This article is part of The Low-Rent Trap, a series about the city’s largest provider of affordable housing. Read other stories in the series here.
Multiple developments owned and controlled by the Detroit Housing Commission (DHC) have been failing property inspections since at least 2019. An investigation by Outlier Media uncovered the scope of these conditions, which could mean tenants in hundreds of DHC apartments and homes are being forced to endure issues like flooded basements, no hot or running water, broken windows and roaches and mice.
The mandate to inspect properties every year comes from the U.S. Department of Housing and Urban Development (HUD), which also provides funding to the DHC. An appointed and local five-member board oversees the finances and DHC staff.
The person responsible for all of the DHC’s biggest decisions is the CEO, Sandra Henriquez. Henriquez was hired in 2019 after a long career in public housing. She had previously served as administrator and CEO of the Boston Housing Authority and as assistant secretary for the Office of Public and Indian Housing for HUD under President Barack Obama.
We spoke with Henriquez earlier this month about the poor inspection performance of DHC properties and related topics like the plan to add properties to the DHC’s portfolio, funding struggles, management and much more.
This article has been edited for length and clarity.
Outlier Media: Let’s start with inspections. A number of DHC properties receive failing scores (Editor’s note: a failing score is 59 or below out of 100 points). Why have so many failed inspections since 2019?
Sandra Henriquez: I would start by saying that we’re aware of what the scores are and what they were. When those inspections get done, we look at emergency conditions on health and safety. Those then go back to the site and the site has to make sure they provide immediate correction generally within 24 to 48 hours.
In the meantime, people are still going through required training on NSPIRE protocols, as well as other inspection protocols. It is our goal to inspect all of our units every year. In fact, we’ll probably start out doing two inspections a year to get back into the routine of doing them, so that residents expect them as well.
I would say we are building this organization, or rebuilding this organization, from the ground up. And by that I mean, whatever systems may have been in place before seem to not be existent or being followed. We want to make sure that we have put the right systems in place, do the right training for people, and make sure that they are held accountable for the work they perform. Inspections really are a hallmark of that. I believe that if the inspection protocols are followed and the work is performed, in a not-too-distant amount of time the quality of our units will continue to improve. It’s something we just need to get better at.
You did inspections in 2021 and they showed a lot of issues, with 13 of 15 properties failing. Did you take corrective action after those scores were returned?
Yes. After each time those scores came back at each property work orders were created, work was done, and those work orders were closed out. And each property manager and maintenance team had to confirm that the work got done.
Have you gotten any metrics back since those 2021 inspections to indicate the work you’ve undertaken has made a difference in those scores? What are you anticipating for the 2023 scores? (Editor’s note: The last HUD-monitored inspections were conducted in 2019 and will be resuming this year.)
Well, let me go with the easier one. I think that the 2023 scores are going to be better. And the reason I think that is because, one, we’ve done a number of capital improvements across the board in our public housing developments. Number two, we’ve taken care of a number of issues, like tripping hazards and parking areas and sidewalks, that lowered the score in a number of locations. I also think that because we are and have been training people more and holding people better accountable, we will see the difference in improved accountability, productivity, and work being performed. So I do expect that those scores will be better.
The Diggs Homes are in particularly bad shape and have gotten failing scores for years. They got a 16 out of 100 on those 2021 inspections. What is the plan to fix up that property?
One of the things we’ve been talking about since I came on board was how we get enough capital into the DHC to do the kind of wholesale upgrades we need at all of our properties. It is a multi-million dollar operation. You’re never going to catch up unless you get hundreds of millions of dollars of capital infusion.
At some point, it all catches up to you and your portfolio starts to lose its ability to stay current with the needs of the property itself. Diggs is one of those, like all of our properties.
I will tell you that Diggs was initially not well-built. The ways in which it was constructed were inappropriate. So the task before us is to get enough cash into the property to fix it and to fix it well. If not, what do we do with it? We’re in the midst of trying to talk about that now.
There are, to my knowledge, 26 units at Diggs that are going into capital construction. Those 26 townhomes will get totally refurbished. The team has been tasked with putting together what the plan is for inspecting all the units, figuring out what needs to happen in those units and moving that plan of action forward.
What do you think the DHC’s capital needs are?
That’s a good question. We’re just finishing up a capital needs assessment. If I were to take a guess at every property coming up to state-of-the-art roofs, windows, building systems, electrical, plumbing, all of that, and the interiors of those units being upgraded, I bet we’re talking a billion dollars or more.
I mean, it’s a huge, huge number. We’re finding out right now that the bids we’re getting now are one and a half to three times higher than they were pre-pandemic. Some of those costs are coming down but they’re not coming down to pre-pandemic levels. If you think about what it costs to develop one unit of affordable housing or any housing in the city of Detroit right now, it’s running about $300,000 to $350,000 per unit. You times that by the number of units we’ve got and you can see how much money it would take to redo everything as if it were new.
