State lifts oversight of Detroit property assessments

Christine Ferretti

Detroit — The Michigan Tax Commission has relinquished its control over property reappraisals in Detroit.

The three-member commission unanimously voted Tuesday to release the city from the oversight it’s been operating under since 2014 in the wake of mismanagement in Detroit’s Assessment Division, widespread over-assessments and rampant tax delinquencies.

The commission had put in place a corrective action plan in hopes of overhauling the troubled Detroit department that sets property taxes.

“This is one more symbol that city government has gotten this right,” said Alvin Horhn, the city’s assessor and deputy chief financial officer, Wednesday of the commission’s decision. “Detroit basically had been an island to ourselves for a long time. That type of intervention was hard to swallow.”

The oversight stemmed from a yearlong investigation by The Detroit News that found Detroit was over assessing homes by an average of 65 percent, leading to higher tax bills, according to an analysis of more than 4,000 appeal decisions by a state tax board.

The series prompted state regulators to overhaul the city’s Assessment Division.

A centerpiece of the agreement was a citywide reappraisal initiated in 2014 to bring Detroit’s assessment role into compliance with the General Property Tax Act to ensure all assessments are at one half of the market value and like properties are uniform.

Such an effort hadn’t been undertaken in Detroit since the 1950s, Horhn added.

In a Tuesday memorandum to the tax commission, its executive director, Heather S. Frick, noted the city’s progress on reappraisals.

“The city has continued to move forward in their work to improve the residential reappraisal and to complete work on the commercial and industrial reappraisals,” wrote Frick, adding city staff continues to conduct field visits to residential properties and do verifications to “maintain and improve the residential reassessments.”

Work on commercial and industrial properties outside of the city’s Commercial Business District and Midtown remain on track. The city has experienced a delay in its downtown reappraisals, but has hired firms to assist and recently issues a request for proposals for a project manager, Frick wrote.

The commission granted Detroit an additional year to complete reassessment of commercial and industrial reappraisals.

Horhn said the department is on schedule to complete industrial assessments this year. All commercial assessments will be completed in 2019, he said.

The city, he said, hadn’t yet requested it be released from oversight, and it came sooner than anticipated.

“We fully expected the State Tax Commission to keep the direct oversight until we completely finished all classes of property,” he said. “It was unexpected but a pleasant surprise.”

The commission also intends to conduct a review in 2020 to ensure completion of Detroit's reappraisal work.

Tax Commission Chairman Doug Roberts said the work Detroit has done in its reappraisals has been “very positive.”

“I was concerned about it for a while, but I was very pleased with the report that we got yesterday,” Roberts said Wednesday. “The fact of the matter is I think they have been working very hard on it. I was pleased to vote for it.”

The city expects to spend nearly $9 million on the reappraisal project, which has included use of aerial photography, mapping programs and exterior inspections by staffers to gauge neighborhood conditions and better reflect property values.

In January, the Duggan administration unveiled its proposed 2017 property assessments on the heels of the completion of the parcel-by-parcel reappraisal for nearly 255,000 residential properties.

Officials estimated 140,000 homeowners would see reductions in their taxes of several hundred dollars.

The new assessments also were based on property sales data from Oct. 1, 2014, through Sept. 30, 2016.

Reductions in recent years came after homeowners long complained that assessments, which taxes are based on, didn’t match market value, significantly increasing taxes and leading to foreclosures.

Michele Oberholtzer, founder of Tricycle Collective, a city-based nonprofit that works to keep families in homes, said the accuracy of assessments in Detroit is improving, but bigger issues remain.

“In my line of work, it’s cold comfort,” she said. “It’s wonderful that we’re seeing these assessments corrected but it does not resolve the most detrimental impacts of the wrong assessment, which is tax foreclosure.”