Update: Smells Fishy -- Two Demolition Contractors Sit on Detroit's Wrecking Board

July 09, 2018, 12:14 PM

Update, 12:09 p.m. Monday: The mayor's office responds to the Detroit Free Press story, describing it as misleading because an ordinance requires that two licensed contractors sit on the Board of Examiners for Wrecking Contractors, and the board has no say over contracts.

The full response is below.

Original article, Monday morning:

Optics matter in government.

Two contractors sit on a Detroit board that awards wrecking licenses, which raises clear conflict of interest questions. Those insiders see potential competitors' proposals during the application process, reports Katrease Stafford of the Detroit Free Press. One of the contractors is currently suspended from bidding in Detroit's demolition program.

Richard Adamo, the owner of Adamo Group, and Michael Farrow, owner of Farrow Group, sit on the seven-member Board of Examiners for Wrecking Contractors.  The remaining members include employees of the Buildings Safety Engineering Department, Detroit residents and an engineer.

Adamo is the largest contractor in Detroit's demolition program and has received more than $40 million since 2014 in federal Hardest Hit Fund money, the Freep reports. Farrow, who has not bid on any work in nearly a year, has received about $2.6 million in contracts. 

"Someone who's bidding and also has some say as to who the competing bidders are — that's a classic conflict of interest," Wayne State University law professor Peter Henning tells the Freep. "Even if you try to do the best job you can, whoever gets the contract could be taking money out of your wallet. Typically, you would have people that don't have any interest in the underlying contract or agreement or whatever it is."

Mayor Mike Duggan's office reacts:

The piece gives the false impression that 2 members of a 7 member ADVISORY board, required by a 40 year old city ordinance, have the power to deny qualified contractors from getting a wrecking license. This is simply untrue.

It goes on to include a quote from Councilmember Roy McAlister stating “If you’re involved in the advisory of who gets licenses and then you’re part of the bidding to get contracts, you know everything you have to in order to get the contract”. The Councilmember appears to have been misinformed as this is incorrect. Below are the facts:

The Board has no role in the review or the award of ANY demolition contracts and does not have the power to deny any qualified applicants from obtaining a wrecking license.

The board does NOT determine who gets a wrecking license. Detroit ordinance 290-H, approved in 1978 by Detroit City Council and remains unchanged, outlines clear requirements. The Building Safety Engineering and Environmental Department (BSEED) STAFF review all applications to ensure each applicant meets the standards outlined in the ordinance. Those that do not meet the legal standards are denied by BSEED. The 7 member board simply administers an oral exam and makes a recommendation to the director based on that exam, but they CAN NOT deny qualified applicants.

Stafford’s story questions why two wrecking contractors are on the board. The answer is simple. The ordinance requires it.

The city ordinance requires the board must include “2 LICENSED wrecking contractors”.  The ordinance does not bar wrecking contractors who do work for the City of Detroit from being members of the board. And there’s no conflict of interest because they do not solely determine who gets a wrecking license and have NO role in the award or bidding of demolition contracts. The board simply provides recommendations to the director of BSEED.  The board is also made up of 5 other members, including 2 Detroit residents, 2 members of BSEED staff, and 1 professional engineer who is also a BSEED employee.

The Freep story provides no examples of qualified applicants who have been unfairly denied a wrecking license based on the actions of this board during the Duggan Administration.

The Free Press and reporter Katrease Stafford are using an ordinance approved by Detroit City Council 40 years ago, that every mayoral administration has been required to follow for the last 40 years, to create an air of impropriety despite the fact that they found no evidence of the City doing anything but following the law.

Read more:  Detroit Free Press

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