Most Detroit property assessments to decrease
Detroit — Property tax assessments in Detroit are expected to dip 5 percent to 15 percent this year for most residents.
During a Monday announcement at City Hall, Mayor Mike Duggan said about 95 percent of Detroit’s 220,000 residential properties will see a reduction of 5 percent to 15 percent of their properties’ assessed values. The remaining 5 percent of property owners — in Detroit’s downtown and Midtown — will see an increase of 5 percent to 15 percent.
The announcement marks the third consecutive year that assessments for most have come down.
“We have good news today for the homeowners in the city of Detroit,” Duggan said. “A great majority are going to see a reduction.”
Duggan says two-thirds of all homeowners will see a 15 percent decrease.
Properties in just over a dozen neighborhoods, including Palmer Woods, Sherwood Forest and Boston Edison as well as downtown and Midtown, will see an increase.
Officials say the reassessment comes following an exhaustive review by Chief Assessor Gary Evanko’s office that examined assessments and home sales between Oct. 1, 2013, and September 2015.
The impact of the lower assessments on city revenue is expected to be in line with the city’s debt-cutting Plan of Adjustment, which projects a 2 percent reduction in all real property values for fiscal year 2016-17, according to Detroit Chief Financial Officer John Hill.
Some have worried that the reductions would hurt the city’s finances, but Duggan said the process has had the opposite result.
In the 2014 fiscal year, the city collected property taxes on 67 percent of its residents, Duggan said.
In the last fiscal year, it collected on 72 percent, and 78 percent in the current fiscal year.
Property tax revenues this year are running $10 million ahead of budget, Duggan added.
While the latest assessment changes are based on two years of data, officials say a recent study conducted by Dynamo Metrics shows that property sale prices have increased across most areas of the city in the past year.
Buying a home now in the city, Duggan said, will lock new homeowners into a taxable value based on this lower assessment.
“This should raise property values in Detroit, which is going to make the need for mortgages that much more critical,” added Duggan, saying he’s “relatively sure” that the city’s mortgage appraisal issues will be resolved in the coming weeks.
Michael J. Steinberg, legal director of the American Civil Liberties Union of Michigan, commended Duggan for making reductions but said they don’t go far enough.
More than 50,000 Detroit properties are facing tax foreclosure in March, according to the Wayne County Treasurer’s Office.
“It is too little too late for many people who have been overcharged,” Steinberg said. “I strongly urge everybody in the city of Detroit to appeal their taxes because it is undisputed they are unrealistic and the values of the homes are overassessed.”
Jackie Grant, a resident in the city’s Morningside Community, was among those who spoke at Monday’s news conference.
The longtime resident praised the reduction, noting that declining property values created a disparity between her taxes and what her property was worth. She appealed her taxes and they were reduced.
“A lot of times, a lot of foreclosures happen because people have a very high tax rate that they have not challenged in the past when they were able to,” said Grant, a 30-year resident of the east side neighborhood.
The city has already begun mailing out its 2016 property assessment notice. For residents who do choose to challenge the assessments, the appeal process began Monday and runs through Feb. 15 on the 8th floor of the Coleman A. Young Municipal Center.
Tax bills will be mailed in June and payments are due by Aug. 31.
Last year, Duggan announced 5 percent to 20 percent reductions in residential property assessments.
The reductions followed years of complaints from homeowners that assessments, which taxes are based on, didn’t match market value, significantly increasing taxes and leading to foreclosures.
A yearlong investigation by The Detroit News in 2013 found Detroit was overassessing homes by an average of 65 percent, according to a review of state tax appeals.
The series prompted state regulators in 2014 to overhaul Detroit’s Assessment Division.
Detroit is in the process of conducting a citywide reassessment. Officials say the results will be reflected in property owners’ January 2017 assessment notices.