Properties with years of tax debt to be sold
The Wayne County Treasurer this fall will auction off a record number of tax delinquent properties, nearly half that were eligible for foreclosure years ago.
Of the approximately 30,000 properties headed to auction in September, about 14,500 have owners that owe five years or more in back taxes, according to county data reviewed by The Detroit News. State law requires foreclosure after three years of nonpayment.
Lois Ray has faithfully paid the taxes on her Melvindale home, even through tough financial times. But her neighbor — an unfinished condo development — hasn't had to play by the same rules.
County treasury officials have let the neighbor, Northpointe Townhomes, ignore tax bills since 2008, racking up nearly $535,000 in debt without facing foreclosure on 84 vacant parcels. Melvindale officials said the city has spent tax dollars mowing the lots twice a month for the last several years.
"We pay. They should," said Ray, who has lived in her home for 38 years. "That's what they should be doing."
In the most extreme examples, The News found several properties where taxes haven't been paid since 1988, when Ronald Reagan was president, including an industrial building on Mt. Elliott, south of Outer Drive, in Detroit that owes $90,000.
The debts accumulated because of county mistakes or a longstanding loophole, officials said. Over the last decade, Treasurer Raymond Wojtowicz hasn't foreclosed on thousands of properties with small annual debts, typically about $1,600 apiece, because his office couldn't handle the volume of foreclosures.
This year, the office is foreclosing on the vast majority of tax delinquent properties, making this fall's online auction the county's largest ever. Since 2008, the county has taken 108,500 properties to auction.
"We have been increasing our efficiencies and now believe we can provide proper notice," Chief Deputy Treasurer David Szymanski wrote in an email to The News, referring to legal requirements the office must follow to notify owners before foreclosure. "Payment of these delinquent taxes is essential to support essential government services."
Critics, including business owners surrounding the Mt. Elliott building, said the treasurer has let properties remain in limbo, preventing them from productive use.
Curt Czerniak, who runs a custom car shop across the street, said an auto supply-related business had been operating out of the building until 2008. The occupants left that year, which is when scrappers descended on the building, stripping plumbing, electrical and anything else of value, he said.
"It was like watching the Discovery channel, watching the ants eat away at the carcass," Czerniak said.
Shawn Dababneh, another nearby business owner, said: "Someone could have bought it a long time ago, and the (scrappers) wouldn't have been able to get in. It would have been worth more."
Szymanski said the building wasn't foreclosed sooner because his office mistakenly believed it was owned by the state of Michigan. He said the majority of properties allowed to escape foreclosure generally do not pose "significant nuisance" because they are vacant lots.
Officials in the Oakland and Macomb treasurer's offices said they follow the law and foreclose on properties that owe taxes, regardless of the amount of debt. State law on tax foreclosure includes some exemptions for owners who have substantial hardships or are incapacitated.
Melvindale Mayor Stacy Striz said Northpointe Townhomes' vacant lots in the north part of the city near Greenfield and Wall has been a financial drain.
"Not getting the tax base for the property is huge ... and we've had to do all the grass cutting and maintenance," Striz said. "It's been years now. It's really frustrating."
In the early 2000s, when construction started, the development was the city's first new residential subdivision in nearly 20 years, according to a Crain's Detroit Business article at the time. Units were built on about two-thirds of the 22-acre property.
"We lost the property because the sales completely stopped," said Ronald Hughes, one of the project's developers, referring to the real estate crash. "We did our best for a long time but we couldn't hold on to the property."
Hughes said Comerica Bank held the mortgage on the properties. The delinquent tax bills for the vacant land go back to 2008 and it could have been foreclosed in 2010. Comerica spokeswoman Kathleen Pitton said the bank did not foreclose on the properties and is not the title holder, but wouldn't comment further, citing client confidentiality rules.
While the treasurer said he hopes to recoup lost taxes in the auction, questions remain about whether some of the vacant lots can be developed.
A lawyer for the condo association filed a notice with the Wayne County Register of Deeds this year notifying potential buyers of building restrictions that took effect in December 2013 barring development on the rest of the land. The lawyer, Stephen Guerra, wouldn't comment when reached by The News.
Striz said she is having a city attorney review the issue. Szymanski said he's doubtful the properties would have generated money even if the office had foreclosed earlier.
About $193 million is owed in taxes and fees on the 30,000 Wayne County foreclosures, including $95 million in debt on properties that had more than five years in unpaid bills. Most of Wayne County properties that escaped earlier foreclosure are in Detroit but others can be found in such areas as Plymouth, Romulus and Melvindale.
In Romulus, city officials said they believe 94 vacant lots in an unbuilt subdivision will sell at auction because they include water and sewer infrastructure. No taxes were paid since 2009, accruing a $322,000 debt for the lots near Tyler Road and Cogswell.
Representatives for the owner, Troy-based Elro Corp., did not return calls for comment.
The city may recoup some of those lost taxes but Romulus City Councilman Bill Wadsworth said he's frustrated that developers can walk away from the responsibility. Like many suburbs, Romulus has cut its budget in recent years, reducing funding for parks and its library, he said.
"We should go after them," Wadsworth said. "Everybody should have to pay taxes."
Many of the properties facing foreclosure in Detroit are vacant lots owned by speculators hoping to land near a development. Dozens are near Coleman A. Young International Airport on the city's east side and near the proposed Gordie Howe International Bridge and plaza.
The treasurer's policy also has allowed landlords to collect rent and not pay taxes for several years, including the owner of the Detroit home that Victor Mann pays $595 a month to rent in Brightmoor.
Mann said he didn't know until recently that the home was scheduled to be auctioned this fall. It owes $9,200 for six years of back taxes.
County records identify the most recent owner as Michael Folk, a real estate investor from California, who bought it for $1 in 2005. He didn't return calls for comment.
"It's like they are playing Monopoly for real," said Mann, who may try to buy the house at auction himself. "It's a tempting hustle."
The first round of the Wayne County Treasurer's tax auction will be held in September, which is when foreclosed properties will be sold for the full debt owed. Anything that doesn't sell is offered at the second round in October. Exact dates haven't been released yet.
Registration for the September round runs from Aug. 13 to Sept. 10. For the October round, the registration dates are Oct. 2-8.
Owners have a last chance to redeem their properties Tuesday-Aug. 8 before the auction. Owner occupants can still enter payment plans that week.