February 22, 2013 at 1:00 am

Snyder: Land banks may help slow Detroit foreclosures

Officials offer ideas to ease Detroit's unpaid property tax situation

Detroit — Gov. Rick Snyder said land banks could help slow an avalanche of foreclosures in Detroit caused in part by high property taxes and unrealistic assessments.

The governor was among those expressing alarm about the findings in a Detroit News project that began Thursday and continues today. The investigation found that taxes were paid on only 47 percent of parcels last year, costing the city and other entities, including Detroit Public Schools, some $246.5 million.

Snyder said the stories "raised a whole set of questions about where things are" and showed foreclosures are "way too high." Wayne County has seized nearly 64,000 county properties since 2008 for nonpayment of taxes.

"That needs resolution," Snyder said. "One of the things we're working on is kind of can we do more with the combined land banks to say, 'Can we stop the tax reversion process and just watching it being churned over?'"

The governor didn't elaborate. But Snyder said the nonpayment rate shows the city is spinning out of control financially, prompting a state-appointed review team to conclude this week that Detroit has no plan to fix its money problems. Snyder has 30 days to make a decision on whether to declare the city is in a "financial emergency.""As long as people don't stop that cycle, it can continue downward," Snyder said.

A spokesman for Mayor Dave Bing said the tax system is not broken but is strained by the economic downturn. Councilman Kenneth Cockrel Jr. said the situation can't be fixed without new state laws reworking Proposition A, which slows increases in taxes.

"State government is going to have to come to grips," Cockrel said. "All of these things have come together (in Detroit) to create a perfect storm of multiple problems."

Councilwoman Saunteel Jenkins said the problem is complex and has been exacerbated by the recession.

"The people who can't pay just don't pay. We foreclose on the property and it becomes city-owned. It's a vicious cycle," she said.

Potential mayoral hopefuls said The News stories showed the city's property tax system is in disarray and agreed the city can't begin to recover until it's reformed. The News reported the city has the highest taxes among big cities nationwide, assesses many properties at more than 10 times their market value and has 77 blocks where only one resident paid property taxes last year.

"Shock is an understatement," said Wayne County Sheriff Benny Napoleon, who is expected to formally announce his candidacy soon.

"The fact is: Property taxes are an unfortunate reality, but people should pay their taxes."

Former Wayne County Prosecutor Mike Duggan said, "The entire revenue collection process for the city of Detroit is broken."

"If you can't collect revenue, you are out of business," said Duggan, who plans to announce Tuesday whether he's running for mayor.

State Rep. Fred Durhal Jr., D-Detroit, said he would order all properties to be reassessed within 90 days if he's elected mayor.

"The whole system is in shambles," Durhal said.

Durhal and accountant Tom Barrow, a potential candidate, said the city's computers are so antiquated some use software from the 1970s.

Barrow and Durhal recommended more programs to help delinquent owners pay taxes without losing their homes.

Napoleon said improving public safety would help repopulate the city, raise property values and improve tax collection rates.

Duggan said improving services would do the same.

Mayoral candidate Krystal Crittendon, the city's former corporation counsel, declined comment. State Rep. Lisa Howze, who is also running for mayor, did not respond to a request for comment.

jkurth@detroitnews.com

(313) 222-2513

Staff Writer Christine MacDonald contributed