October 19, 2007 at 1:00 am

Detroit News investigation

Detroit tax breaks meant for needy often are abused

Property tax exemptions go to well-heeled; Detroit hardship panel asks few questions, gets little oversight

Attorney Bobby Joe Frierson and his wife, Santranina, bought a $335,000 house in Sherwood Forest in 2003 with a $100,000 down payment and a $235,000 mortgage. That year, they sold two other houses for $310,000. In her application, Santranina said she was widowed. The $6,128 tax break is the largest the panel awarded in one year. (John T. Greilick / The Detroit News)

DETROIT -- A little-known city committee empowered to give property tax exemptions to needy residents has awarded tax breaks worth thousands of dollars to apparently well-to-do homeowners, a three-month investigation by The Detroit News has found.

In some of the most egregious cases, people who own multiple houses, drive luxury vehicles and live in homes worth more than $500,000 have been granted "hardship exemptions" by the nine-member committee, which is appointed by the Detroit City Council.

The Hardship Committee keeps no notes, meets in private, has no staff and conducts no investigations of applicants. It has granted more than 14,000 applications totaling $15 million in tax exemptions over the past seven years.

In many cases, the hardship claims are legitimate and have provided tax relief to people living well below the poverty line. But in other instances, the committee has taken the word of well-off residents who have pleaded poverty.

"This is very, very serious," Councilwoman Sheila Cockrel said Thursday. "Even if we have to take criticism, I'll do my part that this is dealt with."

Among The News' findings:

  • The program is intended for property owners whose income is below the federal poverty guidelines and with assets of $5,000 or less, but that requirement is routinely waived or ignored by committee members.

  • More than 300 residents who pleaded poverty drive luxury vehicles such as Cadillacs, Lexuses, Land Rovers and Corvettes. In five cases, people receiving exemptions had four or more cars; three had boats.

  • More than 100 either did not live at the homes for which they obtained tax breaks, or owned other properties as well.

  • 350 of those who received reprieves this year have gotten the breaks each year for the past seven. In some other Michigan communities with hardship programs, exemptions are capped at two consecutive years.

  • 70 senior citizens got tax breaks even though they had received reverse mortgages with an average lump-sum payment of $120,000. Those who get reverse mortgages make no payments on them until the homeowner dies, sells or moves.

  • More than half of the people who claimed they couldn't afford their taxes nonetheless met mortgage requirements -- many for loans worth more than the purchase price of their home.

  • While a home may be owned by several people, some applicants listed just the poorest owner. In other cases, only one owner was listed, and the wealthier party's assets weren't disclosed. One owner of a home in the Woodbridge Historic District, for example, lived in an $800,000 Bloomfield Hills condo and drove a Corvette; the co-owner and applicant, who lived in the home on Avery, earned less than $20,000 a year.

  • Tax breaks were granted to homes owned by five people who had been dead at least three years.

  • Since 2001, the earliest that records were available, to 2006, the number of exemptions has grown 139 percent. Of the 2,919 applications the city received from January through mid-May this year, just 17 percent were rejected by the board, according to city records.

    After getting wind of The News' investigation this week, the Detroit City Council scheduled a private meeting with its lawyers today to discuss the Hardship Committee.

    The tax exemptions, originally intended to help the needy save their homes, have never been audited.

    "We just have to go by what people tell us," said Mattie Johnson, 83, who has been on the committee for eight years. "We can't do any investigating."

    When asked how a person can afford to drive a Cadillac Escalade, yet be exempt from taxes, Johnson said: "Poverty is measured different ways. Just because you have a Cadillac doesn't mean you're rich."

    Representatives of the mayor's office are concerned by some of the tax breaks, but said their hands are tied. Detroit's projected deficit for the fiscal year that ended in July is nearly $70 million, according to a City Council estimate this month.

    "We have no say over who gets the exemptions," said Linda Bade, the city's chief assessor. "This is all City Council." The mayor has no say in appointing Hardship Committee members and he cannot veto any exemptions they grant.

