July 8, 2014 at 7:47 am

Duggan's campaign chair owes Detroit nearly 2 years in back taxes

Conrad Mallett, chairman of Mike Duggan's mayoral campaign, owes taxes on a Palmer Woods house wrongly listed as religious property. (David Coates / The Detroit News)

Detroit— Conrad Mallett, chairman of Mayor Mike Duggan’s election campaign, hasn’t paid taxes on his Palmer Woods mansion for the last two years because the city considers it religious property, records show.

That’s because he bought the 7,600-square-foot brick Tudor from prominent pastor the Rev. Jim Holley and didn’t file the required paperwork informing the city of the July 2012 sale. Taxes would be an estimated $10,700 per year, but the home was a tax-exempt parsonage for Holley until Mallett bought it for $320,000.

Mallett said he’s ready to pay up and notified the city of Detroit last month when he discovered the error. He blamed his real estate agent for failing to file paperwork and said he thought his mortgage holder, Comerica, was paying the taxes through an escrow account.

“There was no intent here at all to not appropriately pay all taxes due and owed,” said Mallett, a former chief justice for the Michigan Supreme Court and current Detroit Medical Center executive. “Everything seemed to be managed in normal course.”

Duggan declined comment. Mallett probably isn’t the only Detroiter who is erroneously living tax-free, said the city’s chief assessor, Gary Evanko.

As of last year, Detroit had nearly 4,100 properties citywide with religious exemptions. Some of those are in error and the city’s assessment division wants to clean up its records so all pay their share, Evanko said.

“We are taking the first steps,” Evanko said. “The bottom line is we need to know when properties are transferred. We are going to go back to 2007 and going to identify the scofflaws.

“You have to assume Conrad Mallett isn’t the last one.”

In most cities, officials get records of sales from the county Register of Deeds, but in Detroit it’s the new owner’s responsibility to file notice within 45 days or face up to a $200 fine, Evanko said. He recently got several years of data from the county and hopes to identify other properties that should be on tax rolls.

The department is in the midst of a citywide reassessment of all 386,000 parcels by December 2016 as part of a corrective action plan ordered by the Michigan State Tax Commission. The state launched an investigation about a year ago after a series in The Detroit News exposed over-assessments, rampant tax delinquencies and mismanagement in the Assessment Division.

Mallett said he learned of the situation from a neighbor and “people in the neighborhood were commenting on the status.” He said Comerica officials told him they had tried to use the escrow money to pay the taxes but the city kept refusing the cash.

It’s unclear how the bank was estimating the tax bill because there has been no city assessment on the property until recently, according to Evanko and records.

“I don’t want to assume how they are doing the calculation,” Mallett said.

Mallett will be assessed the $200 fine and have to pay interest on the tax debt, said Evanko, adding his office plans to reassess the house and send out a bill soon.

Detroiter Sharon Weatherly, who risks foreclosure on her west side home soon if she doesn’t pay her $5,000 debt, said she is skeptical of Mallett’s explanation.

“How could that be an oversight?” Weatherly asked. “The rules should apply to everyone no matter your rank.”

cmacdonald@detroitnews.com