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Detroit officials look at options to pay overtaxed residents

Christine MacDonald
The Detroit News

Detroit — Council President Brenda Jones has asked the city's top lawyer to draft a legal opinion on whether Detroit can set up a fund to reimburse thousands of overtaxed residents. 

It was one of a series of requests Jones made in recent days in response to a Detroit News investigation that found City Hall overtaxed homeowners by at least $600 million between 2010 and 2016 after officials failed to accurately bring down property values in the years following the Great Recession.

This is the home on Asbury Park in Detroit that Anna Bolden bought at auction in 2011. She bought it for $4,800 and it was taxed that year as if it was worth $57,000.  (address intentionally blurred)

City spokesman John Roach said via a text on Wednesday that Mayor Mike Duggan also is looking at "ways to help individuals who were overtaxed during those years."

"The mayor has a whole team of people from his administration looking at possibilities that are both positive and legal," Roach said. 

Jones also wants the city to hire a firm to do its own study of who was overtaxed by how much and look for "corrective solutions," according to her memo to the city's Chief Financial Officer Dave Massaron. 

In addition, she's requested council staff write resolutions urging the Legislature to issue a moratorium on future foreclosures and to pass a resolution giving overtaxed residents a property tax exemption. Those resolutions would need to be voted on by city council members.

Duggan has acknowledged past overassessment problems but said he cleaned them up after he took office in 2014. The mayor said he can't correct past mistakes because current law doesn't allow it and the city can't afford it. 

In comparison, the city will collect about $100 million in property taxes this year, he has said. 

"I have for the last six years done everything legally possible to offset the damage of that," Duggan said last week. “We need to be honest about what is possible and what is not."

The PuLSE Institute, an anti-poverty think tank, is sponsoring a panel on The News investigation at 6 p.m. today at Wayne County Community College. 

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

The News analysis is the first to estimate how much Detroit homeowners were overbilled. State law mandates that assessments reflect the home's market value.

Taxpayers can appeal their assessment, but many are not aware they have the option.

The investigation found that the vast majority of Detroit owners who currently owe debt to the Wayne County treasurer were overtaxed. 

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 debt owed on about 40,000 of those homes is less than the properties were overtaxed over those seven years. 

City Council President Pro Tem Mary Sheffield released a report earlier this month proposing ways Detroit could compensate homeowners who lost homes to foreclosure, from cash payments to free city-owned homes. 

The report roughly estimates anywhere from 10,900 to 33,600 owner-occupants of homes could qualify for compensation, based on research done by Bernadette Atuahene, a professor at Chicago-Kent College of Law. 

Councilman Scott Benson requested information earlier this month a breakdown of how much each taxing jurisdiction would have collected from overtaxed residents. And he asked if there is a way to force all those entities, such as Wayne County and the Detroit Public Schools Community District, to repay residents. 

“I have heard from numerous Detroit residents, all of whom are concerned about how

Detroit plans to repay any overassessment," Benson said in a statement issued last week. "My office is working directly with the City Assessor and our Chief Financial Officer to understand all of the available options to help make whole every Detroiter harmed by over assessments. It is my intent to work with my colleagues and the mayor to ensure that this never happens to us again.”

Jones also wants money in this year's budget for homeowner training on property assessments and foreclosure rights, as well as an ordinance that includes penalties to "ensure the integrity of property tax assessments."

In addition, she asked the Detroit Land Bank to set up a program under which overtaxed residents who have lost their homes to foreclosure can buy homes for $1 and have access to home rehabilitation funds. 

The city of Detroit is taking new applications for the 2020 Poverty Tax Exemption, which wipes away or discounts current tax bills. Click here for the application. For more information, call 313-224-3560 or email assessors@detroitmi.gov.

Taxpayers can appeal their assessments during the February Assessors Review, Feb. 1-22. For more information, call 313-224-3035.

The Detroit Justice Center, a nonprofit law firm, helps owners challenge their bills. For more information, call 833-200-0093 or email clw@detroitnejustice.org.

cmacdonald@detroitnews.com