Our Editorial: Go hard after city’s tax cheats
Taking the unwarranted profit out of blight is an important step toward ridding Detroit of derelict buildings and keeping others from falling into disrepair. The city is taking the right step in aggressively pursuing the owners of foreclosed and abandoned properties for payment of back taxes.
Not all of the tax scofflaws in Detroit are individual homeowners.
A significant portion are financial institutions and corporations that are holding onto homes and buildings without paying their property taxes.
Perhaps they’re speculating on a boom in property values, or simply overwhelmed with the challenge of moving structures that need expensive repairs.
Either way, if they own the buildings, they should be meeting their tax obligations. And too many aren’t.
So Detroit is filing more than 1,000 lawsuits against banks and businesses that collectively owe $30 million in back taxes from the years 2014-16.
Last year, similar action was taken against tax cheats from the years 2010-13.
Some big names are on the target list. The Bank of New York Mellon is being sued for over $865,000 in unpaid taxes on nearly 135 properties it held during the 2011-15 period.
Last year, the giant bank was sued for a $229,121 debt on nearly 30 parcels.
All of those being sued either owned or had a financial stake in properties that have been foreclosed.
Detroit needs the unpaid tax money to remain fiscally solvent.
But it also must demonstrate it will enforce its laws and will not tolerate property owners allowing huge tax bills to build. In many cases, the parcels are eventually seized and sold in a tax sale for less than the debt owed to the city.
Of course, winning in court does not mean collecting the debt. Many owners simply walk away and leave the city holding the property.
But as bankruptcy attorney Doug Bernstein told The Detroit News, if Detroit doesn’t try to get the debtors to pay up, “then you can assume you are going to collect none of it.”
That’s not something Detroit can afford. Just the threat of the lawsuits already has some delinquent property owners coming forward to work out settlements of their bills.
Sending the message that the city is serious about collecting what it is owed may encourage other property owners to stay current on their taxes.
And it tells those who are considering investing in the city that Detroit has moved a long way from the time when it had no certainty of even what it was owed, let alone any hope of collecting the debt.
Efficiently and effectively collecting taxes is a basic sign of a functional city.