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Alexandra Nichols, 52, of Detroit lives in a trailer less than two miles away from the home she grew up in. It’s been eight years since she lost that home to tax foreclosure, but Nichols hasn’t given up on getting the house back — or at least being compensated for the loss.
The house is a single-family home of about 1,600 square feet in the Russell Woods neighborhood. It belonged to Nichols’ family for almost 40 years.
Nichols is one of about 100,000 Detroiters whose homes were overassessed and who later lost those homes to tax foreclosure. She worries the same thing will keep happening to others.
“I don’t want anybody else involved here to go through this, what I’m going through,” she said.
A 2020 Detroit News investigation cites that the city overtaxed homeowners more than $600 million between 2010 and 2016.
Advocates say assessments are more accurate now but that systemic problems remain. Eric Langowski, a data scientist hired by the Coalition for Property Tax Justice, an advocacy group leading tax reform efforts in Detroit, told City Council in September that 12% of homes in Detroit were overtaxed in 2021. The coalition also said most of these homes would be considered at the lower end of the housing market.
The City of Detroit’s Assessor and Deputy Chief Financial Officer Alvin Horhn disagreed with the coalition and said there is no longer any evidence of systemic over-assessment.
Horhn told Outlier that Mayor Mike Duggan addressed the problem of systemic over-assessments and overtaxation in 2014 when he cut property assessments by more than 20% citywide.
“Since that time, the city has invested millions of dollars and hired more staff to overhaul the entire assessment process, and in 2017, the State of Michigan endorsed the city’s new processes and released it from state oversight two years ahead of schedule,” said Horhn.
Despite these assurances, most City Council members support the idea that the council should have more oversight, assessments should be more transparent and there be more time to appeal an assessment. The coalition drafted a property tax reform proposal and Council President Mary Sheffield introduced it earlier this year.
But a memo from the city’s Law Department last month scuttled any chance of the reform ordinance passing this year. The memo called some of the proposed ordinance “unlawful” and said proposed changes were unnecessary and expensive.
Those overtaxed in the past, like Nichols, are still waiting for relief. The Coalition for Property Tax Justice invited her to share her story before the City Council in September. She hopes that after the reform proposal, the city will work toward compensating people like her for the home she lost.
Waiting for relief
Michigan’s state constitution caps assessments at 50% of a home’s market value. But for years the assessors office used inflated home values before taxing them.
Nichols’ inherited her family home in 2006 and was able to afford the taxes. But as the years went by her taxes increased even though her home became less valuable on the open market.
“It was a lot. It was a lot to deal with,” Nichols said. “The pipes burst and that created a thing of whether to pay the taxes or get the debris out of the house.”
Nichols struggled to stay on her property-tax payment plan. Wayne County foreclosed on the house in 2014. She later found out an over-assessment added about $5,000 over three years to her tax bill. Nichols’ former home was auctioned by the Detroit Land Bank Authority in 2016 for $12,800.
Thomas Lewis, another Detroit resident, discovered he was overtaxed $5,535 between 2011 and 2016. The 60-year-old was able to pay his taxes and still lives in his home near the Boston-Edison Historic District. But he told Outlier Media because he’s retired, that money made a difference.
“I don’t have the money to be able to just throw away thousands of dollars at a whim,” he said. “I need that money back.”
Lewis said he would have rather used the money to make repairs around the home. He said reform is necessary to make sure homeowners aren’t overtaxed in the future.
Timeline for reform
The coalition hopes to continue to work with Sheffield on the property tax reform proposed ordinance next year but is frustrated by objections from the city’s lawyers.
The coalition is drafting a response to those objections. If an assessment reform ordinance is enacted next year, it would still be 2024 before any changes in the assessment process are implemented.
“This is something people have been calling for for years,” said Marie Sheehan, the director of the property tax appeals project for the coalition.
Sheehan said the proposed ordinance does not outline any compensation or funding for Detroiters who lost their homes due to overtaxation.
“For homeowners that challenge their assessment, the ordinance makes the process more transparent and accessible,” she said.
Sheehan said compensation is on a list of demands from the coalition to the city but not their focus until after this current reform effort. The coalition is also waiting for a decision from the state attorney general on whether providing cash payments to people who were overtaxed is consistent with state law. That decision is expected by Jan. 15.
In 2020, Duggan proposed giving overtaxed homeowners first dibs on Land Bank properties at a 50% discount. The proposal did not include any refunds for past overpaid taxes, but the mayor’s administration called the plan the most “fiscally responsible” way to correct the city’s past mistakes. The proposal was not passed by council.
Programs that can help now
Qualifying homeowners or taxpayers can resort to some local programs for relief.
The Homeowners Property Exemption (HOPE) program partially or fully exempts the current year’s property taxes based on the homeowner’s household income. The deadline to apply for exemption from 2022 taxes is today. To apply, visit the city’s website or call 313-244-0274.
Those who qualify for HOPE also qualify for the Pay As You Stay program, which provides a reduction on past-due property taxes.
Detroit residents who are approved for both programs also qualify for the Detroit Tax Relief Fund, which helps pay off their remaining property-tax balances.