    Lawyers to reveal findings

    Through the Freedom of Information Act, The Detroit News reviewed records of people who had gotten tax breaks, as well as their addresses and the amount of forgiven taxes dating to 2001. The city provided heavily redacted copies of a handful of actual applications; city attorneys said much of the information they contained -- such as household income and the number of people living at an address -- is personal and cannot be released.

    As part of the probe, The News also gathered information from county and court records.

    After The News requested city records, attorneys in the city law department began inquiring about the program, too. At today's closed-door meeting, the lawyers will reveal what they found, and outline the council's options for addressing those findings.

    Today's meeting was called by Councilwoman JoAnn Watson on Tuesday, a day after The News contacted her appointee to the Hardship Committee, Roslyn Trotter, to ask how Trotter's attorney, Bobby Joe Frierson, ended up with a $6,128 tax break on his $335,000 home in Sherwood Forest -- one of the city's most fashionable neighborhoods. Its previous owner was ex-Detroit school superintendent Eddie Greene.

    Frierson is representing Trotter, a Detroit Institute of Arts board member, in a civil case.

    Bobby Joe Frierson's wife, Santranina Frierson, got the exemption after she made a sworn statement to the Hardship Committeethat she was widowed. But Bobby Joe Frierson, who is listed as Santranina Frierson's husband on their mortgage documents and property deeds, is not dead. He was in Wayne County Circuit Court on Oct. 12, representing Trotter.

    Trotter was one of two Hardship Committee members who approved the exemption for Frierson's home. Neither Trotter nor the Friersons returned repeated telephone calls seeking comment.

    The nine members of the Hardship Committee break into teams of three to evaluate whether a person will get an exemption; two votes are needed.

    In 2004, Karla Harper bought a $160,000 home in the 14000 block of Rutland, putting down 10 percent and borrowing the rest. Later that year, she briefly shared ownership of the property with Sean Tidwell, who continues to register a business to that address. Tidwell characterized the transaction as inadvertent and described Harper as a friend.

    Later, Tidwell was appointed to the Hardship Committee by Councilwoman Martha Reeves. In 2006 and 2007, Harper applied for and was awarded a $5,657 tax break by the committee, although Tidwell did not vote on her application. Tidwell said Harper, who did not return phone calls, has been sick in recent years.

    Home 'is all I have'

    In 1980, the Michigan Legislature passed a well-intentioned law giving communities the discretion to temporarily suspend property tax bills for homeowners with incomes at or below the federal poverty level. Today, that benchmark is $20,650 for a family of four.

    Leomy Smith, 74, is almost certainly the kind of person lawmakers had in mind.

    Her home on Parkside in Detroit's University District, which she has owned since 1978, "is all I have, even though it's the worst house in the block," Smith said.

    Her storm door is broken, the blinds are torn, windows are cracked and the mail slot has been mangled. There is little furniture in the home that Smith shares with her unemployed daughter, two teen-aged grandsons and a mentally disabled nephew.

    "If I didn't get it (the exemption) I'd lose my house and I don't know where I'd live," Smith said.

    Her tax break, which she has been receiving since at least 2001, is worth $4,800 a year. Her annual income, she said, is under $8,000 a year.

    A Kenilworth exemption

    Pia Robertson's case isn't so clear. Robertson drives a 2006 Land Rover and owns a home in the 300 block of Kenilworth with an above-ground pool and a television satellite dish. She was awarded a $4,413 tax break in 2006, and says she deserves it.

    "I'm needy," Robertson shouted as she walked out of her home and rode off in a 2007 cream-colored Escalade with temporary plates.

    Robertson, who earned a degree from Wayne State, bought the house for $60,000 in 2003 with a $6,000 down payment. In 2005, she paid off the home loan, took out a new $100,000 mortgage and got the tax exemption the next year.

    "I don't have to explain anything," Robertson said when asked why she couldn't pay her taxes.

    Her neighbor, retired cafeteria worker Meredith Kominsky, 77, is puzzled by Robertson's tax break.

    "There is no way this is fair," said Kominsky, who pays $1,000 a year in taxes.

