroll, I what I told Ray was our payroll can break any system because of the sheer number of labor contracts we have, the sheer clauses, the nuances, just getting overtime right when one group gets it after 40 hours, or another group gets it after eight hours a day.

How do you how do you code that?

So I give my hats off as Ray said to this payroll team.

They're working with with the number of labor unions and CBAs, then as you said, all the other departments, all these nuances.

Uh it's just very complex.

And again, we hope that these recommendations will help to improve the processes.

Uh, but we also, as you all just went through the budget process.

Every department needs to be adequately staffed to handle, especially our payroll.

It's not just the number of staff, it's the skills set.

Um, and so I just my hat's off to the payroll team, the OCFO team.

We look forward to combining when we get that report on the HR process, making those uh looking at it holistically as to how those two departments interact and interact better with each other.

Well, thank you.

Colleagues, we certainly have something to take a deep dive into next budget sessions, right?

For sure.

All right, then thank you, Mr.

Chairman.

Thank you, Member Waters.

And before I say a few, I um I just want Mr.

Corley.

Did you have anything from OP?

Thank you, Mr.

Chair, City Council of Good Noon.

You know, very thorough audit.

Um appreciate the um recommendations and observations.

I guess my overall is you know, they're they're recommending system improvements.

And so what is that gonna cost?

Um do they need to hire more employees?

Are there vacancies in the payroll you know, areas throughout the city?

If so, what's what's the plan to fill in those vacancies?

Um to member Johnson's um and member Johnson and Member Walters, you know, comments and observations.

You know, what is what is the plan to deal with that?

I I'm gonna be honest.

I mean, I highly respect human resources and the OCFO, you know, I agree with Ms.

Cosby.

There's a lot of talented employees.

There were 23 audit recommendations, and only six was responded to.

That's that that is a concern.

That is a concern.

You know, 12 of the 23, no action.

Um five other 23, no response.

You know, that is a concern.

So I'm I'm hoping that when we have a deeper conversation, you know, a few weeks from now, we can get a greater, you know, understanding and response from particular OCFO, and to the extent needed, HR.

So thank you so much.

Thank you.

Thank you, Mr.

Crowley.

And yes, so want to once again thank you all for the work on this audit.

Um as said, very thorough.

And I was just going through, okay.

Um definitely will dive deeper into this.

And and I agree, just to echo what a lot has been said.

I understand that there are, as you mentioned, uh various labor uh contracts, um Madam Auditor General, the complexity of uh how many employees we have here in the City of Detroit, um, the complexity of what different pay rates and different positions, so understanding how large that task is, um, but also understanding that especially we all here at the city council and everyone in city government, we have a duty to ensure that tax dollars are going to the places that they need to, and and and and being used appropriately.

Um, and and and Mr.

Crowley, I I do share the concern.

Um, if we were talking about an audit and the response is that all the response there were responses to all of them, and there even if there was some disagreement, there was work that was going on on every one of those, or the ones that there was agreement on, I would be filling a better place than I am now that so many of them weren't responded to.

Um, so I I don't have further questions today.

Um, and I know we have folks um uh that are listening that are here from various departments of OCFO and and HR and such.

It would be great if by the time we talk about this on 29th, if if folks are saying we're working on all of these, that would be ideal.

Um, because that is what's needed here.

Um, because what I have heard, as has been mentioned, and just to borrow the term from our our pro Tim Young is that the biggest room uh is one for improvement.

I'm gonna have to tell him I said that uh for the yeah, but what I would say is that that's when we were getting into the audit, what I saw was let's improve on these things.

So we don't have further headlines, so we don't have bigger things that um that it does get to a place where there is some nefarious actions because of the holes that have been identified.

So I hope and we'll ensure that that um work does happen.

We're gonna have the deeper conversation, but I just wanted to thank you all for being here.

Um and and with that, is there a motion to bring this item back in three weeks?

Motion.

There's been a motion to bring back line item 5.15 in three weeks.

Um, any objections?

That action shall be taken.

Thank you all so much.

Thank you.

All right.

So that will take us on to the new business portion of the agenda.

Um, this is 6.1 report related to the February 2026 revenue estimated conference report.

