Debate over proposal to forgive poor Detroiters' tax debt
Wayne County is considering forgiving the delinquent tax bills of poor Detroit homeowners under a new program, but the county's chief debt collector said Thursday he's opposed to the idea and it might be illegal.
The Quiet Title Exemption Program would have low-income Detroiters give temporary ownership of their homes to the Wayne County Land Bank, which would then file a court case that would wipe away the debt and return the homes to their owners.
But one of the main obstacles appears to be whether it is legal. The land bank's staff members said they have an opinion from county lawyers who blessed the idea, but Wayne County Treasurer Eric Sabree said he doesn't believe judges can erase the debt.
At a land bank board meeting Thursday, Sabree said he's consulted with attorneys, including those who work with land banks and other experts.
"Not one of them have any support for something like this," said Sabree, who chairs the land bank. "The judge cannot extinguish taxes."
The goal is to help struggling owners keep their homes, giving them a "fresh start," said Wayne County Land Bank Executive Director Daniel Rosenbaum.
Foreclosures are down 5% this year, but close to 34,000 properties are on repayment plans, according to the treasurer's office.
Low-income Detroiters who qualify don't have to pay property taxes at all, but critics have argued the yearly application process for the property tax exemption is cumbersome and many don't realize it's available. The ACLU of Michigan sued the city of Detroit over the process in 2016, arguing it was also overtaxing owners with admittedly inflated assessments.
The household income of a family of four needs to be below $26,104 to qualify for the tax break. Detroit would be the only city in the county to qualify currently because it is alone in giving a 100% poverty tax exemption.
Under the proposal, owners who currently have a tax exemption would be forgiven for past years they owe, with the county accepting that they would have qualified in the past. If approved this year, the land bank hopes to start with a group of about 80-90 homes, which officials estimated would mean erasing about $150,000 in debt. It would cost owners $500 to file the court case, called a quiet title.
The land bank board members tabled the proposal Thursday and hope to call a special meeting in the next few weeks for further discussion.
"It makes sense to me," board member Tony Saunders said.
Sabree had other concerns, arguing that other taxing jurisdictions, such as the school district and library, weren't consulted. And he questioned whether the county would have to give refunds to low-income owners who had the exemption but were able to pay their past tax bills.
County Executive Warren Evans is supportive.
"We think it’s a good avenue to help some residents break the poverty cycle and keep them in their homes,” Evans said in a statement.
Rosenbaum said it's a temporary program aimed at helping homeowners until Lansing lawmakers change the law to allow retroactive property tax exemptions. That effort has stalled in recent years. Sabree said he's supportive of the legislation but said Thursday that he believes it has stalled because the city of Detroit hasn't weighed in.
A spokesman for Detroit Mayor Mike Duggan said they were reviewing the Quiet Title Exemption Program and a possible retroactive tax exemption.
"We are committed to reducing the financial burden on these individuals in order to keep them in their homes and are working hard to develop the best solution," John Roach said in a statement.