Detroit City Council takes action after study suggests lowest valued homes were overtaxed

The Spirit of Detroit statute outside of city hall. - Steve Neavling

Steve Neavling

The Spirit of Detroit statute outside of city hall.

The Detroit City Council is calling for a reduction in property taxes for low-valued homes and a moratorium on owner-occupied foreclosures after a study suggested the city is illegally overtaxing houses worth less than $35,000.

The council unanimously passed the resolutions on Tuesday, a day after housing activists held a news conference about the University of Chicago’s Harris School of Public Policy study.

“While we have undoubtedly had some key victories in our attempt to restore dignity to impacted homeowners and provide restitution, none of it has been done without a fight and a willingness to stay vigilant,” council President Mary Shefield said. “The most egregious part of the systemic overassessment of properties in Detroit has been the issue of regressivity, which is when low-value homes are assessed at a higher percentage of their true market value than are high-value homes. While we recognize the assessor’s job is difficult, the stakes are too high to sit idly by while the city’s lowest-valued homes are consistently overassessed.”

It’s unlikely that Mayor Mike Duggan’s administration is going to lower assessments because Detroit Assessor Alvin Horhn called the study “utter nonsense” and “politically driven.”

Horhn said the methods used by the University of Chicago “violate Michigan tax law and the practices that every assessor in Michigan is legally required to follow.”

It isn’t yet clear whether Wayne County Treasurer Eric Sabree plans to consider reducing assessments for homes valued at less than $35,000. Metro Times is awaiting a response from him.

Activists for the Coalition for Property Tax Justice, a group that advocates for homeowners in Detroit, called on the council to address the assessments.

Bernadette Atuahene, a property law scholar who has studied Detroit’s property tax foreclosure crisis, called the council’s resolutions “an amazing milestone in our fight for property tax justice.”

“The City Council finally acknowledged the continued over assessments and unanimously demanded that the Duggan administration and the County Treasurer take action to correct the ongoing property tax injustice,” Atuahene said in a statement. “Now Treasurer Sabree and the Duggan administration must follow these resolutions with action.”

The group has been behind a separate push to compensate an untold number of Detroit homeowners who were overtaxed for their homes more than a decade ago. Between 2010 and 2016, the city of Detroit overtaxed homeowners by at least $600 million.

The Michigan Constitution prohibits property from being assessed at more than 50% of its market value. Between 2010 and 2016, the city assessed properties at as much as 85% of their market value.

The latest study suggests that homes valued at less than $35,000 are disproportionately overassessed. By contrast, the highest valued homes in the city are the least likely to be overassessed, according to the study.

Activists are worried about another wave of foreclosures based on inflated property taxes on the lower valued houses, which tend to be owned by people struggling financially.

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