Um, we've been asked to bring this back uh in one week, but is there a motion to discuss one moment?

Um so we have been asked to bring this back in one week, but what I would to uh say to the public, because I know there were some questions that folks wanted to um dive deep.

So there was a revenue estimate conference um that actually happened, and that folks can go back and watch that recording um as well.

And during the budget uh season, we also discussed the reverent revenue estimated conference as well.

So if there are folks that want to go back, um, because uh some of the questions that came up during public comment were discussed during that conference.

Um please do so.

You can also reach out to our office and we can port you into the right direction at council member Denzel at Detroit Mi.gov.

So I just wanted to let folks know this, but we will discuss this in one week if this motion does go through.

So with that, I will is there a motion to bring uh 6.1 back in one week.

Oh, yes, Mr.

Crowley, with discussion, yeah.

Your mic.

The report itself is also posted online if if you go into the OCFO and I think it's financial reports.

Yeah, revenue and economic reports.

So revenue and economic reports, uh citizen can go and actually read this report.

And it's it's a good report.

So just wanted um that the uh department know about that.

Thank you, Mr.

Crowley.

Thank you for that.

Uh and with that, there's been a motion to bring back in one week.

Say no objections, that action shall be taken.

This will bring us on to 6.2.

Uh fiscal years 2026 to 2035, long-term forecast report on legacy pension plans and debt obligations.

Is there a motion to discuss?

Motion.

There's been a motion to discuss 6.2, and I believe we have folks for an administration to discuss 6.2 if you want to come for it.

What I will say to folks that again, this is another discussion that we did have during the budget season.

So this will be a truncated uh discussion.

I would ask folks that are presented.

If we could go over the top lines that we have here in the report, that would be great.

But any additional information that you want to present beyond what has been presented to us during budget season as well, that would be great.

Thank you.

Hi.

Valeria Goli, acting treasurer.

Um I wasn't aware that this was on the agenda as well.

And so I think um if if we may come back with Mr.

Naglik on the pensions, and I can certainly speak to the debt.

Uh I would appreciate that.

Okay.

Well, let's let's have both uh 6.1 and 6.2 discussed um in one week if that is the will of this committee is there are motions to bring back there's been a motion to bury bike 6.2 in one week.

Thank you.

And before we go to the next item, um Mr.

Goalie, is are there any items related to this that folks can find the public and find online?

I'd have to check.

If you we'll we'll make sure that folks know if there is I'll get a note to you too.

Thank you.

Thank you.

Thank you.

All right, we'll bring back six point two in one week.

Thank you all so much.

Let me get back to my all right.

That would take us to six point three.

Um from the office of city clerk and city planning commission.

This is uh neighborhood enterprise zone certificate application for the construction of three new single family houses at one four six three and one eight zero two Fisher and also one seven zero seven McClellan and the East Village amended neighborhood enterprise zone area.

Um is there a motion to discuss?

Motion there's been a motion to discuss six point three, and I believe we have Mr.

Gulach on afternoon.

Uh Mr.

Jarrett Chris Gulak, City Planning Commission staff.

And we're also joined by the developer Matt Temkin.

Hey guys, hey everyone, how you doing?

Good afternoon.

Thank you, Mr.

Gulag.

The floor is yours.

Uh thank you, committee.

Um yes, we submitted a report or a resolution for your consideration.

This is for three new houses in the East Village NEZ.

Um two are located on uh Fisher Street and one is located, so it's on Fisher South of Kirchhoff, uh north of Agnes.

Um the other houses uh just south of Kirchville off of McClellan.

Uh Greatwater's been before the committee before they're they're building they're doing new a new infill housing project just east of Indian Village.

And so this is part of the East Village NE Z, which is shown in the outline turquoise box here.

It's basically bounded by Kirchell on the north and Jefferson on the south and Fisher on the West.

And um it has over 100 acres.

It was created by council back in January 2020 five.

Uh the property in question today is vacant land, it's owned two family residential uh record show.

I believe Great Water purchases in 2025 from Hands Woodlands, which does own quite a bit of land in this area.

Uh the petitioners and LLC listed on the screen and in our report.

It's it's a project of Great Water Homes, which is a venture of Greatwater Opportunity Capital.

