Detroit Mayor Mike Duggan has rolled out a proposed plan he said would help many Detroiters who were overtaxed by the city between 2010 and 2013 due to property tax overassessments. The stated goal is to help Detroiters who were hurt by the overassessments, including many who lost their homes due to tax foreclosures.
Five city council members have co-sponsored Duggan's proposal, and a resolution was introduced Tuesday at a formal session of the city council.
Under the plan, affected homeowners would be first in line for eight city programs. They include affordable housing, city job opportunities, senior home repair grants, and ownership of rehabilitated housing.
The children and grandchildren of affected homeowners would get priority for summer jobs through Grow Detroit's Young Talent. Affected homeowners would get a 50% discount on an auction house or side lot purchase from the Detroit Land Bank Authority.
If the city council passes the proposal, the preferences would remain in effect until December 31, 2024.
"For many residents across Detroit, home ownership is the first step in building generational wealth and economic stability," said Duggan in a written statement. "Years of overassessment took that from families, and this is an effort to ensure some of what was lost is restored."
"The proposal is meant to send a message that we want the affected homeowners to be able to participate in the positive changes that are happening in the city through property ownership and through direct benefits that can help them rebuild what was lost," said Arthur Jemison, head of Housing, Planning and Development for Detroit.
Inflated property tax bills contributed to a tax foreclosure crisis in Wayne County, where around one third of Detroit properties went through foreclosure since 2008. A Detroit News investigation in early 2020 estimated that overtaxation between 2010 and 2016 came to around $600 million. A February 2020 report from Detroit's chief financial officer called that estimate "inflated," and asserted there was insufficient staffing in the Assessor's Office to make a true evaluation feasible.
Many overtaxed homeowners have called for cash compensation, which the plan does not include.
"The city doesn't have a lot of cash resources," said Jemison. "But the city does have land resources. The city does have successful programs that Detroiters appreciate and rely on."
Jemison said cash compensation would result in property taxes going up dramatically.
"We don't want to impose new tax burdens on people who've already got significant tax burdens so that we can then repay the same people who we would be taxing."
Bernadette Atuahene, a member of the Coalition for Property Tax Justice, said the coalition's biggest concern is that the proposed plan limits eligibility for the preferences to those overassessed between 2010 and 2013. She said those dates should be extended because overassessments intensified with the start of the Great Recession in 2008 and continued until the beginning of 2017 when the city completed its citywide reappraisal of residential propoerties.
Atuahene also said the plan fails to create separate funding for affected homeowners so that by giving them preference, the plan pits them against others who also need the programs.
City officials said the proposed plan would be funded by a $6 million one-time appropriation from the City's "modest" 2020 FY surplus. They said the money is intended for administrative expenses associated with the plan.
Officials also cited other steps taken to reduce tax foreclosures in Detroit, including ending the practice of placing water bills in the property tax foreclosure system and allowing delinquent taxpayers to enter into payment plans.
