June 10, 2014 at 4:20 pm

Feds asked to crack down on Wayne Co. landlords who rent to poor, don't pay taxes

Wayne County Treasurer Raymond Wojtowicz )

Detroit— Wayne County Treasurer Raymond Wojtowicz wants federal officials to crack down on landlords who collect government money for renting to the poor but ignore property tax bills.

Wojtowicz sent a letter in late May asking the U.S. Department of Housing and Urban Development to join his “call for action” and bar tax delinquent landlords from its Housing Choice Voucher program, known as Section 8.

The request follows a Detroit News investigation in March that found about 1 in 4 Detroit landlords in the state’s Section 8 program collectively owe Detroit at least $5 million in back taxes and probably much more.

“It’s just abhorrent to think we have the federal government paying (landlords) to provide housing and they are ignoring their responsibility to the local community,” said Chief Deputy Treasurer David Szymanski.

Section 8 generally pays most of the rent bill for needy families directly to landlords. About 7,500 families receive rent help in Detroit through programs run by the state and the Detroit Housing Commission. Federal and state guidelines for the rental assistance don’t require that all landlords pay.

The state changed its policy last month as a result of The News’ investigation and now requires landlords entering the program be current on taxes or be on a payment plan. That’s the same policy as the Detroit Housing Commission, but neither agency monitors whether owners pay after that.

Wojtowicz wants HUD to monitor landlords’ tax payments every year, remove scofflaws from the program or give Wayne County rent money to pay their debts. HUD is reviewing the request, said agency spokesman Jerry Brown.

“Collecting and verifying tax information for thousands of individuals is not an easy task nor is it a task housing professionals are currently trained for,” Brown wrote in an email. “Still, we will examine the situation and see if there are things we can do to assist the treasurer with the problem.”

The News found the delinquency rate among city landlords through the state’s program was 26 percent. In comparison, 6 percent of Wayne County landlords receiving the subsidy owed taxes, according to state and county data.

At least $5 million was owed in January on 757 of 2,914 properties. The debt is likely much higher because it doesn't include 2013 taxes or properties on the Detroit Housing Commission's Section 8 program. The commission refused to provide the landlord names and property addresses to The News, citing concerns it violates the property owners’ privacy.

The debt angers resident George Kaleniecki, who said he doesn’t want his tax dollars going to property owners who won’t pay their share.

“I don’t miss a payment,” said Kaleniecki, 64, who lives on the city’s west side. “What makes them different than me? They are getting money from the government to house people.”

The News found that some landlords collected checks until they faced foreclosure and then sold the tax-delinquent properties to buyers, including tenants.

Some property owners also avoided losing houses by appealing assessments and having them lowered below the $1,600 threshold the county has set for foreclosure. Others allowed properties to fall into foreclosure, then bought them back at tax auctions that don’t require buyers to pay back taxes.

cmacdonald@detroitnews.com
(313) 222-2396