Uh the petition in the petitioner indicates there's four different layouts that new buyers could choose from.

The houses range from a thousand to eight hundred and fifty square feet.

And buyers can pick the number of bedrooms and the type of house they want to build.

So there's a range of houses.

Um two to four bedrooms and the cost of build is about two hundred and seventy-five thousand to four hundred and twenty-five thousand, depending on the model chosen and the and the sale price.

Estimated sale prices five hundred and fifty thousand to six hundred and fifty thousand.

So the uh I guess I did a rough estimate that the NAZ tax breaks would go to the new buyers and they would reduce their property taxes for 15 years.

And uh without the NEZ, they they might be paying about 19 18 to 19,000 dollars in property taxes per year, but with the NEZ, it would give them a uh a property tax of about six thousand per year, so substantial uh benefit for new home buyers.

Um regarding parking, they do propose de detached garages built off the rear alleys.

And regarding accessibility, Greatwater said they can customize the house to have ADA accessibility to the ground to the first floor if requested by the buyer.

Um so the petitioner did submit the NAZ certificate to council back in October.

Uh they the building department did issue building permits for all three houses.

Um the NEZ Act just requires that the uh certificate be submitted before the building permits are issued or within six months.

So they're they met the timeline based on the state law.

There are just a few pictures from Great Waters website of some houses that have already been built on Fisher.

There's a different, you can see the different variety of one story, one and a half story, two story.

And this is um from their website as well.

There's four different models.

There's a one-story option, bungalow option, and the two-story options.

And so, in conclusion, uh the staff I uh uh confirmed it's in the NEZ zone, the East Village NEZ zone established recommended approval and a resolution is submitted for your consideration.

Thank you, Mr.

Chair.

Thank you, Mr.

Gulag.

Um for is there anything to add, um Mr.

Temkin.

Uh no, I mean, I uh council members Johnson and Waters have actually both been out to see them, and I would invite you uh out to come see them as well.

I'm over here at the corner of Kirchwell and McClellan pretty much seven days a week.

Uh so whenever it works for your schedule, um, we think they are really cool, beautiful houses that people are interested in.

And even with the abated taxes, if they're paying six grand a year, you know, that's pretty good increase in tax revenue for the city.

So we're excited to keep keep doing this uh as much as we can.

Thank you.

All right, I'll turn it over to members of the committee for any questions.

Thank you, Mr.

Chair.

Good afternoon to all of you.

Uh Mr.

Tempkin, can you share?

So, yes, um probably maybe four or five weeks ago I had an opportunity to visit um to take a look at the um the houses that are being developed.

Can you just share what your experience has been like thus far, how many properties you have developed in that area?

Um, and if you can perhaps give an update on the status of the properties if you're having uh success with selling the properties.

Yeah, of course, absolutely.

Um we have actually we've sold uh about 40 so far.

And we had heard previously that you basically would probably have to build them before people would buy them.

Uh we've actually been able to see the opposite, which is great, in that people are showing up uh and wanting to pick the floors and pick the cabinets and all of that.

Um there's obviously no shortage of land all over the city.

There's about 400 lots over here, you know, that are south of Kirchhoffville, 200 south of Kirchhoff, another 200 north of Kirchhoff.

Um and as long as people are continuing to be interested in buying them, uh, we're gonna keep building them.

So it is um it's been, you know, I mean, obviously the challenges of providing housing in the city of Detroit are pretty well known.

And I would say that the construction of new multifamily is more or less impossible, you know, without dramatic subsidy.

Um, whereas like the single family homes for sale like appear to be a good deal for the customer.

Um, and we can build them uh and sell them at a price that works and enables us to do more of them.

So we're yeah, you know, I saw the um new administration had announced ambitions of building a thousand over the next four years.

Uh you know, we're up for helping however we can with that.

You know, we've been sharing information, and um anybody whoever wants to come check them out, you know, I'm happy to show it off.

We think um we think they're great, you know, and um it's neat for Detroit to have new houses on offer uh because prior to us doing this, that really wasn't the case.

There was 19 single family home permits pulled in 2024, and I think we were half of them, you know, but 19 in a city of I don't know, 600,000 or something is is just really not much.

