Detroit homeowners could shave tens or hundreds of dollars off their property tax bills if the City implements a land value tax system, depending on the neighborhood they live in and other factors.

Mayor Mike Duggan shared the good news of tax savings to a congregation of Detroiters at Macedonia Baptist Church who were eager to see whether a proposed overhaul of property taxes was worth believing in. Duggan showed off a new website, available now, that allows residents to type in their address and receive a breakdown of how much they would save under his land value tax proposal.

Related:

• Detroit’s land value tax plan explained
• Setback for land value tax reflects distrust, confusion with Detroit plan

One by one, for around 20 minutes, homeowners shouted out their addresses for city officials to plug into the tax estimator website. The results came in fast and furious, and were displayed on a large screen. A home on Winston Street would save $111, another on St. Mary’s Street would save $164, then $111 for a house on Schoenherr Road, then $27, $35, $192 and $204, and on and on. 

Residents cheered when the database predicted several hundred dollars in savings, and Duggan joked that homeowners wouldn’t be happy with him when the predicted savings were slimmer. 

Duggan is pushing the Michigan Legislature to pass laws allowing Detroit to set different tax rates for the value of land and the value of improvements on property. He plans to reduce the city’s operating tax by 14 mills while creating a 118 mill tax on the value of land. That would reduce the typical tax rate for homeowners to 53 mills, bringing Detroit in line with suburban neighbors like Southfield and Grosse Pointe. 

The mayor says homeowners can expect a 17% property tax cut on average, a savings of roughly $184. Residential property owners are expected to save $30 million collectively each year the land value tax is in place, according to the city.  But as the tool demonstrated Thursday night, the predicted impact on homeowners can vary widely. 

Linda Delaney, a retired Detroiter living on the northwest side, said she paid $1,213 in property taxes this year. Shaving off even $100 would have a “substantial” impact on her budget, Delaney said. 

Jocelyn Harris lives in the Jefferson Chalmers neighborhood on the opposite end of the city.  She walked away from Duggan’s Thursday presentation unmoved. Harris said she still doesn’t trust the City’s numbers, but said the average projected tax savings doesn’t amount to much for her either way. She’s among a group of residents that is asking lawmakers to prevent Detroit from implementing Duggan’s tax plan. 

Katrina Martin, a LaSalle Gardens resident, said she came to Duggan’s presentation with an open mind. She left the meeting as a supporter of the plan. Martin pays roughly $1,200 in property taxes on a family home she inherited. She said the annual savings would add up over time. Martin also liked the expected impact on land speculators who pay low taxes while letting their property languish. 

“Having any kind of savings, I’m all for it,” Martin said.

Duggan said he hopes residents came away from the demonstration with more confidence. He also struck a harsh tone against critics of the plan.

“I am confident that all the nonsense that’s been spewed, I think the estimator is going to shut a lot of it up,” Duggan said. “People say today how realistic (it is). Some people got $30 savings, other people got huge savings. You could see this is really good.” 

Three percent of homeowners are not expected to receive a tax break, Duggan said, particularly those who have large lots with smaller homes. However, the mayor guaranteed that no homeowner will see a tax increase. 

The proposal includes protections for urban farms and publicly dedicated spaces like pocket parks and community gardens, exempting those land uses from increased taxes on land value. Homeowners who have up to four side lots adjacent to their home would also receive an exemption. 

Duggan said residents who own five or more side lots can expect an average tax increase of $25. City officials said side lots that don’t touch a person’s homestead can’t receive an exemption. 

Savings vary by neighborhood 

Savings vary by neighborhood 

The property tax estimator tool became available on Oct 30. Residents can view the tool on the Office of the Chief Financial Officer webpage. 

Meanwhile, BridgeDetroit obtained a breakdown of how the tax changes would affect various neighborhoods through a Freedom of Information Act request.

Data provided by the chief financial officer shows the average tax savings for single-family homeowners ranges between $33 and $753, depending on the neighborhood. The data shows a reduction in taxes for every neighborhood – a 16% average decrease overall. 

The Jeffries neighborhood, which has 47 homes directly west of Cass Corridor, would experience a 1.5 percent tax, a cut of $93 on average. The average property tax bill there would drop to $1,512, according to the City data. 

Detroiters living in Mexicantown could experience an 18 percent tax cut, shaving $130 off their bills on average. The average tax bill would drop to $556. 

Homeowners in the Midwest neighborhood, where the average market value is only $17,998, could save $61 on average. That’s a 14.5 percent drop. 

Homeowners in the Detroit Golf neighborhood currently pay the highest tax bills, averaging $6,370. They would save an average of $619, a drop of 7.2 percent. 

The Warrendale neighborhood has the most owner-occupied single family homes, according to city data, a total of 2,717. Residents there would save $134 on average, with the average tax bill dropping 16 percent from $772 to $639. 

The data represents 93,637 single-family owner-occupied homes that aren’t receiving a Neighborhood Enterprise Zone tax exemption. The data doesn’t include neighborhoods, which are defined by the City, that are full of condominiums or industrial uses. 

Duggan said the legislation guarantees no homeowners will see a property tax increase. However, some residents who have a Neighborhood Enterprise Zone tax exemption could experience a slight tax jump after their credits expire. 

A change in state law allowed residents living in select areas to receive a 13 mill property tax cut, reducing their tax rate from 67 mills to 54 mills.

“The reason (an NEZ) is a little better than our (14-mill cut) is because we double the tax on the land,” Duggan said. “If it’s a big house on a small lot, the land value tax is better. If it’s a small house on a big lot, the NEZ is better.”

Duggan said the system is fundamentally unfair because it’s largely available in Detroit’s wealthiest neighborhoods. Residents who have an NEZ tax break can choose to keep it until it expires, but no renewals or new zones would be created if the land value tax is created. 

Duggan said homeowners with an NEZ would have paid “a lot more” once their tax break expires, but under his plan they can take advantage of the land value tax and pay 53 mills. 

“You’re looking at people who in many cases are jumping up $1,000 or $2,000 (on their tax bill) when the NEZ expires,” Duggan said.

The mayor also touted a potential to spur development on long-neglected properties by making it more expensive to hold on to valuable land. Duggan said 30,000 vacant lots pay $30 per year currently, encouraging land speculation. The city cuts grass on those lots five times a year at a cost of $100 each. Duggan said those owners should pay more in taxes. 

“There’s going to be big tax increases on the people on the surface lots,” Duggan said. “It goes building by building, but most of our significant downtown owners will see an increase in the short run because the downtown land is so valuable. When we double (the taxes) they will see an increase, when they build on it, they’ll see a reduction, but the biggest tax increases will go to people who own downtown lots.” 

Deputy Chief Financial Officer and Assessor Alvin Horhn has said his office needs more funding to implement the new tax system. Duggan said he’s willing to write the check. 

“We need to figure out how fast City Council is moving,” Duggan said. “Either this spring or maybe in the (next) budget cycle, we probably need to add $1 million to $1.5 million to make this possible.” 

Duggan strikes at opponents 

The mayor used part of Thursday’s meeting to go on the offensive against critics of the land value tax. Duggan took shots at opponents of the bill package, including Democratic lawmakers and a coalition of Detroiters. 

Duggan claimed Detroiters for Tax Justice, a loose group of around 50 community organizers, is being paid off by scrapyard owners who will see tax increases under his plan. Duggan did not provide evidence, but pointed to literature the group has distributed that casts metal recycling centers in a favorable light. 

“I normally don’t talk like this, but they have put out so much ridiculous misinformation,” Duggan said. “Up in Lansing, there is an organized effort. I’ve been around Lansing long enough to know when someone is paying for an effort.”

Russ Bellant, a lead organizer with the Detroiters for Tax Justice, called the allegations “bullshit.” Bellant said he’s inclined to sue the mayor over the allegations. 

“We have never gotten a dime from any business owner – scrapyards, parking lots, nobody –  either directly as an organization or indirectly as a source of encouragement or support,” Bellant said Friday. “Not one dollar. They have never been at any of my meetings. I haven’t been at any of their meetings.” 

Harris said she’s a member of Detroiters for Tax Justice, and has been to Lansing to advocate against the land value tax bills. Harris said she hasn’t received any payment for her efforts. 

“Who am I supported by? No one,” Harris said. “(Duggan) has gone up there and bullied those representatives.” 

Bellant has visited Lansing several times to advocate against the land value tax plan. He said tax cuts are necessary to make homeownership more attractive in Detroit, but the city should start with a drainage fee cut. Bellant said singling out scrapyards is an “unethical” attack on legitimate businesses.

“Our perspective has prevailed thus far, that’s why he’s attacking us,” Bellant said. “People have listened to what we have to say. The main reasons his bill isn’t being supported is because it’s a bad bill.” 

Duggan also called out state Rep. Dylan Wegela, D-Garden City, who spoke against the bill when it was last on the House floor earlier this month. Duggan sarcastically called Wegela a “deep thinker” who is preventing Detroiters from deciding for themselves. 

Marshall Bullock, a former state lawmaker who is now a lobbyist in Lansing for Duggan’s administration, struck a similar tone during a community meeting earlier this month. Bullock said lawmakers who oppose the land value tax legislation are participating in “voter suppression” because it would be enacted through a ballot initiative.

“I never thought it would be this hard to cut property taxes for Detroiters,” Duggan said Thursday night.