Mayor Mike Duggan displays a map showing the property tax rates of Detroit compared to neighboring cities during an Aug. 31, 2023, press conference. (BridgeDetroit photo by Malachi Barrett)

Mark Fentress breathed a sigh of relief when he learned taxes on his urban farms would not increase under a new proposal to reshape Detroit’s property tax scheme. 

Detroit lawmakers will soon introduce legislation allowing voters to decide on a new property tax system that promises to save homeowners 17% on average while raising taxes for owners of abandoned buildings and vacant land. Mayor Mike Duggan shared his “land value tax” plan on a statewide stage at the Mackinac Policy Conference earlier this summer, but the latest version has undergone several changes aimed at protecting residents who own side lots and urban farms.

Fentress, owner of Corn Wine Oil Farms, said farmers who are turning vacant lots into productive use should not have to pay higher taxes. Fentress was concerned the tax plan would be “squeezing small people like myself,” if not for an exemption Duggan announced Thursday. 

Duggan said adjustments to his original plan – which sought to triple the tax rate on open land while slashing taxes on homes by a third – came after his office met with urban farmers, community groups, developers and owners of parking lots and scrap yards. Key elements of the plan include:

  • Cutting Detroit’s operating from 20 mills to 6 mills
  • Doubling taxes on vacant land from 85 mills to 189 mills
  • No tax increases for urban farms, community gardens and “community-oriented” spaces
  • No tax increase for residents who own up to four side-lots 
  • No tax increase for homeowners in a Neighborhood Enterprise Zone

“There are over 2,200 schools, churches, urban farms and community gardens in our neighborhoods all around the city,” said Jerry Hebron, executive director of Oakland Avenue Urban Farms in Detroit’s North End neighborhood. “We have stabilized these communities. We are feeding folks in our community and creating spaces where folks felt welcome. And so, because of that, the mayor said ‘OK, let’s put language in here that protects our urban farmers and our gardens.’” 

The proposal aims to punish land speculators that have allowed structures to crumble for years and bring Detroit’s tax rate in line with suburban communities that pay much less. The mayor said 97% of homeowners will experience an automatic permanent tax cut and no homeowners will see an increase, while taxes on vacant land will more than double.

“I’ve seen countless neighbors of mine fill their U-Hauls and leave the city for a neighboring suburb,” said Council Member Gabriela Santiago-Romero, who represents Southwest Detroit. “These neighbors come back to see their families and friends, to go to our games, to eat at our incredible restaurants. Detroit should not be a place where people feel like they can’t afford (to live in), they can only afford to visit.” 

Duggan said taxes on the average vacant lot would increase from $30 to $67. He expects the cost savings for homeowners will vastly outweigh the increase in taxes on their vacant land. 

A few things need to happen first. State Rep. Stephanie Young, D-Detroit, plans to introduce a bill in the Michigan Legislature in September. If the bill is signed into law, Detroit City Council must then place a proposal on the ballot asking voters to decide whether to implement the land value tax. Duggan hopes to put the ballot question to voters in February 2024. 

State Rep. Stephanie Young, D-Detroit, plans to introduce legislation allowing cities to opt-in to a new land value tax scheme. (BridgeDetroit photo by Malachi Barrett)

House Speaker Joe Tate, D-Detroit, and Senate Majority Leader Winnie Brinks, D-Grand Rapids, and Gov. Gretchen Whitmer are in support of the tax plan, Duggan said. Democratic control of state government creates a good climate for the legislation to pass, according to the mayor. 

“I think this will get pushed up Lansing’s priority list a lot faster than it otherwise would have,” Duggan said. 

A group of residents with the Coalition for Property Tax Justice attended Duggan’s Thursday press conference in the Rosedale Park neighborhood on Detroit’s northwest side. They support the tax reform plan but said Detroit leaders should first fix the city’s assessments process, highlighting the widespread over assessment of property taxes between 2010 and 2016. A 2020 Detroit News investigation found the city had overcharged homeowners by at least $600 million. 

