February 8, 2011 at 4:42 pm

Wayne Co. plan targets real estate speculation

Detroit — A Wayne County commissioner plans to introduce legislation today intended to combat land speculation by banning tax delinquents from buying property at county tax auctions.

Commissioner Bernard Parker, D-Detroit, said the proposal is "the direct result" of last week's Detroit News investigation into Detroit's major property owners, many of whom live outside the city and built their portfolios buying tax-foreclosed parcels for as little as $500 apiece.

"It will make them think twice about buying properties and not doing anything with them," said Parker, who plans to introduce the ordinance at the noon Ways and Means Committee meeting. "We want someone who is really interested in doing something with these properties."

The News' investigation found that 10 investors own more than 5,000 parcels in the city, and owe back taxes on some of their properties.

Legal questions already surround Parker's proposal, which he said could end a vicious cycle that has some parcels flipping from investors to the county and back because of unpaid taxes. The ordinance would bar those who are more than two years delinquent from participating in fall tax auctions.

By law, parcels with unpaid taxes for three years revert to counties and are sold at auction. Last fall, Wayne County set a record for volume, selling more than 4,300 properties for about $15 million to investors worldwide. Most of the parcels were in Detroit.

Antoine M. Hayes, who bought more than 400 properties in October with several partners, said the proposal won't work, despite its good intentions. Hayes predicted that investors who owe taxes will form new companies to buy properties.

"In the end it will motivate individuals who are unscrupulous to continue to be deceptive," said Hayes, the chief operations officer of Benjigates Estates in Lathrop Village.

Hayes said Parker's proposal would punish investors who buy land from the county and sell them on land contracts. It also won't address an influx of out-of-state buyers that some observers say contribute to a cycle of blight.

"You can legislate us to death, but a crook is going to steal from you anyway," Hayes said. "It's just a theoretical fix. In class, everything sounds good, … but it's different in the real world."

Deputy Treasurer David Szymanski, whose office runs the auction, said late Monday he's unsure if the ordinance would be legal because such a change might have to come from the state Legislature. He said he and his staff will be at today's meeting to discuss the change.

Parker said commission lawyers told him the proposal could be enacted. State law says that the "foreclosing governmental unit may adopt procedures governing the conduct of the sale."

His proposal is similar to one that passed the state House last year but died in the Senate. Gabe Leland, a former state representative from Detroit, pushed the legislation that would have required buyers at auctions to sign affidavits saying they don't owe taxes. Scofflaws would have liens placed on properties.

"It would deter these large investors from doing this kind of speculating," said Leland, a Democrat who was term-limited out of the House. "We don't want these properties back in foreclosure."