Detroit overtaxed homeowners $600M. Years later, advocates still seeking reparations.

The city of Detroit overtaxed homeowners by at least $600 million between 2010 and 2016. After a City Council proposal failed in 2020, Detroit City Council President Mary Sheffield and the Coalition for Property Tax Justice revealed a tentative plan Saturday for compensation and dignity restoration.

At the root of the new proposal is the idea that the overtaxation was dehumanizing and systemic — it took away residents' dignity. To fully repay what Detroiters have lost, the city must restore that dignity, the proposal says.

"You all should have never been put in this position," said U.S. Rep. Rashida Tlaib, D-Detroit, speaking virtually to a crowd of 700 Detroiters, many of whom were hurt by the overtaxation. "These overassessments were illegal; they were systemic, and they gutted out our neighborhoods."

In Wayne County, 451 occupied homes are headed to the annual tax foreclosure auction in 2018. Some residents, like the occupants of this home, marked for auction in 2017, post signs pleading with prospective buyers not to bid.
In Wayne County, 451 occupied homes are headed to the annual tax foreclosure auction in 2018. Some residents, like the occupants of this home, marked for auction in 2017, post signs pleading with prospective buyers not to bid.

The Michigan Constitution states that no property can be assessed at more than 50% of its market value, but the city assessed 55%-85% of its property in violation of that law. This overassessment led to 100,000 Detroiters losing their homes when they should not have, activists say.

Detroit resident Sonja Bonnett lost her home due to "illegal and unconstitutional tax foreclosure." She said nobody told her that she was eligible for the poverty tax exemption and that losing her home lit a fire in her to start fighting for herself, her family and her community.

"When I lost my home, I didn't just lose a structure: I lost my health; I lost my footing; I lost confidence in myself," Bonnett said. "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. You're taking what some of us are 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."

The previous, failed proposal offered overassessed homeowners a 50% discount on city-controlled vacant properties and would have moved those homeowners to the front of the line for affordable housing and for city jobs. Anyone who owned a home in the city and lived in it as a primary residence between 2010 and 2013 would have been eligible, which amounts to about 130,000 residents. The plan would have cost the city roughly $6 million.

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More: Detroiters can get help applying for property tax exemption. Here's how.

Sheffield said the plan was voted down for two main reasons: It did not take into account those impacted before 2010 or after 2013, and the $6 million was "inadequate," meaning it would not have gone far enough to help the residents of Detroit through this crisis.

“Any action that leads to a budget deficit automatically triggers the return of the Financial Review Commission's complete control over city finances," city spokesman John Roach told the Free Press. "We will not support anything that once again leads to Detroit's loss of self-determination.”

The housing advocates noted that a memo from the city's legal department states the city cannot legally give direct monetary reimbursement to the residents. While they work to fight that ruling, the new proposal aims to provide compensation in different ways.

The coalition presented its proposal at a "people's forum" to hear feedback before it is officially presented to the City Council.

The overtaxation of Detroit residents is part of a national racial justice issue, said Bernadette Atuahene, a professor at Chicago-Kent College of Law who has studied overassessment in Detroit, and who is part of the Coalition for Property Tax Justice. Wayne County's majority-Black municipalities — Detroit, Highland Park and Inkster — have a higher foreclosure rate than mostly-white localities, according to Atuahene's research.

To properly rectify the situation, the city's compensation must provide options for each person's individual situation and restore residents' dignity.

"There are other instances where they take something from you as part of a larger strategy of dehumanization, or infantilization, or a larger process of structural racism," Atuahene said. "In those instances, I've taken more than just your property, I've also taken your dignity, and that's called the dignity-taking. And the idea is to say when this larger harm called the dignity-taking has occurred, mere reparations are not enough. Just giving you compensation for the thing taken is not enough. What's required is a more robust remedy that I call dignity restoration, and that's the process of giving you compensation for things taken, but through a process that affirms your humanity and restores your agency."

Proposal details

There are four categories of overassessed residents that are eligible for compensation if they owned and occupied a home that the city overtaxed between 2009 and 2020.

  1. Overtaxed homeowners whose property was foreclosed even though they were exempt from paying property taxes to begin with.

  2. Overtaxed homeowners whose property was foreclosed.

  3. Overtaxed homeowners whom the county did not foreclose on but who are eligible to be exempt from paying taxes.

  4. Overtaxed homeowners whom the county did not foreclose on.

Depending on which category residents fall under, there are a variety of compensation options that range from small business support to property tax credits to a home repair grant, among other things.

Screenshot from the tentative proposal
Screenshot from the tentative proposal

The proposal also includes oversight measures, including the creation of an independent review board to uncover property tax inequities, and changes to the inflated property tax assessments appeals process to make it more accessible.

Read the full proposal here: drive.google.com

Homeowners who might be eligible to appeal their property tax assessment can fill out this interest form: actionnetwork.org/forms/property-tax-assessment-appeal-interest-form

Staff writers Christine MacDonald and Nushrat Rahman contributed to this report.

Contact Emma Stein: estein@freepress.com and follow her on Twitter @_emmastein.

This article originally appeared on Detroit Free Press: Detroit overtaxed homeowners $600M. They're still seeking compensation

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