Bernadette Atuahene, a professor and property law scholar at the University of Wisconsin-Madison Law School who lives in Detroit, said she’s provided the city with a landfill of evidence that residents are still being illegally overtaxed. Atuahene said the City Council must pass a property tax ordinance that would reform the assessment process.

Bernadette Atuahene, a legal scholar who studies Detroit’s assessment system, demonstrates with members of the Coalition for Property Tax Justice at an Aug. 31, 2023, press conference. (BridgeDetroit photo by Malachi Barrett)

“There’s no question the lowest value homes in Detroit are still being over assessed,” Atuahene told reporters Thursday. “We’re not against (the land value tax), what we’re saying is you must pass the property tax reform ordinance first to clean up the assessment division, which is currently still doing these over assessments before we implement a land value tax plan, which will increase the administrative burden on the assessment division.” 

Detroit Assessor Alvin Horhn has previously said there is no “systemic overassessment issue” in the city in response to the coalition’s claims. 

Council President Mary Sheffield introduced the ordinance last year, but it has not advanced from the Budget Finance and Audit Committee. The Detroit Law Department argued some sections of a previous version of the ordinance are unlawful. Council Member Fred Durhal III, who chairs the budget committee, said the language is still being discussed. 

“Our law department is responsible for ensuring that when we pass ordinances that they are constitutional,” Durhal said. “I’ve met multiple times with the Coalition for Property Tax reform, I don’t think we’re at a point where the ordinance is ready to move just yet.” 

Detroit homeowners currently pay 67 mills, more than communities that have drained residents from the city like Southfield, Dearborn, Ferndale, Warren and the Grosse Pointes. Duggan said the tax cut will make Detroit more competitive with surrounding cities. 

Chief Financial Officer Jay Rising is the architect behind a new land value tax system supported by Mayor Mike Duggan and Detroit lawmakers. (BridgeDetroit photo by Malachi Barrett)

In addition to providing universal tax relief to residents, city leaders said the plan will also discourage developers from ignoring vacant property that could hold housing and small businesses. Detroit leaders said it’s too easy for developers to turn vacant land into parking lots or let buildings idle because the current taxes are low. 

“There are far too many people just sitting on their land, not developing it,” Duggan said. “When we raise the taxes by more than double we will start to create incentives for them to improve that property the way they should.”

Young, who previously served in Duggan’s administration as a district manager in the Department of Neighborhoods, said Detroit taxpayers have long carried the cost of cleaning up neglected properties that fell into disrepair. 

“It’s time for those folks to pay their fair share,” Young said. “We took the time and the energy and the money to clean up their properties. Well, I’m saying the bill has come due, y’all.” 

Charity Dean, executive director of the Metro Detroit Black Business Alliance, said the tax plan also addresses inequities with the distribution of Neighborhood Enterprise Zones, which offer tax breaks to select homeowners in the city. No new NEZ breaks will be granted, Duggan said, and existing tax breaks will not be renewed after their 15-year expiration date. 

“We have pockets of folks that are paying different taxes,” Dean said. “We think about the path forward and the future that we want to see in Detroit. We can’t imagine a future Detroit if we’re not talking about equity.” 

Dean also said the tax plan will help address racial wealth gaps exacerbated by lower rates of Black homeownership. 

“That racial wealth gap is manifested in access to land and access to homeownership,” Dean said. “When you think about the journey that we had as (Black) people to acquire land in this beautiful city, what better way to continue the work than to build generational wealth and deal with our property tax issue.” 

Flor Hernandez, president of the Livernois Dragoon Block Club, said the land value tax plan will strengthen neighborhoods and lower barriers for new homeowners who struggle to afford property taxes. 

“It’s especially important to implement this legislation for residents within my community, because we have such a dense population that are primarily homeowners, and this tax break is going to be very well deserved to our community members,” Hernandez said. 

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