Study: Detroit homes as­sessed too high

City’s chief asses­sor de­nies own­ers were be­ing over­taxed

Orlando Sentinel - - NATION & WORLD - By Amy Dob­son

Homes in Detroit were as­sessed at amounts higher than al­lowed by the state con­sti­tu­tion, ac­cord­ing to a forth­com­ing study, a prob­lem that led to many of the wide­spread fore­clo­sures that plagued the city af­ter the hous­ing mar­ket crash in 2007.

Ac­cord­ing to data cited in the study, from 2005 to 2015, 1 out of 3 Detroit prop­er­ties were fore­closed upon be­cause of mort­gage de­fault or un­paid prop­erty taxes. Even as re­cently as 2015, Detroit had one of the high­est prop­erty-tax fore­clo­sure rates in the na­tion for any ju­ris­dic­tion, with 3,949 fore­clo­sures per 100,000 peo­ple.

The study found a much larger pro­por­tion of homes in the low­est price range were sub­ject to th­ese in­flated as­sess­ments when com­pared to homes in top price tiers. More­over, prop­erty own­ers who would have been el­i­gi­ble for waivers be­cause of eco­nomic hard­ship en­coun­tered nu­mer­ous bar­ri­ers pre­vent­ing them from ob­tain­ing ap­proval for a re­duc­tion or elim­i­na­tion of their prop­erty tax bill.

The study, which is to ap­pear in the South­ern Cal­i­for­nia Law Re­view, is au­thored by Ber­nadette Atu­a­hene, a pro­fes­sor at ChicagoKent Col­lege of Law and a vis­it­ing pro­fes­sor at Detroit’s Wayne State Univer­sity Col­lege of Law, and Tim Hodge, pro­fes­sor of eco­nomics at Oakland Univer­sity in Michi­gan.

The Michi­gan con­sti­tu­tion states homes can­not be as­sessed at more than 50 per­cent of their mar­ket value, yet the study an­a­lyzed sales data from 2008 to 2015 and found 55 to 85 per­cent of homes were as­sessed at amounts higher than al­lowed by the state con­sti­tu­tion.

Fur­ther anal­y­sis looked at the dis­tri­bu­tion of th­ese in­flated as­sess­ments in five dif­fer­ent price bands, re­ferred to as quin­tiles in the study.

“We found that in quin­tile 1 and 2 (the low­est priced homes) 95 per­cent or more were be­ing as­sessed in vi­o­la­tion of the Michi­gan con­sti­tu­tion,” Atu­a­hene said in an in­ter­view. “But when you get to quin­tile 5, the high­est val­ued homes, only about 13 per­cent were be­ing as­sessed in vi­o­la­tion of the con­sti­tu­tion. Which means that the poor­est home­own­ers with the low­est val­ued homes are bear­ing the bur­den of th­ese un­con­sti­tu­tional as­sess­ments.”

Detroit Chief Asses­sor Alvin Horhn dis­puted the find­ings of the study, say­ing the method­ol­ogy was flawed.

“We are fa­mil­iar with the UOC study on as­sess­ments in the city of Detroit and find that much of it re­lies on data that do not meet the stan­dards of the State Tax Com­mis­sion. There­fore, its find­ings would not be ap­pli­ca­ble un­der Michi­gan law,” Horhn said in a state­ment. When asked for specifics, city of­fi­cials de­clined to pro­vide any de­tails.

“In each of the past four years, the ma­jor­ity of Detroit home­own­ers have re­ceived dou­ble-digit as­sess­ment re­duc­tions,” Horhn said in the state­ment. “Ev­ery prop­erty owner has the le­gal right to chal­lenge their as­sess­ments, and this year more than 14,000 Detroi­ters took ad­van­tage of this process. By the end of their ap­peal, more than 80 per­cent ei­ther re­ceived an as­sess­ment re­duc­tion or be­came sat­is­fied enough with our method­ol­ogy that they chose to not pur­sue their ap­peal any fur­ther.”

The study ap­pears to give cre­dence to ef­forts by the Amer­i­can Civil Lib­er­ties Union to ad­dress what it as­serts are high as­sess­ments by Detroit that re­sulted in fore­clo­sures car­ried out by Wayne County, the ju­ris­dic­tion where Detroit is lo­cated. The ACLU filed suit against Wayne County on be­half of Detroit home­own­ers, ar­gu­ing the as­sess­ments vi­o­lated the U.S. Fair Hous­ing Act since they dis­pro­por­tion­ately af­fected African Amer­i­cans.

At­tor­neys from the NAACP Le­gal De­fense and Ed­u­ca­tion Fund and the Wash­ing­ton-based pri­vate law firm of Cov­ing­ton & Burl­ing were also part of the le­gal team that pro­vided sup­port to the law­suit. Last month, the Michi­gan Court of Ap­peals ruled against the ACLU, af­firm­ing a lower court de­ci­sion that it lacked the ju­ris­dic­tion to hear the case and it should go to the Michi­gan Tax Tri­bunal.

“They haven’t been ab­solved of any wrong­do­ing,” Atu­a­hene said. “It’s just the lawyers have to bring it to a dif­fer­ent court.”

Home­own­ers who fall be­low the fed­eral poverty line qual­ify for a poverty or hard­ship ex­emp­tion and can have their prop­erty taxes waived dur­ing the years they are el­i­gi­ble for the pro­gram. But ac­cord­ing to the ACLU, many home­own­ers who would have qual­i­fied were ul­ti­mately fore­closed upon be­cause of bu­reau­cratic bar­ri­ers.

Bar­ri­ers, ac­cord­ing to ACLU doc­u­ments, in­cluded re­quir­ing home­own­ers to sub­mit a re­quest for an ap­pli­ca­tion in per­son at a far­away mu­nic­i­pal build­ing that was only open dur­ing lim­ited day­time hours. Ap­pli­ca­tions were then mailed to their home. But some tax­pay­ers never re­ceived the doc­u­ments. Oth­ers re­ceived them so close to the dead­line that they didn’t have time to col­lect all the pa­per­work needed.

CAR­LOS OSO­RIO/AP 2008

A study found that the low­est-priced homes in Detroit were most likely to be over­val­ued for prop­erty taxes.

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