Detroit owes refunds to overtaxed homeowners

Detroit owes refunds to overtaxed homeowners


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Housing advocates on Wednesday evening called on Gov. Gretchen Whitmer and local leaders to investigate inflated property taxes in Detroit and provide options for over-assessed homeowners to get a refund.

The Coalition for Property Tax Justice — which held an online convening — called on Detroit Mayor Mike Duggan to create a fund to compensate overtaxed Detroit homeowners, Wayne County Treasurer Eric Sabree to stop foreclosing owner-occupied homes until the city fixes what the group calls “systemically illegal property tax assessments,” and Whitmer to order the State Tax Commission to investigate tax assessments.  

U.S. Rep. Rashida Tlaib, D-Detroit, Cornel West, and Rev. William Barber II joined the conversation, which drew more than 600 online viewers, and was capped off with a performance by The Clark Sisters. 

“We have a situation in Detroit where unconstitutional property tax assessments are rapid. They lead to illegally inflated property taxes that Detroiters cannot afford to pay, which has led to foreclosure rates we haven’t seen since the Great Depression,” said Bernadette Atuahene, a professor at Chicago-Kent College of Law who has studied overassessment in Detroit, and the leader of the Coalition for Property Tax Justice. 

Wayne county’s majority Black municipalities — Detroit, Highland Park and Inkster —have a higher foreclosure rate than mostly white localities, Atuahene said, citing her own 2018 research.  

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“We categorically disagree with the assertion that homes are being over-assessed based on what we have been able to examine in terms of appeals that people have successfully done,” said Detroit Deputy Mayor Conrad Mallet, adding that “the state tax commission was overseeing our work and left in 2017, because they were confident that we were proceeding in exactly the expected manner.”  

As for advocates’ demands to compensate Detroiters who have been overtaxed, Mallet said “we do not believe that, within the fundraising capability that we have, creating a technically difficult to administer fund that looks back is going to have the same positive effect as the funds that we are trying to raise money for that looks forward.” 

The virtual event marked the launch of #BlackHomesMatter, which organizers are calling a movement to end racialized property tax administration across the country. West, a professor of the practice of public philosophy at Harvard University, said “you can’t talk about Black Lives Matter if you’re not talking about Black homes mattering.” 

Protests across the country for Black lives must lead to policy change that improves Black lives, including housing policies, Tlaib said. 

“This is a national crisis but think about it, this if anything is showing you just how broken these systems are and they’re set up against communities of color like ours,” Tlaib said. 

Detroit City Council in November rejected a proposal by the Duggan administration to offer over-assessed homeowners a 50% discount on city-controlled vacant properties and move those homeowners to front of the line for affordable housing and applying for city jobs. Under the mayor’s proposal, anyone who owned a home in the city and lived in it as a primary residence between 2010 and 2013 would have been eligible, which amounts about 130,000 residents. 

The Coalition for Property Tax Justice said the proposal was insufficient because it did not offer financial repayments and left out homeowners who were overtaxed before 2010 and after 2013. Duggan’s staff at the time said the roughly $6 million plan was the most “fiscally responsible” way to correct past mistakes made by the city’s assessor. 

Michigan law prohibits municipalities from assessing any property at more than 50% of its market value. If the market value of a house is $100,000, local authorities cannot assess the home for more than $50,000, Atuahene said. 

Research published in 2018 from the University of California Irvine found that Detroit over-assessed 53% to 85% of residential properties between 2009 and 2015. A separate study in February from the Center for Municipal Finance found that Detroit was over-assessing most of its lower-value properties — homes priced below $19,000 — between 2016 and 2018. 

The city in 2017 completed a citywide reappraisal after the State of Michigan placed Detroit’s assessment division in 2014 under state oversight for mismanagement. 

A federal class action lawsuit filed last year claims the city was late in delivering more than 260,000 residential property tax notices in 2017, leading to inflated property tax bills issued in recent years. Defendants in the lawsuit include Duggan, Wayne County and state tax officials.

The city overtaxed homeowners by at least $600 million between 2010 and 2016, a Detroit News investigation reported last year. More than 92% — of the 173,000 Detroit homes reviewed — were found to be overtaxed by an average of $3,800. 

The number of tax foreclosures in Detroit hasdropped in recent years. Detroit’s foreclosures went from a high of 9,111 occupied homes in 2015 to 514 in 2019, according to city data. 

Free Press staff writer Christine MacDonald contributed to this report. 

Nushrat Rahman covers issues related to economic mobility for the Detroit Free Press and Bridge Detroit as a corps member with Report for America, an initiative of The GroundTruth Project. Click here to support her work.

Contact Nushrat: nrahman@freepress.com; 313-348-7558. Follow her on Twitter: @NushratR. Sign up for Bridge Detroit’s newsletter. Become a  Free Press subscriber. 

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