Latest News 2017 September Detroit Tax Assessors Are Doing What the Uprising Couldn't

Detroit Tax Assessors Are Doing What the Uprising Couldn't

If you're a homeowner, you're already familiar with the concept of property tax. Tax assessors will go to your home, apply the local tax rate to the assessed value of your property, and that's what you pay in property tax. The value of a piece of property is subject to a principle known as the "best use" rule. Essentially, the value of a piece of land is determined according to what would be the best use of that land.

If you built a Taco Bell in the middle of Beverly Hills or Manhattan, that Taco Bell would be taxed at the same rate as a mansion or a luxury apartment building—considered to be the "best use" of land in those areas. Either that Taco Bell will charge $40 per taco, or they're facing foreclosure by the end of the first month.

It's how areas of high-value real estate maintains its value (and how best-use value is used to shape the community)—if you're going to be taxed at the same rate as a mansion or luxury apartment building, you're going to build something of roughly that value or better.

When "Best Use" Gets Weaponized

However, where that gets unclear are in areas of diminishing value. Cities don't want to lose revenue, but lawmakers need to ensure that they're not taxing people more than their houses are worth. It's essentially where "best use" and a homeowner's rights clash. Michigan's Constitution includes a statute that keeps homeowners from paying more than 50% in property taxes than the market value of their home.

That hasn't stopped tax assessors from foreclosing on thousands of homeowners in Detroit's poorest neighborhoods between 2011 and 2015. Even if a homeowner has owned their home for decades (as is the case for many African American families in Detroit), they could still lose their family home from unpaid property taxes.

In a New York Times op-ed from this year, a man named Mr. Jones talked about his memories of the Detroit uprising—when the National Guard treated the Black neighborhoods of Detroit like an occupied foreign territory in response to locals reacted to the killing of an unarmed Black man by Detroit police. He comments that his family and others didn't leave Detroit after that, despite the violence and uncertainty. Detroit was home.

But where fear and an unprecedented show of force didn't drive them away, illegal tax assessments might do it instead. From 2009 to 2015, city tax officials assessed 85% of Detroit homes at rates that violated the state's constitution—more often violating the constitution for lower-valued homes than higher-valued ones. At a time where Detroit might be making a recovery from its dire financial straits, longtime residents may be facing eviction from their own homes.

Walter Hicks is a 57-year-old lifelong resident of Detroit. His home had a market value of $9,000 when he was evicted. The tax assessors from the city assessed his property's value at $40,000. His home and 30 other homes in his neighborhood were foreclosed on. He was denied a poverty exemption.

The City Faces a Massive Lawsuit

Five homeowners (including Mr. Hicks) and four neighborhood associations, with the help of the NAACP and the ACLU, have filed a lawsuit against the Wayne County treasurer and the City of Detroit. The lawsuit not only claims that homes were illegally foreclosed after unconstitutionally high tax assessments, but that the efforts disproportionately affected Black neighborhoods in Detroit.

The lawsuit also alleges that Detroit and Wayne County are trying to take homes away from thousands of homeowners who were unable to pay their inflated property taxes—based on assessments that were at least 20% higher than they should have been in most cases. The lawsuit also alleges that the city made it unreasonably difficult for homeowners to apply for a poverty exemption, which would offer relief from their tax obligations.

Butch Hollowell, the City Attorney, called the lawsuit "flawed" and "irresponsible." He states that the City's declaration of bankruptcy freed it from outstanding claims and prolong Michigan's oversight of the City's operation. He also claimed that it would threaten basic city services to everyone in Detroit.

Between 2011 and 2015, 1 in 4 properties in Detroit were foreclosed on. While the rest of the nation (and even parts of Detroit) enjoy economic recovery, poor and Black neighborhoods are facing a foreclosure rate that hasn't been seen since the Great Depression. The ACLU and the NAACP hope to get them justice—and hopefully, secure for them the one thing they've always wanted: a home.

Categories: Real Estate