Duggan Exploring Options to Help Over-Assessed Homeowners in Detroit

Mayor Mike Duggan says the city is working hard to make Detroit a more equitable place, focusing not only on attracting new businesses and residents, but also working for people who have stayed in the city.

“I’m just being as honest as I can with folks. I don’t know how to replace money that was spent years ago.” – Detroit Mayor Mike Duggan

But the city also faces scrutiny over past property tax assessments, water shutoffs, and the persistent gap between the wealthy and the poor.

Listen: Detroit Mayor Duggan on Detroit Today with Stephen Henderson.

Here is Mayor Duggan’s exchange with Stephen Henderson about whether the city will compensate homeowners whose properties were over-assessed by the city in the years following the Great Recession.

Stephen Henderson, Detroit Today: The people who suffered these over assessments on their property taxes, you address that during the State of the City as well. And you’re pretty blunt about the idea that you don’t think you’re going to be able to pay those people back. I know people on that block who lost their homes in the last five or six years during this period of the over assessments, how can you say to them that there’s no relief for them, those people in particular, and at the same time be talking about how things can be more equitable? I don’t understand that.

Mayor Mike Duggan: I don’t know how to be except truthful. And the over assessment issue was a big part of why I ran for office, the city of Detroit gutted the assessment department as part of the budget cuts. And when the property values collapsed in this city in 2010, [they] did not adjust the assessments downwards. I campaigned against that every single day in 2013. And in January of 2014, my first month in office, we cut assessments in the city 22 percent. And we’ve continued to work aggressively at that and so I don’t have any way of defending what occurred. But the lion’s share of that money went to the Detroit Public Schools.

And what I’ve said is I’m just being honest. You cannot say to the Detroit Public Schools, ‘Pay me back the money you paid the teachers in 2011 out of that over assessment.’ They don’t have the money. If they were going to get it, they’d have to do a huge property tax levy, which is how you handle judgments. If you do that, you would blow the property tax rates in this city through the roof. And so I’m just being as honest as I can with folks. I don’t know how to replace money that was spent six, eight, ten years ago. But I have the law department working with counsel looking at a whole range of steps that could potentially be taken to provide some kind of benefits to those who are affected. It won’t be the public schools writing a $300 million check. But there may be advantages that we can create on things like purchasing land bank houses, getting back your house that you lost if the city still has it, doing something on housing assistance. Those are the kinds of things we’re looking at.

Henderson: I mean the idea, I think, of leveraging this incredible inventory that is in the Land Bank, largely because of tax foreclosures, to try to make this right makes a lot of sense to me. In other words, why not try to make people whole by getting them a new house? And I know that’s maybe an extreme idea. But we do that now for other people. I mean, and I think that’s one of the things that people are starting to notice, that we go out of our way to make sure that development is happening in Detroit, we do a lot of things to make sure that people like [Fiat Chrysler] or Bedrock get the things they need to do what they’re doing. I think people want to see that same effort leveraged on behalf of the city’s poor.

Duggan: And so that’s exactly the kind of thing that we’re looking at. So, for example, we have a program we call “Buy Back.” But, as you said, the Land Bank didn’t take the houses. The county treasurer foreclosed on them. They used to be at the city. We moved them over to the Land Bank. But we have 3,000 or 4,000 houses that were foreclosed on. Somebody’s still in them. We haven’t gone and evicted those folks. We sat down and said, If you want to buy it, in many cases, they were people who own the house and had it foreclosed. You pay $1,000, put aside $100 a month for 12 months, attend the classes on credit score management and financial management, and at the end of a year, you get a deed.

We’ve had almost 1,000 people walk out of that program with a deed, own their property free and clear. One of the things the law department is looking at is could we extend that program to people who moved out of the house but owned it at one time? Could we offer the same kind of thing for Detroit employees on the auctions? We had employees, as you know, who lost health care, lost pension benefits. To help compensate them, our employees and their families can get a 50 percent discount when they bid on houses on the Land Bank auction. The law department’s looking at, could we take anybody who was disadvantaged on the over assessment, give them the same 50 percent discount?

But I don’t want to make it sound like they will be made whole. These houses for the most part have been abandoned for six or eight years. This is not handing somebody back a house that’s made whole. But these are the kinds of things that we are looking at. And the law department is exploring every opportunity. And I’m working with council. And we’re going to be able to honestly say these are things that we can do if you were negatively impacted.

And you know, someday I’ll come back as a politician who tells people what they want to hear and say, ‘Yeah, you’re going to get a check. I’ll go fight in Lansing for it,’ knowing full well it’ll never happened. That’s not my political style. What I would rather do is is tell you honestly, what we can do what we can’t do and then do everything we possibly can.

Henderson: I mean, one of the things that I would love to see is philanthropy in this city and some of the private sector, both of whom are investing really heavily in a lot of things in Detroit, why not leverage some of that investment to try to fix up some of those Land Bank houses and give them back to the people they were taken from? I mean, I think an effort on that kind of level is probably called for here.

Duggan: And so, again, those things are happening. The Home Again program, Dan Gilbert has put in huge amounts of money in fixing up houses that a renter may have been in where their landlord was foreclosed. We have a program at the Land Bank called Buy Back, where again, Gilbert fronted the money to do rehab. You’ve got a number of companies in this town that have contributed to the Affordable Housing Leverage Fund — tens of millions of dollars. So there is money flowing into these areas. Now the affordable housing money has gone into building affordable housing and renovating affordable housing so people aren’t pushed out. So we’ve gone to the philanthropic community. The rest of the country writes about how Detroit is supported by its philanthropic community like no place else in the country. And they have been good and we’ll continue to push that. But I’m trying to be realistic on what we can do and what we can’t do. And, as I say, we’re pushing very hard on everything we can do.