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New report shows Detroit’s tax foreclosure crisis was even worse than we thought

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Between 2010 and 2017, homes were overtaxed by an astounding $600 million

Two abandoned homes in Detroit. Shutterstock

We knew it was bad. Now we have the numbers to prove it.

A report released this week demonstrates the scope and devastating effects of the tax foreclosure crisis on Detroit. The numbers are so large that they’re difficult to fathom.

The Detroit News and Reveal from The Center for Investigative Reporting analyzed 173,000 properties and found that between 2010 and 2017, they were overtaxed by a total of $600 million.

The Wayne County Treasurer’s Office foreclosed on more than 100,000 Detroit homes between 2012 and 2017. But the new report found that tax bills for these homes was too high by an average of $3,800, with well over half taxed more than twice what they should have been.

Detroit’s foreclosure crisis began with the bottoming out of the real estate market after the housing crash of 2008. But the city’s assessors office was too slow to make changes in its assessments of home values, leaving most with inflated tax bills. Moreover, the city didn’t adequately implement the Poverty Tax Exemption to eligible low-income homeowners. In 2018, the ACLU of Michigan reached a settlement with the city after a two-year lawsuit over how the city administered its property tax breaks.

It’s difficult to know how many owners would have been able to keep their home had they been properly assessed. A study from 2018 estimated that 10 percent of foreclosures were caused by overassessments—this new report suggests it’s even higher.

And these estimates are likely conservative. An unoccupied home often becomes a blighted home, which reduces the value of the surrounding ones. Another study from the University of Michigan found that 90 percent of properties at Wayne County tax auction went to speculators, who often don’t care for the home either.

Many activists are now considering how this problem should be addressed. Several city initiatives, such as the Pay As You Stay program, will keep more Detroiters behind on taxes in their homes.

Some activists and politicians, including City Council President Pro Tem Mary Sheffield, are weighing retroactive options like financial restitution for those affected in cash payments, zero-interest home-repair loans, or free Detroit Land Bank homes.

But Mayor Mike Duggan seems less willing to consider these options. “If you’re assessed too much, there’s a whole series of measures that you can take and a lot of people took advantage of those measures,” he said in an interview on the podcast Reveal. “I don’t know how you go back on past years where people didn’t avail themselves of the rights. What we’re trying to do is fix it going forward.”

There’s no way to make people whole again for the money lost in home values and tax bills. But something must be done.