Owe and behold

At the risk of looking like complete numbers geeks, News Hits wants to draw your attention to a couple of $20 million-plus debts involving the Detroit Housing Commission.

The commission was taken over by the U.S. Department of Housing and Urban Development in July, following what the feds called decades of mismanagement. Before that takeover, there was a dustup going on between the City Council and Mayor Kilpatrick over $22 million that the commission owed the city. Back in 2003, the Michigan Supreme Court declared the commission and the city were really separate entities — which meant the commission owed the city $18 million for payroll and pension services, along with other, more mundane functions like electricity and snow removal, that the city had been providing. After the ruling, the city was no longer handling the DHC’s payroll, but the commission continued to enjoy electricity and plowed parking lots on the city’s dime, to the tune of $4 million.

Kilpatrick decided to write off the $18 million debt, but council members claimed only they could make such a decision. That dispute left the status of the debt in limbo. (The question of what to do about the $4 million has yet to be addressed by Kilpatrick or the council.)

Before July, writing off the debt seemed reasonable, because recouping that money from the cash-strapped housing commission seemed about as likely as the commission offering pillow mints and turndown service at its properties. And, as council fiscal analyst Irvin Corley Jr. points out, keeping an uncollectible debt on the books throws off accounts.

Then HUD took over the department, and another piece of information came to light. According to a 2003 management review, the housing commission owed HUD $21 million in mismanaged funds, namely from mismanaged Hope VI grants for two developments dating from the 1980s.

Initial reports said the city, already struggling to fill a budget gap, might be on the hook for repayment of that debt.

So, there’s good news, and there’s bad news.

We’ll give you the good news first: HUD spokeswoman Donna White says the $21 million was whittled down to $8 million after HUD re-evaluated the reports. Even better, Detroit’s not liable.

The commission is solely responsible for the $8 million, White says, thanks to that nifty Supreme Court ruling, and is working out a payment plan to clear that debt. Of course, if repaying that money means less help on the local public housing scene, that hardly qualifies as good news, does it?

The same can be said for the $22 million the commission may or may not owe the city. Of course, the money is badly needed in a city that’s bleeding red ink. But does anyone really want to see that money taken from public housing coffers?

“We understand that there is a disagreement with the mayor and City Council as to whether it’s still owed,” White says.

That debt will be evaluated, she says, as part of HUD’s financial assessment of the housing commission’s situation. She couldn’t say when that assessment would be complete.

The good news about the bad news is that HUD has slightly more money than the DHC. But when asked what the likelihood was of the city seeing that $22 million, White declined to answer: “I don’t like to make suppositions.”