So um they were Detroit had only like 2% of the permits pulled in Wayne County, despite having you know 36% of the population of Wayne County.

And so obviously it's not super easy to do this, but we're we're here trying and we're gonna keep doing it uh as long as we can.

Yeah, thank you for that.

And we appreciate it.

I know um home ownership and single family housing options are um probably as it relates to new development, are kind of rare in the city.

Um now we're starting to see more vacant land being activated.

I wonder if um one, I was going to ask you about the ability to scale as you continue to develop, um, but also I'm interested in in knowing whether or not you've had any challenges with tapping into the utilities, which perhaps increases the cost um of construction.

Absolutely.

Uh I mean, it's uh we would make more money doing this pretty much anywhere else in the state, as far as I can tell.

Um but I think that like Detroit has a real opportunity to continue to be a city of ownership, you know.

Uh there were some interesting stats that I looked at recently, you know, which the percentage of dwelling units that were owned by the occupant in 1950 was about 45%.

And now it's about 55%, which is pretty cool.

So it's actually like ownership has actually gone up uh over the last 75 years, which is probably not what people would have thought.

Um and we're totally interested in continuing to try to do that.

And I think the big thing that is like the advantage of our product really is that with a new home, if you can qualify for the mortgage, you really shouldn't have to deal with anything else.

You know, like you've got new roof, new everything.

It's all new, you know, so there shouldn't be any expenses for 20 years.

And so even though that like the sticker price is more on the way in, you know, the actual like out-of-pocket expenses for people are much more predictable.

And so I I do think that that's like a key.

You know, our cheapest one, we can maybe get it done without a garage for like 300 325,000, which is expensive, you know, and we're not even making a sustainable margin on that.

But you know, the mortgage payment on that should be about 2300 a month, 2200 or 2300 a month.

And so if you've got a couple that are each earning 45 grand, you know, they can actually get a new home.

And I think that that represents like a really awesome opportunity for the city of Detroit to to kind of have people stay, you know, instead of having to go out somewhere else to get them.

So we are definitely interested in scaling.

You know, I've I have no interest in building one house or two houses.

It's like Detroit needs thousands and thousands if we can turn these vacant lots into like you know, tax paying, you know, you got occupants paying city income tax, you know, even abated, you know, the taxes that they're paying on these are property taxes are substantial.

And so I think this is really the key, you know, to from a housing perspective, helping the city continue to uh, you know, move forward and fix revenue gaps and all of that stuff.

That may have been a little long-winded.

I'm sorry, council member, but um I love this stuff, as you know, you know, it's like uh a passion project, and we've got solid oak floors and those things.

Councilmember McCampbell, like you haven't seen it, but our only non-negotiable was that they'd be beautiful so that the neighborhood would be proud and that owners would be proud.

And uh we've really made them super nice.

That was our goal.

Awesome.

Um, I I appreciate your passion.

It's um an area that I'm really trying to delve a little deeper into to figure out how we just make sure that um homeownership options, opportunities are accessible to everyone.

And so I look for look forward to furthering our conversation around community land trusts.

Um the last question I wanted to ask you is about the garages.

Are do people access the garage through the alley?

They do.

Yep.

All right, okay, thank you.

Thank you, Mr.

Chairman.

Sure.

And happy to help with, you know, on the community land trust front, you know, as I've I've mentioned before, I'm happy to share all of our information about build costs and what we think is possible and not, you know.

So we're we're here all the time and ready to help whenever.

Sounds great.

Appreciate it.

Thank you.

Of course.

Thank you, Vice Chair Johnson member waters.

Thank you.

Good afternoon, Mr.

Tempkin.

Good to see you.

Good to see you too.

So I thank you for mentioning the vacant parcels that we have here in this city.

Oh my goodness.

I know, I know.

There is no shortage of them.

Yeah.

There are so many.

I I wish we could just build build build today.

Um so do you encourage your um your uh customers to take advantage of our of our down payment assistance program at all?

We have suggested it.

We um I think that my understanding is I believe when I looked at this, there was a cap on like what the price of the home could be.

Um and I believe it was in my head for some reason it was like two, it was less than 225,000 or something like that.

And so I think the down payment assistance program, at least as I understood at the time, and admittedly, I don't know that I delved in too deeply.

