In a rare move, Detroit’s assessor Alvin Horhn on Tuesday spoke during public comment at the City Council meeting to voice his support for bringing back property sale inspections in the city.
Of the 6,100 property inspections conducted by his office, all but 250 were transferred through a quit-claim deed, Horhn said. That means the majority of residential properties are sold as-is. Although legal, these sales come with unique dangers in a city with a single-family housing stock that can be more than 100 years old.
“People do not know what they do not know,” Horhn said, noting that quit-claim deeds don’t guarantee a buyer is getting a property that doesn’t have existing issues, and most owners don’t have the expertise required to adequately evaluate a house’s condition.
The assessor’s office is required to review 20% of properties in the city every year and has assessed over a third of the city’s housing stock over the last several years. In doing so, Horhn said they’ve reduced the condition status for 90% of properties from “good and average” to “fair and poor” condition.
“By the time we’re done this year, as part of the mayor’s executive order, more than 90% of the housing stock in this city will be in either fair or poor condition,” he told council.
Some of the issues Horhn said he’s seen over the years include hollowed-out furnaces, painted-over rotten window sills, warped floor boards and cracks in the foundation that have been hidden.
Property taxes: Weighing growth vs. revenue
Detroit City Council members debated on Tuesday the value of Neighborhood Enterprise Zone tax incentives and whether they are a useful tool for alleviating residents’ tax burden compared to suburban areas.
NEZ tax incentives cap the city and county millage rate at 50%. The conversation was sparked by an NEZ application submitted for a Corktown property, which the owner plans to renovate and resell.
Christopher Gulock, deputy director of the planning commission, explained that property taxes for a property in Corktown with a taxable value of $300,000 would be around $21,000 a year. With an NEZ exemption, the taxes are about $6,000 a year.
If an NEZ were granted for a property with the same value in a city with a lower tax rate, such as Novi at 31 mills, Gulock said the NEZ would cap property taxes at around 17 mills, or $2,000 or less.
District 3 Councilmember Scott Benson said the city needs to compete with neighboring cities to overcome the “extraordinarily” high property tax liability it currently faces, and one of the ways to do that is through NEZ certificates.
“To compete, we have our NEZ, which still makes us three times more expensive, but what it doesn’t do is make us 13 times more expensive,” Benson said.
District 7 Councilmember Denzel McCampbell said the council should, as they move forward in their conversations about property taxes, consider the increase in applications they’ve seen “in certain neighborhoods where folks are moving to that they have more means to cover our tax bill than other neighborhoods,” where folks have less and aren’t able to pay their taxes at the current rate.
Gulock said the council’s options were to reduce the number of years an NEZ exemption can last (which is currently anywhere between 11 and 17 years) or eliminate NEZs entirely. The question about whether Corktown, Brush Park, or other neighborhoods need NEZs, he said, is a policy decision.
The application for the Corktown property was unanimously approved, with more discussion anticipated in the future.
Music Hall expansion project
A new financing plan for the Music Hall expansion project was approved Tuesday, as well as a resolution authorizing Detroit’s Economic Development Corporation to issue bonds for the project.
When the Detroit City Council approved the initial project plan in April 2024, developers estimated project costs would be around $125 million and asked for $80 million in tax-exempt bonds. The remainder would be funded through private and public sources.
The project costs are now estimated to be around $174 million and, instead of a combination of public and private sources of funding, the developer is now seeking approval for the issuance of up to $166 million through additional tax-exempt and taxable bonds.
The increases in project costs are due to a variety of factors, including increased costs in light of project delays; financing costs not included in the original project budget, such as paying off certain acquisition costs; bond issuance costs; and funding a debt service reserve fund and capitalized interest accounts, according to the planning commission’s report.
