Evans calls for property tax payment plan review in Wayne Co.
Wayne County Executive Warren Evans called Thursday for an analysis of the tax payment plans being used in the county to prevent foreclosures, as property values took center stage during his State of the County address.
While the number of foreclosures in the county have decreased dramatically since 2015, some critics say taxpayers are being warehoused in payment plans from which they will never escape. The payment plans adjust the amount and time homeowners have to pay back the taxes, but they must continue to pay their current taxes, as well.
"The Wayne County treasurer has done, I think, tremendous work over the last several years in reducing the number of homes that go to foreclosure," Evans said.
"The question I can’t answer, but the benchmarking I would like to see, is what is the success of the payment plans? We need to know. Are we really helping people to stay in their homes? … If we are not and we’re kicking the can down the road only to have it foreclosed a couple years later, we need to know that, too. I think that analysis is something we need to spend more time looking at."
The Wayne County treasurer foreclosed on a high of 28,200 properties, primarily in Detroit, in 2015, according to data reported to the Michigan Department of Treasury. That number has declined to 4,178 properties in 2018.
Treasurer Eric Sabree has acknowledged he may have to extend payment plans for homeowners beyond the five years outlined in the law now. Nearly 31,000 properties were on payment plans as of summer 2018, according to the Treasurer’s Office.
"We want to make sure taxes get paid if at all possible," Evans said, "because we live off property taxes."
County Commissioner Terry Marecki, R-Livonia, said the speech was the first time she had heard of doing a review of the payment plans: "I'm open to hearing what he was to say on that. I'm always willing to look into anything."
Bishop Luke McClendon, pastor at Christ Temple Apostolic Church in Westland, lamented the number of foreclosures he's seen in Detroit, where he grew up.
"My parents were renters, so I grew up in a number of different neighborhoods," he said. "It's not easy. I think (the review) would be a good thing to do if it can help the county."
Virginia Williams, a councilwoman in Romulus, said she believes the review would be a good thing.
"I know many individuals that have taken advantage of the program yet some continued to default the payment plan each time," Williams said. "That's why many have ended up losing their property, the program has benefited many that kept the payment plans that they agree too."
Property values were a key component of Evans' address at the Ford Community & Performing Arts Center. He noted while property values are recovering, local government isn't reaping the benefits.
Thousands of foreclosures during the Great Recession contributed to a 25 percent decline in tax revenue for the county from 2008-14. While property values have grown nearly 24 percent since 2015, tax revenues have increased by just 0.5 percent, which means the county has to fix crumbling roads, fund pensions and balance its budget with less than before the recession.
Ahead of the event, Evans said increasing property values are good news for residents of Wayne County's 43 communities.
"But Michigan’s Constitution prevents property tax revenue from rebounding as the market does. So while property owners benefit from an improved economy, government struggles to maintain services with less money and increasing cost," Evans said in a statement. "We need a solution from Lansing that ensures local governments have the necessary revenue to fix roads, police neighborhoods and properly maintain vital amenities like parks and libraries."
The constitutional amendments known as Proposal A and Headlee limit property tax increases to 5 percent or the rate of inflation, whichever is lower, regardless of growth in the real estate market. But tax revenues fall with assessment decreases during market downturns.
James Martinez, Wayne County communications director, did not say whether Evans was advocating for the repeal of the amendments but that "we need legislators to perform the due diligence" to stabilize revenue for local government services while protecting homeowners from runaway property tax increases.
As a result of the property tax increase caps, Wayne County will never recover the revenue lost during the housing market crash, said Richard Kaufman, deputy Wayne County executive.
"When it comes to providing even basic services," he said in a statement, "Wayne County simply has a lot less money to do so than it did a decade ago.”
For example, the county's parks millage raises $2.5 million less than it did in 2007, when tax revenue totaled $405 million. The county's tax revenue still is down nearly $100 million to an estimated $308 million last year.
The county expects to spend $5 million on park upgrades this year — the centennial of Wayne County parks. Most, $3.3 million, will go to Hines Parks for projects such as the $771,050 renovation of the Nankin Mills Interpretive Center.
But the county also is relying on public-private partnerships, which includes selling three historic Ford Village Industry Mills along Hines Drive, to open them to the public, a move that has drawn criticism from some residents. Phoenix Mill in Plymouth Township already has sold.
"The mill run project demonstrates how we plan to reinvent for the next 100 years: placemaking, park enhancement, public access and resort the historic nature," Evans said. "I said the county can’t do it ourselves. We can’t. We have enough problems paying to keep up the parks as is."
Wayne County has reported a budget surplus for the past four years, and Moody's Investors Service upgraded Wayne County's bond credit rating last year from speculative to investment-grade for the first time in four years.
Still, only 61 percent of pensions are funded; the county's goal is 80 percent. It also is facing high rates of employee turnover. It recently issued the first general raise for employees in 10 years and is taking other steps such as investing $1.5 million to retain county prosecutors and hire eight more.
"Wayne County is the training ground for criminal prosecutors for the state of Michigan," Evans said. "It's where they hone their skills. ... But then they realize our competitive counties, Macomb and Oakland, are paying $10,000 to $30,000 more than we were paying in Wayne County. It’s hard to retain people like that."
But Evans and the board of commissioners clashed during the budget process in September, when the board 13-2 approved the $1.61 billion budget that included a $15 increase to 3,168 retirees' stipends, a measure that would have increased the county's $500 million in unfunded liabilities by an estimated $5.6 million. Evans, a Democrat, sided with the board's Republicans and vetoed the measure. The board did not have enough votes to overturn that decision.
Wayne County's roads and bridges, the oldest and largest system in the state, also weigh heavily on its finances with some projects projected to cost in the tens of millions of dollars. A 10-year asset management plan is expected to be released in April or May and will help guide the county to determine whether to pursue preventative maintenance or road reconstruction.
"The best we can do is to be as efficient as possible and live within our means," Evans said. "However, the reality is that means there will continue to be potholes that county and local governments can’t afford to fill.”
"I thank the governor for at least saying, 'I’m not going to use a Band-Aid approach,'" Evans said. "We need to fix the roads."
Staff Writer Christine MacDonald contributed