Detroit council to vote on resolution to benefit overtaxed homeowners

Christine Ferretti
The Detroit News

Detroit — City Council is expected to vote Tuesday on a broad proposal to give Detroit residents potentially overtaxed before 2014 priority in affordable housing, home-buying discounts and job opportunities. 

But the Coalition for Property Tax Justice and the council's second-highest ranking member oppose the plan, arguing it doesn't go far enough.

The resolution seeks to offset losses for homeowners from 2010 to 2013 as a step toward addressing an estimated overtaxing of $600 million for Detroiters over a six-year period through 2016. 

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

Detroit City Council President Pro Tem Mary Sheffield has championed the cause for several years in partnership with the coalition but said she was unable to negotiate with the Duggan administration that the resolution span from 2008 to 2016. 

"For you not to include those time periods, you're trying to divert political accountability. We can't have that," said Sheffield, adding she won't support the resolution as written. "From a moral standpoint, if this is really about trying to provide relief for individuals who were overassessed, we must include those time frames."

The city's Group Executive for Planning, Housing and Development and the Office of the Chief Financial Officer crafted the four-year program in partnership with some council members to address the "systemic failure of the assessor's office" to appropriately assess residential properties in the city.

In a response last week to questions posed by the coalition, Detroit's chief financial officer, David Massaron, and Arthur Jemison, the city's group executive for Planning, Housing and Development, noted there's a "valid argument that the city as a whole was overassessed from 2010-2013."

"The gap between home prices and assessments was largely closed in 2014 when, following Mayor Duggan’s election, assessments were dropped a record 22%, despite the fact property values were actually increasing at that point," they wrote.

"If someone were to acquire a home in 2014, their home would have been adjusted to values that sale indicated along with similar transactions. Effectively, a homeowner of a newly acquired home in 2014 would receive the benefit of an adjusted value on their home tax bill and would dilute the value of the benefit for those who owned homes during 2009 to 2013."

The city's resolution includes eight preference programs to be funded with a one-time $6 million appropriation of surplus dollars from the city's 2020 fiscal year budget that won't require an additional tax levy on residents, officials said. 

Among the programs, the city wants to extend a 50% discount on Detroit Land Bank Authority side lot purchases or any auctioned house — including those to be rehabilitated under the city's voter-approved $250 million blight bond initiative.

Detroit also would give preference in city employment as well as priority access and placement to summer jobs through the city's Grow Detroit's Young Talent program for children and grandchildren of eligible applicants. 

Other areas include preferential access to Detroit at Work job searches and career services, financial counseling and affordable housing. 

If approved, the preference for impacted Detroiters would remain in effect until Dec. 31, 2024. 

Massaron has said Detroit isn't in a position to pay refunds, as sought by some activists and impacted homeowners. 

"The only way we could write checks would be to levy a tax on Detroit residents," he told The Detroit News in October. "We would have to tax the very residents that were wronged."

The News in January published an investigation that found the city overtaxed homeowners after it failed to accurately bring down property values in the years following the Great Recession.

The city completed a state-ordered reappraisal of all residential property in 2017 to correct the problem but, still, thousands of Detroiters faced foreclosure over back taxes.

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 News' review found. 

Beyond the plan's limited time table, Bernadette Atuahene, a law professor member of the Coalition for Property Tax Justice, argues the resolution forces affected homeowners to compete for limited funding with others victimized by redlining and predatory mortgage lending and that the language in support of a state-level task force is too narrow. 

The group wants a deeper look at the extent of the problem and recommendations for how Detroit can "correct the systematic errors in its assessment practices."

"Without identifying and remedying the underlying causes of the continued overassessments, the city’s assessment practices will continue to have detrimental effects on Detroit homeowners," she wrote in a letter to council. 

In response to the claims, Massron and Jemison wrote that there isn't systematic overassessment of properties in Detroit today and that the city has a thorough appeals process. 

The resolution is co-sponsored by five Detroit council members including Janee Ayers, James Tate, Roy McCalister Jr., Scott Benson and Andre Spivey.

Sheffield said the resolution covers some of her recommendations, including support for a state-level task force to examine non-city funding sources to possibly compensate individuals who were overassessed. Sheffield also pushed for the city to explore ways to offer tax credits for those struggling with current taxes if state law is passed and new state resources are available.

The city has noted over $5 million in property tax exemptions were provided in 2019 to more than 7,000 residents. 

The city also advocated for Pay as You Stay or PAYS, legislation and implemented a program in collaboration with the Wayne County Treasurer's Office to help eligible homeowners with delinquent taxes repay their debt.

That program, which eliminates interest, penalties and fees and reduces back taxes, has helped over 3,400 homeowners this year, officials have said.