Detroit Overtaxed Homeowners by $600 Million Due to Delayed Property Reevaluations

by Scott McClallen


Detroit overtaxed homeowners more than $600 million because it didn’t reevaluate property values after the Great Recession until 2017.

That’s according to The Detroit News, which collaborated with Reveal from the Center for Investigative Reporting to quantify foreclosure and inflated property tax estimates that plagued the city before its 2016 bankruptcy and led to the tax foreclosures of about one in four city properties since 2011.

From 2010 through 2016, more than 90 percent of an estimated 63,000 Detroit homeowners owing past-due debt were overtaxed by an average of $3,700, the News found, with about 40,000 homeowners owing less debt on their properties that were overtaxed.

Simply put, thousands of Motor City residents still face foreclosure directly caused by debt piled on from over-inflated city property tax assessments, even with increased access to fees and interest-reduced property tax exemption programs.

One homeowner the News interviewed, Anna Bolden, bought her house in 2011 for $4,800 and the same year was given a $2,600 property tax bill.

Detroit’s Chief Financial Officer David Massaron told The News the city wronged people in its 2016 bankruptcy, but the city doesn’t plan to forgive overtaxed claims prior to that bankruptcy, as many residents have already paid their taxes.

“At the end of the day, a number of residents over the last decade have paid their taxes,” Massaron said. “Over-assessed or not, they paid their taxes. And we need to be sensitive to the fact that those residents paid into the continued city operations.”

Christopher Berry, a professor at The University of Chicago Harris School of Public Policy and academic director of the Center for Municipal Finance, told The Center Square that Detroit’s practice of tax foreclosure piled onto already-overassessed property taxes of low-priced homes stands out from cities he’s studied in the United States.

Berry co-authored a 2018 paper, Taxed Out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit, which found that illegally inflated tax assessments caused about 10 percent of all tax foreclosures in Detroit.

The property taxes of low-priced homes are overassessed, homeowners fail to pay those taxes, and then their homes are seized through tax foreclosure, Berry said, leading to Detroit’s blight and reduced equity and wealth in the city, disproportionately impacting African American homeownership in Detroit.

Berry said the Detroit News’ estimates are conservative because they assumed the 2017 property tax assessments were correct, which his research to be released in the next few months found are regressive and unfair.

As a solution, Berry said the city could try to reevaluate the assessments correctly or reconsider the practice of tax foreclosure.

“I’m not sure why it didn’t set off alarm bells in the city and county when they see that a quarter to a third of all of the single-family properties have been foreclosed on,” Berry said. “Why is that a good policy?”

Those tax foreclosures split into multiple, expensive problems for the city, including blighted buildings, heightened crime and drained trust in the transparency of local government.

“Obviously, just the over-taxation of property is unjust and unfair, but when you layer on top of that the foreclosure, it really just adds a very grave insult to a very grave injury, which is we tax you unfairly, in the case of Michigan, unconstitutionally too much, and then take your home from you,” Berry said.

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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on and Previously, he worked as a financial analyst at Pepsi.
Photo “Detroit Neighborhood” by University of Michigan School for Environment and Sustainability. CC BY 2.0.







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