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Detroit council asks what can be done for overtaxed homeowners

Christine MacDonald
The Detroit News

Detroit — Members of City Council asked a city assessor questions Tuesday about what can be done for homeowners who were sent inflated tax bills for years after the Great Recession. 

The Detroit News published an analysis last week that found that Detroit overtaxed homeowners by at least $600 million after the city failed to accurately bring down property values in the years following the recession.

City Assessor Alvin Horhn admitted on Tuesday that the city wronged taxpayers in the past but noted Mayor Mike Duggan restored resources and staff to the office that sets property values when he took office in 2014. 

Council President Brenda Jones

"There was a systemic problem with assessments in this city, and it was well known," Horhn said. "I have no easy answer. There is no easy answer. People were harmed by this problem. ... It took years to fix it. It took years to even admit it was a problem, unfortunately."

But he said any solution to correct past mistakes will be difficult and take money the city doesn't have, adding Detroit has to be financially responsible. 

Council President Brenda Jones countered that the problem has nothing to do with whether homeowners were "financially responsible" but is about them getting incorrect tax bills.

Of the more than 63,000 Detroit homes with delinquent debt as of last fall, more than 90% were overtaxed — by an average of at least $3,700 — between 2010 and 2016, according to calculations by The News.

The state ordered the city to perform a reappraisal of every residential property to correct the problem after it was highlighted in a 2013 Detroit News investigation. The city completed that process in 2017.  

Duggan has acknowledged the past overassessment problem but said he can't correct those mistakes for all homeowners, in part because current law doesn't allow it and the post-bankrupt city can't afford it. 

State law mandates that assessments reflect the home's market value. Taxpayers can appeal, but housing advocates say the process is difficult to navigate for most owners, and many are not aware they have the option.

Duggan, first elected in 2014, and other leaders are pushing state legislation that could bring relief for low-income homeowners who qualify by wiping away large portions of their debt, under a program called "Pay as You Stay."  And last week, city officials announced they would raise the qualifying income limits to include more people.

City lobbyist Ken Cole said Tuesday that they hope to get "Pay as You Stay" legislation through by the end of January.

Councilwoman Raquel Castañeda-López said she thinks there should be "more openness" to correcting past mistakes. 

And City Council President Pro Tem Mary Sheffield said she, researchers and activists, including The Coalition to End Unconstitutional Tax Foreclosures, have a 31-page report they will soon issue with suggestions on how to bring relief for homeowners who were overtaxed.

"There is no oops," said Bernadette Atuahene, a law professor at the Chicago-Kent College of Law who has studied the impact of the city's over-assessments on homeowners. "We need compensation."

Atuahene told the council during Tuesday's public comment that her research shows values are still a problem, and that the vast majority of homes under $25,000 are overassessed.

A study she released in 2018 found one in 10 Detroit tax foreclosures between 2011 and 2015 were caused by the city's admittedly inflated property assessments. 

Meanwhile, Jones submitted a memo to city officials asking among other things: the total value of overassessed property taxes in Detroit; how many properties had been overassessed; any plans to help residents who were overassessed on their property taxes; as well as the possibility of providing relief options such as tax credits or extended payment plans with lower payments and no interest.

Jones indicated she wanted to set up another meeting for further discussion, but a date wasn't immediately set. 

The News' review, which was completed with help from Reveal from The Center for Investigative Reporting, is the first to estimate how much Detroit homeowners were overbilled.

The News also found that nearly one in four Detroit homeowners owes more in delinquent property taxes as of fall 2019 than they did three years prior, despite being a part of low-interest payment plans designed to help them get out of debt and avoid foreclosure.

The analysis done by The News were made possible when Reveal's Emmanuel Martinez of "Reveal" wrote code that "scraped" delinquent tax debt amounts from the Wayne County Treasurer's website, public data for which the Treasurer Eric Sabree wanted to charge The News $235,000.

Search a Detroit home here to find out how much The News estimates it was overtaxed between 2010 and 2016. 

cmacdonald@detroitnews.com

(313) 222-2396