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Detroit scores tax foreclosure victories

Chad Livengood
Detroit News Lansing Bureau

Lansing — Detroit Mayor Mike Duggan scored several legislative victories Thursday as lawmakers gave final approval to a pair of bills designed to help financially stressed Detroiters pay off overdue tax bills and avoid foreclosure.

On unanimous votes, the Republican-controlled House sent Gov. Rick Snyder legislation that would allow county treasurers to reduce the interest rate penalty for delinquent property tax bills from 18 percent to 6 percent.

In an effort to stave off a new foreclosure crisis in the city, one of the bills would allow a portion of a homeowner’s unpaid taxes to be forgiven by capping bills at 25 percent of a home’s fair market value.

“The passage of these bills means that real relief is coming to those who need it without any more excuses of why it can’t be done,” said Rep. Phil Cavanagh, D-Redford Township, who sponsored one of the bills.

The bills also allow homeowners with unpaid tax bills to enter into a monthly payment plan.

“Individually, these bills help Detroiters avoid tax foreclosure, allow the city to more quickly remove blight and help attract thousands of new jobs to Detroit,” Duggan said in a statement.

Duggan lobbied lawmakers hard for the bills this week, meeting with senators who expressed concerns that the legislation would create a form of amnesty, said Senate Majority Leader Randy Richardville, R-Monroe.

The Wayne County Treasurer’s Office has begun foreclosure proceedings for 62,000 houses in Detroit.

Duggan has said he’s “most concerned about” some 20,000 of those homes that are owner occupied and could be put on the auction block next year if deals can’t be worked with the owners to lower their bills.

In testimony to a Senate committee earlier this month, Duggan said he’s not as concerned about landlords who buy up rental homes for cheap and then dodge the taxman.

“We’ve got people who are buying houses at auctions for $500, they’re renting them out, they’re pocketing the rent, they aren’t paying their taxes — we aren’t looking at cutting them any breaks,” Duggan told the Senate Finance Committee on Dec. 3.

The Legislature also sent Snyder a third bill the Duggan administration wanted that could help the city demolish fire-ravaged structures.

House Bill 5862 would require insurance companies to place into a city escrow account $12,000 to cover the cost of demolition work — double the amount currently required.

The bill lets Detroit tap $7 million from the city’s fire escrow account to begin immediately demolishing houses and other structures destroyed by fires, according to the mayor’s office.

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