The city of Detroit now faces a reckoning for its history of over-taxing homeowners—and a new class-action lawsuit.
The city admits it over-assessed many homeowners for years after the Great Recession, leading to inflated property tax bills. A recent Detroit News investigation pegged the amount of over-taxation at around $600 million from 2010-2016. Wayne County has foreclosed on around one-third of all Detroit properties since 2008.
Now, some of those homeowners are looking for redress. Five people have filed a lawsuit claiming that in 2017, the city didn’t send out property tax assessments until just days before a deadline to appeal them. The lawsuit also names the offices of Detroit’s chief financial officer and assessor, Wayne County, Mayor Mike Duggan, Assessor Alvin Horhn, and members of the State Tax Commission as defendants.
“In 2017, the city government denied every Detroit homeowner due process when it came to their property tax assessment,” said Sam Schoenburg, one of the attorneys behind the lawsuit.
“The city knew the notices went out late. They tried to announce some halfhearted measures, [such as] an extension that they announced through a press release and a city meeting. This was not enough. This is not constitutional due process,” Schoenburg said.
U.S. Rep. Rashida Tlaib (D-Detroit) worked on the issue as an attorney with Detroit’s Sugar Law Center. She says Freedom of Information Act request data showed the city mailed out assessments on Feb. 14, 2017, and some people didn’t get the information until days after that.
“In 2017, Detroiters had no real right to appeal their systematic inflated assessments due to the city’s failure to mail timely notices of assessment and the right to appeal,” Tlaib said. “This is not right.”
But the city takes issue with the lawsuit’s claims, calling them “inaccurate” and the suit itself “frivolous.”
The lawsuit’s assertions “can be proven false with a simple Google search,” Detroit assessor Alvin Horhn said in a statement. “You can check. The city mailed out the 2017 notices on January 24 in an appropriately timely manner, and the city extended the appeals period by two weeks to last the entire month of February.”
“This suit has nothing to do with concerns about over assessments in prior years. It refers only to 2017, and even the Detroit News analysis does not question the accuracy of our assessments beginning that year,” Horhn said.
2017 was year that Detroit completed a state-mandated re-assessment of every property in the city. But it left most Detroiters with only modest changes in their property tax bills.
But the groups behind the lawsuit, known as the Coalition for Property Tax Justice, say the city owes over-taxed homeowners more than just a retroactive mea culpa. They want the city to take additional steps to “make it right” for them, especially for the thousands of people who have lost homes to tax foreclosure since 2008—many of whom were illegally over-assessed (the Michigan Constitution says tax assessments cannot exceed 50% of a property’s market value), or would have qualified for a low-income property tax exemption that wasn’t widely accessible or known to most Detroiters until the past couple of years.
The coalition’s demands include:
- An across the board cut of assessments for all properties value $30,000 and under (University of Chicago professor Christopher Berry says he’s found the city continues to assess its lowest-value homes at inflated rates, even after the recent re-assessment);
- Making it easier for homeowners to figure out of the city is overcharging them;
- A Michigan Attorney General and Detroit Auditor General investigation into illegally inflated property taxes and the resulting tax foreclosure crisis in Detroit;
- A state and county compensation fund for Detroit residents;
- A stop to the annual Wayne County tax foreclosure auction until faulty assessments and other problems are corrected.
Detroit Mayor Mike Duggan has said that it would be unfair, potentially illegal and too expensive to compensate people who failed to pay property taxes in the past, even if they were over-assessed. Duggan and other Detroit officials do support a proposed program that would offer some relief to all homeowners struggling to get out from under large delinquent tax burdens. That plan, which requires legislative approval, passed the State Senate just this week.
But Sonja Bonnett, a lifelong Detroit resident and activist who lost her home to tax foreclosure, says the city owes its longtime residents better.
“To the city of Detroit: we’ve been here, we’re not going nowhere,” Bonnett said. “Stop treating us like we don’t matter.”
