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Detroit committee delays approval of $30 million portfolio deal, asks for homeowner protections
Summary
The Internal Operations Standing Committee on April 15 deferred action on a proposal to sell a portfolio of judgments to DAC Management, asking law and public-safety staff for a full portfolio review and directing any city receipts be considered for a fund to benefit homeowners affected by prior overassessments. The item will return in three weeks.
The Internal Operations Standing Committee on April 15 heard a detailed presentation on a proposed transaction to sell or assign a portfolio of property-tax judgments to a third-party purchaser and deferred the decision to allow more review and protections for homeowners.
Conrad Mallett, corporation counsel, said the portfolio included judgments with a face amount exceeding $100 million and described an agreement under which DAC Management would pay $10 million upfront and up to $30 million in aggregate consideration tied to collections. "If they feel that this is a good deal for them, we would hold a closing. And at that point, they would pay $10,000,000 upfront," said Eric Gabo, who explained the purchaser's terms during the committee discussion. The committee heard that the $10 million payment would be split among parties and that additional collections would be shared under prearranged percentages.
Committee members pressed the law department and corporation counsel about who is represented in the portfolio and whether collections would primarily come from investment owners or single‑family homeowners who previously lost homes after being overassessed. The chair said she was “troubled” by the possibility the deal could further harm residents who already lost properties, saying the proposal "feels like it's at somebody's expense." Member Benson and others sought clearer data on how many affected properties were owner‑occupied Detroit single‑family homes.
Committee members secured commitments that the law department and LPD would provide a full, itemized accounting of the judgment portfolio — including enough data to isolate single‑family homes owned by city residents — and prepare a memorandum for the committee. The committee also asked the law department to explore mechanisms so any city receipts from the transaction could be placed in a separate trust or fund to help homeowners and retirees impacted by prior overassessments, rather than flowed into the general fund.
After extended questioning about collectability and timing, the committee voted without objection to return line item 9.3 in three weeks to allow staff to gather the requested portfolio details and analysis. The committee recorded no formal vote totals; multiple members said they preferred more information before recommending action to the full council.
The committee also received an overview from corporation counsel on prior contracts and mediation efforts, noting the case resulted in litigation when a private vendor changed course. "We thought we had solved the problem," Mallett said, describing follow-up steps. Committee members emphasized the urgency noted by the court but unanimously agreed that additional fact-finding for this body was appropriate.
The matter will return to committee after staff delivers a memo and the portfolio data requested by members; law department and LPD staff were assigned to help compile the report and the chair directed that the committee receive the full dataset rather than a piecemeal subset.
