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Detroit to expand group of overtaxed homeowners eligible for relief

Christine MacDonald
The Detroit News

Detroit — City officials plan to expand the group of overtaxed homeowners who could be eligible for compensation as Detroit grapples with how to offer relief, announcing the move at an emotional three-hour public hearing Tuesday night. 

Mayor Mike Duggan said last week that any compensation would be restricted to those who owned their homes between 2010 and 2013 because he and his staff say the bulk of the overassessment problem was corrected in 2014, the year he came into office.

Homeowner Yvonne Sanders of the Grandmont Rosedale neighborhood is among several homeowners who said they should be cut a check for their overpayment of property taxes due to being overtaxed.

But Duggan's Chief Financial Officer David Massaron backed off that restriction Tuesday, saying those who owned their homes in 2014 and later possibly could get relief if they are able to prove they were overassessed. Residents who owned their homes between 2010 and 2013 automatically would be eligible under the proposal.

Duggan's staff is researching potential programs as it considers forms of relief. Nothing has been formally announced. 

Many of the nearly 500 who packed the City Council's auditorium Tuesday night were not satisfied with the proposals that Duggan's staff said they were exploring, primarily preferences for existing city programs and free or discounted Detroit Land Bank homes. 

"I didn’t see anything that would apply to me to help me in getting a credit. ... I would prefer a check," said Alberta Rayford, 74, who has lived in the city 50 years. "I never missed paying my taxes. ... I trusted the people who do the tax assessment."

People in attendance raise their hands showing that they are homeowners as Detroit's city council holds a public hearing regarding overtaxation of homeowners at the Coleman A. Young Municipal Center in Detroit on Tuesday.

A Detroit News investigation published in January found the city overtaxed homeowners by least $600 million between 2010 and 2016 after officials failed to accurately assess properties to keep pace with falling property values during the Great Recession. The News estimates Rayford was overtaxed by about $4,000.

Duggan has said Detroit can't repay homeowners because current law doesn't allow it and the city can't afford it. A city legal opinion released Tuesday concludes it's not legal for the city to set up a reimbursement fund because residents have "no legal claim against the city" because the appeals process has passed.

"Any legal option is on the table and being considered," Corporation Counsel Lawrence Garcia told the crowd.

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

Two researchers, the city's former assessor, and The News analysis indicated that the city was still correcting inflated home values after 2013. Of the $600 million overtax estimate, analysis concluded $130 million was charged to homeowners between 2014 and 2016. 

Detroit City Council President Pro Tem Mary Sheffield speaks during a public hearing regarding overtaxation of Detroit homeowners.

Meanwhile, ideas under consideration to compensate overtaxed homeowners include giving them priority in existing city programs, such as job training and rehabilitation loans.

Nicole Small, vice chairwoman of the charter commission, said Duggan should do more, including giving people tax credits and stopping foreclosures.  

"How can you foreclose on someone when you owe them money?" Small said. "You know you have been robbing us for over a decade."

The News found that 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. 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, researchers and community activists released a report in January proposing ways Detroit could compensate overtaxed homeowners who lost their properties to foreclosure, from cash payments to free, city-owned homes.

Gwendolyn Peoples, a resident of Jefferson Chalmers neighborhood for more than 40 years, came Tuesday night because she wants the city to pay back the $1,200 The News estimates she was overtaxed between 2010 and 2016. 

She said the city should stop prioritizing giving tax breaks to developers and corporations and repay residents.  

"There has to be a way to make people whole," Peoples said. "There are no solutions. I guess we will have to have more meetings.

"The rich continue to get richer and the poor get poorer."