Detroit land bank to pay $5 million in demolition probe settlement

Detroit's land bank has reached a deal with the state, agreeing to pay a $5 million settlement over invoice disputes - but the city's demolition program is still under scrutiny by federal agents.

"The land bank and the city have reached final settlement with the state of Michigan for all financial issues relating to demolition contact," City of Detroit Mayor Mike Duggan said.

It's the result of a six month state investigation into the demolition program's finances.

"They released the conclusion of that report in January of this year and indicated they thought there was $7.3 million in potentially inappropriate expenditures under state and federal regulations," Duggan said.

The city agreed to pay $1.3 million but disputed the other $6 million which ended up in arbitration for resolution

"I didn't believe then and I don't believe now that there was anything inappropriate about that $6 million," Duggan explained.

He spelled out the terms of that resolution during a press conference Thursday.

"The city will pay $5 million to settle that in exchange for the state to put $5 million in additional demolition fund. Our agreement says we had to pay the state's investigative fees even if we won the arbitration, we had to pay the investigation fees. That costs us $2.4 million," he explained.

Duggan says this situation has provided many lessons and changes have been made, but the demolition program will continue.

"The demolition program in Detroit is moving full speed forward and we have the funding to take down between 7,000 and 8,000 additional houses by end of 2018," Duggan said.

Now that the city and land bank have reached a settlement, it is speculated as to what this could mean for the federal investigation.

"I was a prosecutor. Prosecutor's follow evidence whereve it goes. The state investigation information has been provided to them, so I'm encouraged by the fact that we were able to settle in what I feel are fair terms on both sides," Duggan said.