I think it was more for existing homes.

Um like you basically can't build a new home.

Like our margin on the little one is not even sustainable.

It's only by mixing the types can we actually do little ones.

And so that was my recollection.

I'm up for obviously to the extent that it exists.

One thing that you'll like, we have we offer so we've got a couple thousand apartments in the city of Detroit, uh, nearly all of which are affordable below 80% AMI, and most of which are affordable below 60% AI.

Okay, and we actually just rolled out a program where any residents inside of our apartments can get a ten thousand dollar uh cash at close from us.

So basically equivalent to the to the program.

So the idea being that people could start by renting with us, you know, we've got studios that you can rent for 800 bucks, and if you get into the ecosystem and you manage to, you know, have a job and qualify for the home, we'll have 10,000 for you uh to help out with your closing costs and everything else.

So we're doing something similar, even if we're not able to take advantage of the uh the city program.

The other program, yeah.

Okay.

Well, that's that's really good.

So I know that I've visited your your uh development over on um Fisher and Kirchhoff area.

Uh do you have other developments in the um in the city?

Is that where uh or is it the majority of them happens to be right there in that area?

We're not building homes anywhere else.

Like obviously, again as you've pointed out, you know, there is no shortage, you know.

It's like um we would do it somewhere else.

We've got our work cut out for us here.

Uh what we've been up for is just kind of talking to other people who are trying to figure it out.

And I mean, ultimately, like we our hope would be I I mean it's it sounds crazy to say, but with the small number of homes that we have been able to sell, we I think are the largest home builder in the city of Detroit, which is absolutely nuts.

You know, but it'd be cool if we were that in there were thousands of homes getting built.

So we we certainly anticipate we want to do that, you know.

Like the goal is to figure out how to simplify the process, make permitting a little easier.

Uh, you know, right away DPW, like DWSD, those things are challenges, more than they are.

Like the infrastructure work that we need to do in Detroit is more than we would need to do in the city of Birmingham.

You know, and it's like homes in Birmingham are uh a million plus.

So there's that kind of stuff, but I'm optimistic that we can I you know, if we all just kind of keep working on it, I'm optimistic that we could get somewhere.

Um, so am I, Mr.

Tempkin.

And we have to continue to uh make improvements to our agent infrastructure, that's for sure.

So uh and thank you so much.

And thank you, Mr.

Chairman.

Thank you.

Of course.

Thank you, Murray Orders, and thank you, Mr.

Tempkins.

We'll definitely take you up on our offer to come visit us.

Please do.

Absolutely.

Um I would just say I I appreciate um being willing to accommodate uh those who may need further accessibility.

Um accommodations on the first floor.

It's good to see here.

Um I had a question on as we're talking about the as you are looking to do more.

Um I know these properties are zone are two.

Do you um have any plans to do uh any duplexes or two family homes um in building?

I would love to.

We we looked at it.

The the trick is you gotta figure out how to do it and not have it cost the same as just buying two homes.

You know, like for a duplex to be something that somebody will want to buy, it's basically, you know, if you want two people to buy, you know, one to buy a half and the other to buy a half, then they definitely need to be a big discount because I think signing up with a neighbor that you don't know for dual ownership is probably not a great recipe for success.

So I think in reality, what would happen is somebody would buy it and live in half and rent out the other half.

And what we've been trying to figure out how to do is get the cost down far enough that it could be economical for somebody to want to do that.

Um it's it's tough because you know, you got two kitchens, you've got double the bathrooms, kitchens, bathrooms are like the expensive things.

And so the answer is we'd love to figure it out because I think it's like a very cool housing type that exists plenty here, and also I think I don't know, I'm sure you, you know, at least in my universe, I see I feel like people are needing to make money three different ways.

You know, they've got like their main job, and then maybe they're driving Uber also, and you know, so if they've got their main job and they could be renting out the other half of their place, like that could be a good recipe for financial stability for that person in the future.

So we'd love to do it.

We haven't figured it out, unfortunately.

But you know, uh we it's it's definitely something we'd love to figure out in the future.

For sure.

Thank you.

Thank and thank you for that uh breakdown of it.

