The Detroit News stunned readers in January when it uncovered just how badly the city had overtaxed homeowners: $600 million between 2010 and 2016. Since then, there’s been a great deal of debate over how — or whether — to compensate people who were over-billed because their properties were over-assessed.
Mayor Mike Duggan insists the city simply can’t afford reparations. “Folks had a process by which they could appeal it,” he told the paper. “Those years are closed.”
Margaret Dewar, a University of Michigan professor emeritus who studies housing and community development, with a focus on deteriorated neighborhoods and cities with depleted populations, says her chief concern for Detroit now is fixing programs that perpetuate poverty and housing insecurity in the first place.
“Though I sympathize with the desire to make up for what happened to people,” she says, “I’m looking at how to ensure low-value properties [owned mostly by people living in poverty] aren’t over-assessed going forward.” The overtaxation fiasco is just one manifestation of deep flaws — disorganization, incompetence, understaffing — within Detroit’s housing and taxation systems, she says.
The high number of foreclosures caused by the current system hurts not just those who lose their homes, but also the city as a whole, Dewar says. When those homeowners vacate, their houses become vulnerable to vandalism and scrapping, leading to blight. Those ugly optics helped chase away existing and prospective residents during the 2010s, fueling Detroit’s well-chronicled population outflow.
As Dewar sees it, any improvement will require a complete reformation of the city’s approach to property tax exemptions. Right now, applicants who demonstrate that their yearly income falls below the poverty threshold — $12,760 for a single-person household — receive a full exemption. But only about 7,600 of the 39,000 Detroiters who qualify are currently exempted. That’s due to both a lack of awareness and a convoluted application process, which must be repeated yearly, Dewar says.
And, she says, even if those problems were fixed, the Property Assessment Board of Review wouldn’t have the capacity to process that volume of applications. What’s the alternative? “It should be shifted to an exemption for properties below a certain value — say, $15,000 — and then require the remainder to apply,” Dewar suggests.
But a change like that takes state legislation, which doesn’t come quickly. In the meantime, the fates of residents will remain in the often-clumsy hands of the Detroit city government.
Overtaxation at a Glance
33: The percentage of people living below the poverty level in Detroit, the poorest big city in the U.S.
28,000: The number of overtaxed Detroit households that have gone into foreclosure since 2013
48: The percentage of Detroit homeowners who currently owe delinquent property taxes
$3,800: The average amount by which Detroit homeowners were overtaxed between 2010 and 2016