Whitmer signs tax break for poor Detroiters into law

Christine MacDonald
The Detroit News

Michigan Gov. Gretchen Whitmer signed legislation Monday morning that will wipe away much of the delinquent tax debt for thousands of low-income Detroit homeowners who qualify, calling it "crucial step" to helping people out of poverty.  

Participants in "Pay as You Stay" will get their interest and fees eliminated. And the remainder of their debt would be capped at 10% of their home's taxable value under the new law.

Gov. Gretchen Whitmer,  alongside (L-R) Lt. Gov. Garlin Gilchrist, Rep. Wendell Byrd, Detroit resident Shanita Jones, Mayor Mike Duggan and Wayne County Executive, Warren Evans, signs into law the new PAYS (Property Tax Assistance Program) during the press conference at Wayne Metro Community Action Agency.

It's pitched as temporary help for thousands of Detroiters struggling to repay debt they likely never had to pay if they had known about the city's low-income tax break. But other communities statewide will be able to opt-in as well.  

“As we seek to take on some of those barriers that keep people in poverty, this is an important step,” said Whitmer, who signed the legislation at a press conference at the Wayne Metro Community Action Agency in Detroit's New Center. “While there is plenty of work to do, today is a day to celebrate policy reflecting the needs of citizens.”

Homeowners first have to apply for the current year's Poverty Tax Exemption, also called the Homeowners Property Tax Assistance Program or HPTAP. That would either wipe away or discount their 2020 tax bill.

Officials are uring low-income homeowners to apply by March 28. Wayne County Treasurer's office will stop the foreclosure process for those that meet that deadline. Then the treasurer plans to contact homeowners starting April 15 to enroll in the Pay as You Stay program, officials said. 

Detroit resident Shanita Jones gets emotional while telling her story about how she almost lost her home to foreclosure and how the new tax law will help her in the future.

Low-income Detroiters who qualify don't have to pay property taxes, but housing advocates have argued the yearly application process for the city's Poverty Tax Exemption is cumbersome and many don't realize it's available.

Resident Shanita Jones teared up at Monday's press conference as she described her payments going from about $400 a month to less than $50.  

The 49-year-old hospice worker recently adopted eight of her nieces and nephews and was worried she was going to soon lose her home to foreclosure. She said she's looking forward to spending more money on them, including enrolling them in soccer or getting extra tutoring. 

"There are no words that I could use to express how beneficial this is," said Jones, who city officials invited to speak.  "I am just so relieved."

To apply for the 2020 Poverty Tax Exemption, or HPTAP, read more here. Download the application here

Mayor Mike Duggan gives his remarks about the new PAYS (Property Tax Assistance Program) during the press conference at Wayne Metro Community Action Agency.

Cities haven't been able to wipe away taxes retroactively even when individuals can prove they would have qualified for the break in the past.

Mayor Mike Duggan called it "remarkable" that they were able to get the legislation passed in four months in a Republican-controlled Legislature, saying the effort was bipartisan. 

"This is what happens when you don’t spend a lot of time yelling at each other," Duggan said. "This is a complicated bill that took a lot of work."

Officials estimate it could cost the city just less than $8 million over the next three years, but similar cost estimates weren't immediately available for the other tax jurisdictions, such as the library and Detroit Public Schools Community District. 

The legislation was sponsored by Rep. Wendell Byrd, D-Detroit. The program will stop taking new applicants in July 2023. 

Gov. Gretchen Whitmer speaks during a press conference addressing how participants in "Pay as You Stay" will get their interest and fees eliminated.

About 3,200 who got the tax break in 2019 and are on payment plans for delinquent debt will already qualify for Pay as You Stay, according to the Wayne County Treasurer's office.

But there are an estimated 11,000 Detroit homeowners on payment plans, so city and county officials are promising a marketing blitz with nonprofits to encourage more homeowners to apply.

City officials have said up to 30,000 homeowners might qualify but that number fluctuates. 

Many homeowners on payment plans are struggling with debt despite tax foreclosures declining dramatically in Detroit in recent years. 

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 plans designed to help them get out of debt and avoid foreclosure, according to Detroit News analysis.