And yeah, you as you mentioned, I think, you know, trying to figure out how we make the cost of building um lower, but also how do we make sure folks get um their living living wages higher?

So something uh exactly that needs to happen as well.

You got a real tough situation here, you know, that we're dealing with, and um, and then taxes, of course, are you know uh make it even harder.

You add the highest property taxes to it, and you're like, okay, yeah, what are we gonna do?

But we're certainly working on those and looking at trying to bring the property taxes uh down for Detroit as well.

Um, I did have a question because I know um I know you have been working or saw a report that you have been working with tenants at the Sherwood Heights apartment.

Could could you just give an update on conditions there for folks?

Yeah.

Yep.

Yeah, totally.

Um yeah, I mean, uh Roger Turner, the president of the uh Sherwood Heights Tenants Association has become my good buddy.

Um we've been working hard at it for just about a year and a half now.

Um, and we have made very material strides on fixing issues at the property.

I mean, when we bought it a couple of years ago, uh things had kind of gone downhill a bit.

And uh there was like an interim owner that we bought it from.

And so we've been working hard to write the ship over there.

And if you ever want to get together with me and some of the residents over there, uh I do a monthly meeting um with everybody.

And um, I believe one of council member waters uh staff members actually popped into one of them, and uh I'd be happy to have you come by.

But no, things are heading in a in a good direction there, and um I'm I'm proud of it.

It's a lot of work, but you know, there's a lot of people that have lived there for a long time.

And uh just trying to help keep people uh keep people there.

Well, appreciate that.

And yeah, I saw in the report that you were even installing the light bulbs there yourself.

So I uh thank you.

It's true.

Yeah, and that's somebody's gotta do it, you know.

It's like uh we got all that fixed, and you know, we're figuring out landscaping.

Um, but the residents are just the best.

It's like you got people that have been there a long time, care about it, love the place, and so I'm just trying to do what I can.

My problem is that there's one of me, you know, and so I'm for trying to figure out how to build these houses, trying to figure out how to help people at Sherwood, you know, and so but good people keep showing up, and I'm optimistic that we can uh you know, keep solving it.

I would love to turn Sherwood into a 55 plus community.

We've been talking about that, because there's just not that here in Detroit, not enough of it anyway.

And um, the residents over there would absolutely love it.

You know, you got that stuff all over the burbs and all over the states, you know, but inside of the city of Detroit, there's just not that.

And um, so we've been talking about trying to do something like that too, because the seniors are gonna, you know, seniors need housing.

Absolutely, you know, and um, so anyway, things are going well is as well as they can be.

It's a challenging property because it's old, but things are I'm I'm very happy with what we're doing with the group over there.

Got it.

Thank you.

Um, and you know, looking forward to meeting with you.

And with that, I don't have any other questions.

Is there a motion on six point thirty?

Quick comment.

Yes, but thank thank you, Mr.

Chairman.

I just want to say that it seemed to me that you were addressing the lighting issue over there.

You know, we have lighting issues throughout the city, so it sounds like we have adequate lighting in in in the alleys and so forth.

That's what it sounds like.

Inside of where the homes that we're building.

Yes.

So actually, no, unfortunately.

So what we've done is we created um basically alley lights by putting motion sensor lights inside of the garages.

And so sort of as you drive down the alley, you know, it it pings on.

And so you'll have lights.

Yeah.

Um, it would be amazing if there was you know, I'll tell you, if there was ever a way to like fix alleys and all that kind of stuff, uh, it would be huge.

Um, you know, or sidewalks or or whatever, like we we have to do all we're doing as much as we can, you know, with that, but some of it is obviously beyond what we're capable of.

Well, that's great.

And the next time, Matt that we we talk, I want to discuss the senior village.

You know, I I I agree with that wholeheartedly.

I've been talking about that for a long time.

So that's my excuse to have another conversation with you now.

Let's do it.

I mean, then we can loop in some of the residents.

Do you want to hear that?

We had this group from U of M that was like running a I had a given them a research project, and you know, they basically analyze whether it could be done, and it's like we can, you know.

So we were talking about starting with a couple buildings and then maybe expand it.

So the residents are would love it, you know, and so just trying to figure out what we could do.

All right.

Thank you.

