LeDuff: Bing pal Emmett Moten $4M behind on loan from Detroit - New York News

LeDuff: Bing pal Emmett Moten $4M behind on loan from Detroit

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Emmett Moten and Detroit Mayor Dave Bing Emmett Moten and Detroit Mayor Dave Bing

"Just because a contractor or friend that's influential wants to meet with you to cut some kind of deal, that's the worse thing that I think can happen because anytime that the public loses its trust in the leaders of the city, you can only go downhill," Detroit Mayor Dave Bing told Fox 2's M. L. Elrick in March.

Bing should have taken his own advice because not only does he have a big public scandal brewing, he is being looked at by the FBI.

First let's go back a little.  A few weeks ago we named Bing's longtime friend, Emmett Moten, Detroit's "Deadbeat of the Week."  He owes the city nearly $200,000 in back property taxes on his downtown hotel -- the Fort Shelby.

It turns out Moten is also $4 million behind on a loan he took out with the city.

Back in 2008, the city borrowed nearly $19 million from the federal Department of Housing and Urban Development and lent it to Moten to redevelop the hotel.  This is known as a Section 108 loan.

When developers like Moten, and there is a handful of them in Detroit, don't make payments on those loans, HUD simply takes it out of another pot of federal money, grant money they give to the city to refurbish the neighborhoods -- money designed for things like playgrounds and demolishing dangerous buildings near schools.

So if the city doesn't watchdog these loans, it is an easy way to give rich people money intended for the poor.

Now Moten is not just any old developer.  He is a longtime pal of Bing.  What's more, Moten is the campaign treasurer for the Committee to Elect Dave Bing, as well as the treasurer of Bing's political action committee.  Where is that headquartered?  At the Hotel Fort Shelby.

Enter Dave Bing.  In 2010, his office drafted a secret letter to Moten, even misspelling his name.  It says, in part, "This letter will confirm certain understandings and the willingness of the City of Detroit to forbear from declaring a default relative to the loan by the City to the Fort Shelby Hotel, LLC."

Wait it even gets more ridiculous.  "We will continue to work with you to develop a plan for repayment that is realistic and acceptable to both.  You're specifically authorized to share his letter with your lender."  It was signed by Karla Henderson, group executive for Planning and Facilities.

"The city doesn't always do as good and as aggressive a job of collecting as it ought to, but in my experience, I've never seen a letter like this be issued.  This is a first for me.  So I'm not saying there's wrongdoing here, but I am saying that it's highly unusual, and I think it merits a closer look," said Detroit City Council Member Ken Cockrel, Junior.

So let's break this down.  Bing's pal, Emmett Moten, gets a nearly $19 million loan to redevelop the Hotel Fort Shelby.  He can't make the payment, so Bing's people write him a letter saying don't worry about it right now.  But the loan is not in default.  Somebody is paying the note.  Who could that be?  You Detroit.

"What about the city loan from the HUD money to develop this place [the Hotel Fort Shelby]?" I asked Moten.

"That's being paid over the next quarters," he said.

After nosing around and asking a few questions, I received a letter from City Hall late Thursday afternoon.  It turns out that the city now wants to talk to the hotel about making payments on that loan, and let's hope they also discuss repaying the federal money we fronted him, stuff that's supposed to go for children and their neighborhoods.  And if they can't get a deal done, according to the letter, the city is going to sue Moten.

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