Letter: Detroit Mayor Mike Duggan's plan to rectify overtaxation

The Detroit News

The Detroit News opened many eyes to the failure of city government to accurately assess properties prior to Mayor Mike Duggan taking office in 2014 (“Detroit homeowners overtaxed $600 million,” Jan. 9).

Just like many Detroiters suffered without streetlights and adequate EMS response, budget and staff cuts in the Assessments Division may have led to many Detroit homeowners being overtaxed prior to 2014. 

Detroit homeowners faced hardships as their homes quickly lost value during the Great Recession. In 2009, home sale prices declined by nearly 60%, according to the Zillow Value Home Index. The city’s Assessments Division did not reduce the “true market value” fast enough in response to the 2009 collapse, and some Detroiters may have been overtaxed between 2010 and 2013. 

Average True Market Value is based on records from the Office of the Assessor, excluding vacant parcels and neighborhoods and condos determined to be outliers.

After years of budget and staff cuts to the Assessments Division, City Council was alerted to the division’s ineffectiveness in 2012, when the Office of the Auditor General concluded, “[…] the (Assessments) Division’s assessing operations are inefficient, ineffective and lacking in some areas of its assessing activities.”  

Within Duggan’s first month in office in 2014, the city reduced homeowners’ assessments by 22% citywide. The graph shows that the 2014 reduction brought the city’s assessments below the housing market. (In Michigan, it is typical for the assessor’s value to be lower than the market because assessments must lag market sales by a year.) At the time, Duggan strongly criticized the city’s past assessment practices: “The assessments in this town have been a source of great anger for the Detroiters,” he said. “In the worst case they have forced people from their homes.”

Where did the money go? Of the property tax revenue collected in those years, 43% went to K-12 education (at the time collected by the state, Detroit Public Schools, and Wayne Regional Educational Service Agency); 38% went to the city of Detroit; and the remainder went to Wayne County, the Detroit Library and other small entities. 

That means that any direct “repayment” would eviscerate our schools and city services, or increase taxes on those that can least afford to pay through a new property tax.

For example, if the Detroit News’ numbers were used:

►A sample Russell Woods homeowner would owe an additional $4,688 bringing their property taxes to almost $8,000. 

►A sample Barton McFarland homeowner would owe an additional $888 bringing their property taxes to more than $1,500 for the year. 

This new tax would cause more foreclosures.

To fix the over-assessment problem, the mayor also increased funding for the Assessments Divisions so that Detroiters never face this challenge again. The city invested more than $10 million in a citywide revaluation and provided the department with a nearly 50% increase in staff. 

Detroit Mayor Mike Duggan led a five-step strategy that so far has helped to reduce tax foreclosures by 90% in Detroit, Massaron writes.

The mayor led a five-step strategy that so far has helped to reduce tax foreclosures by 90% in Detroit. The Duggan administration has:

►Reduced assessments by 22% in 2014.

►Ended the city’s practice of placing water bills in the property tax foreclosure system in 2014.

►In 2014, successfully passed a bill to allow delinquent taxpayers to enter into payment plans, and 15,000 signed up the first year alone.

►Partnered with block clubs, City Council members and others to knock on doors and inform residents of available tax assistance. In 2019, we granted more than $5 million in property tax exemptions to over 7,000 Detroiters.

►Launched the Make it Home Program to allow homeowners who qualify for the Homeowner’s Property Tax Assistance Program (HPTAP) and are at risk of foreclosure to get back their property for $1,000.

On Tuesday, the fight for relief for property owners facing foreclosures took a major step forward when the Pay as You Stay legislation (PAYS) was sent to the governor’s desk.   

“Pay as You Stay” is a simple, three-part plan for HPTAP eligible homeowners with delinquent taxes:

►Once you enroll, all interest, penalties and fees would be eliminated.

►The balance due would be limited to back taxes only or 10% of a home’s taxable value — whichever is less.

►The remaining balance would be paid back over three years at zero percent interest.

The program could reduce a sample homeowner’s monthly payment from $192 a month for 5 years, to $29 a month for 3 years.

The administration is working collaboratively on solutions that help Detroiters without causing more harm. Going forward, I believe our top priority remains keeping Detroiters in their homes and ensuring that they never face these government failures again.

David P. Massaron, chief financial officer, city of Detroit