Hey BridgeDetroit readers!
Last week, the Michigan Supreme Court weighed in on a major property tax foreclosure question.
In an opinion that could affect tens of thousands of people and hit county coffers, the high court ruled that a 2020 decision — which held that former property owners are entitled to the windfall from tax foreclosure sales — applies retroactively.
What does that mean? We have to go back four years. In its decision at the time, the Michigan Supreme Court said it was unconstitutional for local governments to keep surplus proceeds from tax foreclosure sales.
But a question remained: Could people with foreclosed property sold before the decision get surplus proceeds? Simply put, the high court said, yes, former property owners can make claims prior to 2020.
Why does this matter? Property tax foreclosure is a controversial and important issue, particularly in Detroit, where tens of thousands of homes were overtaxed and then foreclosed. Counties have been criticized for using money from foreclosure sales to fund projects.
In 2014, Wayne County foreclosed on more than 26,000 properties. By 2019, that number decreased significantly to about 3,800. But Wayne County still foreclosed the most properties among Michigan counties that year.
Who could this recent decision impact?
- Former owners: The court’s decision opens the door for tens of thousands of former property owners to try to get their money back, one attorney told me.
- Counties: Depending on the county, retroactive payments could be a big hit to county finances. The actual dollar figure is unclear at this point and the impact of the decision will vary by county. But here’s an idea of how much two counties collected in surplus dollars: From 2013 through 2020, Wayne County saw more than $120 million in surplus proceeds whereas Lake County collected $2.3 million in excess funds.
- Speculators: Alex Alsup, vice president of research and development at the property data company Regrid, said the Michigan Supreme Court’s decision would benefit speculators, and not homeowners, in cities like Detroit. Read his opinion piece in the Detroit Free Press from earlier this year explaining why.
Detroit launched a new program for residents, nonprofits and businesses behind on their water bills.
Dubbed EasyPay, the interest and penalty free plan is meant for all types of customers and does not have income restrictions. Customers can enroll by putting down a $10 deposit, then paying off their overdue balance over 36 months on top of their regular bill. The program spares them from a water shut off as long as they make payments.
On Your Radar: Election Edition
It’s primary day tomorrow!
VOTER GUIDE: Michigan’s primary is Aug. 6 and the general election is on Nov. 5. Read BridgeDetroit’s voter guide here. Polls are open from 7 a.m. to 8 p.m. For more information, and to view a sample ballot, go to Michigan.gov/Vote.
In addition to local and congressional races, Detroiters will be asked to weigh in on three ballot questions:
PROPOSITION P: Proposition P is for a millage renewal of 0.2442 mills, or roughly $0.24 per $1,000 of taxable valuation, through 2030. That would cost homeowners with a taxable value of $100,000 about $24 a year. The money would go toward improving and operating parks and facilities across Wayne County. Learn more.
PROPOSITION A: Proposition A is about Wayne County’s financial auditor selection process. Learn more.
PROPOSAL L: Proposal L seeks to reinstate the current property tax of 3.9943 mills, or $3.9943 per $1,000 of taxable property value, for the Detroit Public Library. This means that for a home with a taxable value of $40,000, homeowners would be paying about $160 per year in property taxes. Learn more.
Don’t forget to join us for our third of four conversations this summer. I’ll be moderating and we’ll be talking about an important issue to Detroiters: housing and home repairs. What questions should I keep in mind?
Thank you for reading! As always, you can reach me at nrahman@freepress.com.
Nushrat Rahman
Economic Mobility Reporter, BridgeDetroit and Detroit Free Press