Thank you, Mr.

Chairman.

Thank you, Member Waters.

And you know, we do have to have a further conversation about lighting, especially in the alley.

We had the doing budget, and we will continue to have that.

Uh, with that, is there a motion on 6.3?

Motion to approve.

There's been a motion to send to form center formal with a recommendation to approve.

Any objections?

Seeing none, that action shall be taken.

Thank you, Mr.

Tempkins, and thank you, Mr.

Gulag.

Thanks so much.

Have a great day, everyone.

Take care.

All right.

That will move us along in the agenda just to under miscellaneous 6.4 memorandum from council member Santeo Gomero requests updates on the cost analysis and inspector trainers.

We've been asked to bring this back in two weeks.

Is there a motion?

Motion.

Seeing no objections, that action shall be taken.

Um 6.5.

This is a we know actually where here's what I'm going to do for 6.5.

In addition to 6.7 through 6.12.

Please bear with me just so we can do this.

Um 6.14.

And 6.16 to through 6.22.

These are all budget related memos, and as mentioned earlier, one to just make sure all these memos have been received and posted.

So if there's is there a motion to bring this back in one week?

There's been a motion to bring back in one week.

Seeing no objections, that action shall be taken.

That will move us on to 6.13.

Um this is a memo from member waters.

Um request for the audit on the Detroit Employment Solutions Corporation funding.

Um member waters.

Is there a motion to discuss?

Discussion.

Discussion, there's been a motion to discuss and member waters.

Oh, I know that we well, I don't think we have the information back yet, so we can bring it back in whatever LPD wants.

Uh LPD, do you know when we should expect this?

Like three weeks.

Mr.

Courley, do you want three weeks on this one for 6.14?

13.

13.

Thank you, Madam Chair.

I mean on the clock.

So Mr.

Chair, uh, please repeat that I'm so sorry.

I just wanted to defer to you all to see if you need us to bring 6.13 back.

Okay.

Um, so I'm I'm sorry, uh, custom member uh water.

So this is a request for LPD to address I guess it starts with LPD.

It doesn't have to.

Okay, all right, go to the department.

I don't care where it goes.

So let's here's what I'll do.

Let's bring this back in.

Um, since we will not meet in two weeks, if we can bring this back in three weeks, and then we could bring back in three weeks.

All right, we'll motion to bring back six point thirteen in three weeks, and then we could figure out who's gonna all right.

Thank you.

Yes, Mr.

Umman uh gave me a great idea uh you probably want to get the order in general involved as well.

Yes, okay.

Okay, maybe a memo sent to them or something.

Okay, all right.

We'll member what is got it.

All right, all right.

We'll take a look.

Thank you.

Yeah, and there's been a motion to bring back 6.13 in three weeks.

See no objections, that action shall be taken.

Um move us on to 6.15 since 6.14 has action has already been been taken on that.

Uh 6.15 from member Santiago Romero, a memorandum relative to the participatory budget expansion.

We've been asked to bring this back in two weeks.

There's been a motion to bring back in two weeks.

Seeing no objection, that action shall be taken.

And I believe that brings us to the end of the agenda.

Uh, do we have any member reports?

No.

Did I miss one?

All right, okay.

Mr.

Chair.

Yeah, Mr.

Crowley and then Madam Parliamentary.

Mr.

Croy.

Thank you.

Um line item on 6.6.

Did you take care of that?

I don't I don't have a notation.

Six point six.

Thank you, Mr.

Corley.

So line item six point six.

Thank you.

Um this is a memorandum relative to a building a free fare pilot.

This is also an item we've been asked to bring back in two weeks.

Is there a motion?

There's been a motion to bring back six point six and two weeks.

And no objections that action shall be taken.

I think I got all of them there.

Yes, all of the budget ones will be brought back next week.

I think that's it.

I think that is it.

All right.

All right.

Cool.

Thank you.

Any member reports?

Motion to suspend.

There's been a motion to resuspend member reports.

Seeing no objection, that action shall be taken.

Thank you all for bearing with us today.

Uh we will see you all soon.

Take care, everyone.

With seeing no further business before this committee, is there a motion to adjourn?

Motion.

No objections, this committee stood stand adjourned.

Thank you.