Let’s talk about occupancy at your buildings. The goal, according to HUD, is 96% and the national average is a little under 95%.
And we’re below that.
I believe you’re at 78%. Why does the DHC have so many vacant units?
I think we have a lot of vacancies because we just have not been aggressively getting those units back online. I think that’s changed. I admit we have to do better. We have to do a whole lot better. We have to expect it from our privately managed properties because they too are not at 96%. We just bid out those contracts for the first time since before I started. But, I’m not proposing to hold a private company to a standard that I’m not willing to hold us to. There’s no excuse.
A number of residents we talked to were also upset about the pace of work orders getting completed. Several people told us that repairs took months or didn’t get resolved at all. How would you assess the DHC’s property management?
I should never hear about unfinished work because it’s the manager’s responsibility to resolve it as quickly and completely as possible. But I do know that when people have raised issues to me, I’ve made sure that they’ve gotten dealt with. Now, that’s not how your system is supposed to work. But I’ll take it in order to get people accommodated until somebody at a site figures out how not to have that happen by doing the work that needs to be done and being able to prove that the work has gotten done.
The people you might have talked to haven’t been knocking on our door. I mean, they probably thought they were doing the right thing. They are supposed to call the manager at their site. Our systems are lax in that regard. HUD’s moving to a new inspection system called NSPIRE. We’ll be implementing this new system on July 1. That system requires a deeper level of accountability.
Again, we need to do a whole lot better. You know, I’m not going to throw my staff under the bus. But, we just need to make sure that we are doing what we’re supposed to be doing the right way. And I can’t sit here in front of you right now and say with 100% certainty that we’ve been doing all the right things and crossing all the t’s and dotting the i’s. I’m not going to say that.
I want to talk about your plans for buying and rehabbing multifamily buildings. (Editor’s note: The city is looking to sell the DHC up to a dozen buildings as part of Mayor Mike Duggan’s affordable housing plan.) I know these are smaller properties. But do you feel like adding to your portfolio is the right thing to do considering some of the struggles you’ve had maintaining your current properties?
I think the right thing for us to do is to create more affordability in the neighborhoods. Because if we don’t do it, who will?
I do agree that we haven’t learned to crawl yet. So why would we try to run and add more to the portfolio? I do think by the time these units come on board and we get this all done, we will be at a point where our property management skills will have improved significantly. And it will make sense that these will just fold right into our portfolio.
There has been no decision about how they’re going to be managed yet. We haven’t decided whether we’ll do it or put them out to bid to be privately managed. But regardless, they will be managed at the standard we want. We want to bring on properties and manage them at the standard of 96% occupancy and at a 3% rent collection loss. Those are just good real estate practices that you would find in any deal.
As an organization, we must start thinking of ourselves as a business, not a public housing business, but a real estate property management business. We are mission-driven, but if we can’t run it like a business, we can’t serve the mission.
I want to give you an opportunity to talk about your time here at the DHC and what you consider your biggest accomplishments to be.
What intrigued me about coming to Detroit was that when I was at HUD, this was the city I visited almost more than any other place — probably five or six different times. New Orleans was a little bit more. At the time, HUD was the administrative receiver for those two agencies. (Editor’s note: HUD put the DHC into receivership in 2005 and managed it for a decade due to its rundown housing, poor accounting practices and chronic mismanagement.) And part of what I had set my sights on doing was getting them out of administrative receivership since New Orleans had been in for more than 20 years and I don’t know how long it had been for DHC. But every time I came back here, it felt different in a good way. Like something was happening here. There was something going on in the city. So when I saw the ad for executive director, I was intrigued because the board was looking for someone to do development and be innovative. And I looked at some of the reports before coming and I went, ‘Oh, this is telling a different story than what I’m hearing.’ But I thought, it’s a challenge. I’m probably a little too old and cranky to challenge these days, but I like a challenge and I thought everything we could do here would be reforming the organization.
I will say that it has been much more difficult than I had thought it would be. I still think that we’re on the right track. We’re headed in the right direction. We’re making decisions for the right reasons. I think that’s really important. I do think that there is some resistance in the rank and file. But I think we’re dealing with those issues. We’re putting systems and policies and procedures in place where we’re building that foundation. And we’re really trying to get to a sense of urgency and immediacy. Do it well the first time, and follow up and follow through. It’s all about customer service.
I’ve given myself until the end of this calendar year. I want to see how much we can accomplish in the next six or seven months moving forward. It won’t all be pretty. It won’t all be fixed. I think issues of financing and funding are always going to be a struggle. We won’t have those nailed down. But will we have the fundamentals about property management and service delivery and customer service? I believe we will.
Listen to the entire 90-minute conversation with Sandra Henriquez: