Activists propose Detroit fund for overtaxed homeowners
A Detroit activist group is proposing the city create a fund to pay back overtaxed residents by fining neglectful landlords.
The Coalition for Property Tax Justice sent a memo last week to Detroit officials requesting they create a Property Tax Compensation Fund aimed at paying homeowners who were overtaxed through the city's inflated property values after the 2008 housing crash, including those who lost their properties to tax foreclosure.
The fund would be supported by fines generated through ticketing landlords operating illegally without a city-issued Certificate of Compliance or registering their rentals. The coalition suggests the city partner with law school clinics at local universities to increase the number of successful lawsuits against landlords who don't follow city ordinances and repair properties.
"This proposal will benefit Detroit and its citizens by providing redress to foreclosure victims, improving housing conditions for a majority of residents, and training a new generation of lawyers," the proposal reads.
The fund is the latest proposal floated to bring relief to Detroiters whose properties were overassessed by the city.
A Detroit News investigation published in January found that the city overtaxed homeowners by at 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.
A city official called the idea "unrealistic and irresponsible." Over the last three years, city inspectors have written more than 30,000 tickets with more than $1 million in fines collected and $1.4 million pending, said David Bell, the city's director of Buildings, Safety Engineering and Environmental Department in a statement.
"It is hard to imagine that a group of students untrained in code and construction requirements could begin to produce nearly the result of the 30,000 BSEED tickets and enforcement measures," Bell said. "The only thing a new wave of lawsuits is likely to produce is upheaval in the rental property market, spurring increased rents and widespread displacement of tenants.”
Duggan's staff said they expect to talk soon with the Detroit City Council about their proposal to address overtaxed residents.
Arthur Jemison, the city's chief of services and infrastructure, told city council members last week that he's "prepared to review in detail" a proposal to address the over-assessment issue, saying "people have raised their voices and we've heard them."
Duggan has acknowledged past inflated assessments but 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 earlier this year concluded it's not legal for the city to set up a reimbursement fund because residents have "no legal claim against the city" because the process to appeal a home's assessment has passed.
Several rallies and events were held earlier this year after The News investigation with residents demanding the city repay residents, including a public hearing before the Detroit City Council that drew 500 residents.
The coalition, along with Detroit City Council President Pro Tem Mary Sheffield, in mid-January proposed ideas for homeowner compensation that Duggan had said he was considering. That included giving overtaxed homeowners priority in existing city programs, such as job training and Detroit Land Bank homes.
The city has struggled for years to get the vast majority of its landlords to comply with inspection rules. As of this year, only about 10% of the city's estimated 40,000 rentals have the certificates, which includes single family homes and large apartment complexes. (There are more than 140,000 rental units in Detroit, according to the U.S. Census.)
Resident Gwendolyn Peoples has lived on Detroit's east side for 45 years and said the city needs to discount current tax bills, even if city coffers are stretched thin from the pandemic. The News estimates she was overtaxed by about $1,200 between 2010 and 2016.
"Why not just deduct it from taxes we owe?" Peoples said. "You owe us."
On Tuesday, the coalition plans a virtual awards ceremony called "Champion of the People" awards to local leaders including Sheffield and U.S. Rep. Rashida Tlaib, D-Detroit, "who are leading the fight against Detroit's illegal and predatory property tax practices."
Staff Writer Christine Ferretti contributed.