Detroiters angry with being overtaxed are working to move forward a plan that would compensate city residents.
For years following the Great Recession, Detroiters had their property taxes overassessed. The Detroit News reported in 2020 that Detroiters were overtaxed by about $600 million between 2010 and 2016. In addition, Detroit, once a mecca of Black homeownership, had become a city of majority renters by 2016 following a massive wave of tax foreclosures. Overtaxation is a national racial justice issue, advocates say.
Related: Why Detroit council rejected the mayor’s proposal to aid overtaxed homeowners
Property tax justice advocates and about 700 residents met virtually Jan. 22 to discuss a proposal that could help fix the damage caused by years of overassessments. The Coalition for Property Tax Justice, which hosted the event alongside City Council President Mary Sheffield, has been working to create solutions for the overassessments since 2017.
The coalition’s goals are to end inflated property tax assessments in Detroit, provide compensation to Detroiters overtaxed and/or foreclosed upon, and to stop Wayne County from foreclosing on owner-occupied homes until the City can ensure assessments are legal and accurate.
Sheffield also submitted a memo to the City’s Legislative Policy Division and the City Law Department to draft a resolution or ordinance meant to address compensating people who were overassessed.
Since 2008, Wayne County has foreclosed more than 145,000 Detroit properties – a third of the city’s properties. Sheffield said the coalition started with the idea of giving Detroiters direct payments to repay the damage, but the City’s former corporation counsel, Lawrence Garcia, rejected that plan in a 2020 legal opinion.
“So we really started to alter our research and begin to focus on how can we provide other options to address this issue of overassessments,” Sheffield said during the virtual event.
The potential solutions include giving those who overpaid Detroit Land Bank Authority-owned homes, property tax credits, home repair grants, small-business business support and rental vouchers.
Sonja Bonnett lost her home in Detroit to tax foreclosure and has been an activist fighting against tax foreclosures since 2017. She said she wants people to know they aren’t alone in this “nightmare.”
“I think that the City really needs to know that when you put the community in these positions, you’re not just taking a building from us, you’re taking the American Dream from us,” Bonnett said during the virtual event. “You’re taking what some of us were so proud to gain in the first place, which is a family home. And when it happened to me, it almost destroyed me, it almost destroyed my family.”
Because of the number of stories like Bonnett’s, the City of Detroit did a parcel-by-parcel reappraisal of residential property in 2014, and some home values were lowered starting in 2017. However, a University of Chicago study from 2020 found that the inequities in Detroit’s property tax assessments continued even after the 2017 adjustment. The group also found that the City of Detroit is still overvaluing its lowest price homes.
On Tuesday, Mayor Mike Duggan said during a press conference announcing an average 31% rise in home values and a no more than 3% rise in property taxes, that any suggestion that taxes are still too high today is “utter nonsense.”
Duggan said he has talked with Sheffield about different ways to solve the overassessment issues from 2010 to 2013 and worked with officials on a full-scale effort to make assessments as accurate as possible.
“I’m optimistic that the council leadership and the administration will reach a solution that will work for everybody,” Duggan said.
In November 2020, Duggan advanced a plan to help compensate residents. However, City Council rejected the resolution that was seeking to give relief to Detroiters whose properties were overtaxed from 2010 to 2013 using a one-time $6 million appropriation of surplus dollars from the city’s 2020 fiscal year budget. Council members voted it down 5-4, saying the funds wouldn’t be enough to adequately address the problem.
The Coalition for Property Tax Justice organizers held a press conference after the mayor’s event to reiterate the importance of providing reparations for Detroiters.
Kim Hunter, a media relations representative from the organization, said he believes residents have been traumatized by becoming a city of renters. He would like for City officials to address the lack of home ownership and loss of wealth.
Organizers say compensation isn’t limited to financial considerations — “healing” is important to restoring dignity to families.
“Dignity was taken and homes were taken,” Hunter said during Tuesday’s press conference responding to Duggan’s update on property tax values in the city.
“We have to do right by the people who are here,” he said.
Owning your own home provides a sense of security and is also a cornerstone for building wealth over generations. Losing one’s home to tax foreclosure when the value has been over assessed is unconscionable, particularly when overvaluation has been acknowledged.
The problem must be addressed and reimbursement /restoration is critical—unfortunately the lingering timing of a solution is adding to the injury. Homes have been lost! Reparation now seems to be the only alternative. Do the right thing, act NOW!
Reparations paid to one-third of Detroiters by the other 2/3rds of Detroit property taxpayers is not the only solution; nor is it at all a defensible remedy. Within that limited context, even calling these proposed remedies “reparations” is an abusive use of that word and concept .
A clear case can be made that the current system of property taxation is unfair and ought to be made unconstitutional. But the Headlee Amendment to our State Constitution was enacted by a sizeable vote of the people. And if it were up for a vote today, it would probably be approved by an even more overwhelming vote, given the growth of anti-tax sentiment over the past 40 years. Unfairness was deliberately built into the Amendment, and it becomes more and more unfair with the passage of time.
“Reparations” could, however, be more fairly and appropriately be applied to calling upon the federal government for a renewed and more targeted response to the disparage damages left upon African-American buyers by its decades of failure to police the sub-prime mortgage arena. Richard Rothstein lays a strong foundation for such a remedy in his 2017 book, The Color or Law, a Forgotten History of How Our Government Segregated America, on pages 109 to 113.