Are Detroit’s poorest still paying more than their fair share of property taxes?

When Sharon Lutz Robinet bought her home in northwest Detroit in 2009 for $14,000, it seemed like a good deal. That is, until the $2,400 tax bill came. She had never owned a home before and the amount shocked her. 

“I panicked,” she said. “I had put everything into this house. I loved it, completely redecorated it, everything was exactly the way I wanted it. Then I didn’t know what to do.”

Like so many Detroit homeowners, the city had overassessed the value of her home and was charging her too much for taxes. 

While Lutz Robinet’s home was in good shape, her block on Fenton Street was not. The abandoned homes, which regularly had squatters, outnumbered occupied ones. Two other homes on the block sold for just $1,400 not long after her purchase. 

But when Lutz Robinet bought her home, Detroit’s millage rate was 65.14, which means the city determined her home’s taxable value was nearly $37,000. The difference between the actual price and the city’s determination was actually even higher: Michigan municipalities aren’t allowed to assess a home for more than 50% of its “true market value,” or what it would sell for in the open market. That means the city thought her home was actually worth $74,000 — even though she had just bought it for $14,000. 

Despite her business going bankrupt during the Great Recession, Lutz Robinet was able to hang onto her home thanks to financial assistance from her father. But situations like hers were common during the Great Recession as Detroit’s housing market collapsed, and waves of foreclosures ensued. That prompted the ACLU of Michigan to sue the city in 2016, arguing that its tax assessments were illegally inflated. The city subsequently conducted a citywide appraisal. In the end, Detroit homeowners were overtaxed by an estimated $600 million between 2010 and 2016, a Detroit News investigation found, resulting in tens of thousands of Detroiters going into tax foreclosure. 

The reappraisal was supposed to fix the problem. But some activists and experts say that even the new assessments didn’t do much for Detroit’s poorest property owners, who are still being overtaxed. 

“The problem still exists today,” said Bernadette Atuahene, a law professor at Chicago-Kent College of Law who has studied Detroit assessments and a member of the Coalition for Property Tax Justice, which is advocating for reparations for Detroiters who were overtaxed.

A separate report published by The Center for Municipal Finance at the University of Chicago in February 2020 analyzed all homes sold in Detroit between the second quarter of 2016 and the first quarter of 2018 by comparing the true value of a home to the city’s assessed value. 

There were some encouraging signs: While the median sales price of homes went up during those years, the median assessment went down. Overall, fewer homes were being overassessed. 

But the report also found that the drop was largely due to lowered assessments at the top end of the market, even though on average, those homes weren’t being overassessed prior to the citywide reappraisal. 

Homes at the bottom 30% of the market, however, were still being overassessed, according to the researchers. For the bottom 10%, they had even gotten worse. This has led to a regressive tax system where, the authors write, “owners of low-value property pay too much in taxes while owners of high-value properties pay too little.”

“As a matter of principle, it’s meant to be a flat tax applied equally to everyone’s property,” said Christopher Berry, academic director of the Center for Municipal Finance and one of the paper’s authors. “Instead it’s unfair and creates greater inequities.”

Detroit’s assessor, Alvin Horhn, said that the report’s methodology is flawed. Among several criticisms, he wrote by email to Detour that “the statistical analysis misses the variation in Detroit neighborhoods.” In other words, taxes are consistent within neighborhoods. 

Berry has heard the city make that argument before, but thinks it’s a bad one. “If you wanted to hide the problem, you’d assess taxes neighborhood by neighborhood,” he told Detour. 

While homes within each neighborhood might be similar, he argues, the differences between them are the problem. The poor neighborhoods are being taxed too much, while the wealthy ones aren’t being taxed enough.

Questions about fairness in tax assessments have created tension in negotiations between City Council and Mayor Mike Duggan about whether and how much to compensate Detroiters who were overassessed. The mayor proposed modest benefits in the form of job opportunities and priority in affordable housing units, which would cost the city an estimated $6 million. 

But that plan was voted down by Council, in part because it would only apply to Detroit residents who owned homes prior to 2014. If the Center for Municipal Finance’s report is right, many homeowners were still being overtaxed in following years. 

“Why does the mayor want to provide compensation only through 2013?” Atuahene said. “Because he came to office in 2014, and then he can say that he cleaned up the problem. It’s a lie and there’s no pretty way to put it.”

Atuahene said that the coalition is not looking for a specific amount in reparations, but rather “the restoration of dignity.”

“If I take something from you as part of a larger strategy, then I’ve taken your dignity,” she said. “Restoring material goods isn’t enough — a larger remedy is required.”

On a practical level, the coalition is asking for affected families to determine how they’re made whole by including them in the decision-making process. The group will be outlining its demands at an event, #BlackHomesMatter, on Wednesday, Jan. 13 that will include speakers like U.S. Congresswoman Rashida Tlaib and Dr. Cornel West.

The city says that it can’t afford anything more than the proposed $6 million. The COVID-19 pandemic has resulted in a $410 million revenue shortfall, severely straining the city’s budget. 

It’s unclear when this issue will be picked back up again. But the coalition does have some strong advocates in Council, including President Pro Tem Mary Sheffield, who wrote in an October op-ed that “I, along with the Coalition for Property Tax Justice, am committed to fully restoring the dignity of those affected and, even in the midst of Detroit’s budget constraints, ensuring Detroit homeowners are made whole financially.”

Horhn also said the city has made it easier to deal with inflated appraisals on a case-by-case basis. “All it takes to start the appeals process is a letter, an email, or a phone call,” he wrote. 

That’s what Lutz Robinet did. Over the years, her home’s taxable value has gone down. But a recent appraisal of $14,000 still seemed too high. So in 2019 she appealed and got her home reappraised to $9,500 — her tax bill is now $874.