Bills could extend poverty tax exemption, increase outreach to low-income homeowners

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Lansing legislators have introduced bills that would provide additional relief for homeowners who qualify for tax exemptions. (Shutterstock)

Low-income seniors who are eligible for a poverty property tax exemption wouldn’t have to reapply for the program for up to three years under a bill the state Senate passed last week.

Another bill, introduced in the state House, would require municipalities to ramp up their notification efforts about the exemption.

Last month, Sen. Jim Runestad, R-White Lake, introduced Senate Bill 1234, which includes two changes to the poverty tax exemption:

  • If a homeowner qualifies for an exemption in 2019 and 2020, the local government can grant an automatic exemption for 2021.
  • A person on a fixed income through public assistance  who doesn’t exceed the income threshold and meets eligibility requirements can get an extension for up to three years. 

It would be up to municipalities to adopt these changes. The bill was crafted in response to the COVID-19 pandemic, Runestad told BridgeDetroit on Friday. Sen. Stephanie Chang, a Detroit Democrat, is a co-sponsor. 

“It’s imperative that we be able to explain to people who qualify for this, that they’re eligible because if they don’t know, they start getting into problems real fast that never should have occurred and with this COVID … we simply can’t get the message out to them,” Runestad said. 

Detroit Mayor Mike Duggan on Wednesday testified before the Senate Finance Committee to support the bill. The legislation moves to the House after passing in the Senate Thursday. 

Runestad’s bill includes language that requires people who no longer qualify for the exemption — because they no longer own or occupy the property or because their income has risen above the eligibility threshold — to notify their municipality of the change. If they don’t, they could be subject to repayment of any additional taxes with interest. 

A House bill introduced by State Rep. Abdullah Hammoud, D-Dearborn, calls for local governments to step up notification efforts about the property tax exemption. 

“You don’t apply for a program that you don’t know about and we have a lot of struggling families, especially now with the COVID pandemic,” Hammoud told BridgeDetroit Thursday. “…We’re hoping that this is just one element to increase that transparency and, hopefully, when you increase transparency you’re increasing accessibility. These are life-altering programs.” 

House Bill 6497 would require municipalities to provide an application for the exemption upon request, post information on their websites and give more detailed information about the exemption when mailing out assessment notices. It also would require the Michigan Department of Treasury to provide education and training materials to local governments.

“Having consistent information available to taxpayers and local assessors and other municipal officials can be helpful in ensuring that the poverty exemption is available and accessible to taxpayers in every community around the state,” said Chris Hackbarth, director of state and federal affairs for the Michigan Municipal League. 

Hammoud’s bill was referred to the House Committee on Local Government and Municipal Finance. 

The Senate legislation could allow more Detroiters to access the poverty tax exemption, who were previously held back because of the “burdensome and difficult” application process, for both homeowners and organizations that help them, said Michele Oberholtzer, director of tax foreclosure prevention at the United Community Housing Coalition, who testified Wednesday to the Senate Finance Committee. 

 “Relatively few people have been able to apply and so it’s an accommodation for COVID that could really be wonderful,” she said. “Currently, we’re just scratching the surface.” 

Oberholtzer said one of the drawbacks of the bill is that it has a sunset of up to three years. She recommends that it should go beyond that. 

“If it’s hard at age 80, it’s going to be hard at age 85 and 92, so to allow for a permanent exemption and then to spend our efforts on making sure if someone’s deceased or if they are double dipping or if they move that they’re not able to continuously get that,” she said.

A survey by Quicken Loans Community Fund last year found that of the 25,000 homeowners behind on paying their property taxes, 55 percent indicated they were unaware of the HPTAP tax exemption.

The American Civil Liberties Union and the city of Detroit in 2018 reached a settlement after the ACLU sued Detroit, claiming the city’s poverty tax exemption system was hard to apply for and not widely advertised. The city agreed to create a more “streamlined” application process and mail notices about the program to homeowners every year. 

“How do we make sure that those with little resources have what they need to continue to move forward and put food on the table,” Hammoud said. “For many, it might be this poverty exemption — where they forgo a $4,000-a-year payment — that they simply won’t have to make, but in exchange they can put food on the table, they can pay their electric bill, they can pay their water bill.” 

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