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Opinion: Detroit's property tax methodology continues to harm its poorest residents

Christopher R. Berry

Despite substantive evidence to the contrary, Mayor Mike Duggan has claimed that Detroit’s property assessment problems are in the past.

While acknowledging that many homeowners were previously overassessed, the citywide reappraisal initiated in 2014, he claims, fixed the city’s historical pattern of inequitable property taxation. Unfortunately for all involved, this simply is not true. The city’s regressive property tax policies continue to this day, unfairly burdening those residents least able to afford it.

The ongoing nature of the problems was highlighted recently when city residents and advocates attended a public hearing and demanded that city officials widen the pool of overtaxed homeowners who could be eligible for compensation.

This public pressure appears to have changed the mayor’s tune. City officials told hearing attendees that they plan to expand the eligibility of overtaxed homeowners to receive some form of compensation — including homeowners taxed after 2013. 

Detroit Mayor Mike Duggan was with Roshona Kennedy on Thursday, Feb. 27, 2020 as the 40-year-old Detroiter received the deed to her grandparents' house that she almost lost to tax foreclosure.

Providing compensation for illegal past assessments is a start. But it fails to address the fact that the assessment methodology that drives the system’s inequities has never been fixed. Last month I published a report evaluating Detroit property tax assessments before and after the citywide reappraisal. Together with my colleagues from the University of Chicago’s Center for Municipal Finance, I shared its findings with local officials — including the city assessor and the state tax commission — at a hearing organized by City Council President Pro Tempore Mary Sheffield. 

Our research shows that average assessments have indeed declined each year since 2016, a fact that city officials tout and hold up as proof that the system has been fixed.

At the same time, however, overall regressivity — the overassessment of low-valued properties relative to high-valued properties — has only gotten worse. How can this be? It is because most of the assessment reductions have gone to higher-priced properties.

The vast majority of properties in the bottom third (less than $19,000 in sale price) are still being assessed well in excess of constitutional limits. In effect, this means that the least well off among Detroit residents continue to pay more than their fair share — even as assessments for others have gone down.  

While continuing to insist that the system has been fixed, city officials admit that they have not conducted their own study of overassessment and don’t plan to, citing costs they say the city can’t afford. Instead, they claim that the law only requires them to look at average assessments — this claim made despite the fact that the Michigan constitution protects every property owner, not just the average owner, from over-assessment. Luckily for them, our report is finished, available and free. 

I have studied property taxes in jurisdictions throughout the country. The problems in Detroit are not unique; in fact, most of the jurisdictions I have studied have similar issues. The magnitude of Detroit’s problem, however, is unique among large cities. I have not seen another jurisdiction that places such a disproportionate burden on its lowest-valued properties.

What is needed now is a more equitable, efficient and transparent property assessment methodology — one that fixates less on lowering average assessments and more on delivering relief to those who deserve it most. Detroit’s property tax system can be fixed — but doing so begins with acknowledging that, for far too many Detroiters, overtaxation is not a thing of the past.

Christopher R. Berry is the William J. and Alicia Townsend Friedman Professor at the University of Chicago Harris School of Public Policy and the College. He is the academic director of the Center for Municipal Finance.