    She believes taxes are high in Detroit -- and at 69 mills, they are -- but says paying them is a part of civic responsibility.

    "I could use the extra $1,000 a year to buy me some extras, but that's my duty," she said. "I get police protection. I get my street cleaned. I get my trash picked up. That stuff ain't free."

    City Council's role

    Until sometime in the 1980s or 1990s -- no one seems to know, exactly -- the Detroit City Council vetted hardship applications itself. But it handed that duty to the committee, whose members are paid $200 per meeting.

    Other Michigan communities imposed restrictions on hardship exemptions, such as limiting the number of tax-exempt years; capping the value of homes that can be exempted; and setting a ceiling on the assets that an applicant can have and still get an assessment.

    But in Detroit, City Council oversight of the process is lax and the definition of who should get a tax exemption is vague. The applicants' income threshold is routinely waived, and unlike other communities, Detroit does not set a maximum limit on the value of homes seeking tax forgiveness.

    The most expensive home pardoned from the tax rolls during the period reviewed was in 2004 -- a mansion in Detroit's upscale Palmer Woods neighborhood that sold in February 2005 for $525,000.

    According to Detroit's application guidelines, a property owner may have assets, in addition to the home, of no more than $5,000. But in their notarized applications, many property owners failed to list additional homes, vehicles or cash they received from reverse mortgages, home equity loans and other financial instruments.

    Jasper and Constance Williams, who live just north of New Center in a run-down brick home, did not report that they owned a rental home on the west side. They drive a late-model Escalade and a Cadillac STS.

    Oscar Lucas, the 76-year-old owner of home in a an upscale section of West Outer Drive, did not disclose he had gotten a check for $247,500 in a reverse mortgage for his home -- money that only must be repaid if he moves or dies. He slammed the door on a reporter asking about his tax break.

    Charleszetta Lynn Cotton, 53, lives in a well-maintained, 4,000-square-foot, three-bath home on Atkinson in Boston-Edison. Since 2003, she's gotten tax breaks totaling $15,268.

    She says looks can be deceiving. "I'm entitled to help when I need it," said Cotton, explaining that she was laid off from her job at General Electric in 2000 and can't work due to asthma.

    "I'd lose this house if I didn't get the break."

    Cotton shares the brick home with her husband, Tyrone, 46, and her daughter, Jamayea Cheeks, 32. Neither works, Cotton said.

    On her 2007 application for the tax break, Cotton wrote that she was separated from her husband and didn't know where he was.When a reporter stopped by this week, her husband -- who she said can't work because of a bad back -- was in the living room, watching a wall-size color TV.

    She said she and her daughter together lease the 2005 Chrysler Pacifica in their driveway.

    Cotton said ongoing renovation projects were accomplished by getting contractors to install materials she found on clearance at Lowe's.

    "We're struggling. I still have funeral expenses from when my sister died in January," she said.

    Council President Kenneth V. Cockrel Jr. said Thursday he is "concerned" about the Hardship Committee's work and the questions raised by The News' investigation, but added there was little he can say pending advice from the city's law department and the possibility of a criminal investigation.

    "We're committed to finding out all the facts," he said.

    You can reach David Josar at (313) 222-2073 or djosar@detnews.com">djosar@detnews.com.

    Of those receiving tax breaks:

    302 drive luxury vehicles.
    100 did not live in the homes or own multiple dwellings.
    5 have four or more cars.
    3 have boats.

  • LaMarco and Arlena Triplett bought a $169,000 Corktown condo in 1999. They ... (John T. Greilick / The Detroit News)
    Pia Robertson bought her home, which has an above-ground pool, for $60,000 ... (David Josar / The Detroit News)
    Karla Harper, 30, bought a brick house in Rosedale Park for $160,000, ... (David Josar / The Detroit News)
    Oscar Lucas, 76, bought his 2,100-square-foot house in 1967 for $35,000; ... (John T. Greilick / The Detroit News)
    Leomy Smith, 74, is certainly the kind of person lawmakers had in mind ... (John T. Greilick / The Detroit News)