Detroiters start to see tax bills slashed under new program

Christine MacDonald
The Detroit News

Detroit — Low-income homeowners in the city are starting to see relief from crushing delinquent property tax bills under a new program called Pay As You Stay. 

Carla King got a letter Monday from the Wayne County Treasurer's Office saying her $6,000 delinquent bill had shrunk to less than $500 under a new state law that took effect earlier this spring.

"I could not be happier," King said. "A gigantic load has been lifted."

The 55-year-old westside homeowner is on disability and didn't realize until earlier this year her income qualified her not to pay taxes in Detroit.

Housing advocates have argued the yearly application process for the exemption is cumbersome and many don't realize it's available. The ACLU of Michigan and the NAACP Legal Defense and Education Fund sued the city in 2016, arguing the process was so onerous it prevented people from applying.

The new law, first pushed by Mayor Mike Duggan and other county leaders late last year, allows the city to wipe away taxes retroactively for the first time for those who likely would have qualified. 

Under the program, interest and fees are eliminated. And the remainder of the tax debt is capped at 10% of their home's taxable value. 

Participants can pay the remaining debt as a lump sum or as a small monthly amount under a payment plan. They must stay current on the plan or they risk owing their original debt again. 

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.

That qualifies them for the Pay as You Stay program, which is administered by Wayne County Treasurer Eric Sabree.

"We think it’s going to have a great impact now … because people are struggling now more than they were," Sabree said. 

His office sent out more than 4,600 letters Friday to homeowners who have the city's exemption. The letters include directions about how to enroll in Pay as You Stay online or by mail. The office is currently closed because of the pandemic and phones are temporarily down. 

On average, $2,000 in debt has been eliminated for those among the first group of 4,600 homeowners, he said. 

"This is a game-changer," said Willie Donwell, who heads the Detroit board that grants exemptions.

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

Sabree urged homeowners to apply as soon as possible, particularly those who may now qualify because of a coronavirus job loss. Sabree's office announced earlier this spring that there will be no tax foreclosures in 2020 because of the outbreak. 

Many homeowners like King, who have been 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 a Detroit News investigation. 

Another 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.

Other cities can opt into the program, but it's unclear if there are other municipalities that have offered it to their low-income owners in debt.