Housing advocates, attorneys and activists are still trying to force the city of Detroit to compensate residents for monumentally erroneous tax bills that forced thousands of mostly-Black homeowners to lose their homes.
Detroit homeowners were overtaxed by an estimated $600 million between 2010 and 2016, according to a 2020 Detroit News investigation. Many of the faulty tax bills violated a Michigan law that limits residential property from being assessed at more than half of their market value, while some, according to the Detroit Metro Times, were assessed at as much as 85% of their market value. An estimated 100,000 homeowners, most of them Black, were foreclosed an as a result of the overtaxation.
But even though state officials In 2017 ordered Detroit to reassess all the homes in the city, to date, none of the incorrectly-taxed homeowners have been compensated. Now, advocates are pushing for a remedy on behalf of those who were wronged.
The Coalition for Property Tax Justice, a group of advocates for impacted homeowners, is trying to change that. The coalition surveyed more than 200 overtaxed residents to determine how they want to be compensated. The findings were published in a report released Thursday.
“Residents indicated that really no amount of monetary or in-kind compensation could fully repair the harm that the city or county had caused them, their families, and their community,” Alexa Eisenberg, a housing activist and researcher, said at a news conference Thursday. “Residents emphasized that they wanted resources to support them in dealing with the irreparable and intergenerational mental health consequences. They also want the government to apologize and to be held accountable for the wrongs that were committed.”
Eisenberg called for “swift and meaningful compensation.”
Most of the surveyed residents prioritized cash payments as compensation. But that’s likely not going to happen because Mayor Mike Duggan’s administration insists that state law prohibits the city from providing cash payments or tax credits to any of the overtaxed residents.
The need for compensation is massive based on the scale of the errors, which were nothing short of systemic. The News originally reported that one-third of all Detroit properties had been foreclosed between 2008 and the time of their investigation. That represents not only a $600 million in overtaxation, but a massive transfer of assets from homeowners to lenders or municipal government in what the News called “the poorest big city in the nation.”
A hypothetical example shows how erroneous taxation increases financial stress on cash-strapped homeowners. Detroit, like many other cities, calculates property taxes by multiplying a percentage rate, called “millage”, by a percentage of the property’s assessed value. One mill is worth $1 for every $1,000 in a home’s value.
Under Michigan law, a house with a market value of $100,000 could only be assessed at a maximum of $50,000. Detroit’s millage rate of 69.6 mills should then establish a maximum property tax bill from the city of $3,480. But if the same house was assessed at $85,000, or 85% of market value, that bill would increase to $5,916. In Detroit, many who couldn’t afford to pay those artificially inflated bills